In India, about 75% of farmers are small and landless. They need credit for cultivation. What is the main hindrance in granting them formal loan?

Banks charge high interest rate

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Farmers do not approach banks

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Farmers lack of awarness

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Farmers lack of collateral

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Open in App

Solution

The correct option is D Farmers lack of collateral
Banks are unwilling to lend to small, landless farmers because they lack collateral. Collateral is a safety net that is promised at the time of taking a loan from a bank. In the event a borrower fails to repay the loan, banks take the collaeteral.

Suggest Corrections

Similar questions

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?

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

Q. About _____ farmers are engaged in the cultivation of jute in India.

Q. Landless agricultural labourers, small and marginal farmers, share croppers, and weavers belongs to the sector in rural India.

At the time of Independence, moneylenders and traders exploited small and marginal farmers and landless labourers by lending to them on high interest rates and by manipulating the accounts to keep them in a debt trap. A major change occurred after 1969 when India adopted social banking and multi-agency approach to adequately meet the needs of rural credit. Can you highlight values violated by moneylenders and traders?

Q. Ramakant, a farmer, owns a large portion of cultivated land. He sells the surplus wheat in the nearby market and profits from it. He lends this money to the poor and landless farmers in need at a very high interest rate. Identify the correct statement about Ramakant.

Join BYJU'S Learning Program

In India, about 75% of farmers are small and landless. They need credit for cultivation. What is the main hindrance in granting them formal loan?

The correct option is D Farmers lack of collateralBanks are unwilling to lend to small, landless farmers because they lack collateral. Collateral is a safety net that is promised at the time of taking a loan from a bank. In the event a borrower fails to repay the loan, banks take the collaeteral.

The correct option is D Farmers lack of collateral
Banks are unwilling to lend to small, landless farmers because they lack collateral. Collateral is a safety net that is promised at the time of taking a loan from a bank. In the event a borrower fails to repay the loan, banks take the collaeteral.