1. Compare the role of informal & formal sources of credit??
2. Describe the function of Reserve Bank of India??
3. what is the idea behind the formation of self help groups???
4. Name the formal and informal sources of credit in India ??
5. How is money used as a medium of exchange ???
6. Explain the term Debt- trap in India ??
7. What do you mean terms of credit??
Answers
Answer:
Formal sources usually charges lower rates of interest whereas in informal sources they charge much higher rates of interest. The main motive of formal sources is social welfare whereas the main motive of informal sources is profit-making.
Reserve Bank of India (RBI) is the central bank of the country. RBI is a statutory body. It is responsible for the printing of currency notes and managing the supply of money in the Indian economy. Initially, the ownership of almost all the share capital was in the hands of non-government shareholders.
The basic idea behind formation of SHGs is to create self-employment for the poor, particularly rural poor women. The SHGs help poor borrowers to overcome the problem of lack of collateral.
There are a two main sources of credit in India. (ii) Informal sources - e.g. Money lenders, traders. (i) It provides loans at a fixed rates and terms. (ii) It gives loans not just to profit-making businesses and traders but also to small cultivators, small-scale industries to small borrowers etc.
Money is used as a medium of exchange by: ... Goods and services can be bought and sold with the use of money. For example, someone who wants shoes can buy it with money and if someone wants to sell shoes, that also can be done by receiving money.
Debt trap is a situation where the debtor will not be able to repay the debt incurred. Debt trap situation may arise due to the higher interest rates or change in terms and conditions of debt incurred. Normally, debt trap will result in default of payments or bankruptcies.
Terms of credit are the requirements need to be satisfied for any credit arrangements. It includes interest rate, collateral, documentation and mode of repayment. However the terms of credit vary depending upon the nature of lender, borrower and loan.
Answer:
(1).
Formal sources usually charges lower rates of interest whereas in informal sources they charge much higher rates of interest. The main motive of formal sources is social welfare whereas the main motive of informal sources is profit-making.
(2).
Reserve Bank of India (RBI) is the central bank of the country. RBI is a statutory body. It is responsible for the printing of currency notes and managing the supply of money in the Indian economy. Initially, the ownership of almost all the share capital was in the hands of non-government shareholders.
(3).
The basic idea behind formation of SHGs is to create self-employment for the poor, particularly rural poor women. The SHGs help poor borrowers to overcome the problem of lack of collateral.
(4).
There are a two main sources of credit in India. (ii) Informal sources - e.g. Money lenders, traders. (i) It provides loans at a fixed rates and terms. (ii) It gives loans not just to profit-making businesses and traders but also to small cultivators, small-scale industries to small borrowers etc.
(5.
Money is used as a medium of exchange by: ... Goods and services can be bought and sold with the use of money. For example, someone who wants shoes can buy it with money and if someone wants to sell shoes, that also can be done by receiving money.
(6).
Debt trap is a situation where the debtor will not be able to repay the debt incurred. Debt trap situation may arise due to the higher interest rates or change in terms and conditions of debt incurred. Normally, debt trap will result in default of payments or bankruptcies.
(7).
Terms of credit are the requirements need to be satisfied for any credit arrangements. It includes interest rate, collateral, documentation and mode of repayment. However the terms of credit vary depending upon the nature of lender, borrower and loan.