Question : Statement 1: Institutional sources of credit offer lower interest rates compared to informal sources.
Statement 2: Institutional sources of credit provide farmers with financial counseling and guidance.
Option 1: Both statement 1 and statement 2 are true.
Option 2: Both statement 1 and statement 2 are false.
Option 3: Statement 1 is true, but statement 2 is false.
Option 4: Statement 1 is false, but statement 2 is true.
Correct Answer: Both statement 1 and statement 2 are true.
Solution : The correct answer is (a) Both statement 1 and statement 2 are true.
Institutional sources of credit do offer lower interest rates compared to informal sources. This is because institutional sources, such as banks and cooperatives, have a more regulated and structured approach to lending, which allows them to offer loans at competitive interest rates. Informal sources, on the other hand, may charge higher interest rates due to their higher risk and lack of regulatory oversight.
Additionally, institutional sources of credit provide farmers with financial counseling and guidance. They often have dedicated staff or departments that help farmers understand their financial needs, evaluate loan options, and provide advice on financial management. This guidance can be valuable for farmers in making informed decisions about their borrowing and financial planning.
Therefore, both statements 1 and 2 are true, as they accurately describe the characteristics and benefits of institutional sources of credit for farmers.
Question : Statement 1: Institutional sources of credit provide farmers with flexible repayment options.
Statement 2: Institutional sources of credit offer longer loan tenure compared to informal sources.
Question : Statement 1: Institutional sources of credit provide loans at lower interest rates compared to informal sources.
Statement 2: They have access to funds from government schemes and financial institutions.
Question : Statement 1: Institutional sources of credit offer flexible repayment schedules to accommodate farmers' cash flows.
Statement 2: Institutional sources of credit require farmers to provide collateral for loan approval.
Question : Statement 1: Institutional sources of credit provide farmers with timely access to credit facilities.
Statement 2: Institutional sources of credit have simplified loan application procedures.
Question : Statement 1: Institutional sources of credit include banks, cooperatives, and government programs.
Statement 2: These institutions provide credit to farmers at high-interest rates.
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