WHY IS IT ACCEPTED AS(MONEY) A
MEDIUM OF EXCHANGE?
Money acts as an intermediate in the
exchange process. It is called medium of
Money as a
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
M1= Currency held by public+Demand deposits with Bank+Other deposits
Modern forms of money include
Currency---Paper notes and coins.
Deposits with Banks.
Money eliminates problems of the
Banks mediate between the
Depositors and the Borrowers.
NEED FOR CREDIT
• SHORT TERM
• MID TERM
• LONG TERM
NEED FOR CREDIT
BASIS OF TIME
THAN 15 MONTHS
MID TERM:15 MONTH
TO 5 YEARS
THAN 5 YEARS
BASIS OF PURPOSE
PURCHASE OF SEEDS
G OF OLD LOANS
• COMMERCIAL BANKS
• LAND DEVELOPMENT BANK
• REGIONAL RURAL BANKS
• THE GOVERNMENT
TERMS OF CREDIT
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
If crop failure, credit
pushes the person into
a debt trap.
SOURCES OF CREDIT
for Rural Households in India
Why are Poor Households still
dependent on Informal Sources of
Banks are not present everywhere in rural
Loan from a bank is much more difficult than
taking a loan from informal sources.
Bank loans require proper documents and
Informal lenders know the borrowers
personally and give a loan without collateral.
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
organized in SHGs,
even though they
have no collateral as
2.The poor should get a much
greater share of formal loans
from banks, cooperative
societies etc. Both these steps
are important for development.
J K DOGRA
KV NO-3,DELHI CANTT.
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