Podcast
Questions and Answers
What is the primary purpose of promoting online banking and digital transactions?
What is the primary purpose of promoting online banking and digital transactions?
What is the process of finding someone to trade goods directly before money was introduced called?
What is the process of finding someone to trade goods directly before money was introduced called?
Where can one find data and statistics related to self-help groups?
Where can one find data and statistics related to self-help groups?
How would transactions be significantly impacted if money was not used as a medium of exchange?
How would transactions be significantly impacted if money was not used as a medium of exchange?
Signup and view all the answers
What is demonetisation in the context provided?
What is demonetisation in the context provided?
Signup and view all the answers
Which of the following is a function of money as described in the content?
Which of the following is a function of money as described in the content?
Signup and view all the answers
What was the primary impact of the demonetisation mentioned?
What was the primary impact of the demonetisation mentioned?
Signup and view all the answers
What does the stock of money primarily consist of according to the information?
What does the stock of money primarily consist of according to the information?
Signup and view all the answers
What challenge is highlighted for developing countries?
What challenge is highlighted for developing countries?
Signup and view all the answers
What was one of the responses to the invalidation of currency notes in India?
What was one of the responses to the invalidation of currency notes in India?
Signup and view all the answers
Study Notes
Money and Credit
- Money is a fascinating subject, tracing its history and various forms through time
- Modern money is linked to banking systems
- Understanding how newer forms of money are spreading in India due to computerization, is important
- Money consists of currency held by the public and demand deposits with banks
- Money is essential for social transactions and economic development
- The government ensures the smooth function of the monetary system
- Demonetization (India, 2016) involved invalidating and replacing currency notes of specific denominations; this encourages digital transactions.
Functions of Money
- Money serves as a medium of exchange, facilitating transactions without the need for a double coincidence of wants
- Money streamlines exchanges between diverse goods and services
- A system of barter (direct exchange) has limitations compared to a monetary system
- Money allows for the exchange of goods/services at varying times
- Money permits the exchange at different places
Modern Forms of Money
- Modern money includes currency (paper notes and coins), and deposits with banks
- Currency is authorized by the government and is widely accepted as a medium of exchange
- Bank deposits are withdrawable on demand, considered money for transactions
- A person can pay using their deposit via a check instructing the bank to transfer money to another person
Cheque Payments
- Payment by cheque involves writing a check and instructing the bank to transfer money to another party
- Payments using cheques do not involve physical cash transfer
- Cheques and demand deposits are widely accepted as a form of money
Loan Activities of Banks
- Banks receive deposits and use a portion to provide loans to others
- Loan demand is high for various economic activities
- Banks evaluate borrowers' creditworthiness and determine loan eligibility
- Banks charge borrowers interest, which helps fund operations
- Deposits and loans are closely linked to the modern banking system
Two Different Credit Situations
- Credit is essential in daily life
- Temporary credit needs can be met via loans (e.g., for festivals or production needs)
- Credit is vital for economic activities
Formal vs. Informal Credit
- Formal credit is provided by banks and cooperatives, often with collateral and lower interest rates.
- Informal credit is provided by moneylenders or relatives and often at higher interest rates.
- Formal sector loans reach a larger part of the population as compared to informal ones
- Poor households rely more on informal credit sources
Self-Help Groups (SHGs)
- SHGs provide a way for disadvantaged communities to secure loans & economic empowerment
- SHGs aid with collateral since they help with savings and loan schemes
- Lending to SHGs is more favorable than lending to individual borrowers in many cases
Grameen Bank
- Grameen Bank's success shows the effectiveness of loan programs for the poor.
- The model encourages women to start and run various businesses using loans.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
Test your knowledge on the functions and history of money. Explore how banking systems and digital transactions have transformed monetary exchanges in India. Understand the importance of money for social transactions and economic development.
