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 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/