Reema D.

Credit is a contractual agreement in which borrower receives something of value nowand agrees to repay the lender someday in the future, generally with interest. Credit also refers to an accounting entry that either decreases assets or increases liabilities and equity on the company's balance sheet. Credit has a unique role in the economic development of the country. It is needed by all the three sectors of the economy.

i. In rural sector, the main demand for credit is for crop production. Crop production involves cost of seeds, fertilizers, pesticides, irrigation facilities, electricity and repair of equipments. Cheap credit would thus lead to increase in production.

ii. In urban sector, big businessmen and small manufacturers need loans either to expand their enterprises, to bring new technology or diversifying their business.

iii. Every tertiary sector needs loans to buy the latest equipments and technology.

Thus, we can say that credit has a unique role in the development of a country.