Explain the term ‘debt trap’ why is it more rampant in rural
areas.? Give two reasons.
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• Explain the term ‘debt trap
→Debt-trap is a situation in which a person after taking a loan is not able to pay back the loan.
• why is it more rampant in rural
→(i) A borrower repays a loan by selling the agricultural produce, which sometimes may not be enough to repay the loan.
→(ii) Rural borrowers normally depend on informal sources of credit who charge a high rate of interest.
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Debt-trap is a situation in which a person after taking a loan is not able to pay back the loan. (i) A borrower repays a loan by selling the agricultural produce, which sometimes may not be enough to repay the loan. (ii) Rural borrowers normally depend on informal sources of credit who charge a high rate of interest.
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