Question

at what interest rate shamlal borrow money from the village moneylender? (5m)

Answer 1

Explanation:

a few years back, he would borrow money from the village moneylender at an interest rate of five per cent per month (60% per annum).

Answer 2

Shyamlal borrows money from a village money lender @ rate of  5 per cent per month

Explanation:

• In rural areas, crop production is the main market for credit. Cultivation costs for fertilizer,  seeds,  fuel, chemicals, machinery repair, and more are substantial. The cycle from the time the farmers purchase these supplies & sell the crop takes at least 3-4 months. Farmers typically take crop loans & repay the loan after harvesting at the start of the season. The repayment of the loan relies heavily on agricultural revenue.
• Shyamlal informs us that he wants a loans for his 1.5acres of land each year for cultivation. He borrowed the money from a village "money lender" for an interest rate of 5% each month (60% annually) until a couple of years ago. Over the past few years, Shyamal has borrowed at a rate of 3 per cent a month from an agricultural merchant in the region. The merchant will supply farm raw materials on credit at the start of the cropping period  and whenever the crops are ready to be harvested the credit must be repaid
• The merchant promises to sell the crop to him as well as the interest rate on the loan. This helps the trader to insure swift repayment of the currency. As the value of crops is small following the harvest the seller is still able to benefit from purchasing the crop from the farmers at a small price & selling it later whenever the price has increased.

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What are informal sources of credit? Mention any two featuresof it ...

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