Monday, 9 December 2019

BC / BF - 5 , Banking Fundamentals to Know for Students.

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What is a BC? How does a BC function?
Banks have been allowed to appoint local individual persons and others as business correspondents (BCs) to work as agents of the banks. The BC uses devices based on Information and Communication Technology (ICT) such as handheld machines, smartcard-based devices, mobile phones, etc. to carry out the banking transactions.

Is our money safe if we deposit it with a BC?
The BC is a way of providing banking service at our doorstep if the bank branch is far from our area. Depositing our money with the BC is as good as depositing it with a bank branch. The transactions are done through ICT – based devices and accounted in the books of the banks. Customers get immediate verification of their transactions because the BC issue a receipt on behalf of the bank.
Additionally, transactions because of the BC issues a receipt on behalf of the bank. Additionally, transactions through BCs are based on our biometrics or a PIN number and no one else can do the transactions in our account.

What services are provided through BCs?
BCs help you open and make transactions in saving deposit accounts with the inbuilt overdraft, fixed deposits, and recurring deposits. They also help us remit funds from our accounts and receive funds into our account. Besides, they provide credit for income-generating activities through Kisan Credit Cards for farming activities and General Credit Cards for non-farm activities.

Many people need to borrow money to buy a house or car or for their children’s education. This is called credit. Borrowing money is neither good nor bad. But financial experts often distinguish between good debt and bad debt. Good debt is an investment in something that creates value or produces more wealth in the long run. Examples are a loan to buy a house or an education loan for your children to pursue higher education. Bad debt is money taken to buy something that immediately goes down in value or to buy something that you can't repay on time. An example is a loan to buy a large television or a loan to pay your monthly expenses.
It's easy to spend without realizing how the debts are piling up. Sometimes, despite your best efforts, you find yourself with more debt than you can handle.
Although it may seem impossible, you can get out of debt. The first step in solving your financial problems is to admit that you have them and take control before they get out of hand.
Suppose you want to buy something and you don’t have money. The phone rings or you receive an email, offering to get you a loan. Don't fall for such pitches. Make a plan to save enough money so that you can buy what you want.

Why borrow within a limit?
v  When you borrow money, you have to pay interest on the borrowed amount.
v  Borrowing beyond your means will lead to a debt trap and it will be very difficult to get out of it.
v  When you borrow more than you can handle, you find it difficult to repay.
v  Borrowing within limits will help you build a good credit score because you can repay your loans.
v  Paying interest on the loans you have taken is an expense. If you borrow more, your expenses grow.

No one plans to get in an accident or become seriously ill. The chances of these things happening to you may be very small. So we may put off buying the insurance we need. But these things do happen. It's only when the event occurs that we realize that we may not be as well protected as we would wish. Insurance is a way to protect yourself and your loved ones from financial hardship in case losses occur.


Life Insurance : When you buy a life insurance policy, you name a beneficiary. Life insurance provides financial payment to your beneficiary upon your death.
It is generally recommended that you purchase  insurance with coverage worth 7 to 10 times your annual income in order to protect your family.

Vehicle insurance : Auto or vehicle insurance is mandatory if you own a vehicle. Depending on your policy, it covers losses that your vehicle causes to other people and of your own medical expenses if you meet with an accident. It also covers the cost of repairing or replacing your vehicle due to other types of damage or loss, such as vandalism, fire or theft.

Health insurance : In the recent past the cost of treatment has increased enormously. A simple visit to a doctor now costs anywhere between 300 and 3000 rupees, depending on where you live. If your treatment requires you to stay in the hospital for a few days, you will end up with a huge medical bill that can severely impact your savings. To avoid such financial shocks, we must insure ourselves. Every insurance company offers a medical insurance plan that covers basic medical care, including doctor’s visits and the costs of hospitalization.

Making a claim: A disaster happens. Your bike is stolen. You have met with an accident. It's time to make a claim. When you make a claim, you are officially asking the insurance company to pay you for the loss you have suffered under the terms of your insurance policy.
Contact your insurance broker, agent or company as soon as possible, because most companies have time limits within which you must submit your claim. Also, remember to provide all supporting documents when submitting your claim.

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