Telangana SCERT Solution Class VIII (8) Social Studies Chapter 7 Money and Banking.
1.) Can there be any difficulties or disadvantages in keeping money in a bank? Think and write.
Answer
The disadvantage of keeping money in bank are:
- You cannot pay a huge amount of money in cash if you keep your money in the bank.
- Buying things for daily needs like vegetable, fruit, and groceries can’t be paid directly from bank we need cash.
- Travelling in a small place or rural areas people deal in cash and don’t have a bank account.
- Problems may arise while withdrawing amount.
2.) In what ways have cheques made exchange of money more convenient?
Answer
Cheques are widely used for making payments and receiving money in a secured and in a easy manner .When you want to give money to someone, you write a cheque on that person’s name. When you want to send money to someone who lives in a different place, you can send a cheque to them by post. You can also use your cheque to transfer money electronically into the other person’s account through a bank. For business purposes, where money is frequently received and paid, cheques are very important as a medium for transactions. Cheques have become such convenient way of transferring money which creates less trouble than cash.
3.) Only a part of the total deposits is kept as cash in the bank-safe. Why is this so and how does this benefit the bank?
Answer
Only a part of the total deposits is kept as cash in the bank-safe for the daily cash transactions of the bank like the withdrawal.
The banks benefits by lending the remaining amount to their customers on interest this how banks earn profits.
4.) If many loans are written off (that is, borrowers are not required to pay back the money), how will this affect the working of the bank?
Answer
If the loans are written off, the bank cannot perform all the activities like pay interest to its depositors, pay salary to its employees, has to buy and maintain equipment, pay rent and bear all the cost of running a bank which is earned by the profits of loan. So the banks cannot performer properly or may close down as they cannot handle such expenses and if the government writes off the loans, then the government should bear the losses.
5.) Read the paragraphs under the heading ‘Types of Loans’ and answer the following question: What sort of loans are more common in your area?
Answer
The types loans which are common in my areas are
- Agricultural Loan- The farmer of my region take this type of loan to grow their crop.
- SHG Loan- In my region self-help group are formed who support with the loan.
- Housing Loan- People in my place take loan for building their houses.
6.) Suppose, this year, the rainfall is poor and the crop yield is only half as much as was originally expected. Some argue that farmers should be asked to pay back only half the amount they have taken as loans. Others argue that full amount should be repaid, keeping in view the next year’s crop. In your opinion, what should the bank do and why?
Answer
Basically the bank lends money on loan so it can earn profit and it can cover it’s expenses so the bank will try to recover all the amount given loan to the farmer. In my opinion the bank should
- The bank can reduce the amount of interest on the loan and see if the farmer can payoff this will help the bank to recover some of the money.
- As the farmers are unable to repay their loans the bankshould reschedule the repayment procedure as this will help the bank to recover the money lend.
- The banks can ask the Government to repay the loans as the farmer in the region are suffering.
7.) People have to pay a higher interest on loans than the interest they receive on a fixed deposit for the same time-period. Why do you think this is so?
Answer
I think this procedure of paying higher interest on loans than the interest they receive on a fixed deposit for the same time-period happens because as the bank takes risk by giving loans. This interest of the loan covers the expenses of the banks like pay interest to its depositors, pay salary to its employees, has to buy and maintain equipment, pay rent and bear all the cost of running a bank .
8.) Do you feel that the loans taken from SHGs are helpful to the members? How?
Answer
Yes it’s helpful for the member as:
- Loan can be repaid in easy monthly instalments with the help of SHGs.
- Interest rate are paid by this group in case the member face any problem.
- The member of SHG need not ensure the bank with securities.
- The Committee helps the member in case of any financial problem.
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