Note on Financial Education

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Generally finance means a person’s property or merchandise. Any activity based on economics is finance. This includes currency trade as well. In Nepal, most people reside in rural areas. They don’t have sufficient access to any financial transactions organizations. Each person has the right to economic or financial resources, and for it to be used effectively and economically. The understanding of the importance of finances and their appropriate management is called financial education. The understanding of the importance of finance helps in managing money, providing the best use of economic and social security and household income and helping to run a smooth household. Financial education teaches us to save a portion of the family income, managing the amount received from abroad remittance properly and productive use of financial education information. Financial education has been giving special importance by the Nepal government.

Financial System

Recently the financial system, the central bank, commercial banks, development banks, finance companies and micro-finance development banks include. And this includes the cooperative banking business and micro business to include non-governmental avert. Financial organizations in Nepal are classified in Class A, B, C and. Statistically from 2073 B.S., there are 31 'A' class commercial banks, 7 'B' class commercial banks, 59 'C' class financial companies, and 35 'D' class microfinance financial companies. The organizations that conduct business in economic or currency exchange institutions are called financial institutions.

Banks and financial institutions collect savings and deposits, provide loans, etc. In addition to these, institutions also work on money transfer transactions, exchange of foreign currency, the official governmental bonds business, gold loans, bank guarantees, etc. So the business in bank can be started by opening a bank account and conducting transactions.

Bank Account

Banks and financial institutions involved in financial transactions opens an account in the individual or organization’s name. A bank account is the description with the name of the person or organization and details. Customers receive a voucher when depositing money in their account. A checkbook is issued for withdrawal and bank statements are available to view the transactions. Brief descriptions of each type of account are:

Checking Account

These types of accounts are used mostly by business and offices. One can deposit and withdraw any amount any number of times within a single day. They usually do not pay interest, and they may restrict or impose additional fees for excessive activity, such as writing more than a certain number of checks per month.

Savings Account

These types of accounts are used mostly by small amount deposits by general public. One can deposit any amount any number of times but can only withdraw a fixed amount at fixed intervals. The banks define the terms of deposit and withdrawal. The banks pay interest on the deposited amount.

Fixed Deposit Account

Fixed deposit accounts are the accounts that are opened with a certain amount for a fixed length of time. These accounts are opened for 3 months, 6 months, 1, year, 2 year, or longer. The amount cannot be withdrawn before the set time. These accounts give high interest on the deposit. If one wishes to withdraw the amount before the set time, a loan can be taken by submitting the original deposit certificate as collateral.

Automated Teller Machine (ATM)

ATM cards are digital cards that can be used to withdraw money from a bank account or view the current status of the account through an ATM machine. These are also called Debit Cards because they are only used to withdraw the amount available in the bank account. The ATM cards come with a pin number provided by the bank which can be later changed by the user.

Credit Cards

Credit cards are issued to its loyal customers by banks who can withdraw amounts greater than their accounts hold at the moment. The credit limit is fixed by the bank and the interest is taken from the account with each use of the credit card.

SMS Service

The banking service can be accessed by the use of SMS system. The amount remaining in the account, transfer of amount to another bank account, or payment of bills can be done by the SMS.

Savings and its Advantages

Savings is the amount saved from salary or other sources for future use. These are put in a bank account and called savings. Saving is done for personal gain. We save money for property purchase, investment, daily expenditure, family engagements, marriage, education, health, etc.

  1. Official Saving in Financial Institutions: Deposit in bank account in banks that are certified by the central bank of Nepal.
  2. Semi-official Saving in Financial Institutions: Savings in cooperatives, mother groups, consumers group, etc.
  3. Informal Savings: Saving done by investing in houses, jewellery, friends, family, etc.
  4. Piggy Banks: Savings done in small amounts deposited in small boxes, and kept safe at home.

Advantages of Savings

  1. Formation of capital.
  2. Formation of investments.
  3. Development of work ethic.
  4. Safety of earned money.
  5. Return on savings through interest.

  1. Generally finance means a person’s property or merchandise. Any activity based on economics is finance, including currency trade.
  2. Each person has the right to economic or financial resources, and for it to be used effectively and economically.
  3. The understanding of the importance of finances and their appropriate management is called financial education.
  4. The understanding of the importance of finance helps in managing money, providing the best use of economic and social security and household income and helping to run a smooth household.
  5. Financial education teaches us to save a portion of the family income, managing the amount received from abroad remittance properly and productive use of financial education information.
  6. Financial organizations in Nepal are classified in Class A, B, C and. Statistically from 2073 B.S., there are 31 'A' class commercial banks, 7 'B' class commercial banks, 59 'C' class financial companies, and 35 'D' class microfinance financial companies. 
  7. Banks and financial institutions collect savings and deposits, provide loans, etc. In addition to these, institutions also work on money transfer transactions, exchange of foreign currency, the official governmental bonds business, gold loans, bank guarantees, etc.
  8. Banks and financial institutions involved in financial transactions opens an account in the individual or organization’s name. A bank account is the description with the name of the person or organization and details.
  9. Checking accounts are used mostly by business and offices. One can deposit and withdraw any amount any number of times within a single day. They usually do not pay interest, and they may restrict or impose additional fees for excessive activity, such as writing more than a certain number of checks per month.
  10. Savings accounts are used mostly by small amount deposits by general public. One can deposit any amount any number of times but can only withdraw a fixed amount at fixed intervals. The banks define the terms of deposit and withdrawal. The banks pay interest on the deposited amount.
  11. Fixed deposit accounts are the accounts that are opened with a certain amount for a fixed length of time. These accounts are opened for 3 months, 6 months, 1, year, 2 year, or longer. The amount cannot be withdrawn before the set time. These accounts give high interest on the deposit. If one wishes to withdraw the amount before the set time, a loan can be taken by submitting the original deposit certificate as collateral.
  12. Automated Teller Machine (ATM) cards are digital cards that can be used to withdraw money from a bank account or view the current status of the account through an ATM machine. These are also called Debit Cards because they are only used to withdraw the amount available in the bank account. The ATM cards come with a pin number provided by the bank which can be later changed by the user.
  13. Credit cards are issued to its loyal customers by banks who can withdraw amounts greater than their accounts hold at the moment. The credit limit is fixed by the bank and the interest is taken from the account with each use of the credit card.
  14. The banking service can be accessed by the use of SMS system. The amount remaining in the account, transfer of amount to another bank account, or payment of bills can be done by the SMS.
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