SELECT * FROM question_mgmt as q WHERE id=10651 AND status=1 SELECT id,question_no,question,chapter FROM question_mgmt as q WHERE courseId=9 AND subId=46 AND chapterId=329 and ex_no='1' AND status=1 ORDER BY CAST(question_no AS UNSIGNED) CBSE Free NCERT Solution of 10th social-science-understanding-economic-development Money and Credit in situations with high risks credit might create

Question:

In situations with high risks, credit might create further problems for the borrower. Explain?

Answer:

In situations with high risks, credit might create further problems for the borrower. This is also known as a debt – trap. Tracking credit involves a certain amount of loan that is taken by a borrower from a lender at a high-interest rate . it the borrower fails to pay back the loan amount due to some loss in his job or business, he further falls in the trap of credit. He has to repay the credit along with the interest applied by the lender. This increases the problems for the borrower. In such situation he is focused to give up his collateral or asset used as the guarantee to the lender. For example, if a farmer takes a loan for crop production and crop fails , then it becomes nearly impossible for him to repay the loan amount along with the charged interest. To repay the loan the farmer may sell a part of his land making the situation worse than before. Due being unable to repay the loan and harassed by the lenders, many times farmer commit suicide. Thus, in situations with high risk, if the risks , if the risks affect a borrower badly, then he ends up losing more than what he would have without taking the loan.


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