Question

In one of the small villages, a farmer borrows money from the village moneylender at a high monthly interest rate but is not able to repay it back. Next, he borrows it from a bank at a lower interest rate. Gradually he earns and pays back the loan to the moneylender and the bank. Which of the following best describes the role of the bank in this credit situation?

• A. The bank acts as a cooperative lender
• B. The bank facilitates a debt-trap situation
• C. The bank ensures a fair exchange of goods
• D. The bank saves the farmer from debt-trap

Answer 1

The Correct Option is D

The bank plays a crucial role in providing credit at a lower interest rate, helping the farmer repay his debts and escape the high-interest trap of the moneylender.