GRADE- 10 – ECONOMICS

CHAPTER- 3- MONEY
AND CREDIT
B Y ; N AV YA R A I
 MONE
Y that is widely used
• Money is any good
and accepted in transactions involving
the transfer of goods and services from
one person to another.
• Any circulating medium of exchange,
including coins, paper money, and
demand deposits.

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 Barter System
• Goods are exchanged without use of
money.
• Double Coincidence of wants : In
exchange of goods both parties have to
agree to sell and buy each others
commodities.

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Limitations of Barter System
Lack of Double Coincidence of Wants

Lack of Common Measure of Value

Lack of Store of Value

Lack of Standard of Deferred

Payment
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Money As A Medium Of Exchange
• In an economy where money is in use,
money by providing the crucial
intermediate step eliminates the need
for double coincidence of wants.
• Money acts as an intermediate in the
exchange process, it is called a medium
of exchange.

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 Roles of Money

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 Early Coins of India

Hindu Coin of
Coins of Kushan
Medieval India Coins of Alupas
Dynasty

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 Modern Forms of Money

Currency

Bank Deposits

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Why Modern Currency is accepted
as medium of exchange?
• It is accepted as medium of exchange
because the currency is authorised by
the government of the country.

• In India Reserve Bank of India issues

currency notes on behalf of the central
government.

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Various Types Of Bank Deposits

Savings Deposit

Recurring Deposit

Current Deposit

Fixed Deposit

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 Cheque
• A cheque is a paper instructing the bank to
pay a specific amount from the person’s
account to the person in whose name the
cheque has been issued.

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 Loan Activities of Bank
• Banks in India these days hold
about 15% of their deposits as cash.
• Bank use the major portion of
the deposits to extend loans.
• Difference between the interest
rates is the main source of income
for banks.

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 C redi
• t to an agreement in
Credit refers
which the lender supplies the
borrower with money, goods or
services in return for the promise of
future payment.

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 Negative
S ituation
(Debt
trap)

Positive
S ituation
(improve)
Two
Different
Credit
S ituation
s

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 Document Interes
- ation t
Rate

The mode
of
Collateral repaymen
Terms t
of
C redi
t
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 Difference between Formal
and Informal Credit

Formal sector loans: Informal sector loans:

• (i) Loans from banks • (i) Loans from
and cooperatives. moneylenders,
relatives, friend,
• (ii) Under
traders, etc.
supervision of the
Reserve Bank of • (ii) No supervision of
India. any institution.
• (iii) Reasonable rates • (iii) Very high rates
of interest. of interest.

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Loans Taken by Urban households
in 2003

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 Issues
C urrency

Banker to Foreign
the exchange
G overnm Managem
e nt ent

Role of
RBI

Monetary S upervis
o r of
Policy
other
Banks

Banker
s
bank
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 Self- Help Groups for the Poor
Poor households are still
dependent on informal sources
of credit because of the
following reasons:
1. Banks are not present
everywhere in rural India.
2. Even if banks are present,
getting a loan from a bank is
much more difficult as it
requires proper documents
and collateral.
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 Self Help Groups
• To overcome these problems, people created Self
Help Groups (SHGs).
• S H G are small groups of poor people which
promote small savings among their
members.
• A typical S H G has 15-20 members, usually
belonging to one neighbourhood, who meet and
save regularly.

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Advantages of Self Help Group (SHG)
1. It helps borrowers to overcome the problem of
lack of collateral.
2. People can get timely loans for a variety of
purposes and at a reasonable interest rate.
3. SHGs are the building blocks of organisation of
the rural poor.
4. It helps women to become financially self-
reliant.
5. The regular meetings of the group provide a
platform to discuss and act on a variety of
social issues such as health, nutrition,
domestic violence, etc.
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 Grameen Bank of Bangladesh

• Grameen Bank,
Bangladeshi bank founded
by economist Muhammad
Yunus as a means of
providing small loans to
poor individuals.
• In 2006 Grameen and
Yunus were awarded the
Nobel Prize for Peace.

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 Thank You
By : Navya Rai

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