Q1. [4]
Arun supervises the work of one farm labourer. Arun has seven acres of land. He is one of the few persons in Sonpur to receive bank loan for cultivation. The interest rate on the loan is 8.5 per cent per annum, and can be repaid anytime in the next three years. Arun plans to repay the loan after harvest by selling a part of the crop. He then intends to store the rest of the potatoes in a cold storage and apply for a fresh loan from the bank against the cold storage receipt. The bank offers this facility to farmers who have taken crop loan from them.
Read the given source and answer the questions that follow :
- 36.1 Under which source does Arun's loan come ? [1]
- 36.2 Mention one important term of credit for taking a loan from the bank. [1]
- 36.3 How is Arun's loan beneficial ? Explain any two reasons. [2]
Previously asked in CBSE board exam
2025 32/2/1 Q36
Generated by claude-sonnet-4-6 · 2026-06-15 06:53 · grounding stimulus
Model Answer
36.1 Arun's loan comes from a formal source of credit (specifically, a bank).
36.2 One important term of credit is the interest rate — Arun pays 8.5% per annum on the loan.
36.3 Arun's bank loan is beneficial in two ways:
- Low and fixed interest rate: The interest rate is only 8.5% per annum, which is much lower than loans from informal sources like moneylenders, reducing the burden on the farmer.
- Flexible repayment and additional credit facility: The loan can be repaid anytime within three years, and Arun can also apply for a fresh loan against the cold storage receipt, helping him manage his income better after harvest.
Source: Money and Credit, Formal Sector Credit
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Explanation
- 36.1 Examiners expect the term "formal source of credit" — bank is the key identifier.
- 36.2 Any one valid term (interest rate, collateral, repayment period) scores the mark; picking interest rate is easiest here as it is directly stated.
- 36.3 Both points must be distinct and linked to the passage. Low interest rate and flexible repayment + cold storage loan facility are the two most passage-supported reasons. Avoid generic statements — tie each point back to Arun's situation.
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