Black Book 2021 Tybaf D1 Jai Jain 8608 Black Book 2021 Tybaf D1 Jai Jain 8608

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Black Book 2021 Tybaf D1 Jai Jain 8608
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PROJECT REPORT ON:
RETAIL CREDIT EXPLOSION IN INDIAN BANKING
SUBMITTED BY:
JAI RAJNEESH JAIN
T.Y. ACCOUNTING AND FINANCE (SEMESTER VI)
SUBMITTED TO:
PROJECT GUIDE:
Asst. Prof Kajal Gala
Academic Year: 2020-2021

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DECLARATION
I JAI RAJNEESH JAIN from THAKUR COLLEGE OF SCIENCE AND COMMERCE, Student of
T.Y.B.Com [ACCOUNTING AND FINANCE (SEM VI)], hereby submit my project report on “RETAIL
CREDIT EXPLOSION IN INDIAN BANKING”.
I also declare that this project which is a partial fulfillment of the requirement for the degree of T.Y.B.Com
[ACCOUNTING AND FINANCE] offered by UNIVERSITY OF MUMBAI is the result of my own efforts
with the help of experts.
Date: 6th April 2021 JAI RAJNEESH JAIN
Place: Mumbai

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CERTIFICATE
This is to certify that Mr. JAI RAJNEESH JAIN has worked and duly completed his Project Work for the
degree of Bachelor’s in Commerce (Accounting and Finance) under the Faculty of Commerce in the subject
of Research Methodology and his project is entitled, “RETAIL CREDIT EXPLOSION IN INDIAN
BANKING” under my supervision.
I further certify that the entire work has been done by the learner under my guidance and that no part of it
has bee submitted previously for any Degree or Diploma of any University.
It is his own work and facts reported by his personal findings and investigations.
Seal Name and Signature of

of the college Guidance Teacher
Date of submission: 6th April 2021 KAJAL GALA

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ACKNOWLEDGEMENT
It gives me immense pleasure in presenting the project on “RETAIL CREDIT EXPLOSION IN INDIAN
BANKING”. Firstly I take the opportunity in thanking our respected Principal Dr. C.T.
CHAKRABORTY. I would like to thank the almighty and my parents without whose continuous blessings;
I would not have been able to complete this project.
I would like to thank my coordinator Prof. Nishikant Jha for his great, valuable opinions, advice and for
supporting me, giving me encouragement and for providing me with the material and knowledge to make
this project a success. And I would also like to express my sincere gratitude towards my project guide Kajal
Gala. I convey my deep appreciation to her for sparing her valuable time and efforts, to make me capable of
presenting this project.
I am thankful to our college for all the possible assistance and support, specially our library by making
available the required books and internet room which have proved useful to me in successfully completing
my project. I hope that I have succeeded in presenting this project to the best of my abilities.

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EXECUTIVE SUMMARY

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This project throws a light on the study of:s

RETAIL CREDIT EXPLOSION IN INDIAN BANKING.
One of the key mainstays of present day society has been the enlightened and sorted out trade of
merchandise and ventures. In India, as in different nations around the globe, a sorted out strategy for
installment has developed after some time from a trade framework to the more mind boggling types of fiscal
exchanges. The overwhelming type of installment crosswise over India in the twentieth century has been
coins, money and checks. As we move into the 21st century, installment through money and checks itself
has experienced a change. It has moved from being a physical paper-based trade of significant worth to a
virtual electronic one. This is in accordance with the advancement of electronic installments the world over.
Plastic cash has an additional capacity of distinguishing proof alongside that it monitors exchanges as they
are caused with all subtleties of buys, for example, shop name, date of procurement, measure of
procurement, city of procurement and so forth. Along these lines holder has the office of "invigorating" his
memory about his buys which is denied to the paper cash holder. On a large scale level, since the
information is accessible electronically, spending designs, rising patterns, statistic subtleties and such other
data can be agreed effectively which thusly can be utilized for boosting monetary improvement and for
diminishing pointless and unnecessary review costs. A noteworthy downside of plastic cash as installment
mode is substantial reliance on innovation (satellite telephone lines, PC joins, LANs, WANs and so on). A
tangle in any of these can cause a noteworthy interruption in acknowledgment methodology. Another hazard
connected to the utilization of plastic cash is that the moderate customers are not reacting to the costly
crusades propelled to present cards; alternate dangers that remaining parts are those intrinsic to this sort of
business, viz. administrative controls, fakes and terrible obligations. Synopsis and Conclusion 193 The
investigation has been made to realize the way of managing money examples of customers and why they are
not embracing the plastic cash in their everyday lives. The examination additionally attempts to discover the
job of part foundations in the advancement of plastic cash in India. The audit of writing demonstrated that a
large portion of research work in the field attempted till now has been done in created nations like the
United States and other quick creating nations.

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Plagiarism Report
Website: www.papersowl.com/free-plagiarism-checker

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INDEX
SR. NO TOPIC PG. NO.
1.1 Introduction 3-4
1.2 Definition 5-6
1.3 Role of Retail Banking 7-9
1.4 Origin and History of Retail Banking in India 10-13
1.5 Current Scenario 14-15
1.6 Future Scenario of Retail Banking 16
1.7 Features of Retail Banking 17
1.8 Advantages and Disadvantages of Retail Banking 18
1.9 Retail Banking: Indian Scenario 19-20
1.10 Components of Retail Banking 21
1.11 Retail Credit 22
1.12 Strategies for Client Retention 23
1.13 Opportunities and Challenges of Retail Banking in India 24-28
1.14 Credit Risk Management 29-30
1.15 Components of Credit Risk 31-34
1.16 Credit Strategy 35-41
2.1 Objective of the Study 43
2.2 Scope of the Research 44
2.3 Need for the Study 45
2.4 Significance of Retail Credit 46-47
3 Review of Literature 48-59
4 Data Analysis and Data Interpretation 60-68
... Findings 69-70
... Suggestions 71-72
... Conclusions & References 73-74

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CHAPTER-1
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1.1 INTRODUCTION
Retail banking is, however, quite broad in nature- it refers to the coping with business banks with individual
customers, each on liabilities and assets sides of the record. Fixed, current / savings accounts on the
liabilities side; and mortgages, loans (e.g. personal, housing, auto, and educational) on the quality aspect, are
the more important of the products offered by banks. Retail banking refers to provision of banking services
to people and tiny business wherever the money establishments are coping with sizable amount of low worth
transactions. This is in contract to wholesale banking where the customers are large, often multinational
companies, governments and government enterprise, and the financial institutions deal in small numbers of
high value transactions. Retail banking includes a comprehensive vary of economic product viz. deposit,
products, loan products, consumer durable loans, loans against equity shares, loans for subscribing to Initial
Public Offers (IPOs) / Mutual Funds, bill payment services, investment advisory services, credit / debit
cards and other cards. These products provide an opportunity for the banks to diversify the asset portfolio
with high profitability and relatively low NPAs. The categorization of retail banking services is shown in
table-1. Today, the many proactive banks have entered the retail banking segment and have identified it as a
principal growth driver. They are slowly gaining market share within the retail house.
Retail Banking Sector is characterized by 3 basic characteristics:

Multiple products (Deposits, Loans, Credit Cards, Insurance, Investments and Securities).
Multiple channels of distribution (Branch, Internet and Kiosk, Call Centers, Mobile Phones, ATM); and
Multiple Consumer Group (Salaried people, Self Employed Professionals, Small Business and SMEs)
The Indian Banks are competing with one another to grab a pie of the retail banking sector, which has
tremendous potential as retail loans constitute only 8% of GDP in India, whereas their share is regarding
thirty-five in alternative Asian economies. Retail banking environment today is changing fast. The dynamic
client demographics demands to make a differentiated application supported scalable technology, improved
service, and banking convenience. Higher penetration of technology and increase in world acquirement
levels has started to meet. Surplus deployable funds may be place into use by the banks. Products may be
designed, developed, and marketed as per individual needs. Competition, securitization, automation and
regulation are the major forces that are driving and shaping consumer lending.Net banking, Phone banking,
Mobile banking, ATMs and Bill payments are the new facilities that banks AR victimization not solely to
lure customers however additionally or line to help them reduce their total operating costs. In India,
commercial banks dominate the market or consumer credit. The enormous competition has led to innovative
retail banking products that are extremely customer friendly and plug the loopholes in the existing similar
products.
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Retail banking, also known as consumer banking expectation of the client on top of ne'er before. Increasing
use of recent technology has more increased has more increased reach and accessibility. The market these
days provides USA a challenge to supply multiple and innovative modern services to the client through a
consolidated window therefore on make sure that the bank's client gets 'Uniformity and Consistency' of
service delivery across time and at each bit purpose across all channels. The pace of innovation is fast and
security threat has become prime of all electronic transactions. High value structure rendering mass-market
mating in prohibitively costly. Present day tech-savvy bankers are currently a lot of watching reduction in
their in-operation prices by adopting scalable and secure technology thereby reducing the time interval to
their customers therefore as to improve their shopper base and economies of scale. The solution lies to plug
demands and challenges lies in innovation of recent providing with minimum dependence on branches- a
multi-channel bank, and to eliminate the disadvantage of an inadequate branch network. . Generation of
results in cross sell and making extra revenues with utmost client satisfaction has become focus worldwide
for the success of a Bank. Traditional loaning to the company is slow moving in conjunction with high NPA
risk, treasure profits are now losing importance; hence retail Banking is now an alternative available for the
banks for increasing their earnings. Retail Banking is a beautiful market section having an outsized variety
of assorted categories of consumers.
Retail Banking focuses on individual and small units. Customized and wide-ranging products are available
the risk is unfolding and therefore the recovery is slow, is the provision of services by a bank to the public,
rather than to companies, corporations, or other banks, which are often described as wholesale banking.
Banking services which are regarded as retail include provision of saving and transactional accounts,
mortgage personal loans, debit cards, and credit cards. Retail banking is also distinguished from investment
banking or commercial banking. It may also refer to a division or department of a bank which deals with
individual customers. In the U.S., the term commercial bank is used for a normal bank to distinguish it from
an investment bank. After the Great Depression, the Glass–Stag all Act restricted normal banks to banking
activities, and investment banks were limited to engaging capital market activities. That distinction was
repealed in the 1990s. Commercial bank can also refer to a bank or a division of a bank that deals mostly
with deposits and loans from corporations or large businesses, as opposed to individual members of the
public (retail banking).
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1.2 DEFINITION
Retail banking is typical mass-market banking wherever individual customer use native branches of larger
business banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit
cards, credit cards, and so' 'Retail banking may be a banking service that's in gear primarily towards
individual consumers' 'Banking services for individual customers' Retail banking is sometimes created
obtainable by business banks, furthermore as smaller community banks. In contrast to wholesale banking,
retail banking focuses strictly on shopper markets. Retail banking entities offer a good vary of private
banking services, furthermore as debit and credit cards. Through retail banking, shopper may additionally
get mortgages and private loans. Though retail banking is, for the foremost half, mass-market driven, several
retail banking merchandise may additionally reach tiny and medium sized businesses. These days abundant
of retail banking is efficient electronically via automated teller machine machines (ATMs,) or through
virtual retail banking referred to as on-line banking. The Indian economy is growing at a gentle rate of
eight.5 to September 11 within the last five years. Most of the expansion has been contributed by the
business and services sector. The expansion within the agriculture sector throughout the past five years has
been showing a declined trend and may be a growing at a touch level two. The potential for growth in
agriculture and SME sector is gigantic. The foremost reasons for low growth area unit non handiness of
banking services at reasonable value and too at a remote location. As a result, a massive majority of the
population within the rural areas and unorganized sector is disadvantaged from money facilities. This is
often acting as a constraint to the expansion impetus in these sectors. Therefore, access to money services at
reasonable value - particularly credit and insurance enlarge financial gain opportunities and provide money
direction to the agricultural poor. Such direction ensures social and political stability. Money inclusion offers
formal identity and provides access to the payment system and to saving, safety internet like deposit
insurance. Thus, money inclusion is considered vital for achieving comprehensive growth and guaranteeing
overall property growth of the economy. India ought to vary from the developed countries. whereas within
the developed countries, the main focus is on the comparatively tiny share of population not having access
to banks, in Bharat the main focus must air the overwhelming majority of the Indian population residing in
rural and semi urban area unit as WHO are financially excluded. One in all the vital aspects of retail banking
in Bharat is that the reach of the bank to the retail banking shoppers. It's calculable that fifty of the banking
business of the country is conducted in seven metropolitan cities and Pune.
As per 2001 census, seventy-three of the country's population resided in rural areas. In December 2003,
sixty-two of rural households failed to have access to Bank services. It's been calculable that regarding 12-
tone system of the urban households additionally doesn’t have such access. Thus, over forty eighth of all the
households of the country stay excluded from the advantages of banking. Gratuitous to mention that the
majority of the household's area unit the potential business field for retail banking merchandise. We,
therefore, felt it applicable to check the explanations and consequences of monetary inclusion in Bharat as a
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district of our research. Retail banking as a business model is adopted by all the banks on account of
multiple comfort factors for the banks viz. acquisition of an enormous client base, multiple product
offerings, higher evaluation and gain, scope for cross merchandising and up merchandising money and on
the far side money merchandise for increased per client revenue and in fact higher risk proposition With the
dynamic paradigm of technology because the driver for retail banking explosion, banks area unit embrace
totally different ways by redesigning their standard business silos, re-engineering existing merchandise and
inventing merchandise, services, channels, relationships to extend the share of the customers' billfold.
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1.3 ROLE
OF
RETAIL BANKING
Banks play many different roles in local and global economy. Retail banking is that part of banking which
deals with individual customers and small businesses. In contrast, commercial banks deal with big
businesses and corporations. Retail banking, compared to other kinds of retail businesses, lags as far as
coming up with innovative products. This is partly due to the nature of the banking business. Retail banking
in many, if not most, countries adheres to the conservative banking philosophy. Such message was echoed
by Tang Shunning, vice chairman of the China Banking Regulatory Commission, when he challenged the
Chinese banks to come up with innovative products to stay competitive.
SERVICES OFFERED ssssBY RETAIL BANKING

Retail banks offer a variety of important services to their customers. The retail banking sector is often
described as a typical mass-market banking, offering services such as savings and checking accounts and all
kinds of personal loans, including auto loans and student loans. Retail banks also offer mortgage services,
debit and credit card services and ATM services--all of which have become essential to today's consumers.
WHAT ROLES DO RETAIL BANKS PLAY WITHIN ECONOMIES?

Retail banks play a critical role in their home economies, and their activities have implications for the global
economy as well. They offer critical credit functions, which largely fuel the engine of economic growth in
their economies. When problems hit the retail banking sector the result is often dire economic circumstances
for the economy. When retail banks are failing, little or no credit is available for credit seekers, and
economic activity becomes depressed.
RETAIL BANKS AND THE SUB PRIME CRISIS
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A major challenge to retail banking surfaced in late 2008. Retail banks as well as commercial banks had
provided sub-prime mortgages to consumers who were not qualified for the size of the loans they received.
Although this process generated much of the housing boom of the early 21st century, eventually the loans
became too cumbersome for borrowers to pay back. This problem led to loan defaults across the United
States and led to many bank failures, not only in the United States but around the world. It produced serious
deterioration in the global economy and led to the economic and financial crisis that dominated the political
landscape in early 2009.
RETAIL BANKING AND CONSOLIDATION ISSUES

Some banks turned to consolidation as a way of cutting expenses to survive difficult economic conditions.
Often consolidation works as intended, but it also has its limitations. Federal law prohibits any single bank
in the United States from holding more than 10% of the U.S. customer market. When banks merge they also
make gains in their customer base. Several banks in the United States are approaching the 10% mark, so for
those banks, further consolidation may not be a way to solve their problems. The Indian economy is growing
at a steady rate of 8.5 to 9% in the last 5 years. Most of the growth has been contributed by the industry and
services sector. The growth in the agriculture sector during the past 5 years has been showing a declined
trend and is a growing at a little level 2%. The potential for growth in agriculture and SME sector is
enormous. The major reasons for low growth are non-availability of banking services at affordable price and
too at a distant location. As a result, a vast majority of the population in the rural areas and unorganized
sector is derived from financial facilities. This is acting as a constraint to the growth impetus in these
sectors. Therefore, access to financial services at affordable price - especially credit and insurance enlarge
income opportunities and offer financial empowerment to the rural poor. Such empowerment ensures social
and political stability. Financial Inclusion gives formal identity and provides access to the payment system
and to saving, safety net like deposit insurance. Therefore, financial inclusion is considered critical for
achieving inclusive growth and ensuring overall sustainable growth of the economy.
India should be different from the developed countries. While in the developed countries, the focus is on the
relatively small share of population not having access to banks, in India the focus has to be on the vast
majority of the Indian population residing in rural and semi urban areas who are financially excluded. One
of the important aspects of retail banking in India is the outreach of the bank to the retail banking clients. It
is estimated that 50% of the banking business of the country is conducted in seven metropolitan cities and
Pune.
As per the 2001 census, 73% of the country's population resided in rural areas. In December 2003, 62% of
rural households did not have access to Bank services. It has been estimated that about 12% of the urban
households also do not have such access. Thus, over 48% of all the households of the country remain
excluded from the benefits of banking. That most of the households are the prospective business field for
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retail banking products. We, therefore, felt it appropriate to study the reasons and consequences of financial
inclusion in India as a part of our research project.
Retail Banking as a business model is adopted by all the banks on account of multiple comfort factors for
the banks viz. acquisition of a huge customer base, multiple product offerings, better pricing and
profitability, scope for cross selling and up selling financial and beyond financial products for increased per
customer revenue and of course better risk proposition. With the changing paradigm of technology as the
driver for retail banking explosion, banks are embracing different strategies by redesigning their
conventional business silos, re-engineering existing products and inventing products, services, channels,
relationships to increase the share of the customers' wallet.
The issue of retail banking is extremely important and topical. Across the globe, retail lending has been a
spectacular innovation in the commercial banking sector in recent years. The growth of retail lending,
especially, in emerging economies, is attributable to the rapid advances in information technology, the
evolving macroeconomic environment, financial market reform, and several micro-level demand and supply
side factors. India too experienced a surge in retail banking. There are various pointers towards this. Retail
loan is estimated to have accounted for nearly one-fifth of all bank credit. Housing sector is experiencing a
boom in its credit. The retail loan market has decisively got transformed from a sellers' market to a buyers'
market. Gone are the days where getting a retail loan was somewhat cumbersome. All these emphasize the
momentum that retail banking is experiencing in the Indian economy in recent years. Retail banking is,
however, quite broad in nature - it refers to the dealing of commercial banks with individual customers, both
on liabilities and assets sides of the balance sheet. Fixed, current / savings accounts on the liabilities side;
and mortgages, loans (e.g., personal, housing, auto, and educational) on the assets side, are the more
important of the products offered by banks. Related ancillary services include credit cards, or depository
services. Today's retail banking sector is characterized by three basic characteristics:
Multiple products (deposits, credit cards, insurance, investments, and securities),
Multiple channels of distribution (call center, branch, Internet, and kiosk), and
Multiple customer groups (consumer, small business, and corporate).
What is the nature of retail banking?

In a recent book, retail banking has been described as 'hotter than vindaloo'. Considering the fact that
vindaloo, the Indian-English innovative curry available in umpteen numbers of restaurants of London, is
indeed very hot and spicy, it seems that retail banking is perceived to be the in-thing in today's world of
banking.
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1.4 ORIGIN AND HISTORY OF BANKING IN INDIA
Banks area unit among the most participants of the national economy in Bharat. Banking offers many
facilities and opportunities. Banks in Bharat were started on land pattern within the starting of nineteenth
century. The primary half the nineteenth century, the Malay Archipelago Company established three banks:
The Bank of geographic area.
The Bank of Mumbai
The Bank of Madras
These 3 banks were referred to as presidency banks. In 1920 these 3 banks were amalgamated, and the
Imperial Bank of Bharat was formed. In those days, all the banks were joint stock banks and an outsized
range of them were tiny and weak. At the time of ordinal warfare regarding 1500 joint stock banks were
operative in Bharat out of that 1400 were non-scheduled banks. Because of imprecise and dishonest
management there have been variety of bank failures. Thus the govt. had to step in and also the Banking
company's Act (subsequently named because the Banking Regulation Act) was enacted that led to the
elimination of the weak banks that weren't in an exceedingly position to satisfy the assorted necessities of
the Act. In order to strengthen their weak units and review public confidence within the banking industry, a
replacement section forty five enacted within the banking regulation act within the year 1960, empowering
the govt. of Bharat to obligatory amalgamate weak units with the stronger ones on the advice of the run.
These days banks area unit broadly speaking classified into two groups namely:
Scheduled-banks
Non- regular banks
Scheduled banks because the name counsel square measure the banks, that square measure accounted within
the second schedule of the Federal Reserve Bank of Asian nation (RBI) Act, 1934. The bank needs to satisfy
the financial organization that's affairs don't seem to be administered in a very means that causes damage to
the interest of the depositors. Regular banks could be a banking corporation whose minimum paid up capital
is Rs.25 lakhs and doesn't damage the interest of the depositors. Listed within the second regular. Money
reserve magnitude relation is maintaining with run batted in. regular banks square measure allowed to
borrow cash from run batted in for normal banking functions. Returns to be submitted sporadically. Regular
banks members will be of financial institutions. Non-scheduled banks square measure the banks that don't
fits rules nominative by the Federal Reserve Bank of Asian nation or say the banks that don't come back
underneath the class of regular banks. It's not listed within the second regular. Money Reserve magnitude
relation maintained with themselves. Non- scheduled banks don't seem to be allowed to borrow cash from
run batted in for normal banking functions. No such provision of submitting periodic returns. They cannot
be the members of financial institution.

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There square measure 3 completely different phases within the history of banking in Asian nation.
Pre – Nationalization Era
Nationalization Stage
Post Relaxation Era
Pre-Nationalization Era: In Asian nation the business of banking and credit was practiced even in early
times. The payment of cash through Hun dies, associate degree autochthone credit instrument was highly
regarded. The hundis were issued by bankers called Shroffs, Sahukars, Shahus or Mahajans in numerous a
part of the country. Organizational Structure of Banks in Asian nation bank square measure classified in
varied classes in keeping with completely different criteria. The subsequent charts indicate the banking
structure.
During the first a part of the nineteenth century, the degree of foreign trade was comparatively little because
the trade enlarged, the requirement for the banks of the escort was felt and therefore the government of the
Malay Archipelago Company took interest in having its own bank. The primary banks were the overall
banks of Asian country that started in 1789 and therefore the Bank of Hindustan, each of those square
measure currently defunct. The oldest bank alive is that the banking company of India that originated within
the name of Bank of metropolis in June 1806. It soon became the Bank of Mumbai and therefore the Bank
of Madras. All the 3 banks were incorporate in 1925 to create the imperial bank of Asian country. The
swadeshi movement witnessed the birth of many native banks as well as the Punjab commercial bank, Bank
of Baroda, and geographical region Bank. In 1995, the banking company was established below the Reserve
of India Act because the financial organization of India.
Nationalization stage: After Independence in 1951, the all Republic of Asian Bharat Rural Credit Survey
committee counselled nationalized of the Imperial Bank of India. In 1955 the imperial Bank of Republic of
Asian country was nationalized and established because the banking company of India. The most objective
of creating SBI by nationalizing the Imperial Bank of Asian country was 'to extend banking facilities on an
outsized scale a lot of notably within the rural and semi-urban areas and to various it for alternative public
functions. In 1959, the SBI Act was planned and therefore the eight state- associated banks were taken by
the SBI as its subordinates. With result from first January 1963, these subsidiary banks shaped the banking
company of Asian country cluster. On nineteenth July 1969, the nationalized six a lot of business non-public
sector banks with the deposit value Rs fifty crores and higher than came into result. It absolutely was a
turning purpose within the history of economic banking in Asian country. Later the govt. nationalized six a
lot of business non-public sector banks with the deposit liability of not but Rs.20 crores on fifteenth April
1980. These banks were:
Andhra Bank Corporation Bank
New Bank of Asian country Oriented Bank of Commerce, Punjab And Sindh Bank Vijaya Bank

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In 1969, the bank theme was introduced to increase banking facilities to each corner of the country. Later in
1975, Regional Rural Banks were established to supplement the activities of the business banks and
particularly to satisfy the credit wants of the weaker sections of the agricultural society. Nationalization of
banks sealed manner for. Retail banking and as a result there has been an all spherical growth within the
branch network, the deposit mobilization, credit disposals and employment. The primary year once
nationalization witnessed the overall growth within the agriculture loans and therefore
the loans to SSI by eighty-seven and forty eighth severally. The general growth within the deposits and
therefore the advances indicates the advance that has taken place within the banking habits of the folks
within the rural and semi-urban areas wherever the branch network has unfolded. Such credit growth
enabled the banks to attain the goals of nationalization.
Post relaxation Era: Thrust on quality and profitability; the requirement for restructuring the industry was
felt bigger with the initiation of the important sector reform method in1992. The reform method in 1992.
The reform method has increased the opportunities and challenges for the important sector creating them
operate during a borderless world marketplace. However, to harness the advantages of globalization. There
ought to be an economical money sector to support the structural reform going down within the real
economy. The foundation causes for the shortage luster performance of banks, shaped the weather of the
banking sector reforms. Several the factors are:
Regulated rate structure Lack of specialize in profit
Lack of transparency within the bank's record Lack of competition
Excessive regulation on organization structure and social control resources Excessive support from
government
During this context, the recommendations created by a high-level committee on purposeful sector, chaired
by M. Narasimha, ordered the muse for the banking sector reforms. The Narasimhan committee advised that
there ought to be purposeful autonomy, flexibility in operations, dilution of banking strangulation, reduction
in reserve necessities and adequate money infrastructure in terms of supervising, audit, and technology. The
committee more advocated introduction of prudent norms, transparency in operations and movements in
productivity, that aimed toward liberalization the restrictive framework however additionally to stay them in
tune with international standards. The stress shifted to economical and prudent banking coupled to higher
client care Band client services.

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1.5 CURRENT SCENARIO
The current situation in India is that banking system is extremely developed. Yet, Indian banking remains
mean down from achieving world standards in size furthermore as merchandise and services because the
economic process continues, the strain on the banking sector to cater to the wants of the economy also are
growing systematically. The expansion in economic activities has redoubled wholesale furthermore as retail
banking within the country. Higher financial gain levels among the households and a dynamical lifestyle that
has accepted outlay on white merchandise have accelerated credit start off and redoubled activities within
the retail banking sector. This is often except for the rise within the activities of the wholesale/corporate
banking sector because of the acceleration in industrial production and alternative factors on the assembly
facet. The general demands for banking merchandise and services has a light-emitting diode to the
innovation of latest merchandise and an additional client friendly approach through the introduction of
custom-made merchandise by the banks.
This sustained demand has additionally light-emitting diode to increasing pressure on the banks to be
additional competitive to retain customers. The technological drive, that has become imperative for the
banks to deliver the merchandise and services, that square measure a part of new age banking, desires
substantial investments. During this context, the smaller banks realize it tough to fund comes geared toward
rising the service delivery/distribution mechanisms. This brings within the mergers and consolidation within
the banking system. Indian banks have additionally realized that with organic growth there’s desire to grow
inorganically furthermore, to be competitive with alternative players within the market. For instance, the
depository financial institution of India, India's largest bank, has non inheritable seventy-six stake within the
Kenyan Bank, Giro industrial Banks. ICICI Bank, Bank of India, Bank of Baroda has additionally followed
constant route. Bank of Punjab has been unified with warrior Bank of Punjab Ltd. several instances have
started growing within the Indian banking system the foremost necessary issue for the Indian banking
system is to vie and sustain within the world banking surroundings. To satisfy these challenges of growing
inorganically, Indian Banks square measure going world. The banks have additionally started following
international norms. There has been arise within the transparency within the system. The utilization of
technology within the banking system has modified things plenty, so making quicker processes, addressing
client issues in an exceedingly additional economical means. India has additionally complied with the core
principles of effective banking direction of the urban center committee. For increasing the scale of banking
system and international recognition, Indian Banks have started going in the get across competition.
However still India has solely twenty-two Banks that figure within the world high a thousand and solely five
Banks within the high five hundred. The table three.1 has shown the overall assets of Indian banks.

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Currently Bharat has 222 regular business banks, of that 133 are regional rural banks. There are seventy-one,
777 bank offices unfold across the country, of that forty third are placed in rural areas, twenty second in
semi-urban areas, eighteen in urban areas and the rest revolutionary Organization 17 November within the
metropolitan areas. the key bank teams (as outlined by RBI) functioning throughout the reference amount of
the report are banking concern of Bharat and its seven associate banks nineteen nationalized bank and also
the IDBI Ltd, nineteen previous non-public sector banks, eight new non-public sector banks and twenty nine
foreign banks. Now, commendable growth has been witnessed within the national economy of Bharat over
the past few years. With chain of quite 65000 branches, Indian industry is one amongst the biggest banking
networks within the world. There has been a substantial growth within the retail- banking sector in Bharat
that makes up for concerning 1/5th of the general bank credit. The retail banking system encompasses the
services like credit cards, housing loans academic loans and automotive vehicle loans etc.

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1.6 FUTURE SCENARIO OF RETAIL BANKING
The future appearance exotic for retail banking in India and the retail banking business silos can bear a
metamorphic transformation. The rising client situation and technology situation provides opportunities for
all players within the banking and monetary house. Several the influencing parts in retail banking revenues
are going to be third party distribution and wealth management and personal banking solutions for the
burgeoning mass affluent. merchandising in retail banking are going to be associate degree rising space
wherever banks are going to be extending not solely on the far side banking solutions to hide the whole
monetary designing of shoppers however conjointly life vogue designing of the shoppers. desegregation
banks' knowledge bases with third party monetary suppliers are going to become the order of the day within
the modified situation and outsourcing can be a natural sales and method within the dynamical human
resources paradigms publicly Sector Bank. Remote channels can rule the dealing banking method and
branch format are going to be chiefly used for relationship and consultative banking. Core Banking
Solutions are going to be total and client knowledge integration are going to be the bottom within which
retail initiatives are going to be addressed client data processing and CRM can exist as generic options of
retail banking. The subsequent area unit a number of the attention-grabbing findings that have emanated
from this analysis study concerning the general public Sector Banks - Most of the general public Sector
Banks don't have a centered model for retail banking either within the structure or business objectives.
1) Generation of a retail banking business (either a retail plus or alternative retail product / service) from the
prevailing client base isn't totally tried.
2) In the majority the public Sector Banks, there's no centralized client knowledge base for client life cycle
cantered retail initiatives.
3) Core Banking Solutions implementation isn't totally achieved to focus on the various segment of
shoppers. - Method models aren't totally centralized for an expert and standardized approach.
4) Cross mercantilism is tried on a standalone basis at the branch level thanks to lack of centralized
knowledgebase.
5) Remote Channels area unit solely evolving and has not matured for migration of shoppers from the direct
channels to remote channels.
6) Customer segmentation has not happened on the specified lines for effective retail banking.

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1.7 FEATURES OF RETAIL BANKING
One of the outstanding options of Retail Banking product is that it's a volume driven business.
Further, Retail Credit ensures that the business is widespread among an outsized client base not like within
the case of company loaning, wherever the chance is also focused on a particular few plan. Ability of a bank
to administer an outsized portfolio of retail credit product depends upon such factors Strong credit
assessment capability: Because of massive volume smart infrastructure is needed. If the credit itself is
qualitative then the necessity for follow up within the future reduces significantly.
Today retail banking is characterized by following features:

1. Retail banking aims at doing banking business in large volume of transaction involving low volume.
2. The retail banking portfolio includes deposits and assets linked products as well as other financial
services provided to individual for personal consumption.
3. Retail banking business is an attractive market segment with opportunities for growth and profits.
4. Retail banking is based on the maxim 'do not keep all the eggs in one basket'.
5. Retail banking industry is diverse and competitive. There are many retail banking products that are
extremely customer-friendly and are offered by many banks.
6. Banks adopt multiple channels of distribution of retail banking products. The channels include call center,
branch, internet, mobile phones, ATMs, etc.

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1.8 ADVANTAGES AND DISADVANTAGES OF RETAIL BANKING
ADVANTAGES: Retail Banking is mass market banking, where individual consumer's diverse needs are
fulfilled at the local level i.e.by providing multiple products. Retail banking has the following advantages:
1. Retail deposit are stable and constitute core deposit.
2. They are interest insensitive and less bargaining for additional interest.
3. It increases the subsidiary business of banks.
4. Retail banking results in improved bottom line for banks.
5. It is a goof avenue for fund deployment.
6. It builds a strong customer base
DISADVANTAGES: The following are the disadvantages:

1. There can be problem in managing large number of clients, especially if IT system are not sufficiently
robust.
2. The cost of maintaining branch networks and handling large number of low-value transactions tend to be
relatively high.
3. Designing own and new financial products is very costly and time-consuming for the bank.
4. Long term loans like housing loans, due to its long repayment term, can became NPA in the absence of
proper follow-up.
5. Major disadvantages are monitoring and follow-up of huge volume of loan accounts banks to spend
heavily on the human resource department.
6. Though banks are investing heavily in technology, they are not able to exploit it to the maximum.

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1.9 RETAIL BANKING: INDIAN SCENARIO
India began a technique of economic reforms within the wake of a balance-of-payments crisis in 1991. The
central plank of the reforms was reforms within the monetary sector, and banks being the mainstay of
monetary mediation, the banking sector reforms became inevitable. At an equivalent time, reforms were
additionally undertaken within the different segments of monetary markets, to change the banking sector to
perform its mediation role in an economical manner. The thrust of those reforms was to push a diversified,
economic, and competitive financial set-up, with the final word objective of rising the allocate potency of
resources, through operational flexibility, improved monetary viability and institutional strengthening. In
India, retail banking has continuously been given importance since the nationalization of banks in Asian
nation, keeping the target to succeed in the mass across the country by banking establishments. However, the
thought of retail banking has taken a concrete form in terms of volume and size within the recent past when
the alleviation of the economy. For the previous couple of years, growth of retail banking in Asian nation
has been maintaining nearly an equivalent pace there with of thought banking for several leading banks.
Retail banking is turning into progressively advanced thought to outline. Generally, retail banking in
outlined to be the availability of mass market banking services to non-public individuals; it's been swollen
over the years to hide the small- and medium sized businesses additionally. Some leading banks may
additionally categories their 'private banking' business (i.e. services to high internet price individual) in their
definition of retail banking. Retail Banking as a business model is adopted by all the banks in Asian nation
on account of multiple comfort factors for the banks viz, acquisition of a large client base, multiple product
offerings, higher rating and profit, scope for cross commercialism and up commercialism monetary and on
the far side monetary merchandise for accrued per client revenue and in fact higher risk proposition. With
the ever-changing paradigm of technology because the driver for retail banking explosion banks square
measure grasp completely different ways by redesigning their standard business silos, re-engineering
existing merchandise and inventing merchandise, services, channels, relationships to extend the share of the
customer's billfold. The evolution of retail banking in Asian nation is derived back to the entry of foreign
banks. The traditional banking business by Public Sector Banks (Public Sector Banks) was done on a lot of
generalized approach and there was no specific demarcation as retail and non-retail activities. Client and
trade segmentation were adopted at intervals the general business arrange of Banks. Providing merchandise
and services supported specific client segment wasn't tried in a much-targeted approach.
Foreign banks operational in Asian nation set the trend and within the late 1970 and early Eighties and came
out with their client banking models with hybrid liability and plus merchandise specifically targeted at the
private phase. Normal leased Bank and Grind lays Bank were the pioneers in introducing these forms of
merchandise. Citibank created waves within the early Eighties with their master card merchandise and
spurred the retail banking house. Banking company of Asian nation and a few public sector banks like

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Indian Overseas Bank, Bank of Asian nation, Bank of Baroda, and Andhra Bank developed and marketed
plus merchandise and card merchandise to cater to retail phase. In fact, Bank of Baroda and Andhra Bank
were 2 of the first players within the master card business within the PSB house. The entry of latest
generation non-public sector banks in early Nineteen Nineties has created a brand-new approach to retail
banking by banks. With the advantage of technology right from begin, these banks had a transparent
positioning for retail banking and sharply strategized for making new markets for the retail phase.
Additionally, the new generation non-public banks have exhibited a threat to the retail business of foreign
banks that have by currently well outlined business models for retail banking. To feature to the fuel, Public
Sector Banks additionally with technology initiatives and redefined business model for retail have sharply
entered the market house, making a retail war and capture their share of the pie within the liberalized
economic surroundings and also the resultant opportunities in retail banking. The retail war is fully swing
currently with a win - win scenario for all the players and the focus is on capturing and rising the market
share and client base.
A recent study seen that the retail banking system in Asian nation grew by a combined annual rate of thirty
5% between 1999 and 2004 and also the figures are going to be a lot of higher supported the performance of
the banks during this house within the instant years. Retail Banking is predicted to grow at on top of half-
hour and retail assets square measure expected to the touch a whopping $300 billion by 2010.But even with
this rate, still the potential for the expansion in retail assets appearance terribly promising. The contribution
of retail assets to Gross Domestic Product (GDP) in Asian nation is 6 June 1944 and is relatively lesser than
that of different Asian counterparts like China (15%), Asian country
(33%), Thailand (24%), and Taiwan (52/%). This indicates the lower level of penetration of retail banking in
Asian nation and strengthens the views and methods of the retail players.

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1.10 COMPONENTS OF RETAIL BANKING INDIA
Economic Reforms attributed prosperity to the economy alongside associate overall improvement of the
buying power of the common mass, dynamic their tastes and preferences, finance homes began to initiate
with styles of product & services to catch larger section of the population of India. Antecedent banking was
similar with some few merchandise, savings a/c and dealing supported Cheque / deposit slip. For many
years, banks' angle towards client loans was terribly skeptical. Loans were restricted to housing loans solely.
The situation has modified significantly within the last decade. Indian Banking Sector has witnessed a
revolution in merchandise and connected services, e.g. earlier one was a client of a branch of a specific
branch, now-a-days due to core banking one could be a client of a bank, not any specific branch. Universal
banking has additionally enabled clients to induce a spread of merchandise at a branch wherever as
antecedent one had to be a customer of varied alternative establishments. Favorable macroeconomic
conditions continuing to underpin the business and money performance of regular business banks (SCBs)
throughout 2005-06. The credit growth has become broad-based as credit enlargement in respect of the retail
sector, notably housing, and loans to business land has additional pronounced. On the liability facet, deposits
are growing at the next rate as compared with the previous years. However, the enlargement of deposits
couldn't keep up with the high credit growth compelling banks to liquidate several their holdings of state
securities. Reversing the trend of the previous years, web profits of the SCBs, as a group, increased. To an
oversized extent, this was expedited by a pointy increase in deposits and web interest financial gain because
of a robust growth in credit volumes.

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1.11 RETAIL CREDIT
What Is Retail Credit?
Consumer credit risk (also retail credit risk) is the risk of loss because of a customer's non repayment
(default) on a credit line product, like a mortgage, unsecured loan, master card, bill of exchange etc. (the
latter 2 choices being sorts of unsecured banking credit. Continuing the robust growth in recent years, retail
advances exaggerated by 49% to Rs.3,75,739 large integer in 2005-06, that was considerably on top of the
general credit growth of 31%, are the prime driver of the credit growth in recent years. As a result, their
share in total loans and advances exaggerated from 22% per cent in March 2004 to 25 % throughout March
2006 (Chart- 3). Car loans fully fledged the very best growth, followed by master card assets, alternative
personal loans (comprising loans primarily to professionals and for academic purposes) and housing finance.
Of the parts of retail credit, the expansion in housing loans was fifty percent in 2004-05 and 34% in 2005-
06. Banks' direct exposure to business land additionally quite doubled within the last fiscal year. Loans for
durable exaggerated by 17.3% as against the decline of 39% within the previous year Banks square measure
seeing a pointy rise in business from associate sudden sector - education loans. Bank loans to students has
up 96.5% for the fiscal year ending March '06, reports Economic Times. The outstanding loans to the
education sector, that is additionally classified as priority sector advances, stood at Rs.10, 057 crore. In its
assessment of the economics and financial developments created in its quarterly policy review, run batted in
same that loans to land continuing to spiral, news a 100% growth. The loan book rose by Rs.13, 380 large
integers to Rs.26, 682 crores. Growth of Retail Credit in India Retain disposition has seen completely
different phases in its period, since the easing of India in 1991. Each non-public and public sector bank,
regardless of size are progressively specializing in the retail sector for each resource mobilization and
disposition. Banks square measure is currently the first supply of retail disposition, a forte antecedent
enjoyed by NBFI's. except for domestic banks (national and private); the engaging growth potential of the
Indian retail credit business has over the past decade close to, attracted the interest of world money
establishments. This has light-emitting diode to vital investments in product style, distribution networks and
sales groups.

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1.12 STRATEGIES FOR CLIENT RETENTION
Client retention is one among the key words for the success of retail banking. In recently of cutthroat
competition within the retail banking house, retentive a client is additional vital than exploit is placement
client. Price of exploit replacement client is quite retentive associate existing client. Client retention creates
opportunities for product and worth bundling, cross mercantilism and up mercantilism. Banks additionally
structure client Loyalty Enhancements Programmed for specific client segments like NRIs, HNIs, non-
public Banking & Wealth management. The programmed vary from easy client conferences to transcription
for social, cultural needs and additionally embody special musical concerts. Of these square measures
enforced as a neighborhood of the overall client relationship management initiatives. Client retention is
additionally adopted by client discrimination or differentiation by specialized worth services and delivery
and worth prescriptions for various client segments. In PSBs, most of the higher than mentioned methods
square measure enforced for client retention and improvement in most the banks. The degree of
implementation of those methods differs across banks betting on the sort of client segments. A combination
of these methods is intended by the banks.
In previous Generation non-public Sector banks additionally the higher than client retention method square
measure adopted. However, size matters and because of smaller client base as compared to PSBs these
banks implement methods additional on the overall client universe than on specific segment as mentioned
higher than. In new Generation non-public Sector Banks, although all the higher than methods square
measure enforced the focus is additional on section specific retention methods.

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1.13 OPPORTUNITIES AND CHALLENGES OF RETAIL BANKING IN INDIA
Commercial Banking throughout the world has been undergoing a major transformation. Traditional banks
in India have been exposed to strong external pressures, which have been brought about by the influence of
worldwide globalization and unceasing technological development. The question is: Will banks be able to
survive and grow in the market of financial service providers or will they gradually get extinguished under
the influence of these pressures? The following are the challenges which are posing threats to all banks:
1. Technological Revolution.
2. Disintermediation and Securitization.
3. Product and Service Proliferation.
4. Multiple technology-based delivery channels.
5. Rising Competitions.
6. Increasing Deregulations.
7. Rising Funding costs and shrinking spreads.
8. Consolidation and geographic expansion.
9. Globalization of banking.
In the face of these challenges, the options before the banks are: Watch their customers leaving the bank
because of no change in their strategies. Copy the new entrants and market leaders' products and delivery
channels and struggle to maintain market shares, or Rebuild with focus on customers with innovative
products, improved processes, modern technology, competitive range of delivery channels and focusing
services on the best customers. Traditionally, banking was personal. The customers knew the bank
employees, who in turn, knew the customers. By tracking the previous business done by a customer, the
employee could anticipate his future needs, but with advent of technology, this personal touch is lost, and
customers are lured away by other banks by providing better services. The main bondage in the retail
banking is the relationship the customers enjoys with the bank, the closer the customers feels to the bank,
more are his chances of remaining with the bank. More and more banks are, therefore, turning to customer
relationship management (CRM) technology in search of more effective ways to woo and retain the
customers. Reasons for surge in retail lending, The revived target retail loans is essentially on account of
skyrocketing liquidity (reduction in CRR/SLR over the years), increasing autonomy (with respect to product
innovation), reduced dependency on corporate customers and demand facet growth drivers like increasing
income, enlarging middle class, increasing population of young people, changing attitude of customers
towards loans and so on. Lastly, retain banking is currently accepted as less risky by banks in Asian nation.

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GROWTH DURING PRE-1990 ERA
However, the expansion in retail credit has not been sleek, as one would expect. Prior to economic reforms
in 1990, most of the banking credit was focused on agriculture, industry, and commerce. The major role of
bank loaning until then was to support offer. Various regulative restrictions were in to confirm limits on total
quantity of housing loans and loans to people. There were alternative restrictions associated with rate of
interest, margin stipulation and maximum repayment period.
After the economic and regulative reforms were created, 3 distinct phases in the growth of retail assets have
been observed.
Acceleration period (1996-97 to 2005-06)
Deceleration period (2006-07 to 2009-10) Moderation period (2010-11 onwards)
The table below shows the variation in retail credit from Mar'96 to Mar'10. The total SCB's credit by bank
teams in Asian nation for private loans has been given in Rs. Crores.
As we can see from the data, the growth in retail credit experienced a surge during the acceleration phase
and then mellowed down until Mar'2010. At present, all banks are in the moderation phase and are
maintaining around 20% Y-O-Y growth in retail assets. The graph below shows the various stages of growth
in retail credit from 1997 to 2011.
ACCELERATION PERIOD
The acceleration section is often thought about from Mar'97 to Mar'06. Throughout this era, retail credit
grew at a mean annual rate of twenty-eight.4% against nineteen.5% growth of the general bank credit. The
key characteristics of this section that are often noncommissioned below
Low risk perception of banks. Liberation and augmented autonomy. Competition.

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Liquidity in market thanks to positive economic indicators. During this era, the share of retail loan to total
loan went around twenty fifth. The table below shows the expansion of consumer goods throughout this
section.
It is conjointly price perceptive that in this part, the share contribution of housing loans to total retail loans
multiplied from thirty-seven.3% in Mar'93 to fifty-one.6% in Mar'06. Moreover, the share of foreign banks
conjointly multiplied from 8 May 1945 in 1996 to around two hundredth in 2006. This was primarily thanks
to the expansion story of Asian nations throughout this era.
DECELERATION PERIOD
This period lasted for around three years from Mar'07 to Mar'10. Throughout this era, there was a delay in
retail credit and the annual rate of retail credit was solely 4-5% in 2010. The expansion rate of bank credit
was a lot of above the retail credit leading to reduced share of retail to total loans.

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The graph below highlights the quantity of non-public loan accounts (outstanding) that were gift within the
bank teams from 1997 to 2010. This shows that the delay began in 2005 itself and born to abysmal level by
2010.
Although the growth drivers like GDP growth rate, expansion in size of middle class etc. were present and
active, the sole reason for deceleration was supply-side factors. The banks decided to go slow owing to the
increasing trend of NPAs in their retail portfolios.
MODERATION PERIOD
During this part, the expansion of retail loans has been a lot of or less kind of like that of bank credit. The
current share of retail assets is predicted to stay a lot of or less at 20-21%. Most banks have conjointly
reduced the contribution of housing loans in their loan portfolio.
Moderation was for the most part due to low rate of interest around known as extremely debatable 'teaser
rates' till the primary half 2010. So as for the banks to supply banking services to retail customers during a
profitable manner, banks ought to follow Associate in nursing acceptable retail strategy. The essential
elements of a profitable and property strategy are inclusive retail banking accountable banking, client
banking, credit quality and safe supply of financial gain from retail banking. Inclusive retail banking
Inclusive banking strategy (providing basic banking services together with credit to financially excluded
sections of the society) has many benefits for the most part to the banks themselves, except making certain
basic banking facilities to vulnerable sections of the society. Infosys has launched its core banking answer
Financial that provides solutions to around sixty fifth of Indian banks is guiding them to faucet a mass of
disadvantaged Indians as yet thought of too poor to possess a checking account (Economic Times, Feb 8,
2010). Responsible Retail Banking Banks should go with prudent practices in assessing the credit good and
compensation capability of the borrower’s victimization Credit counselling. Yes, Bank operates during a
property zone wherever wider economic, environmental, and social objectives are met by supporting new
rising businesses that not solely promote

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monetary growth however conjointly enhance social and environmental causes Customer centurial Retail
Banking Service quality in retail banking may be an important issue to client satisfaction that aid in client
retention. Client criticism redressed systems got to be sturdy and will be handled rigorously.

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1.14 CREDIT RISK MANAGEMENT
An analysis ought to be created to determine the extent to that the bank's existing processes and procedures
ought to be increased to fulfil the stress of the rules. For this purpose, there' sought to train the team of
bankers and develop and strategic models and solutions with the assistance of specialists or outside
agencies. It's primarily to keep up record of each activity of the bank to manage the credit risks.
As declared by Rekha Arun Kumar (2005), 'Better and effective strategic credit risk management method
may be a higher thanks to manage portfolio credit risk.' The process provides a framework to confirm
consistency between strategy and implementation that reduces potential volatility in earnings and maximize
shareholders wealth.
Beyond and over riding the specifics of risk modelling problems, the challenge is moving onwards improved
credit risk management lies in addressing banks' disposition and openness to just accept amendment to a lot
of clear system, to speedily ever-changing markets, to more practical and economical ways that of operative
and to fulfil market needs and multiplied accountability to stake holders. There's a necessity for strategic
approach to Credit Risk Management (CRM) in Indian industrial Banks, significantly visible of NPA level,
automobile (Capital Adequacy Ratio) norms and urban center Capital Accord.
A METHOD OF MANAGING CREDIT RISKS: CREDIT RATING:

Credit rating is that the main tool that helps in measurement the credit risks and facilities the evaluation of
the account. It offers important indication of weakness within the account. It conjointly triggers portfolio
management at the company level. So, banks ought to understand importance of developing and
implementing the inner credit scoring system, and conjointly acknowledge the role such system play in
credit risk management, capital adequacy and quality. To ensure correct administration of their numerous
credit risks-bearing portfolios the banks should have the following:
A system for watching the condition of individual credits and determinative the adequacy of provisions and
reserves. An internal risk scoring system in managing credit risk.
The scoring system ought to be in line with the character, size and quality of a banks activities Information
systems and analytical techniques that permits the management to live the credit risks inherent altogether
on- and off record activities.
The management system ought to give adequate info on the composition of the credit portfolio together with
identification of any concentrations of risks.
A system for watching the composition and quality of the credit portfolio. The information will function the
idea or rating the credit beneath the banks internal scoring system.

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Internal credit risk rating is employed by the banks to spot gradations in credit risk among their business
loans. To manage credit risks it's vital to spot its gradations among the business loans and assign internal
credit risk rating to loans that correspond to those gradations. The utilization of such internal rating method
is acceptable and so, necessary for sound risk management at giant establishments.
Credit risk rating are designed to mirror the standard of a loan or different credit exposure and thus-
explicitly- the loss characteristics of that loan or exposure. Additionally, credit risk rating could mirror not
solely the probability or severity of loss however conjointly the variability of loss over time, significantly as
this relates to the result of the trade cycle. Credit risk depends on each internal and external factor. Some of
the vital external factors are state of economy, swings in trade good costs, interchange rates and interest rates
etc. the inner actors are also deficiencies in loan policies and administration of loan portfolios. The key issue
in managing credit risk is to use an identical analysis and scoring system to any or all the investment
opportunities. prudent limits ought to be set down the varied facet of credit viz, benchmarking current
magnitude relation, debt equity magnitude relation, concentration limit or group/single receiver, maximize
exposure limit to industries, provision for flexibilities to permit variation for terribly special options. Credit
rating is also single purpose indicator of device risk issue. Management of credit risk during a bank would
require alertness on the part of the workers in any respect stages of credit delivery and watching method.
Lack of such standards in monetary establishments would increase the matter of skyrocketing loan write-off.

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1.15 COMPONENTS OF CREDIT RISK
Credit risk consists of primarily 2 parts, viz, amount of risk, that is nothing however the outstanding loan
balance as on the date of default and also the quality of risk, viz, the severity of loss outlined by each chance
of default as reduced by the recoveries that would be created within the event of default. So, credit risk may
be a combined outcome of Default Risk and Exposure Risk. Requirement of Effective Credit Risk
Management in Banking Basel II Accord identifies that effective credit risk management may be a crucial
part of a bank's overall risk management strategy and is crucial to the long–term success of any banking
organization. Overall, the parts of effective credit risk comprise Active Board and senior management
oversight. Sufficient policies, procedures, and limits. Adequate risk measure, monitoring. Management info
systems. Comprehensive internal controls. RBI expectations from Banks on Credit Risk Management RBI
expects that banks take specific measures, in the main at the company Level, for implementing applicable
Credit Risk Management systems within the bank. The policy can involve the following: policy can involve
the following:
1. Policy framework. Credit rating framework.
2. Credit risk models.
3. Portfolio management and Risk Limits.
4. Managing Credit Risk in Inter-Bank Exposure.
5. Credit Risk in Off-Balance Sheet Exposure.
6. Country Risk.
7. Loan review mechanism/credit audit.
8. RAROC (Risk adjusted come back on capital) pricing/Economic profit.
9. Urban center II Accord: Implications for Credit Risk Management.
The banks area unit needed to make sure that their Risk Management functions considers the on top of
problems as applicable to the bank and place in situ applicable structures/systems. This can make sure that
Risk primarily based direction (RBS) is effective.
Every bank should have a Credit Rating Framework to suit their necessities.

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CREDIT RISK MANAGEMENT ENCOMPASSES
The management of credit risk ought to receive the highest management's attention and the method ought to
encompass:
Risk valuation on a scientific basis.
Dominant the danger through effective Loan Review Mechanism and portfolio management; and
quantifying the danger through estimating expected loan losses i.e. the quantity of loan losses that bank
would expertise over a selected time horizon (through trailing portfolio behavior over five or a lot of years)
and sudden loan losses i.e. the quantity by that actual losses exceed the expected loss (through variance of
losses or the distinction between expected loan losses and a few chosen target credit loss quintile).
Techniques for Management of Credit Risk The instruments and tools, through that credit risk management
is applied, area unit elaborated below:
Exposure Ceilings: Prudent Limit is coupled to Capital Funds-say V-J Day for individual recipient entity,
four-hundredth for gaggle a bunch} with further 100% for infrastructure comes undertaken by the group,
Threshold limit is fastened at grade not up to prudent Exposure; Substantial Exposure, that is that the
assemblage of the exposures on the far side threshold limit mustn't exceed 600% to 800% of the Capital
Funds of the bank (i.e. six to eight times). Review/renewal: Multi-tier Credit Approving Authority,
constitution wise delegation of powers, Higher delegated powers for better-rated customers; discriminatory
time schedule for review/ renewal, hurdle rates and Benchmarks for recent exposures and regularity for
renewal supported risk rating area unit developed. Risk Rating Model discovered a comprehensive risk
classification system on a six to 9 purpose scale.
Clearly out line rating thresholds and review the ratings sporadically ideally at 0.5 yearly intervals. Rating
migration is to be mapped to estimate the expected loss. Risk primarily based scientific valuation: Link loan
pricing to expected loss. Unsound class borrower's area unit to be priced high. Build historical information
on default losses. Assign capital to soak up the sudden loss. Adopt the RAROC framework.

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PORTFOLIO MANAGEMENT
The necessity for credit portfolio management emanates from the need to optimize the advantages related to
diversification and to cut back the potential adverse impact of concentration of exposures to a selected
recipient, sector, or business. Stipulate quantitative ceiling on mixture exposure on specific rating classes,
distribution of borrowers in varied business, business cluster and conduct fast portfolio reviews. The present
framework of trailing the non-performing loans round the record date doesn't signal the standard of the
complete loan book. There ought to be a correct & regular on-going system for identification of credit
weaknesses well ahead. Initiate steps to preserve the required portfolio quality and integrate portfolio
reviews with credit decision-making method.
Loan Review Mechanism: this could be done freelance of credit operations. It's additionally referred as
Credit Audit covering review of sanction method, compliance standing and review of risk rating, pick-up of
warning signals and recommendation of corrective action with the target of up credit quality. It ought to
target all loans on top of sure cut-off limit making certain that a minimum of half-hour to four-hundredth of
the portfolio is subjected to LRM in a very year therefore on make sure that all major credit risks embedded
within the record are tracked. This can be done to cause qualitative improvement in credit administration.
Establish loans with credit weakness. Confirm adequacy of loan loss provisions. Guarantee adherence to
disposition policies and procedures. The focus of the credit audit must be broadened from account level to
overall portfolio level. Regular, correct & prompt news to high Management ought to be ends.

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CONSUMER CREDIT RISK MANAGEMENT

Most corporations concerned in disposition to shoppers have departments dedicated to the activity,
prediction, and management of losses thanks to credit risk. This field is loosely brought up in
consumer/retail credit risk management; but the word management is often born. Scorecards A common
methodology for predicting credit risk is through the credit record. The record may be a statistically based
mostly model for attributing variety (score) to a client (or associate degree account) that indicates the
expected likelihood that the client can exhibit an explicit behavior. In hard the score, a variety of information
sources is also used, together with information from associate degree form, from credit reference agencies or
from product the client already holds with the investor. The most widespread variety of record in use is that
the application record, that lenders use once a client applies for a brand-new credit product. The record tries
to predict the likelihood that the client, if given the merchandise, would become 'bad' inside a given
timeframe, acquisition losses for the investor. The precise definition of what constitutes 'bad' varies across
totally different lenders, product sorts and target markets, but examples is also missing 3 payments inside
succeeding eighteen months' or 'default inside succeeding twelve months. The score given to a client is
sometimes a 3- or four-digit number, and in most cases is proportional to the logarithm of the percentages
(or logit) of the client changing into 'bad'. Generally, a coffee score indicates a coffee quality (a high
probability of going 'bad') and a high score indicates the alternative.

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1.16 CREDIT STRATEGY
Credit strategy thinks about with turning predictions of client behavior (as provided by scorecards) into a
choice whether to just accept their custom. To turn associate degree application score into a Yes/No call,
'cut- offs' square measure usually used. A cut- off may be a score at and higher than that customers have
their application accepted and below that applications square measure decline The location of the cut-off is
closely joined to the worth (Annual share Rate) that the investor is charging for the merchandise. The upper
the worth charged, the bigger the losses the investor will endure and still stay profitable. So, with the next
value the investor will settle for customers with the next likelihood of going 'bad' and may move the cut-off
down. The alternative is true of a cheaper price. Most lenders go any and charge low marking customers the
next April than high marking customers. This compensates for the other risk of taking over poorer quality
business while not effecting the lender's place within the market with higher quality borrowers. In the UK,
lenders should advertise a typical rate that a minimum of fifty-one of shoppers should receive. Application
score is additionally used as an element when deciding such things as associate degree draft or master card
limit. Lenders square measure usually happier to increase a bigger limit to higher marking customers than to
lower marking customers, because of they're a lot of probably to pay borrowings back. Aboard score cards
lie policy rules that apply regulative needs (such as ensuring there's no disposition to beneath 18s) and
alternative disposition policy (such as several leaders won't lend to customer customers WHO have a County
Court Judgment registered against them). Activity scorecards square measure used (usually monthly) to
produce associate degree updated image of the credit-quality of the customer/account. Because the
customer's profile changes, the investor could favor to extend or contract the customer's limits. Underwriting
not all selections may be created mechanically through the strategies mentioned higher than. This might be
for variety of reasons, shy information, regulative needs, or a borderline call. In such cases extremely trained
professionals known as underwriters manually review the case and create a choice. Typically, this is often
wiped out conjunction with the 'cut-offs ‘mentioned higher than and the information provided by marking.
This is often a lot of common in extremely regulated product like mortgages, particularly once giant sums
square measure concerned.

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CREDIT QUALITY IN RETAIL BANKING

Though retail banking is a smaller amount risky, there's a chance that poor credit quality may end up in an
exceedingly high share of NPA's. The Credit info Bureau (India) restricted, incorporated in 2000, has
contended a vital role in sensitizing Indian retail lenders to the requirement and edges of timely credit info.
The govt. too has acknowledged the importance of sturdy credit info infrastructure as proved by the
enactment of the Credit info corporations Act 2005 (CIC Act) that seeks to produce a comprehensive
regulative framework for credit bureaus in Republic of India. This can facilitate improve credit quality to an
honest extent. Additionally, sensitizing the loan officers regarding potential risks related to product can
facilitate the bank greatly.
CUSTOMER ACQUISITION STRATEGIES

Customer base is that the basis on that the business methods area unit in-built retail banking. Acquisition of
client base (1 million accounts, a pair of million accounts) to attain target volumes is one strategy. Achieving
target volumes from the prevailing and purchased client base is another strategy. Effort client bases embrace
effort target segments (HNI, Mass affluent) in line with the business methods. Some bank works on business
volumes 1stthrough client targets. Another banks target client volumes 1st and business volumes within the
method. Some banks adopt each the on top of in cycle. Most of the general public Sector Banks follow the
strategy of client segments and business volumes along with the client acquisition is given a lot of focus to
boost the business volumes In one metropolis primarily based PSB, the strategy is a lot of skew towards
achieving business volumes. In recent Generation personal Sector Banks, the on top of is true the' in one
bank, the main target is on segments and in another bank, the main target is a lot of holistic.
In New Generation Personal Sector Banks, a mixture of each client segments and additionally business
volumes area unit the drivers of the methods.
Foreign banks additionally adopt constant line of methods as in new generation personal sector banks.
Banks adopt totally different methods to amass customers. Totally different model’s area unit enforced
betting on the business strategy and after all regulative prescriptions during this regard. The first mode of
acquisition is thru the banks' own branch internet work or sales groups specially shaped for the aim.
Sourcing customers through Direct marketing Agents (DSAs) is another strategy. Tele line of work (cold
calls) associated follow up from an existing information base or outsourced information base and cross
marketing to the prevailing customers and prospecting for brand new business from the outsourced
information base is yet one more model.
Publicly Sector Banks, the branch format is that the largely used model for effort customers. Across the
counter acquisition through the Branch Head/different employees is that the primary mode through that
client acquisition happens.
There are regulative prescriptions for outsourcing for client acquisition. After all, to obviate this, some banks
have developed special sales teams/selling officers

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supporting their retail model to possess exclusive and targeted methods for client acquisition and business
mobilization.
In recent Generation personal Sector Banks, additionally constant methods as on top of area unit enforced.
However, within the case of latest Generation personal Sector Banks, the methods extend on the far side
branches. Branches play solely a restricted role in client acquisition. DSAs play a vital role in their methods.
A strategic mixture of outsourced and in-house models is adopted. For sourcing customers for a few
merchandise, DSA strategy is employed whereas for other banks' sales team is employed. For instance,
customers for liability merchandise, care merchandise area unit non inheritable through DSAs, whereas
customers for real estate loan merchandise area unit non inheritable through banks' sales team. This can be
the strategy followed by most of the personal sector banks.
STRATEGIES FOR CLIENT ENQUIRES FOR MERCHANDISE/SERVICES

Response mechanism for client enquiries is one among the determinative factors for the name of the banks.
Client Response Management is that the commencement for a prospering client relationship management.
Banks follow totally different methods for client enquiries. Some banks discovered a center for a centralized
client response mechanism. Client enquiries area unit handled through a centralized toll-free range and
actions initiated through that discovered. Another strategy adopted by banks is putting in place regional
decision hubs specific for regions and responses accomplished by specially selected client service
executives. Additionally, bit screen data kiosks supported centralized / regional information bases area unit
offered as enquiry tools in a very standalone information base situations branch level enquiry response
model is that the common place strategy uniformly adopted by all banks.
In most Public Sector Banks, the stand-alone approach at the branch level is that the commonplace strategy
adopted for client enquiries. In some banks, regional level client enquiry management is adopted through
client service officers. The knowledge cubicle is additionally tried by one among the public Sector Banks
primarily based in Bombay. 2 Public Sector Banks within the sample one from urban center and another
from Bombay, have discovered decision centers for client enquiries showing their further commitment to
CRM initiatives.
In recent Generation personal Sector Banks additionally, constant methods as publicly Sector banks area unit
adopted. Call center construct isn't there however regional level client enquiry management is adopted by
one bank and knowledge kiosks area unit in situ for client enquiries in another bank.
In new Generation personal Sector Banks, call center for centralized client enquiry is that the common place
strategy adopted by these banks.

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DRIVING FORCES OF RETAIL BANKING SERVICES IN INDIA

There square measure some factors among the economy that have contributed to retail banking growth :
initial, economic prosperity and also the resulting rise within the financial gain of the center category section
of the country increase in overall buying power of the section, that have given a lift to a shopper boom. After
1992, India's economy grew at a mean rate of half-dozen.8 p. C and continues to grow at virtually identical
rate, associated reached at an astonishing rate of nine.2% within the year 2006-07 not several countries
within the world may match this performance. Sustained producing activity and spectacular performance of
the services sector with cheap support from the recovery in agricultural activity have extra larger momentum
to the present growth method.
According to the revised estimates discharged by the Centre applied mathematics Organization (CSO) in
could2006, real value accelerated from seven.5 per cent in 2004-05 to eight.4 per cent throughout 2005-06.
The Indian economy has, thus, recorded a mean growth of over eight per cent within the latest 3 years
(2003-04 to 2005-06). Fewer Indians were living in pauperization in 2004-05 than in 1999-2000, with
official knowledge showing economic condition declined by four.3 per cent throughout the amount from
twenty one.8 per cent in 2004-05 from twenty six.1 per cent in 1999-2000 as per the report of the National
Sample Survey (NSS) discharged by the look Commission.
The decline in economic condition was relatively a lot of steep in rural areas wherever the proportion of
individuals living below personal income fell to twenty-one.8 per cent (2004-05) from twenty-seven 1 per
cent (1999-00). In urban areas, proportion of individuals living below personal income fell to twenty-one.7
per cent (2004-05) from twenty-three.6 per cent (1999-00), consistent with the NSS estimates.
Second, ever-changing shopper demographics indicate large potential for growth in consumption each
qualitatively and quantitatively. Asian country is one among the countries having highest proportion (70%)
of the population below thirty-five years older (young population). The BRIC report of the Goldman-Sachs,
that expected a bright future for Brazil, Russia, Asian country, and China, mentioned Asian country
demographic advantage as a vital positive issue for India.
Third, technological innovations contend a significant role. Convenience banking within the kind of ATMs
credit / debit cards, net, and phone-banking, anyplace and anytime banking has attracted several new
customers into the banking field and conjointly contributed to the expansion of retail banking in Asian
country.

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Fourth, the Treasury financial gain of the banks, that had strong all-time low lines of banks for the past few
years, has been on the decline throughout the last 2 years. In such a situation, retail business provides a
decent vehicle of profit maximization. Because retail's share in impaired assets is much less than the general
bank loans and advances, retail loans have place relatively less provisioning burden on banks except for
diversifying their financial gain streams.
Fifth, Interest spreads square measure wide, since customers square measure too fragmented to discount
effectively; Credit risk tends to be wide-ranging, as loan amounts square measure comparatively small,
Sixth, the ever-changing dynamics of the pattern of company financing: The equity base of the company
sector, relative to debt, appears to possess accumulated, and lots of company square measure presently
money surplus, presumptively to satisfy their investment
commitments. Besides, the company even have access to different funding sources, particularly external
industrial borrowings and domestic and world capital markets, this development combined with evaporating
margin in finance, due to declining interest rates and competition have created company money services less
enticing. Too much exposure
The results of the transition in perception has been a pointy increase within the share of retail disposal in
total advances since the first Nineties when having up bit by bit from 8.3% of total outstanding bank credit
at the tip of 1992-93 to twelve.6 per cent in 2001-02, the share of private loans rose sharply to the touch
twenty three.3 per cent at the tip of 2005.
This was a time once total bank credit too was booming. It is to be expected once there's a pointy increase in
disposal to a couple of sectors of this type, those that would have earlier been thought of risky or not
responsible may enter the universe of borrowers.
Not astonishingly, by now the concern that overexposure may lead to a rise in defaults had begun to be
expressed. Banks too began to carry back as mirrored in a very gradual decline within the magnitude
relation of private loans to gross bank credit from twenty-three.3 per cent to fifteen.6 per cent in 2011-12.
Whereas this was still higher than the amount at the start of the previous boom, the decline in share did
counsel that the retail disposal splurge had tempered. However, a lot of recently, this decline within the share
of retail disposal has reversed, rising from fifteen.6 per cent in 2011-12 to sixteen.6 per cent in 2014-15.
Figures on rates of growth tell a clearer story. According to Care Ratings, over the money years ending
March 2015 and March 2016, whereas overall non-food credit grew at eight.6 and 9.1 per cent severally,
loan growth rates were fifteen.5 and 19.4 per cent severally. Over the year

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all over March 2016, the house loan section grew by nineteen.4 per cent, vehicle loans by twenty-two per
cent, and master card outstanding by twenty-three.7 per cent.
The reason for this flip isn't troublesome to seek out. First, the opposite major space of growth in bank
disposition has been infrastructure that nowadays accounts for an outsized proportion of the non-performing
assets on the books of the larger banks. Therefore, banks are seeking out new avenues of disposition. With
business not activity too well and agriculture languishing, retail disposition emerges because the most
popular alternative.
Second, since retail disposition was discouraged within the amount before monetary liberalization the
exposure of the retail sector to debt continues to be quite low.
The quantitative relation of non-public loans to non-public income has so accumulated in India, from 2.4
per cent at the tip of 1995-1996 to thirteen per cent in 2007-08, and it still is at a traditionally high level of
around 12.5%. However, this can be extraordinarily low when put next with, say, Asian country, wherever in
2013, once it long-faced a housing loan crisis, the quantitative relation of house debt to house income was
around a hundred and fifty per cent. While which will be so much too high a figure for a rustic like India
with a far lower per capita financial gain to approach, it's hefty indefinite quantity during this space.
Finally, default rates on retail disposition, even though increasing, and area unit still quite low. Within the
case of the banking concern of India for instance, NPAs in its retail loan portfolio area unit placed at a touch
on top of one per cent, whereas the combination New People's Army quantitative relation is on top of half
dozen per cent in keeping with recent estimates. Therefore, shifting to retail disposition appears a sound
plan. Segments of concern that after all depends on the degree to that increasing exposure within the retail
market needs diversifying the retail portfolio of banks. As Of now, Housing loans overpoweringly dominate
that Portfolio, accounting for well on top of fifty per cent of the whole With loan-to-value ratios in housing
still low in several cases, and housing serving pretty much as good collateral, NPAs during this phase area
unit among all-time low.
There are 3 alternative areas that account for an affordable share of non-public loans outstanding: vehicles,
education, and master card outstanding. Of these, whereas the auto loan phase isn't a high default space,
education is certainly proving to be, therefore. Government policy mandates provision of education loans of
up to ₹4.5 large integer while not collateral. So, recovery too is troublesome. Nonetheless the shortcoming
to seek out jobs when finance education with loans is leading to rising defaults, which, in keeping with
reports. average eight per cent of such loans. Moreover, run out 1/4 of retail disposition is within the 'others'
class, and presumably includes personal loans for such-and-such functions advance while not collateral or
disposition against shares, etc. by banks attempting to make their retail portfolio. Here too, rising default
may be a chance as combination disposition will increase and recovery troublesome. That prospect however
it's quite probably that India would witness another retail disposition boom, semiconductor diode by banks
attempting to maximize their presence during this on the face of it under exploited space.

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CHAPTER-2 RESEARCH METHODOLOGY

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2.1 OBJECTIVE OF THE STUDY
To understand the concept of credit risk management. To know the different retail credit scheme.
To understand lending pattern of public sector banks for retail borrowers. To analyze NPAs position and
their risk management.
In this dynamic retail banking scenario, the study is an attempt to understand the different models and
strategies adopted by the banks, their performances across retail banking business lines and derive the
inferences for the future. The study is intended to present a holistic picture of the retail banking space in
India.

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2.2 SCOPE OF THE RESEARCH
The main objective of the project is to get to know about the origin of Retail Credit in India, the various
products, and services available. The numerous benefits to the banks and the customers, the problems
associated with Retail Credit.
1. All round increase in economic activity.

2. Increase in the purchasing power. The rural areas have the large purchasing power at their disposal,
and this is an opportunity to market retail banking.
3. India has 200 million households and 400 million middleclass population more than 90% of the
savings come from the household sector.
4. Falling interest rates have resulted in a shift. 'Now people want to save less and spend more.'
5. Nuclear family concept is gaining much importance which may lead to large savings, large number
of banking services to be provided are day-by-day increasing.
6. Tax benefits are available, for example, in case of housing loans the borrower can avail tax benefits
for the loan repayment and the interest charged for the loan.

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2.3 NEED FOR THE STUDY
Now a day's credit risk could be a major risk for all banking establishments. Profitableness of banks depends
on this sector. Liquidity is another major issue for choosing this subject, because of every and each bank are
currently facing economic conditions, if they're not economical enough to handle credit risk they're
conjointly facing additional economic condition. Credit Risk refers to potential loss because of customers’
inability to honor the terms and conditions of credit facility. Most of the shares of the full revenue of the
bank come back from credit operation and the existence of the bank depends on quality of assets portfolio.
So, economical management of credit risk could be a dominant importance. Credit risk is that the loss
related to degradation within the credit quality of borrowers of counter parties. during a bank's portfolio,
losses stems from outright default because of the lack or temperament of the client or counter party to fulfill
commitments in relevance leading, trading, settlement, and different monetary dealing. As an alternative,
losses result from reduction in portfolio price arising from actual or perceived determination in credit
quality. Because the credit department significantly plays role together these problems. It's necessary to
review credit risk management practices public ally sector bank.

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2.4 SIGNIFICANCE OF RETAIL CREDIT
Retail deposits area unit stable and represent core deposits.

They area unit interest insensitive and fewer negotiation for added interest. They represent low price funds
for the banks.
Effective client relationship management with the retail clients engineered a robust customer base Retail
banking will increase the subsidiary business of the banks.
ASSETS SIDE: Retail banking ends up in higher yield and improved bottom line for a bank. Retail section
is sweet revenue for funds development. Consumer loans area unit likely to be of lower risk and NPA
perception. Helps economic revival of the state through increased production activity. Improves manner and
fulfills aspirations of the individual through increased production activity. Innovative development credit.
Retail banking involves minimum promoting efforts in an exceedingly demand- driven economy Diversified
portfolio because of large client base allows bank to scale back their dependence on few or single receiver.
Bank will earn smart profits by providing non fund primarily based} or fee-based services while not
deploying their funds.
RETAIL BANKING ACTIVITIES : Banks' activities will be divided into retail banking, dealing directly
with individuals; business banking, providing services to mid-size business: company banking coping with
giant business entities; non-public banking, providing wealth management services to High Net worth
Individuals; and investment banking, relates to serving to customers raise funds within the Capital Markets
and advising on mergers and acquisitions. Banks area unit currently moving towards Universal Banking that
could be a combination of economic banking, investment banking and numerous alternative activities as
well as insurance.
Technology has caused strategic transformation within the operating of banks. With years, banks are adding
services to their customers. The Indian industry is passing through a part of shopper’s market. The
purchasers have additional selections in selecting their banks. With stiff competition and advancement of
technology, the service provided by banks has become less difficult and convenient.
(E-Banking): web banking (or E-banking) suggests that any user with a private laptop and browser will get
connected to his banks web site to perform any of the virtual banking functions. In web industry the bank
features a centralized info that's web enabled. All the services that the bank has allowable on the web area
unit displayed in menu. Any service will be elect, and interaction is set by the character of service. The
normal branch model of bank is currently giving place to another

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delivery channels with ATM network. Once the branch offices of bank area unit interconnected through
terrestrial or satellite links there would be no physical identity for any branch.
The banking company of Bharat planted a unit on web Banking. The cluster divided the web banking
product in Bharat into three sorts supported the amount of access granted. They are: Information solely
System General purpose data like interest rates, branch location, bank product and their options, loan and
deposit calculations area unit provided within the bank web site Fully Electronic Transactional System The
system provides customer-specific data within the type of account balances, dealings details, and statement
of accounts. This method permits bi-directional capabilities. Transactions will be submitted by the client for
on-line update. This method needs high degree of security and management.
Automated Teller Machine (ATM): ATM is meant to perform the foremost necessary perform of bank. It's
operated by plastic card with its special options. The plastic card is replacement cheque, personal attending
of the client, banking hour's restrictions and paper primarily based verification. Credit Cards/Debit Cards
The master card holder is authorized to pay where and whenever he desires along with his master card inside
the bounds mounted by his bank. Master card could be a postpaid card. Debit Card, on the opposite hand,
could be a postpaid card with some keep worth. Smart Card banks area adding unit to their current magnetic
tape cards to boost security.
Core Banking Solutions: Core Banking Solutions is new jargon often employed in banking circles. The
advancement in technology particularly web and knowledge technology have light-emitting diode to new
method of doing business in banking.
The technologies have impeded time, operating at the same time on completely different problems and
increased potency. The platform wherever communication technology and knowledge technology area unit
unified to suit core wants of banking is understood as Core Banking Solutions. Here laptop package is
developed to perform core operations of banking like recording of transactions, record maintenance, and
interest calculations on loans and deposits, client records, balance of payments and withdrawal done with
units.
Real Time Gross Settlement (RTGS): RTGS is AN electronic settlement system of banking company of
Bharat while not involvement of papers. To facilitate AN economical, Secure, Economical, Reliable, and
efficient System of Fund transfer and clearing within the Banking sector throughout Bharat. Real time gross
settlement systems (RTGS) area unit a funds transfer mechanism wherever transfer of cash takes place from
one bank to a different on a 'real time' and on 'gross' basis.

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CHAPTER 3
REVIEW OF LITERATURE

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3. REVIEW OF LITERATURE
According to the Birla Institute of Scientific Research (1981) in its study makes a comparative
assessment of the performance of public sector banks and major private sector banks since nationalization.
They find that the performance of public sector banks is not satisfactory in rural development activities
when compared to the private sector banks.
According to the Jain, Pinson, and Malhotra (1987) in their study “Customer loyalty as a construct in the
marketing of bank services” feel that customer loyalty is a very useful construct. Their contention is that the
human aspect of banking should be given utmost importance by the loyal segment for the marketing of bank
services.
According to the R Jaya Kumar (1993) in his study of “Performance of private sector banks in Kerala”
makes a comparative examination of performance of public sector banks and private sector banks in Kerala.
He finds that in Kerala private sector banks perform better than their public sector counter parts.
According to the Delvin James (1995) makes a case study of the retail banking services in UK using First
Direct, a subsidiary of Midland Bank. He concludes that banks can increase their market share through
proper communication and prompt delivery of their products.
According to the Govindan Rajala (1996) in his article “Satisfaction and dissatisfaction with bank
services” views that the Indian banks have lost the quality of customer service. The dissatisfaction of
customers with bank services is an important issue to be considered by banks and policy makers for the
development of banking sector.
According to the Sarkar and Das (1997) make a comparison of the performance of the three bank sectors -
public, private, and foreign - for the year 1995-1996. These banks are compared in terms of profitability,
productivity, and financial management. They find that the public sector banks are very poor in performance
based on these variables than the other two sectors.
According to the D Mishra (1997) makes a study on the performance of commercial banks in India
choosing relevant parameters like quality of service, risk management, profitability etc. His conclusion is
that the banks should try to increase quality, balance risk management, and optimize profitability to survive
and succeed. He identifies four challenges for the bank namely competition, credit, customer, and control.

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According to the Gaganjeet Singh (1998) in his study “New innovations in banking industry – a study of
new private sector banks” views that the new private sector banks in India are using better technology and
are offering better services to the customers. The new private banks have emerged as a model to the banking
industry in terms of service levels, ambience, technology etc. As the public sector banks have already
established a huge customer base, they become complacent and are slow to become customer friendly. They
are also less innovative in the use of technology-assisted customer service. Because of their huge customer
base, they feel that they can withstand competitions from new generation banks.
According to the N. S. Varghese (2000) is of the opinion that new generation private sector banks with
their latest technology can implement e-banking and are highly preferred by investors in the stock market.
He also points out that prominent new generation private sector banks like HDFC and ICICI have entered
internet banking through which greater convenience is offered with lower transaction cost.
According to the P Verma (2000) is in tune with the findings of Varghese. Analyzing the impact of
information technology on new generation banks Verna feels that new generation banks are far ahead of
traditional public sector banks. He finds that information technology is posing a threat to the public sector
banks. He observes that the business per employee of major public sector banks in India is a mere fraction of
the business per employee of new generation banks. So, the public sector banks must improve their
productivity and efficiency to compete with the new generation banks which are fully computerized.
According to the Mini Joseph’s (2001) view is that new generation banks have created a spirit of
competition in the banking industry by fully utilizing the facilities and amenities available from technology
and computerization, and by accepting customer satisfaction as the core aspect. For preventing the erosion in
the market share of old private sector banks and public sector banks, they are also providing quality service
now in a competitive spirit.
According to the Ananthan Swamy (2001) makes an appraisal of the performance of different bank groups
in India in the backdrop of competition, deregulation, and changes in the field of banking. He classifies
banks into public sector, old private sector, new private sector, and foreign banks. His focus has been on
profitability, NPA, contingent liabilities, spread etc. for the last five years and arrives at the conclusion that
the new private sector banks are performing better than the banks in other sectors.

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According to the Jamal and Naser (2002) makes a study on “The factors influencing customer satisfaction
in the retail banking sector of Abu Dhabi”. He collected the necessary data using structured questionnaire.
Customer response to questionnaire shows that the customer expectations from the bank and service quality
provided by the banks are the major determinants of customer satisfaction. Their investigation on factors
influencing customer satisfaction in the Pakistan retail banking sector15 also reveals that service quality is
the important determinant of customer satisfaction.
According to the P. D. Jerome (2002) who studied “The trends and issues of bank credit in Kerala” finds
that the absolute rate of growth of credit is reasonably good. But in relation to deposits, per capita credit,
credit per account, disbursement by all India Financial Institutions the level of credit is lower. He also
observes that more attention should be given to mobilization of deposits than to expansion of credit.
According to the Pushpangadharan’s (2002) study on “The quality of customer service in public sector
banks” also shows that public sector banks lag private sector banks in customer service. The parameters he
used in the study are facilities and amenities, speed in completing transactions and providing deposit related
and credit related services. The customers of public sector banks are not much satisfied with branch
managers‟ and employees‟ attitudes. The public sector banks are very poor in respect of customer feedback
system and redress of grievances.
According to the Bharathi Pathak (2003) makes a study of “The financial operations of new generation
private sector banks in India”. Five banks (IndusInd bank, Centurion bank, HDFC bank, ICICI bank and
UTI bank) are taken up for financial analysis for a period of five years from 1996-97 to 2000-01. Their
financial performance is studied under four different parameters – financial, operating, profitability and
productivity. His conclusion is that the working of all banks is satisfactory but HDFC bank comes at the top
closely followed by ICICI bank.
According to the Bikram De (2003) makes a study on the effects of ownership on bank performance. He
compared old private sector banks and new generation banks in terms of profitability, efficiency, liquidity
etc.
According to the Gilstrap (2003), in his study on retail lending, views that the success of retail lending of a
bank depends on factors like marketing efficiency, proper appraisal and follow-up. He also finds that HDFC
has become very excellent in housing finance solely due to the long-term strategies adopted by them.
According to the R. Kumar (2003) in his study “Retail banking growth drivers and analysis of associated
risks” views that banks should review the retail loan portfolio at periodical intervals in a structured manner
for identifying the risks and upgrading the strategies for the reduction of risk.

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According to the V.S. Murthy (2003) in his study views that in India the banking industry has very high
competition particularly in the retail sector. In this competition only the fittest will survive. It is expected
that the banks are well equipped to succeed in the retail journey.
According to the Qamar (2003) has done a comparative study on the “Profitability and resource use
efficiency in scheduled commercial banks in India”. He finds that efficiency of new private banks and
foreign banks is better though marginally than the old private sector banks and public sector banks.
According to the Sealyham (2003) in his article “Banking for corporate new directions” reminds banks to
ensure that for a balanced asset portfolio retail banking must go along with wholesale banking. Besides, for
better management of customer’s needs and consultative selling of products, commercial banks should have
customer relationship management department.
According to the Filomena’s (2004) survey on expectations of customer from retail banks shows that none
of the banks can meet the diverse needs of customers. As a result, the customers are not so loyal to a
particular bank and go for multiple banking. Customers are aware of the variety of products and services
that are available in the banking sector and demand them from their banks. The aggressive banking of new
generation banks make customers dislikes them.
According to the Groeneveld and Wavemakers (2004) in their article “Retail banking strategies in
Europe” analyze retail banking strategy with special emphasis on retail banking in the broadest sense of the
word. He finds that many banks rediscovered retail banking after the collapse of investment and corporate
banking activities and the fall in the stock prices in the last few years. The retail banking strategies in
general and the strategic positioning of Rabu bank group are described in the study.
According to the Gurudutt (2004) has made an analysis of income, expenditure, operating profit and NPA
of public sector banks, foreign banks, old private sector banks and new private sector banks. He contends
that the reforms in banking sector positively influence the financial health of the banks. He observes that the
financial performances of the banks are improving because of the prudential norms of RBI and other
committees. Besides, these reforms have helped to increase competition in the banking industry.
According to the Subrata Mohapatra (2004) in his article states that the non-food credit of the banks has
increased several times. Banks must increase the lending even though the interest rates are decreasing due to
the of bulk deposits received by them. Retail credit and SME advances are the growth areas of banks.

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According to the Velouté and Cleopatra (2004) in their study have analyzed the relative role of certain
drivers of bank loyalty. Their study shows the links between image, perceived quality satisfaction,
commitment, and loyalty in Greek retail banking. The result of the study is that the image has a positive
impact on perceived quality and satisfaction. The key factor that leads to loyalty is the personalization in
providing services to customers which help to increase customer satisfaction.
According to the Yale (2004) nihilartikel “Problems of NPA” deals with the NPA problems of commercial
banks. She feels that the public sector banks are facing the NPA problem more often than the private and
foreign banks. The NPA of public sector banks is growing due to external and internal factors and affects the
profitability and liquidity of the banks adversely.
According to the Zhou’s (2004) study is on “The dimensions of customer satisfaction in the Chinese retail
banking”. The factors contributing to customer satisfaction are determined using the model of SERVPERF
his study points that empathy or responsiveness of the employees, reliability or assurance from the bank and
tangibility of services are the important factors affecting customer satisfaction.
According to the Bhayani (2005) conducted a study among 200 customers on the retail banking awareness
of private banks, nationalized and co-operative banks in the Rajkot city of Gujarat. The conclusion she
arrives at is because of the low literacy among the customers, they are not aware of technology assisted
banking services. So the banks should try to create awareness among customers on technology and
technology driven products for better retail banking operations.
According to the Chakraborty (2005) in the article, “Customer relationship management, and a new
mantra in Indian banking” views that CRM has an important role for banks in the marketing of products and
services in an era of technology. By practicing CRM, the customer base and customer loyalty in banks can
be increased.
According to the Gopal krishnan (2005) in his study identifies four main causes of NPA. In his opinion
the main causes are willful default, funds diversion, deficiency in credit appraisal standards and lack of
follow-up and supervision. Besides these, absence of market intelligence, lack of staff to supervise the
advances and shortage of credit information among banks also cause NPA.
According to the S. Joy (2005) in his study “Performance evaluation of private sector scheduled banks in
Kerala” suggests that private sector banks in Kerala are far below the other banks in performance but above
other banks in growth proportions.

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According to the Ramola (2005) in his article states that Indian banking industry can reach international
level only through the growth of retail banking. For the growth of retail banking, innovative products which
satisfy the needs of the individuals are required. Such products can be developed through market research.
Besides, new regulations are required to reduce NPA in retail sector.
According to the Rudra Sen Sarma (2005) makes a study on “The cost and profit efficiency ofIndian
banks during 1986-2003”. During this period the cost efficiency of the banks improved but the profit
efficiency decreased. Compared to foreign banks, domestic banks are found to be more efficient in terms of
cost and profit.
According to the Sudhir (2005) in his study “Retail banking – a paradigm shift” points out that the
potentials of retail banking in rural and semi urban areas remain untapped. The potential customers in the
rural and semi urban areas provide opportunities for the growth of retail banking in future.
According to the Ndubisi and Wah (2005) studied on the “Factors affecting customer satisfaction in the
Malaysian retail banking”. They made a field survey using structured questionnaire among the bank
customers in Malaysia. Using the method of factor analysis they identified five important factors of
customer satisfaction. Are they are communication, competence, trust, conflict handling and relationship
quality.
Amit and Anwarin (2006) view that most of the Indian banks are providing retail banking services like
phone banking, internet banking, multi-city cheque facility, any branch banking and bill pay services. Along
with this technology based services, banks are concentrating on business intelligence for providing better
customer services.
According to the Arun Kumar (2006) in his study entitled “Retail banking-its socioeconomic impact”
argues that retail banking has failed to improve the socioeconomic conditions of retail loan customers.
According to the Deepal Singh (2006) who made a study on “Consumer behavior and banking of retail
products” argues that borrower‟s attitude is the most important factor which determines the success of
housing loan scheme.
According to the Dharmendra Singh and Garima Kohli (2006) are of the opinion that the new generation
banks in India are different from the traditional banks. They are the pioneers in the use of technology,
utilization of manpower with professional management and implementing corporate governance. The
traditional banks follow the technology adoption of these banks to retain customers.

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According to the Laxman (2006) in his article “Retail banking, small and beautiful dimensions” identifies
the convenience of the customers, excellence in processing and cost effectiveness as prime factors
determining the success of retail banking
According to the Nair (2006) opines that Indian banks should innovate and grow for facing the new
situations of technological developments in the banking sector. Modern customers are not satisfied with
traditional banking and traditional banking products and services.
According to the Neetu Prakash’s (2006) comprehensive study on “Growth of retail banking in India” is
growth pattern of retail banking in India.hisargument is that even though the growth of Retail banking in
India is very small compared to world standards, the growth and development of retail banking is an
important milestone in the Indian banking sector development. She also finds that the performance of
private sector banks is better than that of their public sector counterparts in the growth of retail banking.
According to the Pikkarainen, Karjaluoto, and Pahnila (2006) studied the “Factors affecting online
banking customer satisfaction in the Finnish retail banking”. Convenience sampling was adopted and data
was collected with a structured questionnaire. The outcome of their research is that website content, ease of
use of the websites and accuracy are the important factors of customer satisfaction.
According to the Rajesh Chakrabarti (2006) observes that the over emphasis on competition and
profitability has driven away the socialistic approach of public sector banks followed for decades. Yet he
concludes that the emergence of new generation banks and foreign banks has promoted the use of
technology and professionalism in banking sector.
According to the Shyamala (2006) inhisstudy “Retail banking –opportunities and challenges” has
identified certain opportunities and challenges of retail banking in India. Inhisopinion, the growing youth
population, technological developments like ATM, credit card, internet banking etc are the major
opportunities and challenges in Indian retail banking.
According to the Uppal (2006) in his study the “Survival of public sector banks in the post LPG era”
studied the profitability of SBI and its associates, nationalized banks, new private sector banks and foreign
banks in the post-reforms era. He finds that there is a significant difference in the profitability of major bank
groups. Foreign banks have the highest profitability. It is also found that the lower profitability of public
sector banks is due to the negative effects of burden.

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According to the Dhandapani Alagiri’s (2007) article “Retail banking: challenges” is on the retail banking
in India with increased consumer spending and increased challenges in the form of competition and
technology up-gradation. He concludes that the most important issues for the new generation customers are
product innovation and competitive packaging services. Retail banking increased the uses of the mobile
phones and e-banking facilities for quick service. As a result the security and confidentiality have become
very difficult to maintain. This has become a major problem for the banks in India. Another result of the
study is that credit delivery mechanism has been improved considerably with the advent of technological
advances.
According to the Molina, Martin-Consuegra, and Esteban (2007) have made a study on “The impact of
relational benefits on customer satisfaction in Spanish retail banking”. It is an empirical study using a
sample of customers regarding the relationship between relational benefits and customer satisfaction. Their
study shows that confidence benefits have a direct, positive effect on the satisfaction level of customers with
their bank.
According to the Praveeth (2007) in his study the “Perceptions of customers on retail banking” points out
that the customers of both public and private sector banks are satisfied on many factors but are dissatisfied
on areas like holiday period granted by banks and insurance coverage.
According to the Santi Gopal and Soma Dey (2007) in their study on “Retail banking in Indian scheduled
commercial banks” bring to light that there is very high competition in Indian retail banking. Innovation in
products, technological developments and strategies to capture the market share decide the success in retail
banking. Quality of customer service is equally important. Thus retention of customers and attracting
potential customers are the major challenges before banks.
According to the Vyas and Dhade (2007) who conducted a study on “The impact of new private sector
banks on State Bank of India” observe that the new private sector banks are not a threat to the SBI at present
but the situation may change in future. The SBI with a vast network of branches and presence is able to
compete with these banks at present.

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According to the Manoj Kamar Joshi (2008) in his article entitled “Customer service in retail banking in
India” discusses the various service aspects of Indian banks in retail banking. He finds that through the use
of modern technology, they provide high standard and quality customer service and this helps them to
succeed in the competitive world of retail banking. While processing the loans, banks should provide
comprehensive information with regard to the fees / charges levied from the borrowers. By standardizing the
procedures banks can prompt the customers to visit them hassle free and by directing them to the right
officials they can save their time and acquire their goodwill.
According to the Uppal (2008) in his study finds that the banks are not following the cardinal principles of
lending in distributing the retail credit. Banks can succeed only through aggravating and emphasizing
various retail credit activities.
According to the Al-Eisa and Alhemoud (2009) studied the most important attributes that influence
customer satisfaction with retail banks in Kuwait. They also measured the level of overall satisfaction of the
customers of the sample banks. The multiple attribute approach was applied in the analysis of data. A
Convenient sample was selected from customers of retail banks in Kuwait. They observe that the most
important factors for predicting customer satisfaction with retail banks in Kuwait are fast service,
availability of self-banking services and courtesy and helpfulness of employees
According to the Arti (2009) inhiscomparative study of ICICI bank and SBI found that ICICI bank perform
better in staff behavior and services than SBI. She also found that the competitive rate and commitment
make satisfied customers while hidden charges is the reason for dissatisfaction with ICICI bank.
According to the Herington and Weaven (2009) analyzed the factors affecting customer satisfaction for e-
retail banking in Australia. A survey was conducted among the regular users of online banking by selecting a
convenience sample. The factors for customer satisfaction were ascertained by factor analysis and regression
analysis. He identifies that personal need of the customer, website organization, user-friendliness of the
websites and efficiency as important factors contributing to the satisfaction of customers.
According to the Kanning and Bergmann (2009) studied the “Factors affecting customer satisfaction in
the German retail banking sector”. By applying the field study method they identified the factors affecting
customer satisfaction. They identify Performance of banks and fulfillment of customer expectations as the
major factors which affect customer satisfaction.

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According to the Mohammed Hossain and Shirley Leo (2009) in their study find that the perception of
customers changes in accordance with the nature of service. They view that in this competitive environment,
all banks are offering the same or similar products and the only factor to differentiate them is the service
quality. Thus retail banks must ensure better service to their customers to become successful.
According to the Pankaj Kumar (2009) in his article “Customer relationship management in retail
banking” highlights that Customer relationship management is especially useful for large banks like SBI
which are spread across different locations. For CRM to be truly effective, it requires a well thought out
initiative involving strategy, people, technology and process.
According to the Uppal (2009) in his article “Retail banking strategies in the liberalized globalized era”
views that Indian banks must give more attention to the retail banking activities. Banks have to expand the
product line, identify new delivery channels, develop better marketing systems and strategies and service
quality so that satisfaction of the customers can be enhance.
According to the Bhaskaran (2010) in the article “Impact of financial crisis on banks in India” views that
the impact of financial crisis is more on private sector banks. Nonperforming assets have increased in all
banking sectors. The increase in NPA preceded the financial crisis and coincided with the retail boom.
According to the Dhara Kothari (2011) views that retail banking offers vast opportunities for growth and
at the same time has challenges which are discouraging. The success of retail banking depends on the ability
of banks to make use of these challenges and opportunities profitably. The efficiency of operations and use
of technology would provide the competitive strength for success in retail banking.
According to the Dilip Kumar and Durga Sankar (2011) compare the performances of new generation
banks in India. During the periods of slow- down in the growth of credit, the private sector banks have been
able to perform better on account of the retail lending. The competition in the field is very high and the
customers are benefitted by it in the form of better service quality, product innovations and better bargains.
The retail segment has tremendous growth.
According to the Ganguli and Roy (2011) also studied the “Factors affecting customer satisfaction in the
Indian retail banking sector”. The factors affecting customer satisfaction were identified through factor
analysis. Their study also shows that the important factors affecting customer satisfaction are customer
service and technology usage, easiness and reliability.

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According to the Gupta and Meera (2011) in their study on “Indian banks and Basel II norms” find that
the capital adequacy and risk structure of the banks have improved as a result of Basel II regulations. The
NPA of all banks have declined. The capital adequacy ratio of banks has increased as a result of capital
regulations which in turn lead to decrease in NPA.
According to the Aashish Shashikant Jani (2012) in his comparative study on the use of technology in
retail banking among public and private sector banks argues that channels are preferred by customers
because of cost and time utility.his suggestion is that in this era of information technology, the public sector
banks have to introduce more technology based products and services to compete with other bank groups
especially new generation banks.
According to the Ashok Kumar (2013) in his study “Opportunities and challenges in the Indian retail
banking industry” Concludes that for the development of retail banking in India, a paradigm shift is required
in bank financing through innovative products and mechanisms involving constant up-gradation of the banks
internal systems and processes. Banks require product development and differentiation, innovation and
business process reengineering, micro-planning, marketing, prudent pricing, customization, technology up-
gradation, electronic or mobile banking, cost reduction and cross-selling for their development through retail
lending. He says that retail banking has more scope for generating profit than any other traditional methods
According to the Gokilamani, and Natarajan (2014) in their study opine that customers of Indian
commercial banks are positively responding to retail banking. It is important for banks to focus on service
quality for strengthening their competitive edge and to allocate the limited resources to serve the personal
banking division. They further views that the success of a retail bank will depend on product innovation,
technological developments and strategies to retain the retail customers.

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CHAPTER-4
DATA ANALYSIS AND DATA INTERPRETATION

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Q.1) What category of bank you consider as the most advanced?
Study show that 72.2% of the respondent consider private sector banks as the most and advanced bank and
27.8% of the respondent considers public sector banks as the most advanced banks.

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Q.2) Which attribute of the bank you value the most?
Study shows that 66.7% of the respondent values the quality of service provided by bank. 13% of the
respondent values the trust towards the banks. 11.1% of the respondent value the technology used by the
banks and 9.3% of the respondent value location of the banks.

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Q.3) Which factor promotes you to use the new techniques in banking?
Study shows that 44.4% respondent promotes the new techniques because it reduces time of transactions.
33.33% of respondents promote the new technique because it is easy to use. Rest other respondents promote
new techniques because it is cost effective and technology savvy.

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Q4) Do you think human contact is important for banking relations?
Study shows that 50% respondents agree that it is important to have banking relationships.

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Q5) What would encourage you to use online banking services more than manual services?
Study shows that 44.44% of the respondent think online banking services is good than manual banking
because of its simple and clear services. 44.44% of the respondent think online banking is better than
manual because of its high security. 20.4% respondent think online banking is better than manual banking
because of free transactions.

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Q6) Do you trust the security of online banking services?
Study shows that 51.9% of respondent somewhat trust the security of online banking services.
40.7% of the respondent completely trust the security of online banking services.

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Q7) Are you satisfied with the overall technological services of the bank?
Study show that 70.4% of the respondent are completely satisfied with the overall technological services of
the bank. 24.1 of respondent are in a condition of may be and maybe not.

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Q8) The contribution of the new technology to the success of banks as per your opinion is?
Study show that 55.6% of the respondent highly agree to the contribution of the new technology to the
success of banks. 24.1% of the respondent averagely agree to the contribution of the new technology to the
success of banks. 16.7% of the respondent completely agree to the contribution of the new technology to the
success of banks.

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FINDINGS
Retail credit publicly sector banks has been increasing when the economic reforms and banks are known the
credit to the present sector has less weighted average loaning risk is relatively, as a result of the loaning are
against mortgage of the property and secured for reimbursement of loans.
The thought of ancient service in banking sector is ceased, in reality the general public sector banks provide
trendy services to manipulate hedge with alternative personal and foreign banks by providing retail credit.
The general public sector banks have linkage with capital market, insurance, leasing, high purchase,
factorization and forfeiting. All the general public sector banks in co-ordination with stock exchanges and
non-fund based mostly services organization.
The study seen that the profit publicly sector banks was declining trend because of competition lack of
diversity of banking services and tight rules of run batted in before economic reforms. The profit was
declining initial amount because of operation wasn't joined with profit and lack of diversity within the
banking services.
The banks as well as public sector banks face the matter of liquidity because of the amount of retail credit
longer. The banks weren't segmenting the barrowers in line with their liquidity demand.
The study finds that public sector banks renders combination of ancient trendy and world services within the
world industry... Slowly and steady the general public sector banks are moving from trendy services to
world banking services by getting into to retail credit market, because of freedom accorded to them run
batted in.
The study shows that the Gross NPAs level of Public Sector Banks did registered a transparent decreasing
trend throughout the 2008-09. The NPAs level was twelve.4 that in the year 2000- 01, wherever because it
reduced to a pair of.1 % within the year 2008-09 and once more it increase to three.3% within the year 2011-
12.
Within the year 2011-12 NPAs level registered at three.3%. The study ascertained that when 2008-09 the
general public sector banks are failing to satisfy the standard of assets. The Gross NPAs level of Public
Sector Banks shows associate degree increasing trend throughout the year 2008 to 2012.
Infobahn NPAs of public sector banks in throughout the year 2011-12 is one 7 of the d a share of Advances,
wherever because the FTO was zero.9% throughout the year 2008-09. This show the Credit Risk
Management performances of public sector banks don't seem to be satisfactory.

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Retail Loan Portfolio throughout the year 2011-12 witnessed the growth at higher rate in the main
attributable to the expansion in master card and alternative personal loans. Housing loans alone occupies the
five hundred share in total retail portfolio of bank.
It‟s ascertained that durable goods showed four-hundredth decrease in 2012(27 Crores) over 2011 (46
Crore). This is often attributable to public sector banks are terribly rigid with their rate with reference to
durable goods loans.

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SUGGESTIONS
Cut back to scale back to cut back} the NPAs in retail credit the general public sector banks should follow
the rules of the credit good of the barrowers and judge the quantity and nature of loan by that the danger will
be effectively manage and also the rate of NPAs can even be reduce within the retail merchandise.
Public sector Banks have to be compelled to work on estimating and investigation the past records of
trustworthiness of the borrowers thus on scale back the burden of defaults and additionally to cut back the
NPAs.
Public sector banks might modify to homeward-bound the workers on the role of banks within the
competitive arena. Clearly the banks have to be compelled to impart data at the incubator prospective that
operationally includes the importance of the retail credit merchandise.
Public sector banks have versatile of use outsourcing has been ascertained privately and foreign banks in
selling of retail credit. To more provide is an alternate to any or all the shoppers intrinsically it will
acknowledge in to force.
The speed of interest charged by the general public sector banks on retail credit merchandise in Asian nation
additional compare to personal and foreign banks. The run batted in and ministry of finance shall add co-
ordination in the main to bring down the rate onpar with the opposite banks within the country. At time once
the country dreaming of super power standing in world by 2020 the got and apex body of the industry
should trigger the interest chargers on downward.
To cut back the increasing NPAs in retail credit market the general public sector banks when considering the
each NPAs management and every one the remedial measures it's noticeably vital establish link between
loaning to productive investment and recovery of credit to product sale. Public sector banks will strengthen
retail banking services keeping in sight the potentiality and also the volume of dealings.
More public sector banks might scale back service chargers on debit transactions.
KYC thought has to be reinforced thus on modify customers to own red-reseal of their issues among the
timeframe. In order that straightforward to comparison of service charges and fee of differential rates of
interest charge by the loaning banks might host on the web site of involves banks, in order that the shoppers
will create comparison of price of capital, rate of interest and repair charges. This may facilitate the
costumers to make your mind up concerning the competitive retail merchandise from the banks.

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Public sector banks ought to make sure that there's associate degree adequate security is provided by the
borrowers at the time of applying for retail credit. Banks are another time wishing on retail credit within the
current yr. to drive credit growth. This is often as a result of credit demand from the company sector might
still stay weak. Within the previous yr., banks had centered tons on retail credit as company credit demand
had stalled amid economic process at its slowest pace in an exceedingly decade. “This year, too, retail credit
can mostly drive credit growth.
That’s as a result of demand for credit from the company sector is weak.
We are concerned of Bharat (SBI) area unit focusing a great deal on home and auto motivate the same Pratip
Chaudhuri, chairman of the bank. Different giant bank chiefs additionally hold identical opinions. “Positive
steps are a unit being taken to spice up the company sector. Company credit can develop as we tend to
travel. But, as of now, it'll be retail credit which is able to drive growth,” same K R Kamath, chairman and
director, geographic area commercial bank.
Reserve Bank of Bharat (RBI) knowledge show retail loans have redoubled by 13.5% in Feb this year,
compared with a rise of 12.2% in Feb 2012. In line with Vaibhav Agrawal, VP (research), Angel Broking,
home and car loans can drive
retail credit growth. “As the economy revives and inflation starts returning down. We are going to see a lot
of choose in retail credit,” same Agrawal. He expects retail credit growth to be higher this fiscal year. RBI
knowledge additionally show credit to trade redoubled fourteen.7 per cent in Feb 2013, compared with the
rise of 19.1% in Feb 2012.
Deceleration in credit growth to trade was ascertained altogether the foremost

sub-sectors exclusion liquid and tobacco, animal skin and animal skin product, wood and wood product,
petroleum, coal product and nuclear fuels, cement and cement product, chemicals and chemical product and
infrastructure. A report by Esparto Santo Securities discharged in last June same Indian retail credit
penetration was still among the bottom within the world and fares poorly even as compared with a number
of the opposite rising economies like China, Russia and Brazil.
The report had additionally discerned that it absolutely was a troublesome business to create, in contrast to
company banking, and here a pro-cyclical strategy doesn't facilitate in building a property retail banking
franchise. However, some bankers feel company credit demand may even see some revival. “The company
sector could
develop which is able to lead to credit demand. Within the company sector, growth is seen returning from
the infrastructure area,” same R K Bansal executive IDBI bank.

lOMoARcPSD|24964090
CONCLUSION
The retail banking, that may be and a part of the fashionable banking service, has undergone tremendous
changes primarily to stay pace with quick dynamic international business. Bharat n banking is absolutely
controlled by the govt. of India beneath its code. The economic reforms sealed the manner for the
competition because the mantra for the survival of the banks specially and everyone different considerations
normally. The non-public banks, foreign banks, and public sector banks area unit forced to contend with one
another primarily to grab the chance besides fast the retail banking market share. General Agreement on
Trade and Services and Basal II and Basal III expected banking in Republic of Bharat to equip them
properly to satisfy the challenges of foreign banks that entered into India. The govt. of Bharat has ready a
road map and planned a dictum to all or any the general public sector banks to accumulate needs capabilities
to satisfy the challenges. any the govt. has been trying to clear legal hurdles, technical hurdles and time unit
hurdles either by repetition the prevailing provisions of the involved banks legislation before mergers or by
change with appropriate provisions within the existing Act. Public sector banks couldn't tune themselves to
the globalised standard; thus they need issues like impact of social banking on the economy, poor client
service, obsolete to technology, awful terrorist group prudent regulation in effective human resources
leading to beneath utilization of human resources.

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REFERENCES
1] Kem, H.J. (2005), “Global Retail Banking” changing paradigms”, chartered financial analyst, ICFAI
Press, Hyderabad, vol. XI no. 10, pp. 56-58.
2] Dhanda Pani Alagiri, (2006) “Retail Banking challenges”, ICFAI University press, Hyderabad, pp-25-34.
3] S. Santhana Krishnan (2007), “Role of credit information in retail banking: A business catalyst”, ICFAI
University Press, Hyderabad, pp. 68-74.
4] Manoj kumar Joshi (2007) “Growth Retail Banking in India”, ICFAI university press, Hyderabad, pp13-
24.
5] Sunil Kumar, (2008) “Retail Banking in India”, Hindustan Institute of Management and Computer
Studies, Mathura.
6] Divanna, J.A. (2009), “The future retail banking, Palgrave Macmillan, New York.
7] Birendra Kumar (2009), “Performance of Retail Banking in India”, Asochem Financial Pulse (AFP),
India.
8] Raj Janak Rao, et.al. (2011). Reserve bank of India bulletin, Cambridge University, Press India limited,
volume LXV number.
9] Dr. R. Srinivasa Rao (2014).The Role of Retail Banking In Indian Economy, International Journal of
Engineering Research and General Science Vol.2(2), 152- 158.
10] Shraddha Deoda (2015). Journal of Research in Business, Economics and Management, Vol.1 (1), 1-6.

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Date of submission: 6th April 2021 KAJAL GALA

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This project throws a light on the study of:s

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SR. NO TOPIC PG. NO.

1.1 Introduction 3-4

1.2 Definition 5-6

1.3 Role of Retail Banking 7-9

1.4 Origin and History of Retail Banking in India 10-13

1.5 Current Scenario 14-15

1.6 Future Scenario of Retail Banking 16

1.7 Features of Retail Banking 17

1.8 Advantages and Disadvantages of Retail Banking 18

1.9 Retail Banking: Indian Scenario 19-20

1.10 Components of Retail Banking 21

1.11 Retail Credit 22

1.12 Strategies for Client Retention 23

1.13 Opportunities and Challenges of Retail Banking in India 24-28

1.14 Credit Risk Management 29-30

1.15 Components of Credit Risk 31-34

1.16 Credit Strategy 35-41

2.1 Objective of the Study 43

2.2 Scope of the Research 44

2.3 Need for the Study 45

2.4 Significance of Retail Credit 46-47

3 Review of Literature 48-59

4 Data Analysis and Data Interpretation 60-68

... Findings 69-70

... Suggestions 71-72

... Conclusions & References 73-74

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Retail Banking Sector is characterized by 3 basic characteristics:

SERVICES OFFERED ssssBY RETAIL BANKING

WHAT ROLES DO RETAIL BANKS PLAY WITHIN ECONOMIES?

RETAIL BANKS AND THE SUB PRIME CRISIS

RETAIL BANKING AND CONSOLIDATION ISSUES

What is the nature of retail banking?

1.4 ORIGIN AND HISTORY OF BANKING IN INDIA

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1.5 CURRENT SCENARIO

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1.6 FUTURE SCENARIO OF RETAIL BANKING

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1.7 FEATURES OF RETAIL BANKING