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Question
Read the given case and choose the correct option:
| Swapna, a small farmer grows groundnut on her three acres of land. She takes a loan from the moneylender to meet the expenses of cultivation but midway due to flood, crop fails and her debt increased. Again she has to take loan to manage crops. |
Suggest Swapna, which of the following sources of loan would be suitable for her.
Options
Friends
Relatives
Moneylenders
Banks
MCQ
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Solution
Banks
Explanation:
They are part of the formal sector, which offers lower interest rates and more flexible repayment arrangements. Banks provide a safer atmosphere than moneylenders, who frequently exploit farmers with excessive interest rates, trapping them in debt. Furthermore, formal credit frequently includes provisions for crop insurance or government assistance in the event of natural disasters, such as floods.
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