MONEYAND CREDIT MADEBY :- HIMANSHU AHIRWAR X-AMONEY AND CREDITBARTER SYSTEMIt is a system in which goods are exchanged for other goods.LIMITATIONS OF BARTER SYSTEMLack of double coincidence of wantsDifculty of storing value.Difered payments are difcultSome goods are indivisibleMONEYnything which is used as a medium of exchange! store of value and standard of difered payments is called moneyFUNCTIONS OF MONEY"edium of #xchange.Store of valueOLD FORMS OF MONEYMODERN FORMS OF MONEYRESERE BAN! OF INDIADEMAND DE"OSITS - ANOTHER FORM OF MONEYBAN!#S LOAN ACTIITIESCASH RESERE CREDIT$redit%loan&referstoan agreementinwhichthe lendersuppliesthe borrowerwithmoney! goodsorservicesinreturn forthepromiseoffuture payment. $redit%loan&referstoan agreementinwhichthe lendersuppliesthe borrowerwithmoney! goodsorservicesinreturn forthepromiseoffuture payment. TERMS OF CREDIT$ollateral securityDocumentation re'uired(erm of the loan"ode of repayment)ate of interest$ollateral securityDocumentation re'uired(erm of the loan"ode of repayment)ate of interestIM"ORTANCE OF CREDIT FOR FARMERS IN RURAL AREAS*armers need credit to buy seeds! fertiliserspesticides! electricity!e'uipments!etc. (here is a minimum period of three to four months between the time when the farmers buy these inputs and when they sell the crop. *armers usually take crop loans at the beginning of the season and repay the loan after harvest. FORMAL SOURCES OF CREDIT$ommercial +anks! co,operative societies and )egional )ural +anks constitute the formal sector of credit(he )eserve +ank of India supervises the functioning of formal sources of loans.(hey collect low rate of interest.(hey follow some well de-ned rules and proceduresINFORMAL SOURCES OF CREDIT(he informal lenders include moneylenders! traders! employers! relatives and friends! etc. (here is no organisation which supervises the credit activities of lenders in the informal sector.(hey collect high rate of interest(hey do not follow any rules or procedures(he informal lenders include moneylenders! traders! employers! relatives and friends! etc. (here is no organisation which supervises the credit activities of lenders in the informal sector.(hey collect high rate of interest(hey do not follow any rules or proceduresSOURCES OF CREDIT IN RURAL AREAS"oney Lenders ,./01ther informal sources 2 340$o operative Societies 2 560+anks 2 750CREDIT IN URBAN AREAS8oor takes 470 credit from informal sources and only 340 from banks and other formal sources)ich takes more than 9/0 of loans from formal sources So formal sources mostly serve the rich peopleWHY ARE THE BAN!S NOT ADANCIN$ LOANS TO THE "OOR "EO"LE%WHY ARE THE BAN!S NOT ADANCIN$ LOANS TO THE "OOR "EO"LE%8oor people do not have anything to ofer as collateral security+anks are not available in many rural areas+anks do not consider the poor people as credit worthy.8oor and ignorant people -nd it difcult to produce the needed documents.8oor people do not have anything to ofer as collateral security+anks are not available in many rural areas+anks do not consider the poor people as credit worthy.8oor and ignorant people -nd it difcult to produce the needed documents.SELF HEL" $ROU"SELF HEL" $ROU"S:; has 37,5/ members! mostly women of a neighbourhood#ach member contributes some money"embers can get small amounts as loans from the group. )ate of interest is low and it is decided by the members. fter 5 years the group can get loans from the bankIM"ORTANCE OF SH$&"embers can get loans at low rate of interest.(he group will encourage the members to -nd self employment"embers can discuss and act on many social issues such as health! nutrition! domestic violence! etc.+anks will give loans tp S:;s without any collateral"embers can get loans at low rate of interest.(he group will encourage the members to -nd self employment"embers can discuss and act on many social issues such as health! nutrition! domestic violence! etc.+anks will give loans tp S:;s without any collateral