Explain with an example how the term of credit can be unfearable for small farmers
Answers
Answer:
The term of credit is unfearable for small farmers because many times farmers cannot repay their loans.
Explanation:
Credits are in the form of collatera loans, money borrowed on interest by big farmers , all act as infavourable for small farmers because many time due to failure of crops they are not able to repay back the amount which is borrowed from the bank or the moneylenders. This failures results in the huge interest and many times there property are also taken away which was given as security.
Terms of credit is unfavourable for farmers because of the following reasons:
i) Terms of credit includes collateral such as- property, land titles, vehicles, buildings etc. which a small farmer may not be capable of providing.
ii) In case of crops failure, it becomes impossible for the farmer to repay the loan.
iii) It also includes documentation requirements. Small farmers are not capable of providing complicated paper work