Question

Banks and cooperatives need to lend more to borrowers because _______.

• A. high cost of borrowing form informal sources
• B. borrowers wish to set up enterprises
• C. borrowers need more money but cannot ask
• D. none of these

Answer 1

The correct option is A high cost of borrowing form informal sources

• Banks and cooperatives need to lend more to borrowers because informal sources of credit lenders charge higher rates of interest and often changes terms and conditions.
• Informal sources of credit could be exploitative in nature.
  
• Informal sources of credit are relatives, friends and money lenders.