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RETAIL BANKING
DEFINITION:
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for growth and profits. Retail banking and retail lending are often
used as synonyms but in fact, the later is just the part of retail
banking. In retail banking all the needs of individual customers are
taken care of in a well-integrated manner.
ORIGIN OF BANKING
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ADVANTAGES
Retail banking has inherent advantages outweighing certain
disadvantages. Advantages are analyzed from the resource angle
and asset angle.
RESOURCE SIDE
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ASSETS SIDE
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DISADVANTAGES
o Long term loans like housing loan due to its long repayment
term in the absence of proper follow-up, can become NPAs.
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OPPORTUNITIES
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If all these challenges are faced by the banks with utmost care and
deliberation, the retail banking is expected to play a very important
role in coming years, as in case of other nations.
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This will compensate for the thin margins. The Indian retail
banking market still remains largely untapped giving a scope for
growth to the banks and financial institutions. With changing
psyche of Indian consumers, who are now comfortable with the
idea of availing loans for their personal needs, banks have
tremendous potential lying in this segment. Marketing
departments of the banks be geared up and special training be
imparted to them so that banks are successful in grabbing more
and more of retail business in the market.
o Infrastructure outsourcing
Banks may go for detail market research, which will help them
in knowing what their competitors are offering to their clients.
This will enable them to have an edge over their competitors
and increase their share in retail banking pie by offering better
products and services.
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o Cross-selling of products
o Tie-up arrangements
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which will enable them to hold the head above water. Hence,
banks should make all out efforts to boost the retail banking by
recognizing the needs of the customers. It is essential that
banks would be imaginative in predicting the customers'
expectations in the ever-changing tastes and environments. It is
the innovative and competitive products coupled with high
quality care for clients will only hold the key to success in this
area. In short, bankers have to run very fast even to stay where
they are now. It is the survival of the fastest now and not only
survival of the fittest.
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o Sound documentation
A latest system for credit documentation is necessary pre-requisite
for healthy growth of credit portfolio, as in the case of credit
assessment, this will also minimize the need to follow up at future
point of time.
o Technological support
This is yet another vital requirement. Retail credit is highly
technological intensive in nature, because of large volumes of
business, the need to provide instantaneous service to the
customer large, faster processing, maintaining database, etc.
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O KNOWING CUSTOMER
O TECHNOLOGY ISSUES
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O ORGANIZATIONAL ALIGNMENT
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O PRODUCT INNOVATION
O PRICING OF PRODUCT
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O PROCESS CHANGES
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O RURAL ORIENTATION
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o CUSTOMER SERVICE
Customer service is perhaps the most important dimension
of retail banking. While most public sector banks offer the
same range of service with similar technology/expertise, the
level of customer service matters the most in bringing in
more business. Perhaps more than the efficiency of service,
the approach and attitude towards customers will make the
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difference.
Front line staffs have to be educated in this regard. A
scheme of entrusting a group of important customers to the
care of each employee/officer with a person to person
knowledge and intimacy can be implemented all sundry
advices/notices such as Dr. /Cr. advices. TDR maturity
advices, etc. whether signed by employees or officers should
be identifiable by the name of those signing, and inviting
customers to contact them for further assistance in the
matter.
A customer centred organization has to be built up, whose
ultimate goal is to "own" a customer. Focused merchandizing
through effective market segmentation is the need of the
hour. A first step can be the organization of the various retail
branches to enter for different market segments like
upmarket individuals, traders, common customers, etc..
For the SIB (Small Industry and Business) sector banks, the
focus should be on identifying efficient units and allocations
of loans lo these units. These banks should try Merchant
Banking services en a small scale.
With agricultural output growing at a fast rate and
mechanization setting in, banks should try to cater to the
credit needs of the people involved in this profession. A wide
network is absolutely imperative for this sector.
Separate branches/divisions should be opened for traders
and similar government businesses. Special facilities for
cash tendered in bulk and immediate issue of drafts, by
extending facilities like "guarantee bond" system, will go a
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Make sure that the officials as well as the staff are fully
aware of the rules so that processing is faster.
o TECHNOLOGY
In the current scenario, the importance of technology cannot
be understated for retail banks which entail large volumes,
large queues and paperwork. But most of the banks are
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o PRICE BUNDLING
Price bundling is a selling arrangement where several
different products are explicitly marketed together to a price
that is dependent on the offer. As banks are multi-product
firms this strategy is more applicable to retail banking. Price
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o INNOVATION
The scope for innovation in financial services is unlimited.
Although banks have introduced a variety of deposit and loan
products, the basic features of all these products are almost
one and the same. Among the delivery channels, ATMs have
emerged as ubiquitous money centers. Almost all banks
have established their ATMs. India had only 400 ATMs,
which increased to 3,600. Out of this 881 ATMs have
Swadhan connectivity. It is projected that the number of
ATMs will reach up to 35,000 by the end of. The question
arises is, are they cash cows? The answer is certainly no.
For most of the banks the overhead costs on these ATMs
are far higher than the revenue generated by them. ATM
operation costs are largely fixed in nature - the cost of the
machine, its maintenance, replenishment of currency, and
the satellite (network) connection. There should be a
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MACRO-ECONOMIC FACTORS
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CATALYST-ROLE OF GOVERNMENT
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BANKS IN INDIA
Allahabad Bank
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Aadhra Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Overseas Bank
Oriental Bank of Commerce
Punjab & Sind Bank
Punjab National Bank
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank
List of State Bank of India and its subsidiary, a Public Sector Banks
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market. - They are the biggest purveyors of credit, and they also
attract most of the savings from the population. Dominated by
public sector, the banking industry has so far acted as an efficient
partner in the growth and the development of the country. 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 banking sector in India has undergone remarkable
changes since the economic reforms were initiated in 1991-92. The
period has been marketed by a slew of reforms in the sector, which
provided the much needed impetus for the growth of the sector as
a whole. One of the remarkable reforms found crucial to study is
emphasizes of public sector banks on retail banking.
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RETAIL BOOM
Keeping pace with the average 8.5 per cent growth of the
Indian economy over the past few years, the retail banking sector
in India has also witnessed phenomenal growth. It has faced up to
the need of the hour and introduced anytime, anywhere banking,
for its customers through ATMs, mobile and internet banking. It
has also offered services like D-MAT, plastic money (credit and
debit cards), online transfers, etc. This has not only helped in
reducing operational costs but facilitated greater conveniences to
its customers.
o High-Tech Banking
ATMs - With growing technological innovations, banks have
significantly expanded their ATM network over the past three
years. According to the RBI data as of end-June 2008, the
number of ATMs in the country had climbed to 36,314
compared to 27,088 and 20,267 as at end-March 2007 and
2006, respectively.
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o Loan disbursement
Technology has facilitated the growth in retail loan
disbursements, making the whole process simpler and
faster. The sector has delivered a growth of around 30 per
cent per year over the past 4-5 years. As per the RBI data,
although the retail portfolio of banks saw a slowdown to 29.9
per cent during 2006-07 from 40.9 per cent in 2005-06, the
growth was faster than the overall credit portfolio of the
banking sector (28.5 per cent).
o Plastic Money
Credit cards have also played an important role in promoting
retail banking. The use of credit cards has been growing
significantly over the last few years. The number of credit
cards outstanding at the end- June 2008 stood at 27.02
million as against 24.39 million in June 2007, with usage
increasing by 10.73 per cent during this period.
o Future Outlook
Indian retail banking, according to a report, is likely to grow
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The reasons for this shift to retail, particularly the housing finance
segment, are many. The important among these include—
The poor credit off take to the corporate, commercial and other
business sector because of industrial slowdown.
Risky nature of lending to corporate, given in industry recession
and uncertainty prevalent in the economy.
High disintermediation pressure, leading many highly rated
corporates to tap the domestic and/or overseas markets directly
for finance, rather than approaching the banks.
Relatively safe nature of some of the retail credit finance with
lesser incidence of loan turning bad.
Rising disposable income, changing lifestyles/aspirations and
willingness to spend for more luxuries of the higher middle
class.
Better availability of loans, because of the consultancy lowering
interest rates, as a result of the low interest regime followed by
the regulating authorities, the housing loans interest rates hailed
to almost 7.5 – 8% in last 5 years.
Increased government incentives in form of tax rebates etc. in
the case of certain loans like housing loans.
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CASE STUDY
ICICI BANK
PERSONAL BANKING
PRODUCT AT GLANCE
LOANS
Online Loans
Home Loans
Loan Against Property
Personal Loans
Car loan
Two Wheeler
Commercial Vehicle
Loans against Securities
Loan Against Gold
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Farm Equipment
Construction Equipment
Office Equipment
Medical Equipment
Pre-approved Loans
Retail Assets Branches
FlexiCash
Farmer Finance
Rural Housing Finance
Retail Warehouse Receipt Based Finance
Business Instalment Loans
Aquaculture Finance
Horticulture Finance
Self Help Group Finance
Channels Terminated
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CARDS
Consumer Cards
Credit Card
Travel Card
Debit Cards
Commercial Cards
Corporate Cards
Prepaid Cards
Purchase Card
Distribution Cards
Business Card
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INSURANCE
Health Insurance
Overseas Travel Insurance
Student Medical Insurance
Motor Insurance
Home Insurance
Life Insurance
DEMAT
Overview
Account Opening
ISIN Lookup
Settlement Calendar
Charges
Digitally Signed Statement
Mobile Banking
Service Request Forms
Access Account Online
Membership Guide
Demat Branches
FAQs and Basic Concepts
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ONLINE SERVICES
Branchfree Banking
smsNcash
Bill Payment (New Billers Added)
Receive Funds
Funds Transfer
Convert to EMI
Smart Money Order
Prepaid Mobile Recharge
Ticket Booking
Online Tax Calculation
Account to Card Transfer
Mobile Banking Funds Transfer
Mobile Banking [iMobile]
Shopping
Share Trading
Special Promotions & offers
Online Loans and Credit Cards
Demand Draft Online
Mumbai Suburban Season Ticket
Instant Voice Response (IVR) Banking
ATM Banking
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ELIGIBILITY
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DOCUMENTATION
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SERVICE CHARGES
BANK@CAMPUS
BENEFITS
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Other Benefits
ELIGIBILITY
DOCUMENTATION
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Bank@Campus
Available to All cities
Students pursuing pre-approved
Eligibility courses only and b/w 18-27
yrs of age
Minimum average quarterly
Rs 500
balance
Charges for non maintenance
of minimum quarterly Rs.250 per quarter
average balance
Cash transactions at base
No Branch Access for cash
branch (branches in same
transactions
city)
ATM Interchange
Rs.18 per cash withdrawal and
(Transactions at Non ICICI
balance enquiry - Free.
Bank ATMs)
Issue of DD drawn on ICICI Rs.50 per D.D. up to Rs.10, 000;
Bank by cheque/transfer Rs.3 per thousand rupees or
part thereof for DD of more
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HDFC BANK
PERSONAL BANKING
PRODUCT AT GLANCE
Savings Accounts
Regular Savings Account
Savings Plus Account
SavingsMax Account
No Frills Account
Institutional Savings Account
Salary Accounts
Payroll
Classic
Regular
Premium
Defence
Reimbursement Current Account
Kid's Advantage Account
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Current Accounts
Fixed Deposits
Sweep-in Facility
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Demat Account
LOANS
Personal Loans
Home Loans
Gold Loan
Educational Loan
Tractor Loans
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CARDS
Credit Cards
Silver Credit Card
Value Plus Credit Card
Health Plus Credit Card
Gold Credit Card
Titanium Credit Card
Woman's Gold Credit Card
Platinum Plus Credit Card
Visa Signature Credit Card
World MasterCard Credit Card
Corporate Credit Card
Business Credit Card
Debit Cards
EasyShop International Debit Card
EasyShop Gold Debit Card
EasyShop International Business Debit Card
EasyShop Woman's Advantage Debit Card
EasyShop NRO Debit Card
Kisan Card
Prepaid Cards
ForexPlus Card
GiftPlus Card
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FoodPlus Card
MoneyPlus Card
PAYMENT SERVICES
NetSafe
Merchant Services
Prepaid Refill
BillPay
Visa BillPay
InstaPay
DirectPay
Visa Money Transfer
e-Monies Electronic Funds Transfer
Excise & Service Tax Payment
Online Payment of Direct Tax
Religious Offerings
Donate to Charity
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OneView
InstaAlerts
MobileBanking
ATM
PhoneBanking
Email Statements
Branch Network
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Credit Shield
In case of death or total permanent disability of the loanee,
the loanee/nominee can avail of the Payment Protection
Insurance (Credit Shield) which insures the principle
outstanding on the loan upto a maximum of the loan amount.
Principle outstanding is defined as the amount of loan
outstanding (not including any arrears in payment or interest
thereon) at the Date of Loss, having accounted for payments
made and interest accruing as determined in the Policy.
Hence, the amount covered does not include any principal
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SALARIED INDIVIDUALS
Eligibility Criteria
Documents required
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Eligibility Criteria
Documents required
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Latest ITR along with computation of income, B/S & P&L a/c
for the last 2 yrs. certified by a CA
Qualification proof of the highest professional degree
Documents required
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Eligibility Criteria
Documents required
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BALANCE TRANSFER
If you have a personal loan from any other bank with a clean
repayment record, simply transfer the loan to us and save
substantially.
Benefits
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Multiples of Rs.100/-
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ELIGIBILITY
The following can apply for a 5 Year Tax Saving Fixed Deposit
Resident Individuals
Hindu Undivided Families
An initial deposit of Rs. 100/- is required to open a Tax Saving
Fixed Deposit.
INTEREST RATES
When you open a Fixed deposit with HDFC Bank
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RATE of INTEREST
Normal rate: 9.50% p.a.
Senior Citizen rate: 10.00%
TAX DEDUCTIONS
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If you are exempt from paying tax, you need to present Form
15H when you open a Fixed Deposit and subsequently at the
beginning of the following financial year.
At the end of the financial year, the TDS will be deducted on
the basis of interest accrued on the Fixed Deposit (s) even if
this interest has not been credited.
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CONCLUSIONS
Retail banking is the fastest growing sector of the banking
industry with the key success by attending directly the needs of the
end customers is having glorious future in coming years.
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