Financial Literacy: An Overview

This course helps you gain a clear understanding of money matters. You learn how to manage your
money smartly, how to spend and save, and also how to grow your money.

Some important financial concepts are:

Needs: A necessity, something that is required, and something that is essential for life. Food, shelter,
clothes, education, etc. are needs
Wants: A desire, something that is wished for, something that is non-essential. Expensive shoes,
expensive mobiles, expensive clothes are some examples of wants.

The money you earn by working at a company is called Income. The money you spend on purchasing
things, paying bills, etc. is Expenditure. The money you are left after that is our Savings.

Why do you think savings are important?

• In case of an emergency in future
• To plan and buy something special for yourself or your loved ones

In Order to save money, you need to do Budgeting. By budgeting, you can ensure that you have enough
money to handle a major expense and not merely the surplus. Budgeting means planning your expenditure
in a way that will leave you with some extra money to save.

To open an account, you will require 2 passport-size photographs and a few copies of KYC documents.
KYC or Know Your Customer is a mandatory procedure done by banks at the time of opening a new
account. KYC documents are: Voter's Identity Card, Driving License, Aadhar Letter/Card, NREGA card,
PAN Card.

When you go to the bank to deposit or withdraw money you need to meet the specific person who is
responsible for taking and giving the money to customers in a bank. They are called Teller.

When you keep our money in the bank account, you are paid Interest by the bank. Interest is calculated
by this formula, SI = PxRxT

There are other ways to save money in the bank account:

Fixed Deposit (FD): An amount is put in a fixed deposit account once. The entire amount is blocked for
the period of deposit. The amount of interest is more than the interest received in a savings account.
Recurring Deposit (RD): Money is deposited periodically. The interest rate, once determined, does not
change during the tenure; and on maturity, the individual will be paid a lump sum amount which includes
the regular investments as well as the interest earned.

Apart from bank you can get similar services in a Post Office. The process is exactly the same. Even a
10-year-old minor can open a savings account in the Post Office.

There are two types of loans:

Secured Loan is connected to a guarantee or collateral. E.g., car loan, home loan.
Unsecured Loan doesn't require any type of collateral. Lenders approve unsecured loans based on a
borrower's creditworthiness. E.g., personal loans, student loans.
Collateral: Collateral is something of value like a car or a house or land. If the borrower does not pay
back the amount borrowed on time, then the lender has the right to take possession of the collateral.
Credit Cards are also a type of unsecured loan. Credit cards allow you to borrow money from the card
issuer up to a certain limit. You have to pay back the amount within a specified time otherwise a penalty
is charged. The interest on credit cards is much higher. You must borrow money responsibly and only
when absolutely necessary.

You must complete your education first with the support of various government schemes. If someone is
forcing you to get married you must call Child helpline number that is 1098.

There are two types of taxes: Direct and Indirect.

CGST and SGST. These are the little extra amount that you pay on purchase of items such as medicines,
clothes, shoes, scooters, jewelry, furniture, etc. The tax amount is your contribution to the government.
These are Indirect Taxes.
Tax Deducted at Source (TDS) is collected tax from any source of income. TDS is also deducted from
the interest earned. When you file your Income Tax Return (ITR) the TDS amount is returned to you by
the government, if you are found eligible. PAN (Permanent Account Number) is an identification
number assigned to all taxpayers in India. All the taxes you pay are linked to your PAN card. It
is useful for claiming tax refunds.
When you cannot go to the bank:
A Banking Correspondent or a Business Correspondent (BC) is appointed by the bank to take
financial services to the doorstep of individuals where banks are not available.

Payment and money transfer can be done online; they are called Digital Payments. E.g., shopping,
booking tickets, booking taxis and hotels, enrolling for a course and so on.
Through Internet banking you conduct financial transactions at the bank’s website. Type of transactions
are NEFT, RTGS, IMPS
Mobile Banking is used to conduct financial transactions remotely using a mobile device. You can use
Mobile Wallet, a way to carry cash in digital format. Your account is required to be linked to the digital
wallet to load money in it. e.g., Paytm, Phone Pe.

Different types of Insurance policy:

1. Life Insurance provides a financial cover where in case of an unforeseen death, the amount
would go to your nominee at the time of her death
2. Property Insurance protects homes and other property like shops against theft, floods,
earthquake, cyclones, fire or any unseen threats
3. Health Insurance covers medical expenses that may arise due to an illness
4. Accident Insurance provides compensation for the insured person meeting with an accident
which includes a broken limb, loss of a limb, burns, lacerations, or paralysis.
5. Vehicle Insurance is compulsory for every vehicle and provides protection to the vehicle owners
against the risk of any legal liability and/or accidental damage to the vehicle.
6. Travel Insurance covers risks associated with traveling such as loss of luggage, delays, thefts
and death or injury while travelling
7. Crop Insurance provides insurance cover to farmers in the event of loss or damage to crops due
to any natural disasters and infestation of pests etc.

Points to remember for Complaints:

Reserve Bank of India (RBI) governs all financial institutes. If needed, complaints can be sent online at
cms.rbi.org.in or by post to the following address:
Chief General Manager,
Reserve Bank of India
Consumer Education & Protection Department, Central Office,
First Floor, Amar Building, Perin Nariman Street, Mumbai 400001
In case of any problem with the bank the first step is to submit a complaint letter to the Branch
Manager of the bank. After a month if the bank rejects the complaint or if you are not happy
with the resolution, you can approach the Banking Ombudsman. Whenever you visit the bank,
please note the name and details of the Banking Ombudsman. The details will be found on the
noticeboard.

For complaints against Insurance and redressal inform the Insurance Regulatory and Development
Authority of India (IRDAI) through mails, phone or emails to the IRDAI Grievance Call Centre and
inform the Insurer too.
Complaints can be registered online at www.igms.irda.gov.in (or) you can call toll free number 155255
(or) 18004254732.
• If the response is satisfactory then the case is closed OR
• The case can be escalated to the Ombudsman/Consumer Court/Civil Court

Pension Fund Regulatory and Development Authority (PFRDA) is the body to approach in case of
pension related complaints or fraud. registered complaints online at https://www.cra-nsdl.com/CRA/ (or)
you call the Toll-free number: 1-800-2220

Cyber-crimes are reported to a separate section called Cyber-crime cells. You can register a complaint
with ‘National Cyber Crime Reporting Portal’