Money and Credit notes sst

BARTER SYSTEM

A system in which goods are directly exchanged without use of money.Here both

parties agree

to sell and buy each other's commodity.

This is known as double

coincidence of wants .

Modern forms of money

Money is something that can act as a medium of exchange in transactions.

# CURRENCY : fCbse 20197 °

Currency is a generally accepted form of money , including coins and paper notes.

° In India, Reserve Bank of India (RBI) issues currency notes on behalf of the

central government .

° The law legalises the use of '

rupee '

F) as a medium of payment that cannot

be refused in setting transactions in India .

° Therefore ,

the '

rupee '

Fl is widely accepted as a medium of exchange.

# DEPOSITS WITH BANKS :

° Banks -

other form in which people hold money.

°

Money deposited in Banks is safe with the bank and people also get interest

on the deposited amount.

° The deposits in the bank accounts can be withdrawn on demand . Hence,

these

deposits are also called demand deposits .

# CHEQUE FACILITY :

A cheque is a paper instructing the bank to pay a specific amount from the

person 's account the person in whose name the cheque has been issued.

Facility of cheque ,

make it possible to settle payments directly without use of

cash .

Modern Banking system

o Banks mediate between those who have extra funds (the depositors) and those

who are in need of those fund (the borrowers).

o Bank charge a higher interest rate on loans than what they offer on deposits . This

difference between interest is banks main source of income.

° In India only 15% of deposit Ps kept with the bank itself ,

the rest is given out as

loans.

CREDIT

credit (loans) refers to an argument in which the lender supplies the borrower with

money , goods or service in return for the promise of future payment.

oans are both good and bad , in one situation it can increase a person 's earnings Yon other situation ,

it may push the person into debt trap .