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. Out of the total money deposited with the banks 15% of it is kept as minimum cash balance to…
This is a new idea to organize rural poor particularly women who pool their savings. Generally, this group has 15-20 members. Members belong to the neighbourhood so that they can meet and save regularly. Saving per member varies from 25 to 100 or more, depending on the economic condition of the member. When the group…
Credit is an agreement between the lender and the borrower in which the borrower promises to pay the lender in the future. Credit plays a positive role when the borrower is able to return the loan amount on time and also made some profit with the use of that money. For example: Salim, a shoe…
Due to the following reasons it is necessary for the banks and the cooperative societies to extend their lending activities 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…
The two categories of sources of credit are formal sector credit and informal sector credit. Four features of formal sector credit are: Formal sector credit sources includes banks and cooperatives. Mostly people in the urban areas and the well-off households use it. Formal sector credit need proper documents and collateral before lending. They charge less…
This is a new idea to organize rural poor particularly women who pool their savings. Generally, this group has 15-20 members. Members belong to the neighbourhood so that they can meet and save regularly. Saving per member varies from ? 25 to ? 100 or more, depending on the economic condition of the member. The…
Depositors are those who open an account and deposit money in the banks. Depositors can withdraw their money as and when they require therefore, these deposits are also called demand deposits. Demand deposits are accepted as a means of payment because the depositors get the facility of Cheque against it, which is used to settle…
Sometimes credit is very painful as it pushes the borrower into such a situation from where recovery is very difficult. In this situation the borrower is not able to repay the loan and many a times, caught into the situation of debt-trap. For example: A small farmer Swapna took loan for crop cultivation but due…
When goods are produced by exploiting the natural resources, it is an activity of the primary sector.