Unit 4 Ch 3 : Money and Credit — Social Studies STD 10 — Question

 

 

i

Comparatively rate of interest charge is lower.

i

Higher rate of interest is charged.

ii

Collateral is must for getting loan from a formal sector.

ii

They are ready to give loans without any collateral too.

iii

RBI supervises them.

iii

There is no organisation to supervise them.

iv

Rich urban households depend on formal sector.

iv

Poor households depend on informal sector.

v

Example: Banks and Cooperatives.

v

Example: Moneylender, traders, friends, retailers, etc.

vi

Organised banking sector is systematic
in its functioning.

vi

Unorganised sector is not so systematic
and often indulges in malpractices to exploit the customers.

vii

Organised financial intermediaries maintain proper books of accounts. Their books of accounts are regularly audited. Their functioning is more transparent.

vii

Unorganised financial intermediaries do not maintain proper books of accounts. They do not charge uniform interest rates.They keep their business affairs confidential.

viii

Formal credit sector usually grants loan for productive purposes like purchase of machinery, agricultural equipments, house, etc.

viii

Informal credit sector usually does not differentiate between loan for productive and unproductive purposes. They easily give loan even for unproductive purpose like loan for family function, for illness, etc.

ix

Here, more documentation is required. It involves many formalities.

ix

It involves less documentation. It involves less formalities. That is why illiterate persons prefer to take loan from this sector.