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Money and Credit
What are the reasons why the banks might not be willing to lend to certain borrowers?
The banks might not be willing to lend certain borrowers for the following reasons:
(i) Banks require proper documents and collateral as security against loans. Some persons fail to meet these requirements.
(ii) The borrowers who have not repaid previous loans, the banks might not be willing to lend them further.
(iii) The banks might not be willing to lend those entrepreneurs who are going to invest in the business with high risks.
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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.
_________ issues currency notes on behalf of the Central Government.
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