Question

Why are some banks reluctant to sanction loans to small farmers?

• A. There is high risk involved in farming. Thus, the money may not be repaid.
• B. The banks have have policies against lending money to farmers.
• C. The banks feel that farmers do not really require money.
• D. Farmers cannot initiate the paperwork required for the loan.

Answer 1

The correct option is A There is high risk involved in farming. Thus, the money may not be repaid.

Banks are often reluctant to lend loans to small farmers because there is high risk involved. Also, the bank may not have any assets to collect in case of non-payment of the loan.