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Ayushree
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Asked: 2025-11-15T04:16:39+00:00 In:

Person X is discussing different borrowing situations in rural areas and tries to identify which one would be considered a favourable credit arrangement. Which of the following options do you think the best supports X’s understanding?

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Poll Results

33.33%(a) A borrower takes a loan from a local money lender at an extremely high interest rate of 36%, which leads to a debt trap ( 3 voters )
0%(b) A person uses a bank loan not for productive use but to repay an older high interest informal loan
66.67%(c) A farmer receives a crop loan from a formal source at a low interest rate of 4% and invests it in buying seeds for cultivation. ( 6 voters )
0%(d) A borrower is forced to sell a portion of land or property in order to repay a previously taken loan.
Based On 9 Votes

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A favourable credit arrangement is one that benefits the borrower without leading to debt. Option (c) is correct because the farmer takes a low-interest bank loan for productive agricultural purposes, ensuring better income and easy repayment. Hence, the correct option is (c).

2025 previous year question papers class 10 cbseboard exam question paper 2023 class 10different borrowing situations in rural areas
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    1 Answer

    1. A favourable credit arrangement helps borrowers use loans productively and repay them without falling into debt. Option (c) best represents this, as the farmer borrows from a formal source at a low interest rate of 4% and invests in cultivation, which increases productivity and income. Such loans promote financial stability and rural growth. Hence, the correct option is (c).

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