Long answer question Explain a situation …
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Posted by Abc Xyz 5 years, 4 months ago
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Yogita Ingle 5 years, 4 months ago
This is true that in circumstances of huge risks, credit produces more problems for the borrower on account of the following reasons:
1. The borrower has to repay a fixed percentage on the capital obtained, whereas the interest on investment may or may not come due to the ambiguity of business and economic situation.
2. If the borrower defaults to repay the pledged capital to the banker, then he might face a constitutional case in the court of law which will generate an additional predicament for the borrower.
3. The huge risk is correlated with a high rate of interest. Paying off high rates of interest will constitute a difficulty for the borrower if profits from the business are not sufficient then the situation of debt will arise.
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