Here, you will find summaries, questions, answers, textbook solutions, pdf, extras etc. of (Nagaland Board) NBSE Class 10 Financial Literacy Chapter 2: Modern Day Banking. These solutions, however, should be only treated as references and can be modified/changed.
Summary
The Reserve Bank of India has issued guidelines allowing minors to operate bank accounts independently with a view to promote financial inclusion. A Savings Account is meant for depositing and withdrawing money whenever required, leaving the balance for savings. Banks pay interest for the savings, with the rate of interest ranging between 3.5% to 6% per annum. There is no restriction on the number and amount of deposits, but withdrawals are subjected to certain restrictions. Savings account helps to inculcate a habit of savings in individuals as well as families.
A Fixed Deposit Account, or FD Account, is an account where a sum of money is deposited or invested for a specific time period. The money deposited into this account is usually not withdrawn before the expiry of the Fixed Deposit Term, hence it is also called a Term Deposit Account. Banks pay a higher rate of interest for Fixed Deposits than in case of Savings accounts.
A Current Account is usually used by business persons, firms, and companies, with the objective of carrying out business transactions rather than savings or investment. Banks do not pay any interest on the amount held in the current account.
A Recurring Deposit Account, or RD Account, is for those who want to save a fixed sum of money periodically, usually every month. The rate of interest on RD Account is usually higher, with the period of deposit being minimum six months and maximum ten years. The interest rates vary according to plans.
Minors above 10 years of age can independently open and operate bank accounts, while children below the age of 10 years can open a bank account with the help of their guardian. To open a Savings Account, minors above 10 years of age need the following documents: ID and address proof of minor, photograph of minor, declaration from minor, and declaration along with ID proof of guardian (for guardian consent account).
At a bank, customers can find various counters for different services, such as Reception or “May I help you” counter, Deposit counter, Withdrawal counter, and Miscellaneous counter. The Deposit counter is used to deposit cash or cheques into an account, while the Withdrawal counter is used to withdraw cash from the account.
In Modern Banking, transfer of funds has become much more convenient and hassle-free. From issuance of cheque and demand draft, it has moved to NEFT, RTGS, and now IMPS. A cheque is an instrument used for banking transactions, which is a written mandate given by the account holder to his/her bank to make the payment as per the details mentioned therein. A Demand Draft is an instrument through which the payer remits the money to the receiver with an arrangement through a Bank.
For electronic transfer of money, banks provide three options: NEFT, RTGS, and IMPS. NEFT is the most popular method of transferring funds, which is an electronic fund transfer system that settles transactions in batches during the bank’s working hours. RTGS happens in real-time and gross basis, where the transaction is settled individually, and is meant for high-value transactions of minimum 2 lakh. IMPS is for instant money transfer, with the service available 24 hours a day, and a maximum transfer limit of 2 lakh.
Starting early in life with savings and investments is always beneficial, and opening a bank account for a minor child, often called a Junior account by some banks, is a great way to teach them the meaning of money and savings while planning for their future.
Textual questions and answers (MCQs)
1. Banks are ______ Institutions.
(a) Financial (b) Educational (c) Charitable
Answer: (a) Financial
2. ______ Account is mainly used by business persons.
(a) Current (b) Savings (c) Recurring Deposit
Answer: (a) Current
3. A sum of money not required at the moment can be deposited in _____
(a) Savings Account (b) Term Deposit Account (c) Recurring Deposit Account
Answer: (b) Term Deposit Account
4. IMPS Stands for _____
(a) Immediate Payment Service (b) Instant Payment Service (c) Immediate Payment Solution
Answer: (a) Immediate Payment Service
5. The rate of interest ranges in Savings Account between _____
(a) 8% to 10% per annum (b) 5% to 8% per annum (c) 3.5% to 6% per annum
Answer: (c) 3.5% to 6% per annum
Extra/additional MCQs
1. What is the primary purpose of a Savings Account?
A. Saving purposes B. Business transactions C. Fixed investments D. Periodic deposits
Answer: A. Saving purposes
2. What is the typical interest rate range for a Savings Account?
A. 1% to 2% B. 2.5% to 4% C. 3.5% to 6% D. 7% to 9%
Answer: C. 3.5% to 6%
3. What type of account is also known as a Term Deposit Account?
A. Savings Account B. Current Account C. Fixed Deposit Account D. Recurring Deposit Account
Answer: C. Fixed Deposit Account
53. Which type of account incurs a higher rate of interest compared to a Savings Account?
A. Current Account B. Fixed Deposit Account C. Recurring Deposit Account D. Both B and C
Answer: D. Both B and C
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