Question

In the village Sonpur, Arun has seven acres of land. He is one of few persons in Sonpur to

receive bank loan for cultivation. The interest rate on the loan is 8.5% per annum, and can be

repaid any time in the next three years. Arun plans to repay the loan after harvest by selling a

part of the crop. He then intends to store the rest of the potatoes in the cold storage and apply

for a fresh loan from the bank against the cold storage receipt.

Arun is able to take the loan from the bank which implies –

a. He can use cold storage receipt for taking loan as a colleteral.

b. He took the loan without repaying the previous loan.

c. There are formal as well as informal sector of credit available in the village Sonpur.

d. Interest rate on bank loan is same as the interest rate charged by the traders​

Answer 1

Answer:

a he can use cold storage receipt for taking loans as a collateral