Tag: Strategic Marketing Management Mumbai University BMS Notes

A systematic investment plan (SIP) is an investment vehicle offered by many mutual funds to investors, allowing them to invest small amounts periodically instead of lump sums. The frequency of investment is usually weekly, monthly or quarterly.

In SIPs, a fixed amount of money is debited by the investors in bank accounts periodically and invested in a specified mutual fund. The investor is allocated a number of units according to the current Net asset value. Every time a sum is invested, more units are added to the investors account.

The strategy claims to free the investors from speculating in volatile markets by dollar cost averaging. As the investor is getting more units when the price is low and fewer units when the price is high, in the long run, the average cost per unit is supposed to be lower.

SIP claims to encourage disciplined investment. SIPs are flexible; the investors may stop investing a plan anytime or may choose to increase or decrease the investment amount. SIP is usually recommended to retail investors who do not have the resources to pursue the active investment.

Benefit:

Power of compounding

Compounding occurs when the returns you earn on your investments start earning returns. This is a simple concept in theory. But its practical implications are substantial.

When you invest regularly through SIPs, your returns get reinvested. Over time, this result in a snowball-effect, that may increase your potential returns manifold. An ideal way to maximise this gain is to invest for an extended period. This also means you may benefit by investing as early as possible.

Rupee cost averaging

Rupee cost averaging is a concept where you purchase more units when the Net Asset Value (NAV) of the fund is low, and lesser units when the NAV is high. Essentially, it averages out your purchasing costs over the tenure of the investment period. You don’t need to worry about how to time the market when you invest through a SIP.

Low initial investment

You can invest in mutual funds through a SIP with just Rs. 500 per month. This can be an affordable way to invest each month without hurting your wallet. You can increase your monthly investment amount with a rise in your income via SIP step-up feature. Mutual fund houses allow investors to top up their SIPs on a regular basis. So, even if you start with Rs. 500 or Rs. 1,000 every month, you can invest more over the years. This strategy can help you reach your investment goals at a faster rate.

Convenience

SIP can be a convenient mode of investing. Like most investors, you may not have the time for extensive market research and analysis to adjust or balance your portfolio. So, once you pick a good fund, you can give standing instructions to the bank and let the SIP take care of your monthly investments.

Indian Post Office Fixed Deposit Interest Rates range between 5.50% and 6.70%. Senior citizens may earn higher rates; 0.25% to 0.50% additional on existing rates. The tenure of the Fixed Deposit (FD) is from 7 days to 5 years. The schemes come with a fixed rate of interest and earning. So, you can consider Post Office FD plans for safe and secured investment. You will also receive an insurance cover on the deposited amount up to a limit.

In this post, we will discuss Indian Post Office FD Interest Rate features, details about National Savings Time Deposit Account, loan against FD, most feasible plans, application procedure, documents required, and frequently asked questions.

Features of Indian Post Office FD Rates

Here are the features:

• You can deposit as less as Rs. 1,000. There is no upper limit to the deposit amount.
• Tenure of the Post Office Fixed Deposit is between 7 days and 5 years.
• The most popular scheme is the National Savings Time Deposit Account.
• The range of interest rate per annum is from 5.50% to 6.70%. It is the Government of India that decides the Indian Post Office Fixed Deposit Interest Rates on a regular basis.
• You can choose to apply for a loan against FD to fulfil any cash liquidity. For this, you do not have to break the fixed deposit.
• You will receive facilities such as nomination and auto-renewal.
• The deposits of up to Rs. 5 lakhs are covered under the RBI’s Deposit Insurance Scheme, insured by the DICGC.

Loan against FD Indian Post Office

You can also choose to take a loan on the Indian Post Office FD.

• The maximum tenure of the loan is the maturity date of the FD.
• The applicable rate on the loan is 6.5% to 7.7%.
• The maximum loan amount offered against the fixed deposit depends on the decision of the authorities.

Most Lucrative FD Scheme by the Indian Post Office

Before you invest in the Indian Post Office FD scheme, you must know the varying tenures and the corresponding interest rates. This will give you an idea as to which scheme will provide you the highest return. For instance, the tenure of 3 years 1 day to 5 years provides the highest rate at 6.70% per annum. But if you are not into long-term deposits, then you may look for a short-term scheme.

The interest rate for short-term schemes is 5.50%. The tenure for the same is 7 days to less than 365 days. Remember that the interest on the FD is applied at the time of maturity. Senior citizens may get an additional 0.25% to 0.50% on the standard rates.

Counterfeiting is the oldest technique used by fraudsters to cheat unsuspecting individuals of their money. Here, the fraudster may handover an imitation currency in exchange for real bank notes under various pretexts like making change or offering help.

Figures & Alignment

In real currency, the figures will be aligned perfectly. But in the fake currency, chances are there to get the figures out of alignments. The gap between digits, smaller or bigger number, and the unaligned digits should be observed carefully.

Look at the Watermark

In a fake currency, the watermark usually looks thick. Pay detail attention to the watermark. The fake currency gang apply oil, grease or wax to give the picture a translucent feel.

Ink Smudge

Real notes will not have ink smudges and broken printed lines. The notes with broken printed lines and ink smudges should be regarded with suspicion.

Security Threads

Security threads that are just drawn or printed on the currency, instead of the original one that is incorporated through the currency.

Typography

In fake notes, the typography for “Reserve Bank of India” will be thicker whereas in real Indian currency will have smoother lettering.

Microlettering

In real currency, the micro-lettering feature appears between the vertical band and Mahatma Gandhi portrait which contains ‘RBI’. A magnifying glass would be required to see this feature well.

Rs 200

Front

Salient features of the New ₹200 Notes

1. See through register with denominational numeral 200,
2. Latent image with denominational numeral 200,
3. Denominational numeral २०० in Devnagari,
4. Portrait of Mahatma Gandhi at the centre,
5. Micro letters ‘RBI’, ‘भारत’, ‘India’ and ‘200’,
6. Windowed security thread with inscriptions ‘भारत’and RBI with colour shift. Colour of the thread changes from green to blue when the note is tilted,
7. Guarantee Clause, Governor’s signature with Promise Clause and RBI emblem towards right of Mahatma Gandhi portrait,
8. Denominational numeral with Rupee Symbol, ₹ 200 in colour changing ink (green to blue) on bottom right,
9. Ashoka Pillar emblem on the right,
10. Mahatma Gandhi portrait and electrotype (200) watermarks,
11. Number panel with numerals growing from small to big on the top left side and bottom right side,
12. For visually impaired

Intaglio or raised printing of Mahatma Gandhi portrait, Ashoka Pillar emblem, raised Identification mark H with micro-text ₹ 200, four angular bleed lines with two circles in between the lines both on the right and left sides

Reverse

13. Year of printing of the note on the left,
14. Swachh Bharat logo with slogan,
15. Language panel,
16. Motif of Sanchi Stupa,
17. Denominational numeral २०० in Devnagari

Rs 500

The new ₹500 notes in the Mahatma Gandhi (New) Series are different from the present series in colour, size, theme, location of security features and design elements. The size of the new note is 66mm x 150mm. The colour of the notes is stone grey and the predominant new theme is Indian heritage site; Red Fort.

• See through Register
• Latent image
• Denominational numeral in Devnagari
• Mahatma Gandhi portrait
• Security thread
• Guarantee clause
• Portrait and electrotype watermark
• Number panel
• Denomination in numerals
• Ashoka pillar emblem
• Intaglio printing
• Intaglio printing on the lines for visually impaired

Rs 2000

The Reserve Bank of India is introducing new design banknotes in the denomination of ₹2000 as part of Mahatma Gandhi(New) Series. The new denomination has motif of the Mangalyaan on the reverse, depicting the country’s first venture in interplanetary space. The base colour of the note is magenta. The note has other designs, geometric patterns aligning with the overall colour scheme, both on the obverse and the reverse. The size of the new note is 66mm x 166mm

• See through Register
• Latent image
• Denominational numeral in Devnagari
• Mahatma Gandhi portrait
• Micro letters “RBI” & “2000”
• Security thread with inscription “Bharat”
• Guarantee clause
• Portrait and electrotype watermark
• Number panel
• Denomination in numerals
• Ashoka pillar emblem
• Intaglio printing
• Intaglio printing on the lines for visually impaired

Savings Bank Account

A savings account is an interest-bearing deposit account held at a bank or other financial institution. Though these accounts typically pay a modest interest rate, their safety and reliability make them a great option for parking cash you want available for short-term needs.

People deposit funds in savings account for a variety of reasons, including a safe place to hold their cash. Savings accounts normally pay interest as well: almost all of them accrue compound interest over time. Several countries require savings accounts to be protected by deposit insurance and some countries provide a government guarantee for at least a portion of the account balance.

There are many types of savings accounts, often serving particular purposes. These can include accounts for young savers, accounts for retirees, Christmas club accounts, investment accounts, and money market accounts. Some savings accounts also have other special requirements, such as a minimum initial deposit, deposits made regularly, and notices of withdrawal.

Some savings accounts require a minimum balance in order to avoid monthly fees or earn the highest published rate, while others have no balance requirement. Know the rules of your particular account to ensure you avoid diluting your earnings with fees.

Money can be transferred in or out of your savings account online, at a branch or ATM, by electronic transfer, or direct deposit. Transfers can usually be arranged by phone, as well.

Recurring Deposit

A recurring deposit is a special kind of term deposit offered by Indian banks which help people with regular incomes to deposit a fixed amount every month into their recurring deposit account and earn interest at the rate applicable to fixed deposits. It is similar to making fixed deposits of a certain amount in monthly installments. This deposit matures on a specific date in the future along with all the deposits made every month. Recurring deposit schemes allow customers an opportunity to build up their savings through regular monthly deposits of a fixed sum over a fixed period of time. The minimum period of a recurring deposit is six months and the maximum is ten years.

The recurring deposit can be funded by standing instructions which are the instructions by the customer to the bank to withdraw a certain sum of money from his/her savings/current account and credit to the recurring deposit account.

When the recurring deposit account is opened, the maturity value is indicated to the customer assuming that the monthly installments will be paid regularly on due dates. If any installment is delayed, the interest payable in the account will be reduced and will not be sufficient to reach the maturity value. Therefore, the difference in interest will be deducted from the maturity value as a penalty. The rate of penalty will be fixed upfront. Interest is compounded on quarterly basis in recurring deposits.

One can avail loans against the collateral of a recurring deposit up to 80 to 90% of the deposit value.

The rate of interest offered is similar to that of fixed deposits.

Features of a Recurring Deposit Account

• Recurring Deposit schemes aim at inculcating a regular habit of saving in people
• The minimum amount for deposits often varies from one bank to another. You could invest with an amount as small as Rs. 1000.
• The minimum period of deposit is six months, while the maximum period of a deposit is 10 years
• The rate of interest is equivalent to that offered for a Fixed Deposit. Therefore, the interest rates are higher than Savings Account.
• Premature withdrawals are However, depending on the bank, they may allow you to close your account before the maturity period on certain conditions.
• A Recurring Deposit can be funded periodically through Standing Instructions that are usually instructions given by the customer to the bank, to credit the RD account every month from his/her Savings or Current Account.

PPF

Public Provident Fund (PPF) scheme is a long term investment option that offers an attractive rate of interest and returns on the amount invested. The interest earned and the returns are not taxable under Income Tax. One has to open a PPF account under this scheme and the amount deposited during a year will be claimed under section 80C deductions.

Importance:

• PPF is a government-backed scheme, and the investment is also not market-linked. Due to this, it offers guaranteed returns to protect the investment needs of many people.
• PPF account is one of the best investment options for individuals who have a low-risk appetite.
• As the returns from PPF accounts are fixed, they are used as a diversification tool for the investor’s portfolio. Additionally, they also offer tax-saving benefits.

NSC

The NSC scheme is available at all NSC post offices and the Indian Government promotes the NSC scheme. Due to the number of post offices present in India and the easy access to these post offices, the scheme has become very popular in India.

The main aim of the scheme is for individuals to make small or medium savings, and tax benefits are provided for these savings. Since the scheme is encouraged by the Indian Government, the risks of investing in the scheme are low.

The scheme was launched mainly for individuals; therefore, non-resident Indians (NRIs) and Hindu Undivided Families (HUF) are not eligible to opt for this scheme. Only Indian citizens will be able to invest in the NSC scheme.

• Minimum investments: The minimum amount that a certificate can be purchased for is Rs.100. The different denominations that the certificate can be purchased for are Rs.10,000, Rs.5,000, Rs.1,000, Rs.500, and Rs.100. Initially, small investments can be made, and individuals can increase investments when feasible.
• Maturity tenure: 5 years and 10 years are the two maturity periods of the scheme that individuals can choose from.
• Rate of interest: Currently, the rate of interest has been reduced from 7.9% to 6.8%. and it is compounded on an annual basis. However, the interest is payable only at maturity. For example, investment of Rs.100 will get the subscriber Rs.146.93 after 5 years of investment.
• Nominations: Family members including minors can be added as nominees by the investor. In case the investor passes away during the tenure of the scheme, the nominee will be able to inherit the scheme.
• Different types of NSC: Initially, the NSC IX Issue and the NSC VIII Issue were the two types of certificates available. However, as of December 2015, the Government of India stopped the NSC IX Issue. Therefore, only the NSC VIII Issue is available.
• Loans against NSC: The NSC can be used as a security or collateral and can be provided to banks to avail loans. However, the respective post master must authorise the transfer of the certificate to the bank.
• Purchase of NSC: Upon submitting the required documents, the scheme can be purchased at post offices.
• Transfer of certificate: Transfer of NSC is possible from one post office to another. Transfer of certificate from one individual to another is also possible. However, the certificate will remain the same and the name of the new owner shall be written on the certificate and the name of the old owner will be rounded.

Advantages of NSC

• One of the main advantages of investing in the NSC is the tax benefits that individuals can avail on the investments they have made. The returns are also guaranteed under this scheme. Many individuals prefer the NSC scheme as it can provide a regular income once they retire.
• Except for the interest that is earned in the final year, the remaining interest that is generated is tax-free.
• In case individuals lose the original certificate, a duplicate certificate can be obtained.
• Even after the maturity period, individuals have an option to continue investing in the scheme.
• Transfer of the certificate is allowed from one individual to another. However, it is allowed only once during the lock-in period.
• The interest that is generated is compounded on a yearly basis and reinvested towards the scheme. Therefore, the invested amount of the individual increases without purchasing certificates.

Personal Budget

A personal budget or home budget is a finance plan that allocates future personal income towards expenses, savings and debt repayment. Past spending and personal debt are considered when creating a personal budget. There are several methods and tools available for creating, using and adjusting a personal budget. For example, jobs are an income source, while bills and rent payments are expenses.

Purpose

A budget should have a purpose or defined goal that is achieved within a certain time period. Knowing the source and amount of income and the amounts allocated to expense events are as important as when those cash flow events occur. Budgeting’s ultimate goal is to plan different phases of corporate operations, coordinate the actions of various divisions within the company, and maintain effective management.

A budget seeks to achieve the following goals in order to reach this goal:

To forecast the firm’s future sales, manufacturing costs, and other expenses in order to maximise profits while reducing the risk of business losses.

• To forecast the firm’s future financial situation and the requirement for cash to be used in the business in order to keep the company sustainable.
• To determine the capitalization composition in order to ensure that funds are available at a fair cost.
• To coordinate the activities of the firm’s many departments toward shared goals.
• To improve the efficiency of the company’s operations across departments, divisions, and cost centres.
• To establish the roles and duties of various department leaders.
• To establish the roles and duties of various department leaders.
• To use the budgeting system to enhance centralised control of the company.

The 60% Solution

The 60% Solution is a budgeting system created by former MSN Money’s editor-in-chief, Richard Jenkins. The name “The 60% Solution” originates from Jenkins’ suggestion on spending 60% of a household’s gross income (before taxes) on fixed expenses. Fixed expenses includes federal, state and Social Security taxes, insurance, regular bills and living expenses such as food and clothing, car and house payments.

The other 40% breaks down as follows, with 10% allocated to each category:

• Retirement: Money set aside into a pension or other retirement account (in the United States this may include an CPF, EPF, PPF etc.
• Long-term savings: Money set aside for car purchases, major home fix-ups, or to pay down substantial debt loads.
• Irregular expenses: Vacations, major repair bills, new appliances, etc.
• Fun money: Money set aside for entertainment purposes.

Family Budget

A family budget is a plan for your household’s incoming and outgoing money over a certain period of time, such as a month or year. For example, you may aim for certain dollar amounts or percentages of your combined monthly income to go toward various expenses, like groceries, as well as saving, investing and paying off debt.

(a) That very small percentage of income is being spent on children’s education, religious and social functions, travelling, entertainment and luxuries,

(b) Expenditure on light and medical aid is negligible,

(c) 10% of the income is spent on dress and 6% on fuel,

(d) But the biggest item of expenditure is food which absorbs 60% of the income.

According to Engels’ Law of Consumption, it is a typical poor man’s budget in which about 3/5ths of the income is swallowed up by food alone and practically nothing is left for medical aid, education and for the satisfaction of educational and recreational needs of the members of the family.

Importance of Family Budgets:

Study of family budgets is of very great use from the economic point of view. That is why many economic organisations devote special attention to the study of family budgets. The economic and statistical organisation of a State Government in India makes a special study of family budgets of different classes of the people in the State.

To the householder, the study of this budget is very useful. He will be able to find out from the budget before him whether his income has been properly distributed among the various items of expenditure and also whether he has been able to balance his budget or not. If the house-holder is to derive maximum satisfaction from his limited income, then mapping out of expendi­ture beforehand is absolutely necessary.

To the economist, the legislator and the social reformer, the value of the study of family budgets is undoubtedly very great. They are able to form an idea of the standard of living of the people and the measure of economic welfare which is enjoyed by them. They are deeply interested in the economic welfare of the people, which very much depends on the way the income is spent.

A man may have a very large income, but, if it is not spent in a rational manner, he may not be able to derive maximum advantage from it. If the people waste most of their income on drinks and other harmful forms of consumption, then the economists and social reformers must sound a strong note of warning and call or urgent reforms. Another great utility of family budgets lies in this that they greatly help in determining the wages of labour and salaries of employees and in deciding about the dearness allowance claimed by them.

Thus, family budgets are a mirror of the consumption of a people. On consumption depends the standard of living, and the standard of living determines economic efficiency, which in its turn leads to economic prosperity. There is no doubt that the study of family budgets is very useful to the economist, to the householder, the social reformer and the State.

Engles’ Law of Family Expenditure:

Ernest Engels was a Prussian official. He studied a number of family budgets and arrived at certain conclusions. These conclusions have been given the name of Engels’ Law of Consumption.

They are:

1. As income increases, the percentage expenditure on necessaries of life decreases, and vice versa.
2. Percentage expenditure on luxuries and other cultural and recreational wants increases with an increase in income and decreases when income decreases.
3. As for lodging or rent, fuel and light, percentage expenditure is generally the same for all incomes.
4. Whatever the income, percentage outlay on clothing is practically the same.

It should be carefully noted that it is percentage increase or decrease in expenditure which is mentioned and not the total amount of expenditure. A rich man, certainly spends a larger sum on food and other necessaries of life but the percentage expenditure’ on hood, etc., is certainly less. This law was enunciated in Europe but it has got a universal application. It applies to India also. Family budgets have been studied in almost all States of India. All these studies amply bear our Engels’ conclusions.

The percentages of expenditure may slightly vary, but these conclusions broadly hold good. A very large percentage of the small incomes go into the purchase of the bare necessaries of life, whereas people with large incomes spend a small percentage of their income on such things. In the case of luxuries, the case is quite the opposite.

Business Budget

Budgets are an integral part of running any business efficiently and effectively.

Budget Development Process

The process begins by establishing assumptions for the upcoming budget period. These assumptions are related to projected sales trends, cost trends, and the overall economic outlook of the market, industry, or sector. Specific factors affecting potential expenses are addressed and monitored.

The budget is published in a packet that outlines the standards and procedures used to develop it, including the assumptions about the markets, key relationships with vendors that provide discounts, and explanations of how certain calculations were made.

The sales budget is often the first to be developed, as subsequent expense budgets cannot be established without knowing future cash flows. Budgets are developed for all the different subsidiaries, divisions, and departments within an organization. For a manufacturer, a separate budget is often developed for direct materials, labor, and overhead.

All budgets get rolled up into the master budget, which also includes budgeted financial statements, forecasts of cash inflows and outflows, and an overall financing plan. At a corporation, the top management reviews the budget and submits it for approval to the board of directors.

Static Vs. Flexible Budgets

There are two major types of budgets: static budgets and flexible budgets. A static budget remains unchanged over the life of the budget. Regardless of changes that occur during the budgeting period, all accounts and figures originally calculated remain the same.

A flexible budget has a relational value to certain variables. The dollar amounts listed on a flexible budget change based on sales levels, production levels, or other external economic factors.

Both types of budgets are useful for management. A static budget evaluates the effectiveness of the original budgeting process, while a flexible budget provides deeper insight into business operations.

Financial Inclusion is described as the method of offering banking and financial solutions and services to every individual in the society without any form of discrimination. It primarily aims to include everybody in the society by giving them basic financial services without looking at a person’s income or savings. Financial inclusion chiefly focuses on providing reliable financial solutions to the economically underprivileged sections of the society without having any unfair treatment. It intends to provide financial solutions without any signs of inequality. It is also committed to being transparent while offering financial assistance without any hidden transactions or costs.

Financial inclusion wants everybody in the society to be involved and participate in financial management judiciously. There are many poor households in India that do not have any access to financial services in the country. They are not aware of banks and their functions. Even if they are aware of banks, many of the poor people do not have the access to get services from banks.

They may not meet minimum eligibility criteria laid by banks and hence, they will not be able to secure a bank’s services. Banks have requirements such as minimum income, minimum credit score, age criteria, and minimum years of work experience. A bank will provide a deposit or a loan to an applicant only if he or she meets these criteria. Many of the poor people may be unemployed without any previous employment record due to lack of education, lack of resources, lack of money, etc.

These economically underprivileged people of the society may also not have proper documents to provide to the banks for verification of identity or income. Every bank has certain mandatory documents that need to be furnished during a loan application process or during a bank account creation process. Many of these people do not have knowledge about the importance of these documents. They also do not have access to apply for government-sanctioned documents.

• The RBI instructed every bank to have Basic Saving Bank Deposits (BDSD) accounts for the economically weaker sections of the society. These are no-frill accounts where account holders do not have to maintain any minimum balance or minimum deposit. These account holders can withdraw cash at any ATM or at the bank branch. They should also be given the opportunity to make use of electronic payment channels for receiving and transferring money to others.
• The RBI also asked banks to have simple Know Your Client (KYC) regulations for the less fortunate people of the society. There are many people in rural areas who are unable to open bank accounts due to strict KYC norms. Hence, the RBI wants banks to have simplified KYC requirements particularly if a low-income individual is interested in opening a bank account with an amount not above Rs.50,000. It also wants minimal KYC norms if the overall credit in the accounts does not go above Rs.1 lakh for 1 year. Recently, banks have been asked to accept Aadhaar Card as identity proof as well as address proof since most people belonging to low-income groups have made Aadhaar card in their names.
• Keeping in mind about the lack of bank branches in rural areas, the RBI has asked all banking institutions to open more and more branches in villages across the nation in order to provide good banking services to the villagers. There are many remote villages where there are no banks and also no good transportation services. It is very difficult for residents of these areas to commute to a far-off bank branch for availing banking services. Hence, with the compulsory rule of the RBI, banks are distributing the ratio of banks in villages and cities to have a balance.

Insurance companies

Insurance plans are beneficial to anyone looking to protect their family, assets/property and themselves from financial risk/losses:

Insurance plans will help you pay for medical emergencies, hospitalisation, contraction of any illnesses and treatment, and medical care required in the future.

The financial loss to the family due to the unfortunate death of the sole earner can be covered by insurance plans. The family can also repay any debts like home loans or other debts which the person insured may have incurred in his/her lifetime

Insurance plans will help your family maintain their standard of living in case you are not around in the future. This will help them cover the costs of running the household through the insurance lump sum payout. The insurance money will give your family some much-needed breathing space along with coverage for all expenditure in case of death/accident/medical emergency of the policyholder

Insurance plans will help in protecting the future of your child in terms of his/her education. They will make sure that your children are financially secured while pursuing their dreams and ambitions without any compromises, even when you are not around

Many insurance plans come with savings and investment schemes along with regular coverage. These help in building wealth/savings for the future through regular investments. You pay premiums regularly and a portion of the same goes towards life coverage while the other portion goes towards either a savings plan or investment plan, whichever you choose based on your future goals and needs

Insurance helps protect your home in the event of any unforeseen calamity or damage. Your home insurance plan will help you get coverage for damages to your home and pay for the cost of repairs or rebuilding, whichever is needed. If you have coverage for valuables and items inside the house, then you can purchase replacement items with the insurance money

Types of Insurance

There are several types of insurance plans available. Some of the commonly preferred ones include the following:

Health insurance:

This is purchased for covering medical expenses revolving around various health issues, including hospitalisation, treatments and so on. These insurance plans come in handy in case of medical emergencies; you can also avail of cashless facility across network hospitals of the insurer.

Life insurance:

Life insurance is what you can avail in order to safeguard your family in case of your death during the tenor of the policy. The most basic form of life insurance available to buyers is term insurance. Life insurance helps secure your family financially with a lump sum amount that is paid out in the event of the policy holder’s death within the policy period.

Home insurance:

These insurance plans cover any damages to the home on account of accidents, mishaps and natural calamities, among other such events.

Child Plans:

These insurance policies are savings instruments that help in generating lump sum funds whenever children reach a certain age for pursuing higher studies. In these plans, the life assured is that of the child or the recipient of the funds while the parents are the policy owners.

Auto Insurance:

These are insurance plans for vehicles, including cars and bikes. These offer protection against natural calamities, damages to third parties (people who have incurred losses or been hurt in an accident with the policyholder’s vehicle) and also damages to the vehicle along with mishaps and accidents

Insurance is thus the need of the hour in today’s uncertain times evaluate your financial situation to choose a plan best suited to your future financial needs

Postal Services

Sending domestic money order using post is old story. Now you can send money to foreign country using post. This outward remittance money will be credited in to the bank account of beneficiaries in foreign country. Maximum limit of outward remittance is 5000 USD. Maximum 12 outwards remittances are allowed per year. This facility is known as MO Videsh.

Postal Life Insurance

You can purchase postal life insurance using post office. Premium of postal life insurance is very low compare to private insurance companies. Regular postal life insurance provides risk coverage from 20 thousand to 50 Lac.

Mutual Fund Investment

You may be surprised to hear those Post offices are also involved in selling mutual funds. Only few selected mutual funds schemes are available for investment through post office. Principal, SBI, UTI, Franklin Templeton and Reliance Mutual are some of them. Post office is providing this service in association with IDBI bank.

ATM

Some selected post office also offers ATM services. You can withdraw cash or carry out money transfer using this ATM services. Postal department is issuing separate ATM card to customer for these services. Postal department is planning to extend this facility to every city.

Small Saving Schemes

You can also invest in small saving schemes using post office. NSC, MIS and Sukanya Samrriddhi Account are most popular small saving investment option offered by post office.

Payment Bank

Indian post office converted in to payment bank in 2017, the government of India has in principally approved this proposal. This bank act as payment bank means you can deposit money in this bank you can not avail loan facility.

Common Services

Indian Post office is also thinking to open common service center. You will be able to avail services like applying for Aadhar card, birth certificate, mutual funds investment etc.

A post office is a public facility that provides mail services, such as accepting letters and parcels, providing post office boxes, and selling postage stamps, packaging, and stationery. Post offices may offer additional services, which vary by country. These include providing and accepting government forms (such as passport applications), and processing government services and fees (such as road tax, postal savings, or bank fees). The chief administrator of a post office is called a postmaster.

India Post is a government operated postal system in India, which is under the jurisdiction of Department of Post, Ministry of Communications of the Government of India. Generally called “The Post Office” in India, it is the most widely distributed postal system in the world. Warren Hastings had taken initiative under East India Company to start the Postal Service in the country in 1766. It was initially established under the name “Company Mail”. It was later modified into a service under the Crown in 1854 by Lord Dalhousie. Dalhousie introduced uniform postage rates (universal service) and helped to pass the India Post Office Act 1854 which significantly improved upon 1837 Post Office act which had introduced regular post offices in India. It created the position Director General of Post for the whole country.

It is involved in delivering mail (post), remitting money by money orders, accepting deposits under Small Savings Schemes, providing life insurance coverage under Postal Life Insurance (PLI) and Rural Postal Life Insurance (RPLI) and providing retail services like bill collection, sale of forms, etc. The DoP also acts as an agent for the Indian government in discharging other services for citizens such as old age pension payments and Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) wage disbursement with 154,965 post offices (as on 31.03.2017), India Post has the most widely distributed postal network in the world.

The country has been divided into 23 postal circles, each circle headed by a Chief Postmaster General. Each circle is divided into regions, headed by a Postmaster General and comprising field units known as Divisions. These divisions are further divided into subdivisions. In addition to the 23 circles, there is a base circle to provide postal services to the Armed Forces of India headed by a Director General. One of the highest post offices in the world is in Hikkim, Himachal Pradesh operated by India Post at an altitude of 14,567 ft (4,440 m).

Services

Philately

The first philatelic Society in India was founded in Calcutta on 6 March 1897 to service postage-stamp collections. Function include design, printing and distribution of special or commemorative postage stamps, definitive postage stamps and items of postal stationery, promotion of philately, conduct of philatelic examinations at the national level, participation in international exhibitions and monitoring exhibitions at the state, regional and district levels and maintenance of the National Philatelic Museum.

Army Postal Service

The Army Postal Service (APS) functions as a government-operated military mail system in India. A primary feature of Army Postal Service systems is that normally they are subsidized to ensure that military mail posted between duty stations abroad and the home country (or vice versa) does not cost the sender any more than normal domestic mail traffic. In some cases, Indian military personnel in a combat zone may post letters and/or packages to the home country for free, while in others, senders located in a specific overseas area may send military mail to another military recipient, also located in the same overseas area, without charge.

Electronic Indian Postal Order

The Electronic Indian Postal Order (e-IPO) was introduced on 22 March 2013, initially only for citizens living abroad. The postal orders can be used for online payment of fees for access to information under the Right to Information Act, 2005. The service was expanded to include all Indian citizens on 14 February 2014.

Postal Life insurance

Postal Life Insurance (PLI) was introduced on 1 February 1884 with the express approval of the Secretary of State (for India) to Her Majesty, the Queen Empress of India. It was essentially a welfare scheme for the benefit of Postal employees in 1884 and later extended to the employees of Telegraph Department in 1888. In 1894, PLI extended insurance cover to female employees of P & T Department at a time when no other insurance company covered female lives. It is the oldest life insurer in this country. There was over 6.4 million policies active as on 31 March 2015 with a sum assured of ₹130,745 crore (US$17 billion). Premium income of PLI for the year 2014-15 was ₹6,053.2 crore (US$800 million). It was extended to all rural residents on 24 March 1995.

Policies for government employees include Santhosh (endowment assurance), Suraksha (whole-life assurance), Suvidha (convertible whole-life assurance), Sumangal (anticipated endowment policy) and Yugal Suraksha (joint life endowment assurance). India Post started Rural Postal Life Insurance (RPLI) for the rural public in 1995. RPLI plans include Gram Santosh (endowment assurance), Gram Suraksha (whole-life assurance), Gram Suvidha (convertible whole-life assurance), Gram Sumangal (anticipated endowment assurance) and Gram Priya.

Postal savings

The post office offers a number of savings plans, including recurring deposit accounts, Sukanya Samriddhi Account (SSA), National Savings Certificates (NSC), Kisan Vikas Patra (KVP), the Public Provident Fund, savings-bank accounts, monthly-income plans, senior-citizens’ savings plans and time-deposit accounts.

Banking

In 2013 it was revealed that the Indian postal service had formulated plans to enter the banking industry after RBI guidelines for the issuance of new banking licenses were released. Eventually they are planning to open a Post Bank of India, an independent banking service.

As of 29 February 2016, 18,231 post offices are utilizing Core Banking Solutions (CBS). ATMs are installed at 576 Post Office locations and debit cards issued to Post Office Savings Bank customers. Core Insurance Solution (CIS) for Postal Life Insurance (PLI) is rolled out in 808 head post offices and corresponding 24,000+ sub post offices. In September 2017, it was announced that by 2018 all of the 1.55 lakh post offices, every postman and grameen dak sevak (postmaster) will accept all payment options that the India Post Payments Bank (IPPB) plans to provide.

On 1 September 2018 the India Post Payments Bank was inaugurated by prime minister Narendra Modi.

Data collection

A collaboration between the Ministry of Statistics and Programme Implementation (MoSPI) and the Department of Posts has enabled the computation of consumer-price indices for rural areas. These statistics were previously unobtainable, due to problems of remoteness and scale. The agreement authorises the postal service to collect data on prices paid for selected consumer goods. In February 2011, MoSPI published its first Consumer Price Index (CPI) and All-India Consumer Price Index. The information has since been published monthly, based on data available from 1,181 villages across the country.

E-commerce delivery

The boom in e-commerce and the surging number of cash-on-delivery consignments has led India Post to partner with major e-commerce portals for delivering pre-paid as well as cash on delivery (COD) parcels. According to the Minister for Communications and Information Technology, Ravi Shankar Prasad, revenue of India Post from such deliveries would go up to ₹15 billion (US$200 million) in the year 2015–16.

Managing your money is a personal skill that benefits you throughout your life and not one that everybody learns. With money coming in and going out, with due dates and finance charges and fees attached to invoices and bills and with the overall responsibility of making the right decisions about major purchases and investments consistently.

Money in the Bank

Developing financial acumen starts with opening a bank account. Once you have a paycheck, set up direct deposit. This keeps your money secure and saves you from paying interest to cash advance companies which charge a percentage of your check.

Budgeting

One of the first building blocks of a successful personal finance plan is the ability to budget. Although it’s easy to understand, it’s also difficult to do because it requires a hard look in the mirror and a willingness to see what really stares back at you.

Budgeting requires that you analyze and, likely, change your spending habits. Instead of your money controlling you, you control your money. Develop habits to save, avoid financial crisis and maintain peace of mind.

Investing

To become financially literate, an individual must learn about key components in regards to investing. Some of the components that should be learned to ensure favorable investments are interest rates, price levels, diversification, risk mitigation, and indexes.

Borrowing

In most cases, almost every individual is required to borrow money at one point in their life. To ensure borrowing is done effectively, an understanding of interest rates, compound interest, time value of money, payment periods, and loan structure is crucial.

Taxation

Gaining knowledge about the different forms of taxation and how they impact an individual’s net income is crucial for obtaining financial literacy. Whether it be employment, investment, rental, inheritance, or unexpected, each source of income is taxed differently.

Awareness of the different income tax rates permits economic stability and increases financial performance through income management.

Personal Financial Management

The most important criteria, personal financial management, includes an entire mix of all of the components listed above.

Financial security is ensured by balancing the mix of financial components above to solidify and increase investments and savings while reducing borrowing and debt.

A Successful budget plan clearly defines:

• How to follow a monthly spending plan.
• Ways for lowering your monthly bills.
• How to handle accrued debt.
• Debt pay-off options like the snowball and avalanche methods.
• How to distinguish between short-term, medium and long-term goals.
• A breakdown of family needs.

Numerical and Communication ability

Learn about money matters

To start improving your financial literacy, the first step is to start reading everything about money matters, including investing, money management and finances. You can start with magazines and newspapers or look for books that teach financial literacy. You may also want to look for resources online as well as podcasts and webinars that teach financial literacy.

Use financial management tools

Another important step to gain financial literacy is to start using a financial management tool. There are many services available online and you can easily connect them to your checking and savings accounts, credit cards and mortgage to monitor your spending. Using these tools, you can create a budget and then monitor how effectively you’re staying within the budget.

Ask for advice

A financial advisor can answer questions about how to handle any high-interest credit cards and other debt. They can evaluate your specific situation and make recommendations for how to consolidate and manage your finances to pay off your debt.

Use your network

While there are limitless resources to help improve your financial literacy, look for resources within your own immediate network. Chances are that you have friends, family members or a CPA who can offer guidance or insight to help you improve your own financial literacy.

Learn to budget

Budgeting is a key component of financial literacy. Learning to create and manage a budget allows you to pay down or avoid debt, save money and plan for your future.

Understand credit

To use your credit effectively, you should first understand it. Some important concepts you should know about credit include:

• Why credit is important
• What information goes into your credit score
• How to improve your credit score

Part of understanding credit includes learning how to pay down high-interest credit card debt.

Create and manage a checking and savings account

Creating and managing a checking and savings account is another important step for financial literacy. These accounts will allow you to keep your money safe and make paying bills easier. It’s also important to learn to manage the account to avoid overdraft charges.

Understand debt and loans

Learning about debt and loans is another important part of financial literacy. Not all debt is created equal, so learning about the different kinds of debt, the strategies for each and what you should focus on paying down first should be a top priority.

Invest in retirement

It’s never too late to plan for your retirement. Use a tax-advantaged retirement savings plan like a Mutual Fund or CPF, PPF. Start investing 15% of your income each month to ensure you beat inflation while still leaving enough income to pay for other expenses, like a mortgage or student loan.

Understand the Risk of identity theft

Identify theft is when someone uses your personal information without your permission to commit fraud. It may involve using your name, credit card number, Social Security number or other information linked to your personal identity. The best way to prevent identity theft is to learn how to safeguard your information.

Payment advice note is a document or letter of communication sent by a customer or buyer to businesses which states that an invoice has been paid to vide cheque, NEFT, RTGS or by any means of electronic transfers etc.,

It is a letter of communication that acknowledges the seller as to which outstanding invoices have been cleared by the buyer and by what means. Therefore, a payment advice note can be very useful when it comes to matching payments to an invoice.

Today, most businesses are using accounting software to manage the books which comes with the inbuilt capability to generate various statements including payment advice. Also, managing the outstanding bills portfolio has become very simple with the help of ERP software. It allows you to know the bills which has been paid and which has been outstanding due.

Payment advice processed using accounting software helps to ensure the professional standards have been followed as receipts can be easily tracked against the invoices in real-time.

Components of payment advice

Payment advice should contain the following information:

• The date on which payment advice was drafted.
• A reference to invoice number or invoice number against which the payment has been made.
• The amount of payment against such invoice
• The method of payment such as Cheque, NEFT, RTGS etc.,