Explain the values which a borrower should observe for the proper use of loan taken.

1. A borrower, firstly, needs to be financially independent as well as capable of repayment of a loan taken for various economic activities such as business set up, agricultural needs or household purposes.

2. The proper utilisation of a loan is essential for repayment of loan because only successful use of the loan can help the borrower in generating profit i.e. the required amount of money for repayment or he may fall into a debt trap.

3. The ability to manage the amount of money taken as a loan is a very important attribute. The borrower needs to invest the money in a manner whereby he has sufficient part of it to buy equipment and other things as well as surplus amount (profit) in order to establish himself and also contribute towards the country’s wider development aspect.

NOTE – Credit (loan) refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future repayment. It is very essential for a borrower to be financially independent in order to repay a loan. The proper use of a loan can be ensured through the various efforts put in by the borrower in bringing up the desired results.