SERVICES

Services are the economic activities that are:

➢ intangible,

➢ rendered by the service provider and

➢ provide satisfaction to the consumer.

NATURE OF SERVICES

➢ Intangibility: cannot be touched.

➢ Inconsistency: exclusive each time.

➢ Inseparability: simultaneous activity.

➢ Inventory (Less): cannot be stored for a future use.

➢ Involvement: participation of the customer.

TYPES.:

➢ Business Services: used by business enterprises for the conduct

of their activities. For example: banking, insurance, transportation,

warehousing and communication services.

➢ Social Services: generally provided voluntarily in pursuit of certain

social goals. For example: to improve the standard of living for

weaker sections of society, to provide educational services to their

 children, or to provide health care and hygienic conditions in slum

areas.

➢ Personal Services: experienced differently by different customers

depending upon the service provider, and also depend upon

customer’s preferences and demands. For example: tourism,

recreational services, restaurants.

BANKING:

➢ Banking is the service provided by banks by accepting deposits and

providing loans.

➢ A bank accepts money as deposits, which is repayable on demand.

It earns a margin of profit by lending money.

In the recent past there has been a change in the policy in reorienting

banking towards achieving social objectives:

from to

➢ Urban orientation — Rural orientation

➢ Class banking — Mass banking

➢ Traditional — Innovative practices

➢ Short term objectives — Development objectives

TYPES

➢ Commercial banks

➢ Cooperative banks

➢ Specialized banks

➢ Central bank

Commercial Banks:

➢ Commercial banks are institutions dealing in accepting deposits of

money from the public for the purpose of lending or investment.

➢ These are governed by Indian Banking Regulation Act 1949.

There are two types of commercial banks:

1.Public sectors banks:

➢ In PSBs, the government has a major stake and they usually need

to emphasize on social objectives than on profitability.

➢ Like SBI, PNB, OBC, BOI etc.,

2.Private sector banks:

➢ These are owned, managed and controlled by private promoters and

they are free to operate as per market forces.

➢ Like ICICI Bank, Kotak Mahindra Bank, Jammu and Kashmir Bank

etc.

Cooperative Banks:
 ➢ These are governed by the provisions of Cooperative Societies Act

and meant essentially for providing cheap credit to their members.

➢ These are important source of rural credit, i.e., agricultural

financing in India.

Specialized Banks:

➢ Specialized banks are foreign exchange banks, industrial banks,

development banks, export-import banks catering to specific needs

of these unique activities.

➢ These banks provide financial aid to industries, heavy turnkey

projects and foreign trade.

Note: Turnkey project: It is a contract under which a firm agrees to fully

design, construct and equip a manufacturing/ business/ service facility

and turn the project over to the purchaser when it is ready for operation

for a remuneration.

Central Bank:

➢ The Central bank of any country supervises, controls and regulates

the activities of all the commercial banks of that country.

➢ It also acts as a government banker.

➢ It controls and coordinates currency and credit policies of any

country.

➢ The Reserve Bank of India is the central bank of our country.

Functions of Commercial Banks

➢ Acceptance of deposits

➢ Lending of funds

➢ Cheque facility

bearer cheques - cashable immediately at bank counters.

crossed cheques - to be deposited only in the payee’s account.

➢ Remittance of funds – using bank drafts, pay orders or mail

transfers.

➢ Allied services: banks also provide allied services such as bill

payments, locker facilities, underwriting services.

TYPES OF BANK ACCOUNTS:

Savings accounts: Savings accounts are for encouraging savings by

individuals.

Current accounts: Current account deposits can be withdrawn to the

extent of the balance at any time without any prior notice.

Recurring deposit accounts: A recurring deposit is a special kind of

term deposit offered by banks in India. Interest is allowed at the rate

applicable to fixed deposits.

Fixed deposit accounts: Fixed accounts are time deposits with higher

rate of interest as compared to the savings accounts. A premature

withdrawal is permissible with a percentage of interest being forfeited.

Multiple option deposit accounts: The MOD account is a combination

of transactional account and deposit account. These are the Time Deposits

but at the time of need for funds, withdrawals can be made in units of

Rs.1,000/- from the deposits by issuing a cheque from Savings Bank

Account or from ATM / branch or through any other channel.

e-Banking: e-banking refers to services provided by the banks on the

internet or mobiles.

The range of services offered by e-banking: Automated Teller Machines

(ATM) and Point of Sales (PoS), Electronic Data Interchange (EDI) and

Credit Cards Electronic or Digital cash and Electronic bank transfer (EFT).

Benefits

➢ E-banking facilitates digital payments and promotes

transparency in financial statements.

➢ e-banking provides 24 hours, 365 days a year services to the

customers of the bank;

➢ Customers can make some of the permitted transactions from

office or house or while travelling via mobile telephone;

➢ It inculcates a sense of financial discipline by recording each and

every transaction;

➢ Greater customer satisfaction by offering unlimited access to the

bank, not limited by the walls of the branch and less risk and
 greater security to the customer as they can avoid travelling with

cash.

INSURANCE

CONCEPT

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

uncertain event is spread over a number of persons.

➢ 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 compensate a loss.

➢ The contract is put in writing and is known as ‘policy’.

➢ The person whose risk is insured is called ‘insured’ and the firm which

insures the risk of loss is known as insurer/ assurance underwriter.

Functions of Insurance:

➢ Providing certainty: certainty of payment for the risk of loss.

➢ Protection: from probable chances of loss.

➢ Risk sharing: the loss is shared by all the persons exposed to it by

way of premiums.

➢ Assist in capital formation: The accumulated funds by way of

premium payments are invested.

PRINCIPALS

Utmost good faith:

➢ A contract of insurance is a contract of uberrimae fidei i.e., a

contract found on utmost good faith.

➢ It is the duty of the insured to voluntarily make full, accurate

disclosure of all facts, material to the risk being proposed and the

insurer to make clear all the terms and conditions in the insurance

contract.

➢ Failure to make disclosure of material facts by the insured makes

the contract of insurance voidable at the discretion of the insurer.

Insurable Interest:

➢ It means some pecuniary(monetary) interest in the subject

matter of the insurance contract.

➢ The insured must have an interest in the preservation of the thing

or life insured.

Indemnity:

➢ All insurance contracts of fire or marine insurance are contracts of

indemnity.

➢ The insurer undertakes to compensate the insured for the loss

caused to him/her due to damage or destruction of property insured.

➢ The principle of indemnity is not applicable to life insurance.

Proximate Cause:

➢ According to this principle, an insurance policy is designed to provide

compensation only for such losses as are caused by the perils

which are stated in the policy.

➢ When the loss is the result of two or more causes, the proximate

cause means the direct, the most dominant and most effective

cause of which the loss is the natural consequence.

Subrogation:

➢ It refers to the right of the insurer to stand in the place of the

insured, after settlement of a claim, as far as the right of insured in

respect of recovery from an alternative source is involved.

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.

➢ In case there is a loss, when there is more than one policy on the

same property, the insured will have no right to recover more

than the full amount of his actual loss.

Mitigation:

➢ This principle states that it is the duty of the insured to take

reasonable steps to minimize the loss or damage to the insured

property.

TYPES OF INSURANCE

➢ LIFE INSURANCE

➢ GENERAL INSURANCE

o Marine insurance

o Fire insurance

o Other insurance: Health insurance, Cattel insurance, Crop

insurance, Burglary insurance, Sports insurance, Vehicle

insurance.

Health Insurance:

➢ A safeguard against rising medical costs.

➢ Health insurance usually provides either direct payment or

reimbursement for expenses associated with illness and injuries.

➢ In India, presently the health insurance exists primarily in the form of

Mediclaim policy offered to an individual or to any group, association or

corporate bodies.
Motor Vehicle Insurance:

➢ Motor/Vehicle Insurance is an insurance policy that financially

safeguards vehicle against physical damage and insured against

bodily injury/death and third-party liability.

Burglary Insurance:

➢ In case of burglary policy, the loss of damages of household goods

and properties and personal effects due to theft, larceny, burglary,

house-breaking and acts of such nature are covered.

Cattle Insurance:

➢ A contract of cattle insurance is a contract whereby a sum of money is

secured to the assured in the event of death of animals like bulls,

buffaloes, cows and heifers.

➢ It is a contract against death resulting from accident, disease, or

pregnant condition as the case may be.

Crop Insurance:

➢ A contract of crop insurance is a contract to provide a measure of

financial support to farmers in the event of a crop failure due to

drought or flood.
Sports Insurance:

➢ This policy assures a comprehensive cover available to amateur

sportsmen.

➢ Sports insurance, sometimes known as event insurance, is a special

type of coverage offered by insurance providers.

➢ It offers financial coverage for accidents, lawsuits and damages

caused by or during a sporting event

Social Security Schemes

Atal Pension Yojana:

➢ This scheme is offered to individuals in the age group of 18 to 40

years.

➢ The individual is expected to contribute in the scheme until he/she

attains the age of 60 years.

➢ The scheme acts as an investment for availing old-age pension.

Pradhan Mantri Suraksha Bima Yojana :

➢ This scheme offers accidental and disability cover of Rs. 2 lakh at a

premium of Rs. 12 per year.

➢ Any individual holding a savings account can be enrolled under this

scheme.

Pradhan Mantri Jan Dhan Yojana :

➢ The scheme offers savings account with no minimum balance.

➢ The Rupay ATM-cum-Debit card has in-built accident and life cover of

Rs. 1,00,000 and Rs. 30,000, respectively.

➢ The scheme, suitable for economically weaker sections of society.

Pradhan Mantri Jeevan Jyoti Bima Yojana :

➢ The scheme offers a protection term insurance cover of Rs 2,00,000 to

the dependents of the policy holder in the event of his/her death at a

premium of Rs. 330 per year.

➢ Any individual in the age group of 18-70 years having a savings

account can opt for this scheme.

LIFE INSURANCE

➢ A life insurance policy provides protection against the uncertainty of

life.

➢ The insurance company undertakes to insure the life of a person in

exchange for a sum of money called premium.

➢ The person whose life is insured is called the assured.

➢ In life insurance, the insured must have insurable interest in the life

assured.

➢ Without insurable interest the contract of insurance is void.

➢ In case of life insurance, insurable interest must be present at the time

when the insurance is affected.

➢ Life insurance contract is not a contract of indemnity.

➢ The life of a human being cannot be compensated and only a specified

sum of money is paid.

➢ That is why the amount payable in life insurance on the happening of

the event is fixed in advance.

Types of life insurance policies:

Whole Life Policy:

➢ In this kind of policy, the amount payable to the insured will not be

paid before the death of the assured.

➢ The sum becomes payable only to the beneficiaries or heir of the

deceased.

Endowment Life Assurance Policy:

➢ The endowment policy matures after a limited number of years.

Joint Life Policy:

➢ This policy is taken up by two or more persons.

➢ The premium is paid jointly or by either of them in instalments or lump

sum.

Annuity Policy:

➢ Under this policy, the assured sum or policy money is payable after the

assured attains a certain age in monthly, quarterly, half yearly or

annual instalments.
➢ This is useful to those who prefer a regular income after a certain age.

Children’s Endowment Policy:

➢ This policy is taken by a person for his/ her children to meet the

expenses of their education or marriage.

➢ The agreement states that a certain sum will be paid by the insurer

when the children attain a particular age.

➢ No premium will be paid, if he dies before the maturity of the policy.

FIRE INSURANCE

➢ Fire insurance is a contract whereby the insurer, in consideration of the

premium paid, undertakes to make good any loss or damage caused

by fire during a specified period up to the amount specified in the

policy.

➢ A claim for loss by fire must satisfy the two following conditions: (i)

There must be actual loss.(ii) Fire must be accidental and

nonintentional.

➢ If overheating without ignition causes damage, it will not be regarded

as a fire loss within the meaning of fire insurance and the loss will not

be recoverable from the insurer.

➢ In fire insurance, the insured must have insurable interest in the

subject matter of the insurance.

➢ In case of fire insurance insurable interest must be present both at the

time of insurance and at the time of loss.

➢ The contract of fire insurance is a contract of utmost good faith.

➢ The contract of fire insurance is a contract of strict indemnity.

➢ The insured can, in the event of loss, recover the actual amount of loss

from the insurer.

➢ The insurer is liable to compensate only when fire is the proximate

cause of damage or loss.

MARINE INSURANCE:

➢ Marine insurance provides protection against loss by marine perils or

perils of the sea.

➢ Marine perils are collision of ship with the rock, or ship attacked by the

enemies, fire and captured by pirates and actions of the captains and

crew of the ship.

➢ These perils cause damage, destruction or disappearance of the ship

and cargo and non-payment of freight.

➢ There are three things involved i.e., ship or hull, cargo or goods,

and freight.

➢ Ship or hull insurance: Since the ship is exposed to many

dangers at sea, the insurance policy is for indemnifying the insured

for losses caused by damage to the ship.

 ➢ Cargo insurance: The cargo while being transported by ship is

subject to many risks. These may be at port i.e., risk of theft, lost

goods or on voyage etc. Thus, an insurance policy can be issued to

cover against such risks to cargo.

➢ Freight insurance: If the cargo does not reach the destination due

to damage or loss in transit, the shipping company is not paid

freight charges. Freight insurance is for reimbursing the loss of

freight to the shipping company i.e., the insured.

➢ Unlike life insurance, the contract of marine insurance is a contract of

indemnity.

➢ The insured can, in the event of loss recover the actual amount of loss

from the insurer.

➢ Under no circumstances, the insured is allowed to make profit out of

the marine insurance contract.

➢ But cargo policies provide commercial indemnity rather than strict

indemnity.

➢ The insurers promise to indemnify the insured “in the manner and to

the extent agreed.”

➢ In case of ‘Hull Policy’, the amount insured is fixed at a level

above the current market value.

➢ Similar to life and fire insurance, the contract of marine insurance is a

contract of utmost good faith.

➢ Insurable interest must exist at the time of loss but not necessary

at the time when the policy was taken.

➢ The principle of causa Proxima will apply to it.

COMMUNICATION SERVICES

➢ Communication is a process by which information is exchanged

between persons.

➢ Communication services include services for transmission of voice,

data, texts, sound and images.

➢ These are helpful to the business for establishing links with other

parties.

POSTAL SERVICES:

➢ Postal services are arrangements made by a government for the

transmission of letters, packages, and periodicals, and for related

services.

➢ India post department provides various postal services across India.

➢ With 1,55,015 post offices, India Post has the most widely distributed

postal network in the world.

➢ The country has been divided into 23 postal circles, each circle headed

by a Chief Postmaster General.

➢ Each circle is divided into regions, headed by a Postmaster General.

➢ Through their regional and divisional level arrangements the various

facilities provided by postal department are broadly categorized into:

Financial facilities:

Savings schemes like Public Provident Fund (PPF), Kisan Vikas Patra, and

National Saving Certificates in addition to normal retail banking functions

of monthly income schemes, recurring deposits, savings account, time

deposits and money order facility.

Mail facilities:

Mail services consist of parcel facilities that is transmission of articles from

one place to another; registration facility to provide security of the

transmitted articles and insurance facility to provide insurance cover for

all risks in the course of transmission by post.

Services:

Mail: is the public service or system by which letters

and parcels are collected and delivered.

Registered post: similar to an ordinary post, providing additional

facilities like safe delivery, the signature of the recipient at the time of

delivery, extra cover (insurance) and proof of delivery.

Parcel: a postal service for mail that is too heavy for normal letter post.

It is usually slower than letter post.

Speed post: to facilitate high-speed delivery of letters, documents, and

other important stuff.

Greeting post — A range of delightful greeting cards for every occasion.

Media post — An innovative and effective vehicle for Indian corporates

to advertise their brand through postcards, envelopes, aerograms,

telegrams, and also through letterboxes.

Direct post – It is for direct advertising. It can be both addressed as well

as unaddressed.

International Money Transfer – Through collaboration with Western

Union financial services, USA, which enables remittance of money from

185 countries to India.

Passport facilities — A unique partnership with the ministry of external

affairs for facilitating passport application.

e-bill post — It is a smart option for businesses and organizations to

collect their bills or other payments through Post Office network .

Courier

➢ It is also a public utility service provided by private sector

companies, to provide faster delivery of letters and other important

documents.

➢ Some popular courier companies are DHL Express India Pvt Ltd,

First Flight Courier Limited, Blue Dart Express limited, etc. offering a

fast delivery of the parcels.

➢ The service is available to you 24/7 in a year, and thus, there is no

time restriction.
TELECOM SERVICES

➢ Telecommunications refers to the exchange of information by

electronic and electrical means over a significant distance.

➢ The first commercial telephone services were set-up in 1878 and 1879

on both sides of the Atlantic in the cities of New Haven and London.

The various types of telecom services are:

➢ Cellular mobile services: all types of mobile telecom services.

➢ Fixed line services: all types of fixed services primarily connected

through fiber optic cables laid across the length and breadth of the

country.

➢ Cable services: within a licensed area of operation to operate

media services, which are one-way entertainment related services.

➢ VSAT services: VSAT (Very Small Aperture Terminal) is a satellite-

based communications service. It offers businesses and government

agencies a highly flexible and reliable communication solution in

both urban and rural areas.

➢ DTH services: DTH (Direct to Home) is again a satellite-based

media services provided by cellular companies. One can receive

media services directly through a satellite with the help of a small

dish antenna and a set top box.

 TRANSPORTATION

➢ Transportation helps in movement of goods from one place to

another.

➢ Transportation comprises railways, roadways, airways, waterways

and pipelines.

Railways: The Indian railways is among the world’s largest rail

network. It’s network is spread over 1,15,000 km with 12,617

passenger trains and 7421 freight trains each day from 7,349 stations

playing 23 million travelers and 3 million tons of freight daily.

Roadways: The National Highways Authority of India(NHAI) is the nodal

agency responsible for building, upgrading, and maintaining most of the

National Highways Network. India has 1,42,126 km of National

Highways as of April 2019.

Airways: Air Transport in India made a beginning in 1911 when Air Mail

Operation commenced between Allahabad and Naini.

Waterways: India has 14,500 km of navigable waterways,

contributing about 1 % to the countries transportation. It comprises

rivers, canals, backwaters, creeks, etc.

Pipelines: Liquids and gases are transported in pipelines and any

chemically stable substance can be sent through a pipeline.

 WAREHOUSING

It facilitates storing goods in scientific and systematic manner so as to

maintain their original quality, value and usefulness.

Types of Warehouses

➢ Private warehouses: Private warehouses are operated, owned or

leased by a company handling their own goods, such as retail chain

stores or multi-brand multi-product companies.

➢ Public warehouses: Public warehouses can be used for storage of

goods by traders, manufacturers or any member of the public after

the payment of a storage fee or charges.

➢ Bonded warehouses: Bonded warehouses are licensed by the

government to accept imported goods prior to payment of tax

and customs duty.

➢ Government warehouses: These warehouses are fully owned and

managed by the government. The government manages them

through organisations set up in the public sector. For example, Food

Corporation of India, State Trading Corporation, and Central

Warehousing Corporation.
➢ Cooperative warehouses: Some marketing cooperative societies or

agricultural cooperative societies have set up their own warehouses

for members of their cooperative society.

Functions of Warehousing:

➢ Consolidation: receive and consolidate, materials from different

production plants and dispatches the same to a particular customer on

a single transportation shipment.

➢ Break the bulk: dividing the bulk quantity of goods received from the

production plants into smaller quantities.

➢ Stock piling: seasonal storage of goods, raw materials, which are not

required immediately for sale or manufacturing.

➢ Value added services: such as in transit mixing, packaging and

labelling.

➢ Price stabilization: adjusting the supply of goods with the demand

situation.

➢ Financing: on security of goods.