11th Class Business Studies Business Services Business Serivces (Notes)

Business Serivces (Notes)

Category : 11th Class


Business Services


Facts that Matter


  • In all business activities it is either a good which is being transacted or a service which is being experienced.
  • Services are certainly intangible. Their purchase does not lead to creation of anything physical.
  • Business services mean those services which help in the successful running of a business. Business cannot be even imagined in the absence of these services. For example; banking, insurance, transport, warehousing and communication.
  • Digital payments are the mode of payment for online commerce.
  • There are too many good UPI apps available such as BHIM, SBI UPI, HDFC UPI, iMobile, Phone Pe etc.
  • AEPS uses your fingerprint as a password. No one can forge your fingerprints, thus it is the most secure digital payment mode.
  • We need not have a smartphone or internet connection to use USSD banking. We can easily use it with any normal feature phone. USSD banking is as easy as checking your mobile balance.
  • Credit cards are issued by banks and some other entities authorized by RBI.
  • E-wallet or mobile wallet is the digital version of your physical wallet with more functionality.


Nature of Services


  • Features: Services are explained by five Ps namely; Intangibility, Inconsistency, Inseparability, Inventory and Involvement.
  • Intangibility: Services are intangible i.e., they cannot be touched. They can only be experienced.
  • Inconsistency: The second important characteristic of services is inconsistency.
  • Inseparability: Production and consumption of services take place simultaneously. It is possible to manufacture a chair today and sell it later but in case of services it has to be simultaneous.
  • Inventory: Services have no inventory as they can't be stored.
  • Involvement: Consumer gets involved in production of services and gets the opportunity to get the services modified as per his specific requirement.


Types of Services


  • Social Services: These services are provided voluntarily to achieve certain goals. For example, health care and education services provided by NGOs.
  • Personal Services: Services which are experienced differently by different customers are called personal services. For example, tourism, restaurants etc.
  • Business Services: Services used by business enterprises for the conduct of their business activities. For example, banking, insurance, communication, warehousing and transportation.  




Bank means a company accepting deposits of money from public (for lending and investment), repayable on demand and withdrawal by cheque or otherwise.             


E - Banking


Meaning: Banking using electronic media i.e., Internet with personal computer, laptop, mobile phones is called e-banking.



Services Offered by E-Banking


  • Electronic Fund Transfer System (EFTS)                                                   
  • Automated Teller Machine (ATM)                                                        
  • Point of Sales (PoS)
  • Credit Cards.                                                                               




  • 24 hours  7 day services                                                                      
  •  It can operate from anywhere in the world.
  •  It provides greater security as customer can travel without cash.


Functions of Commercial Bank                                                         

  • Accepting the Deposits

Ø  Fixed/Time Deposits

Ø  Current/Demand Deposits

Ø  Saving Deposit Account

Ø  Recurring Deposit Account

Ø  Multiple Option Deposit Account                                                       

  • Lending Money

Ø  Loans

Ø  Cash credit

Ø  Overdraft

Ø  Discounting and purchase of bills of exchange


Types of Banks


  • Commercial bank
  • Central bank
  • Cooperative bank
  • Specialized banks


Commercial Bank


  • Public Sector Bank: They are owned by government. They are 20 in numbers. E.g. SBI, PNB, C.B., etc.
  • Private sector banks: These banks are owned by private promoters HDFC, ICICI, etc. to emphasize more on profitability.
  • Foreign banks: They are owned and managed by foreign promoters. For example; Citi Bank, Standard Chartered.


Co-operative Bank


They provide cheap credit to their members, an important source of rural credit i.e., Agricultural Financing in India. For example, Delhi Nagrik Shastri Bank etc.


Specialized Bank


They are foreign exchange banks, industrial banks, development banks, export/import banks etc. These banks provide financial aid to industries, heavy turnover / key projects and foreign trade. For example, IDBI, SIDBI etc.


Central Bank


The central bank of a country is the apex institution and the monetary authority of a country. It issues currency and controls money supply and credit in the country. It supervises controls and regulates the activities of all commercial banks. It also acts as a banker to the Government. Reserve Bank of India is the central bank of our country.






It is a contract where one party who takes the responsibility of the risk of other party in exchange of some fixed amount which is called premium.


Principles of Insurance


  • Principle of the utmost good faith: It means that no material or important facts should be concealed by both the parties to the insurance contract.
  • Principle of insurable interest: It means that there must be such a relationship between the insured and the subject matter of insurance that the insured stands to benefit by its safety and to loose by its loss.
  • Principle of Indemnity: It means that the insured person can get only the compensation against actual loss and he cannot make profit out of it.
  • Proximate causes: When the loss is the result of two or more causes, the proximate cause, i.e., the direct, the most dominant and most effective cause of loss should be taken into consideration. The insurance company is not liable for the remote cause.
  • Principle of subrogation: It means that if the insured compensate the insured person then all the rights related to the subject matter of insurance get transferred to the insurer.
  • Principle of contribution: If the same subject matter, except life is insured by more than one person, then the actual loss will be shared by all the people.
  • Principle of mitigation: It means that the insured should try to minimise the loss of the subject matter of the insurer even if it is insured.


Types of Insurance


Life Insurance


  • Life Insurance is defined as a contact in which the insurer, in consideration of a certain premium, either in a lump sum or by other periodical payments, agrees to pay to the assured, or to the person for whose benefit policy is taken, the assured sum of money, on the happening of specified event contingent on human life or at the expiry of certain period.


Main Elements of Life Insurance Contract are


  • It must have all the essentials of a valid contract.
  • The contract of Life Insurance is a contract of utmost goods faith.
  • In Life Insurance, the insured must have insurable interest in life insured.
  • It is not a contract of indemnity.


Types of Life Insurance


  • Whole Life Policy: Under this amount payable will not be paid before the death of the assured. It will be payable to legal heir (s).
  • Endowment Life Insurance: Under this sum assured is given in full payment after completion of policy / death of insured, whichever is earlier.
  • Joint Life Policy: When a policy taken up by two or more persons, it is called joint life policy.
  • Annuity Policy: When policy money is payable monthly, it is called annuity policy.
  • Children Endowment Policy: It is a policy for children to meet higher education or marriage expenses.


General Insurance


  • Fire Insurance: It is a contract whereby the insurer, in consideration of a premium paid, undertakes to make good any loss or damage caused by a fire during a specified period upto the amount specified in the policy.
  • Marine Insurance: It is an agreement whereby the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against marine losses. It provides protection against any loss by marine perils or perils of the sea.
  • Health Insurance
  • Vehicle Insurance
  • Burglary Insurance
  • Cattle Insurance
  • Crop Insurance
  • Fidelity Insurance
  • Ship Insurance
  • Cargo Insurance
  • Freight Insurance


Communication Services


Meaning: It can be defined as the imparting or exchanging of information by speaking, writing, or using some other medium. In other words, it means of sending or receiving information, such as telephone lines or computers.




  • Establishing links with outside world, i.e., suppliers, customers, competitions etc.
  • For quick exchange of information.
  • For each and every function of business, we need communication.


Postal Services


  • In India there are 1,54,149 Post Offices.
  • The whole country is divided into 22 postal circles.
  • The different facilities that are provided by postal services are grouped under:

Ø  Financial facilities: It includes monthly income scheme, deposits, Money Order, NSC and Kisan Vikas Patra.

Ø  Mail facilities: It includes parcels, registration of transmitted articles etc.

Ø  Allied facility

ü  Greeting Post

ü  Media Post

ü  Speed Post

ü  E-Bill Post

ü  Direct Post

ü  Inter-national Money Transfer


Telecom Services


  • World class telecommunication infrastructure is the key to rapid economic and social development of a country.
  • It is the backbone of any business.
  • Government of India has developed new Telecom Policy Framework, 1999 and Broadband Policy 2004 to provide universal services to all uncovered areas and high level services for meeting the needs of our economy.


Types of Communication Services


  • Cellular Mobile Services
  • Radio Paging Services
  • Fixed Line Services
  • Cable Services
  • VSAT Services
  • DTH (Direct to Home) Services like Tata Sky, Reliance etc.


Words that Matter


  • Banking: It refers to the acceptance for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise".
  • Bank: Bank is a financial institution which accepts money deposits, repayable on demand and also earns a margin of profit by lending money.
  • Bank Account: A bank account is a record of the financial transactions between the customers and the banking institutions.
  • Savings Account: Savings account is the account meant for people who wish to save a part of their income to safeguard the future and earn interest on the savings.
  • Current Account: Current account is opened by businessmen who have a number of regular transactions with the bank, both deposits and withdrawals.
  • Fixed Deposit Account: Fixed deposit account is an account in which the amount is deposited with the bank for a fixed period of time.
  • Recurring Deposit Account: Recurring deposit account is opened by those who want to save regularly for a certain period of time and earn a higher interest rate.
  • Multiple Option Deposit Account: MOD account interlinks the savings bank account with a deposit account and any amount in excess of a pre-determined amount is automatically transferred to a fixed deposit (FD).
  • Bank Draft: Bank draft is an order issued by a bank on any branch of the same bank to pay the specified amount to the person named in it.
  • Banker's Cheque: Banker's cheque is almost like a bank draft. It refers to that bank draft which is payable within the town.
  • Real Time Gross Settlement (RTGS): Real Time Gross Settlement (RTGS) system is an online system for transferring funds in which transfer of money takes place from one bank to another on a real time and on gross basis.
  • National Electronic Funds Transfer (NEFT): National Electronic Funds Transfer(NEFT) system is an online system for transferring funds in which transfer of money takes place from one bank to another on net basis.
  • UPI: Unified payment interface is a payment mode which is used to make fund transfers through the mobile app. You can transfer funds between two accounts using UPI apps.
  • AEPS: AEPS is an Aadhaar based digital payment mode. The term AEPS stands for Aadhaar Enabled Payment Service.
  • USSD: USSD banking or *99# Banking is a mobile banking based digital payment mode. You do not need to have a smartphone or internet connection to use USSD banking.
  • Cards: Cards are provided by banks to their account holders. These have been the most used digital payment modes till now. Many of us use cards for transferring funds and making digital payments.
  • Prepaid Cards: Prepaid cards are another type of cards which you use to pay digitally. You must have to recharge these cards before using just like prepaid SIM cards.
  • E-Wallets: E-wallet or mobile wallet is the digital version of your physical wallet with more functionality.
  • Bank Overdraft: It refers to a facility in which a customer is allowed to overdraw his current account up to an agreed limit.
  • Cash Credit: Cash credit refers to a loan given to the borrower against his current assets like shares, stocks, bonds, etc.
  • Electronic Banking: Electronic banking is a service provided by many banks, in which a customer is allowed to conduct banking transactions over the internet using a personal computer, mobile telephone or handheld computer (personal digital assistant).
  • Automated Teller Machine: ATM is a computerised machine that provides the customers of banks the facility of accessing their accounts with a magnetically encoded plastic card and a code number.
  • Debit Cards: Debit card is an electronic card issued by a bank which allows the bank client access to his account to withdraw cash or pay for goods and services.
  • Credit Cards: A credit card is an electronic card issued by a financial institution authorizing the holder to buy goods or services on credit.
  • Internet Banking: Internet banking refers to making banking transactions directly with the bank through the internet.
  • Mobile Banking: Mobile banking is a system that allows customers to perform banking transactions through a mobile device.
  • Insurance: Insurance is a contract between two parties, whereby one party agrees to indemnify (cover) the loss suffered by the other party for a consideration of some money, known as Premium.
  • Life Insurance: Life insurance is a contract, under which the insurer in consideration of a premium, agrees to pay a specified amount on the death of the assured, or on the expiry of a certain fixed period, whichever is earlier.
  • Health Insurance: 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 (the premium).
  • Fire Insurance: Fire insurance is a contract whereby the insurer, in consideration of the premium paid, undertakes to compensate the insured for any loss that may result due to the occurrence of fire.
  • Marine Insurance: Marine insurance is a contract of insurance under which the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against marine losses.
  • Reinsurance: It is a contract of insurance, in which an insurer enters into a contract with another insurer to insure the whole or a part of risk covered by the first insurer.
  • Double Insurance: When more than one insurance policy is taken to cover the same risk, then it is known as Double insurance.
  • Under Postal Certificate: Under Postal Certificate is a certificate issued by the post office on payment of prescribed fee, when the sender wants to have a proof that he has actually posted the letters.
  • Registered Post: Registered post is a postal service in which mail is registered by the post office at the time of sending, in order to assure safe delivery.
  • Parcel: Parcel Post is a service of a postal administration for sending articles from one place to another through the post.
  • Speed Post: Speed Post is a postal service which provides for time-bound and express delivery of letters, documents and parcels across the nation and around the world.
  • Courier: Courier is a mail service provided by private operators in which they collect letters and parcels from the doorstep of senders and delivers them at the place of the addressee.
  • Recurring Deposit Account: Post-Office Recurring Deposit Account is a banking service offered by Department of Post, Government of India at all post office counters in the country.


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Business Serivces (Notes)

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