Answer the Following

1) What is insurance? Explain the principles of insurance?
Solution: 
Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. Insurance is a contract between the insurer and the insured, whereby the insurer agrees to compensate the insured against loss. The insured has to pay a certain fixed sum of money on a timely basis to the insurer.

Principles of Insurance:
1) Principle of Utmost good faith:
In all types of insurance contracts, both parties must have the utmost good faith towards each other. The insurer and insured must disclose all material facts clearly, completely, and correctly. Failure to provide complete, correct, and clear information may lead to a non-settlement of the claim.

2) Principle of Insurable interest:
Insurable interest means some financial interest in the subject matter. The insured must have an insurable interest in the subject matter of insurance. Insurable interest is applicable to all insurance contracts.

3) Principle of Indemnity:
Indemnity means a guarantee or assurance to put the insured in the same financial position in which he was immediately prior to the happening of the uncertain event. Under this principle, the insurer agrees to compensate the insured for the actual loss suffered. The amount of actual compensation is limited to the amount assured or the loss, whichever is less. This principle is applicable to fire, marine, and general insurance. It is not applicable to life insurance as loss of life can never be measured in monetary terms.

4) Principle of Subrogation:
This principle is applicable to all contracts of indemnity. As per this principle, after the insured is compensated for the loss due to damage of the property insured, then the right of ownership of such property passes on to the insurer. This principle is applicable only when the damaged property has any value after the event causing the damage.

5) Principle of Contribution:
This principle is applicable to all contracts of indemnity where the insured has taken out more than one policy for the same risk or subject matter. Under this principle, the insured can claim the compensation only to the extent of actual loss either from one insurer or all the insurers.

6) Principle of Mitigation of loss:
Insured must always try to minimize the loss of the property, in case of uncertain events. The insured must take all possible measures and necessary steps to control and reduce losses.Hence, it is the responsibility of the insured to protect the property and avoid loss.

7) Principle of Causa-Proxima:
The principle of causa Proxima means, when a loss is caused by more than one cause, then the proximate cause of a loss should be taken into consideration to decide the liability of the insurer. The property is insured against some causes and not against all causes, in such a case, the proximate cause of loss is to be found. If the proximate cause is the one which is insured against, the insurance company is bound to pay compensation and vice versa.

2) Define bank. Explain Different types of banks?
Solution: 
A bank is a financial institution which deals with deposits and advances and other related services. Bank provides various services related to money or financial requirements of consumers.

1) Central Bank :
The central bank is the apex financial institution in the banking industry in the country. Every country has its own central bank. In India, The Reserve Bank of India (RBI) is the central bank. The RBI was established in 1945 under the Reserve Bank of India Act, 1944. Some functions of RBI are as follows:
i) Frames monetary policy
ii) Issues currency notes
iii) Acts as a banker to the Government
iv) Acts as a banker’s bank to commercial and other banks in India.

2) Commercial Bank:
Commercial banks play an important role in the economic and social development of a country.
Commercial banks perform important functions such as:
Primary Functions i.e. accepting of deposits and lending of money and Secondary Functions i.e. agency functions and utility functions. In India, commercial banks are divided into three groups:

Public sector banks where the majority of the capital is held by the government such as Bank of India, State Bank of India etc.
Private sector banks are owned by a group of individuals such as AXIS bank, HDFC bank, etc.
Foreign banks are those banks that are established outside India but these banks have branches in India such as Citi Bank, HSBC, Standard Chartered, etc.

3) Co-operative Bank:
In India, co-operative banks are registered under Indian Co-operatives Societies Act and regulated under the Banking Regulation Act. Co-operative banks are popular in semi-urban and rural areas. The main aim of the co-operative banks is to provide credit to economically backward people, farmers, and small scale units. Generally, the co-operative bank works at three different levels:

 Primary Credit Societies:
Primary Credit Co-operative society’s work at the village level. They collect deposits from members and the common public.
District Central Co-operative Bank:
These banks operate at the district level. They obtain deposits from the public at the district level and also get funds from the State Co-operative Bank for the purpose of lending.
State Co-operative Bank:
This bank operates at the state level. They provide funds to the central co-operative banks and primary credit societies as required.

4) Industrial Development Banks:
These are financial institutions that provide medium and long term funds to the business firms Examples of development bank are Industrial Finance Corporation of India (IFCI), State Finance Corporation (SFC), Maharashtra State Finance Corporation (MSFC), etc. Some functions of the development bank are as follows:

Provision of medium and long term funds to business units for the purpose of expansion and modernization.
Underwriting of shares issued by public limited companies.
Purchase of debentures and bonds.

5) Exchange Banks:
The exchange banks as well as large commercial banks facilitate foreign exchange transactions. Examples of exchange banks are Barclays Bank, Bank of Tokyo, etc. Some functions of the exchange bank are as follows:

Financing foreign trade transactions.
Issue of letter of credit (LC)
Discounting of bills of exchange
Remittances of dividends, interests, and profits, etc.

6) Regional Rural Bank:
Regional Rural Banks (RRBs) were established in 1975. These banks are sponsored by large public sector banks. The capital of RRB is contributed by Central Government 50%, State Government 15% and Sponsored Banks 35%. RRBs mobilize deposits primarily from rural and semi-urban areas and provide loans and advances mostly to small and marginal farmers, agricultural laborers, and rural artisans.

7) Savings Bank: The main objective of the savings banks is to encourage savings of the people, especially in rural areas. Examples of such banks include postal saving banks, commercial banks, and cooperatives banks.

8) Investment Bank:
These banks provide financial and advisory assistance to their customers. Their clients generally include business firms and government organizations. Investment banks facilitate mergers and acquisitions by undertaking research and providing advice on investment decisions. Generally, investment banks do not directly deal with the general public.

9) Specialized Banks:
These banks cater to the requirements and provide overall support for setting up a business in specific areas.

Export and Import Bank (EXIM): This bank provides financial assistance to exporters and importers.
Small Industries Development Bank of India (SIDBI): This bank provides financing and development of the micro, small, and medium enterprise (MSME) sector.
National Bank for Agriculture and Rural Development (NABARD): It is an apex institution for financing agricultural and rural sectors. NABARD provides both short term and long term credit through regional rural banks.

3) What is a warehouse? Explain its different functions.
Solution: 
A warehouse is defined as “an establishment for the storage or accumulation of goods.”
Warehousing refers to the storage of goods and consists of all those activities which are connected with the storage and preservation of goods. It is a means of storing goods.
Functions of Warehouses:

1) Storage:
This is the basic function of warehousing. Surplus commodities that are not needed immediately can be stored in warehouses. They can be supplied as and when needed by the customers.

2) Price Stabilization:
Warehouses play an important role in the process of price stabilization. It is achieved by the creation of time utility by warehousing. In warehouses, usually large stock of goods is kept.

3) Risk bearing:
When the goods are stored in warehouses they are exposed to many risks in the form of theft, deterioration, fire, etc. Warehouses are constructed in such a way that they minimize these risks.

4) Financing:
Loans can be raised from the warehouse keeper or from financial institutions against the goods stored by the owner. Goods act as security for the warehouse keeper or for financial institutions. In this manner, warehousing acts as a source of finance for the businessmen for meeting business operations.

5) Grading and Packing:
Warehouses nowadays provide the facilities of packing, processing, and grading of goods. Goods can be packed in convenient sizes as per the instructions of the owner.

6) Transportation:
Warehouses can provide transportation facility to bulk depositors. It collects goods from the place of production and also sends goods to the place of delivery at the request of the owner.

7) Time and Place Utility:
Warehouses create time utility by preserving the goods until they are demanded. It also creates place utility by providing the goods at the place, where they are required.

8) Processing:
Certain commodities are not consumed in the form they are produced. Processing is required to make them consumable. e.g. Paddy is polished, fruits are ripened, etc. Sometimes warehouses undertake such activities on behalf of the owners.

4) What is Services? Explain in detail different business services.
Solution: 
Services are intangible in nature; they are neither manufactured, transported nor stocked. Services cannot be stored for future use hence they are produced and consumed simultaneously. They are intangible in nature, heterogeneous, inseparable, inconsistent, perishable in nature, and require consumer participation.
Types of Business Services:
There are various types of services depending upon their nature and purpose. Some of the important services are as follows.

Banking: 
A bank is a financial institution which deals with deposits and advances and other relatedservices. Bank provides various services related to money or financial requirements of consumers.
Insurance: 
Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. Insurance is a contract between the insurer and the insured, whereby the insurer agrees to compensate the insured against loss. The insured has to pay a certain fixed sum of money on a *timely basis to the insurer.
Transportation: 
Transportation is the movement of people, animals, and goods from one location to another location or it can be defined as a means of carrying goods and people from one place to another place. Generally, transportation is carried through various modes such as railways, roads, waterways, and the airway.
Warehousing: 
Warehousing refers to the storage of goods and consists of all those activities which are connected with the storage and preservation of goods. It is a means of storing goods. Warehousing can be defined as a group of activities connected with the storing and preserving of stored goods from the time of production until the time of consumption.
Communication: 
The process of passing any information from one person to another with the help of some medium is termed as communication. Communication is a very simple process where the message is being transferred from a sender to the receiver. The receiver after receiving the message understands it in the desired form and then acts accordingly.

5) What is communication? Explain in detail various types of communication.
Solution: 
The process of passing any information from one person to another with the help of some medium is termed as communication. Communication is a very simple process where a message is being transferred from a sender to the receiver. The receiver after receiving the message understands it in the desired form and then acts accordingly.
The types of communication
Following are various types of communication:

Postal Services
Modem means of communication
Postal Services:

The postal services in India come under the Department of Post and Telegraph which is part of the Ministry of Communication and Information and Technology.
Types of postal services:
      1) Mail Services: Mail services are further classified as follows:

Inland Letter: Inland letter card is used for transmission within India only. Inland letter ensures the confidentiality of the message.
Envelope: It enables sending confidential messages as well as enclosures like cheques, photos, resumes, etc.
Parcel: Parcels of a specified size and weight can be sent across the country as well as outside the country. Anything can be sent in a parcel except those items which are prohibited. Parcels can be insured.
Book-Post: Printed books, magazines, journals, etc. can be sent through book posts.

     2) Specialized Postal Services: Specialized Postal Services are further classified as follows:

Business Post: Business Post provides complete mailing solutions right from mail preparation to mail delivery.

Logistics Post: Logistics Post provides business customers a cost-effective and efficient solution, which manages the entire value chain from collection to storage to transmission to distribution across the country.

Bill Mail Service: Communications in the nature of financial statements, bills, monthly account bills, or any such other items of similar nature may be posted by a service provider to customers at least once in 90 days under this service.

    3) Money Remittance Services: Money Remittance Service is further classified as follows:

Electronic Money Transfer (eMO): A money order is an order issued by the Post Office for the payment of a sum of money to the person whose name is mentioned in the money order. It is sent through the agency of the PostOffice.
Instant Money Order (IMO): IMO is an instant web-based money transfer service through Post Offices (IMO Centre) in India between two resident individuals in Indian territory
International Money Transfer: Money Transfer Service Scheme is a quick and easy way of transferring personal remittances from abroad to beneficiaries in India.

    4) Retail Services: Retail Services are further classified as follows:

Retail Post: Under Retail Post, a range of services is offered including the collection of electricity bills, collection of taxes, collection of other bills and fees for the Government, etc.
e-Post:  Through ePOST, customers can send their messages to any address in India with a combination of electronic transmission and physical delivery through a network of more than 1,55,000 Post Offices.

II) Modern means of communication:

Courier Service: An individual or a company responsible for the exchange of items between two or more parties is known as courier service. Courier services are usually employed by· a company and they charge a flat rate to the party using the courier service. Courier s·ervices are different from ordinary mail services by features such as speed, security, tracking, signature, and swift delivery times.
Internet: It is a network of networks that consists of private, public, academic, business, and government networks of local to global scope, linked by a broad array of electronic, wireless, and services, such as the inter-linked hypertext documents and applications of the World Wide Web (WWW), electronic mail and file sharing.
Email: Electronic mail (email or e-mail) is a method of exchanging mail between people using electronic devices. Today’s email systems are based on a store-and-forward model.

6) What is road transport? Explain the advantages and disadvantages?
Solution: 
Roads are means that connect people and places on the surface of the land. It provides all-over connectivity in any terrain as compared to other modes of transport. India has a network of village roads, district roads, state highways, and national highways which form the economic backbone of the country. In India, the Ministry of Road Transport and Highways (MoRTH) looks after the development of surface transport throughout the country.

 Advantages:
1) It is a cheap mode of transport compared to other modes of transport.
2) Perishable goods can be transported at a faster speed by road carriers over a short distance.
3) It is a flexible mode of transport as loading and unloading are possible at any destination.
4) It provides door to door service. Also, it functions as a feeder transport to other modes of transport.
5) It helps people to travel and carry goods from one place to another place where any other mode of transport is not available.

Disadvantages:
1) Due to limited carrying, capacity road transport is not economical for long-distance transportation.
2) Transportation of heavy and bulky goods through road transport involves high costs.
3) Road transport is affected by adverse weather conditions such as floods, rain, landslides, etc.
4) There is a possibility of road accidents which are common.
5) It causes pollution due to the emission of gases which affect the health of people