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Social Science: Money and Credit: Role of Money in an Economy - Informal Institutions - Local Money Lenders, Landlords, Self Help Groups, Chit Funds and Private Finance Companies

"Deposits with the banks are beneficial to the depositors as well as to the nation." Explain the statement

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Solution

People with small saving amounts earn interest on their savings when they deposit money in the bank. Hence, depositing money in the bank generates income for them rather than letting the money lie idle. These bank accounts are safe to keep money and to withdraw the amount at the time of requirement.

The timely advancing of loan to the farmers at low rate of interest helps the farmers in increasing their production. In urban areas, the provision of loan to small business units can help them to prosper. Banks also provide loans to various builders for their development projects.

Concept: Informal Institutions - Local Money Lenders, Landlords, Self Help Groups, Chit Funds and Private Finance Companies
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