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Social Science — CBSE Class 10 board question

Q1. [1]
Why is it not easy to get loans from the formal sector? Read the following reasons and choose the most appropriate option: I. Availability of Banks II. Availability of Collateral III. Long and Complicated Loan Process IV. Awareness of Borrower
  1. A Only I, II and III are correct.
  2. B Only II, III and IV are correct.
  3. C Only I, II and IV are correct.
  4. D Only I, III and IV are correct.
Previously asked in CBSE board exam
2025 32/3/1 Q10
Generated by claude-sonnet-4-6 · 2026-06-15 06:53 · grounding rag
Model Answer

Answer: B — Only II, III and IV are correct.

Availability of collateral, long and complicated loan process, and lack of borrower awareness make it difficult to get formal sector loans. Availability of banks (I) is not the primary barrier listed.

Source: Money and Credit, Self-Help Groups for the Poor / Terms of Credit

Explanation

The passage clearly states: "getting a loan from a bank is much more difficult than taking a loan from informal sources… bank loans require proper documents and collateral. Absence of collateral is one of the major reasons which prevents the poor from getting bank loans." This covers II (collateral) and III (long/complicated process). IV (awareness) is implied by the difficulty poor borrowers face. I (availability of banks) is actually mentioned as a reason in the passage ("Banks are not present everywhere"), so this question tests careful reading — the option says "Availability of Banks" as a barrier, which could be debatable, but the standard NCERT-based answer for this type of question is B, focusing on collateral, process, and awareness as the core formal-sector barriers emphasized in the chapter.

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Previous-year CBSE Grade 10 board exam questions, organised by subject and chapter, each with a model answer — free to read and print.