Importance of Credit for Development of Country

Credit is important for all three sectors of the Indian economy:

1. Primary sectors include the collection and extraction of raw materials. For example, farmers come under the category of the primary sector.
2. The secondary sector includes the manufacturing and processing of raw materials from the primary sector. For example, the manufacturing of automobiles falls under the category of the secondary sector.
3. The tertiary sector includes the distribution, support, and commercialization of materials from both the primary and secondary sectors. For example, travel and banking have come under the category of the tertiary sector.

Credit is the trust that permits one party to lend money or resources to another, with the understanding that the second party will either repay or return the resources (or other goods of comparable value) at a later time, avoiding the creation of debt in the process. Credit is a technique for implementing mutuality, making it enforceable by law, and extending it to a considerable number of unrelated persons.

The resources offered may take the form of money (such as the granting of a loan), commodities, or services (e.g., consumer credit). Any kind of postponed payment is considered credit. Credit is given to a debtor, also known as a borrower, by a creditor, also known as a lender.