Q1. [1]
Read the given case and choose the correct option :
Swapna, a small farmer grows groundnut on her three acres of land. She takes a loan from the moneylender to meet the expenses of cultivation but midway due to flood, crop fails and her debt increased. Again she has to take loan to manage crops.
Suggest Swapna, which of the following sources of loan would be suitable for her.
- (A) Friends
- (B) Relatives
- (C) Moneylenders
- (D) Banks
Previously asked in CBSE board exam
2026 32/4/1 Q31
Generated by claude-sonnet-4-6 · 2026-06-15 06:52 · grounding rag
Model Answer
(D) Banks
Banks are formal sources of credit that offer loans at low interest rates, which would help Swapna avoid the debt trap caused by high-interest moneylender loans.
Source: Money and Credit, Formal Sector Credit in India
Explanation
The passage clearly states that informal lenders like moneylenders charge very high interest rates, leading to debt traps (as seen in Rama's case). Formal sources like banks charge much lower rates (e.g., 8.5% p.a. for Arun vs. 60% p.a. from moneylenders). Friends and relatives are informal and unreliable for cultivation loans. Banks are the best option for Swapna to break the cycle of debt.
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