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MSSP - Class 9 ppt

  1. 1. Financial Education Class IX
  2. 2. Investment
  3. 3. Types of Investment  Direct Equity  Mutual Funds  Insurance  Fixed Deposit  The buying of shares on a stock market and holding by individual investors in anticipation of dividends and capital gains with changes in its value.  Professionally managed pools of money from investors with similar investment objectives.  Investments that protect you and your family against an uncertain future.  An investment with reliable and pre- defined goal for its return.
  4. 4. Types of Investment (cont.)  Bonds  Gold  Real Estate  A fixed income bearing investment product in which an investor lends money to a company or government in return of interest.  A traditionally favoured investment option as a long term investment.  An investment option which generate an ongoing income source in the form of rent and also can raise in value over time.
  5. 5. Financial Sector Reforms and Insurance
  6. 6. IRDAI  IRDAI stands for Insurance Regulatory and Development Authority of India.  It regulates insurance industry in India.  IRDAI as a statutory body was set up in 1999.  Major function of IRDAI includes protecting the interests of the policyholders and regulating, promoting and ensuring orderly growth of insurance industry in India.
  7. 7. Source of funds
  8. 8. Classification of source of funds  In case of proprietary and partnership concerns, the funds may be raised either from personal sources or borrowings from banks, friends etc.  In case of company form of organization, the different sources of business finance available may be categorized on different basis viz., period, source of generation and the ownership.
  9. 9. On the basis of Period • Shares and debentures • Loans from financial institutions Long Term • Certificate of deposits • Lease financing and loans from financial institutions Medium Term • Trade credit, Customer Advance • Overdraft, Discounting of Bill Short Term
  10. 10. On the basis of Ownership • Funds provided by the owners of an enterprise, which may be a sole trader or partners or shareholders of a company • Equity, related earnings Owner’s Fund • Funds raised through loans and borrowings • Loans from financial institutions, debentures, trade credit, certificate of deposits. Borrower’s Fund
  11. 11. Equity Shares  A company divides its capital into shares.  These are offered to investors to raise capital.  The owner of equity shares are the owner of the company in proportion to their shareholding.  Company may distribute its profit to shareholders which is called dividend.  Value of shares will increase and decrease based on the performance of the company.
  12. 12. Preference Shares  They are different categories of shares where in preference share holders get preference over equity share holders for payment of dividend and payback of capital.  They have to pay a fixed amount of dividend to the investor in case of profit.
  13. 13. Debentures  Issued to raise loan from investor at specific rate of interest for the specific period.  The company has to pay interest and repay the amount invested after specific period.  Debenture holders are not the owners of the company.
  14. 14. Loans from Financial Institutions  Demand Loan  Term Loan  Cash Credit  Overdraft  Discountin g of Bill  The entire amount is paid to the debtor at one time, either in cash or by transfer to his savings bank or current account.  Generally granted for fixed capital requirements, e.g. investment in plant and equipment, land, flat and building etc. Interest has to be paid at pre- decided interest rate.  A drawing account against credit granted by the bank and is operated in same way as a current account in which an overdraft limit has been sanctioned. Usually granted against the security of goods.  It lets its account holders draw over and above his own balance up to the extent of the limit stipulated.  Banks also advance funds by discounting bills of exchange.
  15. 15. Raising fund from Customers and Suppliers • It is popular when the price of order is very high. • Payment towards the price on the product which will be delivered in a next date. Customer’s Advance • The process of buying equipment and supplies for your business from suppliers or vendors, without making payment immediately. • “buy now, pay later”, commonly used as a source of short-term financing. Trade Credit • Profits generated by a company that are not distributed to shareholders as dividends but are either reinvested or kept as reserve. Retained Earnings • One of the important sources of medium and long-term financing where the owner of an asset gives another person, the right to use that asset. Lease Financing
  16. 16. PAN Card and Aadhaar Card
  17. 17. PAN and its Purpose  Permanent Account Number (PAN) is a 10 digit alphanumeric number issued by the Income Tax Department.  It enables the department to link all financial transactions of the “person” and acts as its identifier with the tax department.  It is mandatory to quote PAN on return of income.  It is also compulsory to quote PAN in all documents pertaining to economic or financial transactions of Direct Taxes.  It is mandatory to mention PAN for obtaining a telephone or cellular telephone connection.  PAN has to be mentioned for making time deposit with a bank/post office exceeding Rs.50,000/- or depositing Rs.50,000/- or more in a Bank.
  18. 18. Aadhaar and its Purpose  It is a 12-digit unique number which the Unique Identification Authority of India (UIDAI) will issue to all residents in India. It stores basic demographic and biometric information.  It is easily verifiable.  Unique and robust enough to eliminate the large number of duplicate and fake identities in government and private database.  It is for every individual, including infants.  Each individual will be given a single unique Aadhaar ID number.  It does not replace any other ID e.g. Passport, ration card.
  19. 19. Benefits of Aadhaar  Great potential for not-so-privileged, poor and the marginalized people, mostly the rural population.  Clear and unchangeable proof of identity.  Facilitate entry for poor and underprivileged residents into the formal banking system.  Opportunity to avail services provided by the government and the private sector.  Giving migrants mobility of identity.  Financial inclusion with deeper penetration, easy distribution and direct benefit transfer.
  20. 20. Grievance Redressal Mechanism in Insurance
  21. 21. Role of IRDAI in Grievance Redressal and Channels of receiving Grievances  Channels: - Toll free number - E-mail on the official mail - Registering a complaint on IGMS - Complaint through letter/courier.  Role of IRDAI - Facilitates registration of complaints against insurers. - Facilitates resolution of complaints by insurers. - Monitors timeliness of disposal. - Takes up complaints on a sample basis for off-site supervision. - Uses MIS based on complaints for monitoring market conduct and regulatory compliance.
  22. 22. Credit Cards and Debit Cards
  23. 23. Samples CREDIT CARD DEBIT CARD
  24. 24. Credit Card  Issued by a financial institution, usually banks, giving the holder an option to buy goods and services without making any actual cash payment.  A type of short-term borrowing.  The card holder has to pay the money back to the bank within 30-50 days and an interest is charged on late payment. Debit Card  Issued by a bank which allows the holder access to his account to withdraw cash or pay for goods and services.  A type of plastic money which only allows access to ones own deposited money.  The card holder can go to an ATM or pay electronically at merchant locations. It thus removes the need for cheques as it enables immediate transfer and withdrawal of cash.
  25. 25. Advantages Credit Card  Allows to make purchases on credit . It allows you a lot of flexibility.  accurate record-keeping.  Convenient remote purchasing.  No need to carry cash while making purchase or travelling. Debit Card  Easy and convenient withdrawal of funds.  Can be used anywhere to pay for your purchases.  No monthly interest charged on transactions.  Allows ATM access.
  26. 26. Natural Disasters
  27. 27. Protection against Natural Disasters  General insurance policies provide financial benefits which can help in overcoming post- disaster financial shocks.  Public Liability Insurance Act 1991 has made it mandatory for all establishments handling hazardous chemicals to provide compensation to third party victims of industrial accidents.  Having insurance for crops as well as livestock, helps in recovering the financial loss post-disaster.
  28. 28. RBI Central Bank
  29. 29. Quick facts on RBI  The apex monetary and banking institution in India. India’s central bank.  RBI is headed by it’s governor.  RBI regulates the issue of bank notes, keep reserves to secure monetary stability in India and operate the currency and credit system in the best interests of the country.
  30. 30. Functions of RBI  Issue of Currency  Banker to Government  Banker to Banks  Controller of credit and money supply  Regulator and supervisor of banks  Custodian of foreign exchange  Regulator of payment and settlement system  Maintenance of financial stability  Developmental Role
  31. 31. Banks and Loans
  32. 32. Loan  A sum of money borrowed from a financial institution is called loan.  A loan is repaid with an interest.  Interest is the extra money we pay along with the principal amount borrowed.  Banks accept deposits from people and lends them to people for various purposes.
  33. 33. Types of Loans  Loan availed for the purpose of buying a new home is called home loan.  Personal loans are meant to meet the personal needs of an individual.  Vehicle loan or car loan fulfills your dream of having a car or a bike.  Loan availed to pursue higher education is called education loan.  Gold loans can be availed from banks and other financial institutions in exchange for keeping physical gold as security.
  34. 34. Types of Loans (cont.)  Various loans offered to cater the needs of agricultural farmers are called agricultural loans.  A type of loan where banks allow their customers to withdraw more money than they have in their account is called an Over Draft.  Loan provided to either existing business or those venturing into new business on the basis of borrower’s credentials is called business loan.
  35. 35. Process of applying for a loan  An application form for loan is provided by the banks which should be filled correctly and the type of loan you need should be mentioned correctly.  Credit history check is done by the bank to know the credit worthiness of the borrower. CIBIL (Credit Information Bureau India Limited) collects and maintains the records of individual’s payments pertaining to loans and credit cards.  The customer need to produce their identity proofs and other certificates to the bank.  After reviewing all the submitted documents of the borrower, banks may approve or reject the loan application.
  36. 36. Inflation
  37. 37. What is Inflation  Inflation can be defined as a persistent rise in general prices of goods and services in an economy.  Mathematically, inflation is nothing but rate of increase in price.  It is measured by calculating the increase in rate of a price index i.e. the WPI (Wholesale Price Index) and the CPI (Consumer Price Index).  WPI is extensively used as a measure of inflation in India.
  38. 38. Types of Inflation  Inflation due to excess demand is called Demand Pull Inflation. Aggregate Demand > Aggregate Supply.  Cost-push inflation occurs because of rise in input prices i.e. rising costs.  Supply-shock inflation relates to a considerable increase in the cost of goods and services that are considered to be essential and somewhat difficult to substitute. It involves a trickledown effect.
  39. 39. Risk and Insurance  The term risk means the chance of suffering loss due to possibility of adverse events beyond control of man.  The events that give rise to risks are known as perils.  The essences of the Insurance scheme is that it is a -social science -accumulation of funds -involves a group of risks -transfer of risk to the whole group.  Insurance is an arrangement through which a person can plan for the continuation of income when certain events disrupt one’s ability to earn livelihood.
  40. 40. Thank You Email : ncfe@nism.ac.in Call : 022 6673 5100-05 Like : facebook.com/ncfeindia Follow : twitter.com/ncfeindia Share : youtube.com/ncfeindia