10th Class Social Science Money and Credit

  • question_answer 37) 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 Reason for Needing a Loan
    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  
    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?

    Answer:

     

    Occupation Reason for Needing a Loan
    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 To meet a medical emergency in the family   To pay the fees for a higher degree   To purchase a flat   For expenses related to his daughter's wedding   To meet the daily expenses   To run his business efficiently   To replace his old auto rickshaw with a new one                          To meet his expenses till he gets employed again
      Classification Regarding Ability to get a Loan  
    Those Who Might Get a Bank Loan Those Who Might Not Get a Bank Loan
    Graduate student who is computer literate   A person employed in government service   Small trader   Auto rickshaw driver Construction worker     Migrant labourer in Delhi     Household maid   A worker whose factory has closed down
     The criteria I have used for this classification are (a) Does the borrower have the potential to repay the loan or not? People with a secure job or a running business will get a loan because they have the capability to repay the installments. Here the government servant and small trader will be successful, whereas the migrant labourer, household maid, construction worker and worker whose factory has closed down will not be successful.   (b) Whether the borrower is able to pledge collateral on which to guarantee the loan taken. Here the auto rickshaw driver can pledge his auto rickshaw to the bank and the graduate student can pledge any capital asset owned by him. These two are the basic prerequisites for getting a loan from a bank.  

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