Banking Class 7
Banking unit was also there in class 6, now more details follow:
Bank:
A bank is a financial system licensed by the governing authority to lend money to people in the form of loans and receive money from people in savings and deposits.
Evolution of Money
Students have done Evolution of Money in class 6 also.
Barter-like exchange system prevailed.
The Limitations of the Barter System led to the evolution of money.
In ancient India, people used gold coins as a mode of currency.
The ancient Aztecs used beans as a trade currency, and Norwegians used butter.
US colonists used tobacco leaves and animal hides as a form of currency.
Gradually, coins and currency notes came into circulation.
The earliest known records of metal coins belong to the 5th or 6th century BC. These coins were in the shape of tools like hoes and billhook (tools used in farming).
Ancient civilisations used electrum (a natural alloy of Gold and Silver) to make coins.
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. However, the transition to paper currency is said to have occurred in China during the 10th century.
Plastic cards in the form of credit and debit cards are replacing paper money.
Banking transactions through the internet have been gaining popularity in recent years. It is known as net-banking. Net-banking involves the transfer of money electronically. Thus electronic money came into existence.
The latest form of money used for transactions utilising block-chain technology is called crypto-currency e.g. Bitcoin, Ethereum and Ripple.
Banking Class 7
Banks and Their Importance
Role of Bank
- Economic Development: Banks help in economic development by providing loans to farmers, service members, businesspeople, and organisations.
- Capital Formation: Banks provide people and businesses with the opportunity to convert their savings into investments
- Raises Standard of Living: Banks raise the standard of living by providing loans for consumer goods, homes, automobiles, etc.
- Balanced Regional Development: Banks identify our country’s backward regions and help in their economic and social development by providing them adequate funds at reasonable interest rates
Origin of Banking
In ancient human history, banking started in the temples and palaces even before 2000 BC. Ancient Greeks, too, developed a system of transferring money in the form of book entries.
Modern banking in India started in the form of the Bank of Hindostan in 1770. Bank of Calcutta (formed in 1806 and later known as the Bank of Bengal), Bank of Bombay (formed in 1840) and Bank of Madras (formed in 1843) merged in 1921 to form Imperial Bank of India.
After independence, the GoI and the RBI nationalised the Imperial Bank of India in 1955 and renamed it the State Bank of India (SBI). SBI is also the oldest surviving bank of India.
Nationalised banks in the country include:
- State Bank of India
- Bank of India
- Bank of Maharashtra
- Canara Bank
- Indian Overseas Bank
- Punjab & Sind Bank
- Punjab National Bank
- UCO Bank
- Bank of Baroda
- Union Bank of India
- Indian Bank
- Central Bank of India (not to be confused with RBI)
Banking Class 7
Types of Banks
Commercial Banks:
Four different types of Commercial Banks:
- Public sector banks or the nationalised banks of India e.g. SBI, Union Bank of India, etc.
- Foreign banksg. National Australia Bank, American Express Banking Corporation, etc.
- Private sector banksg. HDFC, ICICI, Axis Bank, etc.
- Regional Rural Banks (RRBs)
Types of Bank Accounts
Elements of a cheque:
- Amount to pay in words as well as in numbers
- Name and signature of the person making the payment or the account holder
- Name of the person who will receive the payment
- The date on or after which the cheque is valid
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Basic Terms in Financial Literacy 7
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MCQs
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Review of Banking Unit - Drag the words