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Thursday, November 21, 2019

NCERT PRINT CULTURE AND MODERN WORLD


NAV JEEVAN MISSION SCHOOL
HISTORY ( X )
PRINT, CULTURE AND THE MODERN WORLD
CHAPTER 07
NCERT TEXTBOOK QUESTIONS
Q 1 Explain how print culture assisted the growth of nationalism in India.
Ans: Print culture helped in developing a culture of dialogue among people. Ideas of social reform could be spread in a better way. Gandhiji spread his ideas of swadeshi in powerful way through newspapers. Many vernacular newspapers came up in India. These helped in spreading the message of nationalism to majority of the Indian masses. Even in spite of repressive measures print culture was a revolution which could not be stopped.
Q 2 Give reasons for the following:
Woodblock print only came to Europe after 1295.
Ans: Marco Polo returned to Italy from China in 1295 and brought with him the knowledge of woodblock printing.
Martin Luther was in favour of print and spoke out in praise of it.
Ans: Martin Luther’s criticism of Roman Catholic Church reached a large section of masses because of print. Hence he was in favour of print and spoke out in praise of it.
The Roman Catholic Church began keeping an Index of Prohibited books from the mid-sixteenth century.
Ans: Because of print new interpretation of Bible reached to people and they started questioning the authority of church. Due to this the Roman Catholic Church began keeping and index of Prohibited books from the mid – sixteenth century.
Gandhi said the fight for Swaraj is a fight for liberty of speech, liberty of the press, and freedom of association.
Ans: The power of the printed word is most often seen in the way governments seek to regulate and suppress print. The colonial government kept continuous track of all books and newspapers published in India and passed numerous laws to control the press. Because of this Gandhi said the fight for Swaraj is a fight for liberty of speech, liberty of the press, and freedom of association.
Q 3 Write short notes on following:
·         The Gutenberg Press
Ans: Gutenberg was the son of a merchant and grew up on a large agricultural estate. From his childhood he had seen wine and olive presses. Subsequently, he learnt the art of polishing stones, became a master goldsmith, and also acquired the expertise to create lead moulds used for making trinkets. Drawing on this knowledge, Gutenberg adapted existing technology to design his innovation. The olive press provided the model for the printing press, and moulds were used for casting the metal types for the letters of the alphabet. By 1448, Gutenberg perfected the system. The first book he printed was the Bible. About 180 copies were printed and it took three years to produce them. By the standards of the time this was fast production.
·         Erasmus’s idea of the printed book
Ans: Erasmus thought that books were not good for sanctity of scholastic knowledge. He was of the opinion that printed books would glut the market with contents which will do more harm than good to society. Because of this the value of good content would be lost in the din.
·         The Vernacular Press Act
Answer: In 1878, the Vernacular Press Act was passed, modelled on the Irish Press Laws. It provided the government with extensive rights to censor reports and editorials in the vernacular press. From now on the government kept regular track of the vernacular newspapers published in different provinces. When a report was judged as seditious, the newspaper was warned, and if the warning was ignored, the press was liable to be seized and the printing machinery confiscated.
Q 4 What did the spread of print culture in nineteenth century India mean to:
WOMEN
Ans: Because of printing technique books became cheaper. Many hawkers started selling books from door to door. This created easy availability of books for majority of women. Apart from this many liberal males encouraged women from their families to read. Novels contained interesting descriptions of women’s lives. This created interest among women readers. Women, who were earlier cocooned inside their homes could now know about the outside world thanks to the print technology. This created a spurt of many women writers in India. It can be said that print culture not only created readers among women but also writers among them.
THE POOR
Ans: Very cheap small books were brought to markets in nineteenth-century Madras towns and sold at crossroads, allowing poor people traveling to markets to buy them. Public libraries were set up from the early twentieth century, expanding the access to books.
From the late nineteenth century, issues of caste discrimination began to be written about in many printed tracts and essays. This helped in bringing these issues to the forefront of public consciousness.
Workers in factories were too overworked and lacked the education to write much about their experiences. But some workers took initiative to write stories about their conditions. These narratives contained issues related to class oppression. So worker’s problems also came to the fore.
Q 5 What did the spread of print culture in nineteenth century India mean to reformers?
Answer: From the early nineteenth century there were intense debates around religious issues. Different groups confronted the changes happening within colonial society in different ways, and offered a variety of new interpretations of the beliefs of different religions. Some criticised existing practices and campaigned for reform, while others countered the arguments of reformers. These debates were carried out in public and in print. Printed tracts and newspapers not only spread the new ideas, but they shaped the nature of the debate. A wider public could now participate in these public discussions and express their views. New ideas emerged through these clashes of opinions.
This was a time of intense controversies between social and religious reformers and the Hindu orthodoxy over matters like widow immolation, monotheism, Brahmanical priesthood and idolatry. In Bengal, as the debate developed, tracts and newspapers proliferated, circulating a variety of arguments. To reach a wider audience, the ideas were printed in the everyday, spoken language of ordinary people.
Q 6 Why did some people in eighteenth century Europe think that print culture would bring enlightenment and end despotism?
Ans: Because of print books became affordable for masses. This helped in spreading revolutionary ideas to a vast section of society in a more efficient way. Many contemporary thinkers, like Martin Luther and Monochhio could fire people’s imagination because of help from print technology. Even for scientists it became easier to share knowledge and spread knowledge. So, people in eighteenth century Europe started thinking that print culture would bring enlightenment and end despotism.
Q 7 Why did some people fear the effect of easily available printed books? Choose one example from Europe and one from India.
Ans: Not everyone welcomed the printed book, and those who did also had fears about it. Many were apprehensive of the effects that the easier access to the printed word and the wider circulation of books, could have on people’s minds. It was feared that if there was no control over what was printed and read then rebellious and irreligious thoughts might spread. If that happened the authority of ‘valuable’ literature would be destroyed. Expressed by religious authorities and monarchs, as well as many writers and artists, this anxiety was the basis of widespread criticism of the new printed literature that had began to circulate.
Example from Europe: Erasmus thought that books were not good for sanctity of scholastic knowledge. He was of the opinion that printed books would glut the market with contents which will do more harm than good to society. Because of this the value of good content would be lost in the din.
Example from India: Conservative Hindus believed that a literate girl would be widowed and Muslims feared that educated women would be corrupted by reading Urdu romances.
Q 8 How did print culture affect women in the 19th century India?
Ans: Because of printing technique books became cheaper. Many hawkers started selling books from door to door. This created easy availability of books for majority of women. Apart from this many liberal males encouraged women from their families to read. Novels contained interesting descriptions of women’s lives. This created interest among women readers. Women, who were earlier cocooned inside their homes could now know about the outside world thanks to the print technology. This created a spurt of many women writers in India. It can be said that print culture not only created readers among women but also writers among them.
Q 9 Describe the role of nationalist newspaper in spreading nationalistic feelings among the people in the early 20th century.
Answer: Despite repressive measures, nationalist newspapers grew in numbers in all parts of India. They reported on colonial misrule and encouraged nationalist activities. Attempts to throttle nationalist criticism provoked militant protest. This in turn led to a renewed cycle of persecution and protests. When Punjab revolutionaries were deported in 1907, Balgangadhar Tilak wrote with great sympathy about them in his Kesari. This led to his imprisonment in 1908, provoking in turn widespread protests all over India. Thus nationalist newspaper played important role in spreading nationalistic feelings among people in the early 20th century.
Q 10 How did the print culture help scientist and philosopher?
Ans: The ideas of scientists and philosophers now became more accessible to the common people. Ancient and medieval scientific texts were compiled and published, and maps and scientific diagrams were widely printed. When scientists like Isaac Newton began to publish their discoveries, they could influence a much wider circle of scientifically minded readers. The writings of thinkers such as Thomas Paine, Voltaire and Jean Jacques Rousseau were also widely printed and read. Thus their ideas about science, reason and rationality found their way into popular literature.
Q 11 Print did not only stimulate publication of conflicting opinions among different communities but also connected them in the 19th century India. Support this statement with examples.
Ans: From the early nineteenth century, as you know, there were intense debates around religious issues. Different groups confronted the changes happening within colonial society in different ways, and offered a variety of new interpretations of the beliefs of different religions. Some criticised existing practices and campaigned for reform, while others countered the arguments of reformers. These debates were carried out in public and in print. Printed tracts and newspapers not only spread the new ideas, but they shaped the nature of the debate. A wider public could now participate in these public discussions and express their views. New ideas emerged through these clashes of opinions.
Print did not only stimulate the publication of conflicting opinions among communities, but it also connected communities and people in different parts of India. Newspapers conveyed news from one place to another, creating pan-Indian identities.
Q 12 What do you understand by print revolution?
Ans: With the printing press, a new reading public emerged. Printing reduced the cost of books. The time and labour required to produce each book came down, and multiple copies could be produced with greater ease. Books flooded the market, reaching out to an ever-growing readership.
Access to books created a new culture of reading. Earlier, reading was restricted to the elites. Common people lived in a world of oral culture. They heard sacred texts read out, ballads recited, and folk tales narrated. Knowledge was transferred orally. People collectively heard a story, or saw a performance. Before the age of print, books were not only expensive but they could not be produced in sufficient numbers. Now books could reach out to wider sections of people. If earlier there was a hearing public, now a reading public came into being.
Q 13 How were ideas and information written before the age of print in India? How did the printing technique begin in India? Explain.
Ans: Age of Manuscripts: India had a very rich and old tradition of handwritten manuscripts – in Sanskrit, Arabic, Persian, as well as in various vernacular languages. Manuscripts were copied on palm leaves or on handmade paper. Pages were sometimes beautifully illustrated. They would be either pressed between wooden covers or sewn together to ensure preservation. Manuscripts continued to be produced till well after the introduction of print, down to the late nineteenth century.
Beginning of Printing Technique in India: The printing press first came to Goa with Portuguese missionaries in the mid-sixteenth century. Jesuit priests learnt Konkani and printed several tracts. By 1674, about 50 books had been printed in the Konkani and in Kanara languages. Catholic priests printed the first Tamil book in 1579 at Cochin, and in 1713 the first Malayalam book was printed by them. By 1710, Dutch Protestant missionaries had printed 32 Tamil texts, many of them translations of older works.
Q 14 How did printing press create a new reading public? Explain.
Ans. With the printing press, a new reading public emerged.
(i) Printing reduced the cost of books.
(ii) The time and labour to produce each book came down. Multiple copies could be produced
      easily.
(iii) Books flooded the market, reaching out to an ever growing readership.
(iv) It created a new culture of reading.
(v) Common people could not read books earlier, only the elite could. Common people heard
       a story or saw a performance collectively.
(vi) Instead of a hearing public now there was a reading public.
(vii) The rate of literacy in European countries was also low till the 20th century. Publishers
      Reached out to people by making them listen to books being read out.
(vii) Printers published popular ballads and folktales, profusely illustrated. These were then
       sung and recited at village gatherings in taverns in towns. Oral culture thus entered print and printed material     was orally transmitted, Hearing and reading public, thus became one.

PRINT CULTURE AND MODERN WORLD SUMMARY


NAV JEEVAN MISSION SCHOOL
HISTORY(X)
PRINT, CULTURE AND THE MODERN WORLD
CHAPTER 04

  THE FIRST PRINTED BOOKS
The earliest print technology was developed in China, Japan and Korea. From 594 AD onwards, books were printed in China by rubbing paper against the inked surface of woodblocks. The traditional Chinese ‘Accordion Book’ was folded and stitched at the side because both sides of the thin, porous sheet could not be printed.
For a very long time, the imperial state of China was the major producer of printed material. The Chinese bureaucratic system recruited its personnel through civil services examinations. The imperial state sponsored the large scale printing of textbooks for this examination. The number of candidates for the examinations increased from the sixteenth century, and this increased the volume of print.
By the seventeenth century, the use of print diversified in China because of a blooming urban culture. Print was no longer limited to scholar-officials. Merchants used print in day-to-day life because they collected trade related information. Fictional narratives, poetry, autobiographies, anthologies of literary masterpieces and romantic play became the staple for the reading public. Reading acquired the status of a preferred leisure activity. Rich women began to read and many of them began publishing their poetry and plays.

PRINT IN JAPAN
The Buddhist missionaries from China introduced hand-printing technology into Japan around 768 – 770 AD. The Buddhist Diamond Sutra which was printed in 868 AD was the oldest Japanese book. Libraries and bookstores were packed with hand-printed materials of various types. These included books on women, musical instruments, calculations, tea ceremony, flower arrangements, proper etiquette, cooking and famous places.

PRINT COMES TO EUROPE
Marco Polo was a great explorer from Italy. He returned from China in 1295 and brought the knowledge of woodblock printing along with him. Thus, printing began in Italy and travelled to other parts of Europe. Vellum was still the preferred material for printing the luxury editions because printed books were considered as cheap vulgarities. Vellum is a parchment made from the skin of animals.
By the early fifteenth century, woodblocks were widely used in Europe to print various materials. It almost replaced the books made by calligraphy.

GUTENBERG AND THE PRINTING PRESS
Gutenberg was the son of a merchant. Since his childhood he had seen wine and olive presses. He also learnt the art of polishing stones, and became a master goldsmith and also became an expert in creating lead moulds. Such moulds were used for making trinkets.
Gutenberg used his knowledge to bring innovation to the print technology. He used the olive press as the model for the printing press and used the moulds for casting the metal types for the letters. Gutenberg perfected the system by 1448. The first book printed by him was the Bible.
Initially, the printed books resembled the written manuscripts in appearance and layout. In the hundred years between 1450 and 1550, printing presses were set up in most parts of Europe. The growth of the print industry was so good that about 20 million books appeared in the European markets in the second half of the fifteenth century. In the sixteenth century, this number went up to about 200 million copies.

THE PRINT REVOLUTION AND ITS IMPACT
A New Reading Public:
With the print technology, a new reading public emerged. Books became cheaper because of printing. Numerous copies could now be produced with much ease. This helped in catering to an ever growing readership.
Access to books increased for the public. This helped in creating a new culture of reading. Literacy level was very low till the twentieth century in Europe. Printers kept in mind the wider reach of the printed work. Popular ballads and folk tales were published which could be listened by even the illiterates. Literate people read out stories and ballads to those who could not read.

RELIGIOUS DEBATES AND FEAR OF PRINT
Print created an opportunity of a new debate and discussion. People began questioning some established notions of religion. For the orthodox people, it was like a challenge as they feared the disturbance in old order.
Through the printed message, they could persuade people to think differently and introduced a new world of debate and discussion. This has significance in the different sphere of life.
Many were apprehensive of the effects that the easier access to the printed world and the wider circulation of books, could have on people’s minds.
If that happened the authority of ‘valuable’ literature would be destroyed, expressed by religious authorities and monarchs, as well as many writers and artists.
A new intellectual atmosphere and helped spread the new ideas that led to the reformation.
With time, a new culture emerged and access to books made people adopt the reading culture. But with this several debates were put forward related to the fear of the spread of rebellious and irreligious thoughts. In 1517, the religious reformer Martin Luther wrote ‘Ninety-Five Theses’ which criticized various practices of the Roman Catholic Church. This lead to Protestant Reformation.
Because of the reading culture, the literacy rate of the countries increased to 60-80%. Newspapers and Journals got fame and information were carried about wars and trade as well as news of developments in other places. This included French revolution too.
In fact, the Protestant Revolution in Christianity began because of print culture. The Roman Church felt troubled by new ideas which raised questions about the existing norms of faith. It even started to maintain an Index of Prohibited Books from 1558.

THE READING MANIA
The literacy levels improved through the seventeenth and eighteenth centuries in Europe. By the end of the eighteenth century, literacy rates were as high as 60 to 80 percent in some parts of Europe. The growth in literacy level created a reading mania among people. Booksellers employed pedlars who roamed around villages to sell books. Periodicals, novels, almanac, etc. formed the staple for the reading mania.
Ideas of scientists and philosophers became more accessible to the common people. New ideas could be debated and shared with a wider target audience.

PRINT CULTURE AND THE FRENCH REVOLUTION
Many historians are of the view that print culture created the conditions which led to French Revolution. Some of such conditions are as follows:
  • Print popularized the ideas of Enlightenment thinkers. These thinkers gave critical commentary on tradition, superstition and despotism. Voltaire and Rousseau were among the prominent Enlightenment thinkers.
  • Print created a new culture of dialogue and debate. General public began to discuss the values, norms and institutions and tried to re-evaluate the established notions.
  • By the 1780s, there was a surge in literature which mocked the royalty and criticized their morality. Print helped in creating an image of the royalty that they indulged in their own pleasure at the expense of the common public.

  THE NINETEENTH CENTURY-PRINT
There was vast leap in mass literacy in Europe in the nineteenth century. This brought a large numbers of new readers among children, women and workers. Many books were written and printed keeping in mind the sense and sensibilities of children. Many folk tales were rephrased to suit the children. Many women became important as readers as well as writers. The lending libraries which had been in existence from the seventeenth century became the hub of activity for white-collar workers, artisans and lower middle class people.

THE NINETEENTH CENTURY (WOMEN)
As primary education became compulsory from the late nineteenth century. A large number of new readers were especially women.
Women became important as readers as well as writers. Penny magazines were especially meant for women, as were manuals teaching proper behaviour and housekeeping.
In the nineteenth century, lending libraries in England, lower middle-class people. Sometimes self-educated working class people wrote for themselves. Women were seen as important readers. Some of the best-known novelists were women: Jane Austin, the Bronte sisters, George Eliot. Their writings became important in defining a new type of woman.
FURTHER INNOVATIONS
Richard M. Hoe of New York perfected the power-driven cylindrical press by the mid-nineteenth century. This could print 8,000 sheets per hour. Offset press was developed in the late nineteenth century. This could print up to six colours at a time. Electrically operated presses came in use from the turn of the twentieth century. This helped in accelerating the printing process. Many other innovations took place during this period. All the innovations had a cumulative effect which improved the appearance of printed texts.

NEW STRATEGIES TO SELL BOOKS:
  • Many periodicals serialized important novels in the nineteenth century.
  • In the 1920s in England, popular works were sold in cheap series, called the Shilling Series.
  • The dust cover or book jacket is a twentieth century innovation.
  • Cheap paperback editions were brought to counter the effect of the Great Depression in the 1930s.

   INDIA AND THE WORLD OF PRINT
The Portuguese missionaries were the first to bring printing press to Goa in the mid-sixteenth century. The first books were printed in Konkani language. By 1674, about 50 books had been printed in Konkani and Kanara Languages. Catholic priests printed the first Tamil book in 1579 at Cochin. They printed the first Malayalam book in 1713.
From 1780, James Augustus Hickey began to edit the Bengal Gazette. It was a weekly magazine. Hickey also published a lot of gossip about the senior officials of the Company. Governor General Warren Hastings persecuted Hickey. Warren Hastings encouraged the publication of officially sanctioned newspapers to protect the image of the colonial government.
The first Indian newspaper was the weekly Bengal Gazette which was brought out by Gangadhar Bhattacharya.
Print culture helped in initiating new debate on religious, social and political issues in India. Many existing religious practices were criticized. Raja Ram Mohan Roy published Sambad Kaumudi from 1821 to criticize the orthodox views in the Hinduism. The Hindu orthodoxy commissioned the Samachar Chandrika to counter his opinions. In 1822, publication of two Persian newspapers began, viz. Jam – i- Jahan Nama and Shamsul Akhbar. Bombay Samachar; a Gujarati newspaper appeared in the same year.
In North India, the Ulama began to publish cheap lithographic prints which contained Persian and Urdu translations of Holy Scriptures. They also published religious newspapers and tracts. The Deoband Seminary was founded in 1867. It published thousands upon thousands fatwas about proper conduct in the life of Muslims.
Ramcharit manas of Tulsidas was printed from Calcutta in 1810. From the 1880s, the Naval Kishore Press at Lucknow and the Shri Venkateshwar Press in Bombay published many religious texts in vernaculars.
Print helped in bringing the religious texts within reach of the common masses. It also helped in shaping the new political debate. It also helped in connecting the people from various parts of India; by carrying news of one part to another.

PRINTING IN INDIA
  1. The printing press came to India with Portuguese Missionaries in mid-16th century.
  2. The first Tamil Book printed in Cochin in 1579 .
  3. Weekly Magazine ‘Bengal Gazette’ started publication in 1780.
  4. First printed edition of Ramcharitmanas of Tulsidas came out in Calcutta in 1810.
  5. Many newspapers in various languages started publication in 1821-22.
  6. Hindi Printing began seriously in 1870.

NEW FORMS OF PUBLICATION
Initially, people got to read the novels which were written by European writers. But people could not relate to those novels because they were written in the European context. Many writers emerged who began to write in the Indian context. People could correlate with the theme and characters of such novels in a better way. Many other new forms of writing also came into origin; like lyrics, short stories, essays about social and political matters, etc.
A new visual culture was taking shape by the end of the nineteenth century. Many printing presses started to produce visual images in large numbers. Works of painters; like Raja Ravi Varma were produced for mass circulation through printing.
By the 1870s, caricatures and cartoons were being published in journals and newspapers. They commented on various social and political issues.

WOMEN AND PRINT
Many writers wrote about the lives and feelings of women. Due to this, readership among middle-class women increased substantially. There were many liberal husbands and fathers who stressed on women’s education. While some women got education at home, some others went to schools as well. This was the time, when many women writers also began to express their views through their writings.
Conservative Hindus and Muslims were still against women’s education. They thought that a girl’s mind would be polluted by education. People wanted their daughters to read religious texts but did not want them to read anything else.
While Urdu, Tamil, Bengali and Marathi print culture had developed early, Hindi printing began seriously only from the 1870s.

PRINT AND THE POOR PEOPLE
Very cheap small books were brought to markets in nineteenth century Madras towns. These books were sold at crossroads so that poor people could buy them. Public libraries were set up from the early twentieth century which helped in increasing the access to books. Many rich people set up library in order to assert their prestige in their area.

PRINT AND CENSORSHIP
Before 1798, the colonial rulers were not too concerned with censorship. Initially, the control measures were directed against Englishmen in India who were critical of Company misrule.
After the revolt of 1857, the attitude to freedom of the press changed. The Vernacular Press Act was passed in 1878. The Act provided the government with extensive rights to censor reports and editorials in the vernacular press. In case of a seditious report, the newspaper was warned. If the warning was ignored, the press was liable to be seized and the printing machinery confiscated.

MONEY AND CREDIT SUMMARY


NAV JEEVAN MISSION SCHOOL
ECONOMICS X
MONEY AND CREDIT
Chapter 04
MONEY
Money is not a recent Phenomenon. It gradually transformed from a medium of exchange to an important Intermediate for purchasing goods and services.

BARTER SYSTEM:
 The barter system was used before the advent of money.
People used to exchange one thing for another in this system.

DOUBLE COINCIDENCE OF WANTS: 
The double coincidence of wants is the major drawback of the barter system.
It can be very difficult to find a person who can fulfil this condition. Suppose you want to barter your Wheat with a Shoe, then you need to find a person who wants to barter his Shoe for Wheat.
Modern Forms of Money
§  Money is a means by which we can get something in exchange.
§  Initially, coins came into use.
§  The coins were initially made of precious metals; like gold and silver.
§  When the precious metals became too precious, ordinary metals were being used for making coins.
§  Paper money or currency notes gradually took place of coins; although coins of smaller denominations are still in use.
§  The currency notes and coins are issued by the government of an authorized body. In India, the RBI (Reserve Bank of India) issues currency notes.
§  On the Indian currency note, you can find a statement which promises to pay the bearer the amount which is mentioned on the currency note.

Advantages of Money:
  1. Removes the coincidence of wants.
  2. Takes less storage space and is easier to carry.
  3. Liquidity of currency is easier.
  4. Now-a-days; many instruments are available through which it is not necessary to physically carry the currency.

OTHER FORMS OF MONEY

Deposits with Banks
§  Most of the people need only some currency for their daily needs.
§  Rest of the amount is usually kept as deposit in banks.
§  Money which is kept in a bank is safe and it even earns an interest.
§  One can withdraw money from his account as and when required. Since deposit in the bank account can be withdrawn on demand, these deposits are called demand deposits.
One can use a cheque; instead of cash to settle payments. Moreover, one can also buy a demand draft from a bank to make payments.
Credit/Debit Cards: Now-a-days, credit/debit cards are in vogue.
A debit card allows you to make payments from the amount which is lying in your bank account.
A credit card, on the other hand, provides money on credit.
Payment through credit/debit card is done electronically and this removes the need of carrying cash.

CREDIT/LOANS
§  Banks keep a small proportion of their deposits as cash with themselves.
§  This is usually 15% of their deposits as cash.
§  This amount is kept as provision to pay the depositors who may come to withdraw the money on any day.
§   This amount is enough because only a small fraction of people come to withdraw money on a given day.
§  The rest of the amount is used by the banks to give money on credit to people who need the credit.
§  A bank charges interest on the loan which it gives to its creditors.
§  The interest rate charged by a bank on loans is higher than the interest rate given by it on deposits. Thus, interest is the main source of income for banks.

LOAN ACTIVITIES OF BANK.
Bank works as mediator between    the depositors and the borrowers.
Two different credit situations
A.     Credit for Business
B.     Credit for Agriculture.
(a) In the first situation, a person borrows money for Business activities activities with the promise to repay the loan at the end of the year when production work will be completed.
And at the end of the year, he/she makes a good profit from production activities and he/she is able to pay the amount of loan.
Therefore, that person becomes better off than before.
(b) In the second situation, a person borrows money for production activities with the promise to repay the loan at the end of the year when production work will be completed.
And at the end of the year he/she unable to repay the loan due to loss in production. For this term, he/she come under the situation of debt trap. Therefore, that person becomes worse off than before.

 Terms of Credit
§  People often need to borrow money for various purposes.
§  Many businessmen need to borrow to buy raw materials and machineries.
§  Many farmers need to borrow to buy seeds, fertilisers, farm equipment’s, etc.
§  People usually buy vehicles and houses by borrowing from banks.
§  Thus, credit plays an important role in the economy.
Every loan agreement specifies terms and conditions;
§  Regarding the rate of interest.
§  Term of payment.
§  In most of the cases, the banks fix an EMI (Equated Monthly Instalment) for repayment of loan.

COLLATERAL:
§  An asset which is owned by the borrower and is used as a guarantee to a lender until the loan is repaid is called the collateral.
§   Land, house, vehicle, livestock’s, deposits with banks, insurance policy, gold, etc. are examples of assets.
§   If the borrower fails to repay the loan, the lender reserves the right to sell the collateral to obtain payment.

SOURCES OF CREDIT
1.      Loan from Traders
2.      Loan from Banks
3.      Loan from employers
4.      Loan from Cooperatives.
5.      Friends and Relatives
6.      Loan from money lenders

THERE ARE TWO TYPES OF SOURCES OF CREDIT IN AN ECONOMY
(i) Formal sector
(ii) Informal sector

FORMAL SECTOR
In the formal sector, loans from banks and cooperatives are included.
Features of Formal Sector
• As we know that major portion of the deposited money is provided to those people who    are needy of money for economic activities.
§  In India Reserve bank of India is supervised the functioning of loan activities in formal sectors.

§  In India, the rate of interest in informal sector is greater than the rate of interest in formal sector.

§  Rate of interest in formal sector is supervised by the legal authorities.



INFORMAL SECTOR

In the Informal sector, loans from moneylenders, traders, employers, relatives and    friends are included.  In the Informal sector, the rate of interest is supervised by moneylenders, traders, employers       who are provided money.
·         The rate of interest is varying from person to person.

·         There is no organization for supervising loan in informal sector.

·         Lenders can use any method to get back their money from the borrowers.

·         Sometimes, the incomes of the borrowers become less compare than the amount which has to pay due to the high rate of interest.

SELF HELP GROUPS
Self Help Groups (SHGs) are recent phenomena. An SHG is comprised of small number of people; like 15 – 20 members. The members pool their savings. The collection is then utilised to lend small amounts of money which may be required by any of the members. The group charges interest on the loan. The arrangement of loans through Self Help Groups is also known as microfinance because the small amount of loan is involved. An organisation constituted to collect the savings of the poor which is known as self-help group. The aim of the organisation is to lend loan at less rate of interest compared to the rate of interest specified by the money lenders. A self-help group has 15 – 20 members. Savings vary from member to member i.e. Rs. 25 to Rs. 100 depending on the ability of the person to save.
It was the Grameen Bank of Bangladesh which began experimenting with microfinance. The founder of Grameen Bank, MOHAMMAD YUNUS was conferred with Nobel Prize in 2006 for his efforts at improving the lot of the poor.
SHGs have helped immensely in reducing the influence of informal lenders in rural      areas.
Many big corporate houses are also promoting SHGs at many places in India.