What are the prime causes of limited formal credit penetration among the rural and unbanked populations in India? Comment on the effectiveness of Small Finance Banks in addressing this gap and advancing inclusive financial growth. (Answer 250 words in English)

TD SBD RBI Report: Formal credit in India is 74% and informal credit-SHG accounts for 26% of total credit Highlight need for further reform in credit access and penetration. Primary cause of limited formal credit among rural and unbanked population: 1) Lack of security: Rural population lack documents such as land deeds to access bank credit. 2) Poor credit culture: Loan universal hinders regular repayment culture leading to poor credit disbursement. 3) Lack of banking locality in rural and intruption areas hinder access to formal credit. 4) Lack of awareness among rural and unbanked population. 5) Bank hesitancy: Banks hesitant in offering loans in rural areas because of high NPA's and credit culture. 6) Lack of productive use and repayment capacity. Majority farmers earn less than 3000 lack repayment capacity.