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What are the reasons why the banks are not willing to lend money to certain borrowers?

Banks might not be willing to lend to people who

  • have no collateral
  • have no salary slips or tax returns
  • cannot furnish documents of employment
  • have no person to stand as surety
  • do business which involves high risk
  • have a history of non-repayment of loan

In such cases, banks do not have a guarantee as to whether or not the loans will be repaid by the persons concerned. It has to be understood that banks only mediate between those who have surplus money and those who need money. Banks in fact borrow the money deposited with them, and lend it out to persons requiring money. They would thus be unwilling to advance the money to individuals from whom repayment is uncertain.

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(i)Banks do not wish to give loans to the poor, who have no collateral. Bank loans require proper documents and collateral, as security against lo

(ii) The borrowers who have not paid any previous loans are defaulters, and banks might not be willing to lend them again.

(iii) The banks might not be willing to lend those entrepreneurs who are going to invest in the business with high risks.

  • 35

 Banks may not be willing to give loans to certain borrowers because ofthe following reasons :-

1) Banks may not be willing to lend to people having no collateral.

2) Banks may not give loans to people who haven't repaid previous loans.

3) Banks may not be willing to give loan to businessmen who may be investing with high market risks.

4) For getting a loan, a person must have proper documents. If he lacks them, then the bank may not give him loan.

.... Hope dis works...!!!! :) 

  • 62

lack of collateral

  • -19
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