10 ECONOMICS - CHAPTER - 3 - MONEY AND CREDIT
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Use of money in our daily transactions:
 To buy and sell goods and services
 To pay fees, charges, penalties, etc.
 To borrow and to lend and settle the dues at a later time.
Money is an essential system and a necessity in modern economy today’s
world. It facilitates transactions, trade and economic services. Without
money, the development of modern industrialized societies is quite
unimaginable.
Society without money:
Human needs were simple and few that people were self-reliant and selfsufficient. With increase in wants and needs and progress of civilizations,
societies produced more than their consumption needs. The people
exchanged surplus production with other persons, according to their needs.
The practice of exchange of goods and services with one another gave rise to
barter system.
Barter System:
Exchange of goods for goods without the use of money.
For Examples:- If a farmer has some surplus or excess wheat and he needs
an axe, he would try to find someone who would exchange and axe for the
wheat.
A teacher or doctor may be paid rice or pulses as payment for his services.
Money, in any form, was not involved in this system.
Double Coincidence of Wants
 It refers to a situation wherein what a person wishes to sell is exactly
the same as that the other person wishes to buy.
Take the example of a shoe manufacturer. He wants to sell shoes in the
market and buy wheat. The shoe manufacturer has to directly
exchange shoes for wheat without the use of money. He has to find a
wheat growing farmer who not only wants to sell wheat but also wants
to buy the shoes in exchange. That is, both parties have to agree to sell
and buy each other’s commodities.
 This is a concept - in the barter system – goods and or services are
exchanged directly, without the use of money.
 Therefore, double coincidence of wants is an essential feature of
barter.
MONEY – FUNCTIONS OF MONEY
 It serves as a medium of exchange.
As money acts as an intermediate in the exchange process, it is called a
medium of exchange.
 It eliminates the need for double coincidence of wants
[It is no longer necessary for the shoe manufacturer to look for a farmer
who will buy his shoes and at the same time sell him wheat. All he has
to do is find a buyer for his shoes. Once he has exchanged his shoes for
money, he can purchase wheat or any other commodity in the market.
 It eliminates the need for storing – does not decay or get destroyed.
 Money measures the value: It enables ascertain the value of
commodities in terms of money and units of money. – measure of value
+divisible.
 It enables future payments – borrowing and lending.
 Money Transfers value: money efficiently transfers it to someone else
and thereby transmit value, i.e., people can carry or transfer money
from one place to another
Characteristics of good Money
 General acceptability. Portability. Durability.
 Divisibility. Homogeneity. Cognizability. Stability.
Forms of Money
Indians used grains and cattle as money.
Thereafter came the use of metallic coins — gold, silver, copper coins — a
phase which continued well into the last century.
 Ancient period: Grains and cattle, shells, gems, etc.
 Medieval period: Metallic coins of gold, silver, copper and lead as
money.
 Modern period: Paper currency and coins, plastic money,
electronic money, virtual money, [crypto currency]
Modern currency – features [differs from old forms of money]
 Modern currency is not made of precious metal such as gold,
silver and copper.
 Non-perishable: unlike grain and cattle, they are neither of
everyday use. [therefore, durable and has Store Value]
 No commodity value: The modern currency is without any use of
its own.
Money in India
 Rupee is the Indian currency.
 Sanction of Government: Rupee is accepted as a medium of exchange
because the currency is authorised by the government of the country
 Reserve Bank of India (RBI) is authorized to issue currency notes on
behalf of the Government of India. Therefore, law permits no other
individual or organisation to issue currency.
 Moreover, the law legalises the use of rupee as a medium of payment,
such that no one can refuse Rupee in settling transactions in India:
 No individual in India can legally refuse a payment made in rupees.
 Hence, the rupee is widely accepted as a medium of exchange.
The Constitution of India has 22 languages in the 8th Schedule,
but our currency notes have only 17 languages. Why?
FUNCTIONS OF COMMERCIAL BANKS – [pages 41 – 42]
A. Accepting cash deposits from the public.
B. Creating credit i.e., lending of funds to the public.
C. Miscellaneous functions – Bank as an Agent for its customers:
o Collecting bills, draft, cheques, discounting the bills, etc.
o Paying the insurance premium, rent, loan installments, etc.
o Working as a representative of a customer for purchasing or
redeeming securities, etc. in the stock exchange.
o Acting as an executor, administrator, or trustee of the estate of a
customer
o Also, preparing income tax returns, claiming tax refunds, etc.
D. General Utility Services =
 Issuing traveller’s cheques
 Offering locker facilities for keeping valuables in safe custody
 Issuing debit cards and credit cards, etc.
Accepting Deposits
 People deposit their surplus money in banks by opening a bank
account.
Advantages:
1. Safety of money: Banks keep the money safe and
2. Earn Interest: banks provide interest to the depositors on the amount
deposited.
3. Demand Deposit: the deposits in the bank accounts can be
withdrawn on demand [through cheques, debit card, etc.] any time.
What are Demand Deposits? Why are they called so?
 The money deposited in banks are Demand Deposits.
 The depositor can withdraw deposited money from bank when
required, on demand. Hence, bank deposits are Demand Deposits.
 Since demand deposits are accepted widely as a means of payment,
along with currency they constitute money in the modern economy.
Providing Loans
 Banks provide loans to people by charging interest [at some rate].
 Banks keep only 18% of their total deposits as cash to meet the daytoday withdrawal demands [SLR = 18%] + [ CRR = 4%] = 22%
[The RBI requires the banks maintain a minimum cash balance out of
the deposits they receive: LRR = Legal Reserve Ratio = SLR + CRR]
 The bank uses the remaining / balance of the cash deposits to offer
as loans at a specific rate of interest, to the borrowers who need it.
 In this way, banks act as mediators between those who have surplus
funds (the depositors) and those who are in need of these funds (the
borrowers).
 Source of Bank’s Income:
The interest provided by banks to depositors is less than the interest
charged by banks from borrowers on loans.
That is, commercial banks charge a higher rate of interest on loans
provided by the bank and extend a lower rate of interest to
depositors on the funds deposited.[see the diagram below]
This difference is the main source of income of banks.
 Why people need loans?
 There is a huge demand for loans for various economic activities.
Banks provide housing loans, vehicle loans, farm loans, education
loans, consumer loans, personal loans etc. to meet the specific
requirements of borrowers.
UTILITIES ARISING FROM DEMAND DEPOSITS:
 Bank deposits also facilitate easy transfers of money, payment of bills,
recurring instalments, without handling physical money. These
processes are conducted through cheques, demand drafts, debit card or
internet banking.
 Cheque: A cheque is a document issued by an account holder to the
bank, instructing the bank to pay a specific amount from the issuer’s
account to the person in whose name the cheque has been issued. It is
as good as ready cash. [highly liquid]
 ADVANTAGE: The facility of cheques against demand deposits makes it
possible to directly settle payments without the use of cash.
Example of payment through CHEQUE:
 A shoe manufacturer, M. Salim has to make a payment to the leather
supplier [Prem Kumar] and writes a cheque for a specific amount.
 This means that the shoe manufacturer instructs his bank to pay this
amount to the leather supplier [Prem Kumar].
 The leather supplier [Prem Kumar] takes this cheque, and deposits
it in his own account in the bank. The transfer of money, one bank
account to another bank account within 24 hours or couple of days.
 The transaction is complete without any payment of cash.
 DEBIT CARD - A debit card is a payment card that makes payments by
deducting money directly from a depositor’s/ consumer’s checking
account [it is not a loan from the bank]. Examples of Debit cards:
Rupay, Visa or Mastercard.
[What Is] Online Banking?
Internet Banking, also known as net-banking or online banking, is an
electronic payment system that enables the customer of a bank or a financial
institution to make financial or non-financial transactions online via the
internet. Online banking allows a user to conduct financial transactions via
the Internet. Online banking is also known as Internet banking or web
banking.
Online banking offers customers the access to almost every service
traditionally available through a local branch including deposits, transfers,
and online bill payments. Virtually every banking institution has some form
of online banking, available both on desktop versions and through mobile
apps.
[A NOTE ON CHEQUES:
1. Ever since their inception it has been the case that cheques are not a promise to
pay by the bank, but a request to the bank that it pays, out of the funds deposited
by the customer, an amount to a third party.
This means that the bank will only honour the cheque if the account holder has
sufficient funds to meet it or it can be covered by an agreed overdraft or other line
of credit. Cheques are not legal tender and never have been. Even today, if you owe
someone money they are not obliged to accept a cheque. A creditor is entitled to
be paid in legal tender and can refuse payment in any other form.
2. If there were no banks, there would be no demand deposits and no payments by
cheques against these deposits.]
 Banks act as mediators between those who have surplus funds (the
depositors) and those who are in need of these funds (the borrowers).
CASE STUDY: TWO DIFFERENT CREDIT SITUATIONS [page 43]


A large number of transactions in our day-to-day activities involve
credit in some form or the other.
Credit (loan) refers to an agreement in which the lender supplies the
borrower with money, goods or services in return for the promise of
future payment.
Let us see how credit works through the following two examples:
[PAGE 43]
1. SALIM – the shoe manufacturer. Festival Season


It is festival season two months from now and
the shoe manufacturer, Salim, has received an order from a large trader in
town for 3,000 pairs of shoes to be delivered in a month time.
 To complete production on time, Salim has to hire a few more workers for
stitching and pasting work.
 He has to purchase the raw materials.
 To meet these expenses, Salim obtains loans from two sources.
 First, he asks the leather supplier to supply leather now and promises to pay
him later.
 The second, he obtains loan in cash from the large trader, as advance payment,
for 1000 pairs of shoes with a promise to deliver the whole order by the end of
the month.
 At the end of the month, Salim is able to deliver the order, make a good profit,
and repay the money that he had borrowed.
Conclusion:
 In this case, Salim obtains credit to meet the working capital needs of
production.
 The credit helps him to meet
a) The ongoing expenses of production,
b) Complete production on time, and
c) Thereby, increase his earnings.
 Credit therefore plays a vital and positive role in this situation
2. Swapna’s Problem
 Swapna, a small farmer, grows groundnut on her three acres of land.
 She takes a loan from the moneylender to meet the expenses of cultivation,
hoping that her harvest would help repay the loan.
 Midway through the season, pests affect/hit the crop and the crop fails.
 Though Swapna sprays her crops with expensive pesticides, it makes little
difference.
 She is unable to repay the moneylender and the debt grows over the year into
a large amount.
 Next year, Swapna takes a fresh loan for cultivation.
 It is a normal crop this year.
 But the earnings are not enough to cover the old loan.
 She is stuck in the vicious cycle of debt trap.
 She has to sell a part of the land to pay off the debt.
Conclusion:
 In the case of Swapna, the failure of the crop made loan repayment impossible.
 She had to sell part of the land to repay the loan.
 Credit, instead of helping Swapna improve her earnings, left her worse off.


This is an example of, what is commonly called, debt-trap:
Credit in this case makes the loan payment impossible and pushes the
borrower into a situation from which recovery from debt is very difficult,
damaging and destructive. [Detrimental]
Debt Trap [page 44]
When a borrower is unable to break out of the vicious cycle of debts, this
situation is termed as Debt Trap.
He/she takes loans to meet his/her requirements. But, on being unable
to pay back the loan, takes a fresh loan to repay the old loan. When this
cycle continues, it leaves him/her indebted for a long period of time or all
through his/her lifetime.
TERMS OF CREDIT
 Interest rate, collateral and documentation requirement, duration
and the mode of repayment together comprise the terms of credit.
 The terms of credit vary substantially from one credit arrangement
to another.
 They may vary depending on the nature of the lender and the
borrower.
Collateral

In addition to the interest on the principal of loan and installments, lenders may
require / demand collateral (security) against loans.
 Collateral is an asset owned by the borrower such as land, building, vehicle,
livestock, deposits with banks, etc, and used as a guarantee to a lender until the
loan is repaid.
 If the borrower fails to repay the loan, the lender has the right to sell the asset or
collateral to obtain payment.
 Property such as land titles, deposits with banks, livestock are some common
examples of collateral used for borrowing.
CASE STUDY – EXAMPLE: [PAGE 45]

Megha availed a House Loan of ₹ 5 lakhs from the bank to purchase a house.



The annual interest rate on the loan is 12 per cent, and
Megha has to repay the loan in 10 years, in monthly instalments.
Megha had to submit to the bank, documents showing her employment records
and salary before the bank agreed to give her the loan.
The bank retained as collateral the papers of the new house, which will be returned
to Megha only when she repays the entire loan with interest.

LOAN AMOUNT
DURATION OF LOAN
DOCUMENTS REQUIRED
RATE OF INTEREST
MODE OF REPAYMENT
COLLATERAL
₹ 5 Lakhs
10 Years
Employment Record, Salary Certificate, House
Documents
12% Per Annum
Equated Monthly Instalments [EMIs]
Documents of the New House purchased.
[PAGE 46]
VARIETY OF CREDIT ARRANGEMENTS – CASE STUDY - Example of a Village
Rohit and Ranjan had finished reading about the terms of credit in class. They were
eager to know the various credit arrangements that existed in their area:
 Who were the people who provided credit?
 Who were the borrowers?
 What were the terms of credit?
They decided to talk to some people in their village. They recorded the following:
15th Nov, 2006. We head directly for the fields where most farmers and labourers
would be working at this time of the day. The fields are planted with potato crops. We
first meet Shyamal, a small farmer in Sonpur, a small irrigated village.
THREE CASES:
1. Shyamlal:
 Shyamal borrows funds every season for cultivation
 on his 1.5 acres of land. [small land holding – unable to eke out
sufficient income – lack of economic independence]
 Until recent times, he borrowed money from the village
moneylender [lack of investment]
 At an interest rate of five per cent per month (60% per annum).
[exorbitant interest rate]
 For the last few years, Shyamal has been borrowing from an
agricultural trader in the village at an interest rate of three per cent
per month. [36% per annum] [high interest rate]
 At the beginning of the cropping season, the trader supplies the
farm inputs on credit, which is to be repaid when the crops are ready
for harvest. [no financial investment or financial freedom]
 Besides the interest charge on the loan, the trader also makes the
farmers promise to sell the crop to him. This way the trader can
ensure that the money is repaid promptly. [no bargaining power]
 [Exploitation:] since the crop prices are low after the harvest, the
trader is able to make a profit from buying the crop at a low price
from the farmers and then selling it later when the price has risen.
[lack of storage facility]
2. Arun
 Arun supervises the work of one farm labourer.
 Arun has seven acres of land. [he is a medium farmer]
 He is one of the few persons in Sonpur to receive bank loan for
cultivation. [beneficiary of institutional loan]
 The interest rate on the loan is 8.5 per cent per annum, [lower
interest rate]
 Loan can be repaid anytime in the next three years. [flexible
duration to repay]
 Arun plans to repay the loan after harvest by selling a part of the
crop. [Arun has capacity to repay loan – does not fall prey to Debt
trap]
 He then intends to store the rest of the potatoes in a cold storage
and apply for a fresh loan from the bank against the cold storage
receipt. [Arun is capable of creating additional assets/ collateral – to
expand]
 The bank offers this facility to farmers who have taken crop loan
from them.
3. Rama
 Rama is working in a neighbouring field. [landless agricultural worker]
 She works as an agricultural labourer. [low income – dependent on
availability of employment]
 There are several months in the year when Rama has no work,
[seasonal unemployment]
 Needs credit to meet the daily expenses. [indebtedness/ poverty]
 Expenses on sudden illnesses or functions in the family are also met
through loans. [no healthcare security]
 Rama has to depend on her employer, a medium landowner in Sonpur,
for credit. [Dependent on debts – no institutional credit – no
government schemes for employment.]
 The landowner charges an interest rate of 5 per cent per month. [pays
exorbitant/ excessive interest = 60% per annum]
 Rama repays the money by working for the landowner. [exploited to
work for the lender]
 Most of the time, Rama has to take a fresh loan, before the previous
loan has been repaid. [in debt trap]
 At present, she owes the landowner Rs 5,000. Though the landowner
doesn’t treat her well, she continues to work for him since she can get
loans from him when in need. [rural indebtedness – debt trap – lack of
employment opportunities]
 Rama tells us that the only source of credit for the landless people in
Sonpur are the landowner-employers. [lack of institutional credit]

Loans from Cooperatives [PAGE 47]
Besides banks, the other major source of cheap credit in rural areas are the cooperative
societies (or cooperatives).
Members of a cooperative pool their resources for cooperation in certain areas.
There are several types of cooperatives possible such as farmers cooperatives,
weavers cooperatives, industrial workers cooperatives, etc.
EXAMPLE:

Krishak Cooperative functions in a village not very
far away from Sonpur.

It has 2300 farmers as members.

It accepts deposits from its members.

With these deposits as collateral, the Cooperative
has obtained a large loan from the bank.

The cooperative uses these funds to provide loans
to members.

When these loans are repaid, another round of
lending can take place.

Krishak Cooperative provides loans for the
purchase of agricultural implements,

loans for cultivation and agricultural trade,

fishery loans, loans for construction of houses and
for a variety of other expenses.
 Cooperative societies are small-scale organizations formed by
people themselves.
 The members of cooperatives pool their resources in the account of
the cooperative and then extend loans to those in need.
 Cooperatives also take loan from banks.
 There are several types of cooperatives such as krishak
cooperatives, weavers Cooperatives, industrial workers’
cooperatives etc.
FORMAL SECTOR CREDIT IN INDIA [PAGE 48 - 49]
We have seen in the above examples that people obtain loans from
various sources. We can group these various sources of loans as formal
sector loans and informal sector loans.
Loans from banks and cooperatives qualify as formal sector. The informal
lenders include moneylenders, traders, employers, relatives and friends,
others.
In Graph 1 you can see the
various sources of credit to
rural households in India.
Is more credit coming from the
formal sector or the informal
sector?
Over 50% agricultural households in debt with average loan of Rs 74,121 in 2019: NSO
survey
Only 69.6% of outstanding loans were taken from institutional sources like banks,
cooperative societies and government agencies, while 20.5% of loans were from
professional money lenders, says the survey
Of the total loan, only 57.5 per cent was taken for agricultural purposes, says the NSO
survey
India's household debt has doubled in rural and urban areas in 2021 from 2018 levels
according to a survey by SBI Research. The household debt to GDP ratio is ikely to rise
to 37.3% in 2020-21 from 32.5% in 2019-20 due to the COVID-19 pandemic. Household
debt, as a percentage of GDP, may have fallen to 34% in the first of the current
financial year, SBI Research said.
--------------------------------------------------------------
Functions of RBI:
 The Reserve Bank of India supervises the functioning of formal sources
of loans. The RBI monitors the banks actually maintaining the cash
balance.
 Similarly, the RBI sees that the banks give loans not just to profitmaking businesses and traders but also to small cultivators, small scale
industries, to small borrowers etc.
 Periodically, banks have to submit information to the RBI on how much
they are lending, to whom, at what interest rate, etc.
ROLE OF INFORMAL SECTOR:
 No organisation supervises the credit activities of lenders in the
informal sector.
 This absence of a supervisory/controlling agency creates a gap and
informal lenders charge higher/ exorbitant interest rates of their
choice.
 There is no one to stop them from using unfair means to get their
money back.
 Most of the informal lenders charge a much higher interest on loans.
Thus, the cost of credit to the borrower [of informal ]s much higher.
Implications:
 Higher cost of borrowing means a larger part of the earnings of the
borrowers is used to repay the loan.
 Hence, borrowers have less income left for themselves (as we saw for
Shyamal in Sonpur).
 In certain cases, the high interest rate of borrowing can mean that the
amount to be repaid is greater than the income of the borrower.
 This could lead to increasing debt (as we saw for Rama in Sonpur) and
falling into debt trap.
 It discourages new entrepreneur to start an enterprise through
borrowing: he/ she may not do so because of the high cost of
borrowing.
What needs to change?
 [For these reasons,] Banks and cooperative societies need to lend
more.
 Cheap and affordable credit is crucial for the country’s development.
 This in turn leads to higher incomes and many people could then
borrow cheaply for a variety of ventures, like grow crops, do business,
set up small-scale industries, set up new industries or trade etc.
FORMAL SECTOR OF CREDIT
Loans
from
banks
and
cooperatives constitute the formal
sector of credit.
INFORMAL SECTOR OF CREDIT
Loans from moneylenders,
landlords, traders, relatives and
friends, etc. constitute the
informal sector of credit.
These loans are supervised or They are not under the control
regulated by the RBI
or purview of the RBI
The rates of interest are low and The rates of interests are
affordable.
exorbitant.
The terms of credit are changed
and manipulated by the lender.
The formal sector provided about The informal sector provided
60% of loans and rich households about 40% of loans and poor
avail the formal credit.
and rural households avail the
informal credit.
The terms of credit are fixed.
Formal and Informal Credit: Who gets what? [49 – 50]
Graph 2 [below] shows the importance of formal and informal sources of
credit for people in urban areas.
The people are divided into four groups, from poor to rich, as shown in the
figure.
OBSERVATIONS:
 That 85 per cent of the poor households in the urban areas avail
loans from informal sources.
 Whereas, only 10 per cent of rich urban households take loans from
informal sources, while 90 per cent are from formal sources.
 A similar pattern occurs in rural areas.
 Conclusion: The rich households are availing cheap credit from formal
lenders whereas the poor households bear high cost to borrow funds
or avail credit.
What does all this suggest?
First, the formal sector still meets only about half of the total credit needs of
the rural people. The remaining credit needs are met from informal sources.
Most loans from informal lenders carry a very high interest rate and does not
increase the income of the borrowers.
Recommendations:
1. Thus, it is necessary that banks and cooperatives increase their lending
particularly in the rural areas, so that the dependence on informal
sources of credit reduces.
2. Secondly, formal sector loans need to expand, reach larger sections of
the rural needy.
3. Thirdly, it is also necessary that everyone receives these loans
irrespective of the ability to furnish the collateral.
4. Equity in loan distribution: That the formal credit is distributed more
equally so that the poor can benefit from the cheaper loans.
SELF-HELP GROUPS [50 – 51]
Why are the poor households still dependent on informal sources of
credit?
 Banks are not present everywhere in rural India.
 Even when they are present, getting a loan from a bank is much
more difficult due to lack of proper documents and
 Lack of requisite collateral: Absence of collateral is one of the major
reasons which prevents the poor from getting bank loans.
 Informal lenders such as moneylenders, on the other hand, know
the borrowers personally and hence are often willing to give a loan
without collateral.
 The borrowers can, if necessary, approach the moneylenders even
without repaying their earlier loans.
However, the moneylenders charge very high rates of interest, keep no
records of the transactions and harass the poor borrowers
How do Self Help Groups (SHGs) function to organise loans/ credit for their
members?
In recent years, people have tried out some newer ways of providing loans
to the poor. The idea is to organise rural poor, in particular women, into small
Self Help Groups (SHGs) and pool (collect) their savings. A typical SHG has 1520 members, usually belonging to one neighbourhood, who meet and save
regularly. Saving per member varies from Rs 25 to Rs 100 or more, depending
on the ability of the people to save. Members can take small loans from the
group itself to meet their needs. The group charges interest on these loans
but this is still less than what the moneylender charges. After a year or two,
if the group is regular in savings, it becomes eligible for availing loan from the
bank. Loan is sanctioned in the name of the group and is meant to create
self-employment opportunities for the members. For instance, small loans
are provided to the members for releasing mortgaged land, for meeting
working capital needs (e.g. buying seeds, fertilisers, raw materials like
bamboo and cloth), for housing materials, for acquiring assets like sewing
machine, handlooms, cattle, etc
The group members take most of the important decisions, regarding the
savings and loan activities. The group decides as regards the loans to be
granted — the purpose, amount, interest to be charged, repayment schedule
etc. Also, it is the group which is responsible for the repayment of the loan.
Any case of nonrepayment of loan by any one member is followed up
seriously by other members in the group. Because of this feature, banks are
willing to lend to the poor women when organised in SHGs, even though they
have no collateral as such.
Thus, the SHGs help borrowers overcome the problem of lack of collateral.
They can get timely loans for a variety of purposes and at a reasonable
interest rate. Moreover, SHGs are the building blocks of organisation of the
rural poor. Not only does it help women to become financially self-reliant,
the regular meetings of the group provide a platform to discuss and act on a
variety of social issues such as health, nutrition, domestic violence, etc.
1. SHGs are small groups of people who pool their savings and lend money
to those members who are in urgent need of money.
2. It usually consists of 15–20 members.
3. They charge very low rate of interest the loan.
4. A regular group with some savings is also eligible for availing bank credit.
5. The group decides the nature and purpose of borrowing – generally, it is
to create productive assets, like, sewing machine, repurchase the land,
plough, etc.
6. They create these groups to create self- employment opportunities for
the members.
7. They help the poor to become self-reliant in terms of savings and
generating income as the group members take the decisions regarding
savings.
8. SHGs of women have been a great success in India in making women
economically self-reliant. – it has led to women empowerment in rural
India
9. Not only do they help women become financially self-reliant,
10. The regular meetings of the group provide a platform to discuss and
act on a variety of social issues such as health, nutrition, domestic
violence, etc.
Grameen Bank [PAGE 52]
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Started in 1970s as a small savings bank in Bangladesh
Established by Professor Mohammad Yunus
He was awarded the Nobel Peace Prize in 2006.
Most borrowers are women
Micro credit needs met
For income generating economic activities
Success rate of loan repayment is 92% - 98.00% !
Facts:
 97% of the borrowers were women.
 The Bank has been active in 97% of the villages of Bangladesh.
 And default rates for Grameen fall in the range of 2-8% compared to 6070% for more conventional loans.
 Its success has inspired similar projects in more than 64 countries
around the world, including a World Bank initiative to finance Grameentype schemes.
 Headquarters: Dhaka, Bangladesh
 Operating income: ৳8.514 billion (US$100 milli...
 Net income: US$16 million (2016)
----------------------------------------------------N.B.
New Policy Rates by RBI in Indian Banking (as on December 08, 2021):
 SLR Rate : 18.00%
 CRR : 4.00%
 MSF : 4.25%
 Repo Rate : 4.00%
 Reverse Repo Rate : 3.35%
 Bank Rate : 4.25%
New Lending/ Deposit Rates By RBI (as on December 08, 2021):
 Base Rate : 7.30% - 8.80%
 MCLR (Overnight) : 6.50% - 7.00%
 Savings Deposit Rate : 2.70% - 3.00%
 Term Deposit Rate > 1 Year : 4.90% - 5.50%