NCERT Solutions for Class 7th Social Science Chapter 20 After the story of Navdeep’s deposit and Rima’s loan (Fig. 8.3) — THINK ABOUT IT

Book page 196 Updated on2026-09-19

Q1.

Why does Navdeep think that saving at the bank is better than keeping cash at home?

Answer

Because at home ₹3000 stays ₹3000 and can be lost; at the bank it is safe and it grows. The chapter’s own reason comes first: “Saving all that money in his cupboard might not be safe.”

	₹3000 in the cupboard	₹3000 in the bank
Safety	Can be stolen, burnt, lost or damaged; no one can replace it	The bank keeps it safe, in his name
Growth	Stays exactly ₹3000 for ever	Earns interest quarterly, monthly or annually — and with compounding, interest on interest
Record	Nothing written down; easy to spend without noticing	Every rupee in and out is entered in the passbook (Fig. 8.7)
Use	Only usable as cash, in person	Can be paid out by cheque, debit card, netbanking or UPI, and withdrawn at any ATM 24×7
Discipline	Money in the cupboard is easy to dip into	A savings account has limits on how often money can be withdrawn each month

There is a further reason the chapter adds later, and it matters: money kept at home helps nobody else. Money deposited in a bank is lent onwards — to Rima, to a farmer, to a student — so it does work while it waits for Navdeep.

Why it happens: a bank can pay Navdeep interest only because it does not keep his notes lying in a vault. It lends them at a higher rate and passes part of that back to him. So the safety and the growth come from the same fact — the bank puts his money to work while promising to return it.

Q2.

Can Navdeep and Rima lend to each other directly without the bank? What could happen in that case? Discuss.

Answer

Yes, they can — people have always lent to each other — but it works only if a great deal goes right, and that is exactly why banks exist. The chapter itself says Rima turned to a bank when “friends and family couldn’t help as much as required”.

What could go wrong in a direct loan

They may never meet. Navdeep has ₹3000 to spare; Rima needs money for bamboo. Nothing tells either of them that the other exists.
The amounts may not match. Rima may need much more than one person’s savings — the chapter says the bank “provides Rima with the remaining amount she needs”.
The timing may not match. Navdeep may want his money back next month; Rima can only repay after she sells her products.
Trust and information. Navdeep has no way of knowing whether Rima’s business will do well. A bank checks the borrower’s purpose and capacity before lending.
No proof and no rules. A private loan often has nothing in writing — no agreed rate, no repayment date. If there is a quarrel, there is no record. In the bank both sides get written terms and entries in a passbook.
The whole risk falls on one person. If Rima cannot repay, Navdeep loses his entire savings. A bank spreads its lending over very many borrowers, and it also keeps reserve money instead of lending everything out.

Why it happens: a bank is doing something a single lender cannot do — it is pooling. It collects small deposits from thousands of Navdeeps, and lends larger sums to many Rimas. Because deposits keep coming in while loans are being repaid, the bank can promise every depositor his money back even though the money itself is out working. That is why a bank can serve both people at once, and a direct loan can serve only one.

Discuss in class: ask whether a village moneylender solves the same problem as a bank. What does he offer that a bank does not — and what does a bank offer that he does not?

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