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EXECUTIVE SUMMARY

Have you ever thought of applying for Priority Banking with your bank (also called as
Preferred banking)? A lot of banks offer something called as “Priority Banking Solutions”
to their customers who qualify the eligibility criteria. A priority banking customer is
treated in a more special way and is taken care with priority by bank.

The first question to understand is why do banks have a Priority banking model at all ?
The reason is very simple, to treat different level of customers differently. If you want to
harshly put it, then it’s just a way of keep a separate list of High Net-worth Individuals
and focus on them more and service them in a better manner, because one customer who
is eligible for priority banking will give 100 times more business/profit to bank compared
to a normal customer. A preferred banking customer will have a few eligibility criteria to
honor, which is generally linked to his bank amount balance

Facilities provided to Priority Banking Customer

A Priority banking customer has few advantages over normal customers and gets more
features. Some of the most common one’s are:

 Separate queue for in the bank so that you don’t wait

 No charges on NEFT and RTGS transactions through Net banking

 Free “At Par” cheque book payable at any Bank branch across the country, so you
do away with the need to ask for demand drafts

 Charges waiver for DD cancellation, Cheque return, Duplicate statement charges,


Demand Draft Charges, Discount in Locker Charges,

 Cheque pick-up facility

 No charges on balance inquiries and cash withdrawals if you transact on Other


Bank ATMs in India.

 Many other benefits

 Premium Credit Cards

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 However, all this is not so real and true
 While banks list down these facilities on their website, on the ground level – there
are many real life customers who say that at the end of the day, you never get
what is promised from these banks. There are a lot of things just on papers. Most
of the banks just use Preferred banking route to attract high net worth customers
and finally end up calling then for investments products. A relationship manager
keeps in touch with you (the target), he has all the information on how much
money you have and when money comes and goes out of your account.

INTRODUCTION TO BANKING
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1. HISTORY

Banking in India originated in the last decades of the 18th century. The first banks
were The General Bank of India which started in 1786, and the Bank of Hindustan,
both of which are now defunct. The oldest bank in existence in India is the State Bank
of India, which originated in the Bank of Calcutta in June 1806, which almost
immediately became the Bank of Bengal. This was one of the three presidency banks,
the other two being the Bank of Bombay and the Bank of Madras, all three of which
were established under charters from the British East India Company. For many years
the Presidency banks acted as quasi-central banks, as did their successors. The three
banks merged in 1925 to form the Imperial Bank of India, which, upon India’s
independence, became the State Bank of India.
Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848
as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established
in 1865 and still functioning today, is the oldest Joint Stock bank in India. It was not
the first though. That honor belongs to the Bank of Upper India, which was
established in 1863, and which survived until 1913, when it failed, with some of its
assets and liabilities being transferred to the Alliance Bank of Simla.

The Bank of Bengal, which later became the State Bank of India. The first entirely Indian
joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It
failed in 1982. The next bank incorporated was the Punjab National
Bank, established in Lahore in 1895, which has survived to the present and is now one of
the largest banks in India.
Around the turn of the 20th Century, the Indian economy was passing through a relative
period of stability. Around five decades had elapsed since the Indian Mutiny, and the
social, industrial and other infrastructure had improved. Indians had established small
banks, most of which served particular ethnic and religious communities.
The presidency banks dominated banking in India but there were also some exchange
banks and a number of Indian joint stock banks. All these banks operated in different
segments of the economy. The exchange banks, mostly owned by Europeans,
concentrated on financing foreign trade. Indian joint stock banks were generally under
capitalized and lacked the experience and maturity to compete with the presidency and
exchange banks. This segmentation let Lord Curzon to observe, “In respect of banking
it seems we are behind the times. We are like some old fashioned sailing ship,
divided by solid wooden bulkheads into separate and cumbersome compartments.”

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The period between 1906 and 1911, saw the establishment of banks inspired by the
Swadeshi movement. The Swadeshi movement inspired local businessmen and political
figures to found banks of and for the Indian community. A number of banks established
then have survived to the present such as Bank of India, Corporation Bank, Indian Bank,
Bank of Baroda, Canara Bank and Central Bank of India.

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2.BANKING AND BANKING SYSTEM

Banking is a business of accepting deposits and lending money. It is carried out by


financial intermediaries, which performs the functions of safeguarding deposits and
providing loans to the public.

In other words, Banking means accepting for the purpose of lending or investment of
deposits of money from public repayable on demand and can be withdrawn by cheque,
draft order and so on.

Banking Company: Any company, which transacts the business of banking

Banking System is a principal mechanism through which the money supply of the
country is created and controlled. The banking system enables us to understand
Commercial Banks, Secondary Banks, Central Banks, Merchant Bank or Accepting
Houses and Discount Houses but to exclude the Saving Banks and Investment and other
intermediaries.

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PRIORITY BANKING

INTRODUCTION

Priority banking is relatively new in the Indian context. In this form of banking,
the bank identifies its priority customers (often customers with deposits above 1
lakh-however this is different for each individual bank) and some special benefits
are provided to these first class customers by the bank.
Eg. They do not have to wait in the queue for transactions. They are assigned
client relationship managers to take care of all their banking needs. These
customers can use banks premises for holding meetings, can access the Internet
free of cost and several other benefits are also provided.
The basic purpose of this form of banking is to make the experience of banking
has free and less time consuming. This is not to be confused with wealth
management where the thrust is on providing first-class customers, customized
services and expert advice on various financial needs. This is generally carried out
by the wealth managers of the bank. However priority banking as part of its
service offerings may include wealth management.

May 3 2010
State Bank of India (SBI), India’s biggest, and Society General of France are in talks to
form a joint venture that will offer priority banking services to ultra high net worth
individuals in India. SBI will be the first public sector bank to start specialized services
for the very rich. Ultra high net worth individuals are those who have at least $1 million
in assets (about Rs 4.45 cores).

INDIAN HISTORY
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Since the launch of the priority banking product in august 2005,business dynamics
including the lifestyle of the target segment have changed. To ensure that the product is in
sync with the needs and expectations of the target audiences the existing priority banking
product has been revised and
the eligibility net has been widened to include customer important to other business lines
of the bank. Further, cost rationalization has been done to gain competitive advantage. All
these changes have now made the product more complex. The processes set at the initial
launch of the product required revision to ensure delivery of the product.

Deepen the relationship by cross selling as many of the bank’s product and
services to priority customers. This will result in higher loyalty and greater profitability
of this relationship. Provide best service to customer. Thus each priority relationship will
have a relationship manager take care of all service need. Through a process of referrals
from existing priority customer and through targeted programs on select customer
databases, acquire new priority customer into the program.

INTRODUCTION OF PRIORITY BANKING IN INDIA


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Priority Banking emerged in India with the advent of foreign banks. Foreign banks
usually have the habit of serving their prized/high value customers with priority service.
Seeing them woo their high value customers like this, the banks in India, especially the
private banks.

Similar services were started for their valued Customers. Slowly the government banks
started this service as well and nowadays almost all banks in India provide priority
banking services to their customers. The basic purpose of this form of banking is to make
the experience of banking hassle free and less time consuming .Priority banking service is
born out of the desire of customers today for a comfortable and personalized environment
to discuss an array of financial services, whether of a business or personal nature. There
are many banks coming up with these unique services, Priority banking is a name given
by banks to their private banking services. Priority banking is a service that goes beyond
investment advice and addresses all financial needs of a customer, ranging from
managing and growing his assets to handover of his wealth to future generations. It is the
banking service offered to wealthy clients a service. It is offered by some financial
institutions to high net worth individuals.

e.g. –Standard Chartered, HDFC, Axis bank, Citi bank, and HSBC also the nationalized
banks of India like state bank of India excel in providing mass banking services as well as
priority banking.

PRIORITY BANKING AS AN EXTENSION TO PRIVATE BANKING


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While traditionally, banking meant "borrowing and lending" in the latter part of the 20th
century, the word took on a different meaning altogether. Banks no longer restricted
themselves to traditional banking activities, but explored newer avenues to increase
business and capture new markets. Priority banking is one such service.

Priority banking is a big part of the consumer bank. It’s highly customer-centric approach
will lead to more holistic relationship with the customers, with better product
development and risk management for the bank.

Priority banking in India has so far been the domain of foreign banks and some private
banks. They offer ultra high net-worth individuals a bouquet of services, including
investments.

PRIORITY BANKING V.S RETAIL BANKING SERVICES

Retail banking aims to be the one stop shop for as many financial services as possible on
behalf of retail clients. Some retail bank has even made a much into investment services
such as wealth management brokerage accounts private banking add retirement banking.

Priority baking is much more personalized services even to an individual to invest


substantial sums.

The most noticeable differences between retail and priority services are that private
clients receive customer service on 1-basis via a relationship.

Priority banking, or the provision of banking services to high net worth individuals, has
recently become just as fashionable as investment banking was back in the eighties. It
seems that every provider wants to get into the private banking market, or has weighted
its strategy more towards private clients, because the margins here are still attractive and
assets under management continue to grow worldwide. This in turn means that high
salaries and bonuses are paid in this business to attract and retain human resources that
would otherwise be dispersed across other areas of banking or different industries
altogether. Until about a year ago, another attraction of private banking was that it was
less exposed to economic cycles than investment banking or the brokerage business. But
2001 marked a turning point: there was a massive collapse in profits in private banking,
and far greater pressure on Switzerland's financial industry (banking secrecy, tax

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amnesties). The outlook has now deteriorated, and many banks have had to drastically cut
their costs, which had been allowed to spiral out of control in the expansion drive during
the previous boom. It may well be said that private banking is about to enter a downward
cycle that could last at least three years. The challenges facing institutions active in
priority banking are becoming more demanding all the time.

What are classed as new money clients require increasingly innovative and also
complex products?

They are also more discerning about the services on offer and put greater emphasis on
investment returns. The competition is generally getting
tougher as new players enter the market, investment banks aggressively fight for the most
affluent clients and online communication channels offer low-cost broker services to
wealthy (but price-conscious) private clients. At the same time, offshore financial centers
are coming under increasing pressure from US and EU governments to harmonize
disclosure regulations and tax legislation. Tax authorities are showing considerable zeal
and ingenuity in procuring evidence for undeclared wealth, and to this end are sending
their officers to offshore financial centers to track funds down. Many clients in these
offshore centers feel uneasy and are reconsidering their options for the future. Banks,
which route a substantial portion of their private client business through such offshore
centers, therefore have to press ahead with the creation of alternative financial centers for
their clients, or offer clients the necessary support to switch their assets into onshore
investments, as well as providing suitable tax advice. Although both asset growth and
profit margins are, as already stated, still relatively attractive for Swiss private banks both
in the offshore and onshore domain, one of the main prerequisites for future success in
this industry will be a reappraisal of the bank's own client strategy and also the resources
available to implement it. After all, in the current environment it is not particularly
difficult to copy competitors' products and services! The bank plan to face the challenges
of the next few years by:

 Concentrating on the customer, the most important element in private banking.

 Continuing to expand on our high degree of specialist expertise and our close network
of relationship.

 Maintaining close proximity to the client in a personal manner.

 Emphasizing flexibility, style, empathy, honesty and openness.

 Understanding international interrelationships (with multilingual skills).

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 Utilizing the Internet as a contemporary and powerful information channel.

 Providing the necessary operational and technical back office resources.

 Highlighting the currency of the Swiss financial marketplace.

Although the biggest challenge for private banks at the moment in Asia is the business
cycle, they should prepare for the expected growth in wealth in the region by building up
platforms, training people and expanding footprints. To meet the increasing demand for
high-quality service, the industry needs more patience to focus on developing people
internally rather than relying on hiring from competitors.

To tackle rising cost bases in an environment of low fees, wealth management firms need
to look at where they can control costs and make savings. Resources need to be allocated
to building onshore wealth management businesses in Asia now; even though these are
unlikely to be profitable in the near term as offshore platforms remain dominant.

Improving the quality of advice

As Asia develops, clients are increasingly demanding high-quality service from truly
trusted advisers – especially in the wake of the financial crisis.

So as an industry, there is a need to prepare for this improvement in terms of better


explanations, better training and better disclosure, he explained, adding that this is
essential to regain the trust of clients.

However, given that good quality salespeople are not easy to come by, one of the biggest
challenges the private banking industry faces is the lack of training and talent
management.

More patience is needed, rather than hiring from competitors, said Mak, explaining that
this means a greater focus on training and developing people internally by putting in the
required resources.

Tackling rising cost bases despite lower fees

According to Mak, cost bases in Asia have been rising over the past 10 to 20 years.

But at the same time he said the wealth creation and related opportunities have enabled
firms to offset these costs.

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Yet in the current difficult environment, firms need to look at where they can control
costs and make savings, and should realise they need to prioritise how they expand their
businesses.

Industry outlook

In terms of economic growth, Asia is second to none compared with the other regions of
the world. The last 10 years in particular have seen great wealth creation in China, India
and other parts of Asia.

With regulatory changes in the US and Europe, he predicted that a lot of hedge funds and
private equity firms will move to Asia, which will in turn enhance the region’s
development.

Banks with the proper scale, products and people will therefore be profitable and enjoy
growth.

In terms of the potential for building onshore wealth management businesses in Asia,
Mak said he doesn’t expect the bank’s ever-widening footprint across the region to be
profitable in the short term. As a result, offshore platforms will remain the way to go over
the near term.

Instead, these onshore moves are long term, strategic investments based on the future
expected growth in various markets, which require resources to be put in now.

Priority banking encompasses and array of services for high network individual. that
might mean personal banking, but might also entail sophisticate service: currency
hedging, asset deposition tax advice, portfolio management and mergers and acquisition
on smaller scale.

Investment banking provides services, advice and products to large corporation around
the world. That too might mean basic corporate banking, might entail complex, debt or
equity financing, takeover defense, project finance, convertible bond offerings, or equity
share repurchases.

Priority banking aims at establishing close relationship with clients who are senior
industry leaders or established enterprises. Wealth management is the target growth area
for priority bankers. They focus on accumulating assets and special banking product and
services. They provide customer with flexibility to move from priority banking to other
banking services. They generally target high net worth customers.

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On other hand, investment banking puts continuous emphasis or innovation, new product
and novel financial techniques. This service is mainly provided to share holders. They
add value to share holders by offering something new and special. Investment banking is
intellectually challenging, adrenaline building and stimulating. This business is a cyclical
but banker tried to stabilize it by offering counter cyclical like restructuring advice to
share holder.

Investment banking cannot transfer into priority banking, but priority banking may
transfer into investment banking. Especially when they bring deep relationship with
important people within the industry.

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IMPORTANCE OF PRIORITY BANKING

Why does a bank have Priority Banking Model?

The reason is very simple, to treat different level of customers differently. If you want to
harshly put it, then it’s just a way of keep a separate list of High Net-worth Individuals
and focus on them more and service them in a better manner, because one customer who
is eligible for priority banking will give 100 times more business/profit to bank compared
to a normal customer. A preferred banking customer will have a few eligibility criteria to
honor, which is generally linked to his bank amount balance
 BANKS PROVIDING PRIORITY BANKING SERVICES

There are many banks coming up with these unique services, Priority banking is a name
given by banks to their private banking services.

e.g. –Standard Chartered, HDFC, Axis bank, Citi bank, and HSBC also the nationalized
banks of India like state bank of India excel in providing mass banking services as well as
priority banking.

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BENEFITS OF PRIORITY BANKING

BENEFITS AVAILABLE TO PRIORITY CUSTOMERS:

The following benefits will be available to all Priority customers in the form of wide
array of products and services offered by the banks to meet the diverse complex financial
needs of HNW individuals:
 relationship management

 consumer and business deposits

 general lending solutions

 jumbo mortgages

 aircraft financing

 treasury management

 trust and investment management

 retirement plans

 brokerage accounts

 insurance

 customized travel and educational activities

All Priority customers will have a dedicated Relationship Manager to look


after their relationship. The role of the RM will be to offer all products and Services of
the bank to the customers and make it easy for the customers.

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BENEFITS TO BANKERS:

Depositing money with a bank is reward enough, of course, whether into the bank or into
one of its financial products, but priority banking when it has an advisory nature and is
not accompanied by lending or borrowing may be fee-based. The level of the fees is
highly variable: they will be lower if the bank will get the benefit from time to time of
being able to offer bridging finance, or of holding large amounts in transit etc, or if it can
hope for more substantial involvement with the customer in future. If the relationship is
purely between financial adviser and client, then the fees may be substantial.

Satisfaction drivers in priority banking in Indonesia

Introduction:

The growth in recent years of developing economies across the Asia-Pacific region has
led to a massive increase in the number of affluent and emerging affluent consumers
living in the region. With this rapid increase in accumulated wealth, banks see this
segment as a potentially lucrative area to target due to high take up rates of financial
products and Services.

One way banks have sought to meet the needs of this affluent segment is through the
provision of ‘priority banking’ programs, which often provide what is perceived as a
superior banking experience through various product and service experiences, such as
access to relationship management, wealth management advice and priority banking
privileges.

Primarily using results from the July 2012 Indonesia Priority and Retail Banking Council
(IPRBC) survey, this report explores the demographic profile of a typical priority banking
customer, and the various contributors towards satisfaction in priority banking programs,
as well as identifying areas which priority banks should focus on in future periods to
increase satisfaction and reduce switching attrition whilst also increasing cross-sell
product uptake amongst their priority banking customers.
Highlights
There is a strong relationship between satisfaction with a priority bank and the bank’s
ability to provide high quality relationship management services. Ultimately, relationship

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managers focusing on providing quality banking and financial services and advice is
likely to result in improved satisfaction amongst existing customers.

Priority banking customers generally derive the most satisfaction from a priority
program’s core banking attributes. Although performing well over such core attributes is
of paramount importance to a banks’ ability to satisfy the widest possible range of
customers, priority banks specifically need to also be able to provide facilities and
services above and beyond what a normal retail bank is able to provide to attract and
maintain high value clients.
A priority customer’s satisfaction with their main priority bank also heavily influences
their product uptake of additional retail banking products from the same institution.
Across a plethora of core retail banking products, it was found that satisfied priority
banking customers are much more likely to both apply and use products from their main
priority bank as their main retail banking products.

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PRIORITY BANKING SERVIES IN BANKS

PRIORITY BANKING SERVIES BY AXIS BANK:

Axis Bank Limited (formerly UTI Bank) is the third largest private sector bank in India.
It offers financial services to customer segments covering Large and Mid-Corporate,
MSME, Agriculture and Retail Businesses. Axis Bank has its headquarters in Mumbai,
Maharashtra.

Eligibility Criteria

You can sign up for Priority Banking service by agreeing to any one of the following
criteria
 Average quarterly balance of Rs. 1 Lakh in your savings account ( this
requirement is Rs. 75,000 if in case you have a salary account with Axis Bank).

 Average quarterly balance of Rs. 5 lakhs in combination of your savings and term

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deposits account.

PRIORITY BANKING OF AXIS BANK

Preferential Entertainment
Lifestyle
Treatment Benefits
Privileges

Beyond Banking
Access to Premium Services
Meeting Rooms.

1. Preferential Treatment
 Enjoy preferential treatment when you walk into our branches or when you call
our Phone Banking Centre. Enjoy a specially designed Axis Mobile App.
 Get access to a dedicated relationship manager to help plan your investments.
 Earn points on your credit & debit card spends, as well as on select savings
account transactions to enroll.

2. Lifestyle Privileges
 As a Priority customer, get access to the Premium Privileges program.
 With a new theme every month, you can choose from a selection of customized
delights, special deals & discounts, and exclusive experiences that suit your style.
 Get 15% or more discounts at over 1,000 restaurants in over 80 cities. Just flash
your Priority Platinum debit card, and dine in style.

3. Entertainment Benefits.

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 Get 25% cash back* on movie ticket bookings (including online bookings) with
the Priority Platinum, Debit Card.
 Shopping up to Rs 1.5 lakhs in a single day.
 High ATM cash withdrawal limit of up to Rs.1 lakh in a single day.
 Unlimited ATM transactions at any other bank ATMs.

4. Access to Premium Meeting Rooms.


 Conduct your own private business meetings in any exclusive Premium Meeting
Rooms in 16 cities.
 Check availability of Premium Meeting Rooms and book online 24x7.

5. Beyond Banking Services.


 Financial Health check – Now get your latest CIBIL score through Axis Bank.
 Language assistance for foreign travelers, Simplified process at customs &
immigration Fast-track exit from the airport.
 Book this service online using your VISA debit card and enjoy a discount on the
services.

6. Other services
 As a Priority banking customer an individual will have access to an exclusive
‘Priority Banking Lounge’ at branches. This will allow an individual to conduct
his financial transactions in utmost comfort and confidentiality through an
exclusive Relationship Manager.
 Dedicated Relationship Manager An individual will enjoy access to a dedicated
Relationship Manager who will be his one point contact at branch for all an
banking transactions thus ensuring that An individual would neither have to move
from one counter to the other nor stand in queues to await his turn.
 Home Banking Experience the convenience of Axis Bank’s home banking
facilities. Avail of free cash and cheque pick-up delivery at an individual’s or
residence.
 Exclusive Priority Banking International Debit card This card allows an
individual free access to all VISA ATMs in Idea. The card also comes with higher
ATM withdrawal limits; higher POS transaction limits at merchant
establishments, enhanced insurance over and a host of special discounts and
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offers. An individual also get Preferential Interest Rates and lowered Processing
Fees on select Retail Loans.
 Investment Privileges avail of assistance in financial planning. Investment advice
market information reports and invitations to investor meets are offered
complimentary to an individual.

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4.2 STANDARD CHARTERED BANK :

PRIORITY BANKING

Resident In a segmentation study undertaken in 2002, it was found that 2.72 % of


Axis Bank’s retail customers contribute to nearly 49.05% of Axis Bank . The clients that
bring a larger share of business to the Bank expect a differentiated standard of service.
This also makes Business sense, as more often than not, most of the business in a
particular Branch flows from a handful of clients. Hence, Priority Banking was launched
in order to cater to the needs of the high net worth customers within the bank. The
product has at its core, the idea of providing certain bit of differentiation in service and
treatment to a segment of its customers with a view to customer retention, acquisition
and cross selling. The nucleus of these services has essentially four important
components.

 Personalized service
 Investment advisory Service
 Preferential pricing of banking products/services
 Lifestyle privileges.

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The definition of the value of relationship and services offered differs across
Banks. In general, MNC banks define the HNI segment taking into account
The customers’ liability as well as, assail relationship with the bank) whereas the Indian
private banks only take in the Savings bank balances and term deposits Bank believes
Standard Chartered customers should enjoy the rewards of their success. With Priority
Banking the customer step into a world of exclusive personalized banking that will
ensure them get the VIP treatment that they truly deserve.

PRIORITY SERVICES OF STANDARD CHARTERED

Comprehensive wealth
management services
Foreign Travelex
exchange discount Remote account
opening

STANDARD
CHARTERED BANK
Access to PRIORITY
international BANKING SERVICES
priority banking
center Emergency cash

Special privileges for


business owner

1.Comprehensive Wealth Management Services

Standard Chartered Priority Banking has created a set of financial tools to assist
customers in planning, building and protecting your wealth.

PLAN-First financial tools is to identify customers needs, analyze customers situation,


evaluate risk appetite and chart the best plan to meet goals.

BUILD-To executes your plan and help there grow your wealth through a wide range of
portfolio management products and solutions.

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PROTECT -Help maintaining the value of what customer have built and ensure
sufficient, long term protection for customer

2. Special Privileges for Business owners

These include invitations to networking events where you can make new and valuable
business contacts and access to priority Banking Centres where you can host meetings
while on business trips. Priority Banking customers also has the benefit of maintaining
savings and current accounts, time deposits, special foreign investment deposit accounts
as well as other benefits such as globally accepted credit card services;

3. Access to international Priority Banking centers

Where a customer qualifies as a Priority Banking customer in any one country, his/her
status will extend worldwide. This will allow the customer as well as his/her family to
enjoy the same privileges for accounts in other countries.

4. Remote Account Opening

Here a customer will have the benefit of opening an offshore account pre-arrival in the
event of migration to another country.

5. Emergency Cash

Here customers have the benefit of having emergency cash delivered to any of the Bank’s
Priority Banking Centers worldwide in the event of an unexpected incident such as losing
your wallet.

6. Foreign Travelex exchange discounts

Where a customer can present his/her Priority Banking cards and receive special
discounts on foreign exchange at Travelex outlets in over 740 locations across 20
countries.

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 Customised benefits tailored to suit your unique individual needs.

As a Priority Banking customer you have the advantage of enjoying customised benefits
that recognise your total relationship with us and have been tailored to suit your
individual needs.

And because we know they mean the world to you, some of these benefits also extend to
your family.

1. Privileged Pricing

As your financial partner, we offer you the best value on your banking requirements
tailored by your Relationship Manager.

Some of your pricing privileges include:

 Special fee waivers and/or discounts on your routine banking transactions

 Special pricing for your deposits and loans

 Free international funds transfers between your accounts

 Charge free overseas ATM cash withdrawals

2. Household Recognition

We know your family is your greatest asset, so we have made them our priority. It’s our
way of ensuring a total banking relationship for you.

Your household benefits include:

 Complimentary Priority Banking membership for your spouse and children

 Family access to Priority Banking Centres, teller counters and hotlines

 Privileged pricing on routine banking transactions and services

 Invitations to specially designed lifestyle events

Total Relationship Rewards

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It is not only about making the right choice of your financial partner but also enjoying the
fruits of a total banking relationship with us

Our exclusive and unique total banking rewards scheme allows you
to earn points on:

 Your card spends

 Your bank deposits

 Your investments and

 Your home loans with us

Your reward points can be accessed through the prestigious


Priority Banking Visa Infinite Card, which is key to unlocking these exclusive benefits
from your relationship with us.

5.Exclusive Lifestyle Privileges

You are interested in more than just a financial relationship. So we have made it our
priority to extend special privileges that match your status and lifestyle.

Your exclusive lifestyle privileges include:

 Special premium offers from our carefully chosen partners

 Invitations to previews and special lifestyle events

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ARTICLES:

Standard Chartered launches 'Priority Banking' service for non resident Indians.
As part of its Priority Banking offering, Standard Chartered has launched a service for
affluent non resident Indians (NRIs) in the UAE after customers have expressed the want
for tailored service. The account, which can be opened either in India or the UAE,
provides customers with access to a single Relationship Manager (RM) who understands
and can address the specific banking requirements of NRIs living in the United Arab
Emirates.

Standard Chartered launches enhanced priority banking offerings.


Standard Chartered Bank Bahrain continues to serve its priority banking customers in the
Kingdom exclusively by reaffirming its commitment to focus on high net worth
customers. Designed specifically for those who appreciate only the finest things in life,
Priority Banking offers the very highest levels of personalized banking.

Source:

25 April, 2010, United Arab Emirates

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PRIORITY BANKING OF HDFC BANK:

HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation


Limited (HDFC), India's largest housing finance company. It was among the first
companies to receive an 'in principle' approval from the Reserve Bank of India (RBI) to
set up a bank in the private sector. The Bank started operations as a scheduled
commercial bank in January 1995 under the RBI's liberalization n policies.

 As a Preferred customer also receive On demand exclusive privileges including :

 No charges on NEFT & RTGS transactions through Net banking.

 Free Preferred Easy shop Platinum Debit card with limit of Rs. 1,00,000 at ATMs and
Rs. 1,25,000 at merchant establishments per day .

No charges for balance enquiries and cash withdrawals if you transact on non HDFC
Bank
ATMs (VISA/ MasterCard / Euronet/ SBI/ Andhra Bank) in India.

An HDFC Bank Credit Card which offers you exclusive and preferential benefits.

Free "At Par" cheque book payable at any HDFC Bank branch across the country, so
you do away with the need to ask for demand drafts.

Locker facility at just 50% of the annual fee. (Subject to availability)

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Demat Folio Maintenance Charges waived off for the first year. Differential Transaction
Based Folio Maintenance charges from second year onwards.

Preferential Forex rates.

Combined monthly statement for your Savings, Current and Fixed Deposit accounts for
which you are the principal holder. This facility is also available
for email statements.

You are eligible for the HDFC Bank Priority customer if you:

 Hold at least one Savings or Current account, sole or joint, with HDFC Bank.

 Maintain a minimum Average Monthly balance of Rs. 15 Lakhs across all your
accounts (Savings, Current and Fixed Deposits*) OR

 Maintain an Average Quarterly Balance of Rs. 2 Lakhs in your Savings account.

OR

 Maintain an Average Quarterly Balance of Rs. 5 Lakhs in your Current account.

In the same way, other banks also keep criteria of maintaining high balance in saving
bank account. That simply means that bank would get lots of cash to use for their own
business and naturally they can treat these customers very well. Check out this survey on
best banks in India.

Facilities provided to Priority customers:

 A Priority banking customer has few advantages over


normal customers and gets more features. Some of the most
common one’s are.

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 Separate queue for in the bank so that customers don’t
wait.

 No charges on NEFT and RTGS transactions through


Net banking

 Free “At Par” cheque book payable at any Bank branch


across the country, so you do away with the need to ask for
demand drafts

 Charges waiver for DD cancellation, Cheque return,


Duplicate statement charges, Demand Draft Charges,
Discount in Locker Charges.

 No charges on balance inquiries and cash withdrawals


if you transact on Other Bank ATMs in India.

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Kotak Mahindra Bank:

Established in 1985, the Kotak Mahindra group has been


one of India's most reputed financial conglomerates. In
February 2003, Kotak Mahindra Finance Ltd, the group's
flagship company was given the license to carry on banking
business by the Reserve Bank of India (RBI). This approval
created banking history since Kotak Mahindra Finance Ltd.
is the first non-banking finance company in India to convert
itself in to a bank as Kotak Mahindra Bank Ltd. Today, the
bank is one of the fastest growing bank and among the most
admired financial institutions in India.

The bank has over 323 branches and a customer account


base of over 2.7 million. Spread all over India, not just in
the metros but in Tier II cities and rural India as well, it is
redefining the reach and power of banking. Presently it is
engaged in commercial banking, stock broking, mutual
funds, life insurance and investment banking.

Privy League
Privy League is the evolution of the concept of Priority
Banking, wherein a select few can expect to enjoy a wider

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range of benefits and services. Whether it is the
dependability on a single point of contact, the benefits of
personal or business banking or cutting-edge investment
advisory, Privy League offers you a world of banking
benefits and investment advisory that truly places you in a
league of your own.

 Privy League is the evolution of the concept of


Priority Banking, wherein a select few can expect to enjoy a
wider range of benefits and services. Whether it is the
dependability on a single point of contact the benefits of
personal or business banking or cutting-edge investment
advisory, Privy League offers you a world of banking
benefits and investment advisory that truly places you in a
league of your own.

 Privy League Advantage:

 Offers a customized financial plan, keeping your


financial objectives at its core Kotak Group offers you a
wide

 range of investment options, under one roof, to meet


customers goals Offers key benefits of the Kotak

 Mahindra Bank account free of charge

 Banking Privileges:
Privileges

As a Privy League member, you get more than a just a


choice of bank account. You get to enjoy a host of our
Banking privileges on your Privy League relationship.
 Ease of Banking & Investing

 ActivMoney: 2-way sweep into Term Deposits

 Free Demand Drafts & Banker’s Cheques

 Free At-par, pre carbonated cheque books

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 Lockers at discounted rates

 Gold at preferential rates

 Customized Financial Planning

 Understanding financial health

 Understanding financial goals

 Planning investments

 Constructing portfolio

 Reviewing and balancing portfolio.

 Criteria for Privy League:

 Privy League Platinum plan is available at an initial


Relationship Value of INR 25 Lakhs , and average
quarterly

 Balance of INR 50,000

 Privy League Gold plan is available at an initial


Relationship Value of INR 10 Lakhs, and average
quarterly balance of INR 50,000

Kotak Priority Banking empowers customer with:-

 A consistent investment planning process based on customer


risk profile, financial goals and time horizon.

 Access to wide range of investment products.

 Mutual Funds

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 Insurance

Post reclassification to regular Current Account, the customer has the option to retain
existing Privy League Business Platinum card at a fee or has the option to hand over
the Privy League Business Platinum Debit Card to the nearest branch along with a
request to issue a new Debit Card.
 Exclusive investment products

 A comprehensive suite of banking products

 Ease of executing and managing investment with In-depth


research and information on market movements and new
investment opportunities.

Terms and Conditions

 The Privy League program is open for Resident


Individuals, Non Individuals and Non Resident Individuals
only. Each customer is provided with a unique Customer
Relationship Number (CRN) and all relationships and
accounts held by the customer are consolidated under the
CRN.

 This program is offered to business banking and


family based on Relationship Value (RV) and Average
Quarterly Balance (AQB) and Forex throughput.

 These eligibility criteria can be reviewed and


amended by the Bank from time to time

 When you start a new Privy League Family


relationship with a Relationship Value less than the
eligibility criteria, then it is desirous that you meet the
required criteria within 3 months.

 Post reclassification to regular Current Account, the


customer has the option to retain existing Privy League
Business Platinum card at a fee or has the option to hand
over the Privy League Business Platinum Debit Card to the

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nearest branch along with a request to issue a new Debit
Card.

 When you start a new Privy League Family


relationship with a Relationship Value less than the
eligibility criteria, then it is desirous that you meet the
required criteria within 3 months of account opening.

 In case you fall short of the requisite criteria, the


Bank has a right to reclassify your relationship. In case of
reclassification to normal Savings Account, fee and charges
as per GSFC will be applicable. In case of reclassification to
normal Current Account, fee and charges as per GSFC will
be applicable.

PRIORITY BANKING COMPARATIVE STUDY:

(KOTAK MAHINDRA BANK AND STANDARD


CHARTERED)

 Standard Chartered Bank

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Standard Chartered Bank launch a new priority banking
offering for India’s increasingly sophisticated and
discerning banking customers in the year august, 2009.

They provide customers with wealth management services,


that is, a financial tool to assist in planning, building and
protecting the customer’s wealth. They provide privileges to
business owners by inviting them to networking events
where the business owners can make new and valuable
business contacts and can access to the priority banking
centres for hosting business meeting when they are on trips.
It gives global recognition to the customers. They provide
access to international priority banking centres, remote
account opening, emergency cash facility, ATM fee waiver,
cross border OTT fee waiver, Travelex foreign exchange
discounts, etc.

They provide various deposit products to their customers


such as HKD time deposits, foreign currency time deposits,
HKD savings and current account, US dollar savings and
current account, renminbi services, etc.

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Kotak Mahindra Bank

Kotak Mahindra Bank leading private sector bank opened its


first Priority Banking Branch for its HNI & Priority
customers at Juhu in Mumbai.

Kotak Mahindra Bank has over 183 branches in 108


locations in India

Offers you a customized financial plan, keeping your


financial objectives at its core
Offers you key benefits of the Kotak Mahindra Bank account
free of charge.

Customer satisfaction level is 90% in terms of priority


banking services

Data analysis:

Duration of Relationship with Bank:

The above diagram shows that 30% of the respondents are


associated with Kotak Mahindra Bank for 0-2 years.

A majority 55% are associated for 2-5 years and only 15%
are associated between 5-10 years. It shows that Kotak
Priority is slowly still in the nascent stage in Priority

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Banking as most of the respondents (85%) have a
relationship with it for 0-5 years.

About 80% of the respondents of Standard Chartered


Priority Banking are associated with its priority banking for
a 0-5 years.

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CASE STUDY OF KOTAK MAHINDRA
BANK

FINDINGS:
There is a strong relationship between satisfaction with a
priority bank and the bank’s ability to provide high quality
relationship management services. Ultimately, relationship
managers focusing on providing quality banking and
financial services and advice is likely to result in improved
satisfaction amongst existing customers.

 Every bank has different name for their high valued


customers but the service provided by them are similar.

 In priority banking the priority customers are given


free pickup and delivery service of instruments.

 In every banks relationship managers deal with


priority customers.

 Every bank involved priority banking have special


policy designed for the customer which is different and
unique form other.

 Banks dealing with priority banking treat their


customer with a great care by providing services to the
fullest

 There is increasing number of HNW customer’s


because of priority service which are provided by banks, it
distinguish them from regular customers.

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RECOMMENDATIONS:

 Customers must be aware of their priority services


being a priority customer.

 Banks should provide equal services to all the


priority customers.

 More of Innovative ideas should be added.

 Bank should come to new priority policy to attract


more priority customers.

 The term “priority banking” is not that popularized


in India because of lack of awareness, more advertisement
should be made by the banks to attract more customers.

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CONCLUSION

Priority banking in India is still at a nascent stage. Among


the fastest growing wealth markets, India is one of the top 2
growth markets. As an estimation HNW client in with
ingestible funds in bank deposits, mutual funds, shares and
securities exceeding Rs.20 lakhs (say, $50000), the four
metros, along with Bangalore, Hyderabad, Pune and
Ahmadabad, together would offer a potential market of
considerable proportion for banks to exploit.

Worldwide, this service serves a lot of Indian billionaires,


but on the domestic side, it is still a growth market. Five
years from now, India will probably contribute about 10%
in terms of overall profitability of priority banking. The
Asian contribution will be 40%, compared to around 26-
27% in the next 5 years.

It is in an early phase. The critical piece is not only the


product development, but laws transparency in how clients
should be investing in products and that they should work
within the regulatory framework. Education and
transparency services are important in this phase of
development.

India as the financial markets mature and the choice of


investment opportunities expand and become
simultaneously more complex. Banks can play a pivotal role
in catering to the market that defines the needs of HNW
individuals.

Thus we can say that priority banking has huge scope for
growth in India.

 Does your bank deal with priority banking?

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 What are the schemes provided under priority
banking for customers?

 How does your bank select your priority customers?

 What are the procedures for getting priority to


customer?

 Any charges for priority banking customer?

 Are the customers happy with your banks priority


service?

 What are the services which customer likes the


most?

 Does RBI issue any special license to your bank for


priority service?

 Is there any privilege to priority bank customer?

 How does your bank treat priority customers other


than regular customers?

 Any suggestion given by the customer?

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 Do you think priority banking service has changed
your banking strategy?

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BIBLIOGRAPHY

www.rbi.org.in

https://www.axisbank.com/webforms/Priority_Microsite/ind
ex.aspx

http://priority.standardchartered.com.my/en/termcondition.h
tml

http://ebookbrowse.com/7-priority-banking-products-
services-jan2010-pdf-d23245052

http://www.deccanchronicle.com/130804/news-
businesstech/article/how-important-priority-status

http://www.efinancialnews.com/story/2013-06-26/bankers-
top-challenges-deloitte-temenos-report

http://www.kotak.com/kotaklpbank/privy_league/privy_leag
ue.html

http://www.standardchartered.ae/media/press/en/2010/2010
0425.pdf

http://www.business-standard.com/article/finance/kotak-
revises-premium-banking-offer-113061800437_1.html

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