UP Board Solutions Class 10 Commerce Chapter 17 Indigenous Bankers

Indigenous Bankers Objective Type Questions (1 Mark)

Question 1. The indigenous bankers are more financially:
(a) Week
(b) Sound
(c) Strong
(d) None of these
Answer: (b) Sound
In simple words: Indigenous bankers are generally financially stable and reliable, providing essential financial services primarily in rural and semi-urban areas.

🎯 Exam Tip: Understanding the fundamental characteristics of indigenous bankers, such as their financial strength, is crucial for descriptive answers and multiple-choice questions.

Question 2. Sahukars and Mahajans do not accept deposits from:
(a) People
(b) Bank
(c) Government
(d) None of these
Answer: (a) People
In simple words: Sahukars and Mahajans primarily focus on lending money and typically do not engage in the activity of accepting deposits from the general public.

🎯 Exam Tip: Differentiating between the functions of various financial entities like Sahukars, Mahajans, and traditional banks is a common exam topic, especially regarding deposit acceptance.

Question 3. Indigenous bankers play a vital role in the ...........
(a) Agriculture
(b) Industry
(c) Urban areas
(d) Private Sector
Answer: (a) Agriculture
In simple words: Indigenous bankers are particularly important in supporting the agricultural sector by providing credit to farmers, especially in regions where formal banking access is limited.

🎯 Exam Tip: Recognizing the specific sectors where indigenous bankers contribute significantly, such as agriculture, highlights their economic relevance and can be a key point in essays.

Question 4. The indigenous banker's charge:
(a) Lower rate of interest
(b) A reasonable rate of interest
(c) Higher rate of interest
(d) None of these
Answer: (c) Higher rate of interest
In simple words: Indigenous bankers often charge higher rates of interest due to the increased risk associated with their lending practices and the lack of formal regulation.

🎯 Exam Tip: The interest rates charged by indigenous bankers are a critical point of comparison with formal banking institutions and often a subject of discussion regarding farmer exploitation; ensure you note this difference.

Question 5. The indigenous bankers are the oldest institution providing:
(a) Insurance Facilities
(b) Loans Facilities
(c) Locker's Facilities
(d) Banking Facilities
Answer: (d) Banking Facilities
In simple words: Indigenous bankers are among the oldest financial institutions, offering a range of banking facilities like lending, discounting hundis, and sometimes accepting deposits.

🎯 Exam Tip: Highlighting the historical significance of indigenous bankers as providers of comprehensive banking facilities in earlier times adds depth to answers on their role and evolution.

Indigenous Bankers Definite Answer Type Questions (1 Mark)

Question 1. What is called indigenous hankers in Chennai (Madras)?
Answer: Chetti.
In simple words: In the Chennai (formerly Madras) region, indigenous bankers are commonly known by the term "Chetti."

🎯 Exam Tip: Knowing regional names for indigenous bankers, like "Chetti" for Chennai, can demonstrate a deeper understanding of the subject's cultural and geographical variations.

Question 2. Which bank does not accept small deposits?
Answer: Modern Banks.
In simple words: Unlike traditional indigenous bankers who might accept deposits of varying sizes, modern commercial banks generally have minimum deposit requirements and may not accept very small, informal deposits.

🎯 Exam Tip: When comparing financial institutions, understanding their varying policies on deposit sizes helps illustrate their different operational models and target demographics.

Question 3. Which committee defines an indigenous banker or banks as an individual or private firm receiving deposits and dealing in hundis of lending money.
Answer: The Indian Central Banking Enquiry Committee.
In simple words: The Indian Central Banking Enquiry Committee provided a comprehensive definition of indigenous bankers, recognizing them as individuals or private firms involved in both deposit acceptance and hundi transactions for lending money.

🎯 Exam Tip: Citing relevant committees and their definitions, such as the Indian Central Banking Enquiry Committee, strengthens your answer by demonstrating factual knowledge and historical context.

Indigenous Bankers Very Short Answer Type Questions (2 Marks)

Question 1. Who is called a money-lender?
Answer: Money-lender is also called Sahukars or Mahajans. Sahukars or Mahajans only provide loans to the borrowers. They do not accept any deposits from the people. These people utilise their own capital in granting loans to people. Generally, Sahukars and Mahajans do other business along with this money lending business.
In simple words: Money-lenders, also known as Sahukars or Mahajans, are individuals or firms that provide loans using their own capital, without accepting deposits from the public, and often combine this with other businesses.

🎯 Exam Tip: Clearly distinguishing between the roles of money-lenders (Sahukars/Mahajans) and indigenous bankers, especially regarding deposit acceptance and capital sources, is vital for scoring well in comparison questions.

Question 2. What is the meaning of indigenous bankers?
Answer: Indigenous bankers are persons or institutions which provides the loan, discount hundis and accept deposits from the people. Their area of function is mostly in towns or big villages. The indigenous bankers also provide functional assistance to Sahukars and Mahajans.
In simple words: Indigenous bankers are traditional financial entities that offer loans, discount hundis (traditional credit instruments), and accept deposits, primarily operating in towns and large villages, and sometimes assist money-lenders.

🎯 Exam Tip: A precise definition of indigenous bankers, detailing their core functions like lending, hundi discounting, and deposit acceptance, is fundamental for introductory questions.

Question 3. Give any main functions of indigenous bankers.
Answer:
1. The modern banks have not been able to extend their network in rural areas and the financial requirements of that area are met by indigenous bankers.
2. Indigenous bankers issue and discount hundis. They also give a loan on the basis of hundis.
In simple words: Key functions of indigenous bankers include fulfilling the financial needs of rural areas where modern banks are scarce and dealing in hundis by issuing, discounting, and providing loans against them.

🎯 Exam Tip: Focusing on the two most critical functions-bridging the rural credit gap and dealing in hundis-will ensure a comprehensive answer for this type of question.

Question 4. Write any four demerits of indigenous bankers.
Answer:
1. A high rate of interest
2. Inadequacy of funds
3. Fraudulent Practice
4. Not efficient.
In simple words: Four significant demerits of indigenous bankers are their high interest rates, limited funds, occasional fraudulent practices, and general inefficiency compared to modern banking systems.

🎯 Exam Tip: Listing the demerits clearly and concisely, especially when asked for a specific number, is key to scoring maximum marks; ensure each point is distinct.

Indigenous Bankers Short Answer Type Questions (4 Marks)

Question 1. Why indigenous bankers are important in India?
Answer: The modern banks have their network mostly in the cities and the desired development of these banks in the rural areas has not been fulfilled. India, being a country of villages, its major population lives in villages. The main business of villagers is agriculture. The financial needs of the agriculturists are met by the indigenous bankers and moneylenders because we do not have modern banks in. every village. It is estimated that 90% of the agricultural needs are met by indigenous bankers.
The Indian farmer, being poor, needs money after very short intervals. Sometimes they need money for seeds and fertilisers to pay revenue (Lagan) and also for their personal needs etc. Only indigenous bankers can give a loan at short intervals and without much paperwork. When the farmers sell their crops their financial position is good but after sometimes they have to depend on moneylenders or indigenous bankers for their financial needs. Thus, we can say that indigenous bankers play a vital role in the agriculture of our country.
In simple words: Indigenous bankers are crucial in India because they fulfill the significant financial gaps in rural agricultural areas where modern banks are absent, providing quick, short-term loans for various needs without extensive paperwork, thereby supporting the majority of Indian farmers.

🎯 Exam Tip: To answer why indigenous bankers are important, focus on their role in rural credit, agricultural finance, and bridging the accessibility gap left by formal banking systems; use statistics if remembered to strengthen your point.

Question 2. Distinguish between indigenous bankers and money-lenders. Answer: Difference between indigenous bankers and money-lenders.

🎯 Exam Tip: When presenting distinctions, using a clear table format is highly recommended for readability and ensures all comparative points are well-organized and easy to evaluate.

Question 3. Distinguish between indigenous banks and commercial banks. Answer: Difference between indigenous banks and commercial banks.

🎯 Exam Tip: Comparative questions require a clear side-by-side analysis; ensure your points directly contrast each other for effective distinction between indigenous and commercial banks.

Indigenous Bankers Long Answer Type Questions (4 Marks)

Question 1. Discuss the functions of indigenous bankers and also discuss its demerits. Or Who are indigenous bankers? Briefly describe the demerits of indigenous bankers in India. Or What are indigenous bankers? Mention its two defects.
Answer: Functions of Indigenous Bankers: Following are the main functions of indigenous bankers:
1. Lending of Money: Lending of money is the foremost function of indigenous bankers. Money is lent without any security other than that of borrower's own reliability. But in certain cases, security accepted by them is in the form of land, crops or ornaments.
2. Acceptance of Deposits: Indigenous bankers accept both types of deposits-short-term and long-term deposits, which are repayable either on-demand or after some fixed period.
3. Dealing in Hundis: Indigenous bankers issue hundis to the traders and others for accommodation and remittance purpose. The function of discounting Hundis is also performed by them.
4. Other Functions: Some of the other functions performed by Indigenous bankers are as follows:
• They also perform the function of sending money from one place to another.
• They also assist in the trade of import and export.
• They also perform the trade of grains, gold, silver, clothes etc. They also invest money in speculation.
Demerits of Indigenous Bankers: Main drawbacks of these bankers are as below:
1. The rate of interest charged by indigenous bankers is very high. Because of charging such high rate of interest, the poor farmers are always exploited and their financial position does not improve.
2. Indigenous bankers accept only nominal deposits from the public. For the purpose of granting the loan, they utilise their own capital. This policy of indigenous bankers retards the saving habit of those living in that area.
3. In certain cases, it has come to light that the indigenous bankers indulge in fraudulent practices. They take the thumb impression of the uneducated farmers on a plain paper and then fill in more amount than actually given to them.
4. No banking principles are followed by them, nor any book of account is maintained.
5. There may be the cases that the farmers are unable to repay the loan and the interest of indigenous bankers. In such a case, the bankers purchase the crops of the farmers at a very nominal rate.
6. Indigenous bankers also satisfy the personal monetary needs of the villagers which develop the habit of extravagance and uneconomical expenditure.
7. There is no control exercised by Reserve Bank of India upon indigenous bankers which develops inefficient management.
In simple words: Indigenous bankers primarily lend money, accept deposits, and deal in hundis, besides facilitating trade and remittances, serving as crucial financial intermediaries especially in rural areas. However, their demerits include charging very high interest rates, utilizing limited deposits, engaging in fraudulent practices, lacking formal banking principles and RBI control, which often leads to farmer exploitation and inefficient financial management.

🎯 Exam Tip: For long answer questions combining functions and demerits, use clear headings and bullet points for each section. Ensure you provide sufficient detail for each point to justify the marks allocated, and connect the demerits to their broader socio-economic impacts.

Question 2. State the drawbacks of Indigenous Bankers.
Answer: Drawbacks of Indigenous Bankers: The following are drawbacks of indigenous bankers. 1. High Rate of Interest: The indigenous bankers charge a higher rate of interest. Thus, the poor farmers are exploited by them.
2. Inadequacy of Funds: The indigenous bankers accept only nominal deposits from the public. They utilize only their own capital for providing loans. Thus, the people of that area do not develop the habit of saving. The demand of the farmer is more and the capital available with the indigenous bankers is less, which leads to high rate interest. Another problem is that the needs of all the farmers are not fulfilled.
3. Fraudulent Practice: indigenous bankers adopt fraudulent practices. They take the thumb impression of the uneducated farmers on a plain paper and then they fill more amount in it than actually given to them.
4. Lack of Sound Banking Principles: They do not adopt banking principles and their books of accounts are not proper.
5. Nominal Payment for Crop: If the farmer is unable to repay the loan and the interest of indigenous bankers, then bankers purchase the crops of the farmers at a very nominal rate and sometimes they also take the land of the farmers at a very cheap rate.
6. Advances for Consumption Needs: The indigenous bankers also give loan for personal needs which develop the habit of extravagance and uneconomical expenditures made by people. As the loan is easily available, the villagers spend a lot on marriages and other social customs etc.
7. No Control of Reserve Bank of India: The Reserve Bank of India has no control over indigenous bankers because there is no such law by which Reserve Bank of India can exercise its control over them.
8. Legal Proceedings Against Farmers: When the loan is not repaid by the farmers, the indigenous bankers take legal action against them. The borrower has to spend a lot of money to defend himself against legal proceedings.
In simple words: Indigenous bankers suffer from several drawbacks, including charging exorbitant interest rates that exploit farmers, limited funds due to nominal deposit acceptance, engaging in fraudulent practices, lacking sound banking principles, offering meager payments for crops in default, promoting uneconomical consumption through easy loans, operating without RBI control, and initiating costly legal actions against defaulting farmers.

🎯 Exam Tip: When asked to list drawbacks, aim for a comprehensive list with concise explanations for each point. Emphasize the socio-economic implications of these drawbacks, especially for the rural population and agricultural sector.