This document provides an overview of services as a sector of business and various service-related topics. Some key points: - Services are intangible, inconsistent, inseparable from their production and consumption, and have no inventory. They involve customer participation. - Services differ from goods in being intangible, inconsistent, inseparable from production and consumption, and having no inventory. - Types of services include business services, social services, and personal services. - Banking is described as accepting deposits that are repayable on demand. Types of banks and their functions are outlined. - E-banking services like ATMs, EFTs, credit cards, and their benefits are summarized

1. Plus One
Business Studies

2. Chapter - 4
Service Sector
and Business
Ajith Kanthi Wayanad
www.hssplustwo.blogspot.com

3. Nature of
Services

4. Nature of Services
Intangibility
Services are intangible
It cannot touch or taste
Eg: The service of a Doctor
1

5. Nature of Services
E.g. Service given by the mobile service providers
2 Inconsistency
Always changing based on the demands and
expectations of different customers as and
when it is needed

6. Nature of Services
Inseparability
Services are produced and consumed
at a time
But in case of goods it is not so
3

7. Nature of Services
No Inventory
No tangible components in services,
hence cannot be stored for future use
4

8. Nature of Services
Involvement
Participation of the customer in the service
delivery process is a must
5

9. Differences Between
Services and Goods

10. Services Vs. Goods
1
GoodsServices
Activity or
Process
Physical
Object

11. Services Vs. Goods
2
GoodsServices
Intangible Tangible

12. Services Vs. Goods
3
GoodsServices
Inconsistent
(Different
customers
different
demands)
Consistent
(All customers –
standardized
products)

13. Services Vs. Goods
4
Services
Inseparable
(Production &
Consumption at
a time)
Goods
Separable
(at different
times)

14. Services Vs. Goods
5
GoodsServices
No
Inventory
It has
inventory

15. Services Vs. Goods
Services Goods
Activity or Process Physical Object
Intangible Tangible
Inconsistent Consistent
Inseparable Separable
No inventory It has inventory

16. Types of Services

17. Business Services1
They provide services to business enterprises
for the conduct of their activities
Banking, Insurance, Transportation, Warehousing etc.
Types of Services

18. 2 Social Services
Services rendered voluntarily to achieve
certain social goals
For improving the standard of living of weaker sections of
society or providing education, health care etc.
Medical Camp
Types of Services

19. 3 Personal Services
They differ based on the tastes and
preferences of customers
E.g. Tourism, recreation, resorts etc.
Tourist Guide
Types of Services

20. Business
Services

21. Banking
1

22. Banking
Accepting for the purpose of lending or investment
of deposits of money from the public, repayable on
demand or otherwise and may be withdrawn by
cheque, draft or otherwise
Banking Regulation Act 1949
Business Services

23. Types of Banks

24. Commercial
Banks
Cooperative
Banks
Specialised
Banks
Central
Banks
Types of Banks

25. Commercial Banks
Institutions dealing in money and credit
Governed by Indian Banking Regulation Act 1949
1
Types of Banks

26. Types of Commercial Banks
Public Sector Banks Private Sector Banks
Types of Banks

27. Public Sector Banks
Owned and managed by the government to
channelize bank credit with national priorities
a
Types of Commercial Banks

28. 1969
14 Banks nationalized by Government of India
1980
Another 6 Banks nationalized
Total 28 public sector banks in India
Public Sector Banks

29. Private Sector Banks
Owned and managed by private parties
Governed by the RBI
b
Free to develop their own policy decisions
regarding banking operations
Types of Commercial Banks

30. Private Sector Banks
34 private sector banks are their in India
IDBI, ICICI, Federal Bank, Catholic Syriyan
Bank, Dhanalkshmi Bank etc.
ICICI Bank is the largest private sector
bank in India

31. Types of Banks
Cooperative Banks
Banks organized based on cooperative
principles
They are governed by the provision of State
Cooperative SocietiesAct
It is an important source for rural credit.
2

32. Types of Banks
Specialized Banks
Organized to render specific services
to the public
Eg., Foreign Exchange Banks, Industrial
Banks, Export-Import (EXIM) Banks etc.
3

33. Types of Banks
Central Banks
● Bankers’ bank
● Controls and regulates the operations of all
commercial banks in the country
● Banker to the government and controls the
currency and credit policy of the country
● The Reserve Bank of India is the central bank
of our country established in 1935
4

34. Functions of
Commercial Banks

35. Primary Functions Secondary Functions
Functions of Commercial Banks

36. Primary Functions
Functions of Commercial Banks

37. Primary Functions
Accepts deposits from the public in the form Fixed
Deposits, Savings Bank Deposits, Current
Deposits, Recurring Deposits etc.
Accepting Depositsa

38. Primary Functions
It is the main business of commercial banks and
the interest charged on such advances is the
main source of income
Lending of Fundsb
It may be in the form of cash credit, overdraft,
discounting of bills, term loans etc.

39. Secondary Functions
Functions of Commercial Banks
It includes agency services and
general utility services
Agency services are offered to the customers and
general utility services to the public

40. Secondary Functions
Cheque Facility
Collection of cheques is an important service
provided by the banks to its customers
a
Crossed cheques (en-cashed through account only)
and
Bearer cheques (en-cashed at the bank counters)

41. Secondary Functions
Transfer of funds from one account to another is
made possible by issuing demand drafts (DD)
Remittance of Fundsb

42. Secondary Functions
It includes Payment of insurance premium,
telephone charges etc. and the collection of
dividend, interest etc.
Allied Services (Personal Services)c
Insurance premium

43. E - Banking

44. E – Banking
Electronic banking or internet banking
Any user can get connected to the bank’s website
to perform banking operations and services with
help of a computer or mobile phone

45. E – Banking
Services

46. E – Banking Services
ATM – Automated Teller Machinea

47. E – Banking Services
EFT – Electronic Fund Transferb

48. E – Banking Services
PoS – Point of Salec

49. E – Banking Services
EDI – Electronic Data Interchanged

50. E – Banking Services
Credit Cardse
CREDIT CARD

51. Benefits of
E – Banking

52. Benefits of E – Banking
Any Time Servicea
Providing round the clock service

53. Benefits of E – Banking
Anywhere Bankingb
Either at home or at office

54. Benefits of E – Banking
Creates Financial Disciplinec

55. Benefits of E – Banking
Less Risk and Greater Securityd
Risk of handling cash reduced

56. Benefits of E – Banking
Workload on Branches Reducede

57. Insurance
2

58. Insurance
Contract in writing whereby one party, called the
insurer agrees in consideration of either a single or
a periodical payment called the premium to
indemnify another party called the insured against
loss or damage resulting on the happening of a
specified event or events

59. Insurance at a glance
Insurance
Insured
Indemnity
Premium
Subject
Matter
Contract
Policy
Insurer

60. Functions of
Insurance

61. Functions of Insurance
Providing Certainty1
Insurance provides certainty of payment when
loss occurs

62. Functions of Insurance
Protection2
Insurance creates a sense of security to the insured

63. Functions of Insurance
Risk Sharing3
The risk of loss can be shared among all the
policy holders

64. Functions of Insurance
Assist in Capital Formation4
The fund collected by way of premium can be
invested in various income generating schemes
This results in capital formation

65. Principles of
Insurance

66. Principles of Insurance
Utmost Good Faith1
While entering into a contract of insurance, all the
material facts are to be disclosed,
otherwise it will become void

67. Principles of Insurance
Insurable Interest2
The insured must have an interest on the subject
matter of insurance, otherwise the contract of
insurance become void
E.g. A person who has advanced money on the security of
a house, has an insurable interest on that house

68. Principles of Insurance
Indemnity3
All insurance except life insurance and personal accident
insurance are based on the principle of indemnity
Insured is entitled to get only the actual amount of loss
suffered by him and it will not be a source of profit

69. Principles of Insurance
Causa Proxima (Proximate Cause)4
Nearest cause will be considered for compensation
Insured can recover the loss only when it is caused
by any of the risk insured against

70. Principles of Insurance
Subrogation5
After the payment of loss, the whole right of the
property is entitled with the insurer
The insured should not make any profit by selling
the damaged property

71. Principles of Insurance
6 Contribution
When the same subject matter is insured with
different insurers the actual amount of loss is
divided among various insurers
Liability of one insurer =
Sum insured with that insurer / Total sum insured X Loss

72. Principles of Insurance
7 Mitigation of Loss
It is the duty of the insured to take preventive
measures to minimize the loss of the property
If any expenses are incurred by him for such activities, he is
entitled to get that much of amount along with the
compensation from the insurance company

73. Types of
Insurance

74. Types of Insurance
Types of Insurance
Life Insurance General Insurance
Marine Insurance Fire Insurance Other Insurance

75. Life Insurance
1

76. Types of Insurance
Life Insurance
A person can take a life policy on his own life or on
the life of another person
Eg. Husband on the life of his wife

77. Life Insurance
The person who insures his life is called the
assured
Here a specified amount of money is payable on the death of
insured or on the expiry of the specified period

78. Types of Insurance
LIC enjoyed monopoly of life insurance business
till the end of 2000
Now we have a lot of private insurance companies

79. Elements of
Life Insurance

80. Elements of Life Insurance
Valid Contract
Life insurance contract must fulfil all the essential
conditions of a valid contract
a

81. Elements of Life Insurance
Utmost Good Faith
The insurer and the insured must disclose all
material facts to each other
b

82. Elements of Life Insurance
Insurable Interest
The insured must have insurable interest in the life of
assured at the time of taking policy, it is not needed
at the time of maturity
c

83. Elements of Life Insurance
Not a Contract of Indemnity
The life of a human being cannot be compensated in
terms of money
d
So that the amount payable to the insured on the
happening of the event is fixed in advance

84. Types of
Life Insurance
Policies

85. Types of Life Insurance Policies
Whole Life Policy
This policy taken for one’s whole life and the
payment will be made to the legal heirs.
a
Even if the premium is payable for a fixed period, say 20
years, the policy will continue till the death of the assured

86. Types of Life Insurance Policies
Endowment Policy
This policy taken for a specific period
e.g. 20 yrs. 15yrs. etc.
b
Insurance company undertakes to pay a fixed sum
when the assured attains a particular age or on his
death whichever is earlier

87. Types of Life Insurance Policies
Joint Life Policy
Policy taken out jointly by two or more persons
Premium can be paid jointly or by any of them in
instalment or lump sum
c
This policy matures either on the death of any of the
assured or at the expiry of the period

88. Types of Life Insurance Policies
Annuity Policy
In this policy, the assured gets a regular payment
after he attains a particular age (pension plan)
d
The premium is paid either in instalment for a
definite period or as a single premium

89. Types of Life Insurance Policies
Children's Endowment Policy
This policy is taken by a person to provide funds for
the education or marriage of his / her children
e
If the parent dies before the maturity, the policy
will continue to exist even without the payment of
further premium

90. Fire Insurance
2

91. Fire Insurance
Fire insurance policy is a contract in which the
insurer agrees to pay the loss or damage caused by
fire to the insured
This contract exists only for one year

92. Fire Insurance
The claim for compensation should satisfy the
following conditions:
● There must be an actual loss
● The fire is accidental and non-intentional

93. Elements of
Fire Insurance

94. Elements of Fire Insurance
Insurable Interest
The insured must have insurable interest on the
subject matter of insurance
It must be present both at the time taking policy and
at the time of loss
a
Eg. A house property mortgaged to a bank

95. Elements of Fire Insurance
Utmost Good Faith
The insurer and the insured must disclose all
material facts to each other
b

96. Elements of Fire Insurance
Indemnity
Indemnity is the protection against loss
c
In the event of loss the insured can recover only
the actual loss and not the policy amount

97. Elements of Fire Insurance
Proximate Cause
The insurer is liable to compensate only when the
loss is due to fire
d

98. Marine Insurance
3

99. Marine Insurance
It is a contract whereby the insurer agrees to
indemnify the owner of a ship or cargo against risks
which are incidental to marine adventure in
consideration of premium

100. Marine Insurance
It covers a variety of risks like sinking or burning of
the ship, spoilage of the cargo, freight loss etc.
The subject matter of the insurance may be the ship,
the cargo and the freight

101. Types of
Marine Insurance

102. Types of Marine Insurance
Ship or Hull Insurance
The subject matter of insurance in this case is the
hull or ship
a

103. Types of Marine Insurance
Cargo Insurance
Here the cargo is insured
b
Cargo means goods in the ship

104. Types of Marine Insurance
Freight Insurance
It covers the risk of loss of freight by shipping
companies in the event of loss or
destruction of goods
c

105. Elements of
Marine Insurance

106. Elements of Marine Insurance
Contract of Indemnity
The insured can recover the actual loss if occurred
a

107. Elements of Marine Insurance
Utmost Good Faith
The insurer and the insured must disclose all
material facts to each other
b

108. Elements of Marine Insurance
Insurable Interest
Insurable interest need not be present at the time of
taking policy, but it must exist at the time of loss
c

109. Elements of Marine Insurance
Proximate Cause
The insurer should compensate the insured by
considering the nearest cause for damage, which
must be covered by the policy
d

110. Differences between
Life, Fire and Marine
Insurance
Ajith Kanthi Wayanad
www.hssplustwo.blogspot.com

111. Differences
Risk1
Maturity or
death is sure
Risk is
uncertain
Risk is
uncertain
Life Ins. Fire Ins. Marine Ins.

112. Differences
Period2
Log term
contract
Short term
(1 year)
Short term
(1 year)
Life Ins. Fire Ins. Marine Ins.

113. Differences
Insurable Interest3
Life Ins. Fire Ins. Marine Ins.
Must be
present at the
time of taking
the policy
but not
necessary at
the time of
death
Needed only
in the event
of loss
Must be
present on
taking policy
and at the
time of loss

114. Differences
Premium4
Life Ins. Fire Ins. Marine Ins.
Premium paid
is returned
with or
without
bonus to the
insured
Will not be
returned
Will not be
returned

115. Differences
Payment of Premium5
Life Ins. Fire Ins. Marine Ins.
Monthly,
quarterly,
half-yearly
or yearly
instalments
At the time of
taking policy
At the time of
taking policy

116. Differences
Indemnity6
Life Ins. Fire Ins. Marine Ins.
Not
applicable,
as loss on
the death
cannot be
measurable
Loss can be
measured
and the
insured is
indemnified
Loss can be
measured
and the
insured is
indemnified

117. Differences
Objective7
Investment
and
protection
Protection
against loss
only
Protection
against loss
only
Life Ins. Fire Ins. Marine Ins.

118. Differences
Surrender Value8
It has
surrender
value
No surrender
value
No surrender
value
Life Ins. Fire Ins. Marine Ins.

119. Differences
9
Can enjoy the
benefit of
double
insurance
No ChanceNo chance
Double Insurance
Life Ins. Fire Ins. Marine Ins.

120. Differences
Policy Amount10
One can
insure for
any amount
Only up to the
value of
property
Only up to the
value of
property
Life Ins. Fire Ins. Marine Ins.

121. Other Insurance
or
Miscellaneous Insurance

122. Other Insurance
Health Insurance
Reimbursement of expenses due to hospitalization
because of illness
1

123. Other Insurance
Motor Vehicle Insurance
Protection against loss to vehicle, passenger or third
parties due to motor accident
2

124. Other Insurance
Burglary Insurance
Protection against loss by theft or
house breaking
3
It covers the risk of loss to stock, cash in safe and
properties in the business premises

125. Other Insurance
Cattle Insurance
To cover the loss due to death of animals like bulls,
buffaloes, cows etc.
4

126. Other Insurance
Crop Insurance
To support the farmers due to crop failures due to
draught or flood
5

127. Other Insurance
Sports Insurance
To give protection for amateur sportsmen by
covering their sports equipments, legal liability and
personal accident
6

128. Other Insurance
Third Party Insurance
This policy covers the risk of liability that may arise
because of damage to the property of a third party
and the risk of personal injury to such persons
7
1st
party – Insured, 2nd
party – Insurer, 3rd
party - Outsider

129. Other Insurance
Employer's Liability Insurance
It is intended to protect an employer against any
liability due to death or injury to his employees
during the course of employment
8

130. Other Insurance
Fidelity Insurance
To cover the risk of loss due to fraud or
malpractices by the employees
9

131. Other Insurance
Personal Accident Insurance
To compensate the loss due to accident
(death or injury)
10

132. Communication
Services
3

133. Communication Services
Communication refers to the flow of
information, ideas, feelings and emotions from
one person to another
To co-ordinate the activities of different
departments or personnel in an organization
communication is very necessary

134. Communication Services
Communication
Internal
Communication
External
Communication

135. Internal Communication
Eg: Company mail service, messenger
system, intercom, CCTV etc.

136. External Communication
Eg: Postal services, Courier, Telegrams,
Network, Telephone, E-mail etc.

137. Postal and Telecom Services
Postal Services
● Formed by Govt. of India
● National Postal Services
● International Postal Services
● 22 Postal Circles
● Reliable
● Speed post facility available

138. Postal Services
Postal Services
Financial
Facilities
Mail
Facilities

139. Financial Facilities
● Post Office Savings Schemes like Public
Provident Fund (PPF)
● Kisan Vikas Patra
● National Savings Certificates

140. Financial Facilities
Retail Banking Services by Postal Dept.
● RD – Recurring Deposits
● SB – Savings Bank Account
● Time Deposits
● Money Order Facility

141. Postal and Telecom Services
Mail Facilities
● Parcel Service
● Registration Facilities – ensures security for
postal articles
● Insurance Facilities for postal articles

142. Postal and Telecom Services
Allied Facilities
● Greeting Post – Greeting cards
● Media Post – Advt. Through post cards etc.
● International Money Transfer – Collaborated
to Western Union Financial Services USA

143. Postal and Telecom Services
Allied Facilities
● Passport Facilities – Partnership with ministry
of external affairs
● E-Bill Post – For collecting bills payments for
BSNL and BharatiAirtel

144. Postal and Telecom Services
Telecom Services
● Cellular mobile services (Mobile phone
service provider)
● Radio Paging services
● Fixed line services (Land Line)
● Cable services (leased lines for banks)

145. Postal and Telecom Services
Telecom Services
● VSAT Services (Very Small Aperture
Terminal) – Satellite based communication
service most reliable in urban and rural areas

146. Postal and Telecom Services
Telecom Services
● DTH (Direct to Home) services

147. Transportation
4

148. Transportation
Transport means the movement of goods
and persons from one place to another

149. Importance of
Transport

150. Importance of Transport
● It helps to widen the market
● Creates place utility and time utility
● Helps in large scale production

151. Importance of Transport
● Division of labour and specialization is
possible
● Helps in stabilizing prices
● Standard of living can be improved
● Providing direct and indirect employment

152. Warehousing
5

153. Warehousing
“A warehouse is an establishment for the
storage and accumulation of goods”
Production is in anticipation of future demand, the
finished goods are to be stored until it is being
utilized in a good condition in a well equipped
godown

154. Types of
Warehouses

155. Types of Warehouses
Private Warehouses
Owned by large business houses to store
their own stock
1

156. Types of Warehouses
Public Warehouses
Owned and managed by some agencies whose
main occupation is to provide storage space
against the payment of certain fees
2
They have to obtain a license and their working is
subject to some government regulations
Also known as duty-paid warehouses

157. Types of Warehouses
3 Bonded Warehouses
● Owned by dock authorities or private individuals
● Supervised by customs authorities
● Licensed by Government
● To store imported goods before the payment of
customs duty
● Warehouse keeper collects the customs duty from
the importer when it is released

158. Types of Warehouses
Govt. Warehouses4
Owned by Government
Eg: Central and State Govt. Warehouses, FCI, STC etc.

159. Types of Warehouses
Co-operative Warehouses5
Owned by Cooperative organisations
Eg: National Cooperative Development Corporation,
Cooperative Marketing Federation etc.

160. Functions of
Warehousing

161. Functions of Warehouses
Consolidation1
Receives goods from various plants and dispatch
them to a particular customer on a single
consignment
Plant A
Plant B
Plant C
Consolidation
Warehouse

162. Functions of Warehouses
Breaking the Bulk2
Breaking the
Bulk
Bulk quantity of goods from various plants may be
divided into small quantity and send the same to
the needy customers
Customer A
Customer B
Customer C

163. Functions of Warehouses
Stock Piling3
Storage of surplus products

164. Functions of Warehouses
Value Added Services4
Packaging, labelling, grading etc.

165. Functions of Warehouses
Price Stabilization5
Stabilize prices by equalizing supplies

166. Functions of Warehouses
Financing6
Financial assistance may be available by pledging
commodities to the warehouse keeper either from
himself or from a bank on the warehouse receipt