Question

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

Hint:

Always prefer formal sources of credit such as banks and cooperative societies because they provide loans at lower interest rates and are regulated by the government.

Answer 1

The Correct Option is B

Step 1: Look at what Swapna actually needs.
She needs affordable, dependable credit to cover cultivation costs, not just any source of money.
Step 2: Rule out the weak options.
The RBI does not lend to individual farmers, and moneylenders or traders typically charge steep interest and can trap borrowers in debt, so these are not good choices for her.
Step 3: Pick the sound option.
A nationalised bank lends at regulated, reasonable interest rates and runs proper agricultural credit schemes, making it a safe and affordable choice.
Hence, Swapna should take the loan from the nearest nationalised bank, option (B).