1 RETAIL BANKING

A PROJECT REPORT ON
“RETAIL BANKING”
BACHELOR OF COMMERCE
BANKING & INSURANCE
SEMESTER V
Submitted
In Partial Fulfillment of the requirements
For the Award of the Degree of
Bachelor of Commerce Banking & Insurance
-

By
HARPREET SINGH JAGGI
ROLL NO. 17
G.N.KHALSA COLLEGE OF ARTS. SCIENCE &
COMM ERCE.
MATUNGA. MUMBAI 400019 -

2 RETAIL BANKING

C ER T I F I C A T E
This is to certify that Mr. HARPREET SINGH JAGGI of B.Com —

Banking & Insurance Semester V (2008-09) has successfully completed

—

the project oil “RETAIL BANKING”

Under the guidance of SIR ALLAN D’SOUZA.
Course Coordinator Principal
Project Guide/Internal Examiner
External Examiner
 

3 RETAIL BANKING

DECLARATION
I, HARPREET SINGH JAGGI, the student of B.Com Ban king &
-

Insurance Semester V (2008-09) hereby declare that I have

-
completed this project on “RETAIL BANKING” Submitted is true &
original to the best of
my knowledge.
Student’s Signature
HARPREET SINGH JAGGI
ROLL.NO 17
 

4 RETAIL BANKING
Acknowledgement
On the Event of completion of my project “Retail Banking”. I take the
opportunity to express my deep sense of gratitude
towards all those people without whose guidance,
inspiration and timely help, this project would have never
seen the light of day.
Any accomplishment requires the effort of many people and
this project is not different. I find great pleasure in
expressing my deepest sense of gratitude towards my Project guide Prof.
Allan D’souza whose guidance and inspiration
right from the conceptualization to the finishing stages
proved to be very essential and valuable in the completion of
the project.
 

S
CONTENTS
RETAIL BANKING

SR.NO
1.

INTRODUCTION

TOPIC

PAGE NO 7
2
3
L
4. I[
5.
6.
7.
8.
RETAIL LENDING
ROLE OF IT IN RETAIL BANKING
I MARKETING STRATEGIES
CRM IN RETAIL BANKING
CONCLUSION
BIBLIOGRAPHY

8
9

WhAT IS RETAIL BANKING?

ANALYSIS OF RETAIL BANKING
V STRENGTH
V WEAKNESS
V OPPORTUNITIES
V THREATS
RETAIL BANKING IN INDIA
ADVANTAGES OF RETAIL BANKING
PRESENT SENARTO
WHAT ARE VARIOUS RETAIL

11
13

14

BANKING SERVICES?
VARIOUS PRODUCT OF RETAIL BANKING

V Home Loans 22
V Auto Loans 27
V Two wheeler & consumer 30
durable loan
V Personal/Unsecured Loans 32
V Educational loan 34
V Plastic money 37

9.
10.
11.
12.

13.
14.
A)
-r

43
46
48
49
50

16

18

19
-)
4-

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6 RETAIL BANKING
INTRODUCTION
“We don’t want satistied customers.. .we want delighted customers.” It is the new marketing mantra
today. The same applies to banking as well. Retail banking and Rural banking were once
considered as taboos by the leading foreign and domestic banks. But cut-throat competition,
innovation and advanced technology have altogether changed the faced of banking Sector. Now all banks
have recognized the importance of retail banking.
Retail banking is that part of a bank that offers products and services primarily to individual customers,
professional, self-employed individuals or small businesses. The
 

RETAIL BANKING

focus is on creating products and services thai meet the needs of the target customers and are
profitable for the bank as well.
The approach to retail banking products is more is more on a mass production basis
wherein all risk and operations are based on and geared to cater to a large number of
customers. This is therefore, significantly dilkrent from corporate banking or wholesale
banking vhere focus is on large sized customer accounts rather than large numbers of
customers.
Understanding retail banking will help in servicing your customer better as it would give
you a perspective and insight into how such products are structured and specific
requirements for each set of products. This would help you advice your customer in a
more informed manner besides making you a more informed consumer.
With the advent of ATMs, ‘Anytime banking’ has come into picture. Satellites and
telecom networks across the world have made ‘Anywhere banking’ possible. Now it is
the turn of ‘Anyhow banking’, and the leading bank of the next century will be the one
which has all these three A’s.

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.

WHAT IS RETAIL BANKING?

8 RETAIL BANKING
Fixed currentlsavings 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 card, insurance, investments and securities).
• Multiple channels of distribution (call center, branch, internet and kiosk); and
• Multiple customer groups (consumer, small business, and corporate)
DEFINITION:
Retail Ranking Services:B
anking services provided to individual members of the public as opposed to those
provided to businesses and institutions.
ANALYSIS OF RETAIL. BANKIN(;
STRENGTH:
) Emerging as a new growth driver:
For several years banks viewed consumer loan with skepticism. Commercial loans denominated
the loan portfolio as they generated high net yield with low credit risk. Consumer loans on the
other hand involved smaller amount, large staff to handle account and high default rates. Even
regulators across the glob have not encouraged retail banking until now till very recently.
However, over

9 RETAIL BANKING
past few years, fierce competition among the lowered the spread and profitability an
commercial loan with deregulation and increase in consumer loan rate, the risk adjusted
return in retail sector have exceed the return on consumer loan.
2) Provides diversified psset portfolio:
Retail banking includes comprehensive range of financial product and services i.e. deposit
product, auto loan, car loan, home loan, loan against equity shares, mortgage loan,
payment of bills, debit card, credit card, etc. These product provide an opportunity for banks to
diversify the asset portfolio with higher profit and relatively lower NPA.
3) Improves standard of living:
Due to major economic re1rrns in Indian economy there has been an increase in per
capita income which has led to change in life style and growing urbanization have made
the Indian population rise from oblivion and resurge in modern era on this front role of retail
banking arises. Retail banking provide all such product and services(home loan, car loan,
personal loan, etc) to its customer which are required by them to maintain change in there
life style in short it helps in fulfilling aspiration of people through affordable credit.
4) CRM tool:
The individual customer is deity of bank in retail banking segment. All product and services are
designed to satisfy need and wants of its customer. As customer in retail banking belong to
different economic, cultural, educational, and social background there demand is also varied.
It is acceptance of the banking product and satisfaction of customer that yield profit in this
segment. hence customer Service and Quality implementation through use of CRM tools
will help banks
Success in this competitive world of retail banking.
5) Innovative product development:

10 RETAIL BANKING
The scope for development in financial services is unlimited. In retail banking ball is in the court
of bankers where they approach the customer tinds out there tinancial need and problem,
designs the product and services, market them and finally sells them to satisfy its customer.
6) Economies of scale:
Retail banking enables banks to utilize existing capacities and reaching wider population of
customer. Banks can get the benefits of information and transaction. Tn process of extending
variety of services, banks are acquiring enormous amount of customer information .if this
information is systematically recorded banks can efficiently utilize this information in order to
,

explore new segment and to cross sell new services.

WEAKNESS:
) Avoids corporate sector:
Retail banking avoids corporate sector totally which is the backbone of Indian economy. Main
reason put forth or this is decline in corporate borrowing. However bank can take certain step to
manage there corporate clients such as lower arte credit, higher amount of loan etc. Managing
corporate client is more easier as they have well defined financial policy and project and they
concentrate on product and services offered rather than on CRM of bank unlike individual
clients.

11 RETAIL BANKING
2) Marketing (Internal and External):
Retail banking requires strong marketing strategies to be adopted by bank both internal and
external, under retail banking segment top level management need employees to introduce
product properly to its employees because if the employees are not aware regarding the product they are
offering that product will fil however effective the product is also bank require to spend lot on its
marketing of product to general public because if public is not aware regarding the product and service
how will they opt for it. All this increases the cost and time required to introduce the product in the
market which can reduce or make the product out dated immediately on its arrival.
3) Changes in technology:
Future of retail banking lies in the hand of IT. Various It solution used by banks such as E-hanking, phone
banking, ATM leverage the retail banking product and service offered by banks. But this has weekend the
segment some how. If banks are not able to adopt the latest technology it may pull back the growth of
bank also this technology requires lot of capital investment and if at all the technology fails then it may
shake the customer’s confidence on bank and bank may land up in loosing its customer.
4) Reduces the profitability:
It is claimed that retail banking increases overall profitability of the bank but in reality this is not the case
because managing wide range of product and service requires high quality technology large number of
,

staff and all this requires high capital investment which reduces banks profitability.
5) Co-ordination among various department:
Success of retail banking is not the result of one department but is result of various departments together.
If there is lack of co-ordination among various department of the bank then however strong and effective
the may be the product

12 RETAIL BANKING
it will 1il. Suppose if tile front ollice is successful in attracting tile customer but back office is
not able to execute the delivery of product or service on time then bank may land up loosing the
customer altiloUgh its CRM was effective.
OPPORTUNITIES:
) Scope for innovation:
Under retail banking as banks try to provide all those product and services which arc desired by
its customer this segment has more scope for innovation banks can keep Ofl modilying its
products as per the market demand which helps them from not being out dated.
2) Rise in per capita income:
Tile rise of tile Indian middle class is an important contributory factor in this segment. Tile
percentage of middle to high-income Indian households is expected
 

L3 RETAIL BANKING
to continue rising. The younger population not oniy wields increasing purchasing power, but as fi.r as
acquiring personal debt is concenied, they are perhaps more comfortable than previous generations.
Improving consumer purchasing power, coupled with more liberal attitudes toward personal
debt, is contributing to India’s retail banking segment.
3) Economic growth:
Retail banking has immense opportunities in a growing economy like India. In the BRIC Report India is
stated as an economic superpower. According to A. T. Kearney, a global management-consulting firm,
recently identified India as the ‘second most attractive retail destination’ of 30 emergent markets. Hence
retail banking has high opportunities in India.
THREATS:
1) Large disbursement of loans:
The boom in the field of retail banking and the intense composition among the to increases the customer
base has resulted in the large disbursement of customer loans, loans on credit cards, auto loans,
educational loans etc. on easy terms without much scrutiny this has brought with in an increase in the
number of cases of default in loan repayment thus increasing the bank’s NPAs.
2) Issue of customers ditmitv:

14 RETAIL BANKING
Banks have been adopting carrot and stick policy by renegotiating loan terms where the detitult
is genuine and handing over recovery to third parties where default is willful. Most of the time,
the third parties or external agents are not trained to handle the loan repayment process. Hence,
they restore to strong arms tactics with defaulting customers. Many cases of harassment and
invasion of privacy have been reported by the afThctcd parties. Such instances may hamper the
image and corporate vision of the bank in near future.
3) Issue of customer privacy:
Customer privacy is also affected in another way wherein customer service representatives of the
banks ring up customers at any times at their places of work, informing them about new products
and services. This may cause inconvenience to busy customers. It is also obligation on part of the
banks not to share the private information from the records of the customers with outside
agencies like market research groups and other advertisers.
4) EL
The growth of IT has brought with it a number of frauds perpetrated with the help of technology
and which come under the domain of cyber crimes. Banks are the victims of unscrupulous
elements who have in many instance hacked banks website and stolen credit card number, pass
word and other confidential information relating to customer.
NEED FOR RETAIL BANKING
(The Ultimate Service Provider)
Until now banks were relying Ofl financing, production based activities. Retail finance was not
favored by Indian banks, But they have to tune to it now with the demand for loans from
industrial sector is coming downing the past because of the economic slowdown. As a result
banks have become selective in there lending activities. Further changing demographics, a
rapidly growing ,middle-class, rise in disposable

15 RETAIL BANKING
income changing life style and increasing ability of people to take credit risk are providing banks
with an opportunity to shift there lending operation to retail finance. Hence hankers have been
increasingly shifting to retail to increase profitability and reduce delinquency rates. Customer
shifting. cost pressure and increasing competition are some of the other reasons
Retailing is now favored because of the better returns lesser asset quality problem and low NPA.
Further it provides many opportunities for credit expansion. It helps banks in risk diversification
and is important for low-cost resources mobilization by banks.
For Banks, retail segment is the principal growth driver as they are slowly gaining market share
in the retail space. Foreign banks are securitizing vehicle loans to raise off-balance sheet
resources and to reduce overall cost of funding. For example, Bank of Muscat is taking over auto
loans and personal loans from other banks signaling a softer interest rate regime for consumer
finance and giving indication to the intensifying competition in business.
The objective of the Retail Bank is to provide its target market customers a full range of financial
products and banking services, giving the customer a one-stop window for all his/her banking
requirements. The products are hacked by world-class service and delivered to the customers
through the growing branch network, as well as through
alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile Banking.
RETAIL BANKING IN INDIA
The Indian players are bullish on the Retail business and this is not totally unfounded. There are
two main reasons behind this. Firstly, it is now undeniable that the face of the Indian consumer is
changing. This is reflected in a change in the urban household income pattern. The direct fallout
of such a change will be the consumption patterns and hence the banking habits of Indians,
which will now he skewed towards

16 RETAIL BANKING
Retail products. At the same time, India compares pretty poorly with the other economies of the world
that are now becoming comparable in terms of spending patterns with the opening up of our economy.
For instance, while the total outstanding Retail loans in Taiwan is around 41% of GDP, the figure in India
stands at less than 5%. The comparison with the West is even more staggering. Another comparison that
is natural when comparing Retail sectors is the use ot credit cards. I lere also, the potential lies in the fact
that of all the consumer expenditure in India in 2001, less than 1% was through plastic, the corresponding
US figure standing at 18%.
Retail banking in India is not a new phenomenon. It has always been prevalent in India in various forms.
For the last few years it has become synonymous with mainstream banking for many banks.
The typical products offered in the Indian retail banking segment are housing loans, consumption loans
for purchase of durablcs, auto loans, credit cards and educational loans. The loans are marketed under
attractive brand names to differentiate the products offered by different banks. As the has shown that the
loan values of these retail lending typically range between Rs.20, 000 to Rs.100 lakh. The loans are
generally for duration of five to seven years with housing loans granted for a longer duration of 15 years.
Credit card is another rapidly growing sub-segment of this product group.
In recent past retail lending has turned out to he a key profit driver for banks with retail portfolio
constituting 21.5 per cent of total outstanding advances as on March 2004. The overall impairment of the
retail loan portfolio worked out much less then the Gross NPA ratio for the entire loan porttblio. Within
the retail segment, the housing loans had the least gross asset impairment. In fact, retailing make ample
business sense in the banking sector.
While new generation private sector banks have been able to create a niche in this regard, the public
sector banks have not lagged behind. Leveraging their vast branch network and outreach, public sector
banks have aggressively forayed to garner a larger slice of the retail pie. By international standards,
however, there is still much scope for retail banking in India. After all, retail loans constitute less than
seven per cent of GDP in

17 RETAIL BANKING
India vis-ã-vis about 35 per cent tr other Asian economies South Korea (55 per cent), Taiwan
—

(52 per cent). Malaysia (33 per cent) and Thailand (I 8 per cent). As retail banking in India is
still growing trom modest base, there is a likelihood that the growth numbers seem to get
somewhat exaggerated. One, thus, has to exercise caution is interpreting the growth of retail
banking in India.
The HDFC Rank Preferred program for high net worth individuals, the FIDFC Bank Plus and
the Investment Advisory Services programs have been designed keeping in mind needs of
customers who seek distinct financial solutions, information and advice on various investment
avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans
against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading
provider of Depository Participant (DP) services for retail customers, providing customers the
titcility to hold their investments in electronic form.
IIDFC Bank was the first bank in India to launch an International Debit Card in association with
VISA (VISA Liectron) anti issues the Master debit card as well. The Bank launched its credit
card business in late 2001. By March 2005, the bank had a total card base (debit and credit cards)
of 4.2 million cards. The Bank is also one of the leading players in the “merchant acquiring”
business with over 42,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at
merchant establishments. The Bank is well positioned as a leader in various net based B2C
opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill
Payments, etc.
ADVANTAGES OF RETATLA BANKING
Retail Banking has inherent advantages outweighing certain disadvantages.
RESOURCES SIDE:
• Retail deposit arc stable and constitute core deposit
• They are interest insensitive and less bargaining for additional interest
• They constitute the low cost for banks
• Effective CRM with the retail Customer builds a strong customer base.

RETAIL BANKING
• Retail banking increases the subsidiary business of a bank.
ASSETS SIDE:
• Rctail banking rcsults in better yicld and improve bottom line of a hank.
• Retail segment is a good avenue for funds deployment.
• The consumer loan are presumed to be of lower risk and NPA perception.
• Help economic revival of the nation through increased production activities.
• Improves lifestyle and fulfills aspiration of people through affordable credit.
• Innovative product development.
• Retail segment involves mininrnm marketing efforts in a demand driven economy.
PRESENT SENARIO
There has been a considerable growth in the retail-banking sector in India, which makes up for
about 1/5th of the overall bank credit. Typically, the retail bunking industry encompasses the
services such as credit cards, Housing loans, Education loans, Auto loan, etc
Retail banking has brought in a drastic makeover in the overall banking scenario in India. The
exceptional improvement in the banking system in India is a result of strong

19 RETAIL BANKING
initiatives taken up by both the government and private companies A recent market research
report named, “Indian Retail Ranking Sector Analysis (2006)” published by RNCOS provides an
exclusive tour to the entire retail-banking industry of India. As per the report, “Mainstream
banking and retail banking have become one and the same thing for the past several years now.
Approximately, 22% of the total outstanding advances were derived from the retail portfolios of
the banks in India till March 2004”.
The contribution of retail banking to the overall banking sector has been outstanding. Growing at
a rate of 122%, the retail-banking sector of India managed to reach a worth of S67 billion in the
year 2005”, as per experts at RNCOS. “The retail banking sector in India should reach a worth of
$310 billion by the year 2010”, anticipate the experts. Protiles of key players along with the
strategies and plans adopted by them for the growth of the industry are also talked about in it.
Besides discussing the present scenario of the financial system in India the report offers a
reliable prediction of the market in the years to come.
The ratio of retail credit to net credit at the global level is around 5%. In India, it is interesting to
note that this ratio is over 10% as on March31, 2002 (Source : RBI, Annual Report). With the
economy reforms set in motion , the country is already rated as a major hub for economic
development. Increase in per capita income change in life style and growing urbanization have
made the Indian population rise from oblivion and resurge in modern era. The policy of and
spent is gradually giving way to spend and save concept.
WHAT ARE VARIOUS RETAIL BANKING SERVICES?
Retail banking includes comprehensive range of financial product and services i.e. deposit
product, auto loan, car loan, home loan, loan against equity shares, mortgage loan, payment of
bills, debit card, credit card, etc. These product provide an opportunity for banks to diversify the
asset portfolio with higher profit and relatively lower NPA.

20 RETAIL BANKING
Today the most proactive banks have entered the retail banking segment arid have
identified it as a principal growth driver.
Cateori,ation of Retail Bank services

Loan product: • Current account • Delivery of loan at

Consumer loan • Saving account promised time
Housing loan • Time deposit account • Interest loan option
Personal loan • Flexibility
Education loan in paying loan
• Counseling on Real estate market
• Legal services documentation

Core services Facilitating services Supporting services

• Cash
Foreign currency
requirements • Making payment at door Step
Payment
• Traveller cheque • Internet banking
services
• DD/bankers cheque • Telephone banking
• IT
• EFT

• Credit card
• ATM card • Debit card
Current accoun
• Standing instruction from customer for • Service to senior citizen
making payments • Telephone banking
and saving
• Inter branch transfer of fund • Internet banking
account
• Safety vault • Conversion of excess balance to
time deposit

21

RETAIL BANKING

VARIOUS PRODUCT OF RETAIL BANKING

1) Home Loans:

• ECS for payment of loan installment

Insurance • Current • Additional insurance lacility br family

product: account
Life insurance • Saving account niciiihcrs.
 • Time deposit
Pension scheme account • Counseling on post retirement saving
• Safety vaults

22 RETAIL BANKING
Tes of Home Loans
There arc a variety of home loans available:
+ Home Purchase loans: This is basic home loan for the purchase ota new home.
+ Existing home improvement loans: These loans are given for implementing repair works &
innovations in home that has already been purchased by the borrower.
+ Home construction loan: This is a loan given for the construction of a new home.
+ Home extension loan: his is given for expanding or extending an existing home such as adding a room
or floor etc.
+ Honie conversion loan: This is loan given to those who have financed the present home with loan &
wish to purchase another home for which extra funds arc necessary. The home conversion loan allows the
borrower to transfer the existing loan to the new home loan, which includes the extra amount required,
thus doing away with the need to pre-pay the previous loan.
+ Land Purchase Loans: This is loan which is provided to purchase land either for construction of a
home or for investment in land.

23 RETAIL BANKING
• Bridge Loan: These are loans given to persons who are looking to sell their existing homc &

purchase another. The bridge loan helps finance the purchase of the new home until the old one
is sold.
•:• Balance transfer loan: This is loan which allows the borrower to repay an existing loan & avail
of another loan at lower rates of interest.
+ Refinance loans: This is a loan that is given in order to repay debts incurred from un-organized
sourccd such as relatives, friends etc. which may have been taken to purchase the home.
+ Stamp Duty Loan: This is a loan sanctioned to pay the stamp duty amount necessary to be
paid on the purchase of a home.
+ Loan to NRIs: These arc similar to loans given to domestic borrowers but are specifically ear-
marked loans to NRTs as the repayment is usually from foreign currency sources.
Eligibility terms for home loans
The primary concern of a housing finance company is to determine the loan amount that the
borrower is comfortably able to repay. The repayment capacity is determined by taking into
consideration flhctors such as income, age, qualification, number of dependents, spouse’s
income, assets, liabilities, stability & continuity of occupation & savings history.
Documentations requirements pre-approval —

+ At the time of application for a home loan, the housing finance company would ask for the
following common documents:

 
24 RETAIL BANKING
In case the borrower is a salaried employee, proof of income i.e. salary certificate/slips & TDS
certificate (From 16) of the borrower & co-applicant, if any.
•:• In case the borrower is self-employed; details of business track record & a COPY of the
audited financial statement of the last two years of the borrower & coa pp licant, if any.
+ Copy of hank account statement for the last 6 months.
+ Copy of the latest credit card statement.
+ Passport size photograph.
+ Signature verification from the borrower’s hanker.
+ Proof of residence.
Upon receipt of all the documents along with the duly completed application tonn, the housing
finance company receives the details & communicate its decision regarding approval of he loan
application.
Documentation requirements post-approval/ disbursal stage:
—

After a loan application has been approved & at the time that the borrower requires the fhnds for
payment, the following documents are required to be fi.irnished:

25 RETAIL BANKING
1. Allotment letter
2. Photocopies of title deeds
3. Agreement to sell
4. Non-encumbrance certificate
5. Approved plans & clearance certificates along with estimates if the property is self-
constructed.
Repayment Period
Repayment options range generally from 5 to 15 years. A few housing finance companies
also offer a 20-year repayment period, usually at a higher rate of interest. NRIs can avail of a
housing loan for a maximum period of 7 years. Repayment is usually taken in Equated Monthly
Installments (EMI) by way of post-dated cheques. This fixed money that is repaid to the housing
finance company every month comprises of both interest & principal repayment.
Collateral Securities
Housing finance companies usually take securities as collateral in addition to the mortgage of the
property being purchased. These collateral securities could be guarantees from one or two
persons (guarantors), assignment of life insurance policies, shares, units of Unit Trust of India,
bank deposits & other securities. These securities are taken so as to ensure that the loan is repaid
in the event that the borrower’s normal source of income is rio longer available.
Security for the loan is a first mortgage of the property to be financed, normally by way of
deposit of title deeds. Liquidation of the mortgaged property is usually the last resort of the
housing finance company for repayment of the loan.
Interest Rate Calculation
In India, the interest on home loans is usually calculated on Monthly Reducing or yearly
reducing balance.

 
26 RETAIL BANKING
A. Monthly Reducing Balance: The principal on which the interest is paid reduces evety month
as the EMI is paid.
B. Annual Reducing Balance: The principal is reduced at the end of the year. This method of
calculating interest is more expensive as the borrower continues to pay interest on a certain of the
principal, which has already been paid back to the housing finance company by way of the EM!.
The effective interest rate is approximately 0.7% higher than the monthly reducing balance
method.
Tax Benefits
Tax benetits are available under:
1. Exemption under section 88 of IT act (Rebate) for repayment of principle up to Rs.
10,000.
2. Deduction under section 24 of IT act tbr interest payment on housing loans up to Rs.
150,000 (in respect of self-occupied house property acquired or constructed with capital
borrowed on or after 1 .4.99, & acquisition or construction is completed within 3 years
from the end of the financial year in which the capital borrowed). Tax benefit will defer
in case of the property has been leased out.
2) Auto Loans:

27

RETAIL BANKING

Types of Auto Loans

Auto loans or car loans could be of the following nature:
• New car loan: This is most opted for as it provides a simple loan for purchasing a new
car.

• Used car loan: This is loan facility offered on second hand car purchases. This
involves valuation of the car being purchased by way or certified values of used cars.
• Auto Refinance: This is a loan facility given on an existing car owned by the borrower
provided that the car is not hypothecated to any financicr.Eligibility terms For Auto Loans
Typically most financiers have similar eligibility criteria for auto loans. The age of the borrower should
be between 2-58 years. Annual income should be above Rs. 60,000. Additional infbmiation is taken
with the loan application form.
The size of the loan amount sanctioned depends on the cost of the vehicle, the type of car (standard or
Premium) & the percentage financing. Used cars get lower is offered. A new car can get up to 90%
financing. Used cars get lower financing.

28 RETAIL BANKING
Depending on the model & its resale, the amount in used cars like the Maruti 800 could go up.
Documentations Requirements Pre-Approval —

• In case the borrower is a salaried employee, proof income i.e. salary certificate/slips & TDS certificate
(From 16) of the borrower & co-applicant, if any.
• In case of borrower is self-employed, details of business track record & a copy of the audited financial
statements of the last 2 years of the borrower & co-applicant. If any.
• Copy of bank statements for the last 6 months.
• Copy of the latest credit card statement.
• Passport size photograph.
• Signature verification from the borrower’s bank.
• Proof of residence.
Upon receipt of all the documents along with the duly completed application form, the car finance
company/bank reviews the details & communicates its decision regarding approval of the loan
application.
Documentation requirements Post approal/disbursal
—

Apart from the loan documentation the borrower is required to submit

photocopies of the following:
I. Registration Certificate (RC book).
2. Insurance policy.
3. Road transport tax papers.
The RC book is usually endorsed as hypothecated to the financier until full repayment of the loan amount,
when the hypothecation is cancelled. After the last payment is made the bank issues a NOC & form 35 to
cancel the hypothecation on the car. This is submitted to the RTO for updating the RC hook. The
insurance company also requires an NOC o make the necessary changes on the insurance policy.

2q RETAIL BANKING
Repayment Period
Usually Car financing is available from 1-5 years. Some financiers oiler longer tcnurc loans up to
7 years. Thc tcnurc is usually dependent on thc brand of car being purchased. A super premium
car such as the Mercedes would he restricted to tenure of 3 years only. As tenure increases the
EMI reduces but the total interest outflow is higher.
Some financiers allow a facility fbr back loading of the EMI where in the EMI payments are
lower initially & increases as the borrower’s income increases.
Collateral Securities
Typically there is no requirement for any additional collateral to be provided. The RC book is
endorsed for hypothecation to the financier which by itself is adequate security for the financier.
Interest Rate Calculation
The interest is usually charged on a rate or on a reducing balance basis which could be daily,
monthly, quarterly on annually.
Fees & Charges
There are fees & charges in addition to interest rate. Processing fees, advanced EMIs if
applicable. stamp charges. registration charges & insurance have to be paid prior to the
transaction being completed.
Most financiers do not cover insurance & registration. The price of the car is taken to be the ex-
showroom price, which does not include insurance & registration charges.
Tax Benefits
Salaried employees cannot avail of tax benefits on the loan taken for purchasing a car. However
self employed persons can avail of tax benefits on depreciation as well as on the interest paid Ofl
the amount borrowed for the purchase of the vehicle.

30 RETAIL BANKING
3) Two wheeler & consumer durable loan:
Two wheeler loans arc given for purchase of mopeds, scooters & motor-cycles.
Consumer durable loans cover purchase of durables such as refrigerators, washing machines,
Music systems, camcorders & DVD Players.
Eligibiltv Terms for Two Wheelers & consumer Durable Loans
Broadly, the eligibility criteria are:
1. Between 21 years & 60 years
2. Minimum gross monthly income of Rs.4, 500 for salaried employees.
3. Minimum annual income of about Rs. 45,000 for self-employed individuals.
The loan amount sanctioned range from Rs. 7.500 to Rs. 90’OOO for two wheeler loans.
Consumer durable Loans are usually of a smaller amount & vary as per the nature of the durable
being purchased.
Most of the financiers require a down payment to be made by the borrower towards the purchase
of the two-wheeler or consumer durable.
Documentation Requirements
.In case the borrower is a salaried employee, proof on income that is salary certificate/slips &
TDS certificate (From 16) of the borrower & co-applicant, if any. however, the stringency of his
requirement is waived in most cases.
In case the borrower is self-employed, details of business track record & a copy of the audited
financial statements of the last 2 years of the borrower & coa pplicant, if any. These documents
are not mandatory in most cases.
r Signature verification from the borrower’s hanker/Proof of identity.
Proof of residence.
,-

Repayment Period
Repayment of two wheeler loans are usually over 6 to 36 months, whilst those of consumer
durable loans are between 12 to 36 months.

31 RETAIL BANKING
Collateral Securities
Usually no collateral security is required in iwo wheeler & consumer durable loans.
Interest Rate Calculation
Interest is charged at a flat rate & range between 7.5% & 15.25% for two wheeler loans. The
rates on consumer durable loans are varied depending Ofl the seasonality of the product being
sold.
Fees & Charges
Most two-wheeler financiers charge a flat processing fee of 2% or Rs. 500 whichever is higher.
The additional charges on consumer durable financing are similar to that of the two-wheeler
charges, the difference being that there are slabs of loan amounts of approximately of up to Rs.
10,000 between Rs. 10,000 & Rs. 20,000 & above Rs. 20,000 & fees are based on these
amounts.
Tax Benefits
Salaried employees cannot avail of tax benefits on the loan taken for purchasing a two wheeler.
However, self employed persons avail of tax benefits on depreciation as well as on the interest
paid on the amount borrowed for the purchase of the vehicle of durable if it is for professional
purposes.

32 RETAIL BANKING
4) Personal/Unsecured Loans:
Pcrsonal loan is an all-purpose loan for which the end usc can he to meet any personal requirements of the
borrower.
Eligibility Terms For Personal/Unsecured Loans
Typically, the take home salary has to he over Rs. 8,000. The borrower should be over 21 years of age &
less than 58 years old.
Loan eligibility is determined primarily by the borrower’s capacity to repay i.e. his current earnings are
the primary determinant. The bank usually tries to improve that the EMI does not exceed 3 0-40% of the
net take home salary. The borrower’s place of residence & work place & employment track record are
given higher priority than in secured loans.
The maximum amount of loan sanctioned is usually in the range of about normal household expenses &
outflows such as any EMI on other loan etc. & regular outflows. Most banks lend anywhere between
Rs.15, 000 to Rs.l0 lakhs towards personal loans.
Documentations Requirements Pre-Approval —

In case the borrower is a salaried employee; proof of income i.e. salary certificate/slips & TDS
certificate (Form 16) of the borrower & co-applicant, if any.
.r’ In case the borrower is self-employed: details of business track record & copy of the audited financial
statements of the last 2 years of the borrower & co-applicant, if any.
Copy of bank account statements tbr the last 6 months.
r Copy of the latest credit card statement.
.Passport size photograph.
r Signature verification from the borrower’s banker.
Proof of residence.

33 RETAIL BANKING
Upon receipt of all the documents along with the duly completed application form, the bank
reviews the details & communicates its decision regarding approval of the loan application.
Documentation Requirements Post approval/Disbursal
—

Post approval, the bank collects post-dated cheques for the full tenure of the loan prior to
disbursal along with the collateral securities, if any.
Repayment Period
Personal loans arc usually short tenure loans up to maximum of three years. In rare cases some
banks offer a 5-year repayment option. There is usually a 6 months lock in period in either case.
Collateral Securities
Unsecured loans arc by definition unsecured. They arc designed for people who don’t want to
undergo the hassles of providing security or hypothecation or are willing to pay the higher price
of such loans. No collateral or guarantee is usually taken by the bank. However, in case of
software professionals, some banks are ask for a guarantor or a co-applicant.
Interest Rate Calculation
Interest rates currently vary between 15 to 30%. Longer tenure loans arc usually priced higher.
As also loans to persons with a higher risk profile.
Tax Benefits
Tax benefit Ofl personal loans is not available to salaried employees. However, self employed
persons may avail of tax benefits on the interest amount paid if the loan is for professional
purposes.

34 RETAIL BANKING
Educational loan:
EducationaL loan usually cover a variety of courses. It pays for the cost of tuition fees, hostel
fess, mess fees & examination fees. The cost of books, equipment & other instruments
required by the student are also covered. Some financiers cover the cost of airfare if the
studies are being undertaken overseas.
Eligibility Terms for Educational Loans
The terms for eligibility for an Educational Loan vary from bank to hank. The primary
requirement is that the student should have got admission to the course that he is
seeking the loan for. Most banks also speciI’ an age criteria such as 16-26 years etc.
The past academic track record of’ the student would also he considered.
The maximum loan amount varies by individual banks as well as the institution that the
student would pursue his/her academics. It could be for studies abroad. The repayment
capacity of the student & in several cases, the parents &Jor guardians is of utmost
concern to the bank. Usually no margin money is required for loans uptoRs.4 Lakhs. For
loans in India & 15% for studies in abroad, to be borne by the applicant. The parent’s
income would also be considered by most banks.
Documentation Requirements Pre-Approval
—

The documentation requirements would depend on the specific requirements as per the
policy of the bank giving the loan. However, a confirmation of admission by the
educational institution is necessary. Other documents would include.
Copy of bank account statements for the last 6 months.
u Passport size photograph.
u Signature verification from the borrower’s banker.

35 RETAIL BANKING
u Proof of residence.
o Incase either of the borrower’s parents is a salaried employee; proof of income i.e. salary
certificate/slips & TDS certificate (Form 16) of he borrower & coa pplicant, it any.
o Incase eithcr of the borrower’s parents is self-employed; details of business rack record & a
copy of the audited financial statements of the last 2 years of the borrower & co-applicant.
u Documents with respect of past academic track record of the student.
o Airline hooking details, in case of tbreign university education.
Documentations Requirements Post-Approval/Disbursal
—

Disbursement of the educational loan is made directly to the institution to which the student is
admitted. Hostel & mess fees are also paid likewise. Airfare is directly paid to the airlines. The
student is given certain amounts to make book or instrument/equipment purchases on a monthly
or quarterly basis. Receipts fir each payment are forwarded to the hank.
When the loan amount exceeds Rs. I Iakh, banks usually requires a Life Insurance Policy equal
to or more than the loan amount. This is the security that the bank takes to recover the
outstanding amount in case the student is unable to repay the loan amount.
Repayment Period
A holiday period is usually given for educational loan requirement before he/she starts paying
back the loan in EMIs. The holiday period ranges from 6 months to a year. However, if the
students start working immediately on completing the course, he does

36 RETAIL BANKING
not enjoy a holiday period. Repayment stars 6 months aller completion of the course or on
commencement ofa job, whichever is earlier.
Collateral Securities
Some banks do not require collateral security to he ti.irnished if the amount being borrowed is
less than Rs. 25,000. For amounts greater than that NSCs, bonds, property mortgage etc.
are taken as collateral.
Interest Rate Calculation
Interest on educational loan is charged on a simpic basis during study period or up to
commencement of repayment (interest rates are as per RBI guidelines at ha time).
Fees & Charges
Fees & charges include:
1. Processing fees 2. Documentation cost
3. Prc-paymcnt penalty 4. Penal interest for overdue amount & overdue period.
Tax Benefits
Under section XOE of the IT Act, a deduction will he allowed in respect of repayment of loan
educational purposes, subject to the following conditions.
In computing total income of an assessee being an individual, these shall be deducted, in
accordance with, & subject to, the provision of this section: any amount from the previous year,
out of his income chargeable to tax, or any approved charitable institution for the purpose of
pursuing his/her higher education such loan, provided that the amount that may be so deducted
shall not exceed Rs. 25,000.

37 RETAIL BANKING
5) Plastic money:
A barometer of maturity of an economy with a few exceptions is the stage of development
reached by its payment systems. Cash in the form of notes and coins make up just one Ibrm of
payment system. The development in banking brought about a second phase in payment
system, through paper instruments namely cheques and credit transfers. The requirement for
greater flexibility and convenience and development of technology has given risc to electronic
payment.s and this is where plastic cards have been provided.
The credit card can he defined as “a small plastic card that allows its holder to buy goods and
services on credit and to pay at fixed intervals through the card issuing agencies”.
Regulatory for cards
In view of this ever-increasing role of credit cards, a working group was set up fbr regulatory
mechanism fir cards. The terms of reference of the working group were fairly broad and the
group was to look into the type of regulatory measures that are to be introduced for plastic cards
(credit, debit and smart cards) for encouraging their growth in a safe, secure and efficient
manner, as also to take care of the best customer practices and grievances redressal mechanism
for the card users. The Reserve bank has been receiving a number of complaints regarding
various undesirable practices by credit card issuing institutions and their agents. Some of them
are:
Unsolicited call to members of the public by
card issuing banks/direct selling agents pressurizing them to apply for credit
card.
Communicating misleading/wrong information
regarding credit cards regarding conditions fir issue, amount of service
charges/waiver of fees, gifts/prizes.

3 RETAIL BANKING
Sending credit cards to persons who have not
applicd for them/activating unsolicited cards without the approval of the recipient. Charging very high
interest rates/service
charges.
Lack of transparency in disclosing
tees/charges/penalties. Non —disclosure of
detailed billing procedure.
The working group deliberated a number of major issues relating to customer grievances and rights:
• Transparency and disclosure.
• Customers rights protection and
• Code of conduct.
The group recommended that the most important terms and conditions should be highlighted and
advertised and sent separately to the prospective customer. These terms and conditions include various
issues relating to.
• Fees and charges.
• Drawl limits.
• Billing.
• Default.
• Termination/revocation of card membership.
• Loss/theft/misuse of card and
• Disclosure.
While building a regulatory oversight in this regard we need to ensure that neither
does it reduce the efficiency of the system nor does it hamper the credit card
usage.

3q

RETAIL BANKING

Type ot cards issued b a KiiiI ii

Cash card:
p
Also known as an ATM card. This has been discussed in detail earlier. A special plastic card is
used fbr getting currency notes from a machine. Known as automated teller machine.
Debit Cards:
Debit cards allow for direct withdrawal of funds from a customer’s bank account. The spending
limit is determined by the user’s bank upon available balance in the account of user. It is a
special plastic card connected with electromagnetic identification hat one can use to pay for
things purchased directly from his bank account. Under the system, card holders account arc
immediately debited against purchase or services through the computer network. hence, under
debit card the cardholder must have adequate balance in his account. This system is intended to
replace cheque system of payment. Debit card & smart card issuance by banks in India should be
approved by the

40 RETAIL BANKING
respective bank’s board as well as by RBL These can be issued only for customer maintaining
satisfactory accounts & for a minimum period of six months.
Cheque cards:
It is a card given to customer by the bank that he must show when he writes a cheque, which
promises that the bank will pay out the money written on the cheque. Under check card system,
the card holder is given a card & a chequehook. He has to use the cheques, while purchase is
made & the traders gets guaranteed payment. The customer does not get free credit, he has to
keep sufficient balance in his account or the hank will provide overdraft up to a specific limit, ot
course on interest payment basis.
Charge Card:
A small usually plastic card provided by an organization with which one may buy goods from
various shops, etc. The full amount owed must then be paid on demand. In credit cards, the card
holders get credit or loan for payment of periodical bills when

41 RETAIL BANKING
suflicient balance is available in (heir accounts. In a charge card such credit làcility is not
available. The periodical bill amount is paid off by charging it to customers account. A
fee is also payable by the card holder to the card issuing institution.
Smart Cards:
With the usc of credit cards, we may avail of credit facility on our purchase of goods/services
from approved sales outlets. A smart card however, enables the cardholder to perform
various other banking functions apart from credit purchases. For examples, with smart cards, we
can draw cash from ATMs, we can verit’ entries in our accounts, seek information pertaining to
our accounts, etc. This is possible because the card has an integrated circuit with microprocessor
chip embedded in the card for identification purposes. The card can also perform calculations &
maintain records.
Convenience Users:
Credit card customers arc typically extended an unsecured credit at least up to 30 days. Beyond
the period, the bank charges interest on outstanding bills. However, some cardholders may
prefer to pay oft their full dues hethre the free credit period. Such cardholders are called
convenience users.

42

RETAIL BANKING

REtAIL LEN DING

Everyone dreams of living a comfortable life and does all one can to make this dream come true.
Today this has become much easier, as with higher levels of income and multiple earning
members in the flirnily, it is easy to avail loans to fulfill aspirations Buying a home, car or any
small household item such as TV or a refrigerator using
money borrowed from a bank or a finance company has become the way of life today. This has
created a big business opporninity for finance companies.
They are offering loans to all types of customers for all types of assets. Retail lending has thus
become one of the key business verticals for finance companies. This necessitates banks to
fbllow processes for conducting business profitably. There are two main areas in lending. Loan
Origination and Loan Servicing. The process of validating customers, convincing them that the
finance company is the right source for their loan requirement and finally offering the loan with
terms and conditions that make business sense to the finance company is Loan Origination and
once the loan is disbursed, the process of managing the repayments from customers and
responding to the customer requests for pre payments, early settlement, rescheduling, etc. is
Loan Servicing.

43 RETAIL BANKING
Lending has become very competitive as customers are in the mode of shopping for loans.
Finance companies have to continuously offer new tinancial products to customers and thus
two of the important aspects of the business are time-to-market and flexibility. But as number of
customers increase, the risk of increase in the number of defaulters prevails. Thus finance
companies have to do the balancing act. On one hand they have to acquire more business by
lending to more customers and on the other hand they have to lend to select customers so that the
rate of delinquency is under control.
ROLE OF IT IN RETAIL BANKING
The growth in retail banking has been facilities by the growth in banking technology and
automation in banking process that enables in extension of reach and rationalization of cost.
ATtvI has emerged as an alternative channel which has facilitate low cost transaction It also has
the advantage of reducing the branch traffic and enable bank with small network to offset
traditional disadvantage by increasing there reach and spread.
Indian retail banks have been extensively using Information and Communication technologies
for their operations like central accounting, customer in formation management, transaction-
processing and importantly, for numerous customer-facing solutions. Besides there arc
supporting or ancillary solutions such as security and compliance in addition to the
“middleware” that banks use to link their customer-facing applications to their core systems. The
major business focus of the IT savvy retail banks is in providing products and services to the
customers through a diversitied base of channels bank branches, ATMs, c-banking, c-branch,
-

mobile-banking, SMS-hanking, etc. In India, the business growth is driving technology spending
in the retail banking segment. Indian retail banks are looking to move beyond their branch-
centric distribution models. Extending ATMs networks, advancing online and phone banking,
and rationalizing branch infrastructure are all on the cards.
Technology provides Retail Banks with various delivery channels:
) Automated Teller Macliines(ATM):

44 RETAIL BANKING
The n-end in banking has evolved from a cash economy to cheque economy and thereon to the plastic
card economy. One of the channels of banking services delivery is vide the ATM or the Automated Teller
Machines. whose traditional and primary use is to dispense cash upon insertion of a plastic card and its
unique PIN or Personal Identilication Number.
Current and savings account holders of a bank who hold a certain minimum balance in their accounts
(determined by each bank as per their policy) are issued an ATM card. The card is a plastic card with a
magnetic strip with the account number of the individual. When the card is inserted into the ATM, the
machines sensing equipment identifies the account holder and asks for his/her identification code number.
This is referred to, usually, as the PIN and is issued by the banks computers. This number is unknown to
the banks staff and is secret and unique to that individual. When the person uses the ATM and it asks tbr
the PIN, the cardholder identities himself/herself by pressing the relevant number buttons on the machine.
The machine then verities the account number on the ATM card along with the secret code number stored
in the ATM. When the matches tound, the ATM pops a menu screen, which allows the user to transact
almost all types of bank transactions.
1) TeIc banking: -

Tclc banking or phone banking service offered by banks to enable customers to access their accounts for
information or transactions. Similar to the ATM PIN, a telephone PIN (T-PIN) is provided to each
account holder. The customer can call the exclusive tele-banking numbers and provide the details to
identit’ himself/herself to the automated voice. Typically, the bank account number and the T-PIN are
asked for. Upon the respective numbers matching the computerized systems the customer is given access
to his account to query or transact on his account. Though cash withdrawal and deposit are not enabled
through this service many banks offer cash delivery or collection service to certain classes of customers.
 

45 RETAIL BANKING
Internet Banking:
One of the channels of service delivery to a banking customer is through the Internet. The access to
account information as well as transaction is offered through the worldwide network of computers on the
Internet. Every bank has special fircwalls & its own security measures to protect the accounts from non-
authentic use from unauthorized users. Data are encoded using algorithms with a 128-hit key or, in some
cases, with a 1,024-bit encryption.
Each account holder is provided a PIN similar to that of the ATM or Phone banking PEN. The access to
the account is allowed upon a match of the account details & PEN entered Ofl the computer system. A
higher level ot security may he reached by an electronic finger-print. The finger print is taken before &
after the transaction. Then both versions are compared. In case of any differcnce, the transaction is
aborted.
Account querying as well as transaction is possible on the Internet banking pIatfm. The accounting is
instantaneous & hinds transfers can be effected immediately. Though cash transaction are not possible at
present, the next phase of evolution in Internet banking will allow those as well.

46 RETAIL BANKING
MARKETING STRATEGIES
(Innovative Retail Banking)
The competition is intense in retail banking as almost all the public, private and foreign banks are eyeing
a share a on retail market pie To meet the competition retail banking product and services have to
.

become more competitive, and they are being perceived as commodities. To Leverage the competitive
environment they are reducing the interest rate to increase the customer base
,

According to Ilernant Kaul, Senior vice- President, Retail Banking ,UTI Rank, banks are formulating
there marketing strategies around the customer life cycle because they have different credit requirement at
different stage of there lives Initially customers look fur personal loan after some time they look to buy a
scooter or a car. Around the age of 30-35 years , they look for home loans so banks are not only
.

developing strong product but also investing in developing infrastructure and delivery points.
For expanding the market, banks ate developing both market and product they are venturing into new
locations and adding depth to the existing geography. They are increasing there penetration in existing
location as well. They are also increasing there presence in Tier-2 and Tier-3 because these have immense
potential.
Banks are tying up with small and organized retailers (malls) to co-brand with credit card companies to
fuel retail growth. As disposable income is increasing it gives retail opportunities to sell more. Banks arc
providing retail loans to Small and Medium Entrepreneurs (SME) Sector. They are also extending
collateralized loans and working capital finance to suppliers and vendors to large corporate customers as a
part of the supply chain tinancing initiative. These banks are tying up with manufacturers, builders, and
vehicle suppliers to facilitate quicker supply of loan In such a scenario IT has become an important tool
facilitating net banking, tele banking, mobile banking and

47 RETAIL BANKING
ATM, In retail financing they have been concentrating on mortgages as this lending is less risky
even though it involves significantly larger than average loan.
To be on safe side banks arc targeting the upwardly urban salaried class despite knowing that it
is ‘Rig city Indian youth” who are most profitable segment. However banks are also spreading
there operations to include the self employed and semi-urban rich
Retail Banking covers both asset-side and liabilities-side products. The liabilities side includes
ATM, E-banking, and Tele-banking where the bank has to make significant investment in
infrastructure and technology. The asset side of bank has various type of loans provided by
banks
Bank can devise suitable strategies of segmentation, delivery channels and pricing by
understanding the frame work of retail banking. Banking service can he understood in three
categories from the point of view of retail banking. Core services, facilitating services are
needed and supporting services are needed.

RETAIL BANKING

(kM I REtAIL BNKIN(

Banks are commercial institutions whose chief activity is to borrow money from those entities
that has surplus cash and lend money to those entities which arc deficient in cash, at different
rate of establishment for carrying out business with money. Under retail banking activity, banks
have to deal with a large number of individual accounts whose account size is very small when
compare to the account size of corporate entities.
The individual customer is the presiding deity of banks in the field of retail banking. All the
products and services are designed and fomed to satisfy the financial needs of the customers. The
customers belong to different economic, cultural and social background. Hence the products and
services offered are also varied. Through out the world it has been felt that main focus of the
banks in the retail sector should be customer service. It is the acceptance by the customers of the
banking products and his satisfaction with the services that brings out profit for the banks in this
sector. Unlike corporate

4 RETAIL BANKING
banking where corporate customers have a well defined linancial policy and projects, in retail
banking the onus lies on the banks to approach the customers, find out there financial needs and
problems, design the products and services, market them and finally sell them to the satisfaction
of the customer.
CONCLUSION
There is a need of constant innovation in retail banking. In bracing for tomorrow, a paradigm
shift in bank financing through innovative products and mechanisms involving constant up
gradation and revalidation of the banks’ internal systems and processes is called for. Banks now
need to use retail as a growth trigger. This requires product development and ditThrenti ation,
innovation and business process recngincering, micro-planning, marketing, prudent pricing,
customization, technological up gradation, home / electronic / mobile banking, cost reduction
and cross selling.
While retail banking offers phenomenal opportunities for growth, the challenges are equally
daunting. How far the retail banking is able to lead growth of the banking industry in future
would depend upon the capacity building of the banks to meet the challenges and make use of
the opportunities profitably. however, the kind of technology used and the efficiency of
operations would provide the much-needed competitive edge for success in retail banking
business. Furthermore, in all these customers’ interest is of paramount importance. The banking
sector in India is demonstrating this and I do hope they would continue to chart in this traded
path.
:. ) ‘ -) 1
 

50 RETAIL BANKING
BIBLIOGRAPHY
BOOKS:
• Commercial Banking (sep- 2003), ICFAI
(Page no. 34-37 and 39)
• Banking and financial services- Renu sobti.
MAGZINES:
• Professional banker (FEB-2006), ICFAI
(Page no. 53-55)
• Indian Banking special(2004), ICFAI
(Page no. 72, 74)
WEBSITE:
• www.google.com
(Retail banking)
(Banking in India)
• www. Go2.com (Retail Banking in India)
• www.icfaipress.org
• ww.indiainfolinne.com
• www.wikipedia.com
• www.fotoshop.com