Page 77 - Understanding Economics for Class 10

 These loans support activities such as releasing mortgaged land, meeting working capital
needs, acquiring housing materials, and obtaining assets.
 Group members make important decisions regarding savings and loans, including loan
purposes, amounts, interest rates, and repayment schedules.
Goyal Brothers Prakashan
 Banks are willing to lend to organize SHGs, even without collateral, due to the group's
accountability and responsibility.
 This approach empowers the poor, particularly women, by providing access to credit and
promoting self-sufficiency through savings, collective decision-making, and mutual support.
 Therefore, problem of lack of collateral is overcome by creating SHGs. At a very reasonable
rate of interest, borrowers can get timely loans for a variety of purposes.
 Hence, SHGs are referred as the building blocks of organisation of the rural poor.
 Besides providing help in making women financially independent, regular meetings of the
group provides a platform to discuss and act on a variety of social issues such as health,
nutrition, domestic violence, etc.

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 reasonable rates.
 It started as a small project in 1970s. In 2018, Grameen Bank had over 9 million members
in about 81,600 villages spread across Bangladesh.
 Borrowers mainly consists of women “If credit can be made available to the poor people
who belong to the poorest sections on terms and conditions that are appropriate and
of the society. reasonable these millions of small people with their
 It has proved that poor women are millions of small pursuits can add up to create the
reliable borrowers and they also biggest development wonder.”
have the capability to run a variety Professor Muhammad Yunus,
of small income-generating activities the founder of Grameen Bank,
successfully. and recipient of 2006 Nobel Prize for Peace.

EXERCISES

1. In situations with high risks, credit might create further problems for the borrower. Explain.
Ans. In situations with high risks, credit might create further problems for the borrower as,
Borrower takes some amount from the lender which also carries an interest rate decided by
the lender. The borrower has to repay the credit along with interest applied by the lender but
in case the borrower faces loss and is unable to repay, then he takes loan again in the hope
that he would be able to pay the previous loan.
But again, if he is unable to produce good earnings, they further fall into the trap of credit.
This is known as a debt trap thereby further increasing the problems for the borrower.
The borrower might be forced to sell his assets which is again worsening his situation.

2. How does money solve the problem of double coincidence of wants? Explain with an example
of your own.
Ans. Double coincidence of wants’ means that what one person wants to buy is exactly what the
other person wants to sell. In a barter system, where goods are directly exchanged without the
use of money, double coincidence of wants is an essential feature. Money solved the problem
of double coincidence of wants because, after the introduction of money, people could use

E-68 Economics Class X