The correct answer is (C) Only I, II and IV are correct.
Small farmers lack collateral (assets as guarantee), face complicated documentation procedures, and lack awareness about formal banking. Higher cost of borrowing is a feature of informal sources, not government banks.
The passage states that "absence of collateral is one of the major reasons which prevents the poor from getting bank loans" and that "bank loans require proper documents" (complicated procedure). Lack of awareness is also a barrier for rural poor. Higher cost of borrowing applies to moneylenders/informal lenders, not government/formal banks — so Statement III is incorrect in this context. Examiners expect students to distinguish between problems of accessing formal credit vs. characteristics of informal credit.