money and credit
Money: Anything chosen by common consent as a medium of exchange.
Demand Deposits: Deposits in the bank account that can be withdrawn on demand.
Cheque: Paper instructing the bank to pay a specific amount from a person’s account to the person in whose name the cheque is drawn.
Reserve Bank of India: It is the central bank of India which controls the monitory policy of the country. It also control and supervises all the commercial banks in India.
Credit: The activity of borrowing and lending money between two parties.
Collateral: Collateral is an asset that the borrower owns (such as land, building, vehicle, livestock, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid. Property such as land titles, deposits with banks, livestock are some common examples of collateral used for borrowing. Terms of Credit: Interest rate, collateral and documentation requirement, and the mode of repayment together comprise what is called the terms of credit. The terms of credit vary substantially from one credit arrangement to another. They may vary depending on the nature of the lender and the borrower. Formal credit: Loans provided by institutions under the direct supervision of RBI. Main sources are Banks, Cooperative Societies and Financial Institutions
Informal credit: Loans provided by individual under no supervision, like money lenders, Friends & Relatives, Traders etc.
Self Help Groups (SHG): These are groups generally formed in villages where money is collected from the members and given as loan to the member at a nominal rate of interest.
question answer
1. Self Help Groups support has brought about a revolutionary change in the rural sector. Which values according to you is it able to support. (Value based question)
Women empowerment Team work Self sufficiency Eradication of poverty
2. What are the limitations of the barter system?
Lack of double coincident
Lack of divisibility
Lack of measure of value.
Problem of store of value.
3. What are the advantages of depositing money in the banks?
It is the safer place to keep money as compared to the house or a working place.
People can earn interest on the deposited money.
People have the provisions to withdrawn the money as and when they require.
People can also make payment through cheques.
4. What is collateral?
Collateral is an asset that the borrower owns (such as land, building, vehicles, livestock, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid.
If the borrower fails to repay the loan, the lender has the right to sell the asset or the collateral to obtain the payment.
C) Property such as land, livestock etc are some of the common examples of collateral used for borrowing.
