urgent {insurance & banking}(need answer of few Questions)

D

delhihunter

Prashant Sharma
Please help me out the answer of the following m not able to solve the 1th & 3rd Question , so please anyone can help me out , or is u can also help me in 2nd and 4th Q i will be vry thankful


Question No 1:
a) Suresh had applied New Age Bank for a term loan of Rs.10 lakh for buying a truck. Vasudeo & Sons, a partnership firm dealing in clothing trade, had given the guarantee for the said loan. The guarantee agreement was signed by Vasudeo, the managing partner of the firm. The term loan account became NPA and the bank served a notice on the partnership firm. The firm disowned its liability. Explain the position of the bank
b) A firm has been enjoying temporary overdraft facility upto Rs.50,000 with a bank for four years. No document was executed nor was any security furnished. The bank unilaterally, without notice, terminated the overdraft facility and a cheque drawn by the firm was dishonoured on the ground that there was insufficient balance in the account.The firm claimed damages for wrongful dishonour of the cheque. Discuss legal position in this case
c) Ajit as holder of a cheque endorses sans recourse to Baljit, Baljit endorses to Charanjit and Charanjit to Daljit who endorses it to Manjit. Cheque is dishonoured. From whom can Manjit claim the amount ? Why ?
d) Nav Jeevan Bank has given a hypothecation advance against inventory to Nutan Traders. In a periodical checking, the stocks are found short by the bank. The bank allows more finance to make good the shortage. Examine bank’s action
Question No 2:
Explain the following:
(i) Electronic Clearing Services (ECS)
(ii) RBI as bankers’ bank
(iii) Real Time Gross Settlement (RTGS)
(iv) Cash Management Product (CMP)


(v) E–purse
(vi) Inter–bank call market
(vii) Relationship banking.

Question No 3:
a) A shopkeeper has taken two policies against fire covering the stock at his shop. The sum insured under Policy-A is Rs.20 lakh and the sum insured under the Policy-B is Rs.30 lakh. If the loss occurred due to fire is Rs.10 lakh, whether he would get the claim under both the policies ? If not, then how much amount of claim he would get under both these policies ?
b) Manoj applied for a life insurance policy. He stated in the application that he had never smoked cigarettes. In fact, he had been smoking cigarettes for the last 13 years and during the months before he applied for insurance, he was smoking approximately 10 cigarettes daily. About 10 months later, Manoj died of reasons unrelated to smoking. The beneficiary filed a claim for the death proceeds. The insurer discovered that Manoj smoked cigarettes and denied payment because of a material misrepresentation. Can the insurer deny liability because of Manoj's false statement?
c) A ship was insured against losses resulting from collision. There was a collision and the ship was delayed for a few days. Owing to delay, a cargo of oranges in the ship became unfit for human consumption. Discuss whether the insurance company is liable for the loss
d) There are two policies in existence on the same vehicle with identical cover of Rs.10 lakh. First policy commences from 1st April, 2007 and second policy from 1st May, 2007. Which policy would you recommend to be cancelled and why ?
Question No 4:

4(A) Explain the following:
(i) Underwriting agents for insurance sector
(ii) Claim examiners in life and health insurance
(iii) Risk administration programme
(iv) Certificate of insurance
4(B) State various distribution channels associated with life insurance business
 
Q4 1. Underwriting Agents

Underwriting agents decide whether to accept business on behalf of their syndicate. If they are a working name themselves, the agents can underwrite business on their own behalf and earn fees from using their syndicates’ money to ensure a proportion of the same risk.
 
Q4 ii Insurance Claims Examiners Overview: Among the career paths in insurance, insurance claims examiners do work similar to that of insurance claims adjusters. Examiner, rather than adjuster, is the usual title in life and health insurance. However, in property and casualty insurance, the title of examiner often designates a senior adjuster who handles the most costly or difficult claims. Other closely allied occupations are those of insurance appraisers and insurance investigators.

Education: Educational requirements vary greatly, depending on the position and the employer. Normally, a bachelor's degree is sufficient.

Certification: There are no formal certification processes, but many larger insurance companies have in-house training programs. However, previous experience in allied fields is often an important consideration in hiring. For example, insurance companies look to hire people with legal experience to be examiners for liability claims, people with medical experience to be examiners for health claims, people with engineering or architectural backgrounds to be examiners for industrial claims, etc.

Duties and Responsibilities: Insurance claims examiners require a mix of analytic and people skills. To evaluate a health insurance claim, an examiner may have to consult with medical experts and study medical records. In life insurance, claims examiners may need to establish the cause of death, especially if the policy offers extra payment in case of death in an accident. In some cases, reaching a settlement with the claimant may require negotiation or even legal action, in which the insurance claims examiner must work with lawyers on behalf of the insurance company.

Typical Schedule: Insurance claims examiners in life and health insurance tend to work a regular 40 hour week from fixed office locations. Those in property and casualty insurance will have longer hours and more travel requirements, similar to insurance claims adjusters.

What's to Like: Insurance examiner positions in health insurance and life insurance offer good pay, regular hours and a stable working life.

What's Not to Like: A large part of the job is turning down claims that are excessive or not covered by the policy. This negative aspect of the job, especially in health insurance, where the treatment of ill people is concerned, can be unattractive.
 
Q2 ii) India’s central bank is the Reserve Bank of India (RBI). Reserve Bank of India monitors, formulates and implements India’s monetary policy. Established in the year 1935, Reserve bank of India was nationalized in the year 1949. Owned fully by the Government of India, Reserve Bank has are 22 regional offices in various state capitals of India with its headquarters located in Mumbai. It has a majority stake in the State Bank of India.

Functions of the Reserve Bank of India

1. The financial system is regulated and supervised by the Reserve Bank of India.

2. The guidelines according to which the banking operations within which the country’s banking and financial system functions are defined by the RBI. By monitoring the functioning of other banks, it tries to protect depositors’ interests and provides cost-effective banking services to the public. If a customer has a problem and the bank does not solve the customer’s problem, Reserve bank of India can approach them through the Banking Ombudsman Scheme.

3. RBI regulates the foreign exchange inflow and outflow, by the Foreign Exchange Management Act, 1999 of RBI. All money transfer out of India, is subject to limits defined by the RBI. The money transfer could be either for personal or for trade purposes.

4. Currency notes and coins of various denominations are issued by The Reserve Bank of India. It destroys damaged currency notes not fit for circulation and also issues and exchanges coins. To prevent circulation of fake currency, the design of the currency is periodically modified.

5. The banker to the Government of India is the RBI. Merchant banking function for the central and the state governments are performed by the RBI. Reserve bank of India is the banker to all Government departments of India. For example, in Mumbai, the tax refunds drawn on the Reserve bank of India are issued by the Income tax department.

6. All major banks bank with the RBI. Banking accounts of all scheduled banks in India is maintained by the RBI. RBI provides insurance on deposits for up to Rs 1 lakh in scheduled banks. If cash withdrawn from scheduled banks, cash withdrawal tax is applicable. Smaller co-operative banks do not usually fall under the category of scheduled banks. According to the RBI lending rates, the bank interest rates increase or decrease.

7. The gold trade is also regulated by the Reserve Bank of India. In India. Currently 17 Indian banks are involved in the trade of gold. In order to curb illegal trade in gold and increase competition in the market, applications have been invited by the RBI from more banks for direct import of gold.

8. Know your customer guidelines has been issued by the RBI for non-banking finance companies (NBFC ) in March 2006. Customer whose outstanding credit is more than Rs 1 lakh or deposit balance with the NBFC is less than Rs 50,000 need not provide all the documents to the bank. The customers will be categorized as low risk, medium risk and high risk. One of the largest NBFC in India is Sahara India.

9. To maintain the exchange rate of Indian Rupee versus foreign currencies like the US Dollar, Euro, Pound sterling, and Japanese yen, RBI buys and sells foreign currencies. Their website provides the trends in exchange rate values for these currencies.

10. RBI sets the maximum interest rate Indian banks can offer on NRI dollar deposits depending on the liquidity in the money markets. Banks can offer an interest rate equal to the London Interbank Offered Rate (LIBOR) from March 2006 onwards. LIBOR is an international benchmark rate on dollar deposits.

11. Percentage of deposits that banks in India should keep with RBI is known as the Cash Reserve Ratio (CRR). The CRR which is currently 5%, also depends on the liquidity in the money markets. The rate at which RBI absorbs funds from banks is the reverse repo rate.

12. The opening /installation of ATM (Automatic Teller Machines) is also regulated by the RBI. It is trying to increase the density of the ATMs in rural areas. The RBI supplies fresh currency notes for ATMs.

13. Transactions related to cheques, drafts and pay orders are settled in clearing houses. There are about 1050 clearing house out of which 567 clearing houses are managed by the The State Bank of India, mainly in the smaller cities and towns.

14. In April of every year the annual monetary policy is announced.

15. Banks like ICICI bank charge Rs 100 for clearing an outstation cheque from metro cities (Mumbai, Delhi, Chennai, Kolkatta), but it costs banks only 50 paisa for clearing through the RBI clearing system. Even though RBI has asked banks to display the service charges on their website, only 5 banks have complied so far.

16. The opening of branches by banks are regulated by RBI and ensures that they follow the Know Your Customer guidelines.

RBI is Bankers’ Bank

The Reserve Bank of India acts as the bankers’ bank. Every scheduled bank was required to maintain with the Reserve Bank a cash balance equivalent to 5% of its demand liabilities and 2% of its time liabilities in India, according to the provisions of the Banking Companies Act of 1949. The distinction between demand and time liabilities was abolished by an amendment of 1962, and cash reserves equal to 3% of their aggregate deposit liabilities have to be kept by the banks as has been asked for by the RBI. The Reserve Bank of India can change the minimum cash requirements of other banks.

On the basis of eligible securities the scheduled banks can borrow money from the Reserve Bank of India. At times of need or stringency by rediscounting bills of exchange, the banks can get financial accommodation from the RBI. Reserve Bank becomes not only the banker’s bank but also the lender of the last resort since in times of banking crisis the Reserve Bank of India is expected to come to the help of commercial banks.

RBI is Controller of Credit

The Reserve Bank of India has the power to influence the volume of credit created by banks in India which means that it is the controller of credit. This is being done through open market operation or by changing the Bank rate. Reserve Bank of India can ask any particular bank or the whole banking system not to lend financial support to a particular groups or persons on the basis of certain types of securities according to the Banking Regulation Act of 1949. Selective controls of credit are increasingly being used by the Reserve Bank since 1956.

Indian money market is controlled by the many more powers of the Reserve Bank of India. A license from the Reserve Bank of India to do banking business within India has to be obtained by every bank. On stipulated conditions not being fulfilled, the RBI has powers to cancel the licenses also. Before a new branch of any bank be opened. it has to get the permission of the Reserve Bank. A weekly return showing in detail its assets and liabilities must be sent to the Reserve Bank by every scheduled bank. This power of the RBI to call for information is also intended to give it effective control of the credit system. Another power of the Reserve Bank is the power to inspect the accounts of any commercial bank.

Reserve Bank of India, as the supreme banking authority in the country, therefore, has the following powers:
a) The cash reserves of all the scheduled banks are in the hands of the RBI.
b) Through quantitative and qualitative operations, it controls the credit operations of other banks.
c) Through the system of licensing, inspection and calling for information, the RBI controls the banking system in the country.
d) By providing rediscount facilities to scheduled banks, it acts as the lender of the last resort to other banks.

By all these methods RBI controls the whole financial system of India.
 
Q 2 iii Real Time Gross Settlement System (RTGS)


RTGS is a large value funds transfer system whereby financial intermediaries can settle interbank transfers for their own account as well as for their customers. The system effects final settlement of interbank funds transfers on a continuous, transaction- by-transaction basis throughout the processing day. The system went ‘live’ on March 26, 2004.

The acronym “RTGS” stands for Real Time Gross Settlement RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a “real time” and on “gross” basis. This is the fastest possible money transfer system through the banking channel. Settlement in “real time” meanspayment transaction is not subjected to any waiting period. The transactions aresettled as soon as they are processed. “Gross settlement” means the transaction issettled on one to one basis without bunching with any other transaction. Considering that money transfer takes place in the books of the Reserve Bank of India, the payment is taken as final and irrevocable.

The RTGS system is primarily for large value transactions. The minimum amount to be remitted through RTGS is Rs.1 lakh. There is no upper ceiling for RTGS transactions. RTGS will eliminate settlement risk in the case of interbank and high value transactions.

Banks could use balances maintained under the cash reserve ratio (CRR) instead of the intra-day liquidity (IDL) to be supplied by the central bank for meeting any eventuality arising out of the real time gross settlement (RTGS). The RBI has fixed the IDL limit for banks to three times their net owned fund (NOF).

The IDL will be charged at Rs 25 per transaction entered into by the bank on the RTGS platform. The marketable securities and treasury bills will have to be placed as collateral with a margin of five per cent. However, the apex bank will also impose severe penalties if the IDL is not paid back at the end of the day.

The system has also stabilised over the years and has been witnessing increased coverage in terms of bank branches and transaction volume.The volume of RTGS (Real Time Gross Settlement System ) transactions is increasing rapidly. RTGS settled 1.94 million transactions in the month of March 2009 as against 0.72 million transactions in March 2008. Customer transactions settling in RTGS presently constitute 89 percent of total RTGS transactions and are growing

RTGS transactions to become more bank customer friendly

The RTGS system implemented by the Reserve Bank has been in operation for more than four years. The system has also stabilised over the years and has been witnessing increased coverage in terms of bank branches and transaction volume.The volume of RTGS (Real Time Gross Settlement System ) transactions is increasing rapidly. RTGS settled 1.94 million transactions in the month of March 2009 as against 0.72 million transactions in March 2008. Customer transactions settling in RTGS presently constitute 89 percent of total RTGS transactions and are growing.

At a recent meeting with major banks, Reserve Bank of India reviewed the entire gamut of RTGS customer transactions with a view to making them more user friendly. Based on these discussions, the following decisions have been taken for implementation by RTGS member banks latest by June 01, 2009.

1. It is treiterated that in a Straight Through Processing (STP) environment, standardization is very much necessary and uniformity in message format is a pre requisite for the success of STP.

2. RTGS Customers have been complaining that there is no uniformity on information provided to the customer in the pass books / account statements by different banks. Some banks merely indicate `RTGS credit’ without details while other banks are giving sender's bank account number or UTR number of the transactions etc. Customer is receiving multiple RTGS credits on a given date, is at a loss to understand the source of funds leading to reconciliation issues.

RBI has therefore, advised that

a) A bank customer receiving RTGS credit shall be provided with the name of the remitter in his account statements / pass book.

b) A bank customer sending a RTGS remittance shall be provided with the name of the beneficiary in his account statements / pass book.

The banks are free to provide any additional information as they deem necessary / useful.
 
Q 2 iv) each bank has its own cash management product n one unique way to manage it. so following are of SBI. i have given SBI's purposely becoz its the India's biggest nationalise bank.
A BRIEF INTRODUCTION:

·
STATE BANK OF INDIA provides cash management services to Corporate Clients under the brand name SBI-FAST (Funds Available in Shortest Time).

·
SBI FAST ensures optimization of collections and payouts while ensuring predictability in the cash flows.

·
SBI FAST ensures getting Funds in time, quick transfers, account reconciliation, easy disbursements, controlled processes and customized MIS.

·
SBIFAST eliminates the inherent delays of the traditional funds transfer mechanism and enhances liquidity to ensure optimum planning and utilization of funds.

·
We also offer File upload facility on our web based portal and can provide complete Host to Host facility for Payments and e- collections.




FEATURES & BENEFITS:

·
Centralized Control of cash.

·
Interest Cost reduction on borrowings.

·
Enhanced Liquidity.

·
Interchange of Information between Treasury & Operating units.

·
Cash forecasting & scheduling.

·
Effective control over disbursements.

·
Efficient Financial Management.




SBI F.A.S.T.Cash Management Services Offerings:

1.
COLLECTIONS (Cheques/drafts etc.)

Local Cheques Collection:

·
Collection of instruments tendered at various CMP collection centres.Depending on the clearing practices prevailing at the various centres (i.e. Day-‘0’, Day-‘1’, or Day-‘2’), credit is afforded, as mandated, to the clients’ main account at the pooling centre the same day as the proceeds are cleared.

·
Convenient collecting locations across the country with Pooling facility at any of our 11500+ branches as per client’s choice, which are physically connected to our central hub at Mumbai.

·
Instruments can be deposited at the collection centers either by their dealers/ distributors/representatives or through couriers as per the arrangement.

·
Client is not required to open any account at the Centre from which this facility is availed.

·
Collection of instruments in High Value Clearing, General / MICR Clearing, drawn on local branch and drawn on other local SBI Branches.

·
No correspondent arrangements. Collections are handled exclusively through our own network and hence cost effective.

·
SBI is the acknowledged leader in the collection services.

·
Centralized Reconciliation Support.




OUTSTATION CHEQUES COLLECTION:

·
Outstation Cheques also can be deposited at our CMP Cell branches, presently 751 and growing, and we afford Guaranteed Credit facility with credit available on Day 0 to Day 7.

·
Outstation cheques drawn on our own branches are paid the same day at very concessional charges.

·
Cash collection

·
We also offer the facility of Cash Deposit at our CMP Cell branches on CMP software which facilitates automatic pooling of funds with MIS.

·
Cash Pick up facility is also offered at select centres.

·
Uncleared funds

·
Option of credit against Uncleared Instruments presented in Gen/MICR or High Value clearing. Offered selectively at Bank’s discretion.

·
A nominal limit is required to be set up to take care of returns.




BALANCE SWEEP:

·
Transfer of day-end-balances in collection accounts maintained at various CMP centres across the country to the pooling account.

·
Clients can use the account for crediting local and outstation collections as well as for meeting payments and the residual balance at the end of the day is swept to the main account.

·
Debit transfers

·
Debit Balances in operating accounts, where drawals are permitted up to a pre-fixed daylight limit, maintained at CMP Centres transferred to the main account at the end of the day.

·
The facility dispenses the use of allocated limits and thereby ensures better control, for the client over debits.




CUSTOMISED MIS:

·
Daily presentation / Credit / return reports provided to the representative dealer at the local centre.

·
Daily location-wise / product-wise presentation / credit / returns reports provided to the Corporate Office through E-mails.

·
Customized weekly / fortnightly / monthly consolidated reports in soft-form, compatible with the clients accounting system, through E-Mail / Floppy / CD-ROM as required, for easier and speedier reconciliation.

·
Daily Credit forecast reports through E-Mail.




ELECTRONIC COLLECTIONS

DIRECT DEBIT

·
For Collection of invoice payment from Dealers, SIP/ Premium etc.

·
Payment can be pulled from any account at any of our 11500+ branches.

·
Mandate of Account holders required, which is validated by us

RTGS/NEFT RECEIPTS

·
Funds received through RTGS/NEFT modes are credited to the Corporate pooling Account on the same day.

·
MIS is generated giving Dealer Name, location, Invoice no., product etc. and amount received.



2.
PAYMENTS

A. ELECTRONIC:

i.
Real Time Gross Settlement


·
Inter Bank Product - Settlement through RBI.


·
Minimum Transaction Amount Rs.1.0 lac.


·
Settlement on the day of transaction.


·
Competitive market related rates.

ii.
National Electronic Fund Transfer


·
Inter Bank Product - Settlement through RBI.


·
Used for amount less than Rs.1.0 lac.


·
Settlement on the same day or next day.

iii.
National Electronic Clearing Scheme


·
Electronic mode of payment at all ECS centers.


·
Useful for payment of interest, dividend, salary, pension to a large number of investors/ share holders/ employees/ ex-employees.

iv.
Direct Credit


·
For credit to accounts at all SBI branches.


·
Same day settlement online & available between CBS branches (Over 11,500+ & growing).


·
Can be used for payment for Purchases, Rent, Incentives, Salaries, interest, dividend etc.

B. PAPER PAYOUTS

i.
Drafts


·
Meets Bulk Drafts requirement on day ‘0’.


·
Issued with Facsimile signatures up to Rs.5.0 lacs.


·
Printed with/without forwarding letter also.


·
Provision for direct despatch to the beneficiary.


·
Despatch information also available.

ii.
Multi City Cheques


·
Printed with Client’s facsimile signatures affixed=<Rs.5 lacs.


·
Printed with/without customised forwarding letter giving details of invoice/deductions/net amount etc.


·
Provision for direct despatch to the beneficiary.


·
Maximum amount per cheque Rs.10 lacs.


·
Payable at all CBS branches of the Bank.

iii.
Dividend Warrants


·
Instruments printed in bulk at CMP in a highly secured way.


·
Printed in-house, provide greater security.


·
On-line validation of Dividend warrant particulars to avoid frauds.


·
Payable at par at all or large number of designated branches


·
Full support for Reconciliationand providing Paid/Unpaid data at desired intervals.

iv.
SBIFAST Cheques


·
Similar to multi city cheques but would be payable at all district headquarters branches numbering over 650.


·
Payable at PAR and would be non transferable.


·
Varying validity period of 30/45/60/90/180 days from date of issue.


·
Customized MIS with periodicity of daily/weekly/fortnightly/monthly reports.


·
Payee name validation possible at the time of payment.



3.
LIQUIDITY MANAGEMENT

·
We provide sweep facility from all our branches to identified Account at any of our branches

·
Reverse sweep facility also provided for pushing balance and pulling debits from all branches of our Bank



4.
PRICING:

The pricing of the above products is competitive and volume driven and depends on the location, type of facilities and amount of individual instruments.
 
Q 2 V) Many successful E-purse schemes have been implemented in “close communities" including college campuses, clubs, food malls, shopping complex and massive transportation services. Generally speaking, debit and prepaid cards for small value payments will soon be common when more merchants accept this payment scheme.
The future of smart card in electronic commerce is not just in payment cards, but also loyalty cards, airline tickets and other value-added cards. Customers’ preferences, bonus and other information could be kept in the card. Companies could then obtain their customers’ preferences and shopping histories for planning more customer-oriented marketing strategies. The card could also be personalized to hold the cardholder's profile. In this way, companies could become more competitive in attracting customers.
 
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