Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697806868978.pdf (India)
Central Board of Secondary Education Financial Literacy Curated with the support of NPCI Student Workbook Class-VI Preface The student handbook enhances the knowledge base of students in terms of financial literacy by conveying an understanding of the basic financial concepts, early methods of a transaction and the evolution of trade.

It also covers the importance of collabora- tion through teamwork and focuses on the importance of a team.
The handbook also entails the origin of banking, the transition from coins to paper money, types of bank and major operations and services carried out by banks.

Further, the handbook also emphasises the role and importance of the Reserve Bank of India (RBI) and the Government of India (GoI).

It gives insight into the introduction of the digital payments and the various benefits of these services.
An insight into the modes of digital payments is also covered in the handbook provid- ing the students with information on different types of bank cards and their services.

The handbook introduces about the PoS, mPoS and ATM machines.

Building upon the context of modes of digital payments, the students are made to un- derstand the role of UIDAI and the importance of Aadhaar, and Aadhaar Enabled Pay- ment System (AePS).
It also enables the students to learn about the various forms of digital payments including internet banking, types of internet banking, mobile banking and mobile wallets.

Chairperson, CBSE Central Board of Secondary Education Page i Acknowledgments Editorial and Creative Inputs - Shri.
Manoj Ahuja - IAS, Chairman, CBSE - Dr. Biswajit Saha - Director (Skill Education and Training), CBSE - Dr. Joseph Emmanuel - Director (Academics), CBSE Content Developers - National Payments Corporation of India (NPCI) Review By - Dr. Vibha Dua Satija, Accounting and Tax Consultant, California, United States of America (USA) Editing and Coordination - Sh.

Ravinder Pal Singh - Joint Secretary, Dept.

of Skill Education, CBSE - Ms. Moushumi Sarkar - Deputy Secretary, Dept.
of Skill Education, CBSE Page ii Central Board of Secondary Education Contents Preface Acknowledgments Contents Unit 1: Team Work Unit 2: Introduction to Financial Literacy Unit 3: Banking Unit 4: Security and Modes of Digital Payments Answer Key i ii iii 4 9 16 24 42 Central Board of Secondary Education Page iii Unit 1 Team Work The objective of this unit is to enable students to appreciate the concept and im- portance of teams.
This unit focuses on: • • Describing the concept of team Explaining the benefits of teamwork Learning Outcomes: Location Learning Outcome Knowledge Classroom Understand the meaning of team Evaluation Describe what a team is Performance Evaluation Describe the concept of team and its benefits Teaching and Training Method Interactive Lecture: Mean- ing of Team Activity: Speak to a team leader at school and list down the benefits of teamwork Identify the critical skills required for effective teamwork Explain the skills required for effec- tive team work and their impor- tance Enlist the skills that enable effec- tive team work Interactive Lec- ture: Skills for teamwork Identify the benefits of working in a team Explain the var- ious benefits of working in a team Describe the benefits that can be achieved when individuals work together as a team Activity: Identify the qualities that you appreciate in your sports or house team members Interactive Lec- ture: Benefits of teamwork Activity: Recollect an experience of having worked as a team for a proj- ect.
What are the benefits that you experienced?

Page 4 Central Board of Secondary Education 1.1 Defining Team Work A team is defined as a group of people joined together to perform a common goal or objective.

Teams can be formed in playgrounds, schools and colleges.

When members of a team perform some work together, it is known as teamwork.

The highlight of teamwork is that it is a result of individuals working together in collabora- tion.
Tasks that may be challenging otherwise can be made simpler and achievable with the use of teams.

When a team works together, each member is able to contribute on the basis of his or her unique set of competencies.

Team output is a result of various individuals contributing uniquely and distinctly yet for a common purpose.

1.2 Team Skills Teams are a wonderful way for individuals to come together and achieve common goals.
However, for this to happen, it is important for the team members to possess and demonstrate specific skills.

Let us learn about the kind of skills that are required for teams to work effectively: • Communication Skills: Team members should have the ability to listen attentively and also put across their own thoughts and viewpoints.

• Interpersonal Skills: Teams work well when there is harmony within the members, and that becomes possible with the demonstration of interpersonal skills.
• Feedback Skills: Giving and receiving feedback are essential skills for teams to work.

It involves being able to communicate improvement points to other members while also being able to receive feedback calmly and gracefully.

• Conflict Resolution: It is normal for differences to arise among team members.

It is therefore important for members to be able to demonstrate conflict resolution skills so that these differences can be sorted out peacefully, and teamwork is not impacted.
Central Board of Secondary Education Page 5 1.3 Teams and Groups How is a team different from a group?

Even a group consists of individuals who have common characteristics.

However, they may or may not be tied to a common goal or objective.

It is an important aspect that differentiates a ‘Team’ from a ‘Group’.

Let’s take an example of a team you form while playing a sport such as football.

All the team members are driven by the common goal of winning against the other team.
Page 6 Central Board of Secondary Education 1.4 Benefits of Team Work When individuals join together as a team, this leads to various benefits such as: • Higher Productivity: Humans are essentially social beings, and when they work together, they tend to work faster and more effectively.

• Better Cooperation: Working as a team enables improved levels of cooperation amongst the members as they are able to learn from each other’s mistakes and provide support where required.
• Creativity and Problem Solving: Teamwork provides opportunities for all mem- bers to take advantage of their unique skill-set and propose new creative approach- es to solve challenges.

• Sharing of Work: When a set of people work as a team, the work burden gets di- vided amongst the members, and there is reduced risk of stress on any individual.

• Learning and Motivation: Everyone in the team is able to learn new things from one another, and this also keeps everyone motivated and focused on the goals.
Summary • A team is defined as a group of people who are joined together to perform a common goal or objective • When members of a team perform some work together, it is known as teamwork • There are specific skills that are required to make teams work effectively and each team member contributes uniquely to achieve the common purpose Central Board of Secondary Education Page 7 Unit 1: Self-Test Questions Choose the correct option 1.
Teams are sets of individuals bound with a common a) Education b) Skill-set c) Objective 2.

Which of the following is a valid example of a team?

a) Classroom b) Sports team c) Family Fill in the blanks 1.

A Team is a group of individuals who have a common ____________.

2.

While working in a team you must listen ____________.

3.

Working in a team allows for sharing of ____________.

True or False 1.

A team may or may not have a common objective.

( ) 2.
( ) 2.

Communication skills are among the important skills required for effective team work.

( ) 3.

Teamwork allows for better cooperation and sharing of work.
( ) Page 8 Central Board of Secondary Education Unit 2 Introduction to Financial Literacy The objective of this unit is to make students aware of basic financial concepts This unit focuses on: • • • Evolution of trade and money The concept of barter system Needs and Wants Learning Outcomes: Location Learning Outcome Classroom/ Museum Understand basic financial concepts Knowledge Evaluation Explain the meaning of basic financial concepts Performance Evaluation Demonstrate the understanding of basic finan- cial concepts Summarise the evolution of trade and money Describe how trade and money evolved across the history of mankind Articulate con- cepts such as barter system and how they played a role in the evolution of trade and money Teaching and Training Method Interactive Lecture: Basic financial terms Activity: Search on the inter- net to identify other types of accounts offered by banks, apart from the ones listed in this unit Interactive Lec- ture: Evolution of trade and money Activity: Explore the collection of ancient coins in a nearby mu- seum.
You can also explore online collections at http://www.

nationalmuseu- mindia.gov.in/ Central Board of Secondary Education Page 9 2.1 Understanding basic financial concepts Money Currency Bank Account Money is a recognised medium of exchange in the economy.

It is an asset that can be stored and used in the form of currency, or as value.

Currency is the physical form of money in the form of coins and rupees.

Each country typically has its own currency as a medium of exchange, issued by the central bank.
In India, the Government of India (GoI) and Reserve Bank of India (RBI) are the issu- ers of the currency, i.e.

Indian Rupees A bank is a government authorised financial institution which acts as a custodian of money deposited by account holders and uses the collected funds to extend loans to individuals and businesses while charging interest on the same.

An account is a repository of the funds held by a bank on behalf of the account hold- er.
An account can be of various kinds, and is identified by a unique account number issued to the account holder.

Saving Savings is the amount of money that is remaining from income, after the expenses are made.

Investment An investment refers to an asset acquired with the objective of generating income or appreciation.

When you accompany your parents to the market, do you observe how they purchase the various items?

Every purchase requires the use of money.


As you are able to observe, money is the accepted medium of exchange.

It allows you to buy the things you require, right from basic things such as bread to high-value products such as a car.

In our country, money is used in the form of Indian currency known as ‘Rupee’.

You would surely have used ‘rupees’ when you buy food from the school canteen.
Page 10 Central Board of Secondary Education 2.2 Barter System Historically speaking, humans have been transacting in goods much before money was invented.

Have you ever wondered how these transactions took place?

The answer is ‘Barter System’.

To understand the Barter System in a simple manner, consider this example: Satya has two bags of wheat at his home; however, he needs only one of them for his monthly consumption.

On the other hand, Ahmad has two bags of rice out of which he is able to spare one.
So they meet and decide to exchange the bag of wheat with that of rice.

After the barter exchange, Satya and Ahmad both have one bag of rice and wheat each to match their requirement of food.

Have you ever performed a simple barter exchange with your friend or cousin?

For example, you have a pack of sketch pens that you do not need, and you exchange the same for a geometry box?
Central Board of Secondary Education Page 11 2.3 Needs and Wants To better understand the Barter System, it is important to know the meaning of ‘Needs’ and ‘Wants’.

In the Satya-Ahmad example, we can see that while Satya needs rice to meet the food requirements of his family, Ahmad needs a bag of wheat for the same purpose.

However, rice and wheat are not their ‘wants’.

Let us try to understand the same through another example.

When you feel hungry, you need food to satisfy your hunger.
Therefore, food is your need.

However, when you visit the market with your father and you feel tempted to have ice cream.

In this situation, ice cream is not your ‘need.’ However, it is your ‘want.’ ‘Needs’ are the essential requirements in our life such as food, clothes and house.

On the other hand, ‘Wants’ are for the things you require to enhance the quality of your life, such as games, music and TVs.

2.4 Evolution of Trade Let us start by understanding the definition of trade.
Trade is a financial activity that includes buying and selling various goods and services between two or more people involved in the transaction.

Trade can happen between organisations and countries as well.

For example, India primarily exports products such as rice and jewellery, and imports petroleum and electronic components.

Page 12 Central Board of Secondary Education The evolution of trade across the world has been closely linked with the development of the money system.
You would be surprised to know that trade across continents has been prevalent in our world, even in ancient times.

While ancient trade was based on the barter system, there is also evidence of com- modities being used in the form of livestock, salt, metal, rare stones et cetera.

Pottery traditions were popular in parts of the world such as Japan, Korea, China, Mexico and many more.
The Han Dynasty, which ruled China from 206 BC to 220 AD, opened up the ‘Silk Road’ trading route between China and Central Asia.

Various kinds of merchandise travelled along the Silk Road, making it one of the oldest routes of international trade in the world.

The first non-stop voyages from Egypt to India were initiated at the start of the Com- mon Era.

Spices from India came in demand around the world and were the main to new diplomatic exports the spice relationships between East and West.
trade in mind that Christopher set out in 1492 and discovered America.

led It was partly with the western world.

The spice trade to Central Board of Secondary Education Page 13 Summary • Money is a recognised medium of exchange in the economy.
• A bank is a government authorised financial institution which acts as a custodian of money deposited by account holders • Historically speaking, humans have been transacting in goods much before mon- ey was invented • While ancient trade was based on the barter system, there is also evidence of commodities being used in the form of livestock, salt, metal, rare stones et cet- era.
• The Han Dynasty, which ruled China from 206 BC to 220 AD, opened up the ‘Silk Road’ trading route between China and Central Asia.

Abbreviations GoI RBI BC AD Government of India Reserve Bank of India Before Christ Anno Domini (Latin for “in the year of the Lord”) Page 14 Central Board of Secondary Education Unit 2: Self-Test Questions Choose the correct option 1.

In ancient trade, before the development of currency, the commodity of exchange used was a) Coins b) livestock c) Money 2.
In barter system, humans used to transact with the help of a) Money b) Card c) Goods Fill in the blanks 1.

_________ is a recognized medium of exchange in the economy.

2.

Currency is the _______ form of money.

3.

In our country, money is used in the form of Indian currency known as _______ True or False 1.

Our needs and wants are the same.

( ) 2.

Money allows you to buy the things you require.

( ) Answer the following: 1.

What is trade?


_________________________________________________________ _________________________________________________________ 2.
Define Currency: _________________________________________________________ _________________________________________________________ Central Board of Secondary Education Page 15 Unit 3 Banking The objective of this unit is to make students aware of the purpose and function of Banks This unit focuses on: • • Importance and purpose of Banks The various functions performed by Banks Learning Outcomes: Location Learning Outcome Classroom Understand the purpose and func- tions of Banks Knowledge Evaluation Describe the importance of banks and their purpose as finan- cial institutions Performance Evaluation Enlist the func- tions performed by banks Teaching and Training Method Interactive Lecture: Role and importance of banks Activity: Discuss with your parents which bank they are associated with and which services they have availed 3.1 Evolution of Money As you can see that a Barter-like exchange system has its limitations and only works when you have something to offer that the other person needs and vice versa.
It may not always be the situation.

The limitations of the Barter System led to the evolution of money.

As you may be aware, gold coins were used as a mode of currency in ancient India.

Similarly, different regions in the world have been us- ing other precious/semi-precious products as a unit of trade.

For example, the ancient Aztecs used beans as a trade currency, and Norwegians used butter.

Simi- larly, US colonists used tobacco leaves and animal hides as a form of currency.
Gradually, however, as human civilisation pro- gressed, coins and currency notes came into circu- lation.

In fact, the development of currency has been representative of the development level of an econ- omy across ages.

Page 16 Central Board of Secondary Education The earliest coins were made in the kingdom of Lydia (now in Turkey) in the 7th cen- tury BC.

The use of coins spread rapidly across the world from Lydia to the Africa and Europe.
The transition to paper currency is said to have occurred in China during the 10th century.

In ancient India too, metal coins came into circulation around the 6th century BC.

Paper currency is said to have been introduced in India by the Mughals in the year 1236 AD.

3.2 Banks and their Importance As a young child, you may have used a piggy bank.

You deposit a small amount of cash or coins into a piggy bank, and when you open it finally, it reveals a handsome amount for you to use.
That is how a bank works in real life too.

However, it works according to strict rules and also serves many more functions that are important to individuals and businesses.

To explain in simple words, a bank is an institution where people deposit their funds as savings and are able to withdraw the same when required.

In this sense, a bank acts as a ‘vault’ for safekeeping of funds.
There are situations when people may need funds more than their savings to purchase high-value products such as cars, bikes et cetera.

In such situations, banks also provide ‘loan’ to the ‘deposit holders’.

Central Board of Secondary Education Page 17 3.3 Origins of Banking In ancient human history, banking is said to have started in the temples and palaces of Babylonia even before 2000 BC.

Ancient Greeks too developed a system of transfer- ring money in the form of book entries.
Banking in India started in a major way in the form of the Imperial Bank of India in 1921.

This was later renamed as the State Bank of India (SBI) in 1955.

3.4 Types of Banks Banks are of different types and can be categorised on the basis of their ownership and services they offer: Central Bank: The Central Bank is an extremely important institution in the financial system of any country.

In India, the Reserve Bank of India (RBI) plays the role of the central bank.
It is responsible for the overall management of the nation’s currency to ensure an adequate supply of genuine notes.

As the central bank, RBI also performs various other important functions such as acting as a banker to the government and implementing monetary policies for the country.

Page 18 Central Board of Secondary Education Commercial Banks: These include public sector banks owned by the Government and also the private banks.
Commercial banks provide a direct interface to the people allowing them to open and manage accounts, to obtain loans and other financial ser- vices.
3.5 Opening a Bank Account A bank account can be opened in the name of an individual singly or jointly with a fam- ily member by submitting the following documents: • Passport size photographs • Identity proof • Address proof • Opening amount Once the account is opened, the bank provides to the account holder an account number and cheque book to operate the account.

Some banks also provide account holders with access to mobile banking.
3.6 Types of Bank Accounts Central Board of Secondary Education Page 19 Savings Account: TThese are the accounts opened in banks with the key purpose of inculcating the habit of saving among people.

Savings accounts allow maximum flexibility to deposit any amount of their liking, thus making it easy and convenient for common people.

This kind of account is popular with students, salaried individuals, and senior citizens.
Savings accounts earn a nominal interest which is based on the time period the funds are parked in the account.

Current Account: These accounts are opened by business owners as they meet their requirement for an unlimited number of cash deposits and withdrawals.

The important thing to note in case of current accounts is that they do not earn interest.

On the other hand, banks charge interest from account holders for an overdraft facility.
When banks allow account holders to withdraw more than their account balance in order to meet their business requirements, it is known as an overdraft.

Fixed Deposit: This account type is ideal for depositors who wish to park their funds in the bank for a long period of time.

The key benefit of fixed deposit is that it provides a substantially higher rate of interest compared to savings accounts.
Recurring Deposit: Very popular with students, recurring deposits are designed to encourage the habit of regular savings amongst people.

These deposits too earn in- terest higher than savings accounts.

An example of a Recurring Deposit is when a depositor plans to deposit a fixed amount of Rs.1000 per month for a period of 24 months.

On the completion of the 24 months period, the depositor gets back the base amount of Rs.

24,000, along with the interest amount.


3.7 Cheque ﹘ an instrument of exchange Cheques have been the most popular instrument for money transfer for many de- cades.

Although today more and more people are using the option of online banking, yet cheques continue to remain at the very core of the banking industry.

Page 20 Central Board of Secondary Education Let us understand through a simple example of how cheques work.

Let us suppose that you have Rs.25,000 in your bank account in Bank A.
You wish to pay Rs.5000 to Ajay using a cheque.

1.

You issue a cheque of Rs.5000 to Ajay using the Bank A cheque book 2.

Ajay deposits the cheque in his bank, say Bank B 3.

Bank B sends the cheque to Bank A 4.

Bank A sends the amount of Rs.5000 to Bank B after confirming the cheque details 5.

Rs.5000 is now deposited to Ajay’s account in Bank B 6.
Rs.5000 is reduced from your account in Bank A Each cheque contains some key elements, which include: ● ● ● Name and signature of the person making the payment/account holder Name of the person who will receive the payment Date on or after which the cheque is valid Central Board of Secondary Education Page 21 Summary • Banking in India started in a major way in the form of the Imperial Bank of India in 1921 • In India, the Reserve Bank of India (RBI) plays the role of the central bank • Commercial banks provide a direct interface to the people allowing them to open and manage accounts, to obtain loans and other financial services • Savings Account is the account opened in banks with the key purpose of incul- cating the habit of saving among people • Fixed deposit is ideal for depositors who wish to park their funds in the bank for a long period of time • Cheques have been the most popular instrument for money transfer for many decades Abbreviations BC RBI SBI Before Christ Reserve Bank of India State Bank of India Page 22 Central Board of Secondary Education Unit 3: Self-Test Questions Choose the correct option 1.
Which of the following account types is opened by business owners to meet their requirement for an unlimited number of cash deposits and withdrawals?

a) Savings Account b) Current Account c) Fixed Deposit 2.

For money withdrawal, a cheque must have a) Signature of Recipient b) PAN card no.

of account holder c) Signature of account holder True or False 1.

Commercial banks include public sector banks owned by the government.

( ) 2.
( ) 2.

Current account has a key purpose of inculcating the habit of saving among people.

( ) 3.

Fixed deposit provides a substantially higher rate of interest.

( ) Answer the following 1.

List down the names of bank accounts: _______________________________________________________________ ________________________________________________________________ 2.
Describe about cheque in two or three lines: _______________________________________________________________ ________________________________________________________________ Guess the words 1.

The most popular instrument for money transfer is (_/_/E/_/_/E) 2.

Institutions where funds are kept safe (_/A/_/K) 3.
RBI plays the role of what kind of bank in India (C/_/_/T/_/A/_) Central Board of Secondary Education Page 23 Unit 4 Security and Modes of Digital Payments The objective of this unit is to make students aware of the role played by RBI, the concept of digital banking, benefits of PoS and ATM machines, and the various types of banking cards.
This unit focuses on: • Role and importance of Reserve Bank of India (RBI) • Introduction to digital banking and the Digital India Initiative • Description of various types of banking cards • Definition and benefits of PoS • Purpose and benefits of ATM machines • Various forms of digital payments including internet banking and mobile banking • Digital Platforms: UPI and mobile wallets Learning Outcomes: Location Learning Outcome Classroom Understand the role and impor- tance of RBI Knowledge Evaluation Describe the im- portance of RBI as a core bank- ing institution Performance Evaluation Enumerate the functions per- formed by RBI Appreciate the bene- fits of digital banking Describe the con- cept and benefits of digital banking Enlist the benefits of digital banking to consumers Teaching and Training Method Interactive Lecture: Role and impor- tance of RBI Activity: Visit the RBI website and go to the ‘About Us’ section and read about the ‘Main Func- tions’ of RBI Interactive Lec- ture: Concept and benefits of digital banking Activity: Watch videos about digital banking on YouTube (Recommend- ed Channel: CNBC Awaaz) Page 24 Central Board of Secondary Education Location Learning Outcome Knowledge Evaluation Performance Evaluation Teaching and Training Method Classroom Describe mo- bile banking Explain the concept of mobile banking Appreciate the role of mobile banking in making transac- tions simpler Identify the various kinds of banking cards: Debit, Cred- it and Prepaid Describe the benefits of using Debit, Credit and Prepaid Cards Enlist the pur- poses and benefits of using banking cards Interactive Lecture: Mo- bile banking Activity: Request your parent to demonstrate any mobile banking app Interactive Lec- ture: Purposes and benefits of using bank- ing cards Activity: Have a discussion with your parents on how the use of banking cards and how they have made life convenient Define PoS and its benefits Explain the definition of PoS and its benefits Enumerate the benefits of- fered by PoS Interactive Lec- ture:
 Purposes and benefits PoS Describe the ATM and the bene- fits it offers Explain the function of ATM and its benefits Appreciate the role played by ATM in to- day’s world Activity: Search PoS related information on the internet Interactive Lec- ture: Function and benefits ATM Activity: Ask your grand-parent or another elderly relative on what was the process of withdrawing cash before the prevalence of ATMs Central Board of Secondary Education Page 25 4.1 Reserve Bank of India ﹘ Role and Importance The Reserve Bank of India (RBI) plays a prominent role as the Central Bank of India and has the power to control the monetary situation of the entire country.
Apart from the issuance of currency, RBI performs various other important functions that impact the Indian economy in a significant way: • Implements monetary policies • Manages foreign exchange reserves • Acts as banker to the government • Financial regulation and supervision • Governs the policies for other banks to follow 4.2 About National Payments Corporation of India (NPCI) Page 26 Central Board of Secondary Education National Payments Corporation of India (NPCI) is an umbrella organization for all retail payments in India.
Incorporated in the year 2008, NPCI was set up under the guidance and support of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA).

NPCI provides infrastructure to the entire banking system of India for both physical and electronic payment and settlement systems.

.

4.3 Introduction to Digital Banking Digital banking allows bank customers to avail banking services using the bank’s web- site on a laptop or through a mobile app on a smartphone/tablet.
These services include: • Checking account balance • Transferring funds to another account • Ordering a cheque book • Changing passcodes Digital Banking − Do’s & Don’ts Let us learn about some do’s & don’ts to be observed while performing digital banking: Do’s • Keep your user ID and password confidential and do not reveal to anyone • Memorise your user ID and password instead Don’ts • Do not use an email message to log in to your banking account; Always use the official web- site of noting down anywhere • Do not reveal personal information to anyone • Log off completely and clear your system cache after every session • Register for SMS alerts to keep track of trans- actions on your account over email/SMS/phone call • Do not use the ‘Remember Password’ feature provided by browsers to save your banking password Central Board of Secondary Education Page 27 4.4 Understanding Digital Payments Digital Payments refers to transferring an amount of money to another individual, busi- ness or organisation through the internet without the requirement to handle physical cash.
4.4.1 Benefits of Digital Payments The trend of digital payments has revolutionised the world of business and lives of people.

It has brought in a new era of flexibility of convenience.

Let us discuss the many benefits of digital payments.
Page 28 Central Board of Secondary Education 4.4.2 Modes of Digital Payments − Card Based The objective of this section is to make students aware of banking cards, Point of Sale (PoS) and ATM machines In the previous sections, you have learnt about the importance of banks and the vari- ous services they offer.

Apart from cheques, banking cards are also important tools for making convenient transactions.

Let’s learn about them… Debit Cards: Debit cards serve a dual purpose.
They allow the account holders to perform banking transactions through the ATM machine such as deposits, cash with- drawals and access account information.

Image source: https://www.npci.org.in/npci-in-news/knowledge-centre Credit Cards: As the name suggests, credit cards are instruments that provide instant credit to the cardholders.

When a credit card is used for making a transaction, the amount is not deducted from the bank account but is provided as credit by the issuing bank.
The cardholder is provided with a time period; generally a month, to pay back the amount to the bank.

Image source: https://www.npci.org.in/npci-in-news/knowledge-centre Central Board of Secondary Education Page 29 Prepaid Cards: These are ‘stored value’ cards that are charged with a specific amount.

The prepaid cardholder is allowed to transact for the value stored in the card.
For ex- ample, if the card has a value of Rs.5000, once that value is used up for purchases, more value needs to be added to the card.

Image source: https://www.npci.org.in/npci-in-news/knowledge-centre Guidelines for the use of banking cards Instruments like debit, credit and prepaid cards indeed offer a high level of conve- nience while making transactions; however, all the same, it is also important to follow guidelines during their use.

• One must be observant while using an ATM card to withdraw cash.
Ensure that there is no other person who may be watching while you enter the PIN • Credit cards should be used only for convenience, and the cardholder must ensure to pay back the card dues in time to avoid the heavy interest • Banking cards must be kept very safe and not allowed to go into wrong hands to avoid misuse • Card PIN numbers must not be shared with anyone Page 30 Central Board of Secondary Education 4.5 Various channels for acceptance of card based digital payments 4.5.1 Point of Sale (PoS) PoS is a system that automatically keeps track of each sale transaction and the amount received from the customer.
It also enables card based transactions.

4.5.2 mPoS - Mobile Point of Sale Unlike traditional PoS, mPoS provides great technological advantages.

It is a mobile phone-based application that is designed for simple use by the merchant.

With an extremely intuitive interface, the menus and functions on an mPoS are easy to use.

4.5.3 Soft PoS Soft PoS is an innovative payment acceptance segment, which uses ‘Tap-on-Phone’ technology.
This technology allows merchants to accept payment from contactless cards directly on their Near Field Communication (NFC)-enabled android mobile de- vices via software based payment application, without the requirement for any addi- tional connected hardware.

4.5.4 E-commerce payment Whenever there is a purchase of goods and services online through an electronic medium without the use of cash or cheques, it is known as e-commerce payment.
You might have observed your parents purchasing things online using their smartphone with the help of a mobile application.

That is a popular example of E-commerce.


E-commerce payment offers various benefits in the form of: • Security • Efficiency • Convenience • User-friendliness Central Board of Secondary Education Page 31 4.5.5 Automated Teller Machines (ATMs) ATMs enable bank account holders to withdraw cash, check balance, and do other banking transactions at their own convenient time without the need of bank staff in- volvement.
ATM ‒ Benefits to Customers On the same lines, ATMs offer a host of benefits to the customers/account holders.

These include: 1.

Reduced visits to the bank branch 2.

Shorter travel time as ATMs are situated nearby 3.

Convenient access to cash 24x7 4.

Additional services such as balance inquiry, mini statement, PIN change, etc.

5.

With ATM being interoperable, customers can visit any bank ATM to withdraw cash, do balance inquiry, PIN change, etc.
4.6 Modes of Digital Payments - Biometric Based The objective of this section is to enable students to understand the significance of UIDAI and Aadhaar while also learning about Micro ATMs.

Page 32 Central Board of Secondary Education 4.6.1 Unique Identification Authority of India (UIDAI) The government of India has taken a strong step in the direction of securing digital transactions through the launch of Unique Identification Authority of India (UIDAI).
Launched as a statutory authority in the year 2016, the UIDAI initiative is aimed to- wards issuing a unique identity document named as ‘Aadhaar’ (also known as UID) to all citizens of India.

UIDAI’s key objective is to eliminate duplicate and fake identities, allowing for individual authentication and verification in an easy and cost-effective way.

4.6.2 Aadhaar Enabled Payment System (AePS) Aadhaar Enabled Payment System (AePS) is a payment system operated by NPCI.
AePS empowers a bank customer to access his/her Aadhaar enabled bank account to perform basic banking transactions like balance enquiry, cash deposit, cash with- drawal, mini statement & Aadhaar to Aadhaar fund transfers through a business corre- spondent.

Aadhaar Enabled Payment System (AePS) is a payment system operated by NPCI.
Central Board of Secondary Education Page 33 4.6.3 Micro ATMs - a perfect solution for Rural and Hinter- lands Micro ATMs are handheld devices available with authorised banking correspondents (also known as bank mitras) allowing Aadhaar holders to perform basic banking trans- actions.

Fingerprint and/or Retina/Iris of the customer are used to authenticate a cus- tomer.

Micro ATMs are portable and can be carried anywhere in just one hand.
4.7 Modes of Digital Payments - Mobile Based Banking and Others The objective of this section is to enable students to learn about the various forms of digital payments including internet banking, mobile banking, and digital platforms such as UPI and mobile wallets.

4.7.1 Internet Banking Internet banking allows you to transact on your bank account over the internet using your laptop, tablet or smartphone.
When you transfer an amount using Internet Bank- ing, it can be done through different methods, including: • National Electronic Fund Transfer (NEFT) • Real-Time Gross Settlement (RTGS) • Immediate Payment Service (IMPS) National Electronic Fund Transfer (NEFT) National Electronic Funds Transfer (NEFT) is a nation-wide centralised payment sys- tem owned and operated by the Reserve Bank of India (RBI).
The payment mode enables companies and individuals to transfer funds electronically to other companies and individuals.

Page 34 Central Board of Secondary Education The account holder needs to register the beneficiary account details such as account holder name, account type (savings etc.

), account number and Indian Financial Sys- tem Code (IFSC) which helps to identify individual bank branches.
Real-Time Gross Settlement (RTGS) RTGS is a real-time settlement system which allows for fast processing of money transfer between any two accounts.

‘Real Time’ means the processing of instructions at the time they are received; ‘Gross Settlement’ means that the settlement of funds transfer instructions occurs individually.

The payments made via RTGS are final and irrevocable.

The RTGS system is primarily meant for large value transactions.
The minimum amount to be remitted through RTGS is ₹ 2,00,000/- with no upper limit.

Immediate Payment Service (IMPS) IMPS is a product made available by the National Payments Corporation of India (NPCI).

It allows for 24x7 instant funds transfer service that can be accessed on mul- tiple channels like Mobile, Internet, ATM and SMS.

The key feature of IMPS is that it is available at all times.

The transaction fee for IMPS is nominal, and it allows a transfer limit of Rupees 2 lakhs per transaction.
Central Board of Secondary Education Page 35 4.7.2 - Mobile Banking - Bank in Your Pocket Most popular banks today offer the facility of Mobile Banking.
It is offered in the form of a dedicated and secure app that provides the following key services: • Checking of the account balance • Making funds transfer • Bill payments and card payments • Service requests such as ordering cheque books Unified Payments Interface (UPI) A system developed by the National Payments Corporation of India (NPCI), UPI helps combine the power of multiple bank accounts into one single mobile app.

UPI helps in seamless fund routing and merchant payments.
In addition, it also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience.

Page 36 Central Board of Secondary Education QR Codes, an Easy Way to Pay The UPI interface makes it extremely easy and convenient to make payments using the Quick Response codes or QR codes.

When you accompany your parents to the market, you may have observed them making payments through QR codes.
Let us see how that works: • The customer scans the UPI QR placed at merchant locations / generated on PoS • Customer verifies the transaction details like UPI ID, amount, merchant name, etc.
and provides confirmation • The UPI PIN needs to be entered • Successful payment confirmation is received on the UPI App along with SMS con- firmation on mobile 4.7.3 Mobile Wallets, the Smart Way to Make Payments In today’s time, if a person walks out to the market without his cash and banking cards, yet he/she is able to purchase things of choice, how is that made possible?
As the name suggests, a mobile wallet is a virtual wallet in the form of a mobile app that allows you to make purchases simply by scanning the QR code at the merchant Central Board of Secondary Education Page 37 establishment.

A popular example of a mobile wallet in use today is PayTM.
4.7.4 Unstructured Supplementary Service Data (USSD) Unstructured Supplementary Service Data (USSD) allows users without a smartphone or data/internet connection to use facilities such as mobile banking by using the *99# code.

The key objective of this innovative technology is to allow financial inclusion of the less privileged sections of the society and integrate them into mainstream banking.
4.8 Others - National Automated Clearing House – NACH (Earlier Known as Electronic Clearing Service) The National Payments Corporation of India (NPCI) offers to banks, financial institu- tions, Corporates and Government/s a service termed as “National Automated Clear- ing House (NACH)” which includes both Debit and Credit.

NACH (Debit) and NACH (Credit) aims at facilitating interbank high volume, debit/ credit transactions, which are repetitive in nature, electronically using the NPCI ser- vice.
Page 38 Central Board of Secondary Education Summary • The Reserve Bank of India (RBI) plays a prominent role as the Central Bank of India and has the power to control the monetary situation of the entire country • National Payments Corporation of India (NPCI) is an umbrella organization for all retail payments in India.

• Digital banking allows the bank customers to avail banking services using the bank’s website on laptop or through a mobile app on a smartphone.
• Digital Payments refers to transferring an amount of money to another individual, business or organisation through the internet without the requirement to handle cash.

• PoS is a system that automatically keeps track of each sale transaction and the amount received from the customer.

• Whenever there is a purchase of goods and services online through an electron- ic medium without cash or cheques, it is known as e-commerce payment.
• ATMs enable bank account holders to withdraw cash, check balance, and do other banking transactions at their own convenient time.

• Aadhaar Enabled Payment System (AePS) is a payment system operated by NPCI.

• Micro ATMs are handheld devices available with authorised banking correspon- dents (also known as bank mitras) allowing Aadhaar holders to perform basic banking transactions.

• Internet banking allows you to transact on your bank account over the internet using your laptop, tablet or smartphone.
• Most popular banks today offer the facility of Mobile Banking.

It is offered in the form of a dedicated and secure app that provides the following key services: • The UPI interface makes it extremely easy and convenient to make payments using the Quick Response codes or QR codes.

• As the name suggests, a mobile wallet is a virtual wallet in the form of a mobile app that allows you to make purchases simply by scanning the QR code at the merchant establishment.
• Unstructured Supplementary Service Data (USSD) allows users without a smart- phone or data/internet connection to use facilities such as mobile banking by using the *99# code.

• NACH (Debit) and NACH (Credit) aims at facilitating interbank high volume, deb- it/credit transactions, which are repetitive in nature, electronically using the NPCI service.
Central Board of Secondary Education Page 39 Abbreviations RBI NPCI ATM IMPS UPI Reserve Bank of India National Payments Corporation of India Automated Teller Machine Immediate Payment Service Unified Payment Interface USSD Unstructured Supplementary Service Data NACH National Automated Clearing House Useful Links RBI Role and Functions Digital India NPCI NPCI NPCI NPCI https://rbidocs.rbi.org.in/rdocs/Content/ PDFs/FUNCWWE080910.pdf https://digitalindia.gov.in/ https://www.npci.org.in/ https://www.rupay.co.in/ https://www.bhimupi.org.in/ https://www.upichalega.com/ Unit 4: Self-Test Questions Choose the correct option 1.
Which of the following contribute towards making online transactions secure?

a) Unique transaction ID b) Unique server ID c) Unique PC ID 2.

What is the name of the institution that governs the policies for other banks to follow?

a) SBI b) RBI c) CBI 3.

Choose the correct benefit of ATM a) Increased convenience b) Increased time taken c) Increased risk of security 4.
Choose the correct full form of NEFT a) National Electrical Fund Transfer b) National Electronic Funds Transfer c) Nationwide Electronic Fund Transact Page 40 Central Board of Secondary Education True or False 1.

RBI plays a prominent role and has the power to control the monetary situation of the entire country.

( ) 2.

Digital payments are not easy and convenient.

( ) 3.

Debit cards serve a dual purpose.

( ) 4.

Card PIN numbers should be shared with friends and family.

( ) 5.
( ) 5.

QR codes make it easy and convenient to make payments through mobile wal- lets.

( ) 6.

Micro ATMs are not portable and cannot be carried anywhere.

( ) Fill in the blanks 1.

Nowadays, most of the banks offer their customers the facility of __________ banking.

2.

Digital payments can be made ________ of the day.

3.

Digital banking allows the bank customers to avail banking services using the bank’s website or a __________.

4.
4.

_______ is an innovative payment acceptance segment, which uses ‘Tap-on- Phone’ technology.

5.

Purchase of goods and services online through an electronic medium without cash or cheques is known as _____________ Answer the following 1.

List any two Do’s and Don’ts of Digital Banking ________________________________________________________________ ________________________________________________________________ 2.
Describe ATM and its purpose ________________________________________________________________ ________________________________________________________________ 3.

What is an mPoS?

________________________________________________________________ ________________________________________________________________ Central Board of Secondary Education Page 41 Unit 1 Unit 2 Unit 3 Answer Key Choose the correct option Fill in the blanks True or False 1.

Objective 2.

Sports team 1.


Goal or objective 2. attentively 3. work 1.

False 2.

True 3.

True Choose the correct option Fill in the blanks True or False 1.

Livestock 2.

Goods 1.

Money 2.

Physical 3.

Rupee 1.

False 2.

True Choose the correct option True or False Guess the words Choose the correct option Unit 4 True or False Fill in the blanks 1.

Current Account 2.

Signature of the account holder 1.

True 2.

False 3.

True 1.

CHEQUE 2.

BANK 3.


CENTRAL 1.National Payments Corporation of India 2.

RBI 3.

Increased convenience 4. b) National Electronic Funds Transfer 1.

True 2.

False 3.

True 4.

False 5.

True 6.

False 1.

Digital 2.

Anytime 3.

Mobile app 4.

Soft PoS 5.

E-Commerce payment Page 42 Central Board of Secondary Education Central Board of Secondary Education Page 43 Central Board of Secondary Education