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Money and Credit
' 'Self Help Groups' help borrowers to overcome the problem of lack of collateral.' Examine the statement.
Self help groups (SHG) have helped borrowers to borrow money without collateral in the following ways :
(i.) Self help groups have organised rural poor more so women in collecting their money and in extending loans to its members.
(ii.) SHG charge less rate of interest as compared with any other form of rural banking or even those charged by moneylenders.
(iii.) These groups gradually can seek loans from the bank so as to create employment opportunities for its members.
(iv.) Banks have been extending loans to these groups to meet their needs like buying fertilizers, seeds, raw materials etc.
(v.) These SHG have emerged as building blocks for the rural poor as it is the group as a whole which is responsible for the repayment of the loan. In case, of non repayment it is taken up in a serious manner by the group members.
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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.
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.
Banks charge a higher interest rate on loans than what they offer on ________.
_________ is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.
In a SHG most of the decisions regarding savings and loan activities are taken by:
Formal sources of credit does not include:
Why do we need to expand formal sources of credit in India?
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