Question

given that a large number of people in our country are poor, does it in any way affect their capacity to borrow?

Answer 1

The loans or credit from formal sources are generally associated with certain terms of credit. The lenders often ask for a security or collateral (such as land,vehicle, etc.) that must be submitted against the loans. The poor often lack such assets that that can be submitted as collateral. This reduces their capacity to borrow from formal sources.