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Money and Credit

NCERT Class 10 · Social Science Based on NCERT Class 10 Social Science textbook · Free CBSE study kit

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Chapter Notes

Overview
This chapter explains the concept of money, its modern forms, and the crucial role of credit in economic activities. It explores how money acts as a medium of exchange, the functioning of banks in accepting deposits and providing loans, and the various sources of credit—both formal and informal. The one big idea a student must walk away with is that while credit can be a powerful tool for growth, its terms and risks determine whether it helps a borrower prosper or pushes them into a debt trap, and that access to cheap and affordable credit is essential for a country's development.
Key Concepts (15)
Double coincidence of wants
A situation in a barter system where what a person desires to sell is exactly what the other wishes to buy, and both parties have to agree to sell and buy each other's commodities.
e.g. A shoe manufacturer wants to buy wheat but must find a wheat farmer who also wants to buy shoes; otherwise, the exchange cannot happen.
Medium of exchange
Money acts as an intermediate in the exchange process, eliminating the need for double coincidence of wants. A person holding money can easily exchange it for any commodity or service.
e.g. A shoe manufacturer sells shoes for money, then uses that money to buy wheat from any farmer.
Currency
Modern form of money consisting of paper notes and coins, authorised by the government of the country. In India, the Reserve Bank of India issues currency notes on behalf of the central government.
e.g. A 10 rupee note or a 500 rupee note used for daily transactions.
Demand deposits
Deposits in bank accounts that can be withdrawn on demand by the depositor. They share the essential features of money and, along with currency, constitute money in the modern economy.
e.g. Money kept in a savings account that can be withdrawn anytime via an ATM or cheque.
Cheque
A paper instructing the bank to pay a specific amount from the person's account to the person in whose name the cheque has been issued.
e.g. M. Salim writes a cheque for Rs 10,000 to his leather supplier; the supplier deposits it in his bank, and the money is transferred without cash.
Credit (loan)
An agreement in which the lender supplies the borrower with money, goods, or services in return for the promise of future payment.
e.g. Salim takes a loan from a trader as advance payment for shoes, promising to deliver the order later.
Terms of credit
The conditions of a loan agreement, including interest rate, collateral, documentation requirement, and mode of repayment. These vary substantially from one credit arrangement to another.
e.g. Megha's housing loan has a 12% annual interest rate, requires employment documents, uses the house as collateral, and is repaid in monthly instalments over 10 years.
Collateral
An asset that the borrower owns (such as land, building, vehicle, livestock, deposits with banks) and uses as a guarantee to a lender until the loan is repaid. If the borrower fails to repay, the lender has the right to sell the asset.
e.g. Megha's new house papers are kept by the bank as collateral for her housing loan.
Debt trap
A situation where a borrower is unable to repay a loan, leading to increasing debt over time, often forcing them to sell assets or take fresh loans to cover old ones.
e.g. Swapna, a small farmer, could not repay her loan due to crop failure; her debt grew, and she had to sell part of her land to pay it off.
Formal sector credit
Loans from banks and cooperatives that are supervised by the Reserve Bank of India. They have regulated interest rates and require proper documentation and collateral.
e.g. Arun receives a bank loan for cultivation at 8.5% per annum, repayable in three years.
Informal sector credit
Loans from moneylenders, traders, employers, relatives, and friends. These lenders are not supervised by any organisation and often charge very high interest rates.
e.g. Shyamal borrows from a village moneylender at 5% per month (60% per annum).
Self Help Groups (SHGs)
Small groups of 15-20 rural poor, usually women, who pool their savings and provide small loans to members at reasonable interest rates. After regular savings, the group becomes eligible for bank loans.
e.g. A women's SHG in Gujarat meets regularly, saves Rs 25-100 per member, and provides loans for buying sewing machines or cattle.
Demonetisation
The act of declaring certain currency notes invalid and replacing them with new currency. In India, in November 2016, Rs 500 and Rs 1,000 notes were demonetised.
e.g. People had to surrender old Rs 500 and Rs 1,000 notes to banks and receive new Rs 500, Rs 2,000, or other notes.
Reserve Bank of India (RBI)
The central bank of India that issues currency notes on behalf of the central government and supervises the functioning of formal sources of loans.
e.g. RBI monitors banks to ensure they maintain a minimum cash balance and lend to small cultivators and small-scale industries.
Grameen Bank
A bank in Bangladesh started in the 1970s that provides credit to the poor, especially women, at reasonable rates. It is a major success story in microfinance.
e.g. By 2018, Grameen Bank had over 9 million members in about 81,600 villages, mostly poor women running small income-generating activities.
How It Works
How money solves the problem of double coincidence of wants
  1. A person sells their goods or services for money.
  2. The person now holds money, which is universally accepted as a medium of exchange.
  3. The person uses that money to buy any other commodity or service they want from anyone.
  4. No need to find a trading partner who wants exactly what they are selling.
💡 Money acts as an intermediate step; it eliminates the need for both parties to want each other's goods simultaneously.
How banks mediate between depositors and borrowers
  1. People deposit their surplus cash with banks by opening accounts; banks pay interest on these deposits.
  2. Banks keep only a small proportion (about 5%) of deposits as cash to meet withdrawal demands.
  3. Banks use the major portion of deposits to extend loans to borrowers who need funds.
  4. Banks charge a higher interest rate on loans than what they offer on deposits; the difference is their main source of income.
💡 Banks act as intermediaries between those with surplus funds (depositors) and those in need of funds (borrowers).
How a cheque payment works
  1. The payer (e.g., M. Salim) writes a cheque for a specific amount, instructing his bank to pay that amount to the payee (e.g., leather supplier).
  2. The payee deposits the cheque in their own bank account.
  3. The money is transferred from the payer's bank account to the payee's bank account in a couple of days.
  4. The transaction is complete without any payment of cash.
💡 A cheque is not money itself; it is an instruction to the bank to transfer money from one account to another.
How Self Help Groups (SHGs) provide credit to the poor
  1. Rural poor, especially women, are organised into small groups of 15-20 members from the same neighbourhood.
  2. Members meet regularly and save small amounts (Rs 25 to Rs 100 or more per member).
  3. Members can take small loans from the group's pooled savings for various needs, at interest rates lower than moneylenders.
  4. After a year or two of regular savings, the group becomes eligible for a bank loan, which is sanctioned in the group's name.
  5. The group decides on loan purposes, amounts, interest, and repayment schedules; the group is responsible for repayment.
  6. Loans are used for self-employment activities like buying seeds, sewing machines, cattle, etc.
💡 SHGs solve the problem of lack of collateral; banks are willing to lend to groups because peer pressure ensures repayment.
Exam Traps — Don't Make These Mistakes
⚠ Confusing 'currency' with 'money'
✗ Money is only currency (paper notes and coins).
→ Money includes both currency and demand deposits with banks. Demand deposits, which can be withdrawn on demand and used via cheques, are also a form of money.
✓ Modern forms of money include currency (paper notes and coins) and demand deposits with banks.
⚠ Thinking cheques are money
✗ A cheque is a form of money.
→ A cheque is not money; it is a paper instrument that instructs the bank to transfer money from one account to another. The actual money is the demand deposit.
✓ A cheque is a facility that allows payment without cash, but it is not money itself. Demand deposits are money.
⚠ Misunderstanding 'double coincidence of wants'
✗ Double coincidence of wants means both parties have money.
→ Double coincidence of wants is a feature of the barter system, where goods are directly exchanged. It means that what one person wants to sell is exactly what the other wants to buy, and vice versa.
✓ Double coincidence of wants is the situation in a barter system where both parties must agree to sell and buy each other's commodities simultaneously.
⚠ Confusing formal and informal sources of credit
✗ Moneylenders are part of the formal sector because they give loans.
→ Formal sector credit includes only banks and cooperatives, which are supervised by the RBI. Moneylenders, traders, employers, and relatives are part of the informal sector, which is not supervised.
✓ Formal sources: banks and cooperatives (supervised by RBI). Informal sources: moneylenders, traders, employers, relatives, and friends (not supervised).
⚠ Thinking collateral is always required for loans
✗ All loans require collateral.
→ Informal lenders often give loans without collateral because they know the borrower personally. Also, SHGs provide loans without collateral because the group guarantees repayment.
✓ Formal sector loans usually require collateral, but informal lenders and SHGs often provide loans without collateral.
⚠ Believing credit always helps the borrower
✗ Credit always improves the borrower's financial situation.
→ Credit can be positive (e.g., Salim's case) or negative (e.g., Swapna's case). If the borrower faces risks like crop failure, credit can lead to a debt trap.
✓ Whether credit is useful depends on the risks in the situation and whether there is support in case of loss. It can increase earnings or push the borrower into a debt trap.
Compare & Contrast
Supervision and regulation
Formal sector credit
Informal sector credit
Formal sector (banks and cooperatives) is supervised by the Reserve Bank of India, which monitors lending practices, interest rates, and cash reserves. Informal sector (moneylenders, traders, etc.) has no supervising organisation, so lenders can charge any interest rate and use unfair means to recover money.
Medium of exchange
Barter system
Money-based economy
In the barter system, goods are directly exchanged without money, requiring double coincidence of wants. In a money-based economy, money acts as a medium of exchange, eliminating the need for double coincidence of wants; a person can sell goods for money and then use that money to buy anything.
Exam Focus
Marks pattern: This chapter typically appears in board exams with 2-3 MCQs (1 mark each), 1-2 Short Answer questions (3 marks each), and 1 Long Answer question (5 marks). Total weightage: approximately 8-10 marks.
Most asked: Double coincidence of wants and how money solves it · Modern forms of money (currency and demand deposits) · Role of banks in credit creation (deposits and loans) · Terms of credit (interest rate, collateral, documentation) · Formal vs informal sources of credit · Self Help Groups (SHGs) and their importance · Debt trap and its causes
Don't skip: Explain the role of banks in mediating between depositors and borrowers (3 or 5 marks).; Differentiate between formal and informal sources of credit with examples (3 marks).; What are Self Help Groups? How do they help the poor? (5 marks).; Explain the concept of double coincidence of wants and how money solves it (3 marks).; Analyse the role of credit for development (5 marks).
One-Line Revision (read aloud before the exam)
  1. Money acts as a medium of exchange, eliminating the need for double coincidence of wants in a barter system.
  2. Modern forms of money include currency (paper notes and coins) and demand deposits with banks.
  3. Currency is authorised by the government; in India, the Reserve Bank of India issues currency notes on behalf of the central government.
  4. Demand deposits are bank deposits that can be withdrawn on demand and are considered money because they can be used for payments via cheques.
  5. A cheque is a paper instructing the bank to pay a specific amount from the payer's account to the payee's account.
  6. Banks keep only a small proportion (about 5%) of deposits as cash and use the rest to extend loans, charging higher interest on loans than on deposits.
  7. Credit (loan) is an agreement where the lender supplies money, goods, or services in return for a promise of future payment.
  8. Terms of credit include interest rate, collateral, documentation, and mode of repayment.
  9. Collateral is an asset owned by the borrower that the lender can sell if the loan is not repaid.
  10. A debt trap occurs when a borrower cannot repay a loan, leading to increasing debt and often forcing the sale of assets.
  11. Formal sector credit comes from banks and cooperatives, supervised by the RBI; informal sector credit comes from moneylenders, traders, employers, etc., with no supervision.
  12. Informal lenders charge much higher interest rates than formal lenders, making credit expensive for the poor.
  13. Self Help Groups (SHGs) are small groups of 15-20 rural poor, usually women, who save regularly and provide small loans to members at reasonable rates.
  14. SHGs help borrowers overcome the problem of lack of collateral and become eligible for bank loans after regular savings.
  15. Cheap and affordable credit is crucial for a country's development as it allows people to invest in agriculture, business, and small-scale industries.
  16. Demonetisation in India (November 2016) invalidated Rs 500 and Rs 1,000 notes to promote digital transactions and reduce corruption.

MCQs — 10 Questions with Answers

Q1. In November 2016, the Indian government declared Rs. 500 and Rs. 1,000 notes invalid and asked citizens to deposit them in banks. This policy is known as demonetisation. Which of the following was a PRIMARY economic objective of this policy?

  • A. To reduce cash transactions and promote digital payments while controlling corruption ✓
  • B. To completely eliminate the use of currency notes in India
  • C. To increase the value of new currency notes in circulation
  • D. To prevent citizens from using banks for any transactions

Answer: A — Demonetisation aimed to reduce cash-based informal economy and encourage digital transactions; eliminating notes entirely (B), increasing note value (C), and preventing bank use (D) were not objectives.

Q2. A shoe manufacturer wants to sell shoes and buy wheat from a farmer. Without money, the manufacturer would need to find a farmer who has wheat AND wants shoes in exchange. This problem is known as: A) Double coincidence of wants B) Medium of exchange failure C) Barter system advantage D) Currency inflation

  • A. Double coincidence of wants ✓
  • B. Medium of exchange failure
  • C. Barter system advantage
  • D. Currency inflation

Answer: A — Double coincidence of wants is the exact requirement in barter systems where both parties must want what the other has; money eliminates this need, not fails because of it.

Q3. Assertion (A): Digital payment methods like UPI, credit cards, and cheques are forms of money. Reason (R): These methods allow people to exchange value without using physical currency notes. Choose the correct option:

  • A. Both A and R are true and R is the correct explanation of A
  • B. Both A and R are true but R is not the correct explanation of A
  • C. A is true but R is false
  • D. A is false but R is true ✓

Answer: D — Digital payment methods represent claims on money held in bank accounts (demand deposits), not money itself; R is correct because they do exchange value without physical currency, but A is false because these are payment instruments, not money per se.

Q4. A village shopkeeper gives credit to a farmer to buy seeds now, with repayment expected after harvest. Which aspect of credit is MOST important for the shopkeeper to evaluate before lending? A) The farmer's income and ability to repay B) The amount of land the farmer owns C) The number of family members the farmer has D) The colour of the farmer's house

  • A. The farmer's income and ability to repay ✓
  • B. The amount of land the farmer owns
  • C. The number of family members the farmer has
  • D. The colour of the farmer's house

Answer: A — Ability to repay based on income is the fundamental criterion in any credit arrangement; other factors are irrelevant to creditworthiness.

Q5. "The stock of money in the economy consists of currency held by the public and demand deposits that they hold with banks." Based on this statement, which of the following is included in the money stock? A) Currency in banks' vaults and savings deposits B) Currency in public hands and demand deposits in banks C) Only physical coins and notes in circulation D) Only money deposited in fixed-term accounts

  • A. Currency in banks' vaults and savings deposits
  • B. Currency in public hands and demand deposits in banks ✓
  • C. Only physical coins and notes in circulation
  • D. Only money deposited in fixed-term accounts

Answer: B — Money stock includes currency held by people (not in banks) and demand deposits (which they can withdraw immediately); savings accounts are not demand deposits, and fixed-term deposits lack liquidity.

Q6. Assertion (A): In a barter economy, a teacher who wants wheat must find a farmer willing to give wheat and accept teaching services in return. Reason (R): Money eliminates the need for double coincidence of wants by serving as an intermediate medium of exchange. Choose the correct option:

  • A. Both A and R are true and R is the correct explanation of A ✓
  • B. Both A and R are true but R is not the correct explanation of A
  • C. A is true but R is false
  • D. A is false but R is true

Answer: A — Both A and R are true; R correctly explains A because money solves the exact problem described in A by acting as an intermediary.

Q7. A government introduces a new digital payment system through UPI (Unified Payments Interface) to encourage cashless transactions. Which of the following best explains why this is promoted alongside maintaining some currency in circulation? A) Digital payments reduce corruption and informal economy, while currency remains necessary for those without bank access B) Digital payments are illegal, so currency must remain the only form of money C) Currency notes are always more valuable than digital money D) Digital transactions are impossible in rural areas, so cash is the only option

  • A. Digital payments reduce corruption and informal economy, while currency remains necessary for those without bank access ✓
  • B. Digital payments are illegal, so currency must remain the only form of money
  • C. Currency notes are always more valuable than digital money
  • D. Digital transactions are impossible in rural areas, so cash is the only option

Answer: A — Both digital and cash systems serve different needs—digital reduces corruption and informal transactions while currency ensures financial inclusion; B, C, and D contradict the chapter's message about promoting digital while maintaining accessibility.

Q8. "Before metallic coins, Indians used grains and cattle as money." Which characteristic of these objects made them suitable as money in early economies? A) They had intrinsic value and were universally needed and accepted B) They had high monetary value printed on them C) They could be stored indefinitely without any loss of value D) They were only accepted by wealthy merchants

  • A. They had intrinsic value and were universally needed and accepted ✓
  • B. They had high monetary value printed on them
  • C. They could be stored indefinitely without any loss of value
  • D. They were only accepted by wealthy merchants

Answer: A — Grains and cattle were used as money because they had intrinsic value (people actually needed them for food/farming) and were universally accepted as payment; option B is anachronistic (no printed values existed), C is false (both can perish), and D contradicts universal acceptance.

Q9. Assertion (A): Self-help groups and innovations like Grameen Bank provide credit to poor people who lack access to formal banking institutions. Reason (R): The availability of credit on reasonable terms to all sections of society, especially the poor, is essential for their participation in the development process. Choose the correct option:

  • A. Both A and R are true and R is the correct explanation of A
  • B. Both A and R are true but R is not the correct explanation of A ✓
  • C. A is true but R is false
  • D. A is false but R is true

Answer: B — Both A and R are true statements, but R does not explain why self-help groups and Grameen Bank exist; rather, R provides the justification for why credit access matters, while A describes what these institutions do.

Q10. A Point of Sale (POS) swipe machine at a retail shop processes a customer's credit card payment. According to the chapter's framework, this transaction represents: A) The credit card itself as money being transferred B) A digital payment method reducing the need for physical currency C) An illegal transaction that government discourages D) A direct barter exchange between the shop and customer

  • A. The credit card itself as money being transferred
  • B. A digital payment method reducing the need for physical currency ✓
  • C. An illegal transaction that government discourages
  • D. A direct barter exchange between the shop and customer

Answer: B — POS transactions enable digital payments without cash, though credit cards are not money themselves but payment instruments; they are legal and encouraged, not barter.

Flashcards

What is the double coincidence of wants?

When both parties in a trade must want exactly what the other is selling — a problem solved by money.

Why is modern currency accepted as money?

Because it is authorized and issued by the government, which legally guarantees its use as a medium of exchange.

Who issues currency in India?

The Reserve Bank of India (RBI) issues currency notes on behalf of the central government.

What is demonetisation?

When the government declares certain currency notes invalid and replaces them with new notes (e.g., India 2016).

Are credit cards the same as money?

No — credit cards are not money; they access bank deposits and must be repaid, unlike currency.

What is the main advantage of using money over barter?

Money eliminates the need for double coincidence of wants and makes transactions faster and easier.

Name three forms of digital transaction.

ATM cards, online bank transfers, cheques, UPI (QR code payments), and Point of Sale (POS) machines.

What are bank deposits?

Money held by customers in banks that can be withdrawn on demand; they form part of the money supply.

Why did India promote digital payments after demonetisation?

To reduce cash dependency, control corruption, and make transactions transparent and traceable.

What objects were used as money in ancient India?

Grains and cattle were used as money in very early times before metallic coins were introduced.

Important Board Questions

Explain what is meant by 'double coincidence of wants' in a barter system. How does the introduction of money solve this problem? [2 marks]

Define double coincidence as requirement that both parties must want exactly what the other is selling; show how money provides intermediate step allowing separate buying and selling without finding matching partner.

Why is modern currency accepted as a medium of exchange despite having no intrinsic value? Explain with reference to government authorization and legal backing. [3 marks]

Contrast modern currency with grain/cattle/metallic coins (which have intrinsic use); explain that fiat money is accepted solely because government legally authorizes and guarantees its use as legal tender that cannot be refused.

Analyze the impact of demonetisation in India (November 2016) on the economy and society. Discuss how this measure encouraged digital transactions and what benefits and challenges this shift created. [5 marks]

Explain that Rs 500/1000 notes were declared invalid to reduce cash, control corruption, and push digital payments (UPI, cards, transfers); discuss benefits (transparency, traceability, reduced black money) and challenges (digital divide, technical access issues, informal sector disruption, adjustment period for poor).

Assertion-Reason Questions for Money and Credit

Q1. Assertion (A):

Money was introduced to eliminate the problem of double coincidence of wants that existed in the barter system.

Reason (R):

In a barter system, both parties needed to want exactly what the other person had to offer before a transaction could occur.

Answer: A — Both A and R are true, and R is the correct explanation of A — Both the assertion and reason are true, and the reason correctly explains why money was introduced. Money solved the fundamental problem of barter by providing an intermediate medium of exchange, eliminating the need for both parties to have matching desires.

Q2. Assertion (A):

Modern currency is made of precious metals like gold and silver, similar to ancient metallic coins.

Reason (R):

The government authorizes currency notes which have no intrinsic value of their own.

Answer: D — A is false but R is true — The assertion is false because modern currency is NOT made of precious metals, unlike ancient coins. The reason is true but becomes irrelevant since the assertion itself is incorrect. Modern currency is accepted due to government authorization despite having no intrinsic value.

Q3. Assertion (A):

The Reserve Bank of India has the sole authority to issue currency notes in India according to law.

Reason (R):

Any individual or organization in India can issue currency notes if approved by the government.

Answer: C — A is true but R is false — The assertion is true - RBI is the sole authority for issuing currency notes. However, the reason is false because the law specifically states that no other individual or organization is allowed to issue currency, not even with government approval.

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Case-Based Questions (CBQ) for Money and Credit

Case Study:

Rajesh is a small farmer in Punjab who wants to purchase a tractor to increase his agricultural productivity. He needs ₹500,000 but only has ₹100,000 saved. In the past, farmers like him would struggle to find someone willing to directly exchange goods for a tractor. However, with the modern banking system, Rajesh can now borrow money from a bank through a formal loan process. The bank has computerized systems that allow Rajesh to manage his account online and make digital payments for farm supplies. Additionally, due to the push for digitalization after 2016, Rajesh uses a mobile app to transfer money to his suppliers instead of carrying large amounts of cash to the market.

Q1. What problem from the barter system was Rajesh facing before the introduction of modern money and banking?

  • A. He had to pay high taxes
  • B. He needed to find someone who had a tractor and wanted grain in exchange (double coincidence of wants) ✓
  • C. He could not grow crops
  • D. He had no way to save money

Answer: B

Q2. How does Rajesh's access to bank credit support his economic development?

  • A. It allows him to buy a tractor without having all the money upfront ✓
  • B. It eliminates the need for him to repay loans
  • C. It prevents him from becoming a farmer
  • D. It removes all financial risks from farming

Answer: A

Q3. Why is Rajesh's use of digital payments through mobile apps important in the modern economy?

  • A. It eliminates the need for money completely
  • B. It reduces the need to carry large amounts of cash and formalizes transactions ✓
  • C. It prevents banks from functioning
  • D. It makes farming more difficult

Answer: B

Q4. Which aspect of modern banking helps Rajesh manage his finances efficiently?

  • A. Computerized systems allowing online account management ✓
  • B. Grains stored in the bank
  • C. Direct barter with other farmers
  • D. Government control of his money

Answer: A

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Previous Year Questions (PYQ) for Money and Credit

Real CBSE board exam questions from past papers — free to attempt.

CBSE 2026 · Set 31/4/1 · 1 mark

Read the given case and choose the correct option: 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 but midway due to flood, crop fails and her debt increased. Again she has to take loan to manage crops. Suggest Swapna, which of the following sources of loan would be suitable for her.

  • Friends
  • Relatives
  • Moneylenders
  • Banks

CBSE 2026 · Set 31/4/1 · 3 marks

Explain the role of Reserve Bank of India in the Indian economy.

CBSE 2026 · Set 31/4/2 · 1 mark

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 but midway due to flood, crop fails and her debt increased. Again she has to take loan to manage crops. Suggest Swapna, which of the following sources of loan would be suitable for her.

  • Friends
  • Relatives
  • Moneylenders
  • Banks

CBSE 2026 · Set 31/4/2 · 3 marks

Why is credit important for economic development? Explain.

CBSE 2026 · Set 31/5/1 · 1 mark

Read the following case and choose the correct option: Megha has taken a loan of ₹ 5 lakhs from bank to purchase a house. The annual rate on the loan is 12% and loan is to be repaid in 5 years in monthly instalments. The 12% interest charged by the bank to Megha is related to which of the following?

  • Collateral
  • Cost of Credit
  • Duration of Loan
  • Documentation

CBSE 2026 · Set 31/5/1 · 3 marks

Explain the role of Reserve Bank in Indian economy.

CBSE 2026 · Set 31/5/2 · 3 marks

How does Self-Help-Group work in rural areas? Explain.

CBSE 2026 · Set 31/5/3 · 1 mark

Read the following case and choose the correct option: Megha has taken a loan of rupees 5 lakhs from bank to purchase a house. The annual rate on the loan is 12% and loan is to be repaid in 5 years in monthly instalments. The 12% interest charged by the bank to Megha is related to which of the following?

  • Collateral
  • Cost of Credit
  • Duration of Loan
  • Documentation

CBSE 2026 · Set 31/5/3 · 3 marks

Explain the different terms of credit.

CBSE 2025 · Set 31/1/1 · 1 mark

Why does it become difficult for farmers in rural areas to take loans from government banks? Read the following reasons and choose the most appropriate option: I. Lack of collateral II. Complicated procedure III. Higher cost of borrowing IV. Lack of awareness

  • Only I, II and III are correct.
  • Only II, III and IV are correct.
  • Only I, II and IV are correct.
  • Only I, III and IV are correct.

CBSE 2025 · Set 31/1/1 · 1 mark

Which of the following groups in urban India depend on informal sources to meet their credit needs?

  • Poor households
  • Households with few assets
  • Both poor households and households with few assets
  • Both well-off households and households with few assets

CBSE 2025 · Set 31/1/1 · 1 mark

Loans From Cooperatives 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. 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. These funds are used to provide loans to members. Once 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 come under which source of credit?

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Class 10 Social Science Previous Year Questions, Chapter-wise

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