Choose whether the statement is true/false:

Would Savita's condition be different if she could get a loan from the bank at a low rate of interest instead of from Tejpal Singh?

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Detailed Solution

The above statement is true.
Savita's condition would be different if she could get a loan from the bank at a low rate of interest instead of from Tejpal Singh. Savita, a small farmer, decides to borrow money from Tejpal Singh, a considerable farmer, on the following terms so that she can grow wheat on her one hectare of land:
1) Tejpal Singh consents to extend Savita a loan at a very high-interest rate of 24 per cent for four months. Savita must also commit to accepting a job paying Rs. 35 per day as a farm labourer in his field during the harvest.
2) Tejpal Singh imposed an interest rate higher than that of banks. The interest rate would have been cheaper, Savita could have quickly repaid the loan, and her condition would have been much better if she had gotten the loan from the bank.

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