Social Science (087) — CBSE Class 10 board question

As the Village Development Officer, I would highlight the following benefits of formal sources of credit (banks and cooperatives) for farmers:

1. Low interest rates: Banks charge 8.5% per annum (as seen with Arun), far less than the 36–60% charged by moneylenders or traders.

1. Flexible repayment: Bank loans can be repaid anytime within a fixed period (e.g., three years), reducing pressure on farmers.

1. No forced selling of crops: Unlike trader loans, bank loans do not compel farmers to sell their produce at low prices, ensuring better income.

1. Additional facilities: Banks offer services like loans against cold storage receipts, helping farmers store produce and sell at better prices.

1. Supervised and fair: The RBI regulates banks, ensuring no unfair practices, unlike informal lenders.

1. Avoids debt trap: Cheap credit prevents situations like Rama's, where high-interest informal loans lead to a spiralling debt trap.

Source: Chapter 3 — Formal Sector Credit in India; Example of a Village

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• Examiners expect 5 distinct, relevant points for 5 marks — one point ≈ one mark.
• Always contrast formal vs. informal credit using textbook examples (Arun vs. Shyamal/Rama) to show you understand the chapter.
• Mention RBI supervision as a key feature of formal credit — it is directly stated in the chapter.
• Avoid writing a long essay; crisp, labelled points score better in board exams.