Question

“Credit is useful as well as harmful, it depends on the risk involved”. Support the statement with examples.

Answer 1

1. Credit is a working capital which is required for production. The credit helps the farmers to meet the ongoing expenses of production, complete production on time, and thereby increase his earnings. Credit therefore plays a vital and positive role in this situation.
2. The failure of crop may push the borrower into a situation from which recovery is very painful. In many cases farmers need to sell part of land to repay the loan.
3. Whether the credit would be useful or not depends on the risks in the situation and whether there is some support in case of loss.
Hope this helps you

Answer 2

Answer:1. Credit is a working capital which is required for production. The credit helps the farmers to meet the ongoing expenses of production, complete production on time, and thereby increase his earnings. Credit therefore plays a vital and positive role in this situation.

2. The failure of crop may push the borrower into a situation from which recovery is very painful. In many cases farmers need to sell part of land to repay the loan.

3. Whether the credit would be useful or not depends on the risks in the situation and whether there is some support in case of loss.

Hope this helps you

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