Megha has taken a loan of ₹6 lakhs from the bank to purchase a house. The annual interest rate on the loan is 14 per cent, and the loan is to be repaid in 12 years in monthly instalments. Megha had to submit to the bank documents showing her employment records and salary before the bank agreed to give her the loan.

Choose the given statement is True/False

Megha is seeking an informal source of credit.

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True

False

answer is B.

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Detailed Solution

The given statement is False.
People seeking formal credit sources must follow certain rules and regulations to get credit. The statement mentions that Megha has taken the credit from a bank. Banks are a part of formal sources of credit. They ask for documents and employment certificates to ensure the person can repay the loan. Also, the rate of interest is not high. Banks also provide an opportunity to repay the loan in the instalments mentioned in the statement.
Hence, the correct statement should be that Megha is seeking a formal source of credit.

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