MID TERM EXAMINATION

Spring 2020 Total Marks: 25

Course Name: Company Law Student Name: Registration ID:

Guidelines for students

1- Students will be evaluated on the submission of completed assignment

2- Students has to submit the required assessment within due date
3- If any students have a query they can contact to academic department during 10 AM to 12 PM during week
days.

1- Define the term bank and briefly define the three type of bank? (8 Marks)
Bank:
The term bank is also referred to financial institution which deals in different services related to
money. People can get loans from the banks and they can also save their money into their
account. The three different types of banks which are defined below:
1. Saving bank
2. Agricultural Bank
3. Industrial Bank

1. Saving bank:
Saving banks perform the useful services of collecting small savings. Commercial bank also
runs saving department to mobilize the savings of men of small means.
2. Industrial Bank:
Industrial banks also plays key role for industrial sectors. These banks perform the functions of
advancing loans to industrial undertaking. An industry requires huge capital for purchasing of
machinery and equipment. Industrial banks have their own large capital. They also receive
deposits for long period due to which they are in position to provide with loans for long period.
3. Agriculture of banks:
The main aim of agricultural Bank is to provide funds to farmers. Cooperative principle is used
in agricultural Bank. The farmers requires long-term loan to buy land or for permanent
improvements. This type of loan can be acquired by Land development Banks. Moreover,
farmers also require short term loan for purchasing implements, fertilizers and seeds which can
be acquired by cooperative societies and cooperative banks.
2- Explain the functions of modern commercial bank (5 Marks)
Functions of commercial banks:
Commercial banks performs various functions such as saving accounts, loans etc. some
functions of commercial banks are explained below.
 a) Accepting deposits:
Commercial banks accept deposits in three forms.
1) Saving deposits
In order to encourage savings in the economy, the commercial bank accept small deposits
from individuals or households.
2) Time deposits
The commercial bank also allows deposits for fixed time but carries high rate of interest as
compared to savings deposits.
3) Current deposits:
This type of account holders does not need to pay any kind of interest. The bank therefore,
undertakes the obligation of paying all cheques against deposits subject to the availability of
sufficient funds in the account.
b) Lending funds:
The commercial bank also lends funds to their customers in the form of cash credit, loans and
advances and discounts etc.
3- What is credit control? Explain different methods of credit control? (7 Marks)
Credit control:
Credit control is the system used by banks to negotiate repayment plants, making sure
customers pay invoices promptly. It also decides which customer should be offered loan and it
also setup credit terms and conditions.
Methods of credit control:
There are two methods of credit control quantitative and qualitative
Quantitative method includes:
1. Bank rate
2. Open market operations
3. Variable reserve ratio
Bank rate:
Bank rate is referred to the amount that is set up by the central bank for the commercial bank,
when commercial bank borrows loan from Central Bank. It is the rate of interest that is to be
paid by commercial bank to Central Bank. The whole market is affected, if the interest rate of
the bank is changed.
Open market operations:
The securities which are bought by the central bank from the commercial bank are referred to
open market operations. When the central Bank buys securities from commercial bank, the
commercial bank has the flow of cash and then they can offer more credits to their clients.
Qualitative method includes:
1. Margin requirements
2. Credit rationing
3. Regulation of consumer credit
4. Moral suasion
Margin requirements:
Marginal requirement refers to the difference between the current value of the security offered
for loan and the value of loan granted.
 Moral suasion:
Under this method, moral influence is used by Central Bank upon the commercial bank. It is
referred to give advices, suggestions and Persuasion to commercial Bank to corporate with
Central Bank.
4- Who is company director? Briefly explain the provision relating to the appointment of directors
(5 Marks)
Director:
Director is a person who is responsible for monitoring and managing business affairs and
managing company's productivity to in best possible manner. The director is the person who is
in charge of the organisation.
Appointment of directors:
The directors of the company can be appointed by various ways which are given as under.
I. Appointment of director by signatures to the memorandum. ( Section. 254 and clause
64 of table A)
II. Appointment of director by company in the general meeting (section. 255 to 257, 263
and 264)
III. Appointment of directors by board of directors (section 260, 262 and 313)
IV. Appointment of directors by third parties
V. (Section 255)
VI. Appointment of directors by proportional representation (section 265)
VII. Appointment of directors by the central government (section 408).