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Subsidy: Khushhali Bank receives 20% and Grameen Bank 30% of markup.
2. High rate of interest: Yugoslavian banks receive 70% and Latin American banks 50% of markup.
? Till 1980’s the trend was to provide subsidized credit.
? At that time rate of interest less then rate of inflation.
? And effective rate of interest is less the 0%
? After 1980’s the trend has changed.
? Now banks charge high rate of interest to cover the cost of lending.
? There is an argument that poors problem is of access but not of rate of return.
? And it is said that any change in Rate of return “R” will not affect borrowing...
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