Analyze the role of credit for development

A proper credit policy plays a crucial role in sustaining development. When banks give out loans, business houses have credit to increase production which leads to increased employment and profits. Loans from informal sector have a high rate of interest and they do more harm than good. There is a need to increase loans from formal sector to avoid exploitation of borrowers by moneylenders. Tis will lead to more systematic disbursal of loans to people who would be capable of paying off the loan and contribute to national development.