Role of Money Lenders in Khammam District

Abstract

There is a coexistence of formal and informal finance in underdeveloped credit markets. Formal banks have access to unlimited funds but are unable to control the use of credit. Informal lenders can prevent non-diligent behaviour but often lack the needed capital. The project implies that formal and informal credit can be either complements or substitutes. The project also explains the weak legal institutions increasing the prevalence of informal finance in some markets. the financial market segmentation persists, and the informal interest rates can be highly variable within the same sub-economy.

This study is conducted is khammam district in Telengana state .As money lenders are more prevalent is the specified district ,the study is taken to know the relevance of money lenders. The sample for the study was 150 respondents which included formers , labors ,driver etc. It is concluded that people still prefer moneylenders because of the in availability of banking services.