Informal sector provides loans on high interest rates which cannot be paid by the poor people and they are caught in a debt. Now they have to sell part of their land to repay the loan. This whole scenario is known as

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Interest on loans

Debt trap

Mode of repayment

answer is C.

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Detailed Solution

The whole scenario is known as the debt trap.
In the debt trap, people are forced to take more loans or sell their property to repay existing debts. Over time, people get stuck in a situation where the debt spirals out of control, exceeding the repayment capacity, making them fall into a debt trap.
When money is borrowed from moneylenders, they provide loans at high-interest rates. The borrowers must pay monthly charges, including the principal amount and the interest rate. Thus, the loan amount will increase if people cannot pay the monthly amount. Thus, in a debt trap, the interest amount keeps piling up until it is beyond the repayment capacity.

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