Paper: Insurance and Banking

Code: 442A

General Instructions:

The Student should submit this assignment in the handwritten form (not in the typed format)
The Student should submit this assignment within the time specified by the exam dept
The student should only use the Rule sheet papers for answering the questions.
The student should attach this assignment paper with the answered papers.
Failure to comply with the above Four instructions would lead to rejection of assignment.

Specific Instructions:

There are four Questions in this assignment. The student should answer all the four questions. Marks allotted 100.
Each Question carries equal marks (25 marks) unless specified explicitly

Question No 1:
1(A) Sada Bahar Ltd. has approached Happy Bank Ltd. for sanction of working capital limit of Rs.200 lakh. The
company provided following information :
Liabilities

Actual

Projections

2005-06
(Rs. in Lakh)

2006-07
(Rs. In Lakh)

Paid-up share capital

Reserves and surplus
Term loan
Creditors
Bank borrowings

Assets
Cash and bank balances
Raw materials
Stock-in-process
Finished goods
Book debts
Fixed assets

50
150
40
25

265

2
20
10
20
63
150
265

50
175
30
35
200
490

5
80
35
70
150
150
490

Sales of the company are projected to go up from Rs.250 lakh to Rs.750 lakh and net profit is estimated to move from
Rs.5 lakh to Rs.30 lakh next year.
As the Branch Manager of Happy Bank Ltd., will you sanction the limit of Rs.200 lakh as requested by Sada Bahar
Ltd. ?
1(B) "Financial sector reforms have changed the face of public sector banks in India." Do you agree? Explain what
should be the mission for banking sector in India.

Question No 2:
(i) Write a note on banking ombudsman scheme.
(ii) Write a note on role of treasury management department in banks.

(iii)
Settlements arrived at before Lok Adalats in respect of NPAs are not legally enforceable by themselves.
Comment.
(iv) Skill of successful banking lies in arranging maturity pattern of liabilities and assets sub-serving the principle of
liquidity. Comment.

Question No 3:
a)

Joseph Basker Raj applied for a life insruance policy on his life. Five months after the policy was issued, he
died. The death certificate named the deceased as Joseph Prakash Raj,.his true name. The insurer denied
payment on the ground that Joseph had concealed a material fact not revealing his real identity. Is it correct on
the part of the insurer to deny payment? Give reasons

b) Ganeshan assigned his policy to his minor son Kartik and appointed the mother as the guardian to receive the
money till his son was a minor. After sometime, the family needed the money and decided to surrender the
policy. Whether surrender of the policy is possible? Suggest any other alternative by which Ganeshan can
take back the ownership over the policy?
c)

A letter of credit is valid upto 10th April, 2005 for shipment and 25th April, 2005 for negotiation. Amendment
is received extending the date of shipment upto 10th May, 2005. What will be the validity period of the letter
of credit?

d) Describe the role of the Export Credit Guarantee Corporation (ECGC) in risk management in international
trade

Question No 4:
Attempt the following:
(i) Write short note on 'solatium fund scheme'.
(ii) "Self-insurance is the same as insurance." Comment.
(iii)
Explain rural sector definition for insurance companies as per the Insurance Regulatory and Development
Authority (IRDA) regulations.
(iv) Explain basic categories of risks.
(v) Explain 'insured's declared value' (IDV) under the motor insurance.
(vi) What are the 'captive insurers'?