Question

Read the following case and choose the correct option:

Swapna owns a small farm in her village. She wants to take loan to meet the expense of cultivation.

From which of the following sources should Swapna take the loan?

Options

• Reserve Bank of India

• Nearest nationalised bank

• Moneylender of the village

• Agricultural trader

Answer 1

Nearest nationalised bank

Explanation:

A nationalised bank is a formal source of credit that provides lower interest rates and more favourable terms than informal sources such as moneylenders or dealers. Obtaining a bank loan protects small farmers like Swapna from sliding into a debt trap, which frequently occurs when high-interest rates from informal lenders become impossible to repay.