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    Chapter-18

    Uploaded by

    sravanthikasula88
    Oswaal

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Chapter-18

    Uploaded by

    sravanthikasula88
    10 views1 page
    Oswaal

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

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    Oswaal

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    10 views1 page

    Chapter-18

    Uploaded by

    sravanthikasula88
    Oswaal

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    Currency

    In a barter system where goods are directly exchanged Before the introduction of coins, a Deposits with Bank
    without the use of money, the double coincidence of wants is variety of objects were used as money. For Banks accept the deposits and also pay an
    example, since the very early ages, Indians
    an essential feature. Money acts as an intermediate in the used grains and cattle as money. Modern amount as interest on the deposits.The
    exchange process, it is called a medium of exchange. forms of money include currency – paper modern forms of money – currency and
    notes and coins. In India, the Reserve Bank deposits – are closely linked to the working
    of India issues currency notes on behalf of of the modern banking system.
    the central government.

    Banks keep only a small proportion of their Classification of sources of credit


    deposits as cash with themselves and use Money as a medium
    of exchange
    the major portion of the deposits to extend Modern forms
    loans. Banks charge a higher interest rate of money The various types of loans can be
    on loans than what they offer on deposits.
    conveniently grouped as formal sector
    The difference between what is charged Loan activities
    from borrowers and what is paid to and informal sector loans. The informal
    of banks
    depositors is their main source of income. lenders include moneylenders, traders,
    Formal sector employers, relatives and friends, etc. The
    credit in India Reserve Bank of India supervises the
    Self-help groups
    for the poor functioning of formal sources of loans.

    The moneylenders charge very high rates of interest,


    keep no records of the transactions and harass the poor borrower. Classification of Formal and Informal credit:
    The idea is to organise rural poor, in particular women, into small Self sources of credits Who get what ?
    Help Groups (SHGs) and pool (collect) their savings. A typical SHG
    has 15-20 members, usually belonging to one neighbourhood,
    who meet and save regularly.

    Terms of Credit 85% of the loans taken by poor households in the urban areas
    are from informal sources. Urban households take only 10% of
    their loans from informal sources, while 90% are from formal
    sources. The formal sector still meets only about half of the
    ey and Cr
    ed
    Every loan agreement specifies an interest on total credit needs of the rural people. The remaining credit
    M
    it

    needs are met from informal sources.


    rate which the borrower must pay to the lender along
    with the repayment of the principal addition; lenders
    may demand collateral against the loan. The interest
    rate, collateral and documentation requirement, Trace the Mind Map
    
    
    

    and the mode of repayment together comprise First Level Second Level Third Level
    what is called the Terms of Credit.

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