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Mobile banking is one of the facilities which a bank or a financial institution provides to its customers. With this, one is able to make money transactions through a mobile device like the mobile phone or tablet. A step ahead of the ATMs, this type of banking makes it even easier, as the customer can use the service even sitting at home. Usually, it is active on a 24-hour basis.

Mobile banking uses certain softwares that are also called ‘apps’, provided by a financial institution for the purpose. Transactions that involve cash are however, not handled in mobile banking. That is, if one has to withdraw or deposit money, he has to go to an ATM, or to the bank itself. Mobile banking helps when one has to make bill payment or fund transfer from one account to another.

 

Continue reading "Why is mobile banking so popular? "

      Internet banking is one of the most popular methods of banking today, used by people across the globe. It is also known as e-banking or online banking.

       As the name suggests, it is an electronic payment system provided by the banks in general to conduct a wide range of transactions through their website.

       Like all modern kinds of banking, this one too enables transfer of money from account to account and check balance all this through a computer.

        To use this facility, customers need to first activate the option of e-banking. Websites of banks differ from each other, but in general, management of accounts are easy in net banking. The customer should at first log onto the bank’s website, and enter the user ID as well as password. He is then automatically guided to the page where he is given different options for transactions.

        Banks use various security measures to make sure that the technology is not misused by fraudsters. 

         There are different methods of money transfer in banks today. Let’s look at a few of them.

         RTGS or Real Time Gross Settlement System is one way where funds can be transferred between two banks located anywhere that has enabled RTGS. As the name suggests, transfer happens in real time, and there is no delay involved. Users can transfer large amounts starting from Rs 2 lakhs. There is no upper limit for transaction, through RTGS. Also, there is lesser risk compared to other modes of transfer, as it is done quickly and via the Internet.

         Yet another is the NEFT or National Electronic Fund Transfer, a nation-wide system which allows fund transfer from any bank branch to any other in the country. Any sum up to Rs 10 lakhs can be transferred through this system.

         Another service is the ECS, or Electronic Clearing Service which enables institutions to make payments such as salary, pension, bills etc. in an automated manner. EFT or Electronic Fund Transfer also helps transfer money from one bank account to another without direct handling of money.

           In simple terms, a credit card is a payment card issued by banks to its customers, to use for purchasing goods and services. It is like borrowing money from your bank for shopping, and then repaying it with an interest amount.

            This helps in many situations, especially when you are shopping. You need not carry cash along with you, but just have to give the shopkeeper your credit card. The money will be paid by the bank which issues the card. You can use the card not just for shopping, but paying for services too.

          Credit cards can be very helpful until you delay repayment. A late fee will be charged extra, as decided by the bank, and could possibly be very high! Smart users pay back the amount due every month, so that the debt amount doesn’t get too big.

          There is also a limit up to which money can be credited. It is fixed by the bank, depending on your ability to handle the debt. An intelligent use of credit card will help the customer. 

Similar to credit cards, debit cards are also issued by banks to their customers to help them purchase goods and services. But in their functions, these two cards are quite different.

While using a debit card, money gets deducted from the user’s bank account itself. One can use it for shopping and bill payment, in the same way that a credit card is used. But the moment a transaction is completed, money gets debited from his or her account. This also means that there is no need for repayment.

In most cases it is the same debit card that we use at ATMs for withdrawing money. These cards are used for online shopping too.

The card has a Personal Identification Number or PIN, which has to be used for carrying out a transaction. There are different brands of debit cards used in our country, all of them developed by private companies. Apart from these, the National Payments Corporation of India launched a new one named ‘RuPay’ in March 2012. It has been a success since its launch.

 

          Electronic commerce or e-commerce, in its simplest definition, is trade through the Internet.

         In other words, it helps exchange goods and services electronically, without the customer having to cross barriers of time and distance.

         For example, a customer can buy anything and everything through online markets- from groceries to advanced equipment. This can be done using debit or credit cards. Net banking is also a method of e-commerce.

        The major attraction of such online trading includes convenience, accessibility, and round-the-clock service. Some of them come with a lot of offers too.

        Yet another advantage is that the products of purchase reach the consumer wherever he is. Of course, there are drawbacks to online dealings. You see the purchased product in real life only when it reaches you.

        There could also be delay in delivery. And in case the customer service is not good enough, the shopping may end up in disappointment.

        Yet another threat is the increasing number of online frauds. The customer should always be alert while shopping online, although most of the established firms adopt strong security measures. 

       As the name suggests, representative money ‘represents’ something that is usually valuable. It is not money, but a symbol. So naturally, it does not consist of coins or banknotes.

       In other words, representative money is a token or certificate given in exchange for valuable things like gold, silver, oil etc. It is linked to the commodity that backs it and hence, is also known as ‘commodity-backed money’.

        The concept is believed to have originated with the ancient Sumerians. History goes that small baked clay tokens in the shape of cattle were used instead of real animals in barter system. Later, representative money gained popularity among pilgrims in the Middle Ages.

         In the 19th century, a lot of currencies acted as representative money as they were exchanged for a fixed amount of real money.

 

        You must have heard of the recent demonetization of Rs 500 and Rs 1000 notes. The move was to control the flow of black money in the country, said our Prime Minister.

        So, what exactly is black money? Currencies that is black in colour? Absolutely not.

        The universally accepted definition of black money is this- any money on which tax is not paid. You may know that all wage earning citizens need to pay tax in a country. Black money is income that is hidden from the government. It could be earned by legal or illegal means- either way, it is a crime.

        Not just large amounts, but smaller amounts of money that go without proper recording is also considered as black money. For example, if you go to a shopkeeper, and purchase something for Rs 100, but do not take a receipt for it. Here the purchase is not recorded in the accounts of that shop so the shopkeeper doesn’t have to pay tax on it. Thus, the money he got from you becomes black money.

        As money turns illegal with tax evasion, transference or transaction of it is a crime too.

        Without taxes, the government will not get enough money to meet the country’s expenses. This in turn will affect welfare schemes for the poor. So, knowingly or unknowingly, tax evader means those who escape paying taxes, are ruining the lives of the poor too.

        This also creates a bigger division between the rich and the poor. The government gets affected too, and slowly, it will run into deep financial crisis.

        It is hoped that with the recent move of demonetization, the tax evaders will be forced to return the high denomination bank notes. In this way, hidden money will be exposed and the cheats can be arrested. 

The international definition given for hawala is this - money transfer without money movement.

        Suppose you live abroad, and want to send money to your relative here in India. The proper way is to transfer the money through banks, or other authorized financial institutions. But they will exchange your dollar for rupees only at a rate fixed by the government. You may lose a lot of money there. Besides, the institution will charge an extra amount for delivery and service.

        In such cases, some people prefer to take a bigger risk. They approach a hawala broker, who will help transfer this money without much expense. They just have to be given some commission, which is low compared to legal methods. Also, it requires no paper work.

 

It is a system that works purely on trust. You will not get a receipt for the transaction, and any loss that occurs will be solely yours. Unlike a proper bank transfer, hawala brokers contact their counterparts in India or any country to which the money has to be transferred. The counterparts then deliver the amount to the concerned person. Hence, it is said that there is no actual movement of money. This is a crime in any country.

Hawala is illegal also because there is no tax paid on the amount transferred. It is used extensively across the globe to circulate black money, to provide funding for terrorist activities, and drug trafficking etc.

As they don’t operate through proper channels like banks, hawala money escapes governmental regulations, which has become a serious cause of concern. Yet another threat is that hawala is often linked with equally serious crimes like murder, kidnapping etc. 

As we know, counterfeit money is duplicates or imitation currency produced illegally in a country. The use or production of it amounts to fraud.

       It is believed that counterfeiting is as old as currency itself. Even coins were duplicated in ancient times, with base metals instead of pure gold and silver.

       As time passed by, newer methods were devised, and counterfeit became a big threat to countries across the globe.

       One of the most dangerous effects of money duplication is the reduction in the real value of money.

        Yet another is the increase in price of commodities. Suppose you are a trader and you get fake currencies from your customers. You take it to a bank, and find out that they are not real. You may be innocent, but you are not going to get the money reimbursed.

        Increase in prices, is also caused by the fact that there is an abundance of money being circulated in financial markets-even though some of them are duplicates. In such conditions, the economy of a country starts to collapse. In India, the government has taken various measures to control counterfeit, the latest being the withdrawal of Rs 500 and Rs 1000 notes.

 

 

 

 

 

 

 

 

A stock market is a network of transactions in the form of stocks or shares, instead of money. In other words, it is a platform through which shares of companies are issued and traded. They are also called equity markets.

       Stock markets play important roles in financing as they provide companies with options to raise capital while also giving investors a part of ownership in these companies. Those buying the shares are called ‘shareholders’.

       The stocks or shares are traded through stock exchanges. The National Stock Exchange and the Bombay Stock Exchange are the two prominent stock exchanges in India.

       The largest and the most influential stock exchange in the world is the New York Stock Exchange (NYSE). 

       It is believed that metal coins were first used in our country sometime during the 7th century BC and consisted mainly of silver and copper.

       The earliest coins were punch-marked coins, that is, metal pieces were stamped with symbols. They were known in general as puranas, karshapanas or pana.

        Empires like the Kushanas and Satavahanas imitated the ‘silver drachms and tetra drachms’ of the Indo-Greek kings. Satavahanas made coins in copper, bronze, and silver.

     

Continue reading "Why is it said that each empire in Ancient India had a unique system of coinage?"

Medieval India, marked by the arrival of Muslim rulers, witnessed significant changes in its coinage system. It acquired a new pattern, and came out mostly with inscriptions in Arabic and Persian.

The Delhi sultans introduced a system in which coins were known by the names ‘tankas’ and ‘jitals’. Coins were mostly made out of gold, silver, and copper.

The Tuglaqs were believed to have made coins that were far superior than those made by the rest. Muhammed bin Tughlaq especially, took personal interest in the matter, yet it ended up as big failures. Later, during the reign of the Lodhis, coins were struck exclusively from copper.

In the south, the coins of the Vijayanagara kingdom proved to be a great success, and inspired coinage for the years to come. They stood out for their design and perfection. In a general pattern, a sacred image was seen on one side of the coin, and the ruler’s name on the other. It was the Devanagari script that was used for inscriptions, and the coins were mainly made in gold and copper.

The Mughals brought uniformity and consolidation to the coinage system throughout the empire.

         It was Sher Shah Suri, the founder of the Sur Empire, introduced ‘rupiya’. It is considered to be the precursor of the modern day rupee.

         Mughal coins were made remarkable by their art and originality. The most important period was between 1556 to 1605, when Akbar was the ruler. Like his ideology, his coins too reflected secularism.

         Coins made of gold, silver, and copper were issued during the Mughal era. The largest gold coin was the Sahansah. Muhar, a coin introduced by Sher Shah Suri, was the standard gold coin. There was another silver coin named Jalali.

         Jahangir is also known to have taken interest in coins. Some gigantic coins issued by him have survived and are among the largest ones in the world.