Money and Credit
Money and Credit
Money and Credit
4 The modern currency is without any use of its own , still it is accepted as a medium of 1
exchange because -
a) It is convenient and easy to handle
b) It has a digital and manual system
c) It is authorized by the governmet
d) It can be used as foreign exchange
5 Statement (A) : If the borrower fails to repay the loan, the lender does not have the right to 1
sell the asset or collateral to obtain payment
Statement (B) : Property such as land titles, deposits with banks, livestock, are some common
examples of collateral used for borrowing
e) Statement (A) is correct and (B) is incorrect.
f) Statement (A) is incorrect and (B) is correct.
g) Both (A) & (B) are incorrect.
h) Both (A) & (B) are correct.
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6 Statement (A): Interest rate,collateral, documentation requirement and the mode of 1
repayment together comprise the terms of credit
Statement (B): The various types of loans can be conveniently grouped as formal sector loans
and informal sector loans
a) Statement (A) is correct and (B) is incorrect.
b) Statement (A) is incorrect and (B) is correct.
c) Both (A) & (B) are incorrect.
d) Both (A) & (B) are correct.
7 Statement (A): Higher cost of borrowing means a larger part of the earnings of the borrowers is
used to repay the loan.
Statement (B): It is necessary that landlords and money lenders increase their lending particularly
in the rural areas, so that the dependence on informal sources of credit reduces.
e) Statement (A) is correct and (B) is incorrect.
f) Statement (A) is incorrect and (B) is correct.
g) Both (A) & (B) are incorrect.
h) Both (A) & (B) are correct.
8 Which among the following is a major reason preventing the poor from procuring loans from 1
banks?
a) Lack of capital
b) High rate of interest
c) Absence of mediators
d) Absence of collateral
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3. How does the Krishak cooperative support the farmers of Sonpur?
With the deposits as collateral, it obtains loans from the bank. These funds are used to provide
loans to members.
Krishak Cooperative provides loans for the purchase of agricultural implements, loans for
cultivation and agricultural trade, fishery loans, loans for construction of houses and for a
variety of other expenses.
11 Grameen Bank of Bangladesh is one of the biggest success stories in reaching the poor to meet 4
their credit needs at reasonable rates. It was founded by Professor Muhammad Yunus. Started in
the 1970s as a small project, Grameen Bank in 2018 has over 9 million members in about 81,600
villages spread across Bangladesh. Almost all of the borrowers are women and belong to poorest
sections of the society. These borrowers have proved that not only are poor women reliable
borrowers, but that they can start and run a variety of small income-generating activities
successfully.
1. Who is the founder of the Grameen Bank?
It was founded by Professor Muhammad Yunus.
2. Which section of the society has benefitted from the Grameen Bank initiative?
Almost all of the borrowers are women and belong to poorest sections of the society. Grameen
Bank of Bangladesh is one of the biggest success stories in reaching the poor to meet their
credit needs at reasonable rates.
3. What is the achievement of the Grameen Bank?
Started in the 1970s as a small project, Grameen Bank in 2018 has over 9 million members in
about 81,600 villages spread across Bangladesh.
12 Observe the given graph and answer the questions that follow. 4
1. Given the various sources of credit to rural household in India, classify them into formal
and informal sources of credit.
FORMAL SOURCES: Commercial Banks, Cooperative Banks and Society, Other
Formal agencies
INFORMAL SOURCES : Landlords, Money lenders, Relatives and friends, Other
Informal agencies
2. Why do you think the rural households are turning to formal sources of credit?
The moneylenders charge very high rates of interest, keep no records of the transactions
and harass the poor borrowers.
The Reserve Bank of India supervises the functioning of formal sources of loans.
When organized in self- help groups, the problem of lack of collateral is resolved
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They can get timely loans for a variety of purposes and at a reasonable interest rate. (Any
other points)
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