Credit, Debt, and Finance

Reversionary Bonuses are declared regularly and paid at the end (at the time of claim), i.e. on maturity of policy or death of the person. Hence, option (3) is incorrect.

The insurable interest of a mortgagor in the mortgage’s life is equal to the amount of original loan.

If there is any delay in settlement of claim within 30 days other than an early claim, the insurer has to pay bank interest + 2% rate of interest.

If the claim could not be settled for want of proper identification of a payee, the insurer shall pay interest at the rate of savings bank account.

“Liquidation period” refers to the period during which insurer makes annuity payments.

Benefit under a Unit Linked policy is reckoned by the value of the units and the number of units standing to the credit of the unit holder. 

The term life insurance policy purchased under Section 6 of the MWP Act cannot be taken by the creditors.

As the name suggests, perpetuity is a bond or security with no fixed maturity date.

Terminal bonus is also known as persistency bonus which is paid once, i.e. at the time of maturity of the policy. It is a sort of loyalty bonus given to a policyholder for maintaining the policy till maturity.

Restructuring of debts refers to clearing more interest loans and paying them with less interest loans.

Debt restructuring is a process that allows a private or public company, or a sovereign entity facing cash flow problems and financial distress to reduce and renegotiate its delinquent debts in order to improve or restore liquidity so that it can continue its operations. 

No banking company shall pay any dividend on its shares until all its capi­talised expenses (including preliminary expenses, organisational expenses, share-selling commission, brokerage, amounts of losses incurred and any other item of expenditure not represented by tangible assets) have been completely written off.

The term ‘loans and advances’ will not include loans or advances against

Government securities

Life insurance policies

Fixed or other deposits

Stocks and shares

Temporary overdrafts for small amounts, i.e. upto Rs. 25,000.

Casual purchase of cheques up to Rs. 5000.

Housing loans, car advances, etc. granted to an employee of the bank under any scheme applicable generally to employees.

An indemnifier is someone or something that protects another against or compensates for the loss or damage.

Limitation for suit or application for recovery of debts: The limitation for recovery of the outstanding amount in the cash credit account is three years from the last deposit made by the borrower in the account provided the pay in slip is available with the bank. The position is the same so far as overdraft account is concerned. In term loan account, the loan is payable in installments.

Both "overdraft" and "cash credit" can refer to a type of secured line of credit with a lender. These terms can also refer to financial institutions that allow you to withdraw more funds than you actually have in your demand deposit accounts, although the specific functionalities of these allowances can vary. These provisions are sometimes referred to as overdraft protection, while others might be called cash credits. Be aware of the policies at your own bank or credit union, and know what costs are associated with overdrawing on your account.