3. MONEY AND CREDIT
The chapter delves into the evolution and significance of money and credit within economic systems, emphasizing their role in facilitating transactions and supporting economic growth. It highlights the transition from traditional forms of money to modern banking systems, the dynamics of demand deposits, and the critical nature of credit for both individuals and enterprises. Additionally, it examines the challenges faced by various borrowers, especially in rural settings, and outlines the necessity of equitable access to formal credit sources.
Enroll to start learning
You've not yet enrolled in this course. Please enroll for free to listen to audio lessons, classroom podcasts and take practice test.
Sections
Navigate through the learning materials and practice exercises.
What we have learnt
- Money serves as a medium of exchange, eliminating the need for direct barter.
- Modern currency is issued by the government and backed by the banking system, facilitating transactions.
- Credit can either enhance economic conditions or lead borrowers into debt traps, highlighting the need for responsible lending practices.
Key Concepts
- -- Medium of Exchange
- Money acts as a medium that facilitates the exchange of goods and services, avoiding the complications of barter.
- -- Demand Deposits
- Funds held in bank accounts that can be withdrawn on demand, acting as a convenient form of money.
- -- Credit
- An agreement in which a lender provides money, goods, or services to a borrower, with the expectation of future repayment.
- -- Collateral
- An asset pledged by a borrower to secure a loan, which can be seized by the lender if the loan is not repaid.
- -- SelfHelp Groups (SHGs)
- Organizations formed by rural poor, particularly women, to pool savings and provide affordable loans without the need for collateral.
- -- Formality of Credit
- The structured framework governing loans from formal lenders, including banks, as opposed to informal lending with fewer regulations.
Additional Learning Materials
Supplementary resources to enhance your learning experience.