1. The service sector is growing faster than agriculture and industry. Services have become a major business area. 2. Services are intangible, inconsistent, cannot be inventoried earlier for later consumption, and require customer involvement. 3. Banking services include savings accounts, current accounts, recurring deposits, fixed/time deposits, and multiple option deposits. Digital payment methods are also widespread. 4. Insurance involves the insured paying a premium to the insurer to cover against losses from uncertainties according to principles like utmost good faith and indemnity. Common types are life, fire, marine, and health insurance.

1. By:
Ajay Kumar
BOB
Unit III

2. The role of service sector is growing faster than Agriculture and Industry.
The significance of service sector is gaining momentum and it has
become a major thrust area in the field of business.
FEATURES/NATURE/CHARACTERISTICS OF SERVICES
Intangible
These cannot be seen or touched. Services are purely experiential in
nature.
Inconsistent
Unlike goods, services are not standardised. These have to be performed
according to demands and expectation of each customer.
Inventory
Services cannot be performed earlier to be consumed at a later date,these
are consumed at the same time when they are produced.
Inseparable
These can be separated from provider of Services. These are produced
and consumed at the same place only.
Involvement
The participation of the customer in the service process is must. -

3. DIFFERENCE BETWEEEN :
SERVICES AND GOODS
Sl.
No.
Basis Services Goods
1. Intangible/Tangible Intangible Tangible
2. Inventory Not required Must be
maintained
3. Inseparable Cannot be separated from
providers
Can be separated
from providers
4. Standardisation It is difficult to standardise
and maintain quality
Possible
5. Nature It is an activity or process It is a physical
object.
6. Type Heterogeneous Homogeneous
7. Transfer of ownership Cannot be transferred Can be
transferred

4. TYPES OF SERVICES
 Business Services
These services are used by Business Enterprises to carry on
business activities more smoothly e.g. Banking, Insurance,
transportation, warehousing, communication etc.
 Social Services
Carried voluntarily to achieve social goal.These services
are carried by Govt., business enterprises and NGOs.
 Personal Services
These differ according to service provider.These depend
upon customer demands and preferences e.g. Tourism,
Restaurants etc.

5. BUSINESS SERVICES
The service sector includes commercial Firms engaged in :
 Banking
 Communication
 Transportation
 Insurance
 Warehousing

6. BANKING

7. Meaning
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.

8. Definition
According to Indian Banking Regulation Act
1949 banking means
“Accepting deposits of money from the
public for the purpose of lending or
investments.”

9. Classification of Banks
 Commercial Banks
Commercial banks are governed and regulated by Indian Banking Regulation Act
1949 and according to it banking means accepting deposits from public for the
purpose of lending investment.
 Cooperative Banks
These banks are governed by provisions of State Cooperative SocietiesAct and are
formed to provide loan and advances to its members on easy terms.These are an
important source of rural credit also.
 Specialized Bank:
These Banks are formed to cater to specific needs of Industries, Export Units.There
are Foreign Exchange Banks, Industrial Development Banks, Export Import Banks
etc.
 Central Banks
Central Bank of any country controls, regulates and supervises the activities of
commercial banks. It is known as Banker of Banks, Government’s Bank. It controls
all the credit policy of the country. Reserve Bank of India is the Central Bank of
India.

12. 1. Savings Accounts:
 Savings account is a type of account that can
be opened by a depositor at the bank.This
account is used to deposit money and earn
interest. One of the main benefits is the
liquidity of the saving bank account. A
customer can access the account as per his
requirements, and withdraw money
whenever needed.The bank pays interest on
this account which is less than that of fixed
deposit account.

13. 2. current account
 The current account allows you make limitless
withdrawals in line with the levied cash transaction fees.
These accounts are apt for those who have regular
transactions, especially businessmen.The current
account can also be used for deposits and withdrawals
along with other transactions.These accounts are also
known as demand deposit accounts. However, the
deposits that remain in the current account do not earn
any interest.

14. 3. Recurring Deposit Accounts
 A recurring deposit is a special type of
account that helps depositors invest money
for a fixed period. Recurring deposit is very
popular and the deposits in these accounts
earn compound interest on a quarterly basis.
You can open a recurring deposit account as
the minimum balance required is just Rs 100.
RD account can be opened at any bank or
post office. Longer the tenure of the monthly
deposits higher the interest.

15. 4.Fixed or time deposit
Account:
 Money is deposited in this account for the
fixed period.The depositor gets a fixed
deposit receipt.The money deposited in this
account earns higher interest. Longer the
tenure of the deposits higher the interest.

16. 5. Multiple option Deposit
Account:
 A multiple option deposit account helps enjoy
the liquidity of a savings bank account as well as
get high returns. It is a combination of a fixed
deposit and a savings account, where the
customers can get the benefit of earning higher
interest than savings account as well as enjoy the
liquidity of a savings account. Surplus money in
the savings account is automatically transferred
to the fixed deposit account, thus the higher rate
of interest is earned.

18. Types of Banking Services
 Bank Draft : A bank draft is an instrument issued
by bank for transfer of specified funds to a
specified individual or a company payable at
another branch or another bank at specified
place. It is safer than a cheque as it can be only
withdrawn by the person whose name is written
on the draft.
 Banker’s cheque/Pay order: Pay order is an
instrument issued by bank for transfer of
specified funds to a specified individual or a
company payable at another branch or another
bank within the same city.

19. Types of Banking Services
 RealTime Gross Settlement(RTGS) :RTGS is a
system where funds are transferred through e-
banking, using internet facility. In this system the
funds are transferred from one bank to another
on real time and on Gross basis.
 RealTime means that the transaction is
processed as soon as the instruction are received
.
 Gross basis means that the transaction is settled
on one to one basis without bunching
 The minimum amount for an RTGS transaction is
Rs. 20,00,00.

20. Types of Banking Services
 National Electronic Fund transferred:
Fund transferred through internet using e-
banking facility. Funds are transferred on net
basis where the funds are transferred at a
specified time only.
 Bank Overdraft:
It is a facility where the account holder can
withdraw more than its balance with bank.The
maximum limit of withdrawal is called
overdraft limit.This facility is usually available
to current account holders against a security
deposit.
 Cash Credit : It is a short term loan sanctioned
by the bank against security of property or
current assets like debtors and Stock.

21. E- banking
E-banking or internet banking
means any user with a pc and
browser can get connected to
the banks website to perform
any of the virtual banking
functions and avail of any of
the bank’s services. Individual
can transfer fund through
NEFT or RTGS,withdraw funds
using ATM etc.

22. method of Digital Payments

23. Credit/Debit Card:
Debit card: Plastic card used to make payments
without any physical exchange of money. Debit
card can make payment upto the amount of
balance in the debit card holder’s bank account.
With the help of debit card money can
withdrawn from ATM.
Credit Card : Plastic card issued by bank which
makes payments for account holder up to the
maximum credit limit assigned by the bank. the
customer has the facility to pay the credit card
bill within due date.

24. Unified Payments Interface
(UPI)
UPI or Unified Payments Interface is one of the
most innovative Digital Payments solutions.
Money sent in real-time to anyVPA ID (virtual
payment address) from one Bank Account to
another bank account through your mobile
number already registered with your Bank
Account.

25. Unstructured Supplementary
Service Data (USSD)
 USSD is one of the offline processes of the
Digital payments system in India. Perform
Different banking tasks by dialing *99#
which works on the mode of Unstructured
Supplementary Service Data (USSD).The
services avail of by this mode are balance
inquiry, mini statement, and FundTransfer
through MMID.

26. Aadhaar Enabled Payment
System(AEPS
 By this Digital payment mode, money can be
transferred between two Aadhaar linked
Bank Accounts or withdraw money if Account
is linked with Aadhaar Card. All the
transaction made by this process has to go
through the biometric authentication.

27. Mobile Wallet
 The popularity of mobile wallets has increased
many folds during recent times and it is one of
the most used Digital Payment modes in India.
The reason is anyone can create a Mobile wallet
just by downloading and installing the App.
Money are kept in a digitalized form in the
MobileWallet. Many Mobile wallet providers in
India also run different types of rewards or cash
back programs if the transaction made from the
Mobile Wallet. E.g. Paytm, Amazon Pay, Phone
pay etc.

28. Insurance
 Insurance is a service which covers the risks
and minimizes loses caused by uncertainties.
It is the contract between an individual or a
business and an insurance company where in
the insured pays a premium to the insurer to
cover for the insured loss.

29. Principles of
insurance

30. 1. Utmost good faith: According to this, it
is the duty of the insured to voluntarily
disclose all the facts and binding on the
insurer to disclose all material facts about
the subject matter of the proposed
insurance.
2. Insurable Interest : The insured must
have insurable interest in the subject
matter of the insurance and should suffer
financially on the happening of the event
against which he/she is insured.

31. 3. Indemnity: The insurer undertakes to
compensate the insurer for the loss and
the loss is measured in terms of money.
This is done to put the insured in the
same position as he/she was before
happening of the event.
4. Proximate cause: When the loss is the
result of two or more causes, the most
proximate, means the most dominant,
effective and direct cause is taken into
consideration.

32. 5. Subrogation: After the insured is
compensated for the loss the right of
the ownership of the property passes
to the insurer.
6. Contribution: It implies that, in case of
double insurance, the insurers are to
share the losses in proportion to the
amount assured by each of them.
7. Mitigation: It implies that it is the duty
of the insured to take reasonable
steps to minimise the loss or damage
to the insured property.

33. Types of Insurance
 Life Insurance :
Life insurance provides assurance to individuals
to pay an agreed amount in the event of
death,illness,disabillity or maturity of the
policy.
Types of life insurance:
 Whole life policy : policy for the entire life of
the assured.
 Endowment Life Assurance policy: It is an
insurance policy for a fix period of time.

34. Types of Insurance
 Fire Insurance: Insurance policy where the
insurer agrees to compensate the insured
against loss .due to fire.
 Marine Insurance: Insurance policy wherein
the insurer agrees to compensate the insured
against direct or indirect loss caused by or in
the sea.
Types of Marine Insurance:
 Ship or hull insurance : It cover loss caused
to the ship
 Cargo Insurance: Covers for the loss of cargo
while being shipped.
 Fright insurance: Covers loss of freight to the
shipping

35. Types of Insurance
 Health Insurance: Health insurance is
insurance that covers the whole or a part of
the risk of a person incurring medical
expenses.

36. DIFFERENCE BETWEEN LIFE, FIREAND
MARINE INSURANCE
Basis Life Insurance Fire Insurance Marine
insurance
1 Subject
Matter
Human life Any physical
property or
assets
Ship, cargo or
freight
2 Element Protection and
investment or
both
Only protection
not investment
Only
protection not
investment
3 Loss
measur
ement
Not
measurable
Measurable Measurable

37. 4 Insurable
interest
Insurable
interest must
be present at
the time of
effecting the
policy but not
necessary at
the time when
claim falls
due.
Must be
present both at
the time of
effecting the
policy but not
necessary at
the time when
claim falls due.
Must be
present at the
time effecting
the policy or
when claim
falls due.
5 Duration Exceeds 1
year and for
longer period
from 5 to 30
years or
whole life.
Doesn’t exceed
1 year
Exist for 1 or
period of
voyage or
mixed.

38. 6Indemnity Not based on
the principle
of indemnity.
Based on the
principle of
indemnity.
Based on the
principle of
indemnity
7Surrender
value
Has a
surrender
value
Doesn’t has a
surrender value
Doesn’t has a
surrender value
8Contingen
cy of risk
Element of
certainty . The
event i.e.
death or
maturity of
policy bound
to happen.
Element of
uncertainty.
Destruction by
fire may not
happen.
Element of
uncertainty.
Loss at sea may
not occur.
9Policy
amount
Insure for any
amount
Amount can’t be
more than the
value of subject
matter
Amount can be
the market
value of the ship
or cargo.

40. DOUBLE INSURANCE
Double insurance refers to a situation
in which the same risk and subject matter,
is insured more than once. Loss will be
shared by all the insurers in proportion of
the sum insured.

41. THANK YOU