Credit sometimes pushes the borrower into a situation

CBSE 2020 Money & Credit (C10)

"Credit sometimes pushes the borrower into a situation from which recovery is very painful." Support the statement with examples.

Answer

Credit push the borrowers in a situation from which recovery is painful:

  1. It happens when the borrower is not able to repay the loan.
  2. Many a times caught into the situation of debt-trap.
  3. To repay her loan person has to sell a portion of her/his land.
  4. The situation of the person gets much worse off than before.