Introduction
Banks, credit systems, formal vs informal lending, Self-Help Groups.
1
Money and Banking
Banks: deposits(lower interest) + loans(higher interest). Formal: banks, cooperatives(regulated by RBI). Informal: moneylenders(unregulated, high interest). Collateral: asset pledged for loan. SHGs: 15-20 members pool savings, give small loans (Grameen Bank model).
Key Points
- •Banks regulated by RBI
- •Formal: lower interest, regulated
- •Informal: high interest, exploitative
- •Collateral: security for loans
- •SHGs: pooled savings for rural poor
Quick Summary
- ✓Banks: regulated by RBI
- ✓Formal vs informal credit
- ✓SHGs reduce rural dependence on moneylenders
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