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Question
Identify and explain the concept from the given illustration:
Sara makes a monthly contribution to a fund jointly created by her friends. The collected fund is then given to a chosen member through lucky draw.
Solution
Concept: Chit fund
Explanation:
- Chit fund is an unregulated non-banking financial intermediary in which members make regular contributions to the fund. Bids/draws are made based on some criteria mutually agreed upon by members. Accordingly, the collected fund is given to the chosen member.
- Hence, this illustration relates to the concept of ‘chit fund’ as Sara makes a monthly contribution to a fund created by friends and the collected fund is given to a chosen member through a lucky draw.
RELATED QUESTIONS
Complete the correlation:
Co-operative banks : Organized sector :: Indigenous bankers : ___________
Find the odd word out:
Unregulated Financial intermediates:
Assertion and Reasoning:
Assertion (A): The unorganized sector of the money market lacks transparency.
Reasoning (R): Activities of the unorganized sector are largely confined to rural areas.
Distinguish between Organized sector and Unorganized sector of the money market.
Find the odd word
Unregulated non-bank financial intermediaries -
Explain the structure of unorganized sector of money market in India
- Assertion (A): The unorganized sector of the money market Lacks transparency.
- Reasoning (R): Activities of the unorganized sector are Largely confined to rural areas.
Complete the correlation:
Co-operative banks : Organised Sector :: Indigenous bankers : ______
Factors which are working in unorganized money market.
- Money lenders
- Commercial bank
- Hundi
- Chit funds
