[[1]] is the result of borrowing one loan to repay the previous loan.

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Detailed Solution

A debt trap is a result of borrowing one loan to repay the previous loan.
The moneylenders and traders are informal sources of credit that are not under the control of the credit regulatory body, RBI. The moneylenders charge high interest on loans, resulting in a considerable burden of repayment of loans on the poor borrower. In addition to charging high interest on loans, the moneylenders also do not maintain proper transaction records and use unjust ways to retrieve loan forms from poor borrowers. The borrowers take another loan and get into a debt trap to repay the previous loan. The borrowers must sell their leftover assets and work as landless labourers to repay the debt.

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