Question

Explain about two different credit situations.
It's urgent..

Answer 1

Hey dear,

here is your answer,

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-A manufacturer taking credit during festive season in anticipation of increased demand for his product during the festival to expand his production costs and later that situation has worked in his favor,as it enabled manufacturer,the example mentioned in text book.

-A small farmer who has taken a credit for cultivation might face a problem.As crop production involves high costs on inputs life HYV of seeds,fertilizers,pesticides.Farmers generally take loans at the beginning of the season and repay after harvest.But the failure of the crop makes loan repayment impossible,which a times compel them to sell part of their land which worsen their situation.

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Hope this helps you

Answer 2

Answer:

Credit arrangements can be divided into two categories. These are as follows:

i) Formal Sector- It includes banks and cooperatives that extend loans to households for entrepreneurship and other personal needs. The rates of interest charged by them are low.

ii) Informal Sector- It includes moneylenders, traders, employers, relatives and friends. The moneylenders generally charge at a higher rate of interest.