Retail Banking in India project

8/20/2019 Retail Banking in India project

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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 ">,



59

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



59

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



59

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



59

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.



59

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



59

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



59

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



59

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.



59

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.



59

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



59

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



59

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



59

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



59

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





59

• *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

http://www.icicibank.com/pfsuser/icicibank/depositproducts/bank@campus/benefits.htm#internet

http://www.icicibank.com/pfsuser/icicibank/depositproducts/bank@campus/benefits.htm#phone

http://www.icicibank.com/pfsuser/cards/debitcard/dbfeature.htm#ncash

http://www.icicibank.com/pfsuser/icicibank/depositproducts/bank@campus/benefits.htm#atm

http://www.icicibank.com/pfsuser/icicibank/depositproducts/bank@campus/benefits.htm#otherbenf

http://www.icicibank.com/pfsuser/icicibank/depositproducts/bank@campus/benefits.htm#phone

http://www.icicibank.com/pfsuser/cards/debitcard/dbfeature.htm#ncash

http://www.icicibank.com/pfsuser/icicibank/depositproducts/bank@campus/benefits.htm#atm

http://www.icicibank.com/pfsuser/icicibank/depositproducts/bank@campus/benefits.htm#otherbenf

http://www.icicibank.com/pfsuser/icicibank/depositproducts/bank@campus/benefits.htm#internet



59

• 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.



59

• &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





59

,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



59

+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



59

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



59

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



59

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



59

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



59

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.




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.




59



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




&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


Eears in businessC 0inimum of 4 years in current business and 8 years

total business experience



59

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




&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.



59

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+%



59

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.



59

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.





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.

Documents

Retail Banking in India project