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प्रश्न
How do banks mediate between those who have surplus money and those who need money?
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उत्तर
A bank mediates between those who have surplus money and those who need money by allowing both to open accounts with it. Banks only keep about 15% of cash reserves to provide to people who come to withdraw money on a daily basis. Those with surplus money are encouraged to invest with the bank and are paid a certain rate of interest for the same. Those who need loans are required to pay interest on their loans. The difference between payment to lenders and receipt from borrowers comprises the bank’s earnings. Thus, the bank acts as a beneficiary for those with surplus money as well as those who need money.
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संबंधित प्रश्न
Explain with an example, how credit plays a vital and positive role for development.
Which one of the following is a formal source of credit?
Why is it necessary for the banks and cooperative societies to increase their lending facilities in rural areas? Explain.
Why do we need to expand formal sources of credit in India?
Majority of the credit needs of the _________ households are met from informal sources.
The following table shows people in a variety of occupations in urban areas. What are the purposes for which the following people might need loans? Fill in the column.
|
Occupations |
Reason for needing a Loan |
|
Construction worker |
- |
|
Graduate student who is computer literate |
- |
|
A person employed in government service |
- |
|
Migrant labourer in Delhi |
- |
|
Household maid |
- |
|
Small trader |
- |
|
Autorickshaw driver |
- |
|
A worker whose factory has closed down |
- |
Next, classify the people into two groups based on whom you think might get a bank loan and those who might not. What is the criterion that you have used for classification?
Answer the following question.
Describe the importance of formal sources of credit in economic development.
Explain any three reasons for the banks and cooperative societies to increase their lending facilities in rural areas.
Answer the following question.
Give any two examples of the informal sector of credit.
Answer the following question.
Why is cheap and affordable credit important for the country's development? Explain any three reasons.
