PRASHANT KIRAD
Money and Credit
Barter System
The barter system is an early method of trade where goods and services are
directly exchanged for other goods and services without using money.
Double coincidence of wants The double coincidence
Money as a medium of exchange of wants refers to the
situation in a barter
The use of money is a very large part of our Everyone
system where both
life. Money is widely used as a medium of exchange as
goods are exchanged with money. parties must want what
the other offers in
Modern forms of money
AD
order to make a trade.
CURRENCY:
R
Currency is a generally accepted form of money, Money
KI
including coins and paper notes.
In India, the Reserve Bank of India (RBI) issues Anything which is
currency notes on behalf of the central
T
legalized by the
government.
AN
The law legalizes the use of ‘rupee'(₹) as a medium government of the
of payment that cannot be refused in setting country that helps in
H
transactions in India. medium of exchange and
Therefore the 'rupee’ (₹) is widely accepted as a
AS
measure the value of
medium of exchange. goods and services.
Deposits with banks
PR
Other forms in which people hold money are deposits with banks. Money
deposited in Banks is safe with the bank and people also get interest on the
deposited amount.
The deposits in the bank accounts can be withdrawn on demand. Hence,
these deposits are also called demand deposits.
Cheque Facility
A cheque is a paper instructing the bank to pay a specific amount from the
person's account to the person in whose name the cheque has been issued.
Modern Banking System
Banks mediate between those who have extra funds (the depositors) and
those who need those funds (the borrowers).
Banks charge a higher interest rate on loans than what they offer on
deposits. This difference between interest is bank's main source of income.
, PRASHANT KIRAD
Credit (Loans)
Credit (loans) refers to an agreement in which the lender supplies the borrower
with money, goods or services in return for the promise of future payment.
Loans are both good and bad, in one situation it can increase a person’s earnings,
in another situation it may push the person into a debt trap.
TERMS OF CREDIT: Debt trap Debt trap is a situation
These are the specific conditions under which a in which a loan is
loan is provided, including payment methods,
difficult or impossible
interest rates, loan duration, and other related
terms. to repay, it is mainly
Collateral: This refers to an asset the borrower caused due to high
owns (like land, buildings, vehicles, livestock, or interest.
bank deposits) that serves as a security for the
lender until the loan is fully repaid. Common forms
of collateral include land titles, bank deposits, and
livestock.
AD
Lender's Rights: If the borrower defaults on the
loan, the lender is entitled to sell the collateral to
recover the owed amount.
R
KI
Credit Sources in India:
T
Loans can be categorized into two main types: formal sector loans and informal
AN
sector loans. Formal sector loans include those from banks and cooperatives,
while informal sector loans come from sources like moneylenders, traders,
employers, and even relatives or friends.
H
AS
FORMAL SOURCE OF CREDIT INFORMAL SOURCE OF CREDIT
PR
Their work is regulated by RBI. They do not work under any
They charge a lower rate of government organization.
Interest than informal sources. They charge a higher rate of
They follow rules and regulations interest than formal sources.
formed by the government. They do not follow most of the
rules and regulations.
Formal credit can help prevent
Borrowers are at higher risk of
people from falling into a debt
falling into a debt trap due to
trap.
high interest rates.
It might require collateral for It does not require any
the credit. collateral.
The rate of interest is on a yearly Generate rates of interest
basis. every month.
E.g.: Banks and cooperatives. Eg: Money lenders, and traders.
Money and Credit
Barter System
The barter system is an early method of trade where goods and services are
directly exchanged for other goods and services without using money.
Double coincidence of wants The double coincidence
Money as a medium of exchange of wants refers to the
situation in a barter
The use of money is a very large part of our Everyone
system where both
life. Money is widely used as a medium of exchange as
goods are exchanged with money. parties must want what
the other offers in
Modern forms of money
AD
order to make a trade.
CURRENCY:
R
Currency is a generally accepted form of money, Money
KI
including coins and paper notes.
In India, the Reserve Bank of India (RBI) issues Anything which is
currency notes on behalf of the central
T
legalized by the
government.
AN
The law legalizes the use of ‘rupee'(₹) as a medium government of the
of payment that cannot be refused in setting country that helps in
H
transactions in India. medium of exchange and
Therefore the 'rupee’ (₹) is widely accepted as a
AS
measure the value of
medium of exchange. goods and services.
Deposits with banks
PR
Other forms in which people hold money are deposits with banks. Money
deposited in Banks is safe with the bank and people also get interest on the
deposited amount.
The deposits in the bank accounts can be withdrawn on demand. Hence,
these deposits are also called demand deposits.
Cheque Facility
A cheque is a paper instructing the bank to pay a specific amount from the
person's account to the person in whose name the cheque has been issued.
Modern Banking System
Banks mediate between those who have extra funds (the depositors) and
those who need those funds (the borrowers).
Banks charge a higher interest rate on loans than what they offer on
deposits. This difference between interest is bank's main source of income.
, PRASHANT KIRAD
Credit (Loans)
Credit (loans) refers to an agreement in which the lender supplies the borrower
with money, goods or services in return for the promise of future payment.
Loans are both good and bad, in one situation it can increase a person’s earnings,
in another situation it may push the person into a debt trap.
TERMS OF CREDIT: Debt trap Debt trap is a situation
These are the specific conditions under which a in which a loan is
loan is provided, including payment methods,
difficult or impossible
interest rates, loan duration, and other related
terms. to repay, it is mainly
Collateral: This refers to an asset the borrower caused due to high
owns (like land, buildings, vehicles, livestock, or interest.
bank deposits) that serves as a security for the
lender until the loan is fully repaid. Common forms
of collateral include land titles, bank deposits, and
livestock.
AD
Lender's Rights: If the borrower defaults on the
loan, the lender is entitled to sell the collateral to
recover the owed amount.
R
KI
Credit Sources in India:
T
Loans can be categorized into two main types: formal sector loans and informal
AN
sector loans. Formal sector loans include those from banks and cooperatives,
while informal sector loans come from sources like moneylenders, traders,
employers, and even relatives or friends.
H
AS
FORMAL SOURCE OF CREDIT INFORMAL SOURCE OF CREDIT
PR
Their work is regulated by RBI. They do not work under any
They charge a lower rate of government organization.
Interest than informal sources. They charge a higher rate of
They follow rules and regulations interest than formal sources.
formed by the government. They do not follow most of the
rules and regulations.
Formal credit can help prevent
Borrowers are at higher risk of
people from falling into a debt
falling into a debt trap due to
trap.
high interest rates.
It might require collateral for It does not require any
the credit. collateral.
The rate of interest is on a yearly Generate rates of interest
basis. every month.
E.g.: Banks and cooperatives. Eg: Money lenders, and traders.
