Level 1
Interest rate, collateral documentation requirement and the mode of payment together comprise:
Terms of credit
What is the reason for accepting paper notes as a medium of exchange in India?
the law legalises the use of paper notes as a medium of payment that cannot be refused in setting transactions in India.
How does money solve the problem of Double Coincidence of Wants? Give example!
Individual ans
What is the full form of NABARD?
National Bank for Agriculture and Rural Development
What are the modern forms of money?
Paper notes, coins and demand deposits are the modern forms money.
Why is there a need to expand rural credit?
a) To save poor from the high rate of interest of moneylenders and debt-trap the expansion of formal sources of rural credit is essential.
b) Cheap and easily available credit can encourage self-employment like small scale industries or business leading to higher income and contribute to the country’s development.
Correct the following statement:
The difference between what is charged from the borrowers and what is paid to depositors is the main source of expense of the banks.
bank's income/ Spread
Correct the following statement:
A Collateral 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 made.
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 made.
How are deposits with the bank beneficial for individual as well as for the nation?
Individual justification with example
Suggest some ways by which rural poor can get cheap credit.
Rural poor can get cheap loans from sources like cooperative banks, Self Help Groups, regional rural banks, etc.
The RBI or Central Bank of India, founded in ________.
1935
How the Self-Help Groups help borrowers to overcome the problem of lack of collateral security?
i The members of the group can take a small loan from the group itself to meet their needs.
ii. The group charges Interest rates less than moneylenders which help them to repay their loan with great ease.
iii. These groups are organized by women in rural areas. So these group gives special status to women.
iv. These groups gradually can seek loans for the bank so as to create employment opportunities for its members.