The very purpose of establishing a credit society is to distribute loans, and therefore, this business is not free from risk. The strength of every lending institution - its success or failure - depends on the quality of its loan distribution. The present article explains in detail the precautions to be taken and the measures to be adopted while granting loans.
Regardless of the nature of an institution that conducts lending activities, the primary purpose behind its establishment is to provide loans. Banks and credit societies are primarily registered to lend money to individuals involved in various sectors such as traders, businessmen, farmers, and salaried employees. Even a historical review of this movement shows that credit societies have been functioning with this very objective. Naturally, the business of lending is not free from risk. The strength of every lending institution—their success or failure—depends on the quality of their loan disbursement. Therefore, it is essential to formulate a lending policy, adopt a method of disbursing loans that ensures safety, and take on the minimum possible risk. (To continue, open the magazine)