Sreedhar’s CCE BANKING

DIFFERENT TYPES OF BANKING ACTIVITIES

Income of Bank can be classified as
· Fund Based Income (aka Interest Income)
· Non-Fund Based Income (aka Fee Based Income)
Fund Based Income
· The revenue that banks get out of their lending activities is known as Fund Based
Income. It is also known as Interest Income.
· Fund Based Products - Housing Loan, Credit Card, Personal Loan, Overdraft,
Vehicle Loan, Cash Credit, Education Loan, Crop Loan, Business Loan etc.
Non-Fund Based Income
· Non-Fund Based Income is banks’ revenue derived primarily from Fees / Charges
/ Penalties. It is also known as Non-Interest Income / Fee Based Income.
· Non- Fund Based Products - Bank Guarantee, Letter of Credit, Locker Facility,
Fund Transfers, Bill Payments, Demat Account & Stock Broking Services,
Distribution of Mutual Fund Schemes, Distribution of Insurance Products,
Distribution of Pension Fund Products etc.
Cross Selling
· Cross-Selling is the practice of selling an additional product or service to an
existing customer.
Mis-Selling
· Mis-Selling refers to selling of a product / service to a customer on the basis of
misleading advice.
Up-Selling
· Up-Selling is a sales technique where a seller induces the customer to purchase
more expensive items, upgraded products.
Retail Banking
· Retail Banking refers to the provision of services by a Banking entity to an individual
customers.
· Retail Banking is also known as Consumer Banking or Personal Banking.
Characteristics of Retail Banking System
· Deals with Individual Customers
· Huge customer base
· Large number of transactions will be executed
· Nominal value transactions will be taken place
· Higher interest spread for banking entities
Wholesale Banking
· Doing Banking business with Corporate / Industrial entities is called Wholesale
Banking.
· Wholesale Banking is also termed as Corporate Banking.
Characteristics of Wholesale Banking System
· Deals with Business entities
· Limited customer base
· Large number of transactions will be executed
· High value transactions will be taken place
· Low interest spread for banking entities
Para Banking

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· Banking entities can undertake certain eligible Financial Services either

departmentally or by setting up subsidiaries is called Para Banking.
· The activities which are done by a Banking entity apart from its normal day to day
business transactions are called Para Banking activities.
Universal Banking
· The provision of a wide range of Financial Services by a Bank, under one roof is
called Universal Banking.
· It is a financial supermarket where all financial products are provided under one
roof.
· Universal Banking is also known as Conglomerate Banking.
· Under Universal Banking System banking entities deliver various financial services
to its customers such as Banking Products, Insurance Products, Capital Market
Products and Pension Fund Products
Characteristics of Universal Banking System
· Profitable Diversification by using existing infrastructure
· Generate Non-Fund Based Income
· One-stop Shopping of various Financial Services
· Banking entity can protect its customer base
Narrow Banking
· Narrow Banking, which involves investing large portion of the mobilised deposits
in Risk-free Assets like Govt. Securities.
· Banking entities invest major portion of their accepted deposits in Govt. Secs. So
Narrow Banking entities carry virtually no Credit Risk.
· Narrow Banking is also called Safe Banking.
· As per RBI Guidelines, Payments Banks are required to invest at least 75% of
their mobilised deposits in Government Securities.So Payments Banks can be
considered as an example for Narrow Banking entities.
Core Banking
· Core Banking refers to a centralized system established by a Bank which allows
its customers to handle their basic banking transactions irrespective of the Bank’s
Branch.
· It is a Banking Service provided by a group of networked bank branches where
customer may access his/her bank account & perform basic banking transactions
from any of the member branch offices.
Offshore Banking
· Offshore Banking refers to the deposit of funds by a company or an individual in a
Bank that is located outside of their national residence.
Reasons to perform Offshore Banking Transactions
· To Dilute Political Risk
· To generate High Interest Rate
· To Diversify Exchange Risk
· Prefer Sound Banking System / Banking entity
Investment Banking
· An Investment Banking entity is a special type of financial institution that helps
Governments & Companies access Securities Markets to raise capital for expansion
or other needs.
· Investment Banking entities involves advising companies on Mergers and
Acquisitions.
· Investment Banking is also known as Merchant Banking.

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Unit Banking
· Unit Banking is a system of banking wherein a bank operates in a limited area,
does not open any branches in other locations.
· Unit Banking refers to a single banking outlet that only serves a local community.
· This type of banking system is originated and developed in USA. 
· Unit Banking is also termed as Localized Banking.
Branch Banking
· Branch Banking is a system of banking where a relatively Commercial Bank
undertakes banking activities with a network of branches.
Group Banking
· Group Banking is the system in which two or more independently incorporated
banks are brought under the control of a holding company.
· Group Banking is offered by banks to incentivize a whole group of people, like
employees of a company, to have a relationship with the banking institution.
Group Banking
· Increase in potential customer base
· Scope for Cross Sell Bank’s Products & Services
· Helps in Increasing Fund & Non-Fund Based Income
Islamic Banking
· Islamic Banking is a form of banking based on Islamic Principles.
· Collecting interest is not permitted under Shariah Law.
· It is a form of banking that rules out receipt and payment of interest.
· Islamic Banking Institutions make profits through investments.
· Income arising out of lending activities is called Interest, whereas Income
generated from Investment activities called Profit.
· Islamic Banking is also known as Interest- free Banking / Shariah Banking
Shadow Banking
· Shadow Banking refers to the provision of credit by financial entities that are not
regulated by Central Banking Institution i.e. RBI.
· These entities typically do not have Banking License, they do not mobilize deposits
as Banks.
· Shadow Banking Institutions are typically intermediaries between Investors and
Borrowers.
Ethical Banking
· Ethical Banking is a banking activity concerned with the Social & Environmental
impacts of Bank’s investments & loans.
· Ethical Banking is also called as Social Banking, Civic Banking or Responsible
Banking.
Virtual Banking
· Bank that offer services exclusively over the Internet or Mobile App is known as
Virtual Banking.
· It is a banking activity that offers financial services through electronic channels.
· All services of Virtual Banking entities can be performed online.
· Virtual Banking is also known as Direct Banking.
Digital Banking
· Digital Banking refers to automated delivery of traditional banking products and
services directly to customers through various electronic channels.
Brick & Mortar Banking
· Brick and Mortar Banking means where a customer could directly approaches a
bank branch to avail a Banking Service.

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Premier Banking
· Premier Banking refers to an exclusive banking and financial service that is
personalized to cater to the needs of High Net-worth Individuals.
Inclusive Banking
· Inclusive Banking is the delivery of Financial Services at affordable cost to sections
of disadvantaged and low-income segments of society.
Correspondent Banking
· Correspondent Banking is the provision of banking services by one bank to another
Bank.
Niche Banking
· Niche Banking refers to specialized Banking entities designed to fulfil the needs
of a certain demographic segment of the population.
· Niche Banking is also termed as Differentiated Banking.
Doorstep Banking
· Doorstep Banking designed to save customers’ time & efforts while performing
Banking transactions.
· It offers services like Cash Pickup, Instrument Pickup, Delivery of Cash and Demand
Drafts.
Open Banking
· Open Banking is the secure way to give Financial Services Providers access to
our financial information.
· It could help customers related to budget, find the best deals, and shop for the
financial services that suits them.
Consortium Banking
· In Consortium Banking system, two or more lending institutions join together to
extend credit support to a single borrower.