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  • 1. WHY TRANSACTIONS ARE MADE IN MONEY? I DON’T NEED CLOTHES. I NEED SHOES. I WANT CLOTHES. BUT I DON’T HAVE WHEAT. I’LL GIVE YOU CLOTHES FOR YOUR WHEAT.
  • 2. The Barter System
  • 3. WHY IS IT ACCEPTED AS(MONEY) A MEDIUM OF EXCHANGE?
    • Money acts as an intermediate in the exchange process. It is called medium of exchange.
    • Money as a
    • Means of
    • Payment.
  • 4. MODERN FORMS OF MONEY ARE LINKED TO THE BANKING SYSTEM.
    • TRANSACTIONS ARE MADE IN MONEY DUE TO :----
    • Money can exchange easily any commodity/service.
    • Everyone prefers to receive payments in money
    • To eliminates the need for double coincidence of wants.
    • MONEY SUPPLY IN INDIA
    • M 1= Currency held by public+Demand deposits with Bank+Other deposits with RBI
    • Modern forms of money include
    • Currency---Paper notes and coins.
    • Deposits with Banks.
  • 5. Money eliminates problems of the Barter System.
  • 6. BORROWERS People take loans People repay loans with interest DEPOSITORS People make deposits People make withdrawals and get interest Banks mediate between the Depositors and the Borrowers.
  • 7. NEED FOR CREDIT
    • ON THE BASIS OF TIME
    • ON THE BASIS OF PURPOSE
    • SHORT TERM CREDIT
    • MID TERM CREDIT
    • LONG TERM CREDIT
  • 8. NEED FOR CREDIT
    • BASIS OF TIME
    • SHORT TERM:LESS THAN 15 MONTHS
    • MID TERM:15 MONTH TO 5 YEARS
    • LONG TERM:MORE THAN 5 YEARS
    • BASIS OF PURPOSE
    • PRODUCTIVE LOANS PURCHASE OF SEEDS FERTILISERS,IMPROVEMENT IN TECHNOLOGY
    • UNPRODUCTIVE LOANS:SOCIAL RELIGIOU CEREMONIES,SETTLING OF OLD LOANS
  • 9. SOURCES OF CREDIT
    • FORMAL SOURCES
    • COMMERCIAL BANKS
    • COOPERATIVES
    • INFORMAL SOURCES
    • MONEY LENDER
    • TRADERS
    • EMPLOYERS
    • RELATIVES & FRIENDS LANDLORDS
    • OTHERS
  • 10. FORMAL SOURCES
    • COMMERCIAL BANKS
    • LAND DEVELOPMENT BANK
    • REGIONAL RURAL BANKS
    • THE GOVERNMENT
    • NABARD
    • SHGs
  • 11. TERMS OF CREDIT
    • Interest rate,
    • Collateral and
    • documentation requirement, and
    • mode of repayment
  • 12. CREDIT(LOAN)ACTIVITIES OF BANKS Whether Credit would be useful or not? Depends on the Risk in the situation.
    • 1.Festival Season
    • 2.Credit is for Crop Production
    Credit plays a vital and positive role if made a good profit. If crop failure, credit pushes the person into a debt trap.
  • 13. SOURCES OF CREDIT for Rural Households in India 30% Moneylenders 25% Commercial Banks 27% Cooperative Societies Landlords 3% 7% 7 % 1% Traders Relatives and Friends Others
  • 14. Why are Poor Households still dependent on Informal Sources of credit.?
    • Banks are not present everywhere in rural India.
    • Loan from a bank is much more difficult than taking a loan from informal sources.
    • Bank loans require proper documents and collateral.
    • Informal lenders know the borrowers
    • personally and give a loan without collateral.
  • 15. Newer Ways of Providing Loans to the Poor SELF HELOP GROUPS A women’s self-help group meeting in Gujarat . 1.Banks are willing to lend to the poor women when organized in SHGs, even though they have no collateral as such. 2.The poor should get a much greater share of formal loans from banks, cooperative societies etc. Both these steps are important for development .
  • 16. THANKS BY J K DOGRA PGT ECO KV NO-3,DELHI CANTT.