21-22 /I SSPM ’s

Sri Sri Ravishankar Vidya

Mandir NOTES

Std: X Subject: ECONOMICS Date:15-04-21

Topic: MONEY AND CREDIT

Q.1) What is the barter system? What is the essential feature of it?

ANS. 1 - Condition in which goods are exchanged without the use of money.
2- An essential feature of it is double coincidence of wants.

• How does the use of money make it easier to exchange things?

ANS. 1 - Money acts as an intermediate in the exchange process and eliminate the need double
coincidence of wants.
•Everyone refers to receive money and exchange it for whatever they want to buy.
•example- shoe manufacturer find a buyer Shoes and buy wheat with that money. 4- The use of
money makes the exchange process easier.

• " The Rupee is widely accepted the medium of exchange." Explain.

ANS. The Rupee is widely accepted as a medium of exchange because- 1- Currency is authorised by
the government of the country.
•In India, the RBI issues currency notes on behalf of the central government.
•The law legalizes the use of rupee as the medium of payment that cannot be refused.

• what are demand deposits? Explain any three features.

ANS. 1- People save their money in banks by opening an account. The deposits in the accounts can be
withdrawn on demand as so are called demand deposits.
2- Banks accept deposits and also page rate of interest on it where in the People's money is saved. 3-
The facility of cheques against the demand deposit makes it possible to directly settle payments
without the use of cash. Search demand deposits constitute money in the modern economy.
4- It is authorised by the government and its demand and supply is controlled by RBI. 5- In India the
law legalised the use of Rupee as the medium of exchange.

• what is collateral?

ANS. 1- It is an asset that the borrower owns and giving the lender as a guarantee that he will repay
the loan. If the borrower is unable to repay the loan, then the lender has the right to sell it and get
the money back.

• how does the RBI supervise the functioning of the banks? Why is it necessary?

ANS. 1. It monitors the balance kept by the banks for day-to-day transactions.
•It checks that the bank gives loans not just to project profit making businesses and traders but
also to small borrowers.
•Banks often have to give details about lenders, borrowers and interest rate to RBI. It avoids the
bank to run business with profit motive only.
•It also keeps a check on the interest rates of credit facilities and RBI makes sure that the loans
from the banks are affordable and
cheap.
7)how do banks play an important role in the economy of India? Explain.

ANS. 1. They keep the money of the people in its safe custody.
7)They give interest on the deposited money to the people.
8)They mediate between those who have surplus money and those who are in need of money.
9)They provide loan to a large number of people at low interest rate and also provide funds to
different organisations.
10)Agricultural and industrial sector by providing loans.

7)poor households still dependent on the informal sources of credit?

ANS .1. Not present in the rural areas where most of the people live.
7)Poor people are mostly illiterate and they don't want to go with the process of documentation.
8)They also do not have Collateral which the banks demand.
9)Many a times money lenders know the borrowers personally so they get loan without collateral.
10)The borrowers approach the money lenders even without repaying the earlier loans.

7)how can the formal sector loans be made beneficial for Poor farmers and workers? Suggest
measures.

ANS. 1. Create awareness amongst the farmers about the loans and the process of providing them
should be made easier.
7)It should be simple, fast and timely.
8)More number of Nationalised banks and cooperatives should be open in rural sectors.
9)The banks and the Cooperative should increase the facility of providing the loans so that the
dependence on informal sector decreases.
10)The benefits of the loan should be extended to the farmers and small-scale industries.

7)what is the basic idea behind SHGs for the poor?

ANS. 1. Basic idea is to organise rural poor particularly the women and pool their savings.
7)It helps to reduce the functioning of informal sectors of credit; help the borrowers overcome the
problem of collateral.
8)It helps women by making them financially self-reliant and provides a platform to discuss and act
on social issues.

Q.11) what is the role of SHG? What are the reasons of its growing popularity?

ANS. 1. SHG of certain members to pool their Savings and constitute our fund, which is further used in
making finance and other advances.
7)This group has roughly 15 - 20 women members.
8)When the savings of the members becomes large it gives loans to the needy at a nominal rate of
interest.
9)If the group is regular in savings, it becomes eligible for availing loan from the bank. This loan is
sanctioned in the name of the group and it is meant to create self-employment opportunities.
10)Important decisions regarding Savings and loan activities are taken by the group members i.e.
amount, interest to be charged and repayment schedule.
11)Non - repayment, is, taken, seriously and that is why banks are willing to lend loans to the
members of the SHG.

SHGs are popular because –

I. they help borrowers overcome the problem of the lack of collateral.
ii. They get timely loans for a variety of purposes and at a reasonable
rate.
iii.It helps women to become self-reliant.
iv.The regular meetings of the group provide a platform to discuss and act on various social issues like
domestic violence, health and nutrition.

Q.12) Describe the vital and positive role of credit with examples.
OR
What is credit? How does it play a positive role? Give examples.

ANS. 1. Credits refer to an agreement in which the lender supplies the borrower with money, goods or
services, in return for a promise for future payment.
2. It plays a positive role as: -
iii.it helps people from all walks of life in setting up their businesses their income and support their
families.
iv.Help in constructing their houses and get relief from monthly rent.
v.Helps others in raising their standards.
3. Giving Salim's example
The credit helps him is able to increase his savings.
to withdraw their money as and when they require. Since money can be withdrawn on demand, these
deposits are known as demand deposits.