Business Services Test - 3

Floating Policy is a policy which covers loss by fire caused to property belonging to the same person but located at different places under a single sum and for one premium. Such a policy might cover goods lying in two warehouses at two different locations. This policy is always subject to 'average clause'

Burglary insurance is a policy that covers losses resulting from a burglary, Burglary is the unlawful taking of property from within premises, entry to which has been obtained by force. Usually Jewellery and other valuable items like cash etc are subject to burglary and hence are covered under Burglary Insurance.

Shri Vishwanath Pratap Singh, Minister of Finance introduced Crop Insurance in budget 1985-86.

Commercial banks are considered not merely as dealers in money but also the leaders in economic development. It helps in accelarating Capital Formation, encouragement of industry, development of agriculture, socio economic values etc.

Central bank is an organization that primarily manages a monetary system. The term usually y refers to the central bank for a country, but not every country uses a central bank.

A fixed deposit (FD) is a financial instrument provided by banks which provides investors with a higher rate of interest than a regular savings account, until the given maturity date.

Banks also create money.

1) They do this because they must hold on reserve, and not lend out, some portion of their deposits—either in cash or in securities that can be quickly converted to cash.

2) Banks keep those required reserves on deposit with central banks, such as the U.S. Federal Reserve, the Bank of Japan, and the European Central Bank. Banks create money when they lend the rest of the money depositors give them. This money can be used to purchase goods and services and can find its way back into the banking system as a deposit in another bank, which then can lend a fraction of it.

3) The process of relending can repeat itself a number of times in a phenomenon called the multiplier effect. The size of the multiplier—the amount of money created from an initial deposit—depends on the amount of money banks must keep on reserve.

4) Banks also lend and recycle excess money within the financial system and create, distribute, and trade securities.

5) Banks have several ways of making money besides pocketing the difference (or spread) between the interest they pay on deposits and borrowed money and the interest they collect from borrowers or securities they hold. They can earn money from

•income from securities they trade; and

•fees for customer services, such as checking accounts, financial and investment banking, loan servicing, and the origination, distribution, and sale of other financial products, such as insurance and mutual funds.

Banks earn on average between 1 and 2 percent of their assets (loans and securities). This is commonly referred to as a bank’s return on assets.

Stale check is a check that is presented to be cashed or deposited at a bank six months or more after the date it was written. The date when the check is presented to be cashed or deposited in a bank account is known as the payment date

Monetary Policy is the government's or central bank's policy for control of the amount of currency available and the rate at which people can borrow money. All such borrowings and lending are done through banks only.

A Bank  is an institution that accepts deposit of Money from the public withdraw-able by cheque and used for lending by way of loan and advances. The interest is payable and chargeable at both.