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I. Chapter Summary

The chapter Money and Credit explores the evolution of money, the modern banking system, and the role of credit in economic activities. It begins with a look at barter system and the need for money as a medium of exchange. The chapter explains how banks function as intermediaries between savers and borrowers, and distinguishes between formal and informal credit sources, their interest rates, and their impact on borrowers. It also introduces the idea of collateral, terms of credit, and discusses how credit can both enhance and harm borrowers depending on circumstances.

II. Key Concepts Covered

Key Concept	Explanation
Barter System	Exchange of goods without money; required double coincidence of wants.
Money as Medium of Exchange	Solves limitations of barter by acting as an accepted medium.
Modern Forms of Money	Includes paper currency and digital bank money; issued by RBI.
Credit	Loan given with the promise of future repayment with interest.
Terms of Credit	Conditions like interest rate, duration, repayment schedule, collateral.
Formal Credit Sources	Includes banks and cooperatives; regulated by RBI.
Informal Credit Sources	Moneylenders, traders, relatives; often unregulated and exploitative.
Collateral	Asset pledged as security for a loan.
Self Help Groups (SHGs)	Groups promoting financial inclusion for women and rural poor.

III. Important Questions

(A) Multiple Choice Questions (1 Mark)

1. Which of the following is a modern form of money?
   • a) Barter
   • b) Grains
   • c) Cheques
   • d) Livestock
2. Who issues the currency notes in India?
   • a) State Bank of India
   • b) Ministry of Finance
   • c) Reserve Bank of India
   • d) Government of India
3. Which one is a formal source of credit?
   • a) Relatives
   • b) Friends
   • c) Banks
   • d) Moneylenders
4. The requirement of a ‘double coincidence of wants’ is related to:
   • a) Modern banking
   • b) Barter system
   • c) Digital payments
   • d) Plastic money

(B) Short Answer Questions (2/3 Marks)

1. What is collateral? Why is it important in credit arrangements? (PYQ – 2019)
2. Explain how money solves the problem of the barter system. (PYQ – 2020)
3. Mention two differences between formal and informal sources of credit.
4. How do SHGs help in improving the condition of rural women?

(C) Long Answer Questions (5 Marks)

1. How does credit play a vital and contradictory role in development? Explain with examples. (PYQ – 2021)
2. Compare formal and informal sources of credit on the basis of interest rate, regulation, and accessibility.
3. What are the main functions of a bank in the modern economy?
4. Explain the process of loan sanction and repayment in the formal sector.

(D) HOTS (Higher Order Thinking Skills)

1. Raju borrows from a moneylender at 5% per month, while Sunita borrows from a bank at 12% per annum. Who is in a better situation and why?
2. Suppose formal credit was not available in rural India. What would be the likely economic consequences?

IV. Key Formulas/Concepts

• Interest Calculation (Simple Interest):

SI=P×R×T100text{SI} = frac{P times R times T}{100}SI=100P×R×T​

where P = Principal, R = Rate, T = Time

• Collateral: An asset pledged by the borrower to the lender until the loan is repaid.
• Terms of Credit: Conditions attached to a loan including interest rate, collateral, duration, and repayment.

V. Deleted Portions (CBSE 2025–2026)

 No portions have been deleted from this chapter as per the rationalized NCERT textbooks (2025–26).

VI. Chapter-Wise Marks Bifurcation (Estimated – CBSE 2025–2026)

Unit/Chapter	Estimated Marks	Type of Questions Typically Asked
Money and Credit	6–8 marks	MCQs, Short Answer, Long Answer, HOTS

VII. Previous Year Questions (PYQs)

Year	Marks	Question
2019	3	What is collateral? Why do lenders ask for it?
2020	2	How does money solve the problem of barter?
2021	5	How can credit be both helpful and harmful? Explain with examples.

VIII. Real-World Application Examples to Connect with Topics

• Digital Payments: Growth of UPI, mobile wallets, and banking apps replacing cash.
• SHGs and Microfinance: Rural women now running small businesses through collective loans.
• Loan Waivers & Farm Credit: Political and social debates about rural credit and debt.
• Credit Cards and EMIs: Urban youth accessing goods through credit-based consumption.

IX. Student Tips & Strategies for Success

 Time Management

• Focus 15 minutes each on Money, Credit, SHGs, and comparison of sources.
• Use flashcards for definitions and differences.

 Exam Preparation

• Practice diagrams (e.g., credit cycle flowchart, formal vs informal comparison table).
• Frame answers using examples (e.g., Salim’s vs Swapna’s story from the book).

 Stress Management

• Watch financial literacy videos on RBI, banks, or digital finance.
• Practice peer teaching: explain the topic to a friend or sibling.

X. Career Guidance & Exploration (Class-Specific)

For Classes 9–10

Streams Overview:

• Science: FinTech innovations, economics modeling
• Commerce: Banking, finance, microeconomics
• Arts: Rural development, sociology, policy analysis

Career Paths:

• Banking Professional
• Financial Advisor / Loan Officer
• Rural Credit Analyst
• Economist / Policy Consultant

Relevant Programs:

• NTSE
• CBSE Expression Series on Financial Literacy
• Financial Quiz Competitions & Olympiads

XI. Important Notes

•  Money is not just a medium of exchange, it’s also a measure of trust.
•  Understand the “terms of credit” well—they are commonly tested in board exams.
•  Revise the real-life examples like Swapna’s and Salim’s story to strengthen conceptual memory.