Question: Why Do Banks Say No Loans?

What are the other sources from which small farmers can borrow?

(b) Apart from the banks, other sources from which the small farmers can borrow include informal sources of credit like local money lenders, agricultural traders, big landlords, cooperatives, SHGs etc..

Why farmers in India need credit for cultivation which sources do they prefer and why?

Small farmers need credit to purchase inputs for their farming activities. That is the most obvious reason for credit but it goes further than that as the easiest forms of credit for small farmers comes from merchants. They will provide the inputs on credit and purchase the outputs rapidly for cash.

Why is it difficult for poor to get loan from banks?

It is difficult bcoz: limited availability of banks in rural areas, poor people are not comfortable with high delegates of banks, and they do not have proper documentation required by the banks..

Why are banks unwilling lend?

(a) Small farmers normally have no collateral to pledge against loans. Collateral is an asset that the borrower owns and uses this as a guarantee to a lender until the loan is repaid. That is why banks have no interest to lend to small farmers. … As a result Shiva has to sell a part of his land to repay the loan.

What happens if I get approved for a loan but don’t use it?

If a lender has approved your application for a personal loan, you’re not required to take it. … For starters, some personal lenders may charge a nonrefundable application fee, which you won’t get back if you decline the loan offer.

Can a loan be denied after closing?

Having a mortgage loan denied at closing is the worst and is much worse than a denial at the pre-approval stage. … Whether in the beginning or end, reasons for a mortgage loan denial may include credit score drop, property issues, fraud, job loss or change, undisclosed debt, and more.

Does a loan denial hurt your credit?

Getting rejected for a loan or credit card doesn’t impact your credit scores. However, creditors may review your credit report when you apply, and the resulting hard inquiry could hurt your scores a little. Learn how to wisely manage your next application and avoid unnecessary hard inquiries.

Can a loan be denied after approval?

If one or more late payments or collections show up on a credit report after you’ve already been approved, your credit score could drop below the minimum required for your loan, and your loan could be denied.

Why did my bank refused me a loan?

Banks want to be sure that the borrower has the capacity and capability to repay back the loan and that is the reason banks want detailed documentation on your sources of income and bank account details. … Bad credit rating: A bad credit rating is often the most common reason for a bank to refuse a loan.

What happens if loan is not approved?

If you are not approved for a loan, you will receive what’s called an adverse action letter from the lender explaining why. By law, you’re entitled to a free copy of your credit report if a loan application is denied.

What are the sources of cheap credit in India?

Listed below are the five major sources for rural credit in India.Land Development Banks. These banks provide a considerable sum of money as a credit to farmers by using their land as collateral. … Co-operative Credit Societies. … Regional Rural Banks. … Commercial Banks. … Government.