Question : Statement 1: Institutional sources of credit provide loans at lower interest rates compared to informal sources.
Statement 2: They have access to funds from government schemes and financial institutions.
Option 1: Both statement 1 and statement 2 are true.
Option 2: Both statement 1 and statement 2 are false.
Option 3: Statement 1 is true, but statement 2 is false.
Option 4: Statement 1 is false, but statement 2 is true.
Correct Answer:
Both statement 1 and statement 2 are true.
Solution : The correct answer is (a) Both statement 1 and statement 2 are true.
Statement 1 is true. Institutional sources of credit, such as banks, cooperatives, and government lending agencies, typically offer loans at lower interest rates compared to informal sources like moneylenders. This is because institutional sources have regulated interest rates and may have subsidized loan programs aimed at supporting farmers and promoting agricultural activities.
Statement 2 is also true. Institutional sources of credit have access to funds from various sources, including government schemes and financial institutions. Governments often provide funds and schemes specifically designed to support agricultural lending and rural development. Additionally, institutional sources can raise funds from financial institutions, enabling them to offer loans to farmers and rural entrepreneurs.
Both statements are true and coherent with the functioning of institutional sources of credit.
