Question

Thanu refused to take loans from the moneylender because of the .

• A. high interest rate
• B. tedious process
• C. collateral required
• D. low interest rate

Answer 1

The correct option is A high interest rate

Moneylenders come under the informal sources of credit. Informal sources of credit do not involve a tedious documentation process or a collateral requirement. However, these charge a high rate of interest and follow exploitative practices. The formal sector, on the other hand, is supervised by bodies like the Reserve Bank of India.