Money and Credit

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• Summary

1. Before the introduction of coins, a variety of objects was used as money. For example, since the very early ages, Indians used grains and cattle as money. 
2. Thereafter came the use of metallic coins — gold, silver, copper coins — a phase which continued well into the last century.

1. Modern forms of money include currency — paper notes and coins.
2. Currency is accepted as a medium of exchange as it is authorised by the government of the country.
3. In India, the Reserve Bank of India issues currency notes on behalf of the central government.
4. As per Indian law, no other individual or organization is allowed to issue currency.
5. No individual in India can legally refuse a payment made in rupees. Therefore, the rupee is widely accepted as a medium of exchange.

1. The other form in which people hold money is as deposits with banks.
2. People deposit money with the banks by opening a bank account in their name.
3. Banks not only provide security to their money but also give them interest on their deposits.
4. Customers are authorised to withdraw their money anytime and banks are liable to pay them on demand, therefore these deposits are called demand deposits.
5. Bank also offers cheque facilities to their depositors for settlement of their payments without the use of cash.