Examine the significance of credit in economic development of the country.

(i) A large number of transactions in our day–to-day activities involve credit in some form or the other.

(ii) Credit refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment.

(iii) The credit helps people to meet the ongoing expenses of production, complete production on time and thereby increase his earnings.

(iv) Credit plays a vital and positive role in case people need working capital for production. Like crop production involves considerable costs on seeds, equipment etc.

(v) Farmers usually take crop loans at the beginning of the season and repay the loans after harvest. Repayment of the loan is crucially dependent on the income from farming.