What are the reasons why the banks might not be willing to lend to certain borrowers?



Q.7:- What are the reasons why the banks might not be willing to lend to certain borrowers?

 

Answer:-

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.



TutionTeacher: Know free answers of your school textbook. You can find the correct answer of your School textbook question here. This education portal will help in getting the NCERT solutions for your exams. Here you will get the complete question answer and solution of your textbook for your better education. Your can also ask for online study and assignment help from menu. Online test series will also help you how to learn and achive better marks in your school or collage.