Question

State with Reasons whether the following statements are TRUE or FALSE:
1. Central bank (RBI) connot accept deposit from the public
2. Overdraft facility is given to saving account holders
3. Current account is suitable for salaried people
4. Cash can be withdrawn from ATM at any time
5. The principle of indemnity applies to life insurance
6. Insured must have insurable interest in the subject matter at the time of taking the policy
7. An individual must always tries to minimise the loss by fire as far as possible
8. Duty paid warehouses help to provide storage for perishable commodities
9. Private warehouses are used only by its owners
10. Post offices provide money remittance services
11. E –payment facility is not available to general public
12. Air transport is suitable for short distances
13. Transport helps in raising standard of living
14. Water transport is the costliest means of transport available
15. Rail transport provides door to door services

Answer 1

1. Central bank (RBI) cannot accept deposit from the public- True
Explanation:
The above statement is correct. The RBI cannot accept deposits from the general public; it is the commercial banks that accept deposits from the public. The main function of the central bank is to maintain economic stability in the country by formulating monetary policies.

2. Overdraft facility is given to saving account holders- False
Explanation:
Overdraft facility is given to current account holders. The term “overdraft facility” means a temporary arrangement in which a customer is allowed to withdraw an amount of money greater than the balance in his/her account. The excess amount can be withdrawn upto a certain limit subject to payment of interest in return.

3. Current account is suitable for salaried people- False
Explanation:
No, current account is not suitable for salaried people. This account is generally meant for business class people who make and receive a large number of payments. On the other hand saving account is more suitable for the salaried people as it helps in saving a portion of their income.

4. Cash can be withdrawn from ATM at any time- True
Explanation:
Automatic teller machines (ATMs) render facility of depositing and withdrawal of money to bank customers. An ATM machines operates 24 hours a day.

5. The principle of indemnity applies to life insurance- False
Explanation:
According to the principle of indemnity, the insurer assures the insured that he/she will bring the insured back to the position he/she was in prior to the occurrence of an uncertain event. In case of life insurance, it is not possible for the insurer to compensate the life of the insured. Thus, the principle of indemnity is not applied to life insurance.

6. Insured must have insurable interest in the subject matter at the time of taking the policy- True
Explanation:
The term “insurable interest” means that if a person is planning to get himself/herself or his/her property insured, then he/she must have an interest in it. Thus, insurable interest must exist at the time the policy is taken.

7. An individual must always tries to minimise the loss by fire as far as possible- True
Explanation:
The insured must take all the necessary measures and steps to control and minimise the loss caused by fire. He/she should not remain inactive while the accident occurs. This is a statement under the principle of mitigation of loss.

8. Duty paid warehouses help to provide storage for perishable commodities- False
Explanation:
The above statement is incorrect, as it is the cold storage warehouses that provide storage facility for perishable goods. Duty paid warehouses provide storage facility for imported goods.

9. Private warehouses are used only by its owners- True
Explanation:
It is correct that private warehouses are used only by their owners. These warehouses are owned and used by farmers, traders and local businessmen for the storage of store their goods.

10. Post offices provide money remittance services- True
Explanation:
Yes, various money remittance services are provided by post offices such as money order services, instant money order services, international money transfer services, money gram services, money order videsh services, electronic international money order services and foreign exchange services.

11. E –payment facility is not available to general public- False
Explanation:
E-payment facility is available to the general public. Post offices provide this facility in which customers go to the post office and make the payment of bills. After that, the post office pays the bills electronically.

12. Air transport is suitable for short distances- False
Explanation:
Air transport is suitable for long distances such as travelling international and is costliest also. On the other hand, road transport is suitable for short distances.

13. Transport helps in raising standard of living- True
Explanation:
Transport helps in raising the standard of living because it helps in delivering a wide variety of goods to people. Also, it provides employment opportunities to people, thus helping in raising their income level.

14. Water transport is the costliest means of transport- False
Explanation:
Water transport is the most economical mode of transport when it comes to transporting bulky goods and air transport on the other hand is the costliest mode of transport.

15. Rail transport provides door to door services- False
Explanation:
Rail transport does not provide door-to-door services. Door to door service is offered by the road transport.