Chapter 20 Solutions — Banks and the Magic of Finance

Questions and Activities

1. 1.
   What is financial infrastructure? How does it complement physical infrastructure?
2. 2.
   How does having a bank account help people? Should everyone be required to have a bank account?
3. 3.
   What could be the possible advantages and disadvantages of compound interest for savers and borrowers?
4. 4.
   How does financial infrastructure enable the flow of money between households and businesses? Can you think of how the government can facilitate this flow?
5. 5.
   What could be the reason for the higher interest rate earned on fixed deposits as compared to a savings account?
6. 6.
   Sahil received ₹10,000 as a prize in a poster-making competition. His father promises to pay him 12 per cent interest per year if he does not spend the amount. After 3 years, how much money would Sahil have?
7. 7.
   How does the stock market help mobilise the savings of individuals? In what ways do companies benefit by issuing shares to people?
8. 8.
   How can we balance the convenience of digital payments with the risk of cyber fraud?
9. 9.
   Ask your family members or neighbours about — how they save money; whether they use UPI, ATM or cheques and the kinds of transactions they perform; if they or their acquaintances have experienced digital fraud and what they did. Summarise your findings in a table or short report and share one surprising insight with your class.
10. 10.
    Create a Financial Safety Poster with dos and don'ts of digital banking safety. Include emergency numbers or websites like https://cybercrime.gov.in or the 1930 helpline. Display the posters in school corridors or the library.
11. 11.
    Cheques are often used to pay utility bills. Ask your parents to allow you to fill out the cheques for a few monthly payments.
12. 12.
    Suppose you have to withdraw ₹10,000 from your bank account. How would you fill out the cash withdrawal slip at your bank? (Refer to Fig. 8.24.)