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Class 10 Exam  >  Class 10 Questions  >   Find the incorrect option:a)Poor households ... Start Learning for Free
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Find the incorrect option:
  • a)
    Poor households still depend on informal sources of credit.
  • b)
    RBI supervises the functioning of informal sources of loans.
  • c)
    Banks are not present everywhere in the rural areas.
  • d)
    RBI monitors the banks in actually maintaining cash balance.
Correct answer is option 'B'. Can you explain this answer?
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Find the incorrect option:a)Poor households still depend on informal ...
Commercial banks lend money to for-profit companies and other organizations every day. In fact, business lending makes up a large portion of a commercial bank's operations. This makes a commercial bank different from an investment bank, although the same institution can include commercial and investment branches.
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Find the incorrect option:a)Poor households still depend on informal ...
Poor households still depend on informal sources of credit.
- This statement is correct. Poor households often lack access to formal financial institutions such as banks, and therefore rely on informal sources of credit such as money lenders, friends, and family members.

RBI supervises the functioning of informal sources of loans.
- This statement is incorrect. The Reserve Bank of India (RBI) is the central banking institution of the country and is primarily responsible for supervising and regulating formal financial institutions such as banks. It does not directly supervise or regulate informal sources of loans.

Banks are not present everywhere in the rural areas.
- This statement is correct. While there has been significant progress in expanding the reach of formal banking services in rural areas, there are still many remote and underdeveloped regions where banks are not present. This lack of access to formal banking services contributes to the reliance on informal sources of credit in these areas.

RBI monitors the banks in actually maintaining cash balance.
- This statement is correct. The RBI monitors banks to ensure that they maintain an adequate cash balance to meet the withdrawal demands of their customers. This is important for maintaining financial stability and ensuring that banks can honor their obligations.

Explanation:
- The incorrect option is B, which states that the RBI supervises the functioning of informal sources of loans. The RBI's role is primarily focused on formal financial institutions and it does not directly regulate or supervise informal sources of credit. Informal sources of credit operate outside the purview of the RBI's regulatory framework. These sources are often unregulated and can sometimes charge high interest rates, leading to potential exploitation of borrowers.
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Read the source given below and answer the questions that follows:Banks use the major portion of the deposits to extend loans. There is a huge demand for loans for various economic activities. Banks make use of the deposits to meet the loan requirements of the people. In this way, banks mediate between those who have surplus funds (the depositors) and those who are in need of these funds (the borrowers). Banks charge a higher interest rate on loans than what they offer on deposits. A large number of transactions in our day-to-day activities involve credit in some form or the other. Credit (loan) refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment. In rural areas, the main demand for credit is for crop production. Crop production involves considerable costs on seeds, fertilisers, pesticides, water, electricity, repair of equipment, etc. The various types of loans can be conveniently grouped as formal sector loans and informal sector loans. Among the former are loans from banks and cooperatives. The informal lenders include moneylenders, traders, employers, relatives and friends, etc. The Reserve Bank of India supervises the functioning of formal sources of loans. For instance, we have seen that the banks maintain a minimum cash balance out of the deposits they receive. The RBI monitors the banks in actually maintaining cash balance. There is no organisation which supervises the credit activities of lenders in the informal sector. They can lend at whatever interest rate they choose. There is no one to stop them from using unfair means to get their money back. Compared to the formal lenders, most of the informal lenders charge a much higher interest on loans. Thus, the cost to the borrower of informal loans is much higher. In recent years, people have tried out some newer ways of providing loans to the poor. The idea is to organise rural poor, in particular women, into small Self-Help Groups (SHGs) and pool (collect) their savings.Answer the following MCQs by choosing the most appropriate optionQ. Banks use the major portion of the deposits to

Read the source given below and answer the questions that follows:Banks use the major portion of the deposits to extend loans. There is a huge demand for loans for various economic activities. Banks make use of the deposits to meet the loan requirements of the people. In this way, banks mediate between those who have surplus funds (the depositors) and those who are in need of these funds (the borrowers). Banks charge a higher interest rate on loans than what they offer on deposits. A large number of transactions in our day-to-day activities involve credit in some form or the other. Credit (loan) refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment. In rural areas, the main demand for credit is for crop production. Crop production involves considerable costs on seeds, fertilisers, pesticides, water, electricity, repair of equipment, etc. The various types of loans can be conveniently grouped as formal sector loans and informal sector loans. Among the former are loans from banks and cooperatives. The informal lenders include moneylenders, traders, employers, relatives and friends, etc. The Reserve Bank of India supervises the functioning of formal sources of loans. For instance, we have seen that the banks maintain a minimum cash balance out of the deposits they receive. The RBI monitors the banks in actually maintaining cash balance. There is no organisation which supervises the credit activities of lenders in the informal sector. They can lend at whatever interest rate they choose. There is no one to stop them from using unfair means to get their money back. Compared to the formal lenders, most of the informal lenders charge a much higher interest on loans. Thus, the cost to the borrower of informal loans is much higher. In recent years, people have tried out some newer ways of providing loans to the poor. The idea is to organise rural poor, in particular women, into small Self-Help Groups (SHGs) and pool (collect) their savings.Answer the following MCQs by choosing the most appropriate optionQ. An agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment.

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Find the incorrect option:a)Poor households still depend on informal sources of credit.b)RBI supervises the functioning of informal sources of loans.c)Banks are not present everywhere in the rural areas.d)RBI monitors the banks in actually maintaining cash balance.Correct answer is option 'B'. Can you explain this answer?
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Find the incorrect option:a)Poor households still depend on informal sources of credit.b)RBI supervises the functioning of informal sources of loans.c)Banks are not present everywhere in the rural areas.d)RBI monitors the banks in actually maintaining cash balance.Correct answer is option 'B'. Can you explain this answer? for Class 10 2024 is part of Class 10 preparation. The Question and answers have been prepared according to the Class 10 exam syllabus. Information about Find the incorrect option:a)Poor households still depend on informal sources of credit.b)RBI supervises the functioning of informal sources of loans.c)Banks are not present everywhere in the rural areas.d)RBI monitors the banks in actually maintaining cash balance.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Class 10 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Find the incorrect option:a)Poor households still depend on informal sources of credit.b)RBI supervises the functioning of informal sources of loans.c)Banks are not present everywhere in the rural areas.d)RBI monitors the banks in actually maintaining cash balance.Correct answer is option 'B'. Can you explain this answer?.
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