Classify rural credit in different categories on the basis of time period.
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Rural credit may be classified as:
- Long-term credit: These loans are for a period of 5 to 20 years. These loans are required to acquire permanent assets like tractors, land, costly equipment, tubewells, etc.
- Medium-term credit: Such loans generally stretch over a period of 12 months to 5 years. These loans are required for purchasing machinery, constructing fences and digging wells.
- Short-term credit: These loans are for a period of 6 to 12 months. These loans are required for buying seeds, tools, manure, fertilisers, etc. These loans are given to the needy borrowers by cooperatives moneylenders and banks.
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