CBSE Class 11 Business Studies Revision Notes Chapter 4

CBSE Class 11 Business Studies Revision Notes Chapter 4 – Business Services 

The Business Studies Class 11 Notes Chapter 4 gives a comprehensive and detailed outline of all topics entailed in the chapter following the latest CBSE Syllabus. Extramarks provides Class 11 Business Studies Chapter 4 Notes to help students develop an in-depth understanding of the chapter. Going through the notes will help them score better marks in exams. 

Access Class 11 Business Studies Chapter 4 – Business Services Notes in 30 Minutes

Introduction to Class 11 Business Studies Chapter 4 Notes 

In Chapter 4 Business Studies Class 11 Notes, students will have an overview of varied topics such as goods and services, types of services and the differences between goods and services. It also covers what banks are and the different types of banks. Even the modern interpretation of the banking system, which is E-Banking and its numerous advantages over the traditional method are elaborated.

Insurance, its principles, the various types of insurance and their differences are discussed towards the end of the notes. Business Studies Class 11 Chapter 4 Notes also include pointers on the different aspects of a business like transportation, communication and warehousing. 

Goods and Services

A good can be defined as a product that is tangible and involves the transfer of ownership from the seller to the buyer. 

On the contrary, a service is an intangible action that meets the demands but is not related to the selling of a product or service. The nature of services is discussed below:

1. Intangible – Services are experiential and hence, cannot be touched. One cannot predict the quality of service unless it is consumed.
2. Inconsistency – A major difference between a good and a service is that services are catered differently depending on the customer’s demands and expectations. Every customer experiences a different service each time.
3. Inseparability – Unlike goods, the production and consumption of services happen simultaneously. They are depleted as soon as they are manufactured.
4. Inventory – Services cannot be stored like goods. They are consumed immediately after production.
5. Involvement – This is one of the major characteristics of services. The presence of customers during the production of the service is a must. It is so as to make sure it meets their standards. Hence, a customer can get the service modified as per his/her specific requirement.

The different types of services that are provided are: 

1. Social Services: These are provided voluntarily to achieve some goals. For example, healthcare and education services are provided by Non-Governmental Organisations.
2. Personal Services: These services are offered according to the wants and preferences of the customer. Each client has a unique experience with these services. For example, tourism. 
3. Business Services: These services are used by business enterprises to facilitate soother functioning. For example, banking, warehousing, insurance, communication, etc. 

Banking and Types 

A bank is a financial institution authorised to both, accept deposits and issue loans. It transacts money, helps with the withdrawal and lending of money to people and allows them to deposit money for investment and saving purposes. The various types of banks are:

Commercial banks: Commercial banks, which are governed by the Indian Regulation Act of 1949, assist in accepting funds from the general public for lending and investing. Commercial banks perform the following duties:

Primary Functions 

1. Accepting Deposits: It is the main function of commercial banks. To meet the demands and needs of customers, they provide the following types of bank accounts:

• Fixed Deposit Account: A fixed deposit account is one where money is deposited for a predetermined amount of time. In such a case, after the expiry of the specified period, the account holder can claim the money from the bank. Generally, the rate of interest is maximum in such accounts, the longer the period of deposit, the higher the rate of interest on the deposit.
• Current Deposit Account: Current deposit Accounts are used in business. The amount that the account holder may deposit and withdraw is not restricted. The deposit is referred to as a demand deposit because it is repayable immediately. For current accounts, there is no interest due. Instead, the account holder is charged by the bank for the services it provides.
• Saving Deposit Account: Saving accounts help in mobilising the savings of the public. People can open this account by depositing only a small sum of money. He/she can further withdraw money from the account and make additional deposits in his/her will. Generally, the rate of interest on a savings deposit account is lower than the rate of interest payable on a fixed deposit account.
• Recurring Deposit Account: Such accounts aim to encourage regular savings by the people. The account holder can deposit a fixed amount, say Rs. 500 each month for a fixed period, the amount being repayable along with interest on maturity. The rate of interest on such an account is usually higher than that on saving accounts. 
• Multiple Option Deposit Account: This type of savings account automatically transfers deposits that exceed the predetermined limit into a fixed deposit account. On the other hand, the necessary amount is automatically transferred from the fixed deposit to the savings bank account when there is not enough money in the savings bank account to honour an issued check. As a result, the account holder gains two main advantages from having one of these accounts: they can earn more interest and there is less chance that their cheque will be returned.

2. Lending Money: Commercial banks lend money to people using the funds they have accumulated              from various types of deposits. The various ways that commercial banks lend money include the                following:

• Term Loans: These loans are provided for a fixed period by the banks to purchase machinery, trucks, houses, etc. Such loans are repaid in monthly/ quarterly/ half-yearly or annual instalments.
• Bank Overdraft: A bank overdraft occurs when a current account holder requests permission from the bank to withdraw more money than has been deposited into his account. This loan is typically granted in exchange for the customer’s personal security or the security of some of his or her assets. In this scenario, the customer is responsible for paying interest on the actual overdraft.
• Cash Credit: In this option, the bank makes cash advances on loans that are backed by securities up to a predetermined sum. The bank establishes an account in the borrower’s name and allows limited, intermittent withdrawals of the borrowed funds. On the amount that was actually withdrawn, interest must be paid later.
• Discounting of a Bill of Exchange: Under this arrangement, when any customer needs money before the expiry of the bill of exchange, the bank gives money to him on the security of a bill of exchange. In return, the bank charges a discount for the remaining period of the bill.

Secondary Functions 

The secondary functions of commercial banks are:

(A) Agent Functions- As an agent of its customers a commercial bank provides services like: 

(B) Collecting bills of exchange, promissory notes and cheques on behalf of its customers.

(C) Collecting dividends, interest, etc. on behalf of its customers.

(D) Purchase and sale of shares, debentures and other securities.

(E) Payment of interest and transferring funds from one branch to another.

(F) They act as agents of representation while dealing with other financial institutions and banks on behalf of their customers. 

2) General Utility Functions- Commercial banks also perform the following general utility functions:

(A) They provide lockers for the safe custody of jewellery and other valuable items of customers.

(B) They give references about the financial position of customers.

(C) They provide customers with information regarding the creditworthiness of other customers.

(D) They provide various types of trade information useful to customers.

(E) Issuance of letter of credit, pay orders, credit and debit cards, bank draft and traveller’s cheques to customers.

(F) Providing foreign exchange to importers and people travelling abroad.

Cooperative Banks: These banks are governed by the provisions of the State Cooperative Societies Act. In this banking system, cheap credit is provided to the members which helps to serve them better in the long run.

Specialised Banks: These banks are Foreign Exchange Banks that provide financial aid to industries for massive projects and foreign trade. 

Central Bank: It is the supervisor of all the commercial banks in the country. The Reserve Bank of India (RBI) is the central bank in India.