Maharashtra Board Class 6 Maths part 2 Chapter 14 Banks and Simple Interest PDF Download

Banks And Simple Interest

What does the picture above show? Find out about the nature of work done in this office. Make a note of your observations.

A Bank

A bank is a government recognized organisation that carries out transactions of money. It is a financial organisation. Finance relates to money.

We need to be prudent in spending the money we earn. We save money for use in the future. Our savings are meant to meet expenses on education, building a house, medical treatment, on our occupation such as for using improved methods of agriculture, etc. Small savings made regularly accumulate over a period to become a large amount and prove useful in the future. An amount kept in a bank remains safe and also grows over the years.

Teacher's Note

Banks are very important for keeping our money safe. When you save money in a bank, it grows with interest, just like planting seeds that grow into big trees.

Exam Trick

Remember: A bank is a safe place for money. Your money in the bank earns interest. This is like free money that the bank gives you for keeping your money with them.

Points to Remember

A bank is a government recognized organisation that handles money.
We should save money for future needs like education and medical treatment.
Money kept in a bank grows with interest over the years.
Finance means anything related to money.
Small regular savings become a large amount after some time.

Financial Transactions

In the above picture, who are the people shown to be using bank services?

Students
Traders and Businessmen
Farmers
Industrialists and Professionals
Women's Savings Groups

What does the symbol on the bag in the centre stand for?

What do the arrows in the above picture tell you?

Project Work

Teachers should organise a visit to a bank. Encourage the children to obtain some preliminary information about banks. Help them to fill some bank forms and slips for withdrawals and deposits.

If there is no bank nearby, teachers could obtain specimen forms and get the children to fill them in class.

Give a demonstration of banking transactions by setting up a mock bank in the school.

Invite participation of parents who work in banks or other bank employees to give the children more detailed information about banking.

Teacher's Note

A bank visit helps children understand how money is managed. You can show them how people deposit and withdraw money at the bank near your school.

Exam Trick

Remember: Banks help many people like students, farmers, businessmen, and women's groups. All of them use the bank to keep their money safe and grow it.

Points to Remember

Students, farmers, traders, and professionals all use banks.
Banks help people manage their money and savings.
Different types of people depend on banks for different reasons.
Women's savings groups also use banks to save money together.
Banks provide services to the whole community.

Bank Accounts

To use banking services one has to open an account in a bank. We need the following documents or papers to open a new bank account.

1. Proof of residence: Ration card, electricity bill, telephone bill, domicile certificate, identity card, etc.

2. Proof of identity: Aadhaar card, voter's identity card, PAN card, passport or any other proof suggested by the bank, besides a reference from another customer who is an account holder.

A savings account is meant to induce a habit of saving money. An account holder can deposit money in the savings account as and when money is available. He or She may also withdraw or take out some money from that account occasionally if needed.

Banks give an interest of 4% to 6% on the money in the savings account. The customer gets facilities like a pass-book, cheque book, ATM card, mobile banking, SMS banking, Internet banking, etc. to operate the account.

We have to fill in certain printed slips to deposit money in an account or to withdraw it. Every bank has its own different forms, but the information to be given in it is the same.

There is another kind of bank account called a current account. Money can be withdrawn from it any number of times, but one does not get any interest on the amount in this account.

To get more interest, we have to keep a fixed amount in a bank for a longer period of time. We can avail of facilities like the Fixed Deposit (FD) or Recurring Deposit (RD) schemes for that purpose.

Teacher's Note

Opening a bank account is easy and important for all children. Your parents can help you open a savings account where your money will grow every year.

Exam Trick

Remember: Savings Account = Interest on money. Fixed Deposit = More interest on money kept for longer time. Just like watering plants regularly makes them grow faster, keeping money in a Fixed Deposit makes it grow faster.

Points to Remember

You need proof of residence and proof of identity to open a bank account.
A savings account is meant for saving money regularly.
Banks give interest of 4% to 6% on savings account money.
A current account gives no interest but lets you withdraw money many times.
Fixed Deposit (FD) and Recurring Deposit (RD) give more interest.

Calculation Of Interest

Account holders of a bank are paid some amounts for keeping their money in the bank. On the other hand, people who borrow from a bank are charged an amount for the use of the money loaned to them. Such amounts are called interest. The money deposited in the bank or the money lent by a bank to a borrower is called the principal.

When calculating interest on a deposit or a loan, the rate of interest is given for every 100 rupees. That rate of interest is for a given period of time. A rate of interest 'per cent per annum', written as p.c.p.a., gives the amount of interest due on every hundred rupees for a period of one year, that is, annually.

Simple Interest

In this class, we shall learn only about the interest charged for one year. This is simple interest. The interest charged for longer periods of time can often be quite complicated. That rate is different from simple interest.

Teacher's Note

Interest is extra money you get for keeping money in the bank. Think of it like a reward the bank gives you. The more money you keep, the more interest you get.

Exam Trick

Remember: Principal = Money you give the bank. Interest = Extra money the bank gives you. p.c.p.a. = Interest per hundred rupees per year. Just like 'per piece' means cost of one piece, 'per cent' means per hundred.

Points to Remember

Interest is money the bank pays you for keeping your money with them.
Principal is the money you deposit or borrow from the bank.
p.c.p.a. means the interest rate for one hundred rupees per year.
Simple interest is interest charged for one year only.
If principal increases, interest also increases.

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