Why did the formal credit delivery mechanism turn out to be inadequate in rural area?
Answer & explanation
Correct answer: option 1
The correct answer is Option 1: Since some kind of collateral is required, vast proportion of poor rural households were automatically out of the credit network.
Formal credit delivery mechanism, not only, turned out inadequate in rural areas but also was not able to fully integrate the overall rural community. Since some kind of collateral is required, vast proportion of poor rural households were automatically out of the credit network.