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Question
Explain, why the banks do not lend credit to certain borrowers.
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Solution
- Banks do not lend to borrowers who do not have collateral, as it serves as a guarantee and can be sold if the borrower fails to repay.
- Banks typically do not lend to borrowers without enough proof, such as salary or collateral.
- Banks do not extend credit to persons who have not paid previous debts or are already defaulters.
- Banks typically avoid lending to borrowers who intend to engage in risky firms.
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