Due to the following reasons it is necessary for the banks and the cooperative societies to increase their lending facilities in the rural areas: There is limited availability of the formal sector credit sources in the rural areas. The poor borrowers are bound to take loan from the moneylenders at high rate of interest. Due …
Modern currency accepted as a medium of exchange without any use of its own due to the following reasons: In the modern times, currency notes and coins are used as a medium of exchange. These are not made of any precious metals even though used as a medium of exchange because the government of the …
In barter system, if a shoe manufacturer wants to sell shoes and buy wheat, first he has to look for a wheat growing farmer who wants to buy shoes and needs to sell wheat. Money can make it easier to exchange the things. The shoe manufacturer can sell the shoes for money and then that …
Money has become an essential part of life. For any kind of exchange of goods and services, we need money. In earlier times, when money was not in use, grains and cattle were used which was quite difficult as we had to face the problem of double coincidence of wants. But now for every transaction …
How Is Money Used in Everyday Life? Explain With Examples. Read More »
Three different people are involved in this process: depositors, bank and the borrowers. Those having extra cash open a bank account in their name and deposit the surplus money there. Their money is safe with the banks and they get some interest rate on the amount they have deposited. Those who open an account and …
Explain With Examples, How People Are Involved With the Banks. Read More »
Due to the following three reasons cheap and affordable credit is important for the country’s development: It will help people to take credit for variety of reasons. It will help poor people to get rid of the problem of moneylenders and their high rate of interest. It will be easy for the people to repay …
Collateral is an asset that the borrower owns and given to the lender as a guarantee that he will repay the loan. If the borrower is unable to repay the loan then the lender has the right to sell it and get the money back. The lenders ask for a collateral while lending due to …
What Is a Collateral? Why Do Lenders Ask for Collateral While Lending? Explain. Read More »
Terms of credit includes interest rate, collateral, documents, mode of repayment etc. Suppose a person taking a loan of 5 lakhs at 5% rate of interest from the bank. He has kept his house with the bank as a guarantee of repayment. He agreed to pay the monthly instalment.
The two points of differences between formal and informal sources of credit are: Formal sector credit charge less rate of interest whereas informal sector credit charges very high rate of interest. Formal sector credit is easy to repay whereas the informal sector credit is difficult to repay.
In barter system, if a shoe manufacturer wants to sell shoes and buy wheat, and then first he has to look for a wheat growing farmer who wants to buy shoes and needs to sell wheat. Money can make it easier to exchange the things. The shoe manufacturer can sell the shoes for money and …
How Does the Use of Money Make the Exchange of Things Easier? Explain With Examples. Read More »
