Q2 of 6 Page 117

How are high-interest rates on loans harmful?

Interest rates are the main component of the loan which makes the loan costlier. Cost of borrowing will be high if the interest rates are very high. When the rate of interest is very high, then the loan installment will be high which is to be paid in a fixed tenure. This will make the fixed income group people face a very critical situation because of the increase in the amount to be paid.


More from this chapter

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1

Most of the credit needs of the poor households are met from informal sources. The dependence of richer households on informal credit is less. Do you agree? Use the data from Table 1 to support your answer.

 3

What is the basic idea behind the SHGs for the poor? Explain in your own words.

 4

Talk to a banker and find out what are the purposes for which people in urban areas generally take loans?

 5

What is the difference between the bank loan and through SHG?