Corporate and Retail

Banking
Banking industry Include :-
1. Retail Banking
2. Corporate Banking
3. Investment Banking
4. Wealth Management
 Retail Banking
• Retail Banking is a typical mass banking characterized by a large customer base
and a large volume of transactions.
• In retail banking all the needs of individual customers are taken care of in a
well-integrated manner.
• Important factor in the economy of a country.
Eg: Sub-prime crisis of 2008-09
• Retail Banking is an attractive market segment having large number of varied
classes of customers.
• It focuses on individuals and small units. Customized and wide ranging
products are available.
• The risk is spread and the recovery is good.
• Products can be designed, developed and marketed as per individual needs.
Features
• Characterized by multiple products, multiple channels and multiple
customer groups which are customized and personalized to suit the
needs of the various customer segments.
• Multiple Products
• Different types of Deposit Accounts
• Different types of Loans
• Credit /Debit cards
• Insurance, mutual fund etc
Contd...
Multiple channels of Distribution :-
• Branch Banking
• Internet Banking
• Mobile Banking
• Call Centers
Multiple Customer Groups :-
• Individual customers
• Proprietorship Units
• Micro and Small business/enterprise.
• The typical asset products(loan products) are housing loans, car loans,
consumer loans, pension loans, education loans, credit card etc.
• The loans are marketed under attractive brand names to differentiate
the products offered by different banks.
• The loans are generally for five to seven years with housing loans
granted for a longer duration of 15 to 20 years(vary bank to bank).
• To increase the spread and profits, considerable attention is given to
CASA deposits(low cost).
• Credit card is another rapidly growing sub-segment.
Importance of Retail Banking

• Low cost funds for the Bank

• Retail deposits are stable and constitute core deposits
• Increases the cross-selling business
• Risk spread over a diversified large number of customers.
• Helps in economic revival of nation through increased production
activity.
• Lower risk and NPA perception, thereby better yield and improved
bottom-line.
Now, customers have more choices in choosing their banks
Types of Banking catering to the needs of different segments

• Retail Banking – Dealing directly with individuals

• Corporate Banking – Dealing with large business entities
• Private Banking – Providing Wealth management services to HNIs
• Investment Banking – Advising on mergers and acquisitions,
Merchant Banking, Corporate Advisory services
• Universal Banking – Combination of Commercial Banking, Investment
Banking and other types of cross selling.
Private Banking for HNIs
• Private Banking is personalized financial and banking services offered
to a bank’s HNIs. A dedicated relationship manager is assigned to the
customer who take care of all his/her banking/financial needs. This
include cash delivered at the doorstep, financial planning for children,
retirement planning, drafting will, investing short-term surplus money
and even devising structured products. The criteria for categorizing
HNIs differs bank to bank. Mostly this will be based on their volume of
deposits, investment in mutual funds etc.
• Retail banking environment is changing fast in view of the changing
customer demographic demands for differentiated applications.
BANKER AND CUSTOMER- THEIR RELATIONSHIPS
• BANKER
• Banker has not been defined in any statute
• Sir John Paget defines the term Banker as :- No person or body
corporate or otherwise can be a banker who does not.
• Take deposit accounts
• Take current accounts
• Issue and pay cheques and
• Collect cheques, crossed and uncrossed, for his customers.
• Though Banker is not defined in any statute, Banking is defined, as per
Sec 5(b) of BR Act 1949 as
• “Banking means accepting for the purpose of lending or investment,
of deposits of money from the public repayable on demand or
otherwise and withdrawable by cheques, draft, order or otherwise.”
Hence the basic requirements are :
• Accepting of deposits from public
• Lending or investing the money so collected by way of deposits.
• Allowing withdrawals of deposits on demand or by any other means
CUSTOMER
• There is no definition of a Customer available in any statute. The word is derived
from the word ‘custom’ which means a habit or tendency to do certain things in a
regular or particular manner.
• Generally accepted definition of a customer is –“ A person who maintains any type
of account with the Bank, whether it is a deposit account or a borrowed account”.
• A person frequently visiting the branch of a bank for transacting banking business
like purchase of a draft, enchasing a cheques etc is not a customer if he does not
maintain any account with the branch.
• A person will be deemed to be a customer even if he has only handed over the
account opening form to the bank and the bank has accepted to open the account,
even though no account has actually been opened in the books of the bank.
• Thus a customer means a person who opens account with the bank. When a
customer tenders an account opening form to open an account and banker accepts
it, a contractual relationship is established.
Customer in the words of Mahatma Gandhi
• A customer is the most important visitor on our premises.
• He is not dependent on us. We are dependent on him.
• He is not an interruption on our work. He is the purpose of it.
• He is not an outsider on our business. He is part of it.
• We are not doing him a favor by serving him. He is doing us a favor
by giving us an opportunity to do so.