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How does the use of money market easier to exchange things?
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Can you think of some examples of goods and services being exchanged or wages being paid through Barter system?
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M Salim wants to withdraw ` 20,000 in cash for making payments. How would he write a cheque to withdraw money?
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Tick the correct answer.
After the transaction between Salim and Prem,
(i) Salim's balance in his bank account increases, and Prem's balance increases.
(ii) Salim's balance in his bank account decreases and Prem's balance increases.
(iii) Salim's balance in his bank account increases and Prem's balance decreases.
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Why are demand deposits considered as money?
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Fill the following table.
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Salim
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Swapna
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Why did they need credit?
What was the risk?
What was the outcome?
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Suppose Salim continues to get order from traders. What would be his position after six years?
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What are the reasons that make Swapna's situation so risky? Discuss factors - pesticides, role of money lenders, climate.
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A House Loan Megha has taken a loan of `5 lakh from the bank to purchase a house. The annual interest rate on the loan is 12% and the loan is to be repaid in 10 years in monthly instalments.
Megha had to sumbit to the bank, documets showing her employment records and salary before the bank agreed to give her the loan. The bank retained as collateral the papers of the new house, which will be returned to Megha only when she repays the entire loan with interest.
Fill the following details of Megha's housing loan.
(a) Loan amount (In Rupees)
(b) Duration of loan
(c) Documents required
(d) Interest rate
(e) Mode of repayment
(f) Collateral
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Why do lenders ask for collateral while lending?
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Given that a large number of people in our country are poor, does it in any way affect their capacity to borrow?
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Fill in the blanks choosing the correct option from the brackets.
While taking a loan, borrowers look for easy terms of credit. This means...... (low/high) interest rate,...... (easy/tough) condition; for repayment,............ (less/more) collateral and documentation requirements.
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List the various sources of credit in Sonpur.
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Loans from Co-operatives Besides banks, the other major source of cheap credit in rural areas are the co-operative societies (or co-operatives). Members of a co-operative pool their resources for co-operation in certain areas. There are several types of co-operatives possible such as farmers co-operatives, weavers co-operatives, industrial workers co-operatives, etc.
Krishak Co-operative functions in a village not very far away from Sonpur. It has 2300 farmers as members. It accepts deposits from its members. With these deposits as collateral, the Co-operative has obtained a large loan from the bank. These funds are used to provide loans to members. Once these loans are repaid, another round of lending can take place.
Krishak Co-operative provides loans for the purchase of agricultural implements, loans for cultivation and agricultural trade, fishery loans, loans for construction of houses and for a variety of other expenses.
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Compare the terms of credit for the small farmer, the medium farmer and the landless agricultural worker in Sonpur.
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Why will Anm have a higher income from cultivation compared to Shyamal?
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Can everyone in Sonpur get credit at a cheap rate? Who are the people who can?
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Tick the correct answer.
(i) Over the years, Rama's debt
(a) will rise.
(b) will remain constant.
(c) will decline.
(ii) Arun is one of the few people in Sonpur to take a bank loan because
(a) other people in the village prefer to borrow from the moneylenders.
(b) banks demand collateral which everyone cannot provide.
(c) interest rate on bank loans is same as the interest rate charged by the traders.
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Talk to some people to find out the credit arrangement that exists in your area. Record your conversation. Note the differences in the terms of credit across people.
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What are the differences between formal and informal sources of credit?
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Why should credit at reasonable rates be available for all?
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Should there be a supervisor, such as the Reserve Bank of India, that looks into the loan activities of informal lenders? Why would its task be quite difficult?
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Why do you think that the share of formal sector credit is higher for the richer households compared to the poorer households?
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In situations with high risks, credit might create future problems for the borrower. Explain.
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How does money solve the problem of double co-incidence of wants? Explain with an example of you own.
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How do banks mediate between those who have surplus money and those who need money?
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Look at a 10 Rupee note. What is written on top? Can you explain this statement?
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Why do we need to expand formal sources of credit in India?
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What is the basic idea behind the SHGs for the poor? Explain in your own words.
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What are the reasons why the banks might not be willing to lend to certain borrowers?
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In what ways does the Reserve Bank of India supervise the functioning of banks? Why is this necessary?
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Analyse the role of credit for development.
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Manav needs a loan to set up a small business. On what basis will Manav decide whether to borrow from the bank or the moneylender? Discuss.
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In India about 80% of farmers are small farmers, who need credit for cultivation.
(a) Why might banks be unwilling to lend to small farmers?
(b) What are the other sources from which the small farmers can borrow?
(c) Explain with an example how the terms of credit can be unfavorable for the small farmer.
(d) Suggest some ways by which small farmers can get cheap credit to.
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Fill in the blanks.
(i) Majority of the credit needs of the................. households are met from informal sources.
(ii) .................. costs of borrowing increase the debt-burden.
(iii) .................. issues currency notes on behalf of the Central Government.
(iv) Banks charge a higher interest rate on loans than what they offer on..................
(v) .................. is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.
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Choose the most appropriate answer.
(i) In a SHG most of the decisions regarding savings and loan activities are taken by
(a)bank
(b) members
(c) non-government organization
(ii) Formal sources of credit does not include
(a) banks
(b) co-operatives
(c) employers
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The following table shows people in a variety of occupations in urban areas. What are the purposes for which the following people might need loans? Fill in the column.
Occupation
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Reason for Needing a Loan
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Construction worker
Graduate student who is computer literate
Migrant labourer in Delhi
A person employed in government service
Household maid
Small trader
Auto rickshaw driver
A worker whose factory has closed down
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Next, classify the people into two groups based on whom you think might get a bank loan and those who might not. What is the criterion that you have used for classification?
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