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CBSE Class 10 Money and Credit Notes PDF: Check and download the chapter notes from CBSE 10th class SST Chapter 3 Money and Credit. These Social Science short notes have been specially prepared by subject matter experts for CBSE 2023-24 board exam preparation.
Money and Credit Class 10 Notes: CBSE Class 10 Economics Chapter 3, “Money and Credit,” discusses the significance of money and the functioning of credit in the economy. It covers topics such as the types of credit, formal and informal sources, role of banks, Reserve Bank of India, loans, and the impact of credit on individuals, businesses, and the overall economy. The CBSE Class 10th Economics Chapter 3 Money and Credit short notes provided here are curated by subject-matter experts and cover the important topics from this chapter. It will help you in understanding the essence of the whole chapter and perform better in your tests and board examination.
CBSE 10th Social Science Economics Chapter 3 Money and Credit Class 10 Notes
Money As A Medium of Exchange
When what a person desires to sell is exactly what the other wishes to buy, it is known as double coincidence of wants. In a barter system where goods are directly exchanged without the use of money, double coincidence of wants is an essential feature. In an economy where money is in use, money by providing the crucial intermediate step eliminates the need for double coincidence of wants. Money acts as an intermediate in the exchange process, it is called a medium of exchange.
Modern Forms of Money
In ancient times, Indians used grains and cattle as a medium of exchange. Later, metallic coins made of gold, silver, and copper became the prevalent form of money.
Currency: Today, currency in the form of paper notes and coins is the modern medium of exchange issued by the Reserve Bank of India on behalf of the government.
Deposits with Banks: Additionally, people hold money in the form of deposits with banks. By opening a bank account, individuals can deposit their extra cash, earning interest on their deposits. These deposits can be withdrawn on demand, referred to as demand deposits.
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.Payments can be made through cheques.
The modern forms of money — currency and deposits — are closely linked to the working of the modern banking system.
Loan Activities of Banks
Banks keep small proportion of the deposits, as cash, with themselves. These acts as a provision to pay the depositors who might come to withdraw money from the bank on any given day.
Banks use the major portion of the deposits to extend loans, charging a higher interest rate on loans than what they offer on deposits. The difference between what is charged by borrowers and what is paid to depositors is their main source of income for banks.
Two Different Credit Situations
Whether credit would be useful or not depends on the risks in the situation and whether there is some support in case of loss.
When credit pushes the borrower into a situation from which recovery is very painful, it is called debt-trap.
Ideally, credit helps to increase earnings, and therefore leaves the person better off than before, playying a vital and positive role.
Terms of Credit
When you borrow money, the loan agreement includes an extra amount called interest that you need to pay along with the main borrowed money. Lenders also ask for something valuable, like land, a house, a car, or money in a bank account, as a guarantee. This guarantee is called collateral.
Collateral is an asset that the borrower owns (such as land, building, vehicle, livestocks, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid.
If you can’t repay the loan, the lender can sell the collateral to get their money back. The interest rate, collateral, required documents, and how you will repay the loan are called the terms of credit, which can be different depending on the lender and borrower.
Interest rate, collateral and documentation requirement and the mode of repayment, together, are called the terms of credit.
Formal Sector Credit in India
Cheap and affordable credit is crucial for the country’s development. The Reserve Bank of India supervises the functioning of formal sources of loans yet there are many informal lenders who charge very high interest rates and lead borrowers into a debt-trap.
The various types of loans/ credits are:
Formal sector loans:
These are the loans from banks and cooperatives. The Reserve Bank of India supervises the functioning of formal sources of loans. Banks have to submit information to the RBI on how much they are lending, to whom, at what interest rate, etc.
Informal sector loans:
These are the loans from moneylenders, traders, employers, relatives and friends, etc. There is no organisation which supervises the credit activities of lenders in the informal sector. There is no one to stop them from using unfair means to get their money back.
Formal and Informal Credit
- It is necessary that banks and cooperatives increase their lending, particularly in rural areas, so that the dependence on informal sources of credit reduces.
- While the formal sector loans need to expand, it is also necessary that everyone receives these loans.
Self-Help Groups For The Poor
SHGs are small groups of poor people who promote small savings among their members. A typical SHG has 15-20 members, usually belonging to one neighbourhood, who meet and save regularly.
- It helps borrowers to overcome the problem of lack of collateral.
- People can get timely loans for a variety of purposes and at a reasonable interest rate.
- SHGs are the building blocks of the organisation of the rural poor.
- It helps women to become financially self-reliant.
- The regular meetings of the group provide a platform to discuss and act on a variety of social issues such as health, nutrition, domestic violence, etc.
Also Read:
CBSE Class 10 Syllabus (All Subject)
Download CBSE Class 10 Social Science Book PDF
CBSE Money and Credit Class 10 Notes PDF Download
Related:
CBSE Money and Credit Class 10 Mind Map for Chapter 3 of Social Science Economics, Download PDF
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