Mention the chracteristics of cheque payments.

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The chracteristics of cheque payments:

(i)For payment through cheque, the payer who has an account with the bank, makes out a cheque for a specific amount.

(ii)A cheque is a paper instructing the bank to pay a specific amount from the person’s account to the person in whose name the cheque has been issued.

(iii)Cheque payments share the essential features of money.

(iv)The facility of cheques against demand deposits makes it possible to directly settle payments without the use of cash.

(v)Since cheque payments are accepted widely as a means of payment, along with currency, they constitute money in the modern economy.

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Loan Activities (or borrowing and lending activities) of Banks : 1. Basically, banks borrow money to lend. Banks pay interest (suppose x%) from whom it borrow. After keeping a portion of deposits as reserves, banks lend to people who demand money as loan and bank charges interest) suppose y%) from them.

2. The difference between what is charged from borrowers (y%) and what is paid to depositors (x%) is their main sources of income. After meeting all expenses of banks out of this income, the resultant is profit/loss for the bank.

Explanation through diagram:

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Nature of Household	Informal Sources of Credit	Formal Sources of Credit
1 Poor households	85%	15%
2. Households with few assets	53%	47%
3. Well-off households	28%	72%
4. Rich households	90%	10%

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(i)Paper notes, coins and demand deposits are the modern forms money.

(ii) The Reserve Bank of India (RBI).

(iii) It is situation which pushes the borrower into a situation from which recovery is very painful.

Factors:

(i) Failure of crops.

(ii) Using credit for non-productive purposes.

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The working of Self Help Group:

(i)A typical SHG has 15-20 members, usually belonging to one neighbourhood, who meet and save regularly.

(ii)Saving per member varies from Rs 25 to Rs 100 or more, depending on the ability of the people to save. Members can take small loans from the group itself to meet their needs.

(iii)The group charges interest on these loans but this is still less than what the moneylender charges. After a year or two, if the group is regular in savings, it becomes eligible for availing loan from the bank.

(iv)Loan is sanctioned in the name of the group and is meant to create selfemployment opportunities for the members.

(v)Most of the important decisions regarding the savings and loan activities are taken by the group members. The group decides as regards the loans to be granted — the purpose, amount, interest to be charged, repayment schedule etc. Also, it is the group which is responsible for the repayment of the loan.