Basic Financial Concepts

Almost everyone is familiar with this term in one way or another. In simple language, a loan is the lending of money from one entity to another. This entity can be a person, a company or an entire government of a country. How does a loan exactly work? Its a pretty simple mechanism. Taking a loan involves two entities, a borrower and a lender. The borrower takes a loan from the lender, and while doing so, the borrower makes a commitment to the lender that they will repay the borrowed amount (principal) along with some extra money (interest) over a fixed period of time. Once the borrower returns the principal amount along with the interest, the transaction is said to be settled. The terms and conditions of each loan are defined in a contract provided by the lender. What if the borrower is unable to repay the loan? Now this is where the types of loans come into play. Broadly speaking, there are two categories of loans, secured and unsecured loans. Secured Loans Secured l

We have various online and offline payment methods available to us. Post demonetization, the online payment methods saw more usage than any other. In this post we'll be covering the four major methods to transfer money online namely Immediate Payment Service (IMPS), Unified Payments Interface (UPI), RTGS and NEFT. 1. Immediate Payment Services (IMPS) As the name suggests, this is an immediate method of funds transfer. You can use this method anytime round the clock, even during bank holidays. One should note that using this method you can transfer money upto ₹2 lakhs only. How to use this method? There are two main ways to use this method, one is through mobile banking and the other is through net banking. Both ways have slightly different requirements. Mobile Banking To transfer funds (using IMPS) through mobile banking you'll first need to register for mobile banking services of your bank. Your bank will then provide you with two main things, MPIN and a

What is an insurance? An insurance is an official contract between two entities, the one who seeks an insurance (insured) and the one who provides an insurance (insurer). The insurer promises to provide financial protection to the insured in case of an event which is stated in the contract. In exchange for the financial protection, the insured pays a certain sum (premium) to the insurer every month. How does it work? Lets say you bought a brand new car and want to get it insured (just in case you get in an accident). For this, you'll need to go to an insurance broker or an insurer. The insurer will underwrite your insurance policy.  Now, what is underwriting? Underwriting is a process of analyzing and assessing the risks involved in order to come up with the best possible policy for the insured. In this case, they may check your driving history, the value of your asset (car), the daily routes you take, etc. to assess the probability of a mishap. The insurer then

About me Hey folks! Welcome to my blog. My name is Neil Deshpande. I'm a fresher in college studying Information Technology. Other than writing code sometimes, I'm also interested in physics and data science. I have a hobby of trying new things now and then since I get bored with stuff a bit earlier than others. About the Blog Why Am I Blogging? While paying my college fees online, a year ago, I was introduced to two new terms, NEFT and RTGS. Back then I had no idea what they meant. After looking the terms up, I came to know that they were just money transfer options. It was then when I realized that I needed to work on my financial literacy and familiarize myself with some common terms and how the concepts built around them worked. Since the world has been at a standstill, due to Covid-19, I got some free time to learn about the basics of finance and online banking. I thought it would be a nice idea to share my knowledge of basic financial and banking related conc