Which of the following has a better chance of getting a loan from a formal source?

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A government employee belonging to a rich urban household- Amrita

A helper living in a poor household-Rani

Both of them

None of the above

answer is A.

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Detailed Solution

A government employee belonging to a rich urban household- Amrita, has a better chance of getting a loan from a formal source.
Amrita would successfully obtain the loan from a legitimate source because: Rani would find it challenging to complete the paperwork and fulfil the formalities required by the banks. Due to her background, Amrita is literate and will be able to do so. Rani will have trouble getting a guarantor, whereas Amrita may secure collateral or a guarantee for her loan. Amrita comes from a wealthy family, so the bank will feel better knowing she can return the loan through EMIs deducted from her paycheck. On the other hand, Rani does not have a steady source of income, so the bank might not feel as secure.

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