How do banks and moneylenders give loans to farmers? Do you think borrowing
from moneylenders is profitable? What are the alternative sources?
Answers
Answer:
banks give loan based on possessions like if a person has a house of his own, a job in organised sector,etc which is called collateral. Since farmers are neither aware of these paper work, nor they have proper collateral. That's why they ultimately go to moneylenders since the process of getting loan from a money lender is way easier, but on a cost of very high interest rates as compared to banks. Also moneylenders can use whichever means they want (like harassment) to extract the money back from the farmers if they fail to pay the same in time.
So according to me, moneylenders only have 1 advantage and that is of easier process.
nowadays we have bank credit which makes taking loan for a farmer possible and easier.
other ways of getting loans is from a. self help group, a group of people of a village or a group of village who come together, collect money and help others in need with a very low interest rate.
Answer:
Money lenders generally give loans to farmers on high interest which becomes impossible for farmers to repay loan due to certain factors like crop failure or price drop etc. ... The alternate method is to take loan from bank bcz they give loan at low interest and also give tike to farmers and don't take their land..