NCERT Solutions Class 10th Social Science Economics Chapter – 3 Money and Credit
| Text Book | NCERT |
| Class | 10th |
| Subject | Economics |
| Chapter | 3rd |
| Chapter Name | Money and Credit |
| Category | Class 10th Social Science Economic |
| Medium | English |
| Source | Last Doubt |
NCERT Solutions Class 10th Social Science Economics Chapter – 3 Money and Credit
Chapter – 3
Money and Credit
Notes
| Money and Credit (i) When goods are directly exchanged for goods and there is no use of money, it is called Barter System. (ii) Money is something that can act as a medium of exchange in transction. It elimates the need for double conicidence of wants. (iii) When both parties have to agree to sell and buy each other’s commodities. This is know as the double coincidence of wants. |
| Money – Money acts as an intermediate in the exchange process & it is called medium of exchange. In many of our day to day transactions, goods are being bought & sold with the use of money. • The reason as to why transactions are made in money is that, a person holding money can easily exchange it for any commodity or service that he or she wants. |
| Double coincidence of wants – When in the exchange, both parties agree to sell and buy each others commodities it is called double coincidence of wants. In the barter system double coincidence of wants is an essential feature. |
| Demand Deposits in Bank – Deposits in the bank account that can be withdrawn on demand. People need only some currency for their day to day needs. For instance workers who receive their salaries at the end of each month, have some extra cash. They deposit it with the banks by opening a bank account in their name. Bank accept the deposits and also pay an interest rate on the deposits. |
| Cheque – Paper instructing the bank to pay a specific amount from a person’s account to the person in whose name the cheque is drawn. |
| Reserve Bank of India – It is the central bank of India which controls the monetary policy of the country. • Reserve Bank of India supervises the activities of formal sector and keep the track of their activities but there is no one supervise the functioning of informal sector. • Periodically banks have to submit information to the RBI on how much they are lending and to whom, at what interest rate, etc. |
| Credit – The activity of borrowing and lending money between two parties. |
| Collateral – Collateral is an asset that the borrower owns (such as land, building, vehicle, livestock, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid. • Property such as land titles, deposits with banks, livestock are some common examples of collateral used for borrowing. |
| Terms of Credit – Interest rate, collateral and documentation requirement, and the mode of repayment together comprise what is called the terms of credit. • The terms of credit vary substantially from one credit arrangement to another. • They may vary depending on the nature of the lender and the borrower. |
| Modern Forms of Money • Net banking, Mobile banking, • Paper Notes • Debit Cards • UPI • Credit Cards • Cheque |
| Functions of reserve bank • Issue the currency • Monitor the work culture of banks and SHG • Provide Direction Regarding terms and Interest • Provide Feedback Regarding Monetary Policies of India • Hold a part of the cash reserve of the banks • Credit refern to an agreement in which the lender supplies the borrower money, good and services in return for the promise of future repayment. |
| Credit as an asset: • During the festival season, a shoe manufacture Salim has received an other of making shoes in bulk, within one month’s time. To complete this production, he hires extra workers and has to purchase the raw materials. • He asks the supplier to supply leather now and promise to pay him later. Then he takes some advance paryment from trader. • By the end, of the month, he is able to deliver the order, make a good profit and repay the money he had borrowed. |
| Credit as a debt trap: (i) A farmer Swapna takes lona from a money lender to meet the expenses of cultivation. But unfortunately the crop was hit by the pests and there was crop failure. So, she is unable to repay the loan and debt grows larger with Interest. (ii) Collateral is asset that the borrower owns (such as land, building vehicle, livestock) ad uses this as a gurantee to a lender until the loan is repaid. |
| Terms of Credit • Interest Rate • Collateral • Documentation required • Mode of Repayment |
| Formal sector – Includes banks & cooperatives; RBI supervises the functioning of formal sources of loans. To see that the bank maintains a minimum cash balance and monitors that these banks give loans not just to profit-making business and traders but also to small cultivators, small scale industries, to small borrowers etc. periodically banks have to submit information to RBI of their activities. |
| Informal sector – Includes money lenders, traders, employers, relatives & friends etc. There is no one to supervise their credit activities. They can charge whatever rate of interest. There is no one to stop them from using unfair means to get their money back. |
| Self Help Groups: It’s basic idea is to provide financial resources for the poor thorugh organizing the rula poor especially women into self Help Groups. • SHG has 15-20 members usually belonging to a neighborhood, who meet and save regularly. • Saving per month varies from 25-100 rupees or more depending upon the ability of the people. • Members take small loans from group itself to meet their needs. |
| Works of SHG’s • organizing the rural poors, especially women • Providing platfrom to discuss various social issues • collection of savings from members. • Provide loan at reasonable interest rate • providing loans without collateral |
| NCERT Solution Class 10th Economics All Chapters Notes |
| Chapter – 1 Development |
| Chapter – 2 Sectors of Indian Economy |
| Chapter – 3 Money and Credit |
| Chapter – 4 Globalization and the Indian Economy |
| Chapter – 5 Consumer Rights |
| NCERT Solution Class 10th Economics All Chapters Question Answer |
| Chapter – 1 Development |
| Chapter – 2 Sectors of Indian Economy |
| Chapter – 3 Money and Credit |
| Chapter – 4 Globalization and the Indian Economy |
| Chapter – 5 Consumer Rights |
| NCERT Solution Class 10th Economics All Chapters MCQ |
| Chapter – 1 Development |
| Chapter – 2 Sectors of Indian Economy |
| Chapter – 3 Money and Credit |
| Chapter – 4 Globalisation and the Indian Economy |
| Chapter – 5 Consumer Rights |
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