tue class ( retail banking)

8/4/2019 Tue Class ( Retail Banking)

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Harendra Singh

Asst. Professor


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Concept of retail banking Retail banking refers to banking in which banking

institutions execute transactions directly with consumers, rather thancorporations or other banks. Services offeredinclude: savings and transactional accounts, mortgages, personalloans, debit cards, credit cards, and so forth.

Broadly we can divide the services as Asset side and Liabilities side


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Retail banking- Retail Lending

schemes( Asset Focused segment) Housing Finance

Consumer durable finance

Vehicle finance Personal loan

Advance against future lease rentals

Mortgage Loan

Pension Loan etc.


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Interest rate:

The rate of interest is deregulated by the apex

monetary authority which suggested that the interestoffered by one bank for a retail lending scheme maynot match with the one offered by other bank. The rateof interest is decided by individual bank.


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Retail Banking- Liability focused segment( Deposits)


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Saving fund account/saving bank

account Saving fund account may be opened by a properly introduced singly orjointly, minors of the age 10 yr and above with under natural/legalguardianship.

Saving fund account can not be opened in the name of and business

concern whether proprietary/company/partnership or association. Savings fund account can not be opened in the name of:

Government departments, municipal corporations, panchayat samitis,state housing boards, industrial development authorities, stateelectricity boards etc.


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Minimum Balance/ Account OpeningRequirements:

The min balance to be maintained in the account may differ from bank tobank since this area is deregulated by the apex monetary body, theReserve Bank of India.

Interest rate: the interest rate to be allowed by the bank is decidedby the RBI and this area has not been so far deregulated. The rate ofinterest payable by bank on saving fund account is 3.5 % p.a. on half

yearly basis and it is calculated on the min balance from 10th to the lastday of the month.

Withdrawal: by and large , banks do not permit withdrawals from asaving fund account during every half year, whether by cheque orotherwise for more than 50 occasions. However, there is no bar that thebank should allow more than 50 times


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Transfer of Account:An account may be transferred from onebranch to another branch of the bank, generally free of charge on

written request of the depositor.

Premature Closure of Account: In case the account isclosed within one year, except on account of death of account holder,banks levy certain charges as per the internal guidelines.

Joint accounts: when an account is opened in the name of two or morepersons, all of them must signed the account opening Form and affixtheir photograph. The account will be operated in accordance with theinstructions contained therein. If such instructions are rescinded byone of the joint depositors, withdrawals will only be authorized by allof them.

In case of joint account payable to either or survivor, if any depositor isdead, the balance will be payable to the survivor without any referenceor representatives or heirs if the deceased person


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Minor accounts:An account in the name of minor below the ageof 10 years may only be opened under the guardianship of his/herfather or mother in case both are not alive, a guardian appointed

through a will , deed or legislative act in force for the time being.

Blind customers account/Illiterates personsaccount

The account of such person may be opened when he/she come personally to

the bank with one witness who is known both to the person and bank Normally no cheque book facility is provided for such savings bank account

At the time of wthdrawals / deposit he/she should give the thumb impressionin the presence of authorized officer who should verify the identity of theperson


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Current AccountA current account may be opened by individuals, singly or jointly,

partnership firm, company, association, institution, trust, society, etc.

According to the Indian bank associations model deposit policy, an

illiterate or blind person cannot open a current account as per thepractice of the banks.

It is a running account in which customers are free to make any numberof transactions subject to maintenance of minimum balance in theaccount. The target group of current account is one of the business

segment


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Code of conduct(KYC norms):The bank branches are required to obtain a declaration from the

prospective account holder in the following manner:

that I/We/am/are not enjoying any credit facility with any otherbank/any other branch of you bank and I/We undertake toinform you, on writing as soon as any credit facility is availed ofby me/ us from any other bank/any other branch of your bank.

Or that I/We/am/are enjoying any credit facility with other

bank/other branch of your bank as per details given in theenclosed sheet.

In case the account holder is enjoying any credit facility from anyother bank, the concerned lending banks should be dulyinformed and get the No-Objection certificates from those banks


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Minimum balance/Account Opening Requirements:The min balance to be maintained in the account may differ from bank to

bank.

Withdrawl: there is no restrictions on number of withdrawals . Howeverbank mentioned the amount below which the cheque shouldnot bedrawn otherwise penalty will be levied.

Interest: no interest is allowed on Current Account

Penal charges: the customers are supposed to maintain minimumbalance in the account as per the banks requirements. Other wise penalcharges may be slapped on them


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Term deposits Banks may accept term deposits for a min period of 7

days and maximum period of 10 years

Rate of interest: differ from one bank to another In case of decease depositor


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Recurring deposits As per the practice followed by the banks by and large, it can be opened

for an installment of Rs. 100/- or more or in multiples thereof for aperiod ranging from 6 months to 120 months in multiples of 3 months.

Interest rate is deregulated.


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Wholesale Banking

Banking services between merchant banks and other financialinstitutions. Wholesale banking deals with larger institutions, where asretail banking would focus more on the individual or smaller business.Some services might include currency conversion, working capitalfinancing and large trade transactions.

Wholesale banking is the provision of services by banks to the likesof large corporate clients, mid-sized companies, real estate developersand investors, international trade finance businesses, institutionalcustomers (such as pension funds and government entities/agencies),and services offered to other banks or other financial institutions. Inessence, wholesale banking services usually involve high valuetransactions.


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Corporate Banking Corporate Banking represents the wide range of banking and financial

services provided to domestic and international operations of largelocal corporate and local operations of multinationals corporations.Services include access to commercial banking products, including

working capital facilities such as domestic and international tradeoperations and funding, channel financing, and overdrafts, as well asdomestic and international payments, INR term loans (includingexternal commercial borrowings in foreign currency), letters ofguarantee etc.

tue class ( retail banking)

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