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What are the reason why the might not willing to lent certain borrowers |
| Answer» The banks might not be willing to lend certain borrowers for the following reasons:\tBanks require proper documents and collateral as security against loans. A number of borrowers have no collateral to pledge against loans, particularly small farmers requiring crop loans.\xa0\t\xa0Repayment of such a loan is crucially dependent on the income from selling the crop. Since there is a risk involved (in case the crop yield is inadequate for any reason), banks are not willing to lend to such borrowers who cannot pledge collateral\xa0which can be sold to recover the loan amount in case of default in paying the loan amount.\t\xa0The borrowers who have not repaid previous loans, the banks might not be willing to lend them further.\t\xa0The banks might not be willing to lend those entrepreneurs who are going to invest in the business with high risks. | |