Q.Discuss the role of banking, insurance and real estate as parts of the services sector.
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →Banking, insurance and real estate services are usually discussed together because each deals, in a different way, with capital, risk or property rather than with the direct production or distribution of goods.
Banking accepts deposits from households and firms with surplus funds and lends them to borrowers — other households, firms or the government — who need capital for consumption or investment. In doing so, banks perform the vital function of channelling the economy's savings into productive use, financing everything from a small trader's working capital to a large firm's factory expansion.
Insurance performs a related but distinct function: it pools the risk of many individual policyholders, so that the cost of an unpredictable event — a crop failure, an accident, a fire — falls on a shared pool of premiums rather than ruining any one household or firm that happens to suffer the loss. This risk-spreading function encourages investment and risk-taking that might otherwise seem too dangerous to undertake.
Real estate services organise the market for land and buildings — buying, selling, renting and developing property — which is necessary both for housing a growing and increasingly urban population and for providing the physical premises in which other economic activities (factories, offices, shops) are located. Demand for real estate services has grown particularly fast in India's cities, partly as a spillover from the growth of IT and other high-value services, which draw workers and firms into a handful of urban centres. …
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.