LEARN MORE...

Access over 20 million homework & study documents

What is Retail Banking?

Content type
User Generated
Type
Study Guide
Rating
Showing Page:
1/70
1
1.1 RETAIL BANKING
Service with a smile: Today’s finicky banking customers will settle for nothing less. The
customer has come to realize somewhat belatedly that he is the king. The customer’s choice of
one entity over another as his principal bank is determined by considerations of service quality
rather than any other factor. He wants competitive loan rates but at the same time also wants
his loan or credit card application processed in double quick time. He insists that he be promptly
informed of changes in deposit rates and service charges and he bristles with ‘customary
rage’ if his bank is slow to redress any grievance he may have. He cherishes the convenience
of impersonal net banking but during his occasional visits to the branch he also wants the
comfort of personalized human interactions and facilities that make his banking experience
pleasurable. In short he wants financial house that will more than just clear his cheque and
updates his passbook: he wants a bank that cares and provides great services. So, do banks meet
these heightened expectations? Is there a gap that exists between the management perception
and the customer perception with reference to the services offered in Retail Banking?
1.1.1What is Retail Banking?
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 ( branch, internet); and
multiple customer groups (consumer, small business, and corporate).
1.1.2 Retail Banking in India:
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 durables, auto loans, credit cards and educational loans. The

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/70
2
loans are marketed under attractive brand names to differentiate the products offered by
different banks. As the Report on Trend and Progress of India, 2003-04 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 be 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 portfolio. 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 India vis-à-vis about 35 per cent for
other Asian economies — South Korea (55 per cent), Taiwan (52 per cent), Malaysia (33 per
cent) and Thailand (18 per cent). As retail banking in India is still growing from modest base,
there is a likelihood that the growth numbers seem to get somewhat exaggerated. One, thus,
has to exercise caution in interpreting the growth of retail banking in India.
1.1.3 Drivers of retail banking business in India
Some of the basic reasons which led to the retail banking growth are as follows:
First, economic prosperity and the consequent increase in purchasing power has given
a fillip to a consumer boom. During the 10 years after 1992, India's economy grew
at an average rate of 6.8 percent and continues to grow at almost the same rate – not many
countries in the world match this performance.
Second, changing consumer demographics indicate vast potential for growth in
consumption both qualitatively and quantitatively. India is one of the countries having highest
proportion (70%) of the population below 35 years of age (young population). The BRIC report
of the Goldman-Sachs, which predicted a bright future for Brazil, Russia, India and China,
mentioned Indian demographic advantage as an important positive factor for India.
Third, technological factors played a major role. Convenience banking in the form of
debit cards, internet and phone-banking, anywhere and anytime banking has attracted many
new customers into the banking field. Technological innovations relating to increasing use of

Sign up to view the full document!

lock_open Sign Up
Showing Page:
3/70

Sign up to view the full document!

lock_open Sign Up
End of Preview - Want to read all 70 pages?
Access Now
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.
Honor Code
flag Report DMCA

Review

Review

Honor Code
flag Report DMCA
Anonymous
Excellent resource! Really helped me get the gist of things.
Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Documents

PHC 372 Saudi Electronic University Natural Disasters Public Health Paper
ASSIGNMENT COVER SHEET Course name: Public Health Outbreak and Disaster Management Course number: PHC 372 CRN: Assign...
Module 5 Nursing Evidence Based Practice Discussion
Post your Evidence Based Practice Project: Sharing the Evidence visual aid to the discussion board. Be sure to do this by ...
CDP Consumer Behavior at Chick fil A Fast Foods Restaurant Research
Research Project The research project will be carried out on a company of your choice. The purpose of the research project...
AMU Logistics Management & Transportation Tech Changes Economic Effects Discussion
Write a 500 word essay for both questions using APA citing style. 1.Select one mode of transportation and describe how te...
Chemistry Question
I have Biochemistry exam I need someone to help me text me on whatsapp +16193968140 You should be so smart and know what y...
Theories of Personality Discussion
Pick one of the following :Musical Review – For each chapter covered in the course, select a song that meaningfully repr...
What is really serious about oort s cloud
Can we see something like this around any other star? The Oort's idea was surely born upon his correct consideration that ...
Diagramas polares
Resumen de Análisis de Error y Estabilidad en Diagramas de Bode Para identificar el tipo del sistema a partir de la Res...
Acct week 5 discussion chipotle calculating ratios
e. Operating Cycle (days) [millions]= Days Inventory Outstanding + Days Sales Outstanding – Days 1. Dividing the c...