Question

Credit sometimes pushes the borrower into a situation from which recovery is painful. Explain in point wise and give example.​

Answer 1

When a poor person takes a loan he does find it convenient to go to a bank basically because he is uneducated and even does not have a collateral to present in a bank.

Hence he reaches out to the informal sources of credit which are basically the moneylenders. When he goes to moneylenders the rates of interest charged by them is very high but since the borrower is in need he has no other option.

HOPE IT HELPS