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Money And Credit

Question 11:

In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.

(a) Why might banks be unwilling to lend to small farmers?

(b) What are the other sources from which the small farmers can borrow?

(c) Explain with an example how the terms of credit can be unfavourable for the small farmer.

(d) Suggest some ways by which small farmers can get cheap credit.

Answer:

(a) Banks might be unwilling to lend to small farmers for lack of a collateral or asset on the part of the farmers.

(b) The other sources from which the small farmers can borrow are moneylenders, relati...

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