Q1. [1] § Variety of Credit Arrangements
Read the following case and choose the correct option :
Swapna owns a small farm in her village. She wants to take loan to meet the expense of cultivation.
From which of the following sources should Swapna take the loan ?
- (A) Reserve Bank of India
- (B) Nearest nationalised bank
- (C) Moneylender of the village
- (D) Agricultural trader
Previously asked in CBSE board exam
2026 32/1/1 Q31
Generated by claude-sonnet-4-6 · 2026-06-15 06:52 · grounding rag
Model Answer
(B) Nearest nationalised bank
Nationalised banks offer formal credit at low interest rates (around 8–9% p.a.) with flexible repayment, unlike moneylenders or traders who charge exploitative rates and impose unfavourable conditions.
Source: Money and Credit, Two Different Credit Situations / Variety of Credit Arrangements
Explanation
- RBI does not lend directly to individuals — it regulates banks.
- Moneylenders charge up to 60% p.a. and traders charge 36% p.a. — both are informal, exploitative sources shown in the passage to push small farmers into debt traps (Swapna's case).
- The passage clearly shows Arun (medium farmer) benefits from a bank loan at 8.5% p.a. — the best option for Swapna too.
- Examiner expects students to identify the formal credit source as the correct answer and avoid informal sources.
If a question refers to an image, map, graph or diagram that is not shown here, find the actual CBSE question paper on the CBSE website:
cbse.gov.in.