LESSON-3: MONEY & CREDIT

Learning Objectives:

 To analyse the role of money in an economy

 To evaluate the role of Banks
 To differentiate between Formal and Informal financial institutions
for Savings and Credit -a nationalized commercial bank and a few
informal institutions
 To classify the informal credit in India- Local money lenders,
landlords, chit funds and private finance companies
 How Self Help Groups in India had developed over the years

PRACTICE

Define the following terms-

1. Demand deposits
2. Cheque
3. Double coincidence of wants
4. Barter system
5. Credit

INTERMEDIATE

Answer the following questions:

1. Explain the term ‘debt-trap’.

2. What are Terms of Credit?
3. Differentiate between formal and informal credit.
4. How does RBI supervises the functioning of banks?
5. What are the loan activities of banks?

EXPERT

Answer the following questions in detail:

1. Why do the rural borrowers depend on the informal source of credit? What steps can be
taken to encourage them to take loans from formal sources? Explain any two.
2. ‘Cheap and affordable credit is crucial for the country’s development’. Explain the
statement with four points.
Extension Task-1: List five commercial banks in India and UAE with logos.

Extension Task-2: Write the following currencies current exchange rate against
UAE dirham.

a. US dollar
b. Indian Rupee
c. EU Euro
d. UK Pound sterling
e. Pakistani Rupee

SELF ASSESSMENT- MONEY AND CREDIT

What are Demand Define Give two What What
Deposits? Cheque. examples are does
for Terms RBI and
formal of SHG
and Credit? stand
informal for?
credit.