RETAIL BANKING

By K. RAJASEKARAN Former AGM : Global Trust Bank Ltd Ex-Trainer: State Bank of Travancore (Subsidiary of SBI)

RETAIL BANKING

Retail Banking may be defined as Providing financial services to individuals

Retail Banking is characterised by: MULTIPLE PRODUCTS

MULTIPLE DISTRIBUTION CHANNELS

MULTIPLE CUSTOMER GROUPS

WHAT DRIVES RETAIL BANKING

ECONOMIC PROSPERITY
GDP growing by over 8.5% Gross Savings rate is over 30%

DEMOGRAPHIC DIVIDEND
70% Indias population is below 35 yrs of age
Increased Demand from this aspirational group

TECHNOLOGICAL ADVANCEMENT
Makes Anywhere / Anytime banking easy

DECLINING SPREAD OF BANKS

Due to Financial Disintermediation / Competition

RETAIL BANKING PRODUCTS (LIABILITY PRODUCTS)

SAVINGS BANK ACCOUNT CURRENT ACCOUNT

CASA deposits form over 40% banks total deposits

FIXED DEPOSIT ACCOUNT

UNIT FIXED DEPOSIT REINVESTMENT DEPOSIT LOAN / PREMATURE CLOSURE FACILITY AUTO RENEWAL FACILITY FIXED / FLOATING RATE DEPOSITS

SWEEP ACCOUNT RECURRING DEPOSIT ACCOUNT NRI (SB / FD) ACCOUNT FCNR ACCOUNT

Features of Retail Deposit Accounts

ATM CARD / DEBIT CARD INTERNET BANKING ANYWHERE BANKING PHONE BANKING DOORSTEP SERVICE STANDING INSTRUCTIONS NOMINATION FACILITY ACCOUNT STATEMENT BY EMAIL LIFE INSURANCE COVERAGE INTEREST RATE FIXED BY BANKS FIXED AND FLOATING RATE PRODUCTS

RETAIL LOANS
(Asset Products)

HOME LOANS
For purchase or construction of flat / house

VEHICLE LOANS
Against New / Existing vehicles

CONSUMER DURABLE LOANS

LOAN FOR TV / WASHING MACHINE LOAN FOR COMPUTER / LAPTOP

EDUCATIONAL LOANS
For Overseas / Indian courses

PERSONAL LOANS
LOAN AGAINST SHARES / BONDS LOAN FOR TRAVEL LOAN FOR MARRIAGE

Trends in Retail Loans

Retail Loans form 20% to 25% of banks total loans Home loans account for 50% of Retail Loans Vehicle loans follow next with 18% of Retail Loans Yield on Retail Loans is higher than corporate loans NPA incidence on Retail Loans is less than that of corp loans Indias Retail credit is only 7% of GDP Thailand : 18% Malaysia: 33% Srilanka : 55% Scope for growth in retail loans is very bright

OTHER RETAIL PRODUCTS

CREDIT CARDS DEBIT CARDS DEMAT SERVICES BANCASSURANCE MUTUAL FUNDS WEALTH MANAGEMENT BILL PAYMENTS FACILITY FOREX BUYING / SELLING

Changing Face of Indian Banks

Many banks work from 8 a.m. to 8 p.m. Major banks have installed Core Banking Solution Many banks provide RTGS facility Banks have built strong Brand / Logo Even PSU Banks have got into marketing mode Mergers of banks are under way Outsourcing is the key (DMA / DSA) Account holder is not a customer of a BRANCH but he is a customer of the BANK

CHALLENGES IN RETAIL BANKING

RETENTION OF CUSTOMERS INADEQUACY OF INFRASTRUCTURE NEED FOR BETTER FOLLOW UP UPGRADATION OF TECHNOLOGY OPERATIONAL RISKS KYC and ANTI MONEY LAUNDERING ASSET LIABILITY MANAGEMENT