state the demerits of sahukar system
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Answer: The main demerit of sahukar system is that loan is provided at high interest rates. So, that's why poor peasants are trapped into a debt trap and gains no profit.
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The demerits of Sahukar or Moneylender system is that,
- Private moneylenders charge huge rate of interest
- Private moneylenders take away the mortgages submitted forcefully so as to substitute for the expected amount
- Most of the moneylenders are not authorized
- Moneylenders make an authoritative position in rural areas.
Explanation:
Moneylenders or Sahukars were a part of the economy from ancient times. It is evident throughout in classic stories depicted as novels or films.
A moneylender is an integral part of society and gets more exposure than other regulated financial houses because the process of borrowing money is very simple.
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