(i) they provide 24 hours, 365 days a year services to the customers of the bank;

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1 1. Define goods and services. Goods refer to physical objects that are tangible and can be stocked. Goods are homogenous by nature. On the other hand, services refer to an activity or a process and they cannot be stocked. Services are heterogeneous. 2. What is e-banking? What are the advantages of e-banking? E-banking is a service presented by various banks, that allows, a customer to handle banking transactions, such as managing savings, checking accounts, applying for loans or paying bills using the internet with a personal computer, mobile telephone or any handheld computer (personal digital assistant). Advantages of e-banking The benefits by e-banking are: (i) they provide 24 hours, 365 days a year services to the customers of the bank; (ii) Customers can also make a few of the permitted transactions from office or house or during travel via mobile telephone; (iii) It impresses a sense of financial discipline by registering all the transactions; (iv) More customer satisfaction. 3. Write a note on various telecom services available for enhancing business. (i) Cellular mobile services: These include all types of mobile telecom services along with voice and non-voice messaging, data services and PCO services and use any type of network equipment present within their service area and also can provide interconnectivity with other service providers. (ii) Radio paging services: This kind of service is useful in contacting a person even when he/she is mobile. But it s a one way broadcasting system and has spread far and wide. Radio paging provides services like tone only, numeric only and alpha/numeric only. (iii) Fixed line services: These include all types of services like voice, non voice and data messages for establishing long distance calls. These can utilize any type of network equipment which is connected through fiber optic cables laid across the length and breadth of the nation. Interconnectivity with other telecom services is also provided. (iv) Cable services: These are established one way linkages and switched services which are licensed to operate in a permitted area for providing media to people. The two way service of the same including voice and data messaging is likely to emerge soon. Then services through the cable network will be similar to that of fixed services. 1

2 (v) VSAT services: Very Small Aperture Terminal is basically a satellite-based telecom service. It provides the businesses and government agencies a highly flexible and reliable communication service to both urban and rural areas. VSAT offers continuous and uninterrupted services equal or better than any land based service. It is also used to provide innovative information such as telemedicine, newspapers-on-line, market rates and tele-education to the most remote areas of our country. (vi) DTH services: DTH (Direct to Home) provides satellite based media services by which one can receive media services directly with the help of a small dish antenna and a set top box right to their home. The DTH service provider provides a large number of channels. They can be viewed without any help from the local cable network provider. 4. Explain briefly the principles of insurance with suitable examples. Utmost good faith: A bond of insurance is a bond of begrime fidei i.e., a bond sought on utmost good faith. The insurer as well as the insured should display good faith towards each other in repute to the bond. It is the job of the insured to willingly make full, accurate disclosure of all necessary points, material to the risk being shown and the insurer to make clear all the terms and conditions in the insurance bond. Example motor insurance wherein the insurer should reveal the entire information regarding the vehicle he proposes to insure. Insurable Interest: The insured is suppose to have an insurable interest to insure himself regarding that subject matter. With insurance of property matter, insurable curiosity of the insured in the relevant matter of the insurance should be there at the time of happening of the accident. Indemnity: All insurance bonds of fire or marine insurance are bonds of security. In accordance to it, the insurer is responsible to put the insured, in the event of damage, in the same state that he occupied just before the occurrence of the event insured against. Proximate Cause: By this principle it states that the insured will be reimbursed only if the damage caused is in accordance to the points given in the policy. When there happen to be more than two causes then the cause which is proximate and led to the natural consequence of damage is taken into to consideration. Subrogation: The insurer has the right to stand in the position of the insured after the claim is done, only when the insured is reimbursed from any other alternative source. When the insured is compensated then the right to the property goes in the hands of the insurer. Contribution: According to this principle the insurer has the right to call other insurers as well to contribute to the loss. This shows that in the case of more than one insurer the reimbursement has to shared by them in proportion to the amount assured by each. Mitigation: according to this principle the insured is bound to take certain steps to minimize the loss amount. Suppose goods kept in a store house catch fire then it s the duty of the insured to take certain steps to save them. 5. Explain warehousing and its functions. The warehouse is actually a static unit for keeping and storing commodities in a systematic manner with some scientific help so as to maintain their original quality, value and usefulness. Typically rail, truck or bullock cart transport the merchandise to the warehouse initially and later moved by hand 2

3 and stacked inside. Automatic conveyors, computer operated cranes and forklifts for moving goods and also usage of logistics automation software s for warehouse management is what we find in today s warehouses. Functions of warehousing The warehousing functions are: (a) Consolidation: The warehouses receive and consolidate, materials/goods from different production plants and preserve them to be removed by one single owner. (b) Break the bulk: They divide the bulk quantities received from a production plant into various small quantities and then transport according to the requirements of clients to their places of business. (c) Stock piling: It s the seasonal storage of goods for select business. The goods which are not required immediately for the manufacture or sale are stored. They are made available according to the customer s demands. For example, agricultural goods are harvested only during the season but they are needed for consumption throughout the year and are hence stored. (d) Value added services: Transit mixing, packaging and labeling are certain other services provided. Goods are sometimes opened and repacked according to the requirements. (e) Price stabilization: They stabilize the prices by adjusting the sales demands by removing the good only when required and not allowed to flood the market. Thus, prices are stabilized when the demand increases with less supply of goods and vice versa. (f) Financing: Warehouse owners give some money as advance to the owners for the security of goods and further supply goods on creditable terms to customers. 6. What are services? Explain their distinct characteristics. Services are all those economic activities that are hard to describe and imply an interaction to be realized between the service provider and the customer. Services are those separately recognizable, essentially hard to define activities, that provides satisfaction of wants, and are not necessarily linked to the sale of an item or any other service. There are normally five characteristics of a service. They also distinguish them from items and are called the five Is of services. They are: (i) Intangibility: Services are hard to understand. Can be understood only by experience. We can never taste a doctor s treatment, or touch and feel entertainment. But we can experience it. An important fact which this brings out is that quality of the offer often cannot be found out before consumption and, therefore, buy. It is, therefore, important for the service providers that they consciously work on doing a good service so that the purchaser has a favorable experience. For example, a doctor should give his patient a Good experience so that he comes back. (ii) Inconsistency: The second important thing of this topic is inconsistency. Since there is no standard tangible product, services should be done exclusively every time. Demands and expectations differ from customer to customer. So service providers need to have an opportunity to switch their offer to meet the needs of the customers. Its happening in the case of mobile services. (iii) Inseparability: Another important aspect of services is that production and consumption should have to be done simultaneously. It shows that production and consumption of services are 3

4 inseparable. With services that have to be consumed as and when they are produced its not the case like manufacturing a car today and selling it later. The interaction with the customer remains a key feature of services and cannot be replaced with any technology. Today Automated Teller Machines (ATMs) have replaced the banking clerk for the front office activities, but still the presence of the customer, is needed and his/her interaction with the process has to be managed. (iv) Inventory (Less): Services do not have tangible components and hence cannot be stored for a future use. I.e., services are unpreserved and vendors can, at best, save some related goods but not the service itself. It means that the demand and supply are needed to be managed because the service has to be done as and when the customer asks for it. For example, a railway journey cannot be experienced until the preserved ticket is not provided. (v) Involvement: Finally the most important characteristic of services is the contribution of the purchaser during the service delivery process. A purchaser has the chance to get the services altered according to specific needs. 7. Explain the functions of commercial banks with an example of each. Functions of Commercial Banks Variety of functions are performed by a bank. A few are basic or primary functions of a bank while others are agency or general utility services by nature. The important functions are discussed below briefly: (i) Acceptance of deposits: Deposits are the base of loan operations since banks both borrow as well as lend money. They pay interest for borrowed money and they grant loans and get interest by lending money. They are normally taken from current account, savings account and fixed deposits. People can withdraw deposits to the extent of the balance at any point of time without any prior notice in current accounts. Savings accounts basically encourage savings by individuals. All banks have to pay rate of interest as speculated by RBI on these deposits. According to the amount as well as number of times in a given period the account holder is restricted to withdraw. Fixed accounts are time deposits and have a higher rate of interest when compared to that of savings accounts. A premature withdrawal is allowed with some percentage of interest being a penalty. (ii) Lending of funds: Commercial banks give loans and advances from the money received through deposits. The advances are made in the form of overdrafts, cash credits, discounting trade bills, term loans, consumer credits and other various advances. The funds given out by banks provide a large deal to trade, industry, transport and other business events. (iii) Cheque facility: Banks provide a very significant service to the customers by gathering their cheques drawn on other banks. Cheque, which is the most developed credit instrument has a special feature and function of banks for the withdrawal of deposits. The most comfortable and low-cost medium of exchange is the cheque. The two types of cheques are mainly (a) bearer cheques, which can be encashed right away at the bank counters and (b) crossed cheques which we have to deposit only to the payees account. (iv) Remittance of funds: Another prominent feature of commercial banks is to provide the facility of fund transfer from place to place, with the help of interconnectivity of branches. These transfer of funds are administered with the help bank drafts, pay orders or mail transfers, on minor commission charges. The banks can issue a draft for that amount on its own branches at other locations or other banks at those locations. The payee can handover the draft on the drawee bank at his locality and gather the amount. (v) Allied services: Apart from these functions, banks can also present allied services like bill payments, locker facilities, underwriting services. Banks also provide other services like buying and 4

5 selling of shares and debentures on instructions and other personal services such as insurance premium payment, dividend collection etc. 8. Write a detailed note on various facilities offered by Indian Postal Department. Indian post and telegraph department provides postal services across India and the whole country is divided into 22 different circles. Various head post offices, sub-post offices and branch post offices are managed by these circles. The facilities provided by the postal services are broadly classified as following: (i) Financial Facilities: Financial facilities are provided with the help of post office s savings plans like Public Provident Fund (PPF), Kisan Vikas Patra, and National Saving Certificates along with normal retail banking functions of monthly income schemes, recurring deposits, savings account, time deposits and money order services. (ii) Mail facilities: These provide facilities such as transport of articles from one place to another ;To provide security of the transmitted articles there is a registration facility and to provide insurance cover for all risks in the course of transmission by post we also have an insurance facility. Other allied facilities are also offered such as: 1. Greeting post - we get a variety of delightful greeting cards for every occasion. 2. Media post - helps the Indian corporates to advertise their brand through postcards, envelopes, aerograms, telegrams, and also through letterboxes. 3. Direct post for direct advertising is available which can be either be addressed or unaddressed. 4. International Money Transfer by collaborating with Western Union financial services, USA, helps us in remitting money from 185 countries to India. 5. Passport facilities - in partnership with the ministry of external affairs for the ease of applying for a passport. 6. Speed Post: having over 1000 destinations in India linking 97 major countries across the globe. 7. e-bill post is the latest of all in this department to collect bill payment across the counter for BSNL and Bharti Airtel. Indian Postal Network Realities 1,54,149 post offices 5,64,701 letter boxes 1,575 crore mails every year 5,01,716 villages with public telephones (84 per cent of total villages) 26,000 post offices already connected through network 5

6 Post Office Savings Bank is the largest retail bank of 1,50,000 plus branches Total collections at Rs. 200,000 crores Dedicated VSAT network via satellite of over 1200 post offices Speed Post facility for over 1000 destinations in India Links 97 major countries around the globe Source: 9. Describe the various types of insurance and examine the nature of risks protected by each type of insurance. LIFE INSURANCE Life insurance is defined as a bond in which the insurer in consideration of a certain premium, either in a lump sum or by other periodical payments, agrees to pay to the assured, or to the person for whose benefit the policy is taken, the assured amount, on the happening of a specified event conditional on the human life or at the expiry of time period specified. Hence, the insurance company agrees to insure the life of the person in exchange for an amount called premium. This premium may be paid as a whole or in installments. Hence the company promises to pay certain amount of money either on the death of the person or due to aging(i.e., the expiry of certain period). Thus, the person is sure that a specified amount will be given under any of the given event. This agreement or bond which contains all the terms and conditions is put on paper and such agreement is called the policy. The person whose life is insured is called the assured person. The company hence is called the insurer and the amount the assured person pays to the company is called premium which can be paid in installments. This provides a safeguard for the dependent family members if there is any premature death or aging of the assured. Hence the insurance not only acts as protection but also as an investment. Life insurance indirectly encourages savings as premium has to be paid periodically and hence provides a sense of security. Types of life insurance policies (i) Whole Life Policy: In this kind of policy, the amount payable to the insured is paid only after the death that too only to the beneficiaries or heir of the deceased. The premium is generally payable for a fixed time (20 or 30 years) or for the whole life of the insured. The policy generally continues till the death of the assured if the premium is payable for a fixed period. (ii) Endowment Life Assurance Policy: The Insurance Company agrees to pay a fixed amount on the death of the assured or due to aging whichever comes earlier. The sum is payable to the heir or nominee or the insured in the case of death and in the case of aging the sum will be paid to the assured after a fixed period i.e., till he/ she attains a particular age. This mean that the endowment policy matures after a few years. (iii) Joint Life Policy: Two or more persons take up this policy together. Either anyone or both can pay the premium or the whole lump sum. The assured sum or policy money is paid on the death of either one or both to the other survivor or survivors. Normally this policy is taken up by husband and wife jointly or by two partners in a partnership firm and the amount is paid to the survivors on the death of either of the two. (iv) Annuity Policy: In this policy, the assured amount of money is paid after the assured attains the mentioned age in monthly, quarterly, half yearly or annual installments. The premium is also paid in installments or as a whole. This policy is useful to those who want to have a regular income 6

7 after attaining certain age. (v) Children s Endowment Policy: This policy is useful to those who want to manage the education or marriage of their children In the future. The insurer pays the assured a certain amount of money after the children attain certain age. The person entering into the bond pays the premium but no premium will be paid, if he dies before the policy matures. FIRE INSURANCE Fire insurance is a bond whereby the insurer, giving consideration to the premium paid, undertakes to compensate any loss or damage caused by fire accidents during a specified period the amount mentioned in the policy. Normally, the fire insurance is specified only for an year and renewed every year. like other policies the premium is either paid as a lump sum or in installments. A claim for the damage caused Is suppose to satisfy two conditions which are must: (i) There is suppose to be actual loss; and (ii) Fire should not be intentional. The risk covered by a this bond is the damage resulting from fire or any other cause, and which is the closest cause of the loss. If there is a loss due to overheating without any ignition then it will not be regarded as a fire loss. This bond is made on the fundamental principles of insurance. The important ones are: (i) In fire insurance, the insured should have insurable interest in the matter of insurance and without the interest the bond of insurance is void. In this case the insured must show interest at the time of the bond as well as at the time of the loss. For example, a person has insurable interest in his property, a businessman has insurable interest in the stock he owns, plant, machinery and building, an agent has an insurable interest in the property of his principal, a partner has insurable interest in the property of a partnership firm, and a mortgagee has insurable interest in the property, which is mortgaged. (ii) Similar to the life insurance bond, even this policy of fire insurance is a bond of utmost good faith. The insured should give true and honest information to the insurance company. It is his duty to disclose accurately the facts regarding the nature of property and risks To them and at the same time the insurance company should also disclose the facts of the policy to the proposer. (iii) The bond of fire insurance is a bond of strictest indemnity. The insured can acquire the actual amount of loss from the insurer in case of any loss. But it is subject only to the maximum amount for which it is insured. For example, if a person has insured his house for Rs10,00,000 the insurer is not bound to pay that amount, although the house may have been totally destroyed by fire; but he will pay the actual loss after deducting depreciation within the maximum of Rs.10,00,000. The main purpose of this is that the person should not gain by insurance. (iv) The insurer would reimburse only after finding out if fire is the proximate cause for damage. MARINE INSURANCE A marine insurance bond is an agreement whereby the insurer agrees to undertake to indemnify the insured in the manner and to the extent thereby agreed against marine losses. It gives protection against loss caused by marine accidents like collision of ship with the rock, or ship attacked by the enemies, fire and captured by pirates and actions of the captains and crew of the ship. These happenings cause loss, damage or theft of the ship and cargo and non-payment of the cargo and hence marine insurance insures ship hull, cargo and freight. Thus, it is a solution by which the insurer undertakes to reimburse the owner of a ship or cargo for complete or partial loss at sea. The insurer gurantees compensate the losses due to damage to the ship or cargo occurring due to the risks incidental to marine journeys. The insurer is called as the underwriter and the insured pays certain amount of money to get assurance from the insurer. But its slightly different from the other types because there are ship or hull, cargo or goods, and freight all involved at the same time. (a) Ship or hull insurance: Since the ship is exposed to many dangers at sea, the insurance policy is to make sure that they cover the losses caused to the ship. 7

8 (b) Cargo insurance: Even the cargo while being transported by ship has got many risks like risk of theft at the port, lost goods or on voyage etc. Thus, an insurance policy is required to cover against such risks as well. (c) Freight insurance: The company is not paid freight charges in case there occurs any loss or damage during the journey. Hence for reimbursing the loss of freight to the shipping company the insurance can be taken. The fundamental principles are similar to the general principles. The important points are: (i) The insured is allowed to get the actual amount of loss under any event of damage but is not allowed to make profit out of the marine insurance bond in any case. But in the case of cargo policies commercial indemnity is provided and the insurer indemnifies the insured "in the manner and to the extent agreed." While for Hull Policy, the amount is fixed according to the current market value; (ii) The bond of marine insurance is a again a bond of utmost good faith. The insurer and the insured must disclose everything regarding the subject matter. The insured must accurately disclose all facts about the nature of shipment and the risk of damage to which it is exposed; (iii) Insurable interest may not be present while the policy was taken but should be there at the time of loss; (iv) The proximate cause of damage will be taken under consideration in case of any damage and the insurance company will pay only if that particular cause is covered by the policy. 10. Explain in detail, the warehousing services. Warehousing Storage is always an important aspect for the development of economy. The warehouse is actually a static unit for keeping and storing commodities in a systematic manner with some scientific help so as to maintain their original quality, value and usefulness. Typically rail, truck or bullock cart transport the merchandise to the warehouse initially and later moved by hand and stacked inside. In India normally,manufacturers, importers, exporters, wholesalers, transport business, customs etc., use them. Today s warehouses have are not merely a storage place but have many logistical facilities which helps in making available the right quantity, at the right place, in the right time, in the right physical form at the right cost. Automatic conveyors, computer operated cranes and forklifts for moving goods and also usage of logistics automation software s for warehouse management is what we find in today s warehouses. Types of Warehouses (i) Private warehouses: These types of warehouses are owned, operated and controlled by the company storing the goods, such as retail chain stores or multi-brand multi-product companies. In general the material handling system plans the warehouse to get efficient movement of the goods. Control, flexibility, and other benefits like improved dealer relations are the features of a private warehouse. (ii) Public warehouses: These warehouses are used for storage of goods by traders, manufacturers or any member of the public by paying of a storage fee or charges. Licenses are issued to private parties by the government to carry out the operation of these warehouses. The warehouse owner acts as owner of the commodities and is expected to take good care of them. Transportation by rail and road are some other facilities provided by them and are responsible for the complete safety of the goods. These warehouses are found convenient by small manufacturers as they cannot afford to construct their own warehouses. Flexibility in the number of locations, no fixed cost and capability of offering value added services like packaging and labeling are some other features of these type. 8

9 (iii) Bonded warehouses: These government licensed warehouses store imported goods before their payment of tax and customs duty. Importers are restricted from removing their goods from these warehouses until they pay the customs duty. Sometimes the importer may not be in a position to pay the full tax or he may not require all the goods immediately and so the goods are kept in bonded warehouses by the customs authorities till then. Hence these goods are said to be in a bond. branding, packaging, grading and blending are the facilities provided by these warehouses. Importers bring their buyers for inspection of goods and they are repacked according to their own requirements which helps in facilitating the marketing of goods. Goods can be removed as and when the importers or buyers require and the customs duty is paid in installments. There is no need for the importer to block funds for payment of import duties before the goods are sold or used and if he wishes to export the goods kept in the bonded warehouse he may do so without paying the customs duty. (iv) Government warehouses: These warehouses are totally under government control and are usually managed by agencies set by the public sector like Food Corporation of India, State Trading Corporation, and Central Warehousing Corporation. (v) Cooperative warehouses: A few marketing cooperative societies or agricultural cooperative societies usually set up their own warehouses for their own members. Functions of warehousing The warehousing functions are: (a) Consolidation: The warehouses receive and consolidate, materials/goods from different production plants and preserve them to be removed by one single owner. (b) Break the bulk: They divide the bulk quantities received from a production plant into various small quantities and then transport according to the requirements of clients to their places of business. (c) Stock piling: It s the seasonal storage of goods for select business. The goods which are not required immediately for the manufacture or sale are stored. They are made available according to the customer s demands. For example, agricultural goods are harvested only during the season but they are needed for consumption throughout the year and are hence stored. (d) Value added services: Transit mixing, packaging and labeling are certain other services provided. Goods are sometimes opened and repacked according to the requirements. 9