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  1. Asked: In:

    What are the reasons why the banks might not be willing to lend to certain borrowers?

    Best Answer
    Yajat

    Banks require proper and legal documentations and collateral as security against loans. The borrowers who have not repaid previous loans, the banks might not be willing to lend them further. Those entrepreneurs, who are going to invest in a business with high risks, the might not be willing to lendRead more

    1. Banks require proper and legal documentations and collateral as security against loans. The borrowers who have not repaid previous loans, the banks might not be willing to lend them further.
    2. Those entrepreneurs, who are going to invest in a business with high risks, the might not be willing to lend money.

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    • 10
  2. Asked: In:

    Review any three merits and any two demerits of ‘formal sector of credits’ in India.

    Best Answer
    Yajat

    Merits Helps to meet the working capital needs of production. Helps in completing production on time. Low interest rate. Helps in increasing earnings. Demerits Difficulty in obtaining loans. Collateral issues. Documentation could be a problematic issue for few. For more answers visit to website: httRead more

    Merits

    1. Helps to meet the working capital needs of production.
    2. Helps in completing production on time.
    3. Low interest rate.
    4. Helps in increasing earnings.

    Demerits

    1. Difficulty in obtaining loans.
    2. Collateral issues.
    3. Documentation could be a problematic issue for few.

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    • 7
  3. Asked: In:

    How do farmers gets into debts trap?

    Best Answer
    Yajat

    1. Failure of the crop makes loan repayment impossible. 2. Downfall of crop prices also makes loan repayment impossible. 3. Higher interest makes life difficult. Credit in such a condition pushes the borrowers into a situation from which recovery is painful and they get into the debt trap.   FoRead more

    1. Failure of the crop makes loan repayment impossible.
    2. Downfall of crop prices also makes loan repayment impossible.
    3. Higher interest makes life difficult. Credit in such a condition pushes the borrowers into a situation from which recovery is painful and they get into the debt trap.
     

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    https://www.tiwariacademy.com/ncert-solutions/class-10/social-science/
     

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    • 10
  4. Asked: In:

    Why the formal or informal sector does asks for collateral?

    Yajat

    Lenders may demand collateral or an asset that the borrower owns to use it as a guarantee until he repays the loan. It may be sold if the borrower is not able repaid.   For more answers visit to website: https://www.tiwariacademy.com/ncert-solutions/class-10/social-science/

    Lenders may demand collateral or an asset that the borrower owns to use it as a guarantee until he repays the loan. It may be sold if the borrower is not able repaid.
     

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    https://www.tiwariacademy.com/ncert-solutions/class-10/social-science/

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    • 10
  6. Asked: In:

    The credit activities of the informal sector should be discouraged. Support your statement with relevant arguments.

    Best Answer
    Yajat

    Informal lenders charge very high interest on their loans. There are no boundaries and restrictions. In certain cases, the high interest rate for borrowing can mean that the amount to be repaid is greater than the income of the borrowers. This could lead to increasing debt trap, therefore the creditRead more

    1. Informal lenders charge very high interest on their loans.
    2. There are no boundaries and restrictions.
    3. In certain cases, the high interest rate for borrowing can mean that the amount to be repaid is greater than the income of the borrowers.
    4. This could lead to increasing debt trap, therefore the credit activities of the informal sector should be discouraged.

    For more answers visit to website:
    https://www.tiwariacademy.com/ncert-solutions/class-10/social-science/

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    • 10
  7. Asked: In:

    How is the concept of Self Help Group important for poor people? Give your view points.

    Best Answer
    Yajat

    SHG's basic idea is to provide financial resource for the poor through organizing the rural poor especially women, into small Help Groups. It organizes the rural poor, especially women, into small Self Help Groups. It collects saving of the members. it provides loans without collateral. It providesRead more

    1. SHG’s basic idea is to provide financial resource for the poor through organizing the rural poor especially women, into small Help Groups.
    2. It organizes the rural poor, especially women, into small Self Help Groups.
    3. It collects saving of the members.
    4. it provides loans without collateral.
    5. It provides timely loans at reasonable rate of interest.
    6. It also provides a platform to discuss various social issue.

    For more answers visit to website:
    https://www.tiwariacademy.com/ncert-solutions/class-10/social-science/

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    • 9
  8. Asked: In:

    What are the terms of credit? How it may vary for person to person?

    Best Answer
    Yajat

    Every loan agreement specifies an interest rate which the borrower must pay to the lender along with repayment of the principal. In addition, lender may demand collateral, i.e., as assert that the borrower owns and uses this as a guarantee until the loan is repaid. .If the borrower fails to repay thRead more

    1. Every loan agreement specifies an interest rate which the borrower must pay to the lender along with repayment of the principal.
    2. In addition, lender may demand collateral, i.e., as assert that the borrower owns and uses this as a guarantee until the loan is repaid.
    3. .If the borrower fails to repay the loan, the lender has the right to sell the collateral to obtain payment.
    4. Terms of credit comprise interest rate, collateral and documentation requirement, and the mode of repayment.

     

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    • 9
  9. Asked: In:

    What is credit? How can credit be both an asset as well as a debt trap?

    Best Answer
    Yajat

    Credits refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment. Credit as an asset: During the festival season, a shoe manufacturer Salim has received an order of making shoes in bulk, within a month's time. To complRead more

    Credits refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment.

    1. Credit as an asset: During the festival season, a shoe manufacturer Salim has received an order of making shoes in bulk, within a month’s time. To complete production, he hired 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 took some advance payment from the 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.
    2. Credit as debt trap: A farmer Swapna picks up loan from a moneylender to meet the expenses of cultivation. But unfortunately the crop is hit by the pests and fails. So, she is unable to repay the loan and debt grows larger with interest.

    In Salim’s case credit plays a vital and positive role, whereas in Swapna’s case credit pushes the borrowers into a situation from which recovery is painful.

     

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    • 11
  11. Asked: In:

    How do formal and informal sources of credit differ from each other?

    Best Answer
    Yajat

    Formal sector:- Rate of Interest is lower. Collateral is must for getting loan. RBI supervises them. More documentation is required. Itinvolves many formalities. Ex.: Banks and co-operatives. Informal sector:- Higher rate of Interest. Ready to give loans without any collateral too. No organization tRead more

    Formal sector:-

    1. Rate of Interest is lower.
    2. Collateral is must for getting loan.
    3. RBI supervises them.
    4. More documentation is required. Itinvolves many formalities.
    5. Ex.: Banks and co-operatives.

    Informal sector:-

    1. Higher rate of Interest.
    2. Ready to give loans without any collateral too.
    3. No organization to supervise them
    4. Less documentation, less formalities.
    5. Examples: Moneylender, traders, friends, retailers and so on.

     

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    https://www.tiwariacademy.com/ncert-solutions/class-10/social-science/

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    • 10
  12. Asked: In:

    Analyse the work of Reserve Bank of India?

    Best Answer
    Yajat

    Issue the currency on behalf of Government of India. Issues guidelines regarding working culture of Bank and SHG. Give directions regarding terms and interest on credits. To provide feedback regarding monetary policies to government of India. RBI holds a part of the cash reserve of the bank. For morRead more

    1. Issue the currency on behalf of Government of India.
    2. Issues guidelines regarding working culture of Bank and SHG.
    3. Give directions regarding terms and interest on credits.
    4. To provide feedback regarding monetary policies to government of India.
    5. RBI holds a part of the cash reserve of the bank.

    For more answers visit to website:
    https://www.tiwariacademy.com/ncert-solutions/class-10/social-science/

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    • 10