True or False:Farmers helped contribute to bank failures, because when their crops were bad, they did not repay their loans.

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	True
B	False

Explanation:

Detailed explanation-1: -Crops fail due to drought, floods, pest attack or any other calamity. Infertility of land does not lead to crop failure. It leads to lower yields.

Detailed explanation-2: –They earn their revenue from selling their crops. At certain times due to climatic conditions and unavailability of resources, the crops may fail and the farmers won’t get sufficient revenue to repay what they borrowed.

Detailed explanation-3: -One of the most direct ways disasters affect agriculture is through lower-than-expected production. This causes direct economic loss to farmers which can cascade along the entire value chain-even affecting the growth of the sector or entire national economies.

Detailed explanation-4: -Banks are often reluctant to lend loans to small farmers because there is high risk involved. Also, the bank may not have any assets to collect in case of non-payment of the loan.

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