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Non-Institutional Sources of Credit:
Non-institutional sources of credit play a prominent role in supplying rural credit.
The important sources of non-institutional credit are as follows:
(i) Moneylenders: It is easy to obtain loans from money lenders as the lenders and borrowers are known to each other. Easy access, simple procedure, and no restriction on the use of land attract farmers towards this loan. However, money lenders mortgage the land and charge high rates of interest on credit. It may result in the indebtedness of farmers.
(ii) Other Private Sources: It includes traders, landlords, commission agents, relatives, and friends, etc. At present, the share of noninstitutional finance is declining.
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