Answers the following questions : (a) Why are banks unwilling to lend loans to small farmers ? (b … ) From where can small farmers get…
(a) Banks provide loans after collateral and documentation securities, which generally the small farmers failed to comply with. Therefore, banks are unwilling to lend loans to small farmers.
(b) There are several informal sources of credit like landlords, moneylenders, traders, relatives and friends etc.
(c) Terms of informal credit can put the small farmers into debt-traps. Higher rate of interest and unfavourable conditions expit farmers by the situation of multiple loans.
(d) Farmers can get cheap and safe loans from formal credit providers i.e., banks and co-operative societies.