RBSE Class 10 Social Science Notes Economics Chapter 3 Money and Credit

These comprehensive RBSE Class 10 Social Science Notes Economics Chapter 3 Money and Credit will give a brief overview of all the concepts.

RBSE Class 10 Social Science Notes Economics Chapter 3 Money and Credit

→ Money:
A medium of Exchange: Money plays an important role in every economy. Money is an important medium of exchange. Goods and services are bought and sold through money. Money has solved the problems of barter system of exchange.

→ Modern Forms of Money: At present following are the main modern forms of money

• Currency: Currency is an important modem form of money, which includes paper notes and coins. In India Reserve Bank of India issues currency on behalf of the government.
• Savings in Banks: People keep money in banks in the form of savings. After completing their needs people deposit excess money in banks. People can withdraw money from banks through cash or through cheques.

→ Loan Activities of Banks:
Banks accept deposits from the people. After keeping a portion of deposits as reserves, banks lend to people who demand money as loan. This way banks create credit.

→ Two Different Credit Situations:
Credit plays a vital and positive role in economic activities. In rural areas farmers borrow money to increase crop production. Credit is helpful in increasing their income.

→ Terms of Credit:
Interest rate, collateral and documentation are required and the mode of repayment together comprises terms of credit. The terms of credit vary from one credit agreeihent to another.

→ Formal Sector Credit in India:
Credit is divided into two parts:

1. Formal Sector Credit,
2. Informal Sector Credit.

→ Formal sector loans include loans from banks and cooperatives.

• Informal sector includes money lenders, traders, employees, relatives and friends etc.
• Formal sector are controlled by Reserve Bank of India whereas in Informal sector there is no control of government.

→ Self-help Groups for the Poor:
In India, poor people are still dependent on informal sector and they face difficulties in taking loan from formal sector. In recent years, people have tried out some newer ways of providing loans to the poor. For example, Formation of self-help groups in rural areas.