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
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 lend money.
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
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.
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.
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.
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
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 credit activities of the informal sector should be discouraged.
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
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 provides timely loans at reasonable rate of interest.
It also provides a platform to discuss various social issue.
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
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 the loan, the lender has the right to sell the collateral to obtain payment.
Terms of credit comprise interest rate, collateral and documentation requirement, and the mode of repayment.
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.
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.
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.
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:-
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 to supervise them
Less documentation, less formalities.
Examples: Moneylender, traders, friends, retailers and so on.
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
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.
What are the reasons why the banks might not be willing to lend to certain borrowers?
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
For more answers visit to website:
See lesshttps://www.tiwariacademy.com/ncert-solutions/class-10/social-science/
Review any three merits and any two demerits of ‘formal sector of credits’ in India.
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
Demerits
For more answers visit to website:
See lesshttps://www.tiwariacademy.com/ncert-solutions/class-10/social-science/
How do farmers gets into debts trap?
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.
For more answers visit to website:
See lesshttps://www.tiwariacademy.com/ncert-solutions/class-10/social-science/
Why the formal or informal sector does asks for collateral?
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.
For more answers visit to website:
See lesshttps://www.tiwariacademy.com/ncert-solutions/class-10/social-science/
The credit activities of the informal sector should be discouraged. Support your statement with relevant arguments.
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
For more answers visit to website:
See lesshttps://www.tiwariacademy.com/ncert-solutions/class-10/social-science/
How is the concept of Self Help Group important for poor people? Give your view points.
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
For more answers visit to website:
See lesshttps://www.tiwariacademy.com/ncert-solutions/class-10/social-science/
What are the terms of credit? How it may vary for person to person?
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
For more answers visit to website:
See lesshttps://www.tiwariacademy.com/ncert-solutions/class-10/social-science/
What is credit? How can credit be both an asset as well as a debt trap?
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.
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.
For more answers visit to website:
See lesshttps://www.tiwariacademy.com/ncert-solutions/class-10/social-science/
How do formal and informal sources of credit differ from each other?
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:-
Informal sector:-
For more answers visit to website:
See lesshttps://www.tiwariacademy.com/ncert-solutions/class-10/social-science/
Analyse the work of Reserve Bank of India?
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
For more answers visit to website:
See lesshttps://www.tiwariacademy.com/ncert-solutions/class-10/social-science/