FINANCIAL LITERACY CHAPTER SUMMARY
1. Banking Cards and Precautions
- Debit Card: This is also known as an ATM card. It allows you to
withdraw cash, deposit money, and make cashless payments at shops. The
money is deducted directly from your bank account, and these cards are
protected by a PIN. The biggest benefit is that you don't need to carry
physical cash.
- Credit Card: This card provides "instant credit," which
means you can borrow money from the bank to buy things now and pay later.
The bank sets a "credit limit" for you. You usually have 30 to
45 days to pay it back; if you don't, the bank charges interest.
- Precautions: You must be very careful while using these cards.
Never share your PIN, card number, CVV, or expiry date with anyone.
If your card is lost or stolen, report it to the bank immediately to block
it.
2. Digital Payments
- Internet Banking: This allows you to access your bank account online
using a smartphone or laptop. You can transfer money using NEFT
(within the country), RTGS (for large amounts of a minimum of ₹2 lakhs),
or IMPS (instant transfer up to ₹2 lakhs).
- Unified Payments Interface
(UPI): Developed by the NPCI, this is
a very simple way to send money instantly using a UPI ID or QR code. It
follows a "two-factor authentication" rule, including a mobile
number link and a UPI PIN.
- Precautions: Never use public Wi-Fi for payments. Very
Important: A PIN is only needed to send money, not to receive
it. Never scan a QR code to receive money.
3. Banks and Their Functions
- What is a Bank?: It is a financial institution that takes savings from
people (savers) and gives them as loans to others (borrowers) like farmers
or students.
- Origin: The word "Bank" comes from Italian words
like banco or German banck. The first bank in Assam was the Gauhati
Bank, set up in 1926.
- The Central Bank (RBI): The Reserve Bank of India is the head of all banks in
India and was set up in 1935. Its main jobs are printing currency,
controlling the money supply, acting as a "banker's bank," and
managing foreign exchange.
- Specialized Banks:
- RRBs (1975): Provide cheap loans to villagers.
- NABARD (1982): The main bank for rural and agricultural credit.
- IDBI (1964): Helps large industries.
- SIDBI (1990): Helps small industries with technology and finance.
- NBFIs: Unlike banks, Non-Banking Financial Institutions do
not allow you to withdraw money using cheques and do not have deposit
insurance.
4. Financial Market and Instruments
- The Financial Market: This is a place where buyers and sellers trade
financial securities like stocks and bonds. SEBI
(est. 1992) is the main regulator that watches over this market.
- Market Types: The Primary Market is where new securities are
issued for the first time (like an IPO), while the Secondary Market
(stock exchange) is where existing securities are traded.
- Instruments:
- Stocks: Represent ownership in a company.
- Bonds: Debt instruments where you lend money to a company or
government for interest.
- Mutual Funds: A "pool" of money from many investors
managed by a professional "fund manager."
- SIP: A plan where you invest a fixed small amount
regularly in mutual funds.
5. Important Documentation
- PAN Card: A 10-digit alphanumeric number issued by the Income
Tax Department for all tax-related info.
- Aadhaar: A unique ID that serves as proof of identity and
address throughout India. It is essential for "KYC" (Know Your
Customer) when opening bank accounts.
6. Cyber Frauds and Security
- Types of Fraud: Criminals use the internet to steal money through Phishing
(fake emails), Identity Theft (stealing personal info), or Ransomware
(locking your computer files for money).
- How to stay safe: Use strong passwords that are hard to guess, update
your software regularly, and never click on suspicious links. Cyber
Security is the practice of defending your digital devices from these
attacks.
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