Describe four major sources of credit for households in India.

There are different sources of credit available for the households in India that too with an affordable interest rate. The major sources of credit for households in India are:

Commercial banks

It is one of the formal sources of credit. Commercial banks make up a significant role for the source of credit. The banks accept deposit from the households who have excess money advance loans to the households who are in need of it. It is one of the easiest ways of getting a loan for the households.


Self Help Group is a voluntary organization formed by the women to enhance the microcredit for the members in it, and the women members get to indulge in the entrepreneurial activities such as run a canteen, small shops, etc.


The cooperatives is a voluntary organization which includes certain groups; they remove the problem by advancing the loan to the farmers with a low-interest rate. The cooperative is not only for the farmer society, but there are many societies, but only a few have registered under RBI. One of the major sources of raising credit in the rural area is cooperatives

Regional Rural Banks

These banks are also known as Grameen Bank. These banks are mainly set with concentrating the rural areas in India. It is being regulated by the National Bank for Agriculture and Rural Development (NABARD). Grameen Bank of Bangladesh was founded by Professor Muhammad Yunus, and he also received the 2006 Nobel Prize for Peace.

Money Lenders

The money lender is the informal source of credit which is not encouraging in India. The money lends their money to the households for the higher interest rate for making a profit for them.