chapter 4 Flashcards
service sector
commercial firms engaged in banking, communication, transport, insurance , warehousing etc
nature of services
- intangible
- inventory
- inconsistency
- inseparability
- customer’s participation
three types of services
- business
- social
- personal
business services
services which are used by business enterprise to carry business activities more smoothly
social services
services carried voluntarily to achieve social goal.
bank
an institution which attracts money on deposits for the purpose of being lent to the industry or trade
types of accounts
1, saving deposit account
2. current deposit account
3. recurring deposit account
4. fixed deposit account
5. multiple option account
important services provided by bank
bank draft
banker’s cheque
overdraft
cash credit
loans
bank draft
bank draft is a paper document that’s used to transfer money from one account to another. It’s similar to a check, but the issuing bank guarantees the payment.
banker’s cheque
a document which instructs a bank to pay a certain sum to a third party
overdraft
a customer having current account is allowed to withdraw more than the balance in his account
cash credit
under this arrangement, the borrower is allowed to withdraw up to certain limit against security
loan
lump sum advance repayable on expiry of a specific period.
digital payment
a system of making online payment without involving physical exchange of money.
methods of digital payment
- debit card
2.credit card - national electronic fund transer
- real time gross settlement
- atm
- e cash
benefits of e-banking
- digital payment and transparency
- 24*7 services
- convenience
- financial discipline
- unlimited access
- less risk
benefits to bank
- competitive advantage
- unlimited network
- reduced loan on branches
insurance
insurance is a contract between the insurer and insured in which insurer agrees to make good the loss of insured on happing of an event in consideration of regular payment.
principle of utmost good faith
the insured and insurer must disclose all the material facts to each other and both the parties should not hide any fact related to insurance policy from each other.
principle of insurable interest
the insured must have an insurable interest in the subject of insurance policy.
principle of indemnity
insurance is not a contract of making profit. The purpose of insurance is to bring back the insured in the same financial position as he was before.
principle of contribution
if a person has taken more than one insurance policy for the same subject matter than all the insurers will contribute the amount of loss and composite him for actual amount of loss.
principle of subrogation
when the insured is compensated for the loss or damage to the property insured by him/her, the right of ownership of such property [asses to insurer
principle of causa Proxima
the cause or reason for the loss must be related to the subject matter of the insurance contact.
principle of mitigation of less
the insured must take care of his property or subject matter f insurance in the same way as he would take care without taking insurance policy.
elements of life insurance
- utmost good faith
- insurable inters must be present
- no contract of indemnity
types of insurance
- life
2.fire - health
- marine
fire insurance
a contract under which one party in return for a consideration agrees to indemnify the other party for the financial loss which the latter may suffer due to damage to the property insured by fire during specific period of time and up to specific amount.
main element of fire insurance
- utmost good faith
- insurable inters must be present
- contract of indemnity
- compensation is only paid for loses due to fire
marine insurance
a contract under which one party in return for a consideration agrees to indemnify the other party for the financial loss which the latter may suffer due to damage to the property insured by water during specific period of time and up to specific amount.
types of marine insurance
- cargo (goods)
- hull (ship)
- freight (fair)
main elements of marine insurance
- utmost good faith
- insurable inters must be present
- contract of indemnity
- compensation is only paid for loses due to water
