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Money and Credit
‘Cheap and affordable credit is essential for poor households both in rural and urban areas’. In the light of the above statement, explain the social and economic values attached to it.
Credit means loans. It refers to a sort of agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future repayment.
i. Cheap and affordable credit for poor households is essential for a country’s economic development and material growth. It is required for a variety of important economic activities such as big or small investments, setting up of businesses and buying of cars and houses.
ii. In the rural hinterland, credit helps in the development of agriculture by helping farmers purchase seeds, fertilisers, pesticides and farming machinery.
iii. Some people may also avail of credit to provide for marriage or illness.
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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.
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:
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