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Money and Credit
What is the basic idea behind the SHGs for the poor? Explain in your own words
The basic behind the SHGs is to provide a financial resource for the poor through organizing the rural poor especially women, into small Self Help Groups. They also provide timely loans at a responsible interest rate without collateral.
The main objectives of the SHGs are:
(i) To organize rural poor especially women into small Self Help Groups.
(ii) To collect savings of their members.
(iii) To provide loans without collateral.
(iv) To provide timely loans for a variety of purposes.
(v) To provide loans at responsible rate of interest and easy terms.
(vi) Provide platform to discuss and act on a variety of social issues such education, health, nutrition, domestic violence etc.
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In situations with high risks, credit might create further problems for the borrower. Explain.
How does money solve the problem of double coincidence of wants ? Explain with an example of your own.
How do banks mediate between those who have surplus money and those who need money?
Look at a 10 Rupee note. What is written on top? Can you explain this statement?
In what ways does the Reserve Bank of India supervise the functioning of banks? Why is this necessary?
Analyse the role of credit for development.
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.
In India, about 80 per cent 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 unfavourable for the small farmer.Majority of the credit needs of the _________ households are met from informal sources.
_________ costs of borrowing increase the debt-burden.
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