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NOTES FOR THE TEACHER CHAPTER 3 : MONEY AND CREDIT Money is a fascinating subject and full of legitimate and legal. They can also discuss the curiosities. It is important to capture this transactions which are legal and why. It is also element for the students. The history of important to intimate students that different money and how various forms were used at types of plastic cards are used in place of cash different times is an interesting story. At this transactions but not all of them money per se. stage the purpose is to allow students to Credit is a crucial element in economic realise the social situation in which these life and it is, therefore, important to first forms were used. Modern forms of money are understand this in a conceptual manner. linked to the banking system. This is the What are the aspects that one looks at in central idea of the first part of the chapter. any credit arrangement and how this affects The present situation in India, where people is the main focus of the second part newer forms of money are slowly spreading of the chapter. The world around us offers a with computerisation of the banking system, tremendous variety of such arrangements offers many opportunities to students to and it would be ideal to explain these explore on their own. We need not get into a aspects of credit from situations that are formal discussion of the ‘functions of money’ familiar to your students. The other crucial but let it come up as questions. issue of credit is its availability to all, As you would see in the chapter, the stock especially the poor, and on reasonable of money consists of currency held by the terms. We need to emphasise that this is a public and the demand deposits that they hold right of the people and without which a large with the banks. This is the money that people section of them would be kept out of the can use as they wish and the government has development process. There are many to ensure that the system works smoothy. innovative interventions, such as that of What would happen when the government Grameen Bank, of which students may be declares that some of the currency notes used made familiar with but it is important to by people would be made invalid and would be realise that we don’t have answers to all replaced by new currency? In India, during questions. We need to find new ways and November 2016, currency notes in the this is one of the social challenges that developing countries face. denomination of Rs. 500 and Rs. 1,000 were declared invalid. People were asked to Sources for Information surrender these notes to the bank by a specific period and receive new Rs. 500, Rs. 2,000 or The data on formal and informal sector credit other currency notes. This is known as used in this chapter is drawn from the ‘demonetisation’. Since then, people were also survey on rural debt by the National Sample Survey Organisation (All India Debt and encouraged to use their bank deposits rather Investment Survey, 77 thRound 2019, than cash for transactions. Hence, digital conducted by NSSO) now known as National transactions started by using bank-to-bank Statistical Office (NSO). The information and transfer through the internet or mobile phones, cheques, ATM cards, credit cards, data on Grameen Bank is taken from Point of Sale (POS) swipe machines, and newspaper reports and websites. In order to get the details of bank-related statistics QR codes through UPI system at shops. This or a particular detail of a bank, you can log is promoted to reduce the requirement of cash on to the websites of the Reserve Bank of for transactions and also control corruption. India (www.rbi.org) and the concerned Students could be asked to debate on the banks. Data on self-help groups is provided process and the impact of demonetisation and on the website of the National Bank for digitalisation. They can be guided to make a Agriculture and Rural Development collage of the major areas where people use (NABARD) (www.nabard.org). digital and cash transactions which are 38 U NDERST ANDING E CONOMIC D EVEL OPMENT Reprint 2026-27