Chapter 6

Retail and Wholesale Banking

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 Retail Banking
 In pre-liberalisation era, banks mainly focused on
providing credit to industries and business houses
 With the liberalisation of Indian economy, bank saw
a emerging opportunities in terms of young
population, increased incomes, purchasing power
and aspiration for better life style, quality products
and services
 This gave birth to ‘Retail Banking’……..

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 Contd….
 Retail Banking is defined as doing business with
individuals by segmenting the individuals as a
separate business market
 In technical language, Retail Banking can be defined
as dealing with individuals both on liabilities and
assets side
 Key features of Retail Banking:
- Multiple Products
- Multiple Channels
- Multiple Customer Groups 3
 Contd….
 Commercial Banks offers Retail Deposit Products,
Retail Loan Products and Retail Services
 Key Drivers for Retail Banking:
- Economic Prosperity
- Changing consumer demography
- Rise of convenience banking
- Low delinquency rate

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Contd….
Retail Banking Opportunities
 Contribution of retail loan to GDP stands at 6% as
compared to 15% in China and 24% in Thailand
 Housing Finance itself will require an estimated
3,61,000 Cr to meet the shortfall of 25 million
houses
 Opportunities lies in consumer finance and wealth
management

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 Wholesale Banking
 Wholesale Banking refers to conducting banking
business with industrial and business entities. This
includes, corporates, trading houses, multinationals
and domestic companies etc.
 Key products under Wholesale Banking can be
classified as:
- Fund-based services
- Non-fund-based services
- Value-added services and
- Internet Banking services 6
 Contd….
 Fund-based services
- Term lending, Short-term Finance
- Working Capital Finance, Bill discounting
- Structured Finance, Export Credit
 Non-Fund-based services
- Bank guarantee, Letter of credit
- Collection of bills and documents
 Value-added Services
- Cash management services,
- Channel financing, vendor financing,
- Real Time Gross Settlement, CSA etc…. 7
 Contd….
Wholesale Banking Opportunities
 Commercial lending and small businesses are
expected to drive Wholesale banking
 Opportunities also lie in Investment banking and
structured finance
 Wholesale banking is highly profitable for top
performing banks contributing 35-40% to PBT