Financial Literacy Unit 9/12

Post Office Saving Scheme

Steady and stable financial instruments that act as a security net against market uncertainty, offering reasonable returns and capital protection.

Post Office Savings Account (SB)

A post office saving scheme similar to a bank savings account, applicable across India, especially in rural areas, allowing one account per individual transferable between post offices.

Post Office Recurring Deposit (RD)

A mid-term saving scheme that allows investment for five years through monthly instalments.

Post Office Time Deposit (POTD)

A post office saving scheme that provides the facility of different tenures for investment, similar to a fixed deposit account with a bank.

Post Office Monthly Income Scheme (POMIS)

A unique investment scheme that guarantees fixed monthly returns on the lump sum investment.

Kisan Vikas Patra (KVP)

A small saving certificate scheme introduced in 1988 to encourage long-term financial discipline among people.

Senior Citizen Saving Scheme (SCSS)

A retirement benefit scheme supported by the government of India, available for people whose age is more than 60 years, providing a regular flow of income after retirement.

Sukanya Samriddhi Yojana/Account (SSY/SSA)

Introduced in 2015 as a part of the “Beti Bachao, Beti Padhao” initiative for promoting girl child education.

Lock-in Period

The time period during which the investor cannot sell or withdraw the invested amount.

Nomination

Banking service that allows an account holder or investor to name someone who can claim the investment or deposit after the original account holder's death.

Payout

Expected monetary disbursements or financial returns from annuities or investments.

Pledge

Person who accepts a pledge for a loan and lends money.

TDS

A direct taxation mechanism in which taxes are collected from the income source itself.

Indian Post Payments Bank (IPPB)

Established on September 1, 2018, under the Department of Post, Ministry of Communication, with 100% stake with the Government of India; aims to provide affordable, reliable, and accessible banking for common people.

Money Transfer Services

Services enabling the transfer of funds from one place to another, including foreign exchange, money orders, and international money transfers.

Money Order

A domestic money transfer facility provided through the post office, mainly used by individuals without standard checking accounts, with a maximum remittance of INR 5,000.

E-Money Order

A web-based, quick money transfer service provided by the Indian post office within India, disbursing money within 24 hours, with transfer limits between INR 1 and INR 5,000.

Instant Money Order (iMO)

Instant online money transfer service offered by the post office, allowing transfers between two resident people in India, ranging from INR 1,000 to INR 50,000.

International Financial System

Software developed for coordinating international remittance services between partner countries, where remittances are paid through the post office’s e-money order service.

Money Transfer Service Scheme

An easy and quick way to transfer personal remittances to beneficiaries in India from abroad; outward remittances from India are not allowed under this scheme.

MO Videsh

An international remittance service provided by the Indian post office to over 65 nations through Partner Banks, facilitating remittances to and from foreign nations.

International Money Transfer Service

A service offered by the Indian post office for receiving money from overseas, allowing Indian families to receive money in Indian Rupees from abroad.

Electronic Clearance Services (ECS)

A scheme offering an alternative method for bulk payment transactions like salary, dividend, or pension payments by government departments, companies, or banks.

ECS Credit

When a credit is made by one bank into another bank account, often used to pay dividends or salaries.

ECS Debit

Usually utilized by utility service providers to collect payments from a higher number of customers on a recurring basis.

MoneyGram

Offers money transfer and financial services globally through retail locations and digital platforms, allowing consumers to send money internationally.

Indian Postal Order (IPO)

Provides a means to transmit and receive small amounts of money by post from any corner of India; useful for RTI payments to central government departments.

Payee

An individual to whom money is to be paid.

Remittance

An amount of money sent as payment.

Standard Checking Account

A basic banking account that can be used for paying bills, writing cheques, and making purchases through a debit card.

Dividend

A cash reward provided by the company to its shareholders.

General Insurance

Financial protection against losses or damages to assets, liabilities, and other non-life events; includes health, motor, home, travel, and liability insurance.

Life Insurance

A contract where an insurer promises to pay a sum of money upon the death of the insured or after a set period, providing financial security to the insured's family or dependents.

Term Life Insurance

Pays a death benefit if the insured dies within a specified term; if the insured survives the term, no benefit is paid.

Whole Life Insurance

Provides coverage for the insured's entire lifetime and includes a savings component that grows over time.

Life Insurance Policy

A contract between an insurance company and a policyholder where the insurer promises to pay a sum in exchange for premiums, after a definite period or upon the death of the insured.

Term Life Insurance

Promises to pay a death benefit while the policy is active, i.e., during its term period. Generally, on maturity, nothing is paid to the policyholder.

Endowment Policies

Conventional life insurance plans that are savings oriented, offering coverage against untimely death and providing a guaranteed maturity benefit.

Pension Policies

Annuity plans designed to address post-retirement requirements, providing the dual benefit of insurance coverage and investment.

Unit Linked Insurance Plans (ULIPs)

Life insurance plans that offer the advantages of both insurance and investment, investing premiums in market-linked funds.

Health Insurance

Policies meant to cover emergency medical expenses, either reimbursing or paying the amount for treating any injury or illness.

Individual Health Insurance

Provides coverage to just a single person.

Group Health Insurance

Offered to employees by their employer.

Family Floater Insurance

Provides coverage to the whole family (husband, wife, and their two children) under a single plan.

Critical Illness Cover

Provides coverage against numerous life-threatening illnesses such as heart attack, cancer, stroke etc. Policyholder receives a lump sum if diagnosed with any critical illness.

Property Insurance

Policies that provide liability coverage or property protection coverage to property owners, offering financial reimbursement for theft or damage.

Motor Insurance

Provides financial assistance when a vehicle has an accident, with options for two-wheelers, cars, commercial vehicles, and fleets.

Home Insurance

Provides comprehensive protection to the structure of a house and its contents against physical damage or destruction from manmade and natural calamities.

Home building or structure insurance

Provides coverage against the damage to the structure of a house because of any calamity.

Burglary and theft insurance

Provides coverage against stolen goods if there is any theft or burglary.

Public liability coverage

Offers coverage against damage caused because of natural calamities, anti-social activities, and fire outbreaks.

Contents insurance

Provides coverage against loss of vehicles, furniture or any other appliance due to theft, fire, riot, or flood.

Fire Insurance

Provides coverage to both immovable and movable property against losses due to fire.

Travel Insurance

Provides protection against the losses and costs associated with traveling, including flight cancellations, loss of baggage, and medical emergencies.

Marine Insurance

Provides insurance coverage against loss occurred due to marine perils.

Liability Insurance

Offers coverage against claims of damage or loss for which a policyholder needs to compensate the other party.

Postal Life Insurance (PLI)

Welfare scheme introduced by the Department of Posts in 1884 to help its employees, offering insurance coverage with loan, nomination, revival, and conversion facilities.

Rural Postal Life Insurance (RPLI)

Launched on March 24, 1995, for extending insurance coverage to people residing in the rural regions of India, providing benefits to the society’s weaker sections and women workers.

Housing Loan

An amount borrowed by an individual from a financial institution for purchasing, constructing, extending, or renovating a home.

Home loan

A loan availed to buy a home. Offered by numerous public banks, private banks and housing finance companies.

Home extension loan

A loan can be availed to finance the cost of adding a new floor or room to the existing home, constructing a new bathroom, extending the kitchen etc.

House renovation or improvement loan

Provides financing to repair or renovate the existing house, like plumbing, painting, waterproofing the ceiling, upgrading electrical system etc.

Home construction loan

Can be used if a person already has a plot of land and needs funds to construct a home on that land.

Composite home loan

Can be used to obtain financing to buy a plot of land as well as constructing a home on that land.

Balance transfer loan

Enables the housing loan borrowers to transfer their present housing loan from one lender to the other.

Pradhan Mantri Awas Yojana (PMAY)

A government scheme introduced in 2015 to encourage affordable and sustainable housing among the lower income group in India.

Pradhan Mantri Awas Yojana Gramin (PMAY-G)

Its objective is to cater to the housing needs of the rural poor.

Pradhan Mantri Awas Yojana Urban (PMAY-U)

The objective of PMAY-U is to address the housing needs of the urban poor. This scheme covers around 4,331 cities and towns.

Annuity

A contract between the life insurer and an individual. Its objective is to generate a regular income for the remaining life of the individual after retirement.

Assignment

It refers to the complete transfer of the policy’s ownership to some other individual.

Beneficiary

It refers to a person who will get the death benefit from a life insurance policy on death of the policyholder.

Policyholder

It refers to an individual who owns a given insurance policy.

Premium

It is the amount of money paid regularly to the insurance company to obtain coverage against damage, accident etc.

Portfolio

A collection of investment tools and financial assets (shares, bonds, mutual funds, etc.) held by an individual or institution.

Portfolio Management

The art and process of managing an individual’s investments to meet long-term financial goals while balancing risk tolerance and liquidity needs.

Active Portfolio Management

An approach where managers frequently buy and sell assets using qualitative and quantitative analysis to outperform the market.

Passive Portfolio Management

An approach that builds a fixed portfolio—often mirroring an index (e.g., ETFs)—with minimal trading to match, not beat, market returns.

Share Market

A platform where traders and investors buy or sell shares of listed companies during specific trading hours.

National Stock Exchange (NSE)

One of India’s two main stock exchanges, providing an electronic marketplace for share trading.

Bombay Stock Exchange (BSE)

India’s oldest stock exchange and home of the Sensex index of 30 leading companies.

Primary Share Market

The market in which companies issue shares to the public for the first time via an Initial Public Offering (IPO).

Secondary Share Market

The market where already-issued shares are bought and sold among investors at market prices.

Equity Market

Segment of the share market where whole shares are traded at prices negotiated between buyers (bid) and sellers (ask).

Derivative Market

Market where futures and options contracts—often in large lots—are traded based on underlying assets like stocks.

Bid Price

The price a buyer is willing to pay for a security in the equity market.

Ask Price

The negotiated price a seller agrees to accept for a security; also called the offer price.

Debt Market

A platform where debt securities such as bonds and treasury bills are issued and traded between borrowers and lenders.

Government Securities Market (G-sec Market)

Sub-market where sovereign securities issued by India’s central and state governments are traded; considered low-risk and highly liquid.

Corporate Bond Market

Segment of the debt market where private companies issue bonds, debentures, and PSU bonds to raise capital.

Sensex

The Stock Exchange Sensitive Index—an index of 30 financially strong, highly traded companies listed on the BSE.

Mutual Funds

Money-managing institutions that pool public money and invest it in capital markets; investors receive units proportional to their contribution.

Asset Management Company (AMC)

The organization that sponsors and manages mutual fund schemes on behalf of investors.

Net Asset Value (NAV)

Per-unit value of a mutual fund, calculated as (Fund Assets – Liabilities) ÷ Outstanding Units.

Systematic Investment Plan (SIP)

A disciplined mode of investing fixed amounts at regular intervals into a chosen mutual fund scheme.

SIP Calculator

An online tool that estimates potential returns, wealth gain, and maturity value for a planned SIP investment.

Diversification

An investment strategy that mixes a wide range of assets within a portfolio to reduce overall risk.

Debt Security

A financial asset created when one party lends money to another, such as a bond or debenture.

Corporate Bond

A debt security issued by a private company obligating it to pay contractual interest and repay principal at maturity.

Liquid Instrument

An asset that can be converted into cash quickly and with minimal price impact.

Risk Minimization

The portfolio-management objective of reducing exposure to unfavorable market movements while pursuing returns.