Q1. [1] § FORMAL SECTOR CREDIT IN INDIA § SELF-HELP GROUPS FOR THE POOR § SUMMING UP
Two statements are given below. They are Assertion (A) and Reason (R). Read both the statements and choose the correct option.
Assertion (A) : Rural poor families are still dependent on informal sources of credit.
Reason (R) : For obtaining loan from banks, collateral and special documents are required.
- (A) Both (A) and (R) are true and (R) is the correct explanation of (A).
- (B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
- (C) (A) is true, but (R) is false.
- (D) (A) is false, but (R) is true.
Previously asked in CBSE board exam
2024 32/5/1 Q17
Generated by claude-sonnet-4-6 · 2026-06-15 06:53 · grounding rag
Model Answer
(A) Both (A) and (R) are true and (R) is the correct explanation of (A).
Rural poor lack collateral and proper documents required for bank loans, so they are forced to depend on informal sources of credit.
Explanation
The passage from "Self-Help Groups for the Poor" directly states: "bank loans require proper documents and collateral. Absence of collateral is one of the major reasons which prevents the poor from getting bank loans" — this is exactly why they depend on informal sources. So (R) correctly and directly explains (A), making option (A) the right choice.
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