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RETAIL BANKING
DEFINITION:
“Retail banking is typical mass-market banking where individual customers use
local branches of larger commercial banks. Services offered include: savings and
checking accounts, mortgages, personal loans, debit cards, credit cards, and so”
T he Retail Banking environment today is changing fast. The changing
customer demographics demands to create a differentiated application based
on scalable technology, improved service and banking convenience. Higher
penetration of technology and increase in global literacy levels has set up the
expectations of the customer higher than never before. Increasing use of
modern technology has further enhanced reach and accessibility.The market today gives us a challenge to provide multiple and
innovative contemporary services to the customer through a consolidated
window as so to ensure that the banks customer gets !"niformity and
#onsistency$ of service delivery across time and at every touch point across
all channels. The pace of innovation is accelerating and security threat has
become prime of all electronic transactions. High cost structure rendering
mass%market servicing is prohibitively expensive.&resent day tech%savvy bankers are now more looking at reduction in their
operating costs by adopting scalable and secure technology thereby reducing
the response time to their customers so as to improve their client base and
economies of scale.The solution lies to market demands and challenges lies in innovation of new
offering with minimum dependence on branches ' a multi%channel bank and
to eliminate the disadvantage of an inade(uate branch network. )eneration of
leads to cross sell and creating additional revenues with utmost customer
satisfaction has become focal point worldwide for the success of a Bank.
RETAIL BANKING AN INTRODUCTION
Retail banking is, however, (uite broad in nature % it refers to the
dealing of commercial banks with individual customers, both on liabilities and
assets sides of the balance sheet. *ixed, current + savings accounts on the
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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. Retail banking refers to provision of banking services to individuals
and small business where the financial institutions are dealing with large
number of low value transactions. This is in contrast to wholesale banking
where the customers are large, often multinational companies, governments
and government enterprise, and the financial institution deal in small numbers
of high value transactions.
The concept is not new to banks but is now viewed as an important and
attractive market segment that offers opportunities for growth and profits.
Retail banking and retail lending are often used as synonyms but in fact, the
later is /ust the part of retail banking. In retail banking all the needs of
individual customers are taken care of in a well%integrated manner.
oday!s retail banking sector is characteri"ed by three basic
characteristics:
o 0ultiple products -deposits, credit cards, insurance, investments and
securities
o 0ultiple channels of distribution -call center, branch, internet
o 0ultiple customer groups -consumer, small business, and corporate.
ORIGIN OF BANKING
Banks are among the main participants of the financial system in India.
Banking offers several facilities and opportunities.Banks in India were started on the British pattern in the beginning of the 12 th
century. The first half of the 12th century, The 3ast India #ompany established
4 banks The Bank of Bengal, The Bank of Bombay and The Bank of 0adras.
These three banks were known as &residency Banks. In 1256 these three
banks were amalgamated and The Imperial Bank of India was formed. Inthose days, all the banks were /oint stock banks and a large number of them
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were small and weak. 7t the time of the 5nd world war about 1866 /oint stock
banks were operating in India out of which 1966 were non% scheduled banks.
Bad and dishonest management managed (uiet a (uiet a few of them and
there were a number of bank failures. Hence the government had to step in
and the Banking #ompanys 7ct -subse(uently named as the Banking
Regulation 7ct was enacted which led to the elimination of the weak banks
that were not in a position to fulfil the various re(uirements of the 7ct. In order
to strengthen their weak units and review public confidence in the banking
system, a new section 98 was enacted in the Banking Regulation 7ct in the
year 12:6, empowering the )overnment of India to compulsory amalgamate
weak units with the stronger ones on the recommendation of the RBI. Today
banks are broadly classified into 5 groups namely;#a$ Scheduled banks.
#b$ %on-Scheduled banks .
BENEFITS OF RETAIL BANKING
T raditional lending to the corporate are slow moving along with high
<&7 risk, treasure profits are now loosing importance hence Retail Banking is
now an alternative available for the banks for increasing their earnings. Retail
Banking is an attractive market segment having a large number of varied
classes of customers. Retail Banking focuses on individual and small units.
#ustomi=e and wide ranging products are available. The risk is spread andthe recovery is good. >urplus deployable funds can be put into use by the
banks. &roducts can be designed, developed and marketed as per individual
needs.
SCOPE FOR RETAIL BANKING IN INDIA
o 7ll round increase in economic activity
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o 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.
o India has 566 million households and 966 million middleclass population
more than 26? of the savings come from the house hold sector. *alling
interest rates have resulted in a shift. !<ow &eople @ant To >ave Aess
7nd >pend 0ore.$
o <uclear 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.
o Tax benefits are available for example in case of housing loans theborrower can avail tax benefits for the loan repayment and the interest
charged for the loan.
ADVANTAGES AND DISADVANTAGES OF
RETAIL BANKINGADVANTAGES
Retail banking has inherent advantages outweighing certain disadvantages.
7dvantages are analy=ed from the resource angle and asset angle.
R&S'(R)& S*+&
o Retail deposits are stable and constitute core deposits.
o They are interest insensitive and less bargaining for additional interest.
o They constitute low cost funds for the banks.
o 3ffective customer relationship management with the retail customers
built a strong customer base.
o Retail banking increases the subsidiary business of the banks.
SS&S S*+&
o Retail banking results in better yield and improved bottom line for a
bank.
o Retail segment is a good avenue for funds deployment.
o #onsumer loans are presumed to be of lower risk and <&7 perception.
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o Helps economic revival of the nation through increased production
activity.
o Improves lifestyle and fulfils aspirations of the people through
affordable credit.o Innovative product development credit.
o Retail banking involves minimum marketing efforts in a demand '
driven economy.
o iversified portfolio due to huge customer base enables bank to reduce
their dependence on few or single borrower
o Banks can earn good profits by providing non fund based or fee based
services without deploying their funds.
DISADVANTAGES
o esigning own and new financial products is very costly and time
consuming for the bank.
o #ustomers now%a%days prefer net banking to branch banking. The
banks that are slow in introducing technology%based products, are
finding it difficult to retain the customers who wish to opt for net
banking.
o #ustomers are attracted towards other financial products like mutual
funds etc.
o Though banks are investing heavily in technology, they are not able to
exploit the same to the full extent.
o 7 ma/or disadvantage is monitoring and follow up of huge volume of
loan accounts inducing banks to spend heavily in human resource
department.
o Aong term loans like housing loan due to its long repayment term in the
absence of proper follow%up, can become <&7s.
o The volume of amount borrowed by a single customer is very low as
compared to wholesale banking. This does not allow banks to to exploit
the advantage of earning huge profits from single customer as in case
of wholesale banking.
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OPPORTUNITIES
Retail banking has immense opportunities in a growing economy like
India. 7s the growth story gets unfolded in India, retail banking is going to
emerge a ma/or driver.The rise of Indian middle class is an important contributory factor in this
regard. The percentage of middle to high%income Indian households is
expected to continue rising. The younger population not only wields
increasing purchasing power, but as far as ac(uiring personal debt is
concerned, they are perhaps more comfortable than previous generations.
Improving consumer purchasing power, coupled with more liberal attitudes
towards personal debt, is contributing to Indias retail banking segment.The combination of above factors promises substantial growth in retail sector,
which at present is in the nascent stage. ue to bundling of services and
delivery channels, the areas of potential conflicts of interest tend to increase
in universal banks and financial conglomerates. >ome of the key policy issues
relevant to the retail%banking sector areC financial inclusion, responsible
lending, and access to finance, long%term savings, financial capability,
consumer protection, regulation and financial crime prevention.
CHALLENGES TO RETAIL BANKING IN INDIA
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o The issue of money laundering is very important in retail banking. This
compels all the banks to consider seriously all the documents which
they accept while approving the loans.
o The issue of outsourcing has become very important in recent past
because various core activities such as hardware and software
maintenance, entire 7T0 set up and operation -including cash, refilling
etc., are being outsourced by Indian banks.
o Banks are expected to take utmost care to retain the ongoing trust of
the public.
o #ustomer service should be at the end all in retail banking. >omeone
has rightly said, !It takes months to find a good customer but onlyseconds to lose one.$ Thus, strategy of Dnowing Eour #ustomer
-DE# is important. >o the banks are re(uired to adopt innovative
strategies to meet customers needs and re(uirements in terms of
services+products etc.
o The dependency on technology has brought IT departments additional
responsibilities and challenges in managing, maintaining and
optimi=ing the performance of retail banking networks. It is e(ually
important that banks should maintain security to the advance level to
keep the faith of the customer.
o The efficiency of operations would provide the competitive edge for the
success in retail banking in coming years.
o The customer retention is of paramount important for the profitability if
retail banking business, so banks need to retain their customer in order
to increase the market share.
o Fne of the crucial impediments for the growth of this sector is the acute
shortage of manpower talent of this specific nature, a modern banking
professional, for a modern banking sector.
If all these challenges are faced by the banks with utmost care and
deliberation, the retail banking is expected to play a very important role in
coming years, as in case of other nations.
STRATEGIES FOR INCREASING RETAIL
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BANKING BUSINESS
o Constant product innoation to !atc" t"# r#$uir#!#nts o% t"# custo!#r
s#&!#ntsThe customer database available with the banks is the best source of their
demographic and financial information and can be used by the banks for
targeting certain customer segments for new or modified product. The banks
should come out with new products in the area of securities, mutual funds and
insurance.
o 'ua(it) s#ric# and $uic*n#ss in d#(i#r)
7s most of the banks are offering retail products of similar nature, thecustomers can easily switchover to the one, which offers better service at
comparatively lower costs. The (uality of service that banks offer and the
experience that clients have, matter the most. Hence, to retain the
customers, banks have to come out with competitive products satisfying
the desires of the customers at the click of a button.
o Introduction o% n#+ d#(i#r) c"ann#(s
Retail customers like to interface with their bank through multiple channels.Therefore, banks should try to give high (uality service across all service
channels like branches, Internet, 7T0s, etc.
o Tappin& o% un#,p(oit#d pot#ntia( and incr#asin& t"# o(u!# o% -usin#ss
This will compensate for the thin margins. The Indian retail banking market
still remains largely untapped giving a scope for growth to the banks and
financial institutions. @ith changing psyche of Indian consumers, who are
now comfortable with the idea of availing loans for their personal needs,
banks have tremendous potential lying in this segment. 0arketing
departments of the banks be geared up and special training be imparted
to them so that banks are successful in grabbing more and more of retail
business in the market.
o In%rastructur# outsourcin&
This will help in lowering the cost of service channels combined with
(uality and (uickness.
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o D#tai( !ar*#t r#s#arc"
Banks may go for detail market research, which will help them in knowing
what their competitors are offering to their clients. This will enable them to
have an edge over their competitors and increase their share in retail
banking pie by offering better products and services.
o Cross.s#((in& o% products
&>Bs have an added advantage of having a wide network of branches,
which gives them an opportunity to sell third%party products through these
branches.
o Busin#ss proc#ss outsourcin&Futsourcing of re(uirements would not only save cost and time but would
help the banks in concentrating on the core business area. Banks can
devote more time for marketing, customer service and brand building. *or
example, 0anagement of 7T0s can be outsourced. This will save the
banks from dealing with the intricacies of technology.
o Ti#.up arran&#!#nts
&>Bs with regional concentration can reap the benefit of reaching
customers across the country by entering into strategic alliance with other
such banks with intensive presence in other regions. In the present regime
of falling interest and stiff competition, banks are aware that it is finally the
retail banking which will enable them to hold the head above water.
Hence, banks should make all out efforts to boost the retail banking by
recogni=ing the needs of the customers. It is essential that banks would
be imaginative in predicting the customersG expectations in the ever%
changing tastes and environments. It is the innovative and competitive
products coupled with high (uality care for clients will only hold the key to
success in this area. In short, bankers have to run very fast even to stay
where they are now. It is the survival of the fastest now and not only
survival of the fittest.
SPECIAL FEATURES OF RETAIL CREDIT
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One of the prominent features of Retail Banking products is that it is a
volume driven business. *urther, Retail #redit ensures that the business is
widely dispersed among a large customer base unlike in the case of corporate
lending, where the risk may be concentrated on a selected few plans. 7bility
of a bank to administer a large portfolio of retail credit products depends upon
such factors C
o Stron& cr#dit ass#ss!#nt capa-i(it)
Because of large volume good infrastructure is re(uired. If the credit
assessment itself is (ualitative, than the need for follow up in the future
reduces considerably.
o Sound docu!#ntation
7 latest system for credit documentation is necessary pre%re(uisite for healthy
growth of credit portfolio, as in the case of credit assessment, this will also
minimi=e the need to follow up at future point of time.
o Stron& poss#ssin& capa-i(it)
>ince large volumes of transactions are involved, today transactions,
maintenance of backups is re(uired
o R#&u(ar constant %o((o+. up
Ideally, follow up for loan repayments should be an ongoing process. It
should start from customer en(uiry and last till the loan is repaid fully.
o S*i((#d "u!an r#sourc#
This is one of the most important pre%re(uisite for the efficient management of
large and diverse retail credit portfolio. Fnly highly skilled and experienced
man power can withstand the river of administrating a diverse and complex
retail credit portfolio.
o T#c"no(o&ica( support
This is yet another vital re(uirement. Retail credit is highly technological
intensive in nature, because of large volumes of business, the need to provide
instantaneous service to the customer large, faster processing, maintaining
database, etc.
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E/ERGING ISSUES IN HANDLING RETAIL
BANKING
' KNO0ING CUSTO/ER
Dnow your #ustomer is a concept which is easier said than practiced.
Banks face several hurdles in achieving this. In order to that the
product lines are targeted at the right customers%present andprospective%it is imperative that an integrated view of customers is
available to the banks. The benefits flowing out of cross%selling and
up%selling will remain a far cry in the absence of this vital input. In this
regard the customer databases available with most of the public sector
banks, if not all, remain far from being enviable.@hat needs to be done is setting up of a robust data warehouse
where from meaningful data on customers, their preferences, there
spending patterns, etc. can be mined. #leansing of existing data is the
first step in this direction. &>Bs have a long way to go in this regard.
' TECHNOLOG1 ISSUES
Retail banking calls for huge investments in technology. @hether it is
setting up of a #ustomer Relationship 0anagement >ystem or
3stablishing Aoan &rocess 7utomation or providing anytime, anywhere
convenience to the vast number of customers or establishing
channel+product+customer profitability, technology plays a pivotal role.
7nd it is a long haul. The Issues involved include adoption of the right
technology at the right time and at the same time ensuring volumes
and margins to sustain the investments.It is pertinent to remember that #itibank, known for its
deployment of technology, took nearly a decade to make profits in
credit cards. It has also to be added in the same breath that without
ade(uate technology support, it would be well nigh possible to
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administer the growing retail portfolio without allowing its health to
deteriorate. *urther, the key to reduction in transaction costs
simultaneously with increase in ability to handle huge volumes of
business lies only in technology adoption.&>Bs are on their way to catch up with the technology much
re(uired for the success of retail banking efforts. Aack of connectivity,
stand alone models, concept of branch customer as against bank
customer, lack of convergence amongst available channels, absence of
customer profiling, lack of proper decision support systems, etc., are a
few deficiencies that are being overcome in a great way. However, the
initiatives in this regard should include creating flexible computing
architecture amenable to changes and having scalability, a futuristic
approach, networking across channels, development of a strong
#ustomer Information >ystems -#I> and adopting #ustomer
Relationship 0anagement -#R0 models for getting a 4:6 degree view
of the customer.
' ORGANI2ATIONAL ALIGN/ENT
It is of utmost importance that the culture and practices of an institution
support its stated goals. Having decided to take a plunge into retail
banking, banks need to have a well defined business strategy based
on the competitive of the bank and its potential. #reation of a proper
organi=ation structure and business operating models which would
facilitate easy work flow are the needs of the hour. The need for
building the organi=ational capacity needed to achieve the desired
results cannot be overstated.
This would mean a strong commitment at all levels, intensivetraining of the rank and file, putting in place a proper incentive scheme,
etc. 7s a part of organi=ational alignment, there is also the need for
setting up of an effective #orporate 0arketing ivision. 0ost of the
public sector banks have only publicity departments and not marketing
setup. 7 fully fledged marketing department or division would help in
evolving a brand strategy, address the issue of alienation from the
upwardly mobile, high net worth customer group and improve the recallvalue of the institution and its products by arresting the trend of getting
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receded from public memory. The much needed tie%ups with
manufacturers+distributors+builders will also facilitated smoothly. It is
time to break the myth &>Bs are not customer friendly. The attention is
to be diverted to vast databases of customers lying with the &>Bs till
unexploited for marketing.
' PRODUCT INNOVATION
&roduct innovation continues to be yet another ma/or challenge. 3ven
though bank after bank is coming out with new products, not all are
successful. @hat is of crucial importance is the need to understand the
difference between novelty and innovation &eter rucker in his path
breaking bookC !0anagement #hallenges for the 51st
#entury$ has in
fact sounded a word of cautionC !innovation that is not in tune with the
strategic realities will not work confusing novelty with innovation
-should be avoided, test of innovation is that it creates value novelty
creates only amusement$. The days of selling the products available in
the shelves are gone. Banks need to innovate products suiting the
needs and re(uirements of different types of customers. Revisiting the
features of the existing products to continue to keep them on demandshould not also be lost sight of.
' PRICING OF PRODUCT
The next challenge is to have appropriate policies in place. The
industry today is witnessing a price war, with each bank wanting to
have a larger slice of the cake that is the market, without much of a
scientific study into the cost of funds involved, margins, etc. The
strategy of each player in the market seems to beC under cutting othersand wooing the clients of others. 0ost of the banks that use rating
models for determining the health of the retail portfolio do not use them
for pricing the products. The much needed transparency in pricing is
also missing, with many hidden charges. There is a tendency, at least
on the part of few to camouflage the price. The situation cannot remain
his way for long. This will be one issue that will be gaining importance
in the near future.
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' PROCESS CHANGES
Business &rocess Re%engineering is yet another key re(uirement for
banks to handle the growing retail portfolio. >implified processes and
aligning them around delivery of customer service impinging on
reducing customer touch%points are of essence. 7 reali=ation has to
drawn that automating the inefficiencies will not help anyone and
continuing the old processes with new technology would only make the
organi=ation an old expensive one. @ork flow and document
management will be integral part of process changes. The
documentation issues have to remain simple both in terms of
documents to be submitted by the customer at the time of loan
application and those to be executed upon sanction.
' ISSUE CONCERNING HU/AN RESOURCES
@hile technology and product innovation are vital , the soft issues
concerning the human capital of the banks are more vital. The
corporate initiatives need to focus on bringing around a frontline
revolution. Though the changes envisaged are seen at the frontline,
the initiatives have to really come from the back end. The top
management of banks must be seen as practicing what preaches. The
initiatives should aim at improved delivery time and methods of
approach. There is an imperative need to create a perception that the
banks are market%oriented.This would mean a lot of proactive steps on the part of bank
management which would include empowering staff at various levels,
devising appropriate tools for performance measurement bringing
about a transformation ' cant do to can do mind%set change from
restrictive practices to total flexible work place, say. By having universal
tellers, bringing in managerial controlling work place, provision of
intensive training on products and processes, emphasi=ing, coaching
eti(uette, good manners and best behavioural models, formulating
ob/ective appraisals, bringing in transparency, putting in place good
and acceptable reward and punishment system, facilitating the
placement of young +youthful staff in front%line defining a new role for
front%line staff by pro/ecting them as sellers of products rather than
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clerks at work and changing the image of the banks from a transaction
provider to a solution provider.
' RURAL ORIENTATION
7s of now, action that is taking place on the retail front is by and large
confined two metros and cities. There is still a vast market available in
rural India, which remains to be trapped. 0ultinational #orporations,
as manufacturers and distributors, have already taken the lead in
showing the way by coming out with ex(uisite products, packaging and
promotions, keeping the rural customer in mind. @ashing powders and
shampoos in Re.1 sachet made available through an efficient network
and testimony to the determination of the 0<#s to penetrate the ruralmarket. In this scenario, banks cannot lack behind.
In particular &>Bs, which have a strong rural presence, need to
address the needs of rural customers in a big way. These and only
these will propel retail growth that is envisaged as a key strategy for
portfolio expansion by most of the banks.
SO/E CRITICAL ISSUES
o CUSTO/ER SERVICE
#ustomer service is perhaps the most important dimension of retail
banking. @hile most public sector banks offer the same range of
service with similar technology+expertise, the level of customer service
matters the most in bringing in more business. &erhaps more than the
efficiency of service, the approach and attitude towards customers will
make the difference.
*ront line staffs have to be educated in this regard. 7 scheme ofentrusting a group of important customers to the care of each
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employee+officer with a person to person knowledge and intimacy can
be implemented all sundry advices+notices such as r. +#r. advices.
TR maturity advices, etc. whether signed by employees or officers
should be identifiable by the name of those signing, and inviting
customers to contact them for further assistance in the matter.
7 customer centred organi=ation has to be built up, whose ultimate
goal is to JownJ a customer. *ocused merchandi=ing through effective
market segmentation is the need of the hour. 7 first step can be the
organi=ation of the various retail branches to enter for different market
segments like upmarket individuals, traders, common customers, etc..
*or the >IB ->mall Industry and Business sector banks, the focus
should be on identifying efficient units and allocations of loans lo these
units. These banks should try 0erchant Banking services en a small
scale.
@ith agricultural output growing at a fast rate and mechani=ation
setting in, banks should try to cater to the credit needs of the people
involved in this profession. 7 wide network is absolutely imperative for
this sector.
>eparate branches+divisions should be opened for traders and similar
government businesses. >pecial facilities for cash tendered in bulk and
immediate issue of drafts, by extending facilities like Jguarantee bondJ
system, will go a long way in mitigating problems faced by traders who
are the ma/or customers for drafts issue. &rovision for cash counting
machines in these branches will reduce the monotony of cashiers and
unnecessary delays, thus resulting in better productivity and ultimately
in improved customer service.
The personal segment is however the most important one. @ith the
urban segment moving away because of disintermediation and
competition from foreign banks, retail banks should focus en the
rural+semi%urban areas that hold the maximum potential. Innovative
schemes like Jpaper%goldJ schemes can be introduced. In the urban
areas, private banking to affluent customers can be introduced, through
which advisory and execution services could be provided for a fee.
*oreign currency denominated accounts can also be introduced for
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them.
<ationali=ed banks compare very poorly with the foreign banks when it
comes to the efficiency in services. In order to improve the speed of
service the bank should.
Improve the rapport between the controlling offices and the branches to
ensure that decisions arc communicated fast.
0ake sure that the officials as well as the staff are fully aware of the
rules so that processing is faster.
o TECHNOLOG1
In the current scenario, the importance of technology cannot be
understated for retail banks which entail large volumes, large (ueues
and paperwork. But most of the banks are burdened with a large staff
strength which cannot be done away with. Besides, in the rural and
semi%urban areas, customers will not be at home in an automated,
impersonal environment.
The ob/ective would be to ensure faster and easier customer service
and more usable information, instantly, economically and easily to all
those who need it %customers as well as employees. &ropermanagement information systems can also be implemented to aid in
superior decision making.
#ommunication technology is especially needed for money transfer
between the same city and also between cities. There are inordinate
delays in India because of geographical and other factors. 0odem
technology can make it possible to clear any check anywhere in India
within three days. Installation of *7K facilities at all the big branches
will facilitate speedy transfer of payment advices. #omputeri=ation will
be of great help in improving back%office operations. 7t present, :6? of
IndiaGs rural branches can have &#s. These can be used for (uick
retrieval and report generation. This will also drastically reduce the time
bank staffs spend in filling and filing returns. Housekeeping operations
can also be speeded up.
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o PRICE BUNDLING
&rice bundling is a selling arrangement where several different
products are explicitly marketed together to a price that is dependent
on the offer. 7s banks are multi%product firms this strategy is more
applicable to retail banking. &rice bundling offers several economic and
strategic benefits to a bank. It offers economies of, utili=ation of the
existing capacities and reaching wider population of customers. Bank
can get the benefits of information and transacting. In the process of
extending variety of services, banks are ac(uiring enormous amount of
customer information. If this information is systematically stored, banks
can efficiently utili=e this information in order to explore new segmentsand to cross%sell new services to these segments. #ross%selling
opportunities and larger customer base can also be the motive for
merger against usually stated advantage of cost savings. &rice
bundling can be used in order to lengthen the relationship with a
customer. It will reduce the need of resources to be put on ac(uiring
new customers and saves time of the bank. 7mong the strategic
benefits, price bundling may cause less aggressive competition it
differentiates its products compared to rivals in the same market where
the products are sold individually or in other kinds of bundles.
Retail banking offers many services and it gives an opportunity to the
bank to combine different services in different kinds of bundles. In
many cases demand for one service affects the demand for another
service, for example current or savings account and payment services
are highly related, and here price bundling is a better alternative than
individual selling. Banks have to analy=e the customer segment and
bundle products before applying the pricing strategies.
The first step in price bundling decision is to select the customer
segment. The bundle is targeted to choose a strategic ob/ective. If
there are two products -7 and B that are considered to be bundled
together, the comprehensive strategic ob/ectives for the different
customer segments areC
L #ross%selling to customers that only buy one of the products.
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L Retaining customers that already buy both of the products.
L 7c(uiring new customers when they buy neither product for the time
being.
o INNOVATION
The scope for innovation in financial services is unlimited. 7lthough
banks have introduced a variety of deposit and loan products, the basic
features of all these products are almost one and the same. 7mong the
delivery channels, 7T0s have emerged as ubi(uitous money centers.
7lmost all banks have established their 7T0s. India had only 966
7T0s, which increased to 4,:66. Fut of this MM1 7T0s have >wadhan
connectivity. It is pro/ected that the number of 7T0s will reach up to
48,666 by the end of. The (uestion arises is, are they cash cows The
answer is certainly no. *or most of the banks the overhead costs on
these 7T0s are far higher than the revenue generated by them. 7T0
operation costs are largely fixed in nature % the cost of the machine, its
maintenance, replenishment of currency, and the satellite -network
connection. There should be a minimum number of transactions to
cover these costs. Banks have to innovate wide range of services in
addition to cash withdrawals. 7T0s should allow customers to buy
postal and revenue stamps, payment of bills, event tickets, sports
tickets, etc. Banks can offer 7T0 screens for slide show advertising
also. However, the advantage of the 7T0 has always been speed and
convenience, probably on introduction of these new services customer
has to spend more time at a point. 7T0s can guide the customer also.
*or example, if a customerGs account balance has reached to bareminimum the 7T0 can give a helpful suggestion that Jwe notice your
balance is low, can we help with a loanJ 7T0s can be either within the
premises of a branch or at a remote place. Fn premises 7T0s are
highly immune to competition, but branches can reduce the staff, on
installation of 7T0. The scope for wider services through off%premises
7T0s is very high it provides great opportunity for fee revenue. The
cost of maintenance of off%premises 7T0s is higher in terms of
replenishment, cash couriers, armed security etc. In the ">,
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approximately 54 percent of 7T0s are offering sale of postage stamps.
It is the right time for banks to (uestion themselves whether 7T0 is a
service channel, sales channel, or branding opportunity.
The future of retail banking lies more in mobile banking. 0obile
telephone market is penetrating, and mobile phones are ideal to utili=e
Internet banking services without customer accesses to &#. By a tacit
acceptance India has around three million mobile phone users and this
number is expected to reach to eight million by 5664.
>mart card revolution will further change the face of retail banking.
>mart cards can store information carry out local processing on the
data stored and can perform complex calculations. 7t present, India
has around 4.9 million smart card users and it is estimated that by the
end of 5669 it will reach 19.N million.
GRO0TH DRIVERS OF RETAIL BANKING
The growth drivers of retail lending are analy=ed as underC
/ACRO.ECONO/IC FACTORS
o >hift in the pattern of )& from hitherto agriculture and manufacturing
sectors to services sector with increase per capita income especially that
of the younger generation. OIndiaGs industrial sector accounted for
about 51.M? of )&, where as the services sector accounted for
around 8:.1 of )& in 5665%64 as per revised estimates released by
#entral. >tatistical Frgani=ationP.
o The lower uptake in the non%retail sector has compelled bans to shift
their focus on retail assets % specially housing finance% for deployment
of funds for a longer period, which is considered as the safest within the
retail portfolio. Housing loans and other retail loans are comparatively
high yielding in terms of interest spread and safer, as risk is diversified
among a large number of individuals across the geographic
dimensions. The sector en/oys a privilege of lowest <&7s amongst all
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categories of banks.
o epressed stock and real estate markets as compared to those
prevailing in 1225%24 to 1228%2: thereby diverting deposits to the
banking sectors.
o #omparatively stable real estate prices during last 9+8 years have
laid to spurt in demand for housing loans.
o Inflation continued to be under control.
o Deenness shown by the consumer goods+ automobile manufacturers to
%push up finance schemes through market tie%up with banks with a
view to increasing their marketing share.
DE/OGRAPHIC 3 BEHAVIORAL FACTORS
o )rowing concept of nuclear families than the /oint families
necessitating need for housing units as well as other items of
consumer durables.
o Increased number of dual income families resulting in higher income
and savings.
o Increased demand for dwelling units due to gradual shift of
population from rural+semi%urban centre to urban+metro centre for
employment.
o >hift in the attitude of the Indian household from Jsave and buyG
theory to a Qbuy and repayG principle.
o Increased middle%income segment and their income levels.
o 3mergence of new sectors such as Information Technology, media,
etc. In the economy that resulted in higher income opportunities and
ma/or impact on change in urban consumption pattern.
o 7wareness and sophistication in urban and semi%urban households for
urban convenience. >ocial security and status have also contributed
to higher demand for housing units, cars, etc.
FAVORABLE R OLE OF RBI
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o Inclusion of housing loans within the priority sector. irect finance up to
Rs.16 %lakhs in case of rural and semi%urban areas now form part of the
priority sector advances. This promoted banks to go for housing loans in
a big way as it helped them to attain their targets of priority sector
lending.
o Reduction in risk weight age bankGs extending loans for ac(uisition
of residential house properties to 86 per cent from 166 per cent.
Reduction in #apital 7de(uacy Ratio re(uirement has effectively
doubled the credit disbursement capacity of banks.
o Banks have elongated repayment periods of retail loans years to 86+56
years besides (uoting fixed+ variable rate of interests based on their asset liability management structure and study of behavioral pattern of
demand and time deposits.
o eregulation of interest rate with option to (uote fixed+ variable interest
rate.
o #ontinuous reduction in bank rate, which resulted in reduction in
lending rates as well.
o >outh ward movement in #RR and >AR ratios increasing lending
capacity of banks.
CATAL1ST.ROLE OF GOVERN/ENT
o Tax exemptions for payment of interest on capital borrowed for
purchase+ construction of house property and principle
repayment. This made housing finance affordable and within thereach of common man. OIt is important to note that the housing
sector has been recipient of a large number of fiscal incentives in
the last :Qh budgetsP.
o These exemptions also changed the profile of the retail segment
from hitherto cash transactions to book transactions.
o The )overnment could not ignore the importance of housing sector
in overall development of the economy due to the following factorsC
• Housing construction activities can generate opportunities for
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employment. In the present context of /obless )& growth, this
issue assumes important as the housing construction
provides massive /ob opportunities for both unskilled and skilled
man power.
• 0ass construction of houses will result in the benefits of the
nation by the way of healthy standard of leaving, motivation to
save more and thereby providing sustainable economic
recovery.
• This would also lead to growth in related industries as well.
INITIATIVES ON THE PART OF BANKS
o The growth in retail banking has been facilitated by growth in
banking technology and automation of banking processes to enable
extension of reach and rationali=ation of costs. 7T0s have emerged as
an alternative banking channels which facili tate low%cost
transactions vis%%vis traditional branches + method of lending. It also
has the advantage of reducing the branch traffic and enables banks
with small networks to offset the traditional disadvantages by
increasing their reach and spread.
o The interest rates on retail loans have declined from a high of 1:%
1M?in 1228%2: to presently in the band of N.8%2?. 7mple li(uidity in the
banking system and falling global interest rates have also compelled
the domestic banks to reduce interest rates of retail lending.
o Banks could afford to (uote lower rate of interest, even below &AR
as low cost Osaving bankP and no cost Ocurrent accountP depositscontribute more than 1+4rd of their funds OdepositsP.The declining cost
of incremental deposits has enabled the Banks to reduce their interest
rates on housing loans as well as other retail segments loans.
o 3asy and affordable access to retails loans through a wide range of
options + flexibility. Banks even finance cost of registration, stamp duty,
society charges and other associated expenditures such as furniture
and fixtures in case of housing loans and cost of registration andinsurance, etc. in case of auto loans.
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o Fffering retail loans for short term, 4 years and long term ranging
term ranging from 18+56 years as compared to their earlier 8%N years
only.
o 0aking financing attractive by offering free + concessional + value
added services like issue of credit card, insurance, etc.
o #ontinuous waiver of processing fees + administration fees,
prepayment charges, etc. by the Banks. 7s of now, the cost of
retail lending is restricted to the interest costs.
BANKS IN INDIAIn India the banks are being segregated in different groups. 3ach group
has their own benefits and limitations in operating in India. 3ach has their
own dedicated target market. *ew of them only work in rural sector while
others in both rural as well as urban. 0any even are only catering in cities.
>ome are of Indian origin and some are foreign players.
Fne more section has been taken note of is the upcoming foreign banks in
India. The RBI has shown certain interest to involve more of foreign banks
than the existing one recently. This step has paved a way for few more
foreign banks to start business in India.This &ublic >ector Bank India has implemented 19 point action plan
for strengthening of credit delivery to women and has designated 8
branches as speciali=ed branches for women entrepreneurs.
T"# %o((o+in& ar# t"# (ist o% Pu-(ic S#ctor Ban*s in India 7llahabad Bank
7adhra BankBank of BarodaBank of IndiaBank of 0aharashtra#anara Bank
#entral Bank of India#orporation Bank
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ena Bank
Indian Fverseas Bank
Friental Bank of #ommerce&un/ab S >ind Bank
&un/ab <ational Bank>yndicate Bank
"#F Bank
"nion Bank of India"nited Bank of Indiai/aya Bank
List o% Stat# Ban* o% India and its su-sidiar)4 a Pu-(ic S#ctor Ban*sStat# Ban* o% India
>tate Bank of Bikaner S Uaipur
>tate Bank of Hyderabad>tate Bank of Indore>tate Bank of 0ysore>tate Bank of >aurastra
>tate Bank of Travancore
Banks are the most significant players in the Indian financial market. %
They are the biggest purveyors of credit, and they also attract most of the
savings from the population. ominated by public sector, the banking
industry has so far acted as an efficient partner in the growth and the
development of the country. riven by the socialist ideologies and the welfare
state concept, public sector banks have long been the supporters of
agriculture and other priority sectors. GThey act as crucial channels of the
government in its efforts to ensure e(uitable economic development.
The banking sector in India has undergone remarkable changes sincethe economic reforms were initiated in 1221%25. The period has been marketed
by a slew of reforms in the sector, which provided the much needed impetus
for the growth of the sector as a whole. Fne of the remarkable reforms found
crucial to study is emphasi=es of public sector banks on retail banking.
RETAIL BOO/
K eeping pace with the average M.8 per cent growth of the Indian
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economy over the past few years, the retail banking sector in India has also
witnessed phenomenal growth. It has faced up to the need of the hour and
introduced anytime, anywhere banking, for its customers through 7T0s,
mobile and internet banking. It has also offered services like %07T, plastic
money -credit and debit cards, online transfers, etc. This has not only helped
in reducing operational costs but facilitated greater conveniences to its
customers.
o Hi&".T#c" Ban*in&
7T0s % @ith growing technological innovations, banks have
significantly expanded their 7T0 network over the past three years.
7ccording to the RBI data as of end%Uune 566M, the number of 7T0s inthe country had climbed to 4:,419 compared to 5N,6MM and 56,5:N as
at end%0arch 566N and 566:, respectively.
o Loan dis-urs#!#nt
Technology has facilitated the growth in retail loan disbursements,
making the whole process simpler and faster. The sector has delivered
a growth of around 46 per cent per year over the past 9%8 years. 7s per
the RBI data, although the retail portfolio of banks saw a slowdown to
52.2 per cent during 566:%6N from 96.2 per cent in 5668%6:, the growth
was faster than the overall credit portfolio of the banking sector -5M.8
per cent.
o P(astic /on#)
#redit cards have also played an important role in promoting retail
banking. The use of credit cards has been growing significantly over
the last few years. The number of credit cards outstanding at the end%
Uune 566M stood at 5N.65 million as against 59.42 million in Uune 566N,
with usage increasing by 16.N4 per cent during this period.
o Cor# Ban*in& So(utions 5CBS6
The concept of #B>, which allows a customer to fulfil a wide range of
banking operation online, has come alive during the past four years.The number of bank branches providing #B> rose rapidly to 99 per
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cent at end% 0arch 566N from 5M.2 per cent at end 0arch 566:.
3lectronic fund transfer facilities and mobile banking are expected to
provide a further fillip to the retail banking in the coming years.
o Futur# Out(oo*
Indian retail banking, according to a report, is likely to grow at a #7)R
of 5M per cent till 5616 to Rs 2N,66 billion. >o, although the revolution in
retail banking has changed the face of the Indian banking industry as a
whole, it has still miles to go.
The reasons for this shift to retail, particularly the housing finance segment,
are many. The important among these include;
The poor credit off take to the corporate, commercial and other business
sector because of industrial slowdown.
Risky nature of lending to corporate, given in industry recession and
uncertainty prevalent in the economy.
High disintermediation pressure, leading many highly rated corporates to
tap the domestic and+or overseas markets directly for finance, rather than
approaching the banks.
Relatively safe nature of some of the retail credit finance with lesser
incidence of loan turning bad.
Rising disposable income, changing lifestyles+aspirations and willingness
to spend for more luxuries of the higher middle class.
Better availability of loans, because of the consultancy lowering interest
rates, as a result of the low interest regime followed by the regulating
authorities, the housing loans interest rates hailed to almost N.8 ' M? in
last 8 years.
Increased government incentives in form of tax rebates etc. in the case of
certain loans like housing loans.
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Banks are aware with abundant reserve re(uirement by RBI, they are
searching revenues for packing the surplus funds.
FUTURE OF RETAIL BANKING
Retail banking has significant past and glorious future over the years.
Retail banking has proved as an effective tool not only to improve the bottom
lines of the banks concerned but also to significantly contribute to the
development of the individual consumers availing the services or products in
particular and to the overall development of the society in general with the
needs of the consumers ever multiplying. There is definitely a vast scope for
the furtherance of the Retail Banking business.
The society is made of the individuals and the environment surrounding him.
7s development takes place in the society, the needs of the people grow
faster than ever. The wealth creation and its professional management are
yet another distinct advantage the society or nation can derive from Retail
Banking. The depth of the untapped resources in the retail segment is not yet
measured. These resources could be channeli=ed for nation building.Fn the whole, looking ahead, the prospects of retail banking are brighter than
ever and the bankers have to give continued thrust to this area of banking.Thus, with the consumers ever multiplying needs there is definitely a vast
scope for the furtherance of the retail banking business. Fperationally, there is
a possibility that technology go beyond merely reducing the cost S improving
the (uality of current products. It may prove possible, even profitable, to
combine functions in new ways.
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CASE STUD1ICICI BANK
PERSONAL BANKING
PRODUCT AT GLANCE
LOANS
Fnline AoansHome AoansAoan 7gainst &roperty&ersonal Aoans#ar loanTwo @heeler #ommercial ehicleAoans against >ecuritiesAoan 7gainst )old*arm 3(uipment#onstruction 3(uipment
Fffice 3(uipment0edical 3(uipment&re%approved AoansRetail 7ssets Branches*lexi#ash*armer *inanceRural Housing *inanceRetail @arehouse Receipt Based *inanceBusiness Instalment Aoans 7(uaculture *inanceHorticulture *inance>elf Help )roup *inanceChannels Terminated
ACCOUNTS 7 DEPOSITS
>avings 7ccount>pecial >avings 7ccountAife &lus >enior #iti=ens >avings 7ccount*ixed eposits>ecurity eposits
Recurring epositsTax%>aver *ixed eposit
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Eoung >tars >avings 7ccount#hild 3ducation &lanBankV#ampus >alary 7ccount 7dvantage @oman >avings 7ccount
33*# 7ccountResident *oreign #urrency -omestic 7ccount &rivilege Banking<o *rills 7ccount Rural >avings 7ccount &eopleGs >avings 7ccount >elf Help )roup 7ccounts Futward Remittance *reedom >avings 7ccount#ommon >ervice #harges
CARDS#onsumer #ards#redit #ardTravel #ardebit #ards#ommercial #ards#orporate #ards&repaid #ards&urchase #ardistribution #ardsBusiness #ard
INVEST/ENT 8Tax >avingPI#I#I Bank Bonds OI#I#I Bank Tax >aving BondsP)FI Bonds O)overnment of India BondsP0utual *unds OInvestment in 0utual *undsPI&F OInitial &ublic Fffers by #orporatesPI#I#I Bank &ure )old OInvestment in J&ure )oldJP*orex >ervices O*oreign 3xchange >ervicesP>enior #iti=ens >avings >cheme, 5669
INSURANCE
Health InsuranceFverseas Travel Insurance>tudent 0edical Insurance0otor InsuranceHome InsuranceAife Insurance
DE/AT
Fverview 7ccount Fpening
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I>I< Aookup>ettlement #alendar #hargesigitally >igned >tatement0obile Banking
>ervice Re(uest *orms 7ccess 7ccount Fnline0embership )uideemat Branches*7Ws and Basic #oncepts)uidance &rocedure for Transmission of >hares
ONLINE SERVICES
Branchfree Bankingsms<cashBill &ayment -<ew Billers 7dded
Receive *unds*unds Transfer #onvert to 30I>mart 0oney Frder &repaid 0obile RechargeTicket BookingFnline Tax #alculation 7ccount to #ard Transfer 0obile Banking *unds Transfer0obile Banking Oi0obileP>hopping>hare Trading>pecial &romotions S offersFnline Aoans and #redit #ardsemand raft Fnline0umbai >uburban >eason TicketInstant oice Response -IR Banking 7T0 Banking
ICICI BANK PERSONAL LOANS
I#I#I Bank &ersonal Aoan provides with instant moneyfor a wide range of your personal needs like, renovation of home, marriage in
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the family, a holiday with family, childGs education, 0edical expenses or any
other emergencies.
K#) B#n#%its o% ICICI Ban* P#rsona( Loan
• Aoan up to 18 lacs• <o security+guarantor re(uired
• *aster &rocessing
• 0inimum ocumentation
• 7ttractive Interest Rates
• 15%:6 0onths repayment options
• Aoans available for both salaried S self employed individuals
• Aoan on &honeJ facility
ELIGIBILIT1
Crit#ria Sa(ari#d S#(% . E!p(o)#d
7ge 58 yrs. % 8M yrs. 58 yrs. % :8 yrs.
<et >alary <et annual income % Rs.
2:,666 p.a
<et &rofit after tax % Rs.
186666 p.a
3ligibility 3mployees of &ublic Atd.
companies, &rivate Atd.
companies, )overnment
companies or 0<#s.
octors, 0B7Gs, 7rchitects,
#7Gs, 3ngineers, Traders S
0anufacturers
Eears in
current /ob +
profession
1 Eear 4 Eears
Eears in
current
residence
1 Eear 1 Eear
DOCU/ENTATION
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Docu!#nts 5Pr# Sanction6 Sa(ari#d S#(% E!p(o)#d
Aatest 4 months Bank >tatement -where
salary+income is creditedEes Ees
4 Aatest salary slipsEes
Aast 5 years ITR with computation of
income + #ertified *inancialsEes
&roof of Turnover -Aatest >ales + >ervice
tax returns Ees
&roof of #ontinuity current /ob -*orm 1: +
#ompany appointment letter Ees
&roof of #ontinuity current profession -IT
Returns + #ertificate of business
continuity issued by the bank
Ees
&roof of Identity -any one &assport +
riving Aicense + oters I + &7< card +
&hoto #redit #ard + 3mployee I card
Ees Ees
&roof of Residence -any one Ration
#ard + "tility bill + AI# &olicy Receipt Ees Ees
&roof of Fffice -any one Aease deed +
"tility bill + 0unicipal Tax receipt + title
deed
Ees
&roof of Wualification Highest egree
-for &rofessionals + )ovt employees Ees Ees
CHANGING /ODE OF REPA1/ENT
If you wish to change the mode of repayment of the I#I#I personal loan, this
needs to be done with the permission of I#I#I bank. >topping payments on
post%dated che(ues or otherwise cancelling or revoking mandates would be
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• *ree Internet Banking
• *ree &hone Banking -in select citiesX
• *ree I#I#I Bank <cash ebit #ard
• *ree 7ccess to any BankGs 7T0
• Fther Benefits
Fr## Int#rn#t Ban*in&
• 3n(uire about balance
• ownload detailed statement of accounts
• iew details of all accounts maintained with I#I#I Bank
• Transfer funds between your account and any other I#I#I Bank
account
• &ay your utility bills%mobile, electricity and telephone bills
• Re(uest a che(ue book and demand drafts
• Re(uest to stop payment of che(ue
• Report your lost ebit cards
• Fpen *ixed and Recurring deposits online
• 7ccess information on personal finance, computing S the Internet, e%
commerce, lifestyle etc.
• Aiaise with your 7ccount 0anager
• Invest in mutual funds
Fr## P"on# Ban*in&
• 3n(uire about balance
• Re(uest a tele%draft
• Fbtain mini%statements
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• Re(uest a che(ue book
• Re(uest to stop payment of che(ue
• Intimate lost ebit card
• Transfer funds between I#I#I Bank accounts
Ot"#r B#n#%its
• Fwn a che(uebook personalised with your name.
• Receive an annual statement of account
ELIGIBILIT1
• Eou must be a student.
• Eou have to be above 1M years of age.
DOCU/ENTATION
Docu!#ntation &uid#(in#s %or stud#nt accounts
• erified True #opy of college identification documents with photograph
of the applicant.
->uch college shall be one of the colleges recogni=ed by an Indian
"niversity + Technical Body or a deemed "niversity.
/andator) in%or!ation to -# proid#d in account op#nin& %or! inc(ud#s
• Basic details like name, current address, permanent address, phone
numbers, date of birth, nationality, residential status should be captured
in 7ccount Fpening *orm.
• #ollege and course particulars including end date for the course.
• etails of parents + guardian % name, address, phone numbers,
nationality, residential status.
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• &hotograph and signature
• 3xpected international transfer of funds in the case of foreign students.
INTEREST RATES : 4.86?
SERVICE CHARGES AND FEES
Bank@Campus
Available to All cities
Eligibility
>tudents pursuing pre%approved
courses only and b+w 1M%5N yrs of
age
Minimm ave!age "a!te!ly
balanceRs 866
C#a!ges $o! non maintenance o$
minimm "a!te!ly ave!age
balance
Rs.586 per (uarter
Cas# t!ansactions at base b!anc#
%b!anc#es in same city&
<o Branch 7ccess for cash
transactions
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,DFC BANKPERSONAL BANKING
PRODUCT AT GLANCE
ACCOUNTS 7 DEPOSITS
+avings Acconts
Regular >avings 7ccount
>avings &lus 7ccount
>avings0ax 7ccount
<o *rills 7ccount
Institutional >avings 7ccount
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+ala!y Acconts
&ayroll#lassicRegular &remiumefenceReimbursement #urrent 7ccount
DidGs 7dvantage 7ccount&ension >aving Bank 7ccount*amily >avings )roupDisan <o *rills >avingsDisan #lub >avings
C!!ent Acconts&lus #urrent 7ccountTrade #urrent 7ccount&remium #urrent 7ccountRegular #urrent 7ccountR*# % omestic 7ccount*lexi #urrent 7ccount 7pex #urrent 7ccount0ax #urrent 7ccount
Fi1e( De/ositsRegular *ixed eposit
8 Eear Tax >aving *ixed eposit>uper >aver *acility>weep%in *acilityDemat Accont+a$e De/osit 2oc'e!s
LOANS
&ersonal AoansHome AoansTwo @heeler Aoans<ew #ar Aoans
"sed #ar Aoans3xpress Aoans &lus)old Aoan3ducational AoanAoan 7gainst >ecuritiesAoan 7gainst &ropertyAoans 7gainst Rental ReceivablesHealth #are *inanceTractor Aoans#ommercial ehicle *inance@orking #apital *inance
#onstruction 3(uipment *inance@arehouse Receipt Aoans
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CARDS
C!e(it Ca!(s
>ilver #redit #ard
alue &lus #redit #ard
Health &lus #redit #ard
)old #redit #ard
Titanium #redit #ard
@omanGs )old #redit #ard
&latinum &lus #redit #ard
isa >ignature #redit #ard
@orld 0aster#ard #redit #ard
#orporate #redit #ard
Business #redit #ard
Debit Ca!(s
3asy>hop International ebit #ard
3asy>hop )old ebit #ard
3asy>hop International Business ebit #ard
3asy>hop @omanGs 7dvantage ebit #ard
3asy>hop <RF ebit #ard
Disan #ard
!e/ai( Ca!(s
*orex&lus #ard
)ift&lus #ard
*ood&lus #ard
0oney&lus #ard
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INVEST/ENTS 7 INSURANCE
0utual *unds
)eneral S Health Insurance
Bonds
Dnowledge #entre
3(uities S erivatives
0udra )old Bar
PA1/ENT SERVICES
<et>afe
0erchant >ervices
&repaid Refill
Bill&ay
isa Bill&ay
Insta&ay
irect&ay
isa 0oney Transfer
e%0onies 3lectronic *unds Transfer
3xcise S >ervice Tax &ayment
Fnline &ayment of irect Tax
Religious Ffferings
onate to #harity
ACCESS 1OUR BANK
<etBanking
Fneiew
Insta7lerts
0obileBanking
7T0
&honeBanking
3mail >tatements
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Branch <etwork
HDFC BANK PERSONAL LOANS
FEATURES 7 BENEFITS
Bo!!o) / to 3s 45 66666 $o! any /!/ose depending on your
re(uirements.
*lexible Repayment options, ranging from 15 to :6 months.
Repay with easy 30Is.
Fne of the lowest interest rates.
,assle $!ee loans % <o guarantor+security+collateral re(uired.
>peedy loan approval.
#onvenience of service at your doorstep.
Cstome! /!ivileges
• If you are an H*# Bank accont #ol(e! , we have special
rates for you.
• If you are an existing Ato 2oan cstome! with a clear
repayment of 15 months or more from any of our approved
financiers or us, you can get a #assle $!ee /e!sonal loan
%)it#ot income (ocmentation&.
• If you are an existing H*# Bank e!sonal 2oan cstome!
with a clear repayment of 15 months or more, we can To/07/
yo! /e!sonal loan.
C!e(it +#iel(
In case of death or total permanent disability of the loanee, the
loanee+nominee can avail of the &ayment &rotection Insurance -#redit
>hield which insures the principle outstanding on the loan upto a
maximum of the loan amount. &rinciple outstanding is defined as the
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amount of loan outstanding -not including any arrears in payment or
interest thereon at the ate of Aoss, having accounted for payments
made and interest accruing as determined in the &olicy. Hence, the
amount covered does not include any principal added because of non %
payment of 30I and also will not include interest+ accrued charges.
e!sonal Acci(ent Cove!
In order to ensure that your family is taken care of we also offer a
&ersonal 7ccident cover of Rs.5,66,666 at a nominal premium.
ELIGIBILIT1 7 DOCU/ENTATION
SALARIED INDIVIDUALS
+ala!ie( In(ivi(als include >alaried octors, #7s, employees of select
&ublic and &rivate limited companies, )overnment >ector employees
including public sector undertakings and central, state and local bodiesC
E(i&i-i(it) Crit#ria
0inimum age of 7pplicantC 51 years
0aximum age of 7pplicant at loan maturityC :6 years
0inimum employmentC 0inimum 5 years in employment and minimum
1 year in the current organi=ation
0inimum <et 0onthly IncomeC Rs. M,666 p.m -Rs. 16,666 in select
cities
Docu!#nts r#$uir#d
&roof of Identity -&assport #opy+ oters I card+ riving Aicence
7ddress &roof -Ration card Tel+3lect. Bill+ Rental agr. + &assport
copy+Trade licence +3st.+>ales Tax certificate
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Bank >tatements -latest 4 months bank statement + : months bank
passbook
Aatest salary slip or current dated salary certificate with latest *orm 1:
SELF E/PLO1ED 5PROFESSIONALS6
+el$ em/loye( %!o$essionals& include self % employed octors, #hartered
7ccountants, 3ngineers, 0B7 #onsultants, 7rchitects, and #ompany
>ecretaries.
E(i&i-i(it) Crit#ria
0inimum age of 7pplicantC 58 years
0aximum age of 7pplicant at loan maturityC :8 years
Eears in businessC 9 to N years depending on profession
0inimum 7nnual IncomeC
Rs. 166666 p.a.
Docu!#nts r#$uir#d
&roof of Identity -&assport #opy+ oters I card+ riving Aicence.
7ddress &roof -Ration card Tel+elect. Bill+ Rental agr. + &assport
copy+Trade licence +3st.+>ales Tax certificate.
Bank >tatements-latest : months bank statement +passbook
Aatest ITR along with computation of income, B+> S &SA a+c for the last
5 yrs. certified by a #7
Wualification proof of the highest professional degree
SELF E/PLO1ED 5INDIVIDUALS6
+el$ Em/loye( %In(ivi(als& include self%employed % >ole proprietors,
&artners S irectors in the Business of 0anufacturing, Trading or >ervices.
E(i&i-i(it) Crit#ria
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0inimum age of 7pplicantC 51 years
0aximum age of 7pplicant at loan maturityC :8 years
Eears in businessC 8 yrs continuous business experience
0inimum 7nnual IncomeC Rs. 1, 66, 666 p.a.
7vailable in select cities
Docu!#nts R#$uir#d
&roof of Identity -&assport #opy+ oters I card+ riving Aicence
7ddress &roof -Ration card Tel+elect. Bill+ Rental agr. + &assportcopy+Trade licence +3st.+>ales Tax certificate
Bank >tatements-latest : months bank statement +passbook
Aatest ITR along with computation of income, B+> S &SA a+c for the last
5 yrs. certified by a #7
&roof of continuation -Trade licence +3stablishment +>ales Tax
certificate
Fther 0andatory ocuments ->ole &rop. ecl. Fr #ert. #opy of
&artnership eed, #ert. #opy of 0F7, 7F7 S Board resolution.
SELF E/PLO1ED 5PVT COS AND PARTNERSHIP FIR/S6
+el$ Em/loye( %vt. Cos an( a!tne!s#i/ Fi!ms& include &rivate
#ompanies and &artnership firms in the Business of 0anufacturing, Trading
or >ervices
E(i&i-i(it) Crit#ria
Eears in businessC 0inimum of 4 years in current business and 8 years
total business experience
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Business must be profit making for the last 5 years
0inimum 7nnual IncomeC Rs 166666 p.a.
7vailable in select cities
Docu!#nts r#$uir#d
7ddress &roof -Ration card Tel+elect. Bill+ Rental agr. + &assport
copy+Trade licence +3st.+>ales Tax certificate
Bank >tatements-latest : months bank statement +passbook
Aatest ITR along with computation of income, B+> S &SA a+c for the last
5 yrs. certified by a #7
&roof of continuation -Trade licence +3stablishment +>ales Tax
certificate
Fther 0andatory ocuments ->ole &rop. ecl. Fr #ert. #opy of
&artnership eed, #ertified true copy of 0emorandum S 7rticles of
7ssociation -certified by irector S Board resolution -Friginal.
BALANCE TRANSFER
If you have a personal loan from any other bank with a clean repayment
record, simply transfer the loan to us and save substantially.
B#n#%its
0inimal processing fees.
<o income documentation.
*ast &rocessing.
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Repayment through >tanding Instruction facility.
FEES 7 CHARGES FOR PERSONAL LOAN
D#scription o% C"ar&#s P#rsona( Loan
Aoan &rocessing #harges "pto a maximum 5? of the loan
amount
&re%payment charges "pto 9? of the &rincipal Futstanding<o ue #ertificate + <o Fb/ection
#ertificate -<F#<il
#harges for late payment of 30I V 59 ? p.a on amount outstanding
from date of default
#harges for changing from fixed to
floating rate of interest<ot applicable
#harges for changing from fixed to
floating rate of interest
<ot applicable
#harges for changing from floating to
fixed rate of interest<ot applicable
>tamp uty S other statutory charges 7s per applicable laws of the state
#redit assessment charges <ot applicable
<on standard repayment charges <ot applicable
#he(ue swapping charges "pto Rs 866+% per event
Aoan cancellation + re%booking
charges + Re%scheduling"pto Rs 1666+%
Bounce #he(ue #harges "pto Rs 986+% per Bouncing
>tatement #harges -per statement+ "pto Rs 866+%
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Repayment >chedule
Aegal + incidental charges 7t actual
; <=1EAR TA> SAVING FI>ED DEPOSIT
FEATURES 7 BENEFITS
0inimum 7mountC Rs.166+%
0ultiples of Rs.166+%
0aximum 7mountC Rs. 1 lac -in a *E
Tenure % 8 years -lock in period
Rate of Interest %2.86? p.a, >enior #iti=en rate % 16.66?
<o &artial+&remature withdrawal allowed
>weep%in not allowed
<o F or pledge allowed
In the case of /oint holder deposit, the deduction from income under
section M6# of the 7ct shall be available only to the first holder of the
deposit.
ELIGIBILIT1
The following can apply for a 8 Eear Tax >aving *ixed eposit
Resident Individuals
Hindu "ndivided *amilies
7n initial deposit of Rs. 166+% is re(uired to open a Tax >aving *ixed eposit.
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INTEREST RATES
@hen you open a *ixed deposit with H*# Bank
Eour interest is calculated on a (uarterly basis
Interest for re%investment is calculated every (uarter, and the &rincipal
is increased to include interest earned during the previous (uarter.
Tax at source is deducted as per the Income Tax regulations prevalent fromtime to time.
RATE of INTEREST
<ormal rateC 2.86? p.a.
>enior #iti=en rateC 16.66?
TA> DEDUCTIONS
Ta, D#ductions For R#.In#st!#nt Fi,#d D#posits
The following will be applicable for a 8 Eear Tax >aving *ixed eposit
T> will be deducted when interest payable or reinvested per
customer, per branch, exceeds Rs 16,666 in a financial year.
7 consolidated 7nnual T> #ertificate will be mailed to you after the
end of the financial year, including details of all T> deductions during
the year.
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CONCLUSIONS
Retail banking is the fastest growing sector of the banking industry with
the key success by attending directly the needs of the end customers is
having glorious future in coming years.
Retail banking sector as a whole is facing a lot of competition ever
since financial sector reforms were started in the country. @alk%in business is
a thing of past and banks are now on their toes to capture business. Banks
therefore, are now competing for increasing their retail business.
There is a need for constant innovation in retail banking. This re(uires
product development and differentiation, micro%planning, marketing, prudent
pricing, customi=ation, technological upgradation, home + electronic + mobile
banking, effective risk management and asset liability management
techni(ues.
@hile retail banking offers phenomenal opportunities for growth, the
challenges are e(ually discouraging. How far the retail banking is able to lead
growth of banking industry in future would depend upon the capacity building
of banks to meet the challenges and make use of 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. *urthermore, in all these customer interest is of chief
importance. The banking sector in India is representing this and I do hope
they would continue to succeed in this traded path.