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Social Science · 2025 · 5 marks
CBSE 2025 · Region 4 · Set 2 · Q33
(A) Analyse the role of credit in rural economy.
(A)
Analyse the role of credit in rural economy.
OR
(B)
Analyse the differences between formal and informal sectors of credit.
Marking-scheme solution
(i) Important for economic growth and development of rural economy.
(ii) Encourages farmers to invest in non-agricultural activities.
(iii) Supports the farmer to modernize agricultural practices.
(iv) Increases production of agricultural output.
(v) Helps to manage ongoing expenses.
(vi) Can put a farmer in a debt trap.
| Formal Sources of Credit | Informal Sources of credit |
| The Reserve Bank of India supervises their functioning. | No one supervises their functioning. |
| In urban areas, it is the main source of credit. | In rural areas, it is the main source of credit. |
| Collateral is required. | There is no need of collateral. |
| Cost of borrowing is low. | Cost of borrowing is high. |
| The process of lending is long and complicated. | Credit is easily available. |
| Do not use unfair means to get their money back. | Use unfair means to get their money back. |
| Example: Banks, Cooperatives, etc. | Example: Moneylenders, friends, family, relatives, agricultural traders, etc. |
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CBSE Class 10 Social Science past-paper question from the 2025 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.