Business Services Test - 4

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.

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.

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.

Childeren' money back plans are designed to meet the future goals of a child like Higher education, marriage expenses.It was introduced in 1995 with the purpose of develpoment of childeren.

Insurance is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.Hence it inncludes risk sharing and with passage of time it has become a good source of capital formation as well.

Lending of money is giving money as a loan for interest for fixed period of time and return is confirmed and no risk cover is involved

But in insurance the insured has to pay annual premium to insurer company for risk cover and hence it does not include any lending of money.

liability insurance is only responsible for the other party's losses. Your person and your property are unprotected, but the insurance protects you from being held responsible for the other party's damages.

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'

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

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 compulsory car insurance scheme was first introduced in the United Kingtom with the Road Traffic Act 1930. This ensured that all vehicle owners and drivers had to be insured for their liability for injury or death to third parties whilst their vehicle was being used on a public road.[

Cash credit is a short-term source of finance. Under cash credit, the bank offers its customer to take a loan up to a certain limit.

The main motive of insurance is cooperation. Insurance is defined as the equitable transfer of risk of loss from one entity to another, in exchange for a premium.

CWC stands for Central Warehousing Commission.It is a premier Warehousing Agency in India, established during 1957 to provide logistics support to the agricultural sector and is one of the biggest public warehouse operators in the country offering logistics services to a diverse group of clients.

When a cheque is Account payee, it directs the Bank that cash cannot be withdrawn on this cheque, funds can be only tranferred from one bank account to another bank account.

The Insurance Act, 1938 is a law originally passed in 1938 in British India to regulate the Insurance sector. It provides the broad legal framework within which the industry operates.

The minimum period for Term policy is 1 Year and more. The death benefit of the policy is paid only if the insured dies during that period. If the insured lives beyond the term period, no death benefit is paid. Typically, there are no cash values or loan values for term life insurance.

When the maker or holder of negotiable instrument signs the same, otherwise than as maker, for the purpose of negotiation on the back or face thereof or on a slip of paper annexed thereto, or signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to have endorsed the same and is called the endorser. Endorsement consists of the signature of the maker (or drawer) payee of a negotiable instrument with the intention of negotiation.

A money back policy is a more complex life insurance policy than a term plan or a standard life insurance. A normal term plan or standard life insurance covers death risk and assures to pay sum to the insured party on maturity. But a money back policy provides additionally certain amounts called survival benefits in addition to the sum assured and a bonus from the insurance company based on its performance.

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

 Life Insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policy holder).