Business Services Test - 1

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.

Order cheque is payable to the person named in the cheque or his order. - For e.g. " Pay to X or order.", such cheque is payable either to X or to any person whom he orders the payment of the cheque. - Order cheque is paid by the bank only when the bank is satisfied about the identity of the payee.

The insured is the person or entity who is covered by the insurance policy. The insurer is the entity (insurance company)that pays to, or on behalf, of the insured for a covered loss.The contract between both is Insurance contract.

Since the birth of the industry over a decade ago, flexibility of resources - such as space, labor, and equipment - has been one of the primary advantages of public warehousing. With the current trend toward reducing inventories, there is a constant demand for variable space, labor, and equipment required to support the business during peak season or large growth cycles. Given adequate lead-time, public warehouses are able to offer manufacturers total flexibility to either increase or decrease their space, equipment, and human resources requirements.

A scheduled bank, in India, refers to a bank which is listed in the 2nd Schedule of the Reserve Bank of India Act, 1934

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.

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.

Life insurance is a contract between an insured and an insurer, where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of an insured person while Indemnity contract is compensation for damages or loss. Indemnity in the legal sense may also refer to an exemption from liability for damages.

A life insurance contract does not resemble a contract of indemnity because the insurer does not undertake to indemnify the assured for any loss on maturity or death of the assured but promises to pay sum assured in that event. 

Banks and transport companies do not provide any DTH services. Airtel is the cellular company which provides DTH Services.

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.

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.