challenges and prospects of retail banking in india

8/3/2019 Challenges and Prospects of Retail Banking in India

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EXECUTIVE SUMMARY

This project gives an overview of the emergence of the Banking industry in India. It covers the

most important aspect of the Banking industry today - the Retail Banking segment. It also

portrays Banking in India like the Phoenix bird that has risen from ashes, thanks to its Retail

Banking segment.

It talks about the history of retail banking and also why banks are turning towards Retail Banking

as an option. Also, how Retail credit helps the economy as a whole. In all, its emergence, growth,

challenges and finally the future prospects of the same.

The project also talks about the strategies used by Retail banks and the emerging issues for Retail

Banking in India. A major portion of the project gives an overview of Axis Bank and the various

retail products as the retail assets, retail liabilities and deposits offered by the bank.

This study and the growth of Axis Bank clearly shows how retail banking is here to stay so it can

be rightly concluded that Retail banking has a bright future for India.


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INDEX

Sr. no Topic Page No.

1. Banking In India 6 - 10

2. Structure Of The Banking System 11

3. Functions Of A Bank 12

4. Introduction To Retail Banking 13 - 14

5. History Of Retail Banking 15 - 16

6. Why Retail Banking? 17 - 20

7. Principle Of Retail Banking 21

8. SWOT Analysis Of Retail Banking 22

9. Strategies For Success In Retail Banking 23 - 25

10. Emerging Issues In Handling Retail Banking 26 - 27

11. Framework Of Retail Banking Services 28 - 29

12. Advantages And Disadvantages Of Retail Banking 30 - 31

13. Suggestions 32

14. Challenges To Retail Banking In India 33 - 34

15. Scope For Retail Banking In India 35

16. The Road Ahead 36

17. Axis Bank 37 - 61

- Promoters

- Shareholders

- Board Of Directors

- Mission And Values

- Axis Bank - Fy 2008-09

18. Organisation Chart Of Axis Bank - Byculla Branch 6219. Retail Liabilities 63 - 69

- Savings Accounts

- Current Accounts

- Deposits


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20. Retail Assets 70 -76

21. Third Party Products 77 - 78

22. Documents Required From The Customers To Open

An Account

79 - 81

23. SWOT For Axis Bank Byculla Branch 82 - 83

24. Suggestions 84

25. Bibliography 85


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BANKING IN INDIA

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 AllianceBank of Simla.

When the American Civil Warstopped the supply of cotton to Lancashire from the Confederate

States, promoters opened banks to finance trading in Indian cotton. With large exposure to

speculative ventures, most of the banks opened in India during that period failed. The depositors
http://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/American_Civil_Warhttp://en.wikipedia.org/wiki/Lancashirehttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/American_Civil_Warhttp://en.wikipedia.org/wiki/Lancashirehttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Confederate_States


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lost money and lost interest in keeping deposits with banks. Subsequently, banking in India

remained the exclusive domain of Europeans for next several decades until the beginning of the

20th century.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire

d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862;

branches in Madras and Pondichery, then a French colony, followed. HSBC established itself in

Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the

British Empire, and so became a banking center.

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 1958. The next 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
http://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Pondicheryhttp://en.wikipedia.org/wiki/HSBChttp://en.wikipedia.org/wiki/Bengalhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Indian_rebellion_of_1857http://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/File:Bank_of_Bengal.jpghttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Pondicheryhttp://en.wikipedia.org/wiki/HSBChttp://en.wikipedia.org/wiki/Bengalhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Indian_rebellion_of_1857http://en.wikipedia.org/wiki/Joint_stock_company


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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."

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 Bankand

Central Bank of India.

The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina

Kannada and Udupi district which were unified earlier and known by the name South Canara

( South Kanara ) district. Four nationalised banks started in this district and also a leading private

sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian

Banking".

Banking in India originated in the last decades of the 18th century. The oldest bank in existence

in India is the State Bank of India, a government-owned bank that traces its origins back to June

1806 and that is the largest commercial bank in the country. Central banking is the responsibility

of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the

then Imperial Bank of India, relegating it to commercial banking functions. After India's

independence in 1947, the Reserve Bank was nationalized and given broader powers. In 1969 the

government nationalized the 14 largest commercial banks; the government nationalized the six

next largest in 1980.

The major steps to regulate banking included:

In 1948, the Reserve Bank of India, India's central banking authority, was nationalized,

and it became an institution owned by the Government of India.

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of

India (RBI) "to regulate, control, and inspect the banks in India."

The Banking Regulation Act also provided that no new bank or branch of an existing

bank could be opened without a license from the RBI, and no two banks could have

common directors.
http://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_India


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However, despite these provisions, control and regulations, banks in India except the State Bank

of India, continued to be owned and operated by private persons. This changed with the

nationalisation of major banks in India on 19 July, 1969.

Nationalisation

Nationalisation of 14 largest commercial banks with effect from the midnight of July 19, 1969

took place. Within two weeks of the issue of the ordinance, the Parliament passed the Banking

Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential

approval on 9 August, 1969.

A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated

reason for the nationalisation was to give the government more control of credit delivery. With

the second dose of nationalisation, the GOI controlled around 91% of the banking business of

India.

Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with

the Government of India holding a stake), 31 private banks (these do not have government stake;

they may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a

combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA

Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the

banking industry, with the private and foreign banks holding 18.2

Banking, as defined in Banking regulation Act, is acceptance of deposits for the purpose of

lending and investment and not repayable otherwise than on demand. With the limited network of

commercial bank, and monopolies of few presidency banks, the business flow was spontaneous

and bankers had nothing more to do than banking defined in the statute book, In the Early

Banking.
http://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/July_19http://en.wikipedia.org/wiki/1969http://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/President_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Automated_teller_machinehttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/July_19http://en.wikipedia.org/wiki/1969http://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/President_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Automated_teller_machine


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STRUCTURE OF THE BANKING SYSTEM


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FUNCTIONS OF A BANK


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Introduction to Retail Banking


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The nationalization of major commercial banks in the late 1960s and early 1980s and the

introduction of Lead Bank Scheme resulted in large scale expansion of bank network in the

country.

Added to this, the financial sector reforms have brought in the entry of new private sector andforeign banks into the country. The conventional banking as outlined above has given way for

professional and high-tech banking. There has been a paradigm shift from the monopolies of

public sector banks to competitive banking. Public sector banks can no longer remain complacent

with their conventional products and services. With walk-in business virtually being ruled out,

banks are now scouting for quality consumers, both for building their resources and assets.

There were times, when the corporate clientele occupied the centre stage and the retail ones were

pushed to the back seat. The slowdown of the economy, sluggish industrial growth and slump in

agricultural activities has pushed the commercial banks to the retail customer.

Retail Banking

Definition: Retail banking is banking catering to the multiple requirements of individuals

relating to deposits, advances and associated services.


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Retail banking has both pros and cons. In a situation like today, the bankers have very little

option, but to chant the Retail Mantra.

Retail banking encompasses retail deposit schemes, retail loans, credit cards, deposit cards,

insurance products, mutual funds, depositary services including DEMAT facilities. It includesvarious products and services forming a part of the assets as well as the liabilities segment of the

banks.

Retail banking generally refers to offering financial services, products related to deposits and

assets to individual customers for personal consumption. Banks concentrate on various segments

like professionals, housewives, pensioners, children, salaried class, etc. Different types of

products like recurring deposits, savings bank deposits, fixed deposits, credit cards, housing and

consumer loans and educational loans are offered by banks to the abovementioned market

segments.

History of Retail Banking

Banking industry in India has passed through several stages of change during the past few

decades. The traditional system of lending only to the trading community has undergone changes

after nationalisation and social banking has taken its root. Mass banking was the order of the day

in the 1980s. After globalization, many foreign banks and new private banks have entered into

the arena of Indian banking. A shift from mass banking to class banking was noticed in the


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beginning of the last decade. Due to stringent rules regarding NPAs, the banks were engaged in

cleaning up their Balance sheet at the end of the last century. Compromise, writing off huge

balances, waiver of interest amount were the order of the day. Even the RBI had brought out few

One Time Settlement (OTS) schemes.

After these developments, banks realized that lending to the big industries or blocking huge funds

in a particular segment or lending in bulk is no longer safe. In other words, the old saying Do

not keep all the eggs in single basket has gained importance and banks started looking for some

new ways and means to spread the risk instead of concentrating on the lending risk. This paved

the way for massive expansion under retail lending.

In the same way, accepting big term deposits by paying higher rate landed some banks into

trouble. In the falling interest rate regime, accepting the bulk term deposits for longer period is

quite dangerous. Banks, for mitigating the problem arising out of interest rate risk, started to give

more importance to retail segment for collection of deposits so that they can spread the interest

rate risk.

Thus, due to this background the NBFCs, and banks and lending agencies, all look for Indian

household segment for marketing loan and deposit products. In this millennium, the retail

banking has gathered momentum. The retail banking has now become the only way and means

for the bank.

Due to the prevalence of higher risks in bulk lending, which has landed the banking industry in

severe problems because of increased NPAs from the particular segment, retail lending, due to its

various comparative advantages, has gained much importance in the recent years and banks and

NBFCs are now aggressively marketing their different retail lending products.

Even in the pre-nationalisation era, Indian Overseas Bank (IOB) was the pioneer in introducing

its popular personal loan scheme, which was nothing but an installment credit for purpose of

consumer durable items targeted at salaried class. The personal loan concept in different formats

has come to stay in the country and the potential for widening the retail segment is far great.


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WHY RETAIL BANKING?


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Traditionally the main function of the banks was to cater to the needs of the business community

of the country. but its not the same now due to the following reasons:

Financial Dis-Intermediation -

A scenario has emerged wherein there is a lack of demand for credit from large corporates

primarily due to two reasons:

- Near demise of working capital requirements due to enhancement in activities like

productivity and increased sales realization.

- Corporates have their own avenues, for example, tapping public deposits, issuance of

shares and debentures.

Advent Of Economic Liberalisation -

A lot of new players in the banking sector have come up due to privatisation and

globalization resulting into competition with each other for market share. The confluence


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increased purchasing power, consumerism and competition with the banks has resulted ina

retail chase.

Hence the identity of banks has changed from those known for their roles in development of

business/ economy to the ones helping in the development of the family.

Competition -

The Reserve bank of India (RBI), prime regulator of financial sector, has removed several

artificial barriers which made the banks and the non-banking companies to penetrate into

wide range of financial services. The line dividing the banking, insurance and capital market

services is disappearing and the commercial banks are offering these services under one

umbrella. Banks and non-banks are offering similar retail financial services, for example car

loans similarly primary dealers like PNB gilts are offering GOI securities which are

complimentary to bank deposits.

Consolidation -

Consolidation is in progress, the huge monolithic organization ICICI is merged with ICICI

Bank Ltd. Sometime back Twentieth Century Finance Company a non-banking company is

merged with Centurion bank.

Computers And Information Technology -

Traditionally Retail Banking is built on the foundation of physical branch network. Now the

technology has emerged as a perfect and effective substitute to physical branches through

ATMs, call centers, home banking and internet banking. Several parallel distribution systems

have emerged for delivery of services.

Customer Centric -


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Due to increased financial market products like commercial paper and variety of financial

instruments big corporate clientele of several commercial banks have shifted their loyalty and

have been raising resources from the market directly and commercial banks have become

more retail customer centric by offering wide range of services. Banks have identified new

customer segments like students, working women, and rich net worth individuals.

Customer Relationship Profitability -

Regulated era has given assured profits to banks, but in the post deregulation period as

margins are falling down substantially the banks are concentrating on customer relationships.

Small is beautiful

Does Retail credit help the economy?

What matters is what for you is finance and not what against, says Reserve Bank of India quite

often.

Its implication is obvious: bank finance being scarce and as there are competing claimants, it has

to be rationed in the best interest of national economic prosperity, by ensuring that loan funds

flow to productive sectors. That is why RBI rightly stresses that purpose orientation and end-use

principle are important in lending. If Indian Banking does not face the problems like those of

China, South East Asia and Japan, it is principally due to sound lending norms prescribed and

supervised by the central bank.

Previously consumer finance was not encouraged by RBI. However, things have radically

changed. Banks are awash with excess liquidity. Interest rates and inflation are moving

southwards. Corporate do not borrow from banks in a big way due to a variety of reasons like

economic slowdown, infrastructural constraints, etc. Prime corporates manage to secure sub-

PLR rates. Under these circumstances banks are forced to look into the retail segments for

lending and RBI no longer applies any brakes.


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Is retail credit unproductive from the national economy perspective? Certainly not. The spurt in

retail credit in sectors like consumer finance, automobiles, two-wheelers, financial services and

home loan sector indirectly helps the economy by pushing up the sales of the products and

services involved. That is why central bankers now view with favour retail segment lending. This

apart, banks also consider retail lending as less risky and more profitable. Banks like ICICI Bank,

HDFC Bank, State Bank of India have become aggressive players in retail lending as a

consequence.

Banks are still competing with each other to further augment the retail credit. Banks have now

believed that small is beautiful.

The Flip Side

While banks are agog with augmenting retail credit, there comes the note of caution from RBI. It

had cautioned banks way back in august 2002 that they should not go overboard in the housing

loan segment. According to RBI all the home loans should not be perceived as risk-free by the

bankers. Proper due diligence is necessary while screening the applications to avoid sub-prime

crisis in India.

Even BASEL committee has expressed its reservations about the booming retail loan segment the

world over. As in the case of United States of America, overexposure to housing and other retail

sectors could create bubbles in the Indian markets as a consequence to the over spending by the

salaried class, followed by subsequent defaults.

Perhaps, it is not the time to press the panic button in the Indian context as Indian banks are

emphasizing on Risk Management and prudence in lending. May be in the coming years, we will

hear more success stories in the retail front.


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PRINCIPLE OF RETAIL BANKING

Retail banking is based on the principle

Banking for the people, by the people and of the people

SWOT ANALYSIS OF RETAIL BANKING


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STRENGTHS :

Tendency to default a retail loan is low as these are backed by mortgages of houses in case of

housing loans and post dated cheques in case of other loans like vehicle loans. The housing

loan has been proved as a safe advance as a house is considered as the most sensitive andessential asset of a family.

WEAKNESSES :

Longer tenure of loans, ranging from minimum 3 years to 15/20 years as against the average

deposits of less than 3 years.

OPPORTUNITIES :

Growth in retail lending has outperformed in other segments in recent years and is expected

to continue at much higher rates. Opportunities for banks to offset the demand for funds from

the corporate sector. Banks have more opportunities for cross selling of products.

TREATS :

Incidences of concurrent borrowings are on an increase in case of retail loan through credit

card/ other routes. Shrinkage in the kitty of no cost (current account) deposits, thereby

increasing the average cost of deposits for the bank.


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STRATEGIES FOR SUCCESS IN RETAIL BANKING

Constant product innovation to match the requirements of the customer segments -

The 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.

Quality service and quickness in delivery -

As most of the banks are offering retail products of similar nature, the customers can easily

switchover to the one, which offers better service at comparatively lower costs. The quality 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.

Introduction of new delivery channels -

Retail customers like to interface with their bank through multiple channels. Therefore, banks

should try to give high quality service across all service channels like branches, Internet,

ATMs,etc.

Tapping of unexploited potential and increasing the volume of business -

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. With

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.


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Marketing 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.

Infrastructure outsourcing -

This will help in lowering the cost of service channels combined with quality and quickness.

Detail market research -

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.

Cross-selling of products -

PSBs have an added advantage of having a wide network of branches, which gives them an

opportunity to sell third-party products through these branches.

Business process outsourcing -

Outsourcing of requirements 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. For example, Management of ATMs can be outsourced. This will

save the banks from dealing with the intricacies of technology.

Tie-up arrangements -


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PSBs 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 recognizing the needs

of the customers. It is essential that banks would be imaginative in predicting the customers'

expectations in the ever-changing tastes and environments. It is the innovative and

competitive products coupled with high quality 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.

Other Strategies

Advance technology and adoption of this latest technology.

Skilled manpower in all branches and offices.

Balanced and sustained growth in deposits and advances.

Strategic cost management.

Market research and market intelligence, in order to formulate competitive and innovative

products.

Risk management.

Customers relationship management.

Banks should share the existing networks and services.

Universal banking/Financial super markets.

Service quality with a human touch.

Customer base should be strengthened.


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More and more customers be encouraged to shift from paper to plastic so that usage of

new delivery channels increases.

EMERGING ISSUES IN HANDLING RETAIL BANKING

Knowing the customer -

Each branch should set up dataware house wherein meaningful data on customers, their

preferences, spending patterns, etc can be mined. But especially in India which is easier said

than practiced.

Technology issues -

Retail banking calls for huge investments in technology, for example, providing anytime,

anywhere convenience to vast number of customers, and delivery channels through ATMs

which requires a huge investments by the banks. Also customers nowadays prefer net banking

to branch banking. The banks which are slow in introducing technology based products, are

finding it difficult to retain the customers who wish to opt for net banking. Inspite of

investing heavily in technology, banks are not yet able to exploit the same to the fullest.

Product innovation -


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The need for introduction of innovative products and services is high in the banking sector.

Products should be introduced to create value, not amusement. The days of selling products

on the shelf are gone in the banking sector.

Pricing of products -

The banking sector is witnessing pricing war, with each bank wanting to have a larger slice of

the market share. The much needed transparency in pricing is also missing with many hidden

charges. For example, Minimum amount due and Total amount due in the credit card

application form; and processing charges are not advertised.

Issues related to human resources -

- Motivating the frontline staff by projecting them as sales mangers of products rather

than as clerks at work.

- Changing the image of the bank from a transaction provider to a solution provider.

Low cost and low cost deposits -

Bank managers are in need of more savings bank and current accounts so that their cost of

liability will be less.

Three AAAs (Anytime, Anywhere and Anyhow banking)

- With the advent of ATMs Anytime banking has become a reality.

- Satellites and telecom networks across the world have made Anywhere banking

possible.

- Now is the time for Anyhow banking.


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FRAMEWORK OF RETAIL BANKING SERVICES

Banking services can be divided into 3 categories from the dimension of retail banking

1. Core services

2. Facilitating services

3. Supporting services

Core service is the reason for being the market, facilitating service are needed so that the core service can

be used, and supporting services exactly discriminates the service package from the services of the

competitors.

CORE SERVICES FACILITATING SERVICES SUPPORTING SERVICES

Payment services : Cash

Foreign currency

requirements

Traveler cheques

Making payments at

doorsteps

Internet banking

Telephone banking


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DDs/ Bankers cheques

Electronic Funds

Transfer (EFT)

TT

Letter of Credit

Current account & Savings

account :

ATM cards

Standing instructions

from customers for

making payments

Interbranch / interbank

transfer of funds

Safety vault

Credit cards

Debit cards

Services to senior

citizens

Telephone banking

Internet bvanking

Conversion of excess

balance in time

deposits

Loan products : Consumer

loans, Personal loans,

Housing loans, Educational

loans

Current account

Savings account

Time deposit account

Delivery of loan at

promised time period

Interest rate option:

fixed/floating

Flexibility in

prepayment of loan

Counseling on real

estate markets

Legal services for

documentation

ECS for payment of

loan installmentInsurance products : Life

insurance from a pension

scheme

Current account

Savings account

Time deposit

Safety vaults

Additional insurance

facility for family

members

Counseling on post

retirements savings


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ADVANTAGES OF RETAIL BANKING

Retail banking has inherent advantages outweighing certain disadvantages. Advantages are

analysed both from the asset angle and the resource angle -

Resource

Stable core deposits

Less bargaining for additional interests

Low cost funds

Bills customer based

Increases subsidiary business

A safe and convenient saving avenue

Asset

Better yield and improved bottomline

Good avenue for funds deployment


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Lower risks and NPA perception

Helps economic revival of the nation through increased production activity

Improves lifestyle and fulfills aspirations of the people through affordable credit

Innovative product development

Minimum marketing efforts in a demand driven economy

Risk weight in certain segments like housing loans

DISADVANTAGES OF RETAIL BANKING

Retail banking, thought by and large, is very handy in times of sl9ow credit off take, is not

without disadvantages. A major disadvantage is monitoring and follow up of huge volumes of

loan amounts. Housing loans by virtue of its long repayment term in the absence of proper followup, can become NPAs.

However, by tightening the follow up mechanism this can be checked to a very great extent.


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SUGGESTIONS

Depending on the quantum of loan and credit rating, the customers who have been

associated with the bank for a specific period should be granted certain advantages like softer

repayment terms/schedule, especially for availing housing schemes.

Upgrade the profitability mix of borrowers (Retail v/s Wholesale) to know the

behavioural pattern, primarily through a separate marketing cell on loan products and

services.


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CHALLENGES TO RETAIL BANKING IN INDIA

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.

The issue of outsourcing has become very important in recent past because various core

activities such as hardware and software maintenance, entire ATM set up and operation

(including cash, refilling) etc., are being outsourced by Indian banks.

Banks are expected to take utmost care to retain the ongoing trust of the public.

Customer service should be at the end all in retail banking. Someone has rightly said, It

takes months to find a good customer but only seconds to lose one. Thus, strategy of

Knowing Your Customer (KYC) is important. So the banks are required to adopt innovative

strategies to meet customers needs and requirements in terms of services/products etc.


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The dependency on technology has brought IT departments additional responsibilities

and challenges in managing, maintaining and optimizing the performance of retail banking

networks. It is equally important that banks should maintain security to the advance level to

keep the faith of the customer.

The efficiency of operations would provide the competitive edge for the success in retail

banking in coming years.

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.

One 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.


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SCOPE FOR RETAIL BANKING IN INDIA

All round increase in economic activity

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.

India has 200 million households and 400 million middleclass population more than 90%

of the savings come from the house hold sector. Falling interest rates have resulted in a shift.

Now People Want To Save Less And Spend More.


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Nuclear 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.

Tax benefits are available for example in case of housing loans the borrower can avail tax

benefits for the loan repayment and the interest charged for the loan.

THE ROAD AHEAD

Success of bank depends mainly on anticipating and exceeding customers expectations. Retail Banking

will witness far more challenging and competitive market place and it will grow in keeping with economic

advancement. Hence, product and marketing thrust will have to be maintained and upgraded through

innovative measure on an on-going basis.

A combined strength of good branch network and IT enabled electronic delivery channels will have to be

harnessed to meet the emerging customer needs and delivery capabilities. The question now is that of

retaining the customers, more important than attracting customers. In order to retain them, banks need to

offer what they desire at the click of button. More importantly, products need to be competitive. Today,

banks face competition from virtual banks whose lower overhead costs means ability to pay higher deposit


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rates and charge lower loan and service rates. At the same time, the product profile of bank is equally

important. Retaining clients means offering more than what a traditional bank does. The customer looks

for customised and personalized facilities like service bill payment, mutual funds, insurance, advisory

services, broking services, etc. the four pillars of the customer centricity for retail financer will have to be

- Accessibility

- Affordability

- Convenience

- Customer relationship management

More importantly the customer relationship management will be future differentiators in the market place.

To gain any kind of foothold in the retail finance market, banks will have to learn that change should not

be limited to product profile and competitive pricing. Service and speed of delivery are equally important.

Moreover, the credit is no longer a scarce commodity and the bankers are operating in the buyers market.

Now almost all the banks are laying major thrust in terms of retail lending and this mainly attributed to the

fact that the customer is the key in the industry. In view of the above, retail banking is all set to change the

nuances of basic banking in a major way, as retail consolidation promises to be a powerful catalyst in

managing the overall transformation of Indian banking.

AXIS BANK

Axis Bank was the first of the new private banks to have begun operations in 1994, after the

Government of India allowed new private banks to be established. The Bank was promoted

jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I), Life

Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and

other four PSU insurance companies, i.e. National Insurance Company Ltd., The New India

Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance

Company Ltd.

The Bank today is capitalized to the extent of Rs. 359.00 crores with the public holding (other

than promoters) at 57.60%.


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The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The

Bank has a very wide network of more than 827 branches and Extension Counters (as on 31st

March 2009). The Bank has a network of over 3595 ATMs (as on 31st March 2009) providing 24

hrs a day banking convenience to its customers. This is one of the largest ATM networks in the

country.

The Bank has strengths in both retail and corporate banking and is committed to adopting the best

industry practices internationally in order to achieve excellence.

PROMOTERS

Axis Bank Ltd. has been promoted by the largest and the best Financial Institution of the country,

UTI. The Bank was set up with a capital of Rs. 115 crore, with UTI contributing Rs. 100 crore,

LIC - Rs. 7.5 crore and GIC and its four subsidiaries contributing Rs. 1.5 crore each.

SUUTI - Shareholding 27.08%

Erstwhile Unit Trust of India was set up as a body corporate under the UTI Act, 1963, with a

view to encourage savings and investment. In December 2002, the UTI Act, 1963 was repealed

with the passage of Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 by the

Parliament, paving the way for the bifurcation of UTI into 2 entities, UTI-I and UTI-II with effect

from 1st February 2003. In accordance with the Act, the Undertaking specified as UTI I has been

transferred and vested in the Administrator of the Specified Undertaking of the Unit Trust of


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India (SUUTI), who manages assured return schemes along with 6.75% US-64 Bonds, 6.60%

ARS Bonds with a Unit Capital of over Rs. 14167.59 crores.

The Government of India has currently appointed Shri K. N. Prithviraj as the Administrator of the

Specified undertaking of UTI, to look after and administer the schemes under UTI - I, where

Government has continuing obligations and commitments to the investors, which it will uphold.

SHAREHOLDING


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Share Capital - Rs. 359.01 crores

Net Worth - Rs. 9,757.45 crores

Book Value per share - Rs. 284.50

Market Price as on 17/04/09 - Rs. 503.25

Market Cap as on 17/04/09 - Rs. 18,067 crores (US $ 3.63 billion)


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BOARD OF DIRECTORS

The members of the Board are:

Shri N.C. Singhal Director

Shri J.R. Varma Director

Dr. R.H. Patil Director

Smt. Rama Bijapurkar Director

Shri R.B.L. Vaish Director

Shri M.V. Subbiah Director

Shri Ramesh Ramanathan Director

Shri K. N. Prithviraj Director

MISSION AND VALUES

Mission

Customer Service and Product Innovation tuned to diverse needs of individual and

corporate clientele.


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Continuous technology upgradation while maintaining human values.

Progressive globalization and achieving international standards.

Efficiency and effectiveness built on ethical practices.

Core Values

Customer Satisfaction through

Providing quality service effectively and efficiently

"Smile, it enhances your face value" is a service quality stressed on

Periodic Customer Service Audits

Maximisation of Stakeholder value

Success through Teamwork, Integrity and People

AXIS BANK FY 2008-09

Highlights


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Quarter 4 FY 09

Net Profit 61% yoy (Increase) 69% yoy (Increase)

Net Interest Income 25% yoy (Increase) 43% yoy (Increase)

Fee Income 42% yoy (Increase) 64% yoy (Increase)

Operating Revenue 36% yoy (Increase) 50% yoy (Increase)

Operating Profit 58% yoy (Increase) 67% yoy (Increase)

Net Interest Margin 3.37% 3.3%

Cost of Funds 6.64% 6.50%

Interpretation of Q4 Performance

Rapid Growth in the Banks core businesses

- Total Net Advances grow 37% yoy to Rs. 81,557 crores

- Total Investments grow 37% yoy to Rs. 46,330 crores

- Total Assets register a 35% yoy growth, rising to Rs. 1,47,722 crores

- Fees grow by 42% yoy, rising to Rs. 664.40 crores


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Note: Core Operating Revenue / Profit excludes trading gains/losses.

(Rs.crores)

Consistent Net Profit Growth

Over 30% yoy growth in Net Profit in 35 out of the last 37 quarters

Over 60% yoy growth in Net Profit in each of the last 7 quarters


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Net Interest Margins & Cost Funds


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Growing net interest income


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Growing Demand Deposits


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Fee Income Composition

48% YOY

Fees have grown very strongly in all businesses


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Trading Profits

Constitute 8.85% of Operating Revenue in Q4.


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Network


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Branches Extn. Counters

Metro 273 6

Urban 324 2

Semi - Urban 186 0

Rural 44 0

Total 827 8

Business Banking - Cash Management Services


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Collection of Central Government Taxes on behalf of CBDT and CBEC, including

through e-payments.

Collection of State Taxes on behalf of seven State Governments and UTs.

Collections & Payments for Central Government Ministries - Railways, Urban

Development and Housing & Urban Poverty Alleviation.

Collections under e-Governance initiatives of 4 State Governments and Chandigarh.


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Business Banking - Current Account Growth

Wide Range of Products

Customised offerings for various business segments

Growth aided by Club 50 and Channel One high-end premium products

Broad-based sales strategy

Focused approach for Corporates, Institutions & Government


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Savings bank growth

Savings Bank growth led by:

Wide Network - Branch and ATM Channel reach

Banks own sales channel

Focused strategy for niche customer segments

Corporate and Government payroll accounts


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Retail Assets

Retail Assets grew by 18% yoy

Retail Assets constitute 20% of the Banks total advances, as compared to 23% as at end

March 08

Growth driven through Retail Asset Centres (RACs)


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Composition of Retail Assets

Product-wise composition of Retail Assets portfolio (March 09)


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Card Business

Issuance

- Over 533,000 Credit Cards in force till end March 09.

- 3rd largest Debit Card base in the country.

- 1st Indian Bank to launch Travel Currency Cards in 9 currencies -US$, Euro, GBP,

AUD, CAD, SGD, SEK, CHF, JPY.

- 1st Indian Bank to launch Remittance Card and Meal Card.

Acquiring

- Installed base of over 115,000 EDCs.

Cards business a significant contributor to Retail Fees.

ATM Channel Migration


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Over 95% of SB account cash withdrawals occur on ATMs

Pioneer in ATM sharing arrangements

Value added services such as Bill Payments, MF Investments, Mobile Top-ups and VISA

Money Transfer services

International Presence


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Shareholders Returns

Annualised ROE of 24.38% in Q4 FY09, as compared to 21.24% in Q3 FY09 and 17.28% in

Q4 FY08.

ROA of 1.68% in Q4 FY09, as compared to 1.48% in Q3 FY09 and 1.43% in Q4 FY08.


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ORGANISATION CHART AS APPLICABLE TO AXIS

BANK BYCULLA BRANCH WITH EFFECT FROM MAY

05,2009.

Mr Deekshitulu(Branch Manager/Head)

Mr. Aziz Mr. Makhija(Operations Manager) (Sales Manager)

- Ms. Divya Bajpayee - Mr. Shivesh Kumar(Deputy Manager) (Business Development Executive)- Ms. Pushpa Nair - Mr. Mihir Dhruv(Relationship Manager) (Business Development Executive)- Mr. Rishikesh Kadam - Mr. Ronak Mehta(Cash Officer) (Business Development Executive)- Ms. Diana Fernandes - Mr. Fakre Alam Ansari

(Cash Officer) (Business Development Executive)- Ms. Nicelin Dsouza - Mr. Danish Ahmed

(Front Desk Officer) (Business Development Executive) - Ms Jennifer Gandhi - Mr. Hari. M. Ahire

(Front Desk Officer) (Business Development Executive)- Ms. Manali Adkar

(Receptionist)

Support Staff

- Mr. Shivkumar Sharma

- Mr. Santosh- Mr. Sunil

- Mr. Ashok Singh

RETAIL LIABILITIES


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A) SAVINGS ACCOUNTS

Scheme Type Quarterly Average Balance

Requirement* (in Rs.)

Zero Balance Savings Account NILZero Balance Salary Savings Account NIL

NRI Normal 5,000

NRI Prime 25,000

NRI Priority 100,000

Easy Access Savings Account 5,000

Prime Savings Account 25,000

Priority Savings Account 100,000

Smart Privilege Account (For women) 10,000

Senior Privilege Account (For Senior Citizens) 10,000

Savings with DEMAT Account 1,000 No Frills Account NIL

B) CURRENT ACCOUNTS

Scheme Type Monthly/ Half yearly Average Balance

Requirement *(in Rs.)Local Current Account (CALCA) NIL

Normal Current Account (CANOR) 10,000

Business Advantage Account (CAADV) 25,000

Business Classic Account (CABCL) 100,000

Business Privilege Account (CABPL) 500,000

Channel one Account (CACH1) 1,000,000


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Club 50 Account (C50) 5,000,000 (HAB)

Special Accounts Monthly/ Half yearly Average Balance

Requirement *(in Rs.)

- Builder and Real Estate 500,000

- Shipping and Maritime 500,000

- Pharmaceutical Diagnostic and Chemist NIL

-Business Global Account NIL

-For Chartered Accountants NIL

-Travel, Tourism and Hospitality 100,000 (HAB)

-KRISHI (Urban) 10,000 (HAB)

(Semi - Urban) 5,000 (HAB)

(Rural) 2,500 (HAB)

Capital Market Account Monthly Average Balance *(in Rs.)

Normal Current Account (CAPNOR) 10,000

Business Advantage Account (CAPADV) 25,000

Business Classic Account (CAPBCA) 100,000

Business Privilege Account (CAPBPL) 500,000

Channel one Account (CAPCH1) 1,000,000

* Monthly Average Balance (MAB) Depending upon the type of account chosen, MAB is to be

maintained. The day end balances of all the days are summed up and then divided by the number of days

in the month to arrive at the MAB for that month.

For instance: If the account requires an MAB of Rs.10,000. If the customer deposits Rs. 300,000 on the

first day of account opening and withdraws it the next day, the customer has sufficed the requirement.

Rs.300,000 /30days = Rs. 10,000

MAB = Rs. 10,000.

Quarterly Average Balance (QAB) - Same as MAB but this is calculated on quarterly basis by adding up

all the day end balances and dividing it by the number of days in that quarter.


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Half yearly Average Balance (HAB) Same as MAB but this is calculated on the six-monthly basis by

adding up all the day end balances and dividing it by the number of days in those six months.

C) DEPOSITS

Schemes FeaturesTerm Deposits : Also known as Fixed deposits

or time deposits, are deposits kept for fixed

period and are repayable on expiry of fixed

period.

The bank decides the rate of interest in

term deposits of various maturities from

time to time by taking into account the

directives from RBI in this regard.

The RBI guidelines provide discretion

to banks to offer term deposits from

minimum period of 7 days to maximum

of 120 months (10 yrs)

Short Term Deposits : As the name indicates

are accepted for short period and interest is

paid on the deposit on simple basis.

The minimum period for which short

term deposit can be expected is 7 days

and the maximum period is less than 6

months.

Rate of interest for term deposits

advised by central office for deposits of

various maturities and amount slabs are

applicable to short term deposits.

Interest is on simple basis without


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compounding.

Reinvestment certificate : It is the most popular

form of term deposit. It is a cumulative deposit

scheme, where the interest is compounded on

quarterly basis and is paid with the principal on

maturity.

The minimum period for which these

certificates can be invested is 6 months

and maximum period is 120 months (10yrs)




applicable to reinvestment certificates.

Monthly Interest certificate : It provides fixed

monthly income by way of interest to the

depositor for a specified period leaving the

principal amount of deposit intact.

The minimum period for which the

monthly interest certificate can be

accepted is 12 months and maximum

period is 120 months (10 yrs).




applicable to monthly interest

certificates.

Quarterly interest certificate : It provides fixed

quarterly income by way of interest to the

depositor for a specified period leaving the

principal amount of deposit intact.

The minimum period for which the

quarterly interest certificate can be

accepted is 12 months and maximum

period is 120 months (10 yrs).




applicable to quarterly interest

certificates.

Encash 24-FlexiDeposit : It gives a liquidity of

a savings account coupled with high earnings

As soon as the balance in savings

account crossed over 25000, the excess,


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of a fixed deposit. This is achieved by creating

a fixed deposit linked to a savings account.

in multiples of 10000 is transferred

automatically to term deposits account.

The maturity of this fixed deposit can

be for a maximum period of 181 days

The interest will be calculated on simple

interest rate basis.

Power 24-Term deposit with overdraft

facilities in savings/current accounts : It allows

an overdraft facility in savings or current

account of the depositor against his/ her term

deposits with the bank.

The rate of interest would be as advised

by the central office from time to time

for advances against term deposits.

Recurring Deposit : It enables a depositor,

particularly in a fixed income group, to save by

paying into the account an agreed fixed amount

monthly over a stipulated period.

The recurring period accounts can be

opened for a period of 12 months and in

multiples of 12 months thereafter, upto

a maximum of 120 months (10 yrs).

Rates of interest for other term deposits

of similar maturities are also applicableto recurring deposits. Interest is applied

on quarterly compounding basis.

Senior Citizen scheme : The RBI permits

banks to offer preferential rate of interest on

deposits of senior citizens. Axis Bank offers a

preferential/higher rate of interest for certain

maturities to senior citizens for term deposit

schemes.



various maturities and amount slabs.

The deposits under the scheme can be

accepted for a minimum period of 6

months and a maximum period of 120

months (10 yrs)

Tax saver Term Deposit scheme : In the

Finance Bill of 2006, the government has

The term deposit under this scheme has

a fixed term of five years. Since there is


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announced tax benefits for a scheme called

Bank Term Deposits Scheme 2006 under

section 80C of IT Act,1961. Thus this new

term deposit product has been introduced.

an underlying tax advantage under

section 80C of IT Act, there is a lock in

period of atleast five years on the FD

under the scheme.

The rates of interest for the deposit

under the scheme are as announced by

the treasury department from time to

time. Interest is paid at quarterly

intervals at the rates applicable at the

time of acceptance

RETAIL ASSETS

One of the prominent features of Retail Banking products is that it is a volume driven business.

Further, Retail Credit 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


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plans. Ability of a bank to administer a large portfolio of retail credit products depends upon

such factors :

Strong credit assessment capability -

Because of large volume good infrastructure is required. If the credit assessment itself is

qualitative, than the need for follow up in the future reduces considerably.

Sound documentation -

A latest system for credit documentation is necessary pre-requisite for healthy growth of

credit portfolio, as in the case of credit assessment, this will also minimize the need to follow

up at future point of time.

Strong possessing capability -

Since large volumes of transactions are involved, today transactions, maintenance of backups

is required

Regular constant followup -

Ideally, follow up for loan repayments should be an ongoing process. It should start from

customer enquiry and last till the loan is repaid fully.

Skilled human resource -

This is one of the most important pre-requisite for the efficient management of large and

diverse retail credit portfolio. Only highly skilled and experienced man power can withstand

the river of administrating a diverse and complex retail credit portfolio.

Technological support -

This is yet another vital requirement. 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.

The various schemes under which these Retail Assets are classified by Axis Bank are provided in

the below table -


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Schemes FeaturesAdvance against term deposits

Advance against term deposits : The facility

of advance against security of deposits is one

of the important features of term deposits of

banks. The facility can be granted at any time

during the currency of the deposits.

Advance against term deposits is

subject to the margins stipulated by

central office from time to time. At

present the advance can be granted upto

85% of the face value of the deposit

plus upto date accrued interest i.e. with

a margin of 15%.

Interest on advance against term

deposits should be charged at per therates advised by the Central Office from

time to time.

Advance against postal certificates, GOI relief bonds and life insurance policies

Advance against National Savings

Certificate

Minimum amount of advance that can

be granted under the facility is Rs.

20000 and maximum is Rs. 1000000.

Interest on advance against NSCs

should be charged as per the ratesadvised by the Central Office from time

to time.

Advance against Kisan Vikas Patra (KVP) Minimum amount of advance that can

be granted under the facility is Rs.

20000 and maximum is Rs. 1000000.

Interest on advance against NSCs

should be charged as per the rates

advised by the Central Office from time

to time.

For demand loans, the LNKVP:LN-

KVP-KISAN VIKAS PATRA scheme

may be opened.


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Advances against GOI relief bonds For individuals, HUF and proprietorship

concerns the minimum loan amount is

minimum 1 lakh and maximum 20

lakhs.

For partnership firms and corporate the

minimum loan amount is 5 lakhs and

maximum is 10 crores.

Interest on advance against Relief

Bonds should be charged as per the

rates advised by the Central Office from

time to time.

Advance against Life Insurance policies Advances against LIP are to be

sanctioned for a minimum loan amount

of Rs. 20000 and maximum loan

amount of Rs. 1000000.

Interest on advance against LIP should

be charged as per the rates advised by

the Central Office from time to time.

Empower-Advances against dematerialized shares and units of Mutual funds

Empower-Advances against dematerialized

shares

The minimum amount of advance that

can be granted under the scheme is Rs.

1 lakh and maximum amount is Rs. 20

lakhs.

Interest on the advance should be

charged as per the rates advised by the

Central Office from time to time.

Advance against units of Mutual Funds The minimum amount of advance that

can be granted under the scheme is Rs.

25000 and maximum amount is Rs. 20

lakhs.

Interest on the advance should be

charged as per the rates advised by the


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Central Office from time to time.

Power Home-Home Loans : Housing finance

is granted by th bank under the brand name

Power Home. It is one the major components

of retail credit portfolio and has large potential

for building up long term secured assets.

The loan under the scheme can be

considered for a minimum amount of

Rs. 1 lakh and maximum Rs. 50 lakhs.

Power Homes can be granted on the

basis of fixed rate of interest or the

floating rate of interest as per the choice

of the customer. The interest rate

schedules of both these types of rates as

advised by the Central Office from time

to time should be followed. The floating

rate is normally linked to the MortgageReference Rate.

Loan against property

Loan against property The loan under the scheme can be


Rs. 2 lakhs and maximum of Rs. 150

lakhs.

The interest rate schedules as advised

by the Central Office from time to time

should be followed.

Loan against third party property : It

facilitates providing loan against residential

and commercial property in the name of third

party

The loan against the scheme can be


Rs. 2 lakh and a maximum of Rs. 100

lakhs.


granted at present only on floating rate

of interest. The interest rate schedules

as advised by the Central Office from

time to time should be followed.

Power loans-Car loans and two wheeler loans

Power Drive-Car loans : Car finance is an The interest rate schedules as advised


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important component of retail banking product

portfolio of banks. In Axis Bank car loans are

offered under the product name Power Drive.


should be followed.

Two wheeler loans The interest rate schedules as advised


should be followed.

Personal Power-Personal loan

Personal loan : Personal loans are the major

components of retail credit and has large

potential for building up remunerative asset

portfolio.

The bank has the following main sub

categories and product variants under

Personal Power-

a) Subsection

-salaried individual normal

-Salaried individual professional

-Salaried doctors

-LIC agents

-Self employed Doctors

-Self Employed Professionals

-Self Employed Normal

b) Variants

-Top up Loans

-Balance Transfer

-Repayment Track Record

-Life Insurance Policy

-Credit Card Program

-Express Loans

-Prompt Payment Discounts

Consumer Power-Consumer Loans

Consumer Loans : Consumer loans are

offered by the bank under the name Consumer

Power



should be followed.




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Rs. 25000 and maximum amount of Rs.

2 lakhs.

Study Power-Education Loan

Study Power-Education Loan : The product

aims at providing financial assistance tostudents who have obtained admission to

different courses for pursuing higher education

in India and abroad.



should be followed.

The minimum amount, subject to

eligibility that can be considered for the

loan is Rs. 50000. The maximum limit

for granting loan for studies in India is

Rs. 10 lakhs and Rs. 20 lakhs for studies

abroad.

Medical equipment financing

Medical equipment financing : It is for Self

Employed Doctors. It provides finance to them

for purchase of medical equipments or for

transferring their existing medical equipment

loan to Axis Bank.

The minimum amount of loan that can

be granted under the scheme is Rs. 1

lakh and maximum amount is Rs. 150

lakhs.

The rate of interest is linked to the

prime lending rate.

Card Power

Card Power : Its a credit product for

financing the credit/debit card receivables of

Merchant Establishments (ME) who install

EDC machines of Axis Bank.

Subject to the actual assessment of the

eligible limits, the finance under the

scheme , can be granted for a

-minimum amount of Rs. 2 lakhs at

rural and semi urban centres and rs. 5

lakhs at all other centres and

-Maximum of Rs. 100 lakhs



should be followed.


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THIRD PARTy PRODUCTS

- Met Life Insurance

-Bajaj Allianz

- Reliance Infrastructure Mutual Fund

- ICICI Prudential Mutual Funds (SIP)

- Mohur

- HDFC Mutual Fund

- TATA-AIG Mutual Fund

- UTI Dividend yield

The following are the strategies adopted to promote third party products:


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Focus on cross-selling to existing customers to generate fee income

Third-party products sold include: Mutual Funds, Insurance, On-Line Broking,Portfolio

Management

Services(Non-discretionary), Gold Coins and Depository services

Systematic segmenting of customers

Description Mass Market Mass Affluent Affluent

Profile Largest customer

segment

within the Bank

Small, but growing,

base of customers

Niche customer base

Focus Transactions-driven

crosssales

of products

Transactions-driven,

but with

initial relationships

being built

Total focus on

relationships which

results in cross-selling

Products Bundled insurance

with

home loans and

credit cards

Customer needs

mapped on to

existing standardised

portfolios

Customised

Portfolios

Documents required from the customers to open an

account

INDIVIDUAL


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1) PAN Card / PAN Intimation Letter / GIR No. / Form 60

AND

2) Any one of the following

- Passport

- Voter ID Card

- Driving license

HUF

1) PAN Card of the HUF / PAN Intimation Letter / GIR No. / Form 60

AND


- Passport of the Karta

- Voter ID Card of the Karta

- Driving License of Karta

PROPRIETORSHIP

1) PAN Card / PAN Intimation Letter / GIR No. / Form 60 of the proprietor

AND


- Sales tax / Shops & Establishments Registration Certificate

- Electricity / Telephone Bill of Firm / Proprietor

- Acknowledged IT return with Firms address


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PARTNERSHIP

1) PAN Card / PAN Intimation Letter / GIR No. / Form 60

AND

2) Partnership Deed

AND


- Shops & Establishments Registration Certificate

- Electricity / Telephone Bill of Firm

- Acknowledged IT return with Firms address

TRUST

1) Certified true copy of Trust Deed

AND

2) List of names of the Office-Bearers/Trustees

AND

3) Resolution signed by the Managing Trustee

AND

4) PAN Card / GIR No.

ASSOCIATION/CLUB/SOCIETY

1) List of name of the office bearers


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AND

2) Certified true copy of Registration Certificate (if registered) and Bye-Laws

AND

3) Resolution signed by the Chairman/President

AND

PAN Card / GIR No. of the Association / Club / SocietyIMITED COMPANY

1) Certified true copy of the Certificate of Incorporation

AND

2) Certified true copy of Memorandum & Article of Association

AND

3) List of Directors and copy of Form 32 (if directors different from AOA)

AND

4) Certified true copy of the board resolution

AND

5) PAN Card / GIR No.

AND

6) Certified true copy of the Certificate of Commencement of Business (public limited companies)


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SWOT FOR AXIS BANK BYCULLA BRANCH

Strengths :

- Popularity of Axis Bank as a brand.

- Dedicated and skilled staff.

- Well maintained ATM centre.

- Good working environment and work culture.

Weakness :

- Lack of knowledge about banking services in the local population.

- High level of illiteracy in the local population.


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- Inability of the customers to provide the required documents.

- Lack of enough savings by the localites making it difficult to maintain the minimum

average balance.

- Too many formalities as compared to the other branches.

Opportunities :

- Large untapped market.

- Scope to introduce more products and services.

- Scope of more processes to be brought under this branch.

Threats:

- Branches of other banks operating in the area.

- Competition with nationalized banks.


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SUGGESTIONS

Reduction in charges for Inter branch transactions.

Increasing advertising (Axis Bank only advertised when it changed its name from UTI

Bank to Axis Bank).

Targeting different classes of people of the society.

Waiver of minimum balance requirement in case of Fixed Deposits, of certain amount,

maintained with the bank.


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BIBLIOGRAPHY

www.wikipedia.org

www.axisbank.com

ICFAI book (Retail Banking)

Professional Bankers

www.rbi.org

www.investopedia.com

Economic Times
http://www.wikipedia.org/http://www.rbi.org/http://www.investopedia.com/http://www.wikipedia.org/http://www.rbi.org/http://www.investopedia.com/