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Question

Why might banks be uniting to lend to small farmers? (100 to 150 words)

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Solution

Dear Student,

There is an error in your query, it is Why might banks be unwilling to lend to small farmers?

a. There are a number of reasons as to why banks may not be willing to give loans.
b. Banks are not willing to give loans as there is no surety of loans being returned .
c. A person having no regular income will not be able to guarantee repayment of loans.
d. No income proof implies that the borrower doesn't have valid required documents on the basis of which loans could be granted.
e. lack of collateral- collateral is an asset that the borrower owns ( land, buildings, vehicles) and which he pledges as a security for the repayment of a loan. Such assets are subject to seizure in case the borrower defaults with regard to repayment of loan.
f. In case a no collateral is offered by the borrower, banks refuse loans as they require a collateral as security against which a loan would be given.
g. lack of knowledge- in terms of the process involved, interests rate charged, lack of appropriate documents also acts as a hindrance.
h. Higher risk of non repayment- Banks may be reluctant to provide loans for projects involving high risks and also to those who have been continuous defaulters.


Regards

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