Question

why might banks be unwilling to lend to small farmers????

Answer 1

Small farmers normally have no collateral to pledge against loans. Collateral is an asset that the borrower owns and uses this as a guarantee to a lender until the loan is repaid. That is why banks have no interest to lend to small farmers. ... As a result Shiva has to sell a part of his land to repay the loan

Answer 2

Aloha!

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☆ a bank always asks the borrower for collateral and documentation. when a borrower is not able to repay the loan, the bank is having right to sell the asset which the borrower owns.

☆ a farmer might not have any asset such as a piece of land or proper documentation because of which a bank might be unwilling to give loan to him.

☆ in this case, the farmer can take loan from informal sources or he can get himself into a self help group.

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hope it helps :-)