Business Studies Chapter 4 Business Services

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Examples :

1. Export-Import Banks
2. IDBI Banks
3. ICICI Banks.

1. Postal services
2. Remittence services
3. Banking services
4. Insurance services
5. Other services.

(i) sending post cards
(ii) sending letters
(iii) sending parcels.

1. Money order
2. Postal order.

(i) Business Services : Business services are those services which are used by business enterprises for the conduct of their activities. For example Banking, Insurance, Transportation, Warehousing and Communication.

(ii) Social Services : Social services are those services generally provided to improve people's standard of living. For example health care, education.

(iii) Personal Services : Personal services are those services which are experienced differently by different customers. For example : tourism, recreational services, restaurants.

1. Commercial Banks: Commercial Banks are institutions dealing in money. These are governed by Indian Banking Regulation Act, 1949. There are two types of commercial banks, Public sectors and private sector banks. There are 20 nationalized bank. Public sector banks like SBi; PNB, IOB etc, and other private sector banks represented by HDFC bank, ICICI Bank, Kotak Mahindra Bank and Jammu and Kashmir Bank etc.

2. Cooperative Banks: Cooperative banks are organised under the provision of State Cooperative Societies Act meant essentially for providing cheap credit to their members. It is an important source of rural credit e.g. agricultural financing in India.

3. Specialized Banks : Specialized banks are foreign exchange banks, industrial banks, development banks, export-import banks etc. catering to specific needs of these unique activities.

4. 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 a government banker. It controls and coordinates currency and credit policies of any country. Reserve Bank of India is the central bank of our country.

1. Certainty: Insurance provides certainty of payment for the risk of loss. There are uncertainties of happening of time and amount of loss. Insurance removes these uncertainties and the assured receives payment of loss. The insurer charges premium for providing the certainty.

2. Protection : The second main function of insurance is to provide protection from probable chances of loss. Insurance cannot stop the happening of a risk event but can compensate for losses arising out of it.

3. Risk sharing: On the happening of a risk event, the loss is shared by all the persons exposed to it. The share is obtained from every insured member by way of premiums.

4. Assist in capital formation : The accumulated funds of the insurer received by way of premium payments made by the assured are invested in various income generating schemes.

5. Prevention of loss : The insurance companies provide financial assistance to various organizations like hospitals, fire brigade, schools and colleges, which are engaged in loss prevention from death or damage.

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1. Economic Planning : Industrialization requires industrial infrastructure (transport, communication, power, insurance, banking, finance etc.)      and social infrastructure (education, medical facilities etc). Therefore, these services have expanded rapidly in the country.

2. Increasing urbanisation : Urbanisation has been another cause of expansion of service sector in India.

3. Media : Television, internet and other media have led to spurt in tourism. Modern technology has made business more comfortable.

4. Rise in per capita income : Growing per capita income has led to demand for new and better services.

5. Greater life expectancy : Increase in life span has led to greater demand for health care and related services.

1. Safety of goods : Storage keeps goods safe, otherwise, goods would have destroyed. After keeping goods in the godown the business men are carefree.

2. Useful for seasonal goods : There are certain things which are produced once in a year and used throughout the year such as wheat, rice, sugar, potatoes etc. By keeping goods in the warehouses goods are available throughout the year.

3. Storage of raw material: Production is a continuing activity, so raw material is required throughout the year, supply of raw material can be maintained throughout the year by proper storing of raw material.

4. Helpful in foreign trade : If goods imported are meant for exporting, it is necessary that these goods should be stored in the bonded warehouses situated on the ports. There is time gap between imports and exports of these goods, so they are stored in godowns.

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1. Owner of goods or property.

2. Mortgagee.

3. Pledgee.

4. Insurer.

5. Pawn-broker.

6. Official receiver or assignee in the case of insolvency of a person.

7. Warehouseman as regards goods belonging to a customer.

8. A person in lawful possession of any goods or property.

9. Common carrier.

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1. It is a contract of indemnity i.e. in the event of loss, the assured can recover from the | insurer the actual amount of loss or the maximum amount for which the subject matter is insured whichever is less.

2. It is a contract of utmost good faith.

3. The assured must have insurable interest in the subject matter of the contract both at the time of the contract and at the time of loss.

4. A contract of fire insurance covers the risk of loss resulting from fire or any cause which is proximate cause of such loss.

5. It is an yearly contract. It automatically lapses after the expiry of the year.

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1. Movement of materials and goods :

Through the various means of transport, raw materials can be moved from the places where they are available, to the places where they can be processed or assembled into finished goods. Similarly finished products can also be made available to the consumers living at places situated far away from the place of production.

2. Price equalisation: Transportation helps in maintaining the supply of goods evenly balanced, hence facilitates in equalising the prices everywhere.

3. Removal of distance barrier: Efficient and cheap means of transport have made the world a small place.

4. Location of industries : Transport also helps in location of industries in the regions where maximum economies of scale, both internal and external can be easily availed e.g. jute industries are located in eastern region because of easy availability of cheap means of transport, they have no difficulty in reaching their goods to other parts of the country.

5. Employment: Transport industry has a potential to provide employment opportunities to millions of people.

6. Mobility of labour : Transportation facilitates mobility of labour.

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(i) Capital formation and saving.

(ii) Transfer of funds easily.

(iii) Facility of payment.

(iv) Saving of currency.

(v) Best utilization of financial resources.

(vi) Safety of money and articles.

(viii) Balanced economic development.

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1. Savings Bank Account,

2. Fixed Deposit Account,

3. Current Account,

4. Recurring Deposit Account and

5. Miscellaneous Account.

1. The risk of loss is spread over among many people through insurance.

2. Insurance gives protection to the insured against lossos due to the happening of the events specified in the policies.

3. Insurance does not offer protection only but also makes people to invest.

4. On the security of life insurance policy, loans can be raised.

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Good Faith : A contract of insurance is a contract of uberrimae fidei, i.e., requiring good faith between the parties. The insured must not conceal anything which is material to the subject matter of insurance.

2. Whole life policy,

3. With profit policy,

4. Joint life policy,

5. Without profit policy,

6. Double Accident policy,

7. Convertible policy and .

8. Group Insurance policy.

Freight Insurance : The shipping company has a right of receiving freight on the cargo, if it does not reach the destination safely. Freight insurance may be issued to reimburse the loss of freight to the insured in case the cargo does not reach the place of destination.

(i) Motor vehicle insurance : It protects against the loss to the vehicle, passenger or third party due to motor accident.

(ii) Burglary insurance : It provides protection against burglary and theft.

(iii) Personal accident insurance : It protects against loss caused by accident for person.

(iv) Fidelity insurance: It protects against the loss caused by embezzlement and fraud of employees.

(v) Employees estate insurance : It provides protection to employees against injury, sickness and loss of health.

1. Sufficient Space : Warehouse is a place used for the storage or accumulation of goods. Thus it requires a sufficient spaces to store maximum goods.

2. Safety : Warehouse should be established at that place where there is no possibility of deterioration of goods. In other words, they should be built strong to be safe from pilferages, theft, dacoities, rain, dust, sun and natural calamities.

2. Protection for old age : Through life insurance, a person can make provision for his old age. After retirement the earning capacity of a person is substantially reduced. He cannot maintain his standard of living without substantial savings. Life insurance enables a person to enjoy peace of mind and a sense of security.

3. Funds for investment : Life insurance corporation mobilises the public savings and channelises them in productive investment for the economic development of the country. Life insurance combines both protection and investment.

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1. The owner of the ship,

2. The owner of the cargo.

3. A creditor who has advanced money on the security of the ship or cargo.

4. The master and crew of the ship.

5. A trustee holding any property in trust has insurable interest in respect of their wages.

6. In case of advance freight the person advancing the freight.

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(i) A person has an unlimited insurable interest in his own life.

(ii) A husband has an insurable interest in the life of his wife and a wife in the life of her husband.

(iii) A creditor has an insurable interest in the life of the debtor, to the extent of the debt.

(iv) A servant employed for a specific period has insurable interest in the life of his employer.

(v) A surety has an insurable interest in the life of his co-surety and principal debtor.

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By storing their goods in the bonded warehouses importer gain some control over their goods even before they have paid duties on them. They can remove these goods in part, that is in small quantities, as and when they are sold, after making payments of the duty and warehousing charges on only part of the goods which they want to remove.

Overdraft facility is the special features on this account. Account holder may arrange with the bank to withdraw more than the deposit. After the account is opened, the bank issues the following three books :

(i) Pass Book,  (ii) Cheque Book,   (iii) Pay-in-slip book

1. Intangibility : Services are intangible, they cannot be touched. They are experiential in nature e.g. one cannot taste the lawyer's advice or touch it.

2. Inconsistency : Different customers have different demands and expectations, e.g. telecom services.

3. Inseparability : Services cannot be separated in production and consumption. There is simulation of production and consumption because of which production and consumption services seem to be inseparable e.g. while we can manufacture a scooter today and carry it to be sold after a month, but this is not possible with services that have to be consumed as and when they are produced.

4. Involvement : Customer has direct participation in the service delivered process. A customer has the opportunity to get the services modified according to the specific requirement.

5. Perishability : Services cannot be produced before sale and stored for future demand e.g. an empty seat in an aircraft, a spare birth in train represent a service capacity which is lost forever.

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Goods: A goods is a physical product capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer. Goods also generally used to refer to commodities or items of all types, excepting services, being involved in trade or commerce.

It has many advantages. Firstly it enables the wider distribution of risk. Secondly, the insurer can contract to indemnify more risks. Thirdly, it stablises income over a period of year.

Warehousing : It refers to preserving a quantity of goods for use when required.

Functions of warehousing are as follows :

1. Consolidation : In this function the warehouse receives and consolidates, materials/ goods from different production plants and ispatches the same to particular customer on a single transportation shipment.
                     

2. Break-Bulk : This functions refers to the shipment of bulk quantity of goods from the production plants to the distribution warehouse and then reshipment in small quantities to different customers.

3. Stock Piling : The next function of warehouse is the seasonal storage of goods to select business for eg. Agriculture products are harvested at specific times with subsequent consumption throughout the year.

4. Value-added Services : Certain value added services are also provided by the ware houses, such as in transit mixing, packaging and labeling.

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(Imp.)

Advantages of e-banking.

1. It helps to manage savings and checking accounts, apply for loans quickly and easily round the clock.

2. Customers can see balances on line and find out whether cheques or deposits have cleared.

3. Customers can easily transfer funds between accounts.

4. It provides demat services for shares.

5. Customers can easily down load financial information (relating to their FDs, A/c, cheques, bills etc.) into personal computer quickly.

Kinds of health insurance coverage :

(a) Basic Medical Expenses : First money coverage for expenses of hospitalization and doctors' service.

(b) Major Medical Expense: Coverage for the cost of catastrophic illness.

(c) Disability income : Replaces incomes loss while the insured is unable to work.

(d) Medical supplement : Filler gaps in medicare programme of social security.

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(a) Utmost good faith : It is the principle of insurance that insured person should disclose all the facts to the insurer. Non-disclosure of these facts by the knowledgeable party, could affect the validity of such contract e.g. in a court case decided in England, the court decided that the insurance company could not be made to pay the claim, since it had come to know of the illness after the person had died.

(b)Indemnity : A contract of indemnity is one where the insured person is paid only the actual amount of loss or the amount of the policy, whichever is less e.g. a person insured his house against fire. Later he agreed to sell his house to another person.
Before the completion of sale the house was destroyed by fire. The seller received not only compensation from the insurance company but also, as per the contract of sale, the price of the house from the buyer.
The court decided that the insurance company could recover the amount it had paid. But life insurance contracts are treated differently.

(c) Insurable interest : It represents a legally recognisable relationship between (a) the person insuring another person or thing, (b) the person or thing which is insured, such that he will stand to gain in financial terms if the person or thing insured by him continues to exist, and he would suffer a financial loss if that person dies or that thing is destroyed. Thus, X cannot insure the life of Y if there is no relationship between the two.

(d) Causa proxima: An insured person can recover the loss only if it is caused by any of the risks insured. Such risk should be the nearest, and not a distant or remote, cause of the loss e.g. a ship carrying oranges has met with an accident as a result of which there is some delay in unloading and the oranges were spoilt.
In this case the loss is not due to the accident but because of the delay in unloading. Hence, the shiper would not be able to recover the loss from the insurance company.

(e) Contribution : When we take insurance with insurance company, we have to pay contribution. Its object is to divide the actual amount of loss among the different insurers who are liable for the same risk in respect of the same subject matter, though under different policies.
However, this does not apply to life insurance e.g. X insures his house against fire for Rs. 20,000 with insurer Y and Rs. 40,000 with insurer Z. If the house catches fire and the actual loss amounts to Rs. 24000 then Y will be liable to pay Rs. 8,000 and Z Rs. 16000.
If the whole amount of loss is paid by Y, he can recover Rs. 16000 from Z and if it is paid by Z, he can recover Rs. 8,000 from Y.

(f) Subrogation : The principle of subrogation applies in the fire and marine insurance only. It implies that one paying the amount of loss to the insured person, the insurance company will become entitled to all the signs which were available to the insured person to protect himself against the loss i.e. after paying full indemnity in respect of the loss to the assured the insurer will step into the shoes of the assured and exercise all rights and remedies to which the assured was entitled against third parties and continue doing so until he has recouped the entire amount paid under the policy to the assured.

(g) Period of insurance : A contract of life insurance is a continuing contract subject to regular payments of premium. A contract of fire insurance is for a fixed duration. A contract of marine insurance may be for certain period or for a certain voyage.

2. Automated Tellers Machines (ATMs):
   It is a freestanding self service terminal that can do about 60% of a teller's job 24 hrs. a day at less than half the cost of a human teller. To use an ATM, we insert a plastic card into the terminal and then enter an identification code. The machine responds by cashing cheques, taking deposits.

3. Deposit card : A more complex variation of electronic banking involves the use of point of sale terminals located at merchant's checkout counters and tied electronically to a bank computer. When a store customer presents a debit card the point of sale terminal automatically transfers the money for the purchase from the customer's account to the store's account. Yet another variation enables a person to pay bills automatically by using a personal computer . hich is linked by telephone to the bank computer. When the customer types in the required information, the bank's computer transfers money from the customer's account to the billers account.

(ii) Private Sector Banks : These are owned, managed and controlled by private promoter. They are fee to formulate policies about their activities as per market services. Private sector banks are allowed to compete with the foreign banks.

(iii) Foreign Banks : Most of these banks in India are the subsidiaries of foreign banks. They are owned and managed by promoters. These banks have realized the potentially big market in the retail banking sector. The major foreign banks in India are Citi Bank, Bank of America, etc.

(a) Primary functions.
(b) Secondary functions or subsidiary functions.

Primary functions :

1. Acceptance of Deposits : Accepting of deposits from the public is the most important function of bank. It takes the savings and surplus of people. Banks provide a safe custody of the deposited cash. Depositors can easily transfer money and can make the payments through cheques.
Banks provide an attractive rate of interest on their deposits. There are various types of deposits which can be opened in the bank like Fixed Deposit. Savings Deposit and Current Deposit.

2. Making Loans and Advances : It is another equally important functions of bank. Banks accept surplus money of people and provide loans and advances to the needy persons. It is through loans and advances, banks earn profit. Loans and advances are provided through banks in the following forms :
(i) Loan, (ii) Overdraft, (iii) Cash credit, (iv) Discounting of bills and exchange.

(i) Loan : Loan is a lumpsum advance made by a bank against security or otherwise. In it specified amount is either paid to the customer in cash or is credited in his account. The borrower is required to pay a prefixed rate of interest on the amount of loan from the date of the sanction of the loan.
The loan may be refunded in instalment or in lumpsum. Short and medium term loans are provided by commercial banks.

(ii) Overdraft: Under this system a current account holder is allowed to overdraw his bank account i.e., he can draw upto a fixed limit more than the balance in his account withdrawal at any time.

(iii) Cash-credit: In cash credit, a customer is given credit upto a definite limit against a surety bond or against other securities. The interest is charged on the amount overdrawn by customer on the daily balance and not on the entire amount of the limit.

(iv) Discounting of Bills of Exchange : Bill of Exchange is a negotiable instrument. It is drawn by the seller and is accepted by the buyer. The drawer has got a facility to discount the bill of exchange before maturity if money is required immediately. The bank discounts the bill and deducts a certain amount as discounting charges and pays the remaining money to the drawer.

Secondary functions subsidiary functions can be classified as :

(a) Agency functions
(b) Utility functions.

(a) Agency functions : These are the functions which banks perform as an agent of their customers.

1. Collection of cheques and bills : It collects local and outstation cheques, drafts, bills of exchange, and promissory notes of its customers and credit to their account.

2. Collection of Interest and Dividend : It also collects interest and dividend on debentures and securities held by its customers.

3. Purchase and sale of securities : On instructions from its customers banks purchase or sell stock securities, debentures, bonds etc.

(b) Utility functions : Banks provide the following utility or miscellaneous functions :

1. Safe custody of customers' valuable articles and securities : Some banks provide the facilities of lockers where on nominal rent a customer can keep its valuable articles such as ornaments, jewellery etc.

2. Facility of Foreign Exchange : After obtaining a license from the Reserve Bank of India, commercial banks can deal in foreign exchange. The banks can exchange the various foreign currencies and even discount foreign bills of exchange.

3. Provide Trade Informations : Banks provide useful trade information to its customer through publishing various journals.

There is an element of investment in the life insurance, because the amount of the policy is received in both the case i.e., on the death of the insured or at the expiry of the policy. Life insurance is not a contract of indemnity because it is impossible to compensate the deceased policy holder.

Method of obtaining Life Insurance Policy:

1. Proposal form : The prospective policy holder has to fill in this proposal form, necessary information like, name, address, profession, status of health, family history etc. All the material information are disclosed. Insurance is the contract of good faith, so all the statements made must be true and factual.

2. Medical examination : The proposer is medically examined by the doctor of the corporation.

3. Proof of the age : The proposer has to give satisfactory documentary proof of age.

4. Premium : The policy holders have to pay the insurance premium, which may be monthly, quarterly, half-yearly or annually. A grace period of 15 to 30 days is allowed. Premium is payable in advance. If the premium is not paid the policy is cancelled but may be renewed.

5. Risk : After the receipt of the first premium the risk starts and continues, so far the premium are paid on due dates.

6. Acceptance of the proposal : If every thing is satisfactory, the proposal is accepted. Finally insurance policy is sent with all the terms and conditions to the insured.

1. Private Warehouses : These are the warehouses owned by the traders or producers. In these warehouses they keep their own products and do not allow anybody else to keep their goods. Hence they are called private warehouses.

2. Public Warehouses : These warehouses are owned by private companies and government agencies. These godowns are large size and used by all persons such as traders, farmers, exporters, importers and government agencies. These godowns are located in the commerical centres of big cities. Their main objective is to make earning by providing storing facilities.
Once the goods are stored in the godown, warehouse receipt is issued to the owner of goods. After making the payment of godown charges goods are returned.

3. Bonded Warehouses : These are public warehouses which are licensed by the Government to accept imported goods for storage before payment of customs duty by their importers. When the importer finds that he cannot conveniently make payment of customs duty on the goods imported by him, he can request the customs authorities for storage of goods in the bonded warehouse till the customs duty is paid.
These warehouses are located very near to the ports. The management of these warehouses is responsible to see that the goods are not released till the duty on them is paid. The goods which are so stored are often known as goods in a bond meaning thereby that till the import duty is paid these are not be released. By storing the goods in these warehouses, the importer is able to conveniently arrange for payment of import duty and get the goods released as and when and in whatever quantity required.
Bonded warehouses may be owned privately or by the dock authorities. But in any case these warehouses have to work under the very close supervision of the customs authorities.

4. Duty paid Warehouses : These warehouses are located near the ports but are outside the dock bonds. They are constructed by Port Trust Authorities. We have such warehouses in Mumbai. When duty is paid on imported goods the importer can take the goods away into the domestic market.
But it may sometimes so happen that the importer may not be able to arrange for transportation of these goods immediately. In such case, the importer may keep the goods in duty-paid warehouses until they are transported. For this facility, the Port Trust Authorities charge a specified rent.

5. Commercial Warehouses : Some individuals or firms get built warehouses to provide storage facilities on rental basis. Such warehouses are constructed at commercial and industrial centres. These warehouses are maintained properly.
Power arrangements are made for the preservation of goods stored there. These warehouses may be insured and are run according to the rules and regulations of the government.

6. Cold Storage Warehouses : Some perishable goods such as vegetable, milk, eggs, fruits, etc. require to be stored for long without getting spoiled.
Cold storage warehouses offer the facility of storing such goods. These warehouses require cold temperature so that perishable goods can be stored long.

7. Co-operative Warehouses : These warehouses are run by co-operative societies to provide warehousing facilities in rural areas. Factories in co-operative sector have their own storage faculty, for instance, most of the sugar factories in Maharashtra have their own storage facilities.

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In recent years, the importance of communication in industry has increased on account of the following factors :

1. Large size of organization : Modern organization are large in size and employ a large number of people to realize their objectives. When the number of persons working together is large, cooperation and coordination between them become more difficult.
A formal and effective communication system is required to ensure mutual co-operation and co-ordination.

2. Technological advancement : Rapid changes in technology is a distinctive feature of modern industry. A large enterprise has to adopt latest technology to survive and grow. New technology is generally resisted by the workers.
A sound system of persuasive and educative communication is required to overcome the resistance to change. With the help of communication, management can remove the misgivings and rumours prevailing among the workers in relation to technological changes.

3. Growth of trade union movement: In almost all the industries, workers have organized themselves into powerful trade unions. In order to ensure industrial peace, management must maintain cordial relations with the trade union leaders.
A two-way communication between management and unions is very helpful in developing mutual understanding and cooperation between the two.

4. Emphasis on human relations : Employer-employees relationship is no longer considered as master-servant relationship. Workers are treated as partners in industry rather than a commodity. Management must understand the needs, aspirations, feelings and value system of employees in order to manage them effectively. Two way communication is a very effective means of understanding and managing human behaviour.

5. Public relations : A modern business enterprise is conscious of its responsibilities to the society. It seeks to create and maintain a favourable image of itself among the various social groups. It can do so by keeping the different segments of society informed about its social obligations.

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1. It facilitates production in anticipation of demand : In the modern world production of goods is undertaken in anticipation of demand rather than against existing demand. Hence, warehousing provides services to store these goods properly till the demand for them is made.

2. Warehousing maintains the stock of seasonal production : Production of some of the commodities takes place only during a particular season of the year whereas the demand for the same exists and has to be net throughout the year.
Hence, warehousing helps in maintaing the even supply of these goods throughout the year.

3. Warehousing provides basis both to wholesalers as well as retailers : Storage constitutes the basis of operation by the wholesalers and retailers. Retailers store the goods to be made available to the customers on demand and wholesalers do so to maintain an uninterrupted supply-line to the retailers.
Warehousing provides opportunity to wholesalers and retailers to avail the economies of bulk buying as they often buy goods far in excess of their immediate demand which requires storage.

4. Warehousing enables the producers to respond according to production techniques : Sometimes the production processes may also necessitate storage of partly manufactured goods for varying periods.

5. Price stability : Sometimes storage of goods may become necessary in order to correct any distortions in prices e.g. in case of seasonal goods, their plentiful supply in the season may create conditions of glut thus forcing the prices to fall.
Warehousing enables producer to maintain stock of excess quantity during such period and thus, helps estabilishing the prices.

1. Life Insurance : Life Insurance is a contract under which one person, in consideration of a premium paid either in lumpsum or by monthly, quarterly, yearly payments, undertakes to pay to the person for whose, benefit the insurance is made, certain sum of money either on the death of a person whose life is insured or on the expiry of a specified period of time.

2. 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.
Normally, the fire Insurance policy is for a period of one year after which is to be renewed from time to time.

3. Marine Insurance : Under a contract of marine insurance, the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against. Marine insurance is an agreement by which the insurer undertakes to compensate the owner of a ship or cargo for complete or partial loss at sea.

4. Other Insurance : Other Insurances are as follows :
(i) Health Insurance : Health Insurance is a safeguard against rising medical cost. A health insurance policy is a contract between an insurer and an individual or group, in which the insurer agrees to provide specified health insurance at an agreed upon price. Depending upon the policy, premium may be payable either in a lumpsum or in instalments.
Health insurance usually provides either direct payment or reimbursement for expenses associated with illness and injuries. The cost and range of protection provided by health insurance depends on the provider and the policy purchased.

(ii) Motor Vehicle Insurance : In Motor Vehicle Insurance the owner's liability to compensate people who were killed or insured through the negligence of the motorists or drivers is passed on to the insurance company. The rate of premium under motor insurance is standardized because the business is tariff.

(iii) Burglary Insurance : Burglary insurance falls under the classification of insurance of property. 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 fact of such nature are covered. The actual loss is compensated.

(iv) 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 contract against death resulting from accident, disease, parturitions or pregnant condition as the case may be.

(v) 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.
This insurance covers adjacent all risks of loss or damages relating to production of rice, wheat, millets, oil seeds and pulses etc.

(vi) Sport Insurance : This policy assures a comprehensive cover available to amateur sportsmen covering their sporting equipment, personal effect, legal liability and personal accident risks. If desired the cover can also be made available in respect of the named member of insurer's family residing with him.
This cover is no available to professional sportsmen. The cover is available in respect of any one or more the following sports: Angling, badminton, cricket, golf, lawn tennis, squash, use of sporting guns.

(vii) Amartya Sen Siksha Yojana Insurance : This policy offered by the General Insurance Company secures the education of dependent children. If the insured parent/legal guardian shall sustain any bodily injury resulting solely and directly from accident, cause by externa] violent and visible means and if such injury shall within twelve calendar months of its occurrence be the sole and direct cause of his/ her death or permanent total disablement, the insurer shall indemnify the insured student, in respect of all covered expenses to be incurred from the date of occurrence of such accident till the expiry date of policy or completion of the duration of covered course whichever first occurs and such indemnify shall not exceed the sum insured as stated in the policy schedule.

(viii) Rajeshwari Mahila Kalyan Bima Yojana : This policy has been designed to provide relief to the family members of insured women in case of their death or disablement arising due to all kinds of accidents and/or death and/or disablement arising out of problems incidental to women only.

1. Greeting Post: Beautiful greeting cards.

2. Media Post : Effective media for indrain corporate to advertise their brand through post cards, envelops, telegrams etc.

3. Direct post for direct advertising.

4. International money transfer through collaboration with Western Union finance services, USA which enables remittances of money from 185 countries to India.

5. Speed post: It has over 1000 destination in India and links with 97 major countries across the globe.

6. e-bill post is the latest invention of the department to collect bill payment across the counter for BSNL and Bharti Airtel.

Characteristics of services :

1. Intangibility : The most distinguishing feature of a service is that it is intangible. It has no shape, size or other physical dimensions. Intangible nature of services has many implication.

(i) A service cannot be routed.
(ii) Precise standardization is not possible.
(iii) A service cannot be patented.
(iv) There is no transfer of ownership.
(v) There are no inventories.

2. Irreparability : In most cases a service cannot be separated from the person who sells it. For example, an electrician has to be physically present to provide the services. Therefore, production and consumption of services are inseparable. This is in sharp contrast to products which can be produced and stored for sale in future.

3. Perishability : Services cannot be produced before sale and stored for future demand. An empty seat in an aircraft, a spare birth in a train, an unsold seat in a cinema hall represent a service capacity which is lower foreover. Thus service not fully utilised represent a total loss.

4. Heterogeneity: Since the human element is dominant in rendering services, it is almost impossible to standardize the quality of services. Two waiters in a restaurant or two clerks in a bank rarely provide the same quality of service. Even the same provider may not provide indentical service.
The doctor who gave you complete satisfaction on your first visit may behave different on you next visit. This is despite the fact that rules and procedures have been laid down to ensure maximum efficiency.

5. Ownership : When you buy a product e.g. a shirt or a book you become its owner. But when you buy a service e.g. a seat in an aircraft you do not become its owner. In case of services the payment is not for purchase but only for the use of the facility. A service is purchased for the benefit it provided.

A profile of packages offered by LIC :

1. Jeevan Mitra : Double benefit Endowment Assurance Policy with additional insurance cover equal to the sum assured in the event of death before maturity.

2. Jeevan Sathi : A joint life insurance for couples. Assured sum, immediately payable in the event of death of one of the partners, to the survival partner who need not pay further premiums. The policy is kept alive and will continue to earn bonuses declared on the basis of yearly valuations.
Once again, the basic sum assured with bonuses is payable to the surviving partner on the date of maturity or to the nominee in the event of death of the surviving partner before the date of the maturity. If both partners survive the selected term, the basic sum assured with bonus is paid on the date of maturity.

3. Money Back Policies: Suitable for those who periodically need lumpsum payments. It provides risk cover and lumpsum payments.

4. Jeevan Surabhi: An improved version of Money Back Policy (MBF). Provides increasing life insurance cover with lumpsum payments at short intervals and limited premium paying term.

5. Bima Sandesh : Low-premium term assurance plan. Premium is paid only on survival.

6. Jeevan Kishore : (Exclusive plan for children aged 7 and above), Jeevan Sukanya (ideal scheme for the girls aged 1-12), Jeevan Griha (specially designed for those who need a house) and Jeevan Akshay are the pension plans.

For example, one significant trend is increased use of cross docking, an approach whereby products received at a warehouse are immediately shipped out without ever being put into storage. With computerized information systems, warehouses can pre-assign a shipping door for each inbound carton.
When the shipment arrives, a receiving dock employee can quickly apply a bar-coded-shipping label that includes destination data, and place the carton directly on an outbound vehicle. Cross docking is even changing the configuration of the warehouse.
Although traditional warehouses are square, with truck doors on one side and rail doors on the other, combination storage/cross dock warehouses took more like a modified U with storage at either end and cross-docking areas in the center.
Goods are received through the cross-dock area and moved directly to shipping doors or, if necessary, to short-term storage, which minimizes the distance goods have to travel within the warehouse.

With more and more companies eliminating inventory, warehouses are performing fewer storage functions. Instead, they are growing adept at keeping products moving quickly and accurately.
This requires sophisticated computer information systems to minimize storage costs and time while maximizing quality service to warehouse customers.
The best warehouses are therefore reinventing their role as supply chain partners by becoming expertly managed 'flow through' centers.

(i) Widening of Market : With the emergence of improved means of transport, goods and services can be moved from one place to another at considerably low expenses and with greast ease and speed. This stimulates to produce for local as well as foreign market and expansion of national and international trade.

(ii) Mobilisation of Resources: Transport facilitates the mobility of man, materials and money which is necessary for large scale production and for having balanced development of various regions in the country.

(iii) Regional Specialisation : Transport leads to specialisation on geographical basis. It can concentrate only on the production of those products for which it is most suited and can depend on transport to get its other requirements fulfilled from other regions and sell its surplus production to other regions.

(iv) Price Stabilisation : Transport helps in stabilising prices by facilitating movement of goods from surplus areas to deficit areas. This loads to equilisation of prices in different regions.

(v) Economies of Scale : Transport facilitates the achievement of various economies of large scale production which leads to low cost of production.

(vi) Growth of Industries : Transport helps the growth of industries producing perishable goods like fruits, vegetables and dairy products by carrying them quickly to various consumers located in different areas.

(vii) Social functions : Transport provides employment to people. It helps in stabilising prices. It assists in removing regional disparities.

(viii) Nationalism : Transport is necessary for achieving national integration. It creates a bond of unity among the people of different regions in the country. Transport is indispensable for the defence of a country.

1. Cost : Water transport is the cheapest means of transport for carrying bulky goods over long distance road when time is not essential. Railway is cheaper than road transport for heavy goods and long distance movement.
For small consignments carried over short distance, transport is cheapest. Air transport is the costliest means of transport because its operational cost is too high and its capacity is limited.

2. Carrying capacity : Railways and waterways have larger carrying capacity than other means of transport. They are also cheaper when the whole wagon or vessel is booked for sending the cargo.

3. Speed : Air transport gets first ranking while waterways is the slowest means of transport. Road transport is faster than rail transport over short distance only but for long distances rail transport is faster than road transport.

4. Flexibility of Services : Water, rail and air transports are not flexible as they suffer from the problem of terminal because goods have to be carried to and from the terminal. Road transport is flexible as it covers the maximum areas of the country and is capable of providing door-to-door service. Road transport acts as a complementary service to the other modes of transport.

5. Regularity of Service : Rail transport is the most regular service as it follows regular schedules and is uninfluenced by weather conditions. Road, water and air transport are greatly influenced by weather conditions. Impact of weather on road is comparatively less as compared to airways and waterways.

6. Safety : Roads are considered as safest means of transport. Rails are less prove to accidents as compared to road vehicles. Airways and waterways are the most risky modes of transport.

We are living in the era of advanced communication which has reduced the whole world to a 'global village'. Through the facilities of quick exchange of information with the help of electronic media. Various communication services such as telephone, telegraph, radio, television, satellite communication, fax, e-mail etc, have transformed the modern society and have made our life quite comfortable.

For any organisation, both internal and external communication are essential. Internal communication includes messenger service, intercom, closed circuit television, internal telephone network etc. External communication systems include postal service, telegraphic service, telephone network, fax, e-mail, video conferencing etc.

We may classify the modes of communication as follows :

(i) Postal communication
(ii) Telecom or Telecommunication
(iii) Electronic communication : Fax, Internet, E-mail, Voice mail.

Postal Communication :

A post office is a government institution which is engaged in providing communication service for the whole nation. In addition to communication, post offices facilitate remittance of funds from one place to another and also perform many banking functions.
In our country, post and telegraph services are managed by the Post and Telegra.ph Department which function under the ministry of communications.

Inland Post :

(i) Letter : By letter is meant an envelop. It ensures secrecy of the message.
(ii) Inland Letter Card : The message can be written on the inland letter card itself. If also ensures secrecy of communication like a letter.
(iii) Post Card : A post card is the cheapest means of communication.
(iv) Business reply post card and envelops : The 'Business Reply' service, helps business men to receive prompt reply from their customers who need not bear the cost of postage on that reply.
(v) Book and Pattern Packets : A book packet is a packet containing (a) newspapers, publications of all kinds, printed music books, pictures, maps and drawings : (b) business and legal documents like deeds, accounts, powers of attorney and insurance policies (c) manuscripts for press and (d) written letters of old date which have previously passed through post and served their original purpose.

Telegraphic Service (Telegrams)

Telegram is one of the means of sending messages quickly over relatively long distances. This service is fast and reliable.

Telecom Services:

1. Telephone Service : Oral communication is possible with the help of telephones. If it is desired to talk to any person in another organisation either in the same city or outside the city, the local or trunck call services can be made use of respectively.

2. Cellular Phone : Cellular telephone is a cordless mobile communication device which facilitates two way communication in a wide geographical area.

3. Pager : Pager is a one way wireless communication device which receives and records messages in writing.

4. Fax: A fax machine is a piece of equipment used to copy document by sending information electronically along a telephone line, and to receive copies of that are sent on this way. It means that if we want to fax a document to someone, we will send it from one fax machine to another.

Internet:

Internet is a vast computer network of many different computer networks existing in the world. It is a collection of interconnected networks. 'Internet' connection, one can communicate with any other subscriber of internet throughout the world.
Internet service is provided in India by many companies including VSNL, Essar, Bharti Telecom and MTNL. They are also known as Internet Service Providers (ISP).

World Wide Web :

It contains millions of electronic documents called Web pages. A web page contains text and graphics which are linked to related information.

e-Mail:

e-mail is a system of electronic correspondence by which users send and receive messages over a network of computer and telecommunication links. The messages may consist of short notes and greetings, or extensive text files plus graphics and photographic images, video clips or sound.

Voice Mail:

Voice mail is used to leave voice message for the other person when he is not around his telephone. It is a computerised system for receiving and delivering incoming calls to the intended subscribers.

Unified Messaging Service (UMS):

As the name suggests, UMS integrates various communication services for the benefit of customers. It converts voice message, SMS, phone call, fax or any other form of message into the form that fits the device of the customer is using.

1. To submit an application : When a new account is opened the bank usually requires an introduction. The introduction may be by an existing customer or by some reputed person who is well-known to the bank. The purpose of correct introduction is to establish applicants correct identity and honesty so that frauds could be avoided in future.

2. To take specimen signature : After getting a proper introduction, the bank opens the account and the specimen signature of individual persons who are authorized to operate the account are obtained. In case of partnership the specimen signatures of all partners who are authorized to operate the account are obtained.
Applicants are, generally, asked to give two to three specimens of their signatures on a card which is kept safely in the bank's record. When the customer signs any cheque/withdrawal form for withdrawing money from the bank his specimen signatures are compared with his signatures on the cheque or withdrawal form.
If his signature do not tally with his specimen signatures, his cheques and withdrawals are not honoured.

3. To deposit initial amount : Initial amount is the minimum amount which the applicant is required to deposit in the bank for opening a new account. In case of a saving account it is Rs. 500 to 1000. After receiving the initial amount the bank opens an account in the name of the applicant.
After the completion of all these formalities, account can be opened. When a new account is opened the bank supplies the depositor a Cheque Book and a Pass Book.

1. Originating and destination bank branches should be part of NEFT network.

2. Beneficiary details such as beneficiary name, account number and account type.

3. Name and IFSC of the beneficiary bank-branch.

(ii) Mobilizes capital : It accepts deposits from all section of society. The amount so accumulated is made available to trade, industry and commerce. Thus, it directly leads to mobilization of financial resources of the society lying scattered in small amounts.

(iii) Plays the roles of creditor and debtors : A bank plays the role of creditor and debtor at the same time. It is indebted to all the depositors whose money, for the time being it is using, to advance loans, etc., to its needy clients. At the same time, it is a creditor to those whom it has granted loans and advance.

(iv) Creator of Money: Banks create money when they grant overdraft and credit facilities to account holders.

2. Maximum amount : There is no upper ceiling for RTGS transaction.

1. Meeting Financial Requirements :

The industrialists and traders often face the shortage of capital for buying materials and holding stock. This problem is solved by the commercial banks and other financial institutions which meet the financial requirements of trade and industry. Commerical banks also offer loans to consumers for the purchase of durables such as scooter, refrigerator, T V, etc. They facilitate remittance of funds from one place to another and also settlement of credit transactions.

2. Coverage of Business Risks : Business firms are exposed to several risk such as theft, fire, flood, etc. Such risks are covered by insurance companies through various policies issued against payment of required insurance premium. Insurance companies cover the risks of goods in storage and also in the process of transit of goods to traders and consumers. Business premises, stock, furniture, plant and machinery can be insured against fire, theft, and other risks.

1. Amount to be remitted.

2. His account number which is to be debited.

3. Name of the beneficiary bank.

4. Name of the beneficiary customer.

5. Account number of beneficiary customer.

6. Sender to receiver information if any.

7. The IFSC code of the receiving bank branch.

1. Principle of Utmost Good Faith : The contract of life insurance is a contract of utmost good faith. Insured should be honest and truthful information to the insurance company. He knows more about the subject matter of the contract than the other party. Consequently, he is under a duty to disclose accurately all material facts known to him to the insurer.

2. Principle of Insurance Interest: In life insurance, the isnured 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. It is not necessary that assured should have insurable interest at the time of maturity also.

3. Principle of Indemnity : Life insurance contract is not a contract of indemnity. The life 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. Once the sum of money payable is fixed, it is coastal invariable. A contract of insurance, therefore, is not a contract of indemnity.

The other options open to him are EFT and NEFT.

(i) Corgo insurance,

(ii) Hull insurance and

(iii) Freight insurance.

1. Insurable Interest : In fire insurance the assured must have insurable interest in the subject matter of the insurance. Without insurable interest the contract of insurance is void. In case of fire insurance, there must be present both at the time of insurance and at the time of loss.

(i) Ownership,

(ii) Possession, and

(iii) Contract.

2. Utmost Good Faith : The contract 0f hi insurance is a contract of utmost good faith. The insured should be truthful and honest in giving information to the insurance company. Insured knows everything about the subject matter of the insurance. He is under a duty to disclose accurately all factual information known to him. The insurance company should also disclose the facts of the policy to the proposer. So utmost good faith on the part of both the parties is a must.

3. Indemnity: The contract of fire insurance is a contract of strict indemnity. The assured can, in the event of loss, recover the actual amount of loss from the insurer. This is subject to the maximum amount for which the subject matter is insured.

1. Contract of Indemnity : The contract of marine insurance is a contract of indemnity. The assured 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, so far Hull insurance is concerned. Cargo policies provide commerical indemnity rather than strict indemnity. The insurers promise to indemnify the insured 'in the manner and to the extent agreed.'

2. Contract of Good Faith : The contract of marine insurance is a contract of utmost good faith. Both the insured and insurer must disclose everything, which is in their knowledge and can affect the insurance contract. The insured should be truthful and honest in giving information to the insurance company. He is under a duty to disclose accurately all factual information known to him. The insurer should also disclose the facts of the policy to the proposer. If either party does not observe utmost good faith, other party may avoid the contract. So utmost good faith on the part of both the parties is a must.

(i) Communication involves interchange of facts and thoughts from one person to another to bring about mutual understanding.

(ii) Communication is a two-way process involving sending of a message and receiving the reaction to that message. One person alone cannot communicate.

(iii) Communication is a continuous or never ending process. A manager must always be in touch with his subordinates and superiors to get things done efficiently and effectively.

(iv) Communication is a pervasive function. It applies to all phases of management and to all levels of authority.

(v) The basic purpose of communication is to create mutual Understanding and unity of purpose. According to Keith Davis, the objectives

of communication is to provide the information, skill and understanding necessary for group efforts; and to provide the attitudes necessary for cooperative relationship.

Reason : In case of life insurance policy, the insurable interest must be present at the time of taking policy. The husband will get the compensation for the death of his wife even after divorce, if he is making regular payment of premium even after divorce.

1. Fire means actual fire and ignition caused.

2. It should be accidental and not intentional.

1. Orientation : Earlier banking policy was urban oriented. Now it has shifted to rural orientation.

2. Banking: Earlier, there was class banking. Now it has shifted to mass banking.

3. Change in procedure : Earlier the procedure of working of banks used to be traditional. Now the banks are having innovative practices.

4. Objectives : Short term objectives have shifted to long term objectives.

1. Post Office Saving Bank,

2. 5 years Post Office Recurring Deposit Scheme,

3. Post Office Time Deposit Account,

4. Post Office Monthly Insurance Scheme,

5. Senior Citizens Saving Scheme,

6. National Saving Certificates and

7. Kisan Vikas Patra.

1. Name and address of the sender.

2. Name and address of the person to whom the letter is to be delivered.

3. Date of posting the letter.

A postage stamp is affixed on the certificate of posting.

Type of crossing : There is two types of crossing :
 (i) General crossing
 (ii) special crossing.
 In general crossing, we draw two parallel lines with or without writing. 'Accounts payee' or 'Not negotiable'. On the other hand in special crossing we write the name of a particular bank between the two transverse parallel lines.