Small farmers, who need credit for cultivation might not get a loan from banks. Why?

see full answer

Your Exam Success, Personally Taken Care Of

1:1 expert mentors customize learning to your strength and weaknesses – so you score higher in school , IIT JEE and NEET entrance exams.

An Intiative by Sri Chaitanya

Lack of collateral

Lack of Paper documents

Both 1 & 2

None of the above

answer is C.

(Unlock A.I Detailed Solution for FREE)

Best Courses for You

JEE

NEET

Foundation JEE

Foundation NEET

CBSE

Detailed Solution

Small farmers, who need credit for cultivation might not get a loan from banks because of lack of collateral and lack of paper documents. Numerous reasons contribute to banks' reluctance to offer loans to particular borrowers. Here are a few of these causes:
1)      Bank loans require collateral and the necessary documentation. The primary driver of financial need in rural areas is crop productivity.
2)      Crop loans are frequently obtained at the beginning of the growing season and paid back after the harvest. Farmers mostly depend on income from farming.
3)      Banks demand collateral against loans. The collateral for the loan amount is something that the borrower owns, such as livestock, bank accounts, etc.
4)      Farmers or people who are normally poor could not have enough collateral.

Watch 3-min video & get full concept clarity