Question

What is unproductive credit?

• A. Finance used to purchase seeds, fertilisers, pesticides and related agricultural tools.
• B. Credit taken for the purpose of permanently enhancing the productivity of land.
• C. Credit that can be repaid using increased income generated from productive use of finance.
• D. Credit required to meet consumption expenditures for social and religious purposes.

Answer 1

The correct option is D Credit required to meet consumption expenditures for social and religious purposes.

Credit required to meet consumption expenditures for social and religious purposes is known as unproductive credit. Agricultural credit can be categorized on the basis of both purpose of credit and objective of credit provider.

In order to fulfill the financial requirements of the agricultural sector in rural India, appropriate and specialized credit agencies are needed. Credit helped to increase the productive capacity.