K.E.S Shroff College of Arts and Commerce: Student Name: Falgun Patel

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BANKING & INSURANCE IN SERVICE SECTOR
K.E.S SHROFF COLLEGE OF ARTS AND

COMMERCE
CLASS: T.Y.B.M.S
(SEMESTER- 5)
SUBJECT: SERVICE SECTOR

MANAGEMENT
PRESENTATION ON: BANKING &

INSURANCE IN SERVICE SECTOR
TEACHER INCHARGE: SWETA MAM
STUDENT NAME: FALGUN PATEL

A.Y: 2010-
Acknowledgement
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Any accomplishments requires the efforts of

many people and this work is no different.The
completion of the project not only brings an
appreciated respite from many months of
demanding effort, but also provides a welcome
opportunity to acknowledge in writing the soul who
helped all along the way, Miss SWETA who is our
SERVICE SECTOR MANAGEMENT MAM who
provided overall guidence regarding the
project.Her help was willingly and expertly given at
the time of great pressure and need, so i am
greatly thankful to her.
And, i thank all those who have directly or
indirectly helped us in presenting the project.
INDEX
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Sr.No Particulars Pg.No

1 INTRODUCTION TO SERVICE SECTOR 5.
2 INTRODUCTION TO BANKING SECTOR 8
3 BANKING SECTOR IN INDIA 11
4 7’PS OF BANKING SECTOR 12
5 ELECTRONIC BANKING 21
6 INTRODUCTION TO INSURANCE 26
7 BASIC INSURANCE TERMINOLOGIES 27
8
Types of insurance 29
9 WHY DO PEOPLE IN INDIA TAKE 31

INSURANCE SERVICE?
10 FUTURE SCENARIO OF INSURANCE IN 32

SEVICE INDUSTRY
INTRODUCTION TO SERVICE SECTOR

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Service Sector is the lifeline for the social economic growth of a country. It is
today the largest and fastest growing sector globally contributing more to the
global output and employing more people than any other sector.
The real reason for the growth of the service sector is due to the increase in
urbanization, privatization and more demand for intermediate and final consumer
services. Availability of quality services is vital for the well being of the economy.
In advanced economies the growth in the primary and secondary sectors are
directly dependent on the growth of services like banking, insurance, trade,
commerce, entertainment etc.
The service sector is going through almost revolutionary change, it dramatically

affects the way in which we live and work. New services are continually being
launched to satisfy consumers existing needs and to meet the Needs that they do
not even know they had. Ten years ago people did not anticipate the need for
email, online banking, web hosting, online reservation and many other new
services, but today many of us feel we cannot survive without them. Similar
transformations are happening in Business to business marketing. Service
organizations vary widely in size. At one end are the huge international
corporations operating in industries such as tourism, airlines, banking,
telecommunication etc whereas on the other end of the scale is a vast array of
locally owned and operated small businesses including parlors , hotels , laundry n
numerous business to business services
How important is the service sector in an Indian economy?

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 in most countries services add more economic value than agriculture, raw
Materials and manufacturing combined.
 in developed economies employment is dominated by service jobs and
Most new job growth comes from services.
 Jobs range from high paid professionals and technicians to minimum
Wage positions.
 Service organizations can be any size, from huge global corporations to
Local small businesses.
 Most activities by govt. agencies and non profit orgs involve service.
BANKING SECTOR
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INTRODUCTION TO BANKING SECTOR

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A bank is an institution that deals with money and credit. Different people
understand meaning of a bank in different ways. For a common man, bank is a
storehouse where money is stored, for a businessman it is a financial institution
and for a day to day customer it is an institution where he can deposit his savings.
Banks play an important role in the economy of any country as they hold the
savings of the public. Provide means of payment for goods and services and
provide necessary finance for development of business and change. Thus bank is a
link in the flow of funds from the savers to the users hence they should render
efficient customer service in order to retain the present customers and also to
attract the potential customer.
In the past the banks did not face any attraction in the Indian economy because of
the low level of the economic activities and the little business prospects. Today we
find positive changes in the national business development policy. Earlier the
moneylenders had a strong hold over the rural population which resulted in
exploitation of small and marginal savers. The private sector banks failed in
serving the society. This resulted in the nationalisation of 14 commercial banks in
1969. There was a basic change in the banking concept with a beginning in the
nationalisation of big commercial banks. The involvement of public sector banks,
transformed the Indian economy.
The Indian banking can be broadly categorized into nationalized (government

owned), private banks and specialized banking institutions. The Reserve Bank of
India acts a centralized body monitoring any discrepancies and shortcoming in the
system. Since the nationalization of banks in 1969, the public sector banks or the
nationalized banks have acquired a place of prominence and has since then seen
tremendous progress. The need to become highly customer focused has forced the
slow-moving public sector banks to adopt a fast track approach. The unleashing of
products and services through the net has galvanized players at all levels of the
banking and financial institutions market grid to look anew at their existing
portfolio offering. Conservative banking practices allowed Indian banks to be
insulated partially from the Asian currency crisis. Indian banks are now quoting a
higher valuation when compared to banks in other Asian countries (viz. Hong
Kong, Singapore, Philippines etc.) that have major problems linked to huge Non
Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble
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footed in approach and armed with efficient branch networks focus primarily on
the ‘high revenue’ niche retail segments.
The Indian banking has finally worked up to the competitive dynamics of the
‘new’ Indian market and is addressing the relevant issues to take on the
multifarious challenges of globalization. Banks that employ IT solutions are
perceived to be ‘futuristic’ and proactive players capable of meeting the
multifarious requirements of the large customer’s base. Private Banks have been
fast on the uptake and are reorienting their strategies using the internet as a
medium The Internet has emerged as the new and challenging frontier of
marketing with the conventional physical world tenets being just as applicable like
in any other marketing medium.
The Indian banking has come from a long way from being a sleepy business
institution to a highly proactive and dynamic entity. This transformation has been
largely brought about by the large dose of liberalization and economic reforms that
allowed banks to explore new business opportunities rather than generating
revenues from conventional streams (i.e. borrowing and lending). The banking in
India is highly fragmented with 30 banking units contributing to almost 50% of
deposits and 60% of advances. Indian nationalized banks (banks owned by the
government) continue to be the major lenders in the economy due to their sheer
size and penetrative networks which assures them high deposit mobilization. The
Indian banking can be broadly categorized into nationalized, private banks and
specialized banking institutions.
The Reserve Bank of India acts as a centralized body monitoring any discrepancies
and shortcoming in the system. It is the foremost monitoring body in the Indian
financial sector. The nationalized banks (i.e. government-owned banks) continue
to dominate the Indian
Banking arena. Industry estimates indicate that out of 274 commercial banks
operating in India, 223 banks are in the public sector and 51 are in the private
sector. The private sector bank grid also includes 24 foreign banks that have
started their operations here.
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The liberalize policy of Government of India permitted entry to private sector in

the banking, the industry has witnessed the entry of nine new generation private
banks. The major differentiating parameter that distinguishes these banks from all
the other banks in the Indian banking is the level of service that is offered to the
customer. Their focus has always centre around the customer – understanding his
needs, pre-empting him and consequently delighting him with various
configurations of benefits and a wide portfolio of products and services. These
banks have generally been established by promoters of repute or by ‘high value’
domestic financial institutions.
The popularity of these banks can be gauged by the fact that in a short span of
time, these banks have gained considerable customer confidence and consequently
have shown impressive growth rates. Today, the private banks corner almost four
per cent share of the total share of deposits. Most of the banks in this category are
concentrated in the high-growth urban areas in metros (that account for
approximately 70% of the total banking business). With efficiency being the major
focus, these banks have leveraged on their strengths and competencies viz.
Management, operational efficiency and flexibility, superior product positioning
and higher employee productivity skills.
The private banks with their focused business and service portfolio have a
reputation of being niche players in the industry. A strategy that has allowed these
banks to concentrate on few reliable high net worth companies and
Individuals rather than cater to the mass market. These well-chalked out integrates
strategy plans have allowed most of these banks to deliver superlative levels of
personalized services. With the Reserve Bank of India allowing these banks to
operate 70% of their businesses in urban areas, this statutory requirement has
translated into lower deposit mobilization costs and higher margins relative to
public sector banks.
BANKING SECTOR IN INDIA

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Banks are now the most significant players in the Indian financial market. They are
the biggest purveyors of credit, and they also attract most of the savings from the
population. The Indian banking can be broadly categorized into nationalized
(government owned), private banks and specialized banking institutions. The
Reserve Bank of India acts a centralized body monitoring any discrepancies and
shortcoming in the system.
The need to become highly customer focused has forced the slow-moving
public sector banks to adopt a fast track approach. The unleashing of products and
services through the net has galvanized players at all levels of the banking and
financial institutions market grid to look anew at their existing portfolio offering.
Driven by the socialist ideologies and the welfare state concept, public sector
banks have long been the supporters of agriculture and other priority sectors. They
act as crucial channels of the government in its efforts to ensure equitable
economic development.
The liberalize policy of Government of India permitted entry to private

sector in the banking, the industry has witnessed the entry of nine new generation
private banks. The major differentiating parameter that distinguishes these banks
from all the other banks in the Indian banking is the level of service that is offered
to the customer. Their focus has always centre around the customer –
understanding his needs, pre-empting him and consequently delighting him with
various configurations of benefits and a wide portfolio of products and services.
These banks have generally been established by promoters of repute or by ‘high
value’ domestic financial institutions. Today, the private banks corner almost 4%
share of the total share of deposits.
7 P’S OF BANKING SECTOR

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1. PRODUCT
A product can be defined as a bundle of utilities consisting of various product

features accompanying services.
Bank services are viewed with not just things that are created with value but they
are seen in terms of satisfaction they deliver.
E.g. A bank account is seen in terms of customer satisfaction such as safety,
convenience of paying dues keeping records status, transferring funds, etc.
A. Bank Products
1. DEPOSITS:-
Savings, current, fixed etc.
2. ADVANCES:-
(a) Fund Oriented:

• Term loan
• Clean loan
• Bill discounting
• Advancing
• Pre-shipment and post-shipment finance
• Secured and unsecured lines of credit.
(b) Non-Fund Oriented:
• Guarantees
• Letter of credit
3. INTERNATIONAL BANKING:
• Letter of credit
• Foreign currency
4. CONSULTANCY:
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• Investment counseling
• Project counseling
• Merchant banking
• Tax consultancy
5. MISCELLANEOUS:
• Traveler cheques
• Credit cards
• Remittances
• Collections
• Sale of drafts
• Standing instructions and
• Trusteeship.
2. PRICE MIX
The price mix in the banking sector is nothing but the interest rates charged by the
different banks. In today’s competitive scenario where customer is the king, the
banks have to charge them interest at a rate in accordance with the RBI directives.
Banks also compete in terms of annual fees for services like credit cards, DMAT
etc. Another important aspect of the bank’s pricing policy today is the interest
charged on the Home Loans and Car Loans. With India’s economy progressing,
there are more and more buyers seeking these loans but at a very competitive
interest rate.
Let’s understand this with an example. A particular buyer approaches a bank for a
car loan for a period of 3 years. He is charged Rs. 20,000 as interest. However, if a
sale representative of another bank comes to know of this deal, he will try to attract
the customer by giving him a better deal i.e. a loan at a lower rate on interest. In
this way, it is the customer that ultimately benefits.
3. PLACE MIX
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Place mix is the location analysis for bank’s branches. There are number a factors
affecting the determination of the location of the branch of bank. It is very
necessary for a bank to be situated at a location where most of its target population
is located.
Some of the important factors affecting the location analysis of a bank are:
1. The Trade area
2. Population characteristics
3. Commercial structure
4. Industrial structure
5. Banking structure
6. Proximity to other convenient Outlets
7. Real estate rates
8. Proximity to public Transportation
9. Drawing time
10. Location of competition
11. Visibility
12. Access
It is not necessary that all the above conditions have to be satisfied while
selecting the location but it should try and satisfy as many of them as possible.
4. PROMOTION MIX
Promotion is nothing but making the customer more and more aware of the
services and benefits provided by the bank. The banks today can use a lot of
new technology to communicate to their customers. Two of the fastest
growing modern tools of communicating with the customers are:
1. Internet Banking
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2. Mobile Banking
This can be better explained with the example of ICICI bank.
SMS services:
SMS functions through simple text messages sent from your cellular phone. These
messages are recognized by ICICI bank to provide you with the required
information.
For example, when you enter ‘IBAL’ your cellular phone screen will display the
current balance in your primary account. Thus with the help of SMS a wide range
of query based transactions can be performed without even making a call.
ICICI was the first organization in India to provide Wireless Application Protocol
(WAP) based services. Mobile commerce using WAP technology, allows secure
online access of the web using mobile devices. With WAP one can directly access
the ICICI WAP server, check one’s account details and use other value added
services. Thus different methods are used by different banks to promote its
services.
A bank may have very attractive schemes and services to offer to their customers
but they are of no use if they are not communicated properly to the customers.
Promotion is to inform and remind the individuals and persuade them to accept,
recommend or use of product, service or idea. However there some very important
points that is to be considered before the promotion strategy is made.
DIFFERENT WAYS OF PROMOTION

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1. Public Relations:
In today’s competitive scenario developing strong public relations is very
important for any bank to be successful. Most banks today have a separate Public
Relations department. However primarily it is considered as a responsibility of the
various bank managers to develop a steady and strong relationship with their
present customers as well as potential customers. This can be done by a constant
follow up, small programmers etc.
2. Personal Selling:
Personal selling is found to be one of the most effective and popular forms
of promoting bank business. The main reason for this is that banking is a service in
which trust plays a very important role. In personal selling, a bank representative
goes to the customers and explains the scheme to the customers. Also he gives the
customers any kind consultation he might need. He provides the customers all the
information sought by him. The representative tries to persuade the customers to
go for the scheme provided by the bank by telling him all the benefits. Here are
some of the important features of personal selling
 It is a direct relation between the buyers and the seller
 It is oral presentation in conversation
 It is personal and social behavior
 It is found to be more effective in service oriented organizations
 It is based on the professional excellence or expertise of an individual
3. Sales Promotion:
Sales promotions are basically giving the customers some additional
benefits, maybe at times just some small gifts, in order to promote the schemes.
The more innovative the sales promotions the more positive are the results. Some
of the most popular sales promotions techniques are gifts, contests, fairs and
shows, discounts and commission, entertainment and travelling plans for bankers,
additional allowance, low interest financing etc. It is very important that the sales
promotions benefits are designed in such a manner that they are better than those
of the competitors.
4. Word – of – mouth Promotion:

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This form of promotion is not only very effective in banking services but in
any kind of service. However it is more important in banking for the only reason
that this is a service where trust plays a very important role. If a particular bank’s
services are recommended by friends, relatives, or other well wishers the person is
more influenced and inclined towards that bank. It is very important to note that
the internal employees of the bank play a very important role in word – of – mouth
promotion technique. This is because they can start the process by recommending
the bank to their friends and relatives and after that it is like a chain, which spreads
like a wild fire.
5. Telemarketing:
In recent times telemarketing has gained increasing importance as an
effective tool for promotion. Telemarketing is a process of making use of
sophisticated communication network for promoting the banks. This includes
promoting through television, telephone, and radio. Nowadays, cell phones are
used extensively for the same. This is the most popular form of promotion. Banks
today have started using ‘SMS’ and many other services supported by cell phones
to provide benefits to their customers and thus have tried to increase their sales. In
today’s competitive and modern scenario it very important that banks makes use of
telemarketing techniques very efficiently to have desirable results.
6. Internet:
The use of Internet as a promotional tool is increasing. More and more banks are
using Internet to promote their services. The online banking has made it even
easier for the customers to avail the bank’s services. No longer do people have to
go to their bank branches for small petty matters like checking their balance etc.
All this can be done with the help of a few clicks.
Thus, these were the numerous ways in which a bank can promote its
services and create more awareness amongst the people.
5. PEOPLE
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People are the employees that are the service providers. In a banking sector, the
service provider plays a very important and determinant role in rendering the
customers a satisfactory and a good service. It is extremely essential that the
service provider understand what his customers expect from him. In the banking
sector, the customer needs to be guided in a lot of matters, which is possible only
with the help of the service provider.
The position in the eyes of the customer will be perceived by appearance,
attitude and behavior of the customer contact employees. Not only does the
customer contact employee influence the customer’s perception but also the
customer base of the organization does so.
6. PROCESS MIX
The process mix constitutes the overall procedure involved in using the
services offered by the bank. It is very necessary that the process is very customer
friendly. In other words a process should be such that the customer is easily able to
understand and easy to follow. Today if particular banks formalities are long and
the procedure very complicated the overall process fails and the customer may not
be inclined towards using that banks services.
Let’s take for example the process for application for a car loan at HDFC
bank.
Now this mainly involves 3 things.
1. Producing of proper documents
2. Filling up of application form
3. Paying for the initial down payment.
Here the process may fail in the following cases:

1. If the customer is asked to produce a number of forms out of which some
may not be necessary at all. Thus it is very necessary that the customer be asked
for the minimum but most necessary document and not the other unnecessary
documents.
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2. In case of application form, the application form must be in a language best

understood by the customers and it should not be very lengthy or demanding a lot
of unnecessary information.
3. Finally the payment of initial amount. The customer should be given options
as to how he would like to pay by cheques or by credit card. Once again the
amount should be very competitive not very high above the regular rates prevailing
in the markets.
The smaller and simpler the procedure, the better the process, and the customer
will be more satisfied.
7. PHYSICAL EVIDENCE
Physical evidence is the overall layout of the place i.e. how the entire bank has
been designed. Physical evidence refers to all those factors that help make the
process much easier and smoother. For example, in case of a bank, the physical
evidence would be the placement of the customer service executive’s desk, or the
location of the place for depositing cheques. It is very necessary that the place be
designed in such a manner so as to ensure maximum convenience to the customer
and cause no confusion to him.
Let us see an example as to how banks try to make little changes so as to make the
service better for their customers.
The Hong Kong Shanghai Banking Corporation (HSBC) had decided in

introducing a common uniform for all the employees in all its branches all over
India. The plan is possibly in line with the aggressive retail banking adopted by
HSBC. A common uniform is nothing like a revolutionary change but however this
little change makes it very easy for the customer to identify with his service
provider and makes the entire process very easy for him. The more the bank does
to make the service easier the better it is for the customer.
Thus, these are the 7 P’s of services. Each of them plays a very important and a
pivotal role in determining the quality of the service provided to the customer.
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RELIABILITY
It is defined as the ability to perform the promised service dependably and

accurately. In its broadest sense, reliability means that the company delivers on its
promises–promises about delivery, service provision, problem resolution, and
pricing. It is also known as the “No Excuses” service delivery.
Indian Overseas Bank faces stiff competition from many other banks within
its vicinity and some of these banks are foreign banks. But the existing customers
have faith, loyalty and trust in this bank. The customers are well aware that the
bank will provide them back the best and reliable services. For e.g. No person likes
to wait to withdraw his/her money. In order to correct this problem, Indian
Overseas Bank has ensured that whoever comes in for cash withdrawal will receive
his/her cash within five to ten minutes.
ASSURANCE
Assurance is defined as employee’s knowledge and courtesy and the ability of the
firm and its employees to inspire trust and confidence. It includes the ability,
knowledge, genuineness, and honesty to provide the best services to the customer
from the frontline staff. In this dimension the front line staffs is more important
rather than the owner.
At Indian Overseas Bank, every customer who comes is treated with utmost care
and any problem that takes place is solved with great enthusiasm. It assures the
customers coming up to the bank that the money they invest is secure; the interest
rate that is being provided to them is at par or sometimes even higher as compared
to other banks. Also, it assures the customers that the money they have invested
will be returned to them as and when required with proper interest. It tries to
empower their customer, contact people and regularly train them in skills to build
trust and loyalty between employees and the customers.
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ELECTRONIC BANKING
With the introduction of computers in Indian banks and with the advent of
ATM’s the banking services are provided across the banks. Customers need not
necessarily visit the bank to do banking transactions when the bank provides them
with tele banking and or remote banking facilities. This type of banking is called
electronic banking and the concept is becoming popular with individual as well as
corporate entities in India.
1. Automated Teller Machines (ATMs):
ATM’s have eliminated the time limitations of customer service and offer a host of
banking services including deposits, withdrawals, requisitions, instructions and
transactions. ATM’s traditional and primary use is to dispense cash upon insertion
of a plastic card and its unique PIN or personal identification number. It is issued
to Current and Saving account holders of a bank who hold a certain minimum
balance. When the card is inserted into the ATM, the machine sensing equipment
identifies the account holder and asks for his or her identification PIN number.
This number is not even known to the bank staff and is unique and secret to the
individual
2. Internet Banking:
Banks have over a long time been using electronic and telecommunication
network for delivering a wide range of value added products and services. The
delivery channels include dial-up connection, private network, public network etc
and the devices include telephone personal computers including the ATM etc.
With the popularity of PC’s and easy access to the internet and World Wide Web
banks increasingly use internet as a channel for receiving instructions and
delivering their products and services to their customers. This form of banking is
often referred to as internet banking, although the range of products and services
offered by different banks, vary widely both in their content and sophistication.
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3. Mobile Banking:
Through inter –banking one can visit the web –site of each bank by entering
his password and known the account balance and even pass his own credit and
debit entries. This means that we can do our banking through our personal
computer settings at home. Banks may soon allow zero balance savings accounts
through internet facility only. Customers can now make balance enquires
download statements and open fixed deposits over the net. They will soon be able
to carry out all their transactions over the net. So visiting a bank would be
needless. Time to come; mobile phones will drive banking transactions. These
mobile phones will drive banking transactions. These mobile phones will be
equipped with smart cards that are embedded with banking and other information.
This mobile phone banking facility is yet to come but the mechanics of linking the
banking with the cell phone is being sorted out. Teller machines are being installed
in the banks for the electronic banking facility. Banking will be on wheels and
mobile by the use of smart banking.
4 Note and coin counting machines:
To reduce the need of manual counting, note and counting machines are
available which counts a bundle of notes placed on it. Loose notes are inserted into
the machine. The machine then counts the notes at top speed, while simultaneously
indicating the number counted on a digital display. Every time the number reaches
100, the machine stops, subject to it being fixed at 100 and allows for the bundle to
be taken out. This machine does relieve the drudgery involved in counting.
However, one limitation of this machine is that the notes have to be in fairly good
condition for the machine to able to count properly. However, the machine requires
all the notes to be in the same denomination.
5. Electromagnetic Cards:
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In the modern days of commerce credit cards have acquired a fairly

prominent and pervasive role. With the increasing use of credit cards the society is
moving towards cashless transactions. In India however the use of credit cards is
restricted to small value and mostly personal transactions. The two international
credit card giants viz, Visa international and Master Card international are poised
to make deeper inroad in untapped Indian market.
Types of electromagnetic cards:

1) Charge card:
In such cards transactions are accumulated over a period of time generally a
month and the total amount is charged i.e. debited to the account. In charge card
the amount becomes payable immediately on the debit to the account.
2) Credit card:
This is the same as charge card where the transactions are charged to the account
with the total value of transaction debited to the card holder’s account once in a
month. The difference between the credit and charge card is that in case of the
credit card holder is given about 25 to 50 days time to credit his account in case
there are insufficient funds in his account at the time of debit.
3) Debit card:
A bank-issued card that allows its users to access their funds for the purpose of
paying for merchandise.
4) Smart card:
There are two types of smart cards intelligent memory chip and micro processor
cards. The memory smart cards have been around for several years they are being
used in paying phones, identification, access control, voting and other applications.
Processer smart cards are the most advanced and are ideally suited for banking and
financial application where re use of the card is allowed.
5) Member card:
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This is used by members of a club or a chain of hotels. E.g. the Taj Card is a card
issued by the Management of the Taj group of Hotels to be used by patrons of their
hotels .Similarly there are many other types of cards where the usage is exclusive
to the members of the group.
CONCLUSION OF BANKING SECTOR
With the development of modern communication facilities, electronic payment

systems are becoming popular. These are teller machines available for bank
customers within the bank as well as outside the bank premises. ATM’s which are
being located even at public places, are able to provide the customers minimal
banking services including cash payments round the clock. Shared ATM’s are also
introduced in India where the services are provided across the banks. Customers
need not necessarily visit the bank to do banking transactions when their banker
provides them tele-banking or remote banking facilities.
We have also seen that the various electronic and electro-mechanical aids that help
the modern banker to efficiently render innovative and novel customer service.
Equipments like note and coin counting machines help the banker to take care of
the tedium in his task, reduce drudgery and at the same time efficiently discharge
his functions. These technological aids not only take care of some of the physical
routine tasks but also contribute substantially to efficient housekeeping functions
and also render services that are in tune with the customer needs and satisfaction
INSURANCE SERVICE SECTOR

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INTRODUCTION TO INSURANCE SECTOR

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The Government of India (GoI) opened the insurance sector to private players on
October 24. 2000, thus unraveling a new chapter in this field. This new policy of
GOI is an outcome of India’s policy of liberalizations and also the result of its
obligation as a signatory to the WTO to conform to its principles and guidelines
relating to the reduction of barriers to trade in services. This epoch-making
decision has ushered in a new era that has transgressed four decades of complete
control by the public sector over the insurance sector (life insurance was
nationalized in 1956 by merging 245 private insurance companies to form the life
Insurance Corporation Of India (LIC), while general insurance was nationalized
with the formation of general Insurance Corporation (GIC) in 1972).
This decision of the GOI has been accompanied by a set of laws and regulations
governing this domain. Accordingly the Insurance Regulatory and Development
Authority Act 1999 (The IRDA Act) was enacted with the predominant aim of
setting up an autonomous body known as the Insurance Regulatory and
Development Authority (the IRDA) to regulate, promote and ensure orderly
growth of the insurance industry.
The influx of new players in both life and non-life sectors has made the insurance
market a consumers paradise. All new players are striving to introduce innovative
products. Where the old players (LIC and GIC) have a first mover advantage and
have a wide spread network, the new players are banking on their innovative
products and superior services to surge them ahead.
TYPES OF INSURANCE
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Insurance has been classified into:
(A) Life Insurance

(B) General Insurance or Non-Life insurance
(A) LIFE INSURANCE
Life insurance is a written contract between the insured and the insurer, that
provides for the payment of the insured sum on the date of the maturity of the
contract or on the unfortunate death of the insured, whichever occurs earlier.
(1) The different types of life insurance are:
(2) Whole Life Assurance Plans
(3) Term Assurance Plans
(4) Annuities
(B) NON LIFE INSURANCE
There are various broad categories of non-life or general Insurance as follows:
Health Insurance:
Just like one looks to safeguard ones wealth, these policies ensure guarding the
insurer's health against any calamities that may cause long term harm to ones life
and even hamper ones earning ability for a lifetime. Some examples of this type of
policy are mediclaim policy, personal accident, group accident, traffic accident,
etc.
Business Insurance:
Risks of loss of profits/business, goods, plant and machinery are most profound in
case of business. Under this head they cover the most widely used policies that
cover a business from any loss of the above kind. Some of these policies are
burglary insurance, shopkeeper’s insurance, key-man insurance, marine insurance,
P a g e | 27
public liability insurance, workmen compensation insurance, air transit insurance,

fidelity guarantee insurance etc.
Automobile Insurance:
Auto Policy is required to be taken to cover the risks that arise to the owner,
vehicle and third party. This includes the Compulsory Vehicle Policy (In India, by
the Motor Vehicles Act, every car owner is required to covered against Act risks)
and the Comprehensive Vehicle Policy.
Fire Insurance:
This policy is required to be taken to prevent any loss of profits / property from
incidental fire. Eg: fire insurance and fire consequential loss policy.
Travel Insurance
Every year number of tourists dies while travelling. They lose their baggages;
passports etc are left stranded in unfamiliar environments. Medical attention in a
foreign land while very expensive is also very difficult to find in foreign land.
Travel policies are designed to take care of all the problems that generally occur
while travelling, whether domestic or foreign.
BASIC INSURANCE TERMINOLOGIES

P a g e | 28
Insured:-
The person known as the policyholder, a person with insurance coverage.
Insurer:-
A company licensed to transact the business of insurance and Issue insurance

policies.
Policy:-
It's the written contract between an insurance company and its insured. It defines
what the company agrees to cover for what period of time and describes the
obligations and responsibilities of the insured.
•
Premium:-
It's the amount of money a policyholder pays for insurance protection
Claim:-
It's the notice to the insurance company that under the terms of a policy, a loss
maybe covered.
Indemnity:-
Legal principle that specifies an insured should not collect more than the actual
cash value of a loss but should be restored to approximately the same financial
position as existed before the loss.
Agent:-
A licensed person or organization who sells insurance and represents the insurance
company to the policyholder.
Broker:-
P a g e | 29
An organization or person paid by the policy holder to look for insurance on their
behalf.
Deductible:-
It's the amount of the loss which the insured is responsible to pay before the
insurance company pays the benefits.
Expiration Date:-
This is the date on which the policy ends.
Grace Period:-
A period (usually 30 or 31 days) following each insurance premium due date, other
than the first due date, during which an overdue premium may be paid. All
provisions of the policy remain in force throughout this period.
Limit:-
It's the maximum amount paid by the insurance company under The terms of a
policy.
Underwriting:-
The process of classifying applicants for insurance by identifying characteristics

such as age, gender, health, occupation and hobbies. People with similar
characteristics are grouped together and are charged a premium based on the
group's level of risk.
WHY DO PEOPLE IN INDIA TAKE

INSURANCE SERVICE?
P a g e | 30
People in India have been viewing Insurance, especially life insurance as a form of
Investment .These is the common reasons why people in India take up insurance:
(1). Insurance safeguards a person /his family /his business against possible
losses on account of risks and perils. It provides financial compensation for the
losses suffered due to the happening of any unforeseen events.
(2). Tax Relief:
(A) Under Section 88 of Income Tax Act, a portion of premiums paid for life
insurance policies (LIC) are deducted from tax liability. Similarly, exemption is
Available for Health Insurance Policy premiums.
(B).Money paid as claim including Bonus under a life policy is exempted
from payment of Income Tax.
(3). Encourages Savings: An insurance scheme encourages thrift among

individuals. It inculcates the habit of saving compulsorily, unlike other saving
instruments, wherein the saved money can be easily withdrawn.
(4) The beneficiaries to an insurance claim amount are protected from the
claims of Creditors by affecting a valid assignment.
(5) Life Policies are accepted as a security for a loan hey can also be
surrendered For meeting unexpected emergencies.
(6) Based on the concept of sharing of losses, the society will benefit as
catastrophic Losses are spread globally
FUTURE SCENARIO OF INSURANCE IN SEVICE INDUSTRY

P a g e | 31
The size of the existing insurance market is very large and is growing at the
rate of 10% per year. The estimated potential of the Indian insurance market in
terms of premium was around Rs. 3, 44,000 crores in the year 1999. Only 10% of
the market share has been tapped by LIC and GIC and the balance 90% of the
market still remains untapped.
This vast potential can be tapped only by a large number of insurers. To

serve 100 crores of population, Indian insurance market offers tremendous
opportunities to prospective insurers. Hence, the regulator should issue licenses to
a large number of insurers if the insurance market has to grow at a fast rate.
With the increase in the life span of individuals and disintegration of the
joint family system, each Individual now has arranged insurance cover for himself
and for his family. Hence, coverage of insurers, which was around 7% of the
population in 1999, has to grow very fast. In fact all the citizens in the middle
class, estimated around 314 million can afford insurance from their own financial
resources. The remaining population has to be given subsidized insurance with the
help of the government as well as the insurers.
The huge fund from insurance investments can be utilized for financing the
infrastructure industry as well as a support to other industries in the country. Hence
insurance industry is likely to play a key role in changing the economic landscape
of the country. However the success of the insurance industry will primarily
depend upon meeting the rising expectations of the consumers who will be the real
king in the liberalized insurance market in future.
CURRENT PLAYERS
P a g e | 32
In the first year of insurance market liberalization (April 2-December 31, 2001) as
much as 16 private sector companies including joint ventures with leading foreign
insurance companies have entered the Indian insurance sector. Of this, 10 were
under the life insurance category and six under general insurance. Since then, till
June, 2002 two more joined the life insurance sector. Thus in all there are 18
players (12 life insurance and 6 general insurance) in the Indian insurance industry
till date.
Life Insurance Companies:
(1) Life Insurance Corporation of India

(2) ICICI Prudential
(3) HDFC Standard Life Insurance
(4) Max New York Life
(5) Birla Sun Life Insurance
(6) SBI Life
(7) Tata AIG Insurance
(8) ING Vysya Life Insurance
(9) Allianz Bajaj
(10)Amp Sanmar
(11)Old Kotak Mahindra Life
(12)MetLife India Insurance
General Insurance Companies:
(1) IFFCO-TOKIO General Insurance

(2)National Insurance
(3)New India Insurance
(4)United Insurance
(5)Oriental Insurance
(6)Royal Sundaram
P a g e | 33
EXECUTIVE SUMMARY OF INSURANCE
Insurance is defined as the contract between Insurance co. (Insurer) and the
customer (Insured). In this legal contract, the insurer agrees to indemnify
(compensate) the insured in lieu of payment of premium, for any
financial loss due to risks covered in the Policy.
Since 1956, with the nationalization of insurance industry, the state- run Life
Insurance Corporation of India (LIC) has held the monopoly in that country's life
insurance sector. General Insurance Corporation of India (GIC), with its four
subsidiaries, was its counterpart in the general insurance sector. In 1999, the
government passed the IRDA Bill to open up the insurance sector in India.
In the last year, the country saw a large number of Indian and foreign players
rushing to enter this lucrative and untapped insurance market of India. The Indian
Insurance sector is thus at the beginning of a new era. It has been only a year since
the new players became active and it is difficult to say whether the reforms were
successful. But it is believed that the country has a vast untapped potential and the
new players will surely use this to their best advantage.
This project aims to study the topic of Insurance and the Indian Insurance
Sector in particular. The first part of the project covers the concept of insurance,
the need for insurance, the types of insurance. In the second part, we study the
Indian insurance sector. Under the study of the insurance sector, we will look at
why the government decided to open up the sector, a brief overview of the reforms,
the potential of the sector, the requirement for entry into the market and the new
players in the market. We will also give a brief insight into the investment

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BANKING & INSURANCE IN SERVICE SECTOR

K.E.S SHROFF COLLEGE OF ARTS AND

SUBJECT: SERVICE SECTOR

PRESENTATION ON: BANKING &

TEACHER INCHARGE: SWETA MAM

STUDENT NAME: FALGUN PATEL

Any accomplishments requires the efforts of

Sr.No Particulars Pg.No

2 INTRODUCTION TO BANKING SECTOR 8

3 BANKING SECTOR IN INDIA 11

4 7’PS OF BANKING SECTOR 12

7 BASIC INSURANCE TERMINOLOGIES 27

9 WHY DO PEOPLE IN INDIA TAKE 31

10 FUTURE SCENARIO OF INSURANCE IN 32

INTRODUCTION TO SERVICE SECTOR

The service sector is going through almost revolutionary change, it dramatically

How important is the service sector in an Indian economy?

Materials and manufacturing combined.

 in developed economies employment is dominated by service jobs and

Most new job growth comes from services.

 Jobs range from high paid professionals and technicians to minimum

 Service organizations can be any size, from huge global corporations to

Local small businesses.

INTRODUCTION TO BANKING SECTOR

The Indian banking can be broadly categorized into nationalized (government

The liberalize policy of Government of India permitted entry to private sector in

BANKING SECTOR IN INDIA

The liberalize policy of Government of India permitted entry to private

7 P’S OF BANKING SECTOR

A product can be defined as a bundle of utilities consisting of various product

(a) Fund Oriented:

This can be better explained with the example of ICICI bank.

DIFFERENT WAYS OF PROMOTION

4. Word – of – mouth Promotion:

Here the process may fail in the following cases:

2. In case of application form, the application form must be in a language best

The Hong Kong Shanghai Banking Corporation (HSBC) had decided in

It is defined as the ability to perform the promised service dependably and

1. Automated Teller Machines (ATMs):

4 Note and coin counting machines:

In the modern days of commerce credit cards have acquired a fairly

Types of electromagnetic cards:

CONCLUSION OF BANKING SECTOR

With the development of modern communication facilities, electronic payment

INSURANCE SERVICE SECTOR

INTRODUCTION TO INSURANCE SECTOR

Insurance has been classified into:

(A) Life Insurance

(A) LIFE INSURANCE

(1) The different types of life insurance are:

(2) Whole Life Assurance Plans

(3) Term Assurance Plans

(B) NON LIFE INSURANCE

There are various broad categories of non-life or general Insurance as follows:

public liability insurance, workmen compensation insurance, air transit insurance,

BASIC INSURANCE TERMINOLOGIES

The person known as the policyholder, a person with insurance coverage.

A company licensed to transact the business of insurance and Issue insurance

It's the amount of money a policyholder pays for insurance protection

This is the date on which the policy ends.

The process of classifying applicants for insurance by identifying characteristics