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SlideShare utilise les cookies pour améliorer les fonctionnalités et les performances, et également pour vous montrer des publicités pertinentes. Si vous continuez à naviguer sur ce site, vous acceptez l’utilisation de cookies. Consultez notre Politique de confidentialité et nos Conditions d’utilisation pour en savoir plus.
• A current medium of exchange in the
form of coins and banknotes ..
• Item or verifiable record that is generally
accepted as payment for goods and
services and repayment of debts in a
particular country or social-economic context,
or is easily converted to such a form. The main
functions of money are distinguished as
a medium of exchange; a unit of account;
a store of value; and, sometimes, a standard of
deferred payment.Any item or verifiable record
that fulfills these functions can be considered as
Money as a medium of exchange
• The use of money spans a very large part of our
everyday life. Several transactions involving money
are made in any single day.
• Goods are being bought and sold with the use of
• Services are being exchanged with money.
• Goods are also bought with a promise to pay money
• Money is sometimes paid as advance with the
promise of delivery of goods later.
• As the need for a medium of exchange became a
necessity different materials were used as a medium
Problem of double coincidence of wants
• In the olden days, when modern currency was not
in vogue, people had to sell and buy each others
commodities. This was called the barter system.
For instance if a shoe manufacturer wants to buy
wheat, he has to find a farmer who wants to buy
his shoes in exchange for the wheat.
• Both parties have to agree to sell and buy each
others commodities. This is known as double
coincidence of wants.
• In a barter system where goods are directly
exchanged without the use of money, double
coincidence of wants is an essential feature.
• A barter system is an old method of exchange.
• The system has been used for centuries and long
before money was invented.
• People exchanged services and goods for other
services and goods in return.
Different countries different currencies
i) USA - dollar
ii) Britain – Pound Sterling
iii) Canada – Canadian dollar
iv) Singapore – Singapore dollar
USA - dollar
Britain – Pound Sterling
Canada – Canadian dollar
Singapore – Singapore dollar
v) China – Chinese Yuan renminbi
vi) Japan – Japanese yen
vii) Australia – Australian dollar
viii) Sri Lanka - Sri Lankan rupee.
China – Chinese Yuan renminbi
Japan – Japanese yen
Australia – Australian dollar
Sri Lanka - Sri Lankan rupee.
Deposits money in Banks
• People need only some currency for their day-to-day needs.
• people deposit the extra money with the banks by opening
a bank account in their name.
• Banks accept the deposits and also pay an interest rate on
the deposits. In this way people’s money is safe with the
banks and it earns an interest.
• People also have the provision to withdraw the money as
and when they require. Since the deposits in the bank
accounts can be withdrawn on demand, these deposits are
called demand deposits.
Cheque• A deposit in a Bank offers the customer the facility of
• A cheque is 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 made.
• The recipient of the cheque can deposit it in his own
account in his bank.
• The money is transferred from one bank account to
another bank account in a couple of days.
• The transaction is complete without any payment of
• This is a safe mode of transferring money avoiding
the possibility of any theft.
• a loan is the lending of money from one individual,
organization or entity to another individual,
organization or entity. A loan is a debt provided by
an entity (organization or individual) to another
entity at an interest rate, and evidenced by
a promissory note which specifies, among other
things, the principal amount of money borrowed,
the interest rate the lender is charging, and date of
repayment. A loan entails the reallocation of the
subject asset(s) for a period of time, between
the lender and the borrower.
Loan Activities of Banks
• Banks keep a small proportion of their deposits as
cash with themselves to pay the depositors who might
come to withdraw money from the bank on any given
• Banks use the major portion of the deposits to extend
• In this way, banks mediate between those who have
surplus funds (the depositors) those who are in need
of these funds (the borrowers).
• Banks charge a higher interest rate on loans than what
they offer on deposits.
• The difference between what is charged from
borrowers and what is paid to depositors is their main
source of income. Coupon Accepted Successfully!
• In addition to the interest , lenders may demand collateral
(security) against loans.
• Collateral is an asset that the borrower owns (such as land,
building, vehicle, livestock’s, deposits with banks) and uses
this 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
A small farmer borrows money from an
The rate of interest is 36 % per annum.
The trader supplies farm inputs like seeds and
In addition to the interest and capital the
farmer has to sell his crops only to the trader.
The farmer has to accept the price offered by
The trader not only gets a interest for his loan,
but also earns a huge profit from selling the
crop at a very high price.
A farmer borrows money from a bank
The rate of interest is 8.5 % per annum.
The loan can be repaid anytime in the next
The farmer plans to repay the loan after
harvest by selling a part of the crop.
The farmer will then store the rest of the
potatoes in a cold storage and sell it when the
price is high.
The farmer can apply for a fresh loan from the
bank against the cold storage receipt. The
bank offers this facility to
An agricultural laborer borrows money from her employer to meet the expenses for sudden
illness in the family.
The rate of interest is 60 % per annum
The laborers has to repay her loan by working for the employer.
The employer does not treat the laborer well
Employers are the only source of credit for the landless agricultural laborers.
The working of Cooperatives and people
take loans from Cooperatives.
• Besides banks, the other major source of cheap credit in
rural areas is the cooperative societies (or cooperatives).
• Members of a cooperative pool their resources for
cooperation in certain areas. There are several types of
• Farmers cooperatives .Weavers cooperatives . Industrial
the example of Krishak Cooperative.
• Krishak Cooperative functions in a village not very far
away from Sonpur.
• It has 2300 farmers as members.
• The Cooperative accepts deposits from its
• Using the deposit as collateral, the Cooperative
obtains a large loan from the bank. The loan
amount received from the bank is used as funds to
provide loans to the members.
• Once the members repay the loans the amount is
repaid to the bank and a fresh loan is taken from
• The Cooperative provides loans to its members 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.
• In recent years, people have tried out some newer ways of providing
loans to the poor. The idea is to organize rural poor, in particular women,
into small Self Help Groups (SHGs) and pool (collect) their savings.
• A typical SHG has 15-20 members, usually belonging to one
neighborhood, who meet and save regularly.
• Saving per member varies from Rs. 25 to Rs. 100 or more.
• 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.
• SHGs help borrowers overcome the problem of lack of collateral.
• They can get timely loans.
• SHGs are the building blocks of organization of the rural
Grameen Bank of Bangladesh
• Grameen Bank of Bangladesh is one of the biggest success
stories in reaching the poor to meet their credit needs at
• Started in the 1970s as a small project, now has over 6
million borrowers in about 40,000 villages spread across
• Almost all of the borrowers are women and belong to
poorest sections of the society.
• These borrowers have proved that not only are poor women
reliable borrowers, but that they can start and run a variety
of small income-generating activities successfully.
• Professor Muhammad Yunus was the founder of Grameen
Bank ,and recipient of 2006 Nobel Prize for peace.
• It is a situation in which a
person takes a loan and due
circumstances he is not able
to repay his loan.
• Now faces a difficult
situation and has to take
a tough decision , either
he has to borrow a fresh
loan or sell some part of his
property to repay the earlier
Chit fund• Chit fund mean a fund set up for collection of
small savings of the people who earn on daily
basic like chaiwala, panwala etc .
• These people can save rupees10 and rupees 100
on daily basis and deposit in the fund .
• The money collected in invested in the shares or
debentures of the companies or in the
government bonds the return earned on these
investment paid back to the investors after
deducting the administrative charges of
managing the funds .
Debit and Credit cards are called Plastic money