Question

What are the reasons why the bank might not be willing to lead to certain borrowers

Answer 1

A number of borrowers have no collateral to pledge against loans. Collateral is an asset that the borrower owns and pledges as a guarantee to the lender until the loan is repaid. The main demand for loans is for crop production. Repayment of the loan is crucially dependent on the income from farming. Whether loans would be useful or not, therefore, depends on the risks in the situation. That is why, banks have no interest to lend to such borrowers. Thus, the banks might not be willing to lend to those borrowers who have no collateral and whose repaying capacity is not guaranteed..

The borrowers who have not paid any previous loans are defaulters, and banks might not be willing to lend them again.

The banks might not be willing to lend those entrepreneurs who are going to invest in the business with high risks.