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 BUSINESS SERVICES

SERVICES

Services are essentially intangible and their purchase does not result in
ownership of anything physical. for example you can seek advice from a
doctor.

GOODS

A good is a physical product capable of being delivered to A purchase

and involves the transfer of ownership from the seller to customer.

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 TYPES OF SERVICES

1. Business services are those which are used by Business Enterprises for
the conduct of their business activity for example banking, insurance,
transportation warehousing and communication services.

2. Social services- these services are generally provided voluntarily to

achieve certain social goals for example to improve the standard of
living for weaker section of society, to provide educational services, to
provide Healthcare and hygienic conditions these services are provided
by NGOs and some government agencies.

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3. Personal services- these are
those services which are experienced differently by different customers
they cannot be consistent in nature for example tourism, residence and
other recreation services.

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 NATURE OF SERVICES

1.Intangibility- services are intangible that is there cannot be

touched and their experiential in nature. quality of the offer can open
not to be the mind before consumption and purchase for example
doctors treatment, movie experience etc.

2.Inconsistency- different customers have different demands and

Expectations services have to be performed exclusively each time for
example mobile services

3.Inseparability- ATMs are used for cash withdrawal and cheque deposit
and the interaction between the ATM and the customer is complete with
the presence of the customer.

4.Inventory- services cannot be stored for future use at best only

associated goods can be stored for example railway ticket can be
stored but the experience of the railway journey cannot be stored.

5.Involvement- the participation of the customer is refractory in the

Service Delivery process the customer can also get the services modify
the going to the specific requirements for example to add more
chocolate in chocolate ice cream.

CATEGORIES OF BUSINESS SERVICES

1. Banking
2. Insurance
3. Postal and telecom services

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4. Warehousing

5. Transportation.

BANKING

A bank is an institution which attracts money on deposits for the purpose

of being lent to industry or trade . A bank lends what it borrows from
others . A bank is buyer and seller of money.

Banking means “accepting deposits of money from the public for the
purpose of lending or investments.

Types of Accounts -

1. Savings deposit account- a person can open a savings deposit

account by depositing a small sum of money. He can withdraw the
money from his account whenever needed and can deposit whenever
surplus is available. 


2. Current Deposit Account- Current deposit accounts are opened by

businessmen. The account holder can deposit and withdraw money

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 whenever desired. 


3. Recurring deposit account- a depositor can deposit a fixed amount

say Rs.100 every month for a a fixed period. This amount together
with interest is repaid on maturity . 


4. Fixed deposit account- A fixed deposit is repayable after the expiry

of the specified period. The period may vary from six months to five
years.longer the period of deposit , higher the rate of interest.

5. Multiple Option Deposit Account- this account offers multiple options

to depositors. This account can be with savings a/c or current a/c .in
this account the depositor can enjoy the liquidity of savings and
current a/c and rate of interest of fixed deposit.

SOME IMPORTANT SERVICES PROVIDED BY BANKS

1. BANK DRAFT- This is a cheque drawn by one bank against funds

deposited into its account at another bank , authorising the second
bank to. Make payment to the individual whose name is written on
the draft . It is a financial instrument through which money can be
remitted from one person to other . A bank draft can be obtained
from. Bank after depositing the required amount in the bank. The
bank also charges some commission for issuing bank draft. 


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 2. BANKERS CHEQUE (pay order) - This document which instructs a
bank to pay a certain sum to a third party. Such orders are normally
acknowledged by bank which provides a guarantee that the
payment will be made. 


3. OVERDRAFT- Under this arrangement a customer having current

account is allowed to withdraw more than thebalance inns account .
He can overdraw upto a specific limit and for an agreed period.

4. CASH CREDIT- under this arrangement the borrower is allowed to

withdraw upto certain limit against security. 


5. SHORT/MEDIUM/LONG TERM LOAN- a loan is lump sum advance

repayable on expiry of a specified period. It may be secured or
unsecured . the loam may be paid back by the borrower in
installment. 


TYPES OF DIGITAL PAYMENT/ELECTRONIC FUNCTIONS OF BANK/E-

BANKING



1. Debit Card

2. Credit Card

3. National Electronic Fund transfer 4. Real time Gross Settlement

5. Automated Teller machine

6. E-cash / Digital Cash

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 INSURANCE SERVICES

Insurance is a device by which the loss is likely to be caused by an

uncertain event is spread over a number of persons who are exposed to
it and who prepare to insure themselves against such an event. It is a
contract or agreement under which one party agrees in return for a
consideration to pay an agreed amount of money to another party to
make a loss, damage or injury to something of value in which the
insured has a pecuniary interest as well as a result of some uncertain
event . The agreement / contract is put in writing and is known as
policy . The person whose risks is insured is called insured and the firm
which insures the risk of loss is known as insurer/ assurance
underwriter .

PRINCIPLE OF INSURANCE

1. PRINCIPLE OF UTMOST GOOD FAITH- according to this principle.

Insurance is a contract based on faith. The insured and insurer must
disclose all the material facts to each other and both the parties
should not hide any fact from each other . If the insured hides any
material fact from the insurance company and later on the insurer
comes to know about it , then he can refuse to pay compensation .
Failures to make disclosure of material fact by the insured makes the
contract of insurance voidable at the discretion of the insurer. 


2. PRINCIPLE OF INSURABLE INTEREST- according to this principle the

insured must have an insurable interest in the subject matter of
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 insurance policy. Without interest taking a n insurance policy is a
gamble and fraudulent activity and law does not permit it. In case of
life insurance the insurable interest comes with the relation of insured
with the person. Taking insurance policy.

3. PRINCIPLE OF INDEMNITY- according to this principle , insurance is

not a contract of making profit. The purpose of insurance is t bring
back the insured in the sam financial position as he was before the
loss. For eg. a person insured his factory for rs 4 lakhs against fire.
Due to fire he suffered a loss of 2 lakh , then he insurance company
will compensate hims rs 2 lad only and not the policy amount the is 4
law. Because the purpose of insurance is to compensate for loss and
not for earning profit. 


4. PRINCIPLE OF CONTRIBUTION - the principle of contribution is

corollary to principle of indemnity. According to this principle. If a
person has taken more than one insurance policy for the same
subject matters then all the insurers will contribute the amount of loss
and compensate him for the actual amount of loss. Separately he
cannot claim total loss from each insurer. 


5. PRINCIPLE OF SUBROGATION- according to this principle, after

paying the compensation , the insurer steps into the shoes of the
insured. In other words, when the insured is compensated for the loss
or damage to the property insured byh er/hi,, the right of ownership
of such property passes on to the insurer. 


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 6. PRINCIPLE OF CAUSA PROXIMA- according to this principle the
cause or reason for the loss must be related to the subject matters of
the insurance contract. If loss is due tO some other cause then the
insurr can deny to pay the compensation.

TYPES OF INSURANCE

A. Life insurance

B. Fire insurance

C. Marine insurance

D. Health insurance

LIFE INSURANCE



In life insurance , the insured has to pay a fixed amount of premium and
i n return the compensation is assured at his death or at the maturity
period whichever comes earlier.

Kinds of life insurance policy-

1. Whole life policy- in this type of policy , the amount payable to the
insured will not be paid before the death of the assured. The same
then becomes payable only to the benefeciaries or heir of the
deceased. 


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 2. Endowment life assurance policy- the insurer undertakes to pay a
specified sum when the insured attains a particular age or on his
death which ever is earlier. The sum is payable to his legal heir/ or
nominee named therein in case of death of the assured. otherwise
the sum will be paid to the assured after fixed period.

Apart from these two categories of policies there are various other kinds
of life insurance policy by various companies such as LIC .


FIRE INSURANCE

Fire insurance is a contract under which one party in return for a

consideration agrees to indemnify the other party for the financial loss
which the latte may suffer due to damage to the property insured by fire
during a specific period of time and upto a specific amount . The
contract containing the terms and conditions is knwon as policy.

Kinds of fire insurance-

1. SPECIFIC INSURANCE- under this policy the insurer agrees to make

good the loss or damage by fire to the property insured upto the
amount specified against that particular property in the policy. 


2. DOUBLE INSURANCE- When more than one policy is taken to cover

the same risk then it is known as double insurance. A person is free
to take any number of fire policies for the same property but he
cannot recover more than the loss amount or more than the value of
insured property or more than the policy amount from all the

P A G E 11 THEEXTRACL ASS.COM
 insurers. 


3. Reinsurance- under this, insurer enters into another contract of

insurance with another insurer for the whole or a part of risk covered by
first insurer. Sometimes the amount of risk covered is too high and after
that entering into contract the insurer may enter into another contract
with another insurer called reinsurer it is a kind of sub- insurance.

MARINE INSURANCE



It is defined as an arrangement under which the insurer undertakes to
indemnify the insured in the mannered to the extent thereby agreed
against marine losses. Marine risk are the perils of sea e.g storm ,
collision, capture , seizure , sinking of ship etc.

Different types of marine insurance policies are-

1. CARGO INSURANCE- this form of marine insurance includes the

cargo or the goods contained in the ship and the personal
belongings of the crew and passengers. 


2. HULL INSURANCE- In such type of insurance the whole ship is

insured. It covers the insurance of the vessel and its equipment I.e
furniture , fittings , tools, machinery , fuel , engine. 


3. FREIGHT INSURANCE- such insurance provides protection against

the loss of freight . In many cases the owner of the goods pays the

PA G E 12 THEEXTRACL ASS.COM
 freight only when goods reach their destination. 


HEALTH INSURANCE

Health insurance provides for the payment of medical expenses in case

of illness of the insured person and his family. It provides the following
types of coverage-

1. Basic medical expenses.

2. Major medical expenses

3. Long term hospitalisation

4. Medical supplement

5. Disability income


POSTAL AND TELECOM SERVICES

A)POSTAL SERVICES- The government at national and international level

provides postal services.

Features of postal services-

I. All the postal services are controlled by the government.

II. The postal department provides services at national as well as

international level.

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III.Postal services are highly reliable.

IV.Post offices also provides an important services of telegraphic
communication.

Drawbacks of postal services-

1. Slow in speed

2. Bureaucratic in nature.

The services provided by postal department are broadly categorised as

follows

1. Financial facilities- Various schemes are offered by post offices such

as public provident fund, Kisan vikas part and national Savin g
certificate . 


2. Mail services- Mail services consist of transmission of articles from

one place to another along with normal transfer registration facility. 


B) TELECOM SERVICES-

They are the backbone of every business activity. In the absence of

telecom services every business activity will remain as a dream only.

The types of telecom services are-

I. Cellular mobile service -it includes all mobile telecom services

including voice , non-voice, messages data services and PCO etc. 


PAG E 14 THEEXTRACL ASS.COM

 II.Radio paging services- it is an affordable mean sof communication. It
transmits information to persons even when they are mobile . It is a
way of nfrmaetion broadcasting solution . Radio paging services are
availableincluding tone only, numeric only and alpha/numeric
paging.

III.Fixed line services- these are primarily connected through fibre optic
cables laid across the country. They provide interconnectivity with
other type of telecom services.

IV.Cable services- these are linkage and switched services within

licensed area of operation to provide entertainment services. It
includes two way communication.

V. DTH Services- it is a direct satellite based media service provided by

cellular companies. To receive this service , one needs a small dish
antenna and a set top box.

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 WAREHOUSING SERVICES

It means holding and preservation of goods from the time of their

production or purchase and until their sale or use. It is concerned with
the establishment , maintenance and management of warehouses for the
storage of goods. Warehousing enables businessmen to produce goods
throughout the year and sell them whenever there is adequate demand.

PAG E 16 THEEXTRACL ASS.COM

 TRANSPORTATION

It comprises freight services together with supporting and auxiliary

services by all modes of transportation, I.e rail, road , air , sea for the
movement of goods.and international carriage of passengers.
Transportation removes the hindrance of place I.e it makes goods
available to the consumer from the place of production.

PA G E 17 THEEXTRACL ASS.COM