CBSE Class 10 Economics Chapter 3 Notes - Money and Credit

If you go through the Class 10 Economics Chapter 3 Notes, you will find that money is termed as the medium of exchange for it operates as an intermediate in the exchange procedure.  A person can easily exchange money for any goods or services.

The Modern Form of Money

If you download the Money And Credit Class 10 Notes PDF you will come to know that grains and cattle were used as a mode of exchange by the Indians in the early ages. After that period, various metallic coins such as gold, silver, copper came into existence as the medium of exchange. In the present day, the modern form of money is circulated as currency-paper notes and coins. The present forms of money are directly related to the present banking system.

Currency

The currency notes are issued by the Reserve Bank of India on behalf of the Central Government. No other agencies are permitted to issue currency. The most used currency in India is Rupee.

Deposits in Banks

You will find another form of money in the notes of Economics Class 10 Chapter 3 which is called deposits in banks. The extra cash can be deposited in the banks by opening an account in the banks. Those deposits are accepted by the banks by paying an extra amount as interest. The deposits can be withdrawn as per demand and these are termed as demand deposits. The payment of demand deposits is made with a cheque. The piece of paper indicating the bank to pay a certain quantum from the account of the person to the person in whose name the cheque has been issued is called a cheque.

Activities Related to Loan

Loan activity is one of the most significant topics in the Ch 3 Economics Class 10. In the present day scenario, almost 15% of the deposits are held by the banks as cash. This amount is kept in view of paying the individuals who come to withdraw money from the bank on a certain day. A greater part of the deposits is used to extend loans. Loans are required for different economic activities. A greater rate of interest is charged by the banks on loans. The basic source of revenue of the bank accounts to the difference between the amounts charged from borrowers and the actual payment to the depositors.

Credit

Class 10 Economics Chapter 3 describes the meaning of the term credit. An agreement in which the lender gives money, commodities or services to the borrower in return for the guarantee of future payment is termed as credit.

Terms of Credit

If you study the Money and Credit Class 10 Notes thoroughly, you will come to know about the terms of credit. There exists an interest rate of each loan agreement. The borrower should pay to the lender along with the repayment of the principal amount in that particular interest rate. The collateral (security) is also demanded by the lenders.

The asset of the borrower (land, building, vehicle, deposits, livestock with the banks) is known as collateral (security). The collateral is used as a promise to the lender until the borrower repays the loan. The asset or collateral can be sold by the lender to get the payment if the borrower fails to pay back the loan.

In Money and Credit Class 10 notes, terms of credit refer to the interest rate, collateral and documentation needed and the mode of payback. If you go through the Class 10 Economics Chapter 3 Notes you will find that the terms of credit may alter according to the nature of the lender and the borrower.

Do You Know?

Ch 3 Economics Class 10 will tell you that the development of a country depends upon the affordability and availability of credit. The different types of loans are as follows:

• Formal Sector Loans: Loans from banks and cooperatives are called formal sector loans. These are monitored by the Reserve Bank of India.

• Informal Sector Loans: Loans from moneylenders, traders, relatives are called informal sector loans. This type of loan is monitored by none.