HSC Organisation of Commerce & Management Sample Paper 4



Organisation of Commerce & Management


  1. From the given sub questions attempt any four:

(A) Select the appropriate option from options given below and rewrite them:

(i) For online transactions is required.

(a) registration

(b) trading

(c) business

(ii) is the function which supports to activate the plans with the help of employees.

(a) Staffing

(b) Directing

(c) Co-ordination

(iii) In India, the consumer protection act was initiated in the year

(a) 1986

(b) 1968

(c) 1886

(iv) Postal services are administered by

(a) Private companies

(b) Government of India

(c) Panchayat

(v) Who is the president of State Commission is

(a) District Court Judge

(b) Supreme Court Judge

(c) High Court Judge

(B) Give one word or phrase for the following sentences:

(i) Another term used for ‘People’s Court’.

(ii) Giving of distinct name to one’s product

(iii) It increases the team spirit of the work place.

(iv) A ministry that looks after the development of the surface transport throughout the country.

(v) The process of enhancing entrepreneurial skills and knowledge through structured training and institution-building programmes.

(C) True or false:

(i) LPO stands for legal product outsourcing.

(ii) The term e-business came into existence in the year 1998.

(iii) Monopoly refers to a market situation when there is a single buyer of a commodity or service.

(iv) Social responsibility is broader than legal responsibility of business.

(v) The market for the commodities which are produced in one country and sold in another countries is known as national markets.
(D) Match the pairs:


Group “A”


Group “B”




Branch of social science



Responsibility to



To earn profit







To serve society



Economic objective





Business ethics


Job security






Respecting rules and




To maintain solvency

and prestige

  1. Explain the following terms/concepts in detail (Any 4 out of 6 ):

(i) Startup India

(ii) Grading

(iii) Pricing of Product

(iv) E-mail

(v) Entrepreneur

(vi) Lok Adalat

  1. Study the following case/situation and express your opinion (Any 2):

(i) In ‘Sahaj Sons and Co. Ltd’ 200 employees are working in three shifts. In first shift 60 employees, in second shift 60 employees and in third shift 80 employees are working without sufficient breaks except lunch break and shift change break. No employee is able to complete the work in designated time due to inappropriate time management which results into delay for next shift employees.?

(a) Identify which scientific principle needs to be followed by the company.

(b) Suggest two scientific techniques which can be used for smooth flow of work in ‘Sahaj Sons and Co. Ltd. :

(c) Why the work is not being completed in time?

(ii) Mr. Vaibhav is a businessman. He has his own factories in Pune and Nashik. He lives in Pune with his wife and 2 daughters aged 5 and 8 years.

(a) Can Mr. Vaibhav take a life insurance policy for his wife and 2 children?

(b) Can Mr. Vaibhav take a marine insurance policy for his factories?
(c) Which type of insurance should Mr. Vaibhav take for protecting his factories from loss due to fire?

(iii) Niraj purchases some gift articles online from www. flipkartcom. At the same time Sheetal purchased gift from e-bay.com.

(a) Which website is related to C2C?

(b) Which website is related to B2C?

(c) What first step does Niraj need to follow?

38. Distinguish between (Any 3):

(i) Staffing and Directing

(ii) Current Account and Saving Account

(iii) District Commission and State Commission

(iv) Planning and controlling.

  1. Answer the following questions in brief (Any 2):

(i) Explain any four points of importance of organising.

(ii) Give classification of the market in detail on the basis of ‘regulation’ and ‘competition’.

(iii) Define water transport. State the advantages of water transport.

39. Justify the following statements (Any 2):

(i) E-business does have certain disadvantages when compared to the trautuontatway of doing business.

(ii) Principles of management can be applied universally.

(iii) Social responsibility is necessary for protection of environment.

(iv) Marketing helps in increasing consumer awareness.

40. Answer the following questions in detail (Any 2):

(i) Define staffing and its importance.

(ii) Define marketing mix. Explain 4Ps of product marketing mix.

(iii) Define controlling and state its importance.

41. Answer the following questions in detail (Any 1):

(i) Explain in detail different functions of commercial banks.

(ii) Who is a consumer? State the various rights of consumers.

42. [.]] Answer Key

  1. (A) (i) (a) registration

(ii) (b) Directing

(iii) (a) 1986

(iv) (b) Government of India

(v) (c) High Court Judge.

(B) (i) Lok Adalat

(ii) Branding

(iii) Co-ordinating

(iv) Ministry of Road Transport and Highways

(v) Entrepreneurial Development Programme

(i) False
(ii) False
(iii) False
(iv) True
(v) True


Group “A”


1. Employees

e. Job Security

2. Responsibility to


h. To maintain solvency

and prestige

3. Responsibility towards


g. Respecting rules and


4. Economic objective

b. To earn profit

5. Business ethics

a. Branch of socialscience

  1. (i) Start-up india is an initiative of the Government of India. It was launched in 2016. It aims at building an ecosystem which will nurture start-ups in the country. So that, sustainable economic growth and large scale employment opportunities can be generated. A start-up is defined as an entity having its headquarter in India, which was opened less than
    10 years ago and has an annual turnover of less than ₹ 100 crores. Under this initiative, the government has already launched the I:Made program, to help Indian entrepreneurs to build 10 lakh mobile app start-ups. The MUDRA Bank’s scheme (Pradhanmantri Mudra Yojana) is an initiative by Indian Government which aims to provide micro-finance, low-interest rate loans to entrepreneurs from low socio-economic backgrounds.

(ii) Grading is the process of classification of products according to similar characteristics and/or quality. Grading is done on the basis of their features like size, shape, quality etc. Generally grading is done in case of agricultural products like wheat, rice, potatoes etc.

(iii) Pricing is one of the most important as well as challenging function of the marketing.

Many times price of the product decides the success or failure of the product. Pricing plays an important role in the market where there is cut throat competition. While determining the price of the product businessman needs to consider factors like cost, desired profit, price of the competitor’s product, demand for the product, market condition etc. Business needs to change prices as per the need of the market. If prices are too high, it might lose customers but if prices are too low, it might suffer losses. So deciding the right price needs extensive market research.

(iv) Electronic mail (e-mail) is a method of exchanging mail between people using electronic devices. Today’s e-mail systems are based on a store-and-forward model. E-mail servers accept, forward, deliver. and store messages. Neither the users nor their computers are required to be online simultaneously: they need to connect only briefly, typically to a mail
server or a web mail interface for as long as it takes to send or receive messages,

(v) The concept of entrepreneur varies from industry to industry, country to country as well as from time to time. Economists never had a consistent definition of “Entrepreneur” or “entrepreneurship”. The word “entrepreneur” comes from the French verb entreprendre, it means “to undertake”. An entrepreneur is “a person who starts a business and is willing to risk loss in order to make money”. The common keywords ‘businesses’ and ‘risk’ are interrelated. If there is no real business or risk, a person cannot be called as an entrepreneur. The entrepreneurs are passionate to innovate, lead, invent or pioneer with a disruptive product or technology. The size of the business, the type of work involved, the age or the formal education of the entrepreneur etc. does not restrict the entry of the entrepreneur. Similarly, the label of success or failure also does not matter.

(vi) Lok adalat is the effective and economical system for quick redressal of the public grievances. It can also be referred to as ‘People’s Court’. It is established by the government to settle disputes by compromise. The aggrieved party can directly approach the adalat with grievance, and issues are discussed on the spot and decisions are taken immediately. Resolution of disputes by Lok Adalat gets statutory recognition. e.g. MSEDCL, MSRTC, Railway authority, Insurance companies, banks etc. organise regular Lok Adalat.

  1. (i) (a) In this case Principle of scientific management called Science, Not rule of Thumb needs to be followed.

43. Distinguish Between

(i) Staffing and Directing

Point of Distinction




The staffing function pertains to the

recruitment, selection, development,

training and compensation of

subordinate managers.

Directing is the guidance inspiration, the

leadership of those men and women

constitute the real case responsibilities of



To appoint right type of people at the

right positions and the right time.

To direct the subordinates to get the things

done in the right manner.

Area of Function

It includes recruitment, selection, training,

development and compensation of

human resources.

It includes instructing, guiding, inspiring,

communicating and motivating the

human resources.


Staffing is mostly concerned with internal


Directing is concerned directly with

internal factors ie, human resources.


It follows organising function.

execution of planning.



It is a continuous process as it deals with

employees i.e. human resources.

This continuous process is necessary in the

process of achievement of the goals.

(ii) Current account and Saving account

Point of Distinction

Current Account

Saving Account


It is that account which is maintained

by business man and others who have

regular bank transactions..

It is that account which is opened by

individuals in order to save a part of their


(b) Work study based on the technique of fatigue study and scientific task setting can be used for smooth flow of work.

(c) Reasons for non-completion of work in time are: reduces the efficiency of labour.

  1. Inappropriate time management (planning) done by the departmental head (functional manager) results into delay for next shift employees.
  2. Standard required time and standard output are not defined by the manager or management of ‘Sahaj Sons and Co. Ltd.’

(ii) (a) Mr. Vaibhav can take whole life policy or term insurance policy for his wife and child insurance policy or money back policy for his daughters.

(b) Mr. Vaibhav cannot take marine insurance policy for his factories.

(c) Mr. Vaibhav can take floating fire policy for protecting his factories at Pune and Nashik.

(iii) (a) E-Bay.com website is related to consumer to consumer(C2C) transactions.

(b) wwwflipkartcom website is related to business to consumer (B2C) transactions.

(c) Before online shopping, Niraj has to register with the flipkart site by filling up a registration form. Registrastion is the first step in online transactions. Niraj needs to login a particular website to buy gift articles.

  1. Long working hours without sufficient breaks


Customers can withdraw money by


Customers can withdraw either by

cheques or by withdrawal slips.

3. Documents

The bank gives a passbook, cheque book,

statement of account and pay-in-slip

book to the customers..

The bank gives a passbook, cheque book

and pay-in-slip book to the customers.

4. Who takes it

It is suitable for traders, businessman,

firms or institutions.

It is suitable for fixed income group, wages

or salary earners.

(iii) District Commission and State Commission

Point of Distinction

District Commission

State Commission


A consumer dispute redressal forum

at the district level established by the

State Government is known as District


A consumer dispute redressal forum

at the state level established by the

State Government is known as State



A person who is sitting or retired or

qualified to be District Judge.

A person who is sitting or retired or Judge

of High Court, shall, be appointed by the

State Government as the President of

State Commission.


Not less than two and not more than

such number of members as may be

prescribed, in consultation with the

Central Government.

Not less than four or not more than

such number of members as may be

prescribed in consultation with the Central


Membership Tenure

The members can have the membership

for a term of five years or upto the age of

sixty five years, whichever is earlier.

The members can have the membership

for a term of five years or up to the age of

sixty seven, whichever is earlier.

(iv) Planning and Controlling

Point of Distinction




Planning is deciding in advance what to

do how to do it, when to do it and who is

to do it.

Controlling is the process of taking steps

to bring actual results and desired results

closer together.


To set goals and choosing the means to

achieve these goals.

To ensure that the objectives are achieved

according to the plan.

Area of Function

It includes setting objectives by

identifying the ways of attaining the goal

and selecting the best plan.

It includes setting up of standards

measurement, and comparison with

actual performance and taking corrective

steps whenever necessary.


Internal and external factors are

considered in planning process.

Internal and external factors are taken

into account for taking corrective action.

  1. (i) Importance of Organising: Organising is concerned with grouping and assigning the organisational activities among different departments and workforce. The importance of organising can be stated as follows:

(a) Facilitates Administration as well as Operation: Organising process leads to identify and to group the activities. Grouping and assigning the activities is the task of administration whereas processing according to it is operational activity. Thus, organising facilitates administration as well as operation of the organisation. Due to proper grouping of the tasks and the employees, there is increase in production and reduction in wastage. Duplication of work is restricted and effective delegation becomes possible. (b) Brings Specialisation: Organisational structure is a network of relationships in which the work is divided into units and departments. This division of work helps in bringing specialisation in various activities of organisation. Specialisation in activities leads to increase in organisational efficiency.

(c) Clarifies Authority and Responsibility: Organisational structure defines the role to every manager. This can be done by delegating the authority to every manager and clarifying the way he has to exercise those powers. So that misuse of powers does not take place. Well defined jobs and responsibilities helps in bringing efficiency into managers working. This helps in increasing productivity.
(d) Establishes Co-ordination: This function helps in establishing co-ordination among different departments of organisation. It creates clear cut relationships among positions and ensures mutual co-operation among individuals. Coordination or synchronisation between all departments and different level of managers is important for smooth functioning of organisational activities.

(ii) On the basis of regulation:

(a) Regulated Market: Regulated market refers to the markets regulated by statutory provisions of the country. For example, commodity exchanges, stock exchanges, foreign exchanges.

(b) Unregulated or Free Market: It refers to the markets which are not controlled by any specific regulations. It generally operates according to forces of demand and supply.

44. On the basis of Competition:

(a) Perfect Market: Perfect market is a market where large number of buyers and sellers buy and sell their homogeneous products. These buyers and sellers have perfect knowledge about market conditions and therefore, one single price prevails in the market.

(b) Imperfect Market: Imperfect market refers to a market situation which is characterised by market imperfection such as single seller, maladjustment in demand and supply, imperfect knowledge on the part of buyers or sellers, etc.

(iii). Water transport refers to movement of goods and passengers on waterways by using various means like boats, steamers, ships etc. With the help of these means, goods and passengers are carried to different places, both within as well as outside the country. When the goods and passengers move inside the country, it is known as inland water transport. When the different means of transport are used to carry goods and passengers on the ocean or sea route, it is known as ocean or sea transport. In India, ministry of shipping looks after development of ocean transport throughout the country.

45. Advantages:

(a) It is relatively economical mode of transport for bulky and heavy goods.

(b) It is safe mode of transport with respect to occurrence of accidents.

(c) It helps to promote international trade.

(d) There is no cost for constructing and maintaining of routes as most of them are naturally made.

(e) It offers more flexibility as compared to railtransport.

  1. (i) (a) Lack of Personal Touch: E-business lacks the personal touch. One cannot touch or feel the products. So it is difficult for the consumers to check the quality of products.

(b) Delivery Time: The delivery of the products takes time. In traditional business you can get the product as soon as you buy it. But that doesn’t happen in online business. This time lag often discourages customers e.g. Amazon now assures one day delivery. This is an improvement but does not resolve the issue completely.

(c) Security Issues: There are a lot of people who scam through online business. Also, it is easier for hackers to get your financial details. It has a few security and integrity issues.

This also causes disturbance among potential customers.

(d) Government Interference: Sometimes the government monitoring can lead to interference in the business.

(e) High Risk: High risk is involved as there is nodirect contact between the parties. In case of frauds, it becomes difficult to take legal action.

(ii) While achieving goal of an individual or an organisation, it is always important to use different systems or techniques. Some of these techniques are accepted universally, hence, they are called as principles. It provides guideline to manager to conduct all organisational activities. It helps the manager to take effective decisions and to achieve organisational goal. These principles are universal and applicable everywhere. The principles of management are universal in nature. That means they can be applied to all types of organisations, irrespective of their size and nature. Their results may vary and application may be modified but these are suitable for all kinds of organisations. Similarly, they are applicable to all levels of management.

(iii) Business organisation should make proper use of country’s natural resources. They should avoid environmental degradation such as contamination of water resources, depletion of the ozone layer etc. which have been caused by business activities. These have resulted in poor health of the community and placed a question mark on the survival of human species. Business should be committed to protect and promote environment. Business uses all types of resources from nature, so it is an obligation to protect the environment. It should not create imbalance in nature. Industrialisation results in environmental pollution by generating hazardous waste and has increased the risks to environment. Protection of environment benefits business from many angles such as creating awareness among customers, employees, saving costs, loss, govt. control etc. The number of waste prevention techniques are available and they are commonly summarised as the so called 4 ‘R’s. i.e. reduction, reuse, recycling and recovery.

(iv) Marketing helps the society by informing and educating consumers. The function of marketing is to fulfil the needs of the consumers. Marketing helps consumers to know about new product and service available in the market and its usefulness to the customer. Marketing provides satisfaction to the society by supplying relevant information, goods, and
services to the people of society according to their demand and taste. Marketing can also include more practical information to assist in making a purchase, such as addresses, phone numbers, product release dates, store hours and Web addresses.

  1. (i) Staffing is the function of execution according to plan and organisational structure. It is the process of attracting, recruiting, selecting, placing, appraising. remunerating, developing and retaining the best workforce. Overall growth and success of every venture is based on appropriateness of staffing function.

46. Definitions:

(a) Theo Haimann: “The staffing function pertains to the recruitment, selection, development, training and compensation of subordinate managers.”

(b) Luther Gullick: “Staffing is the whole personnel function of bringing in and training the staff and maintaining favourable conditions of work”.

(c) S. Benjamin: “Staffing is the process involved in identifying, assessing placing, evaluating and directing individuals at work.”

47. Importance of Staffing:

(a) Effective Managerial Function: Staffing is the key to effective performance of other functions of management such as planning, organising. directing and controlling. Competent workforce can work effectively in different functional areas like production, sales, finance etc. The outcome of other functions is based on the effectiveness of staffing.

(b) Leads to Effective Utilisation of Human Resources: Staffing function leads to effective utilisation of human resources i.e. workforce. Proper care is taken at every stage such as recruitment, selection, placement, remuneration, training, development etc. Excessive burden of work is avoided. Optimum utilisation of human resources results in improvement in performances and progress of organisation.

(c) Builds Cordial Relationship: This function is helpful in building healthy relationships among all levels of employees in the organisation. A smooth human relation is the key to better communication and coordination of managerial efforts in an organisation.

(d) Helps Human Resource Development: Skilled and experienced employee is an asset of a business organisation. Staffing helps to inculcate the organisational culture into employees. It trains and develops the existing workforce. It also ensures smooth functioning of all the managerial aspects of the business organisation.

(e) Helps in Effective use of Technology and other Resources: Trained employees can use the latest technology, capital, material and methods of work effectively. It helps in building competitive strength of the organisation. It is also helpful in improving standard of work and productivity in terms of quality and quantity.

(ii) Marketing mix is the combination of different marketing variables that the firm blends and controls to achieve the desired result from the target market. In simple words, the marketing mix is putting the right product, at the right time, at the right price in the right place. It is one of the important tools of the marketing. The 4p’s of marketing mix were introduced by . Jerome McCarthy in 1960. It was further extended by Booms and Bitner in 1981 by adding 3 new elements to the 4 ps principle. There are two types of marketing mix-product: marketing mix (4ps) and service marketing mix (7ps). The four ps are the key factors that are involved in the marketing of goods or services. They are the product, price, place, and promotion.

(a) Product: Product refers to the goods or services that are offered to the customers for sale and are capable of satisfying the need of the customer. The product can be intangible or tangible, as it can be in the form of services or goods. The business need to decide the right type of product through extensive market research. Success of the business depends on the impact of the product in the minds of the customer.

(b) Price: The price of the product is basically the amount that a customer pays for the product. Price plays an important role in creating demand for the product. The business needs to take utmost care to decide the price of the product. Cost of the product and willingness of the customer to pay for the product play an important role in pricing the product. Too high price may affect the demand for the product and pricing too low may affect the profitability of the business. While deciding the prices, the value and utility of the product to its customers are to be considered.

(c) Place: Place is also known as distribution channel. Placement or distribution is a very important part of the marketing. Making a right product at the right price is not enough. Businessman needs to make the product available to potential customer at the right place too. Business needs to distribute the product in a place that is accessible to potential buyers. It covers location, distribution and ways of delivering the product to the customer. Better the chain of distribution higher the coverage of the product in the market.

(d) Promotion: Promotion is an important element of marketing as it creates brand recognition and sales. Promotion is a tool of marketing communication which helps to publicise the product to the customer. It helps to convey product features to the potential buyer and inducing them to buy it. Promotion mix includes tools such as advertising, direct marketing, sales promotion, personal selling, etc. Combination of promotional strategies depend on budget, the
message business wants to communicate in the target market.

48. (iii) Importance of Controlling:

Controlling is important maintaining standards and to achieve desired goals effectively and efficiently. It is a function of checking the performances of employees at every stage of their work in process. The importance of controlling function is an organisation is as follows:

(a) Fulfilling Goals of Organisation: Controlling is the function of measuring the performance at every possible stage, finding out the deviations, if any and taking corrective actions according to planned activities for the organisation. Thus, it helps in fulfilling the organisational goals.

(b) Making Efficient Utilisation of Resources: Various techniques are used by managers to reduce wastage of material and spoilage of other resources. Standards are set for every performance. Employees have to follow these standards. As the effect of this, the resources are used by employees in the most efficient and effective manner so as to achieve organisational objectives.

(c) Accuracy of Standards: An efficient control system helps management in judging the accuracy of standards whether they are accurate or not. Controlling measures are flexible to some extent. So after reviewing them according to changing circumstances, they are revised from time to time which is beneficial for checking performance accurately.

(d) Motivates Employee: After setting standards of checking performance, they are communicated to employees in advance. Due to this, employees get an idea about what to do and how to do. Performance are evaluated and on that basis employees are rewarded in the forth of increment, bonus, promotion etc. It motivates the employees to perform at their best level.

(e) Ensures Order and Discipline: Controlling is the function of order and maintaining discipline. It works for reducing unprofessional behaviour of the employees. Discipline is maintained by continuous checking of performances by the superiors and preventive actions are taken to minimize the gap between actual and standard.

(f) Facilitates Co-ordination: Control is a function in which the roles and responsibilities of all departmental managers and the subordinates are designed clearly. Coordination between them helps to find out the deviations in their respective departments and to use remedial measure for desired results of the organisation.

(g) Psychological Pressure: The performance are evaluated with the standard targets. The employees are very well aware that their performance will be evaluated and they will be rewarded accordingly. This psychological pressure works as a motivational factor for employees to give their best performance.

(h) Ensures Organisational Efficiency and Effectiveness: Factors of control include making managers responsible motivating them for higher performance and achieving departmental coordination. It ensure about organisational efficiency and effectiveness.

(i) Builds Good Corporate Image: Controlling function helps to improve the overall performance of the organisation. Minimum deviation is predetermined standards and actual performance results into the progress of business. It can be achieved with the help of proper control. This builds good corporate image and brings goodwill for the business.

(j) Acts as a guide: Controlling function provides set of standard performance. Managers as well as subordinates work according to it. Wherever necessary, they can take the help of these standards and can achieve desired results. Thus, controlling function acts as a guide for everyone. The steps taken for controlling as activity guide the management while planning the future activities.

  1. (i) Functions of Commercial Banks: The functions of commercial banks can be broadly divided into two groups are as follows:

(a) Primary Functions: The primary functions of commercial banks are known as core banking functions. The primary functions are as follows:

(A) Accepting Deposits: Commercial banks collect deposits from individuals and organisations. The deposits can be classified into two types i.e., time deposits and demand deposits.

(a) Time Deposits: Time deposits are called as time deposits because they are repaid to the customers after the expiry of decided time.

(1) Fixed Deposit: Fixed deposit account is an account where fixed amount is kept for fixed period of time bearing fixed interest rate. Rate of interest is more as compared to saving bank account and varies with the deposit period.

Normally, withdrawal of amount is not permitted before maturity date. However, depositor can withdraw amount before maturity date for which bank will reduce the interest rate. For amount deposited in this account, a fixed deposit receipt (FDR) is issued by the bank. Against this receipt loan can be taken from the bank

(2) Recurring Deposit: It is operated by salaried persons and businessmen having regular income. A certain fixed sum of money is deposited into the account every month. Withdrawal of accumulated amount along with interest is paid after the maturity date. Rate of interest is higher which is similar to fixed deposit account. Separate passbook is provided to know the position of RD account.
(b) Demand Deposits: demand deposits are those which are repaid to customers whenever they demand. That means, money can be withdrawn as per the wish of the customer through withdrawal slips, cheques, ATM cards, online transfer etc

(1) Saving Account: It is generally operated by those who earn regular or fixed income such as salary or wages. The main aim of this deposit account is to encourage habit of savings among people. These deposit accounts are meant for the purpose of maximum savings. There are restrictions on withdrawal limits from these accounts. These accounts carry low interest rates. Interest is credited monthly, quarterly, halfyearly and yearly basis on this account. Passbook facility, balance on SMS, account statement etc. Facilities are provided to account holders to ascertain financial position.

For saving account holders some banks provide separate facility of flexi deposit. This facility combines the advantages of saving account and fixed deposit account. This is not separate deposit account. It is a type of saving bank account or current deposit account with special features and benefits.

In case of multiple option deposit account, the excess amount after a particular limit gets automatically transferred to fixed deposit. When adequate funds are not available to honour payments or cheques in savings account, funds get transferred from fixed deposit to saving banks account

(2) Current Account: This account is operated by business firms and other commercial organisations such as hospitals, educational institutions etc. who have regular banking transactions. In this account there is no restriction on deposits and withdrawals of amounts. No interest is paid by the bank on this account. Overdraft facility is available for this account. For current account, banks provide statement of account every month.

(B) Granting Loans and Advances: Banks grant loans and advances to business firms and others who are in need of bank funds. The loans are provided for longer period of time from 1 year and more. Advances are provided for shorter period from 4 months to 1 year. The advances are in the form of cash credit, overdraft and discounting of bills etc.

(1) Loans: Commercial banks provide loan to businessman and others. The borrowers can use entire amount sanctioned or can withdraw in installments. Interest is charged on the amount sanctioned. The loans are as follows:

(a) Short-term loans are for a period of upto 1 year to meet working capital requirements of the borrower. (b) Medium term loans are for a period of 1 year to 5 years to meet working capital as well as fixed capital requirements of the borrower.

(c) Long-term loans are for a period of 5 years or more to meet long term capital requirements of the borrower.

(2) Advances: Advances are small term fund provided to businessman to satisfy different financial requirements of the business. Advances are as follows:

(a) Cash Credit: The cash credit advances are provided to current account and savings account holders. It provides working capital for longer period of time. Interest rate is higher on cash credit. Separate cash credit account has to be maintained by the borrower.

(b) Overdraft: this facility is offered to current account holders to meet their working capital requirements. The period can vary from 15 to 60 days. Interest is charged on actual amount withdrawn. No separate account is maintained, and entries are shown in current account. It is a temporary arrangement for a short period.

(c) Discounting of Bills of Exchange: The drawer of bills of exchange or beneficiary can discount the bill with bank and obtain an advance. On the due date of the bill, the bank will recover the amount from the drawee.

(ii) Secondary Functions: Secondary functions of commercial banks are classified into two groups:
(A) Agency Functions
(B) Utility Functions

(A) Agency Functions: A commercial bank acts as an agent or representative of its client and performs certain functions which are as follows:

(1) Periodic Collections and Payments: Commercial bank collects salary, dividends, interests and any other income periodically as well as makes periodical payments such as taxes, bills, premiums, rent etc. On the standing instructions provided by customer. Commercial bank charges certain fixed amount quarterly or annually in the form of service charges from customer for providing such services.

(2) Portfolio Management: Large commercial banks undertake to purchase and to sell securities such as shares, bonds, debentures etc. On behalf of the clients. This handling of securities is known as portfolio management. Due to this facility more clients are opting for such services of commercial banks.

(3) Fund Transfer: Commercial banks provide facility of fund transfer from one branch to another branch or branch of another bank. Commercial banks come with various initiatives to make these transfer hassle free.

(4) Dematerialisation: Banks provides dematerialisation facilities to their clients to hold their securities in an electronic format. On behalf
of clients, it undertakes the electronic transfer of shares in case of purchase or sale.

(5) Forex Transactions: Forex is an abbreviation for foreign exchange. A bank may purchase or sell foreign exchange on behalf of its clients. A bank purchases forex from its clients which the clients receive from foreign transactions and sell the forex when the clients need it for overseas transactions.

(B) Utility Functions: A commercial bank performs utility functions for the benefits of its clients. It provides certain facilities or products to its clients as follow:

(1) Issue of Drafts and Cheques: draft/cheque is an order to pay money from one branch of bank to another branch of the same bank or other bank. A bank issues drafts to its account holders as well as non account holders whereas cheques are issued only to the account holders. Bank charges commission for issuing a bank draft.

(2) Locker Facility: This is common utility function of any commercial bank. The bank provides locker facility for the safe custody of valuables, documents, gold ornaments etc.

(3) Project Report: A bank may prepare project report and feasibility studies on behalf of the clients. Project reports enable the business firm to obtain funds from the market and to obtain clearance from government authorities.

(4) Gift Cheques: Banks issue gift cheques and gold coins to account holders as well as to non account holders.

The gift cheques/ coins can be used by the clients for the purpose of gifting on occasions like weddings, birthdays etc.

(5) Underwriting Services: A commercial bank may underwrite the issue of securities issued by companies. If the shares are not fully subscribed, the underwriting bank agrees to take up the unsubscribed portion of the securities.

(6) Gold Related Services: Now a days many banks are providing gold services to its customers. Bank are commercially buying and selling gold or gold ornaments from customers on large scale basis. Some bank also provides advisory services to its customers in terms of gold funds, gold ETF etc.

  1. The word ‘Consumer’ is derived from the Latin word ‘Consumere’ which means, to eat or to drink. The consumer is the one who consumes or uses any commodity or service available from natural resources or through a market.

A Consumer means any person who buys any goods, hires any service or services for a consideration which has been paid or promised or partly paid or partly promised or under any system of deferred payments.

We are all consumers when we use any commodity like foodgrains, milk etc. or service like bank, railway, post office, hospital etc.

49. Rights of Consumers

The success of any campaign depends on the consciousness and awareness of the people for whose cause the movement is organised. Consumer’s rights play an important role in their protection and safety. The business aim should be to meet the needs of the consumers and to provide full satisfaction.

Every consumer should be aware of his rights and use of them in his daily life for protection. Consumers have to fight for their rights and put pressure on business, manufacturer and traders for safeguarding their rights.

50. Consumers have the following rights:

(1) Right to Safety: This right protects consumers against products, production processes and services which are hazardous to health or life. It includes concern for consumer’s long-term interests as well as their immediate requirements. According to this right, consumer must get full safety and protection to his life and health. This safety should be in relation to medicines, electrical appliances, food etc. The GOI has given safety standards in the form of Agmark, ISI, BIS, Hallmark etc.

(2) Right to Information: According to this right, consumer should be provided with adequate information about all aspects of goods and services like price, name of manufacturer. contents used, batch number if any, date of manufacture and expiry date, user manual and safety instruction etc.

This right also enables consumer to select right product or service. It is applicable to food products, medicines, spare parts or any other consumer products or services.

(3) Right to Choose: The choices available to Indian consumers across the basket of goods and services have multiplied like telecommunications, travel and tourism, banking, electronics, fast moving consumer goods (FMCG) etc. According to this right, consumer should be given full freedom to select an article as per his requirement, liking and purchasing capacity. The right to choose is related to the concept of free market economy. As per this right, the seller cannot compel consumer to buy particular product and hence monopoly is prevented.

(4) Right to be Head: Every business organisation should listen and solve the complaints of consumers. According to this right, consumers have opportunity to voice their complaint to the consumer forum. Consumers also give suggestions to manufacturer or trader on certain matters such as quality, quantity. price, packaging etc. Now a days, consumers can file online complaints through portal or mobile applications.

(5) Right to Consumer Education: Every consumer has the right to know about consumer rights and solutions to their problems. This right creates
consumer awareness. An aware consumer can make rational choice of goods and services and protect his rights and interests from the exploitation of unscrupulous businessmen. Thus, consumer education becomes a priority concern. It is necessary to give education and training regarding prevailing acts and legal processes. The government, media and NGO’s play vital roles in this regard. e.g., ‘Jago Grahak Jago’ campaign.

(6) Right to Represent: The act provides an opportunity to individuals and consumer groups to represent consumer’s interest before consumer forum. The act allows the consumer to be represented by a person who is not a professional advocate. This provision is in recognition of consumer’s right to represent.

(7) Right to Redress: Along with the right to represent, right of redressal is also given. Only filing of complaint is not enough to give justice to consumers, so this right implies fair settlement of claims. This right enables the consumer to demand repair or replacement or compensation for defective products and for poor services. According to consumer protection act, three tier quasi judicial consumer dispute redressal machinery is established for settlement of claims such as District Commission at district level, State Commission at state level and National Commission at national level. Consumers are protected from business malpractices.

(8) Right to Healthy Environment: All consumers have a right to healthy and clean environment. According to this right, consumer can demand actions against the pollution causing business organisations. All consumers have the right to healthy and clean environment in present and future.