BUSINESS RETAIL BANKING STRATEGIES IN LIBERALIZED

AND GLOBALISED ERA.

Presented By: Vikas

Sood Roll.No.

61

Introduction

Banking Scenario In India is of highly developed nature even though its still far from world standards.

Indian Banks have realized that along with organic growth there is a need to grow inorganically as well.

Changing lifestyles, Rapid growth of IT and service sector, increasing incomes, etc. have contributed to the growth of retail banking.

Challenges faced by retail banking are security concerns, know your customers(KYC) norms, credit evaluation, etc.

Retail Banking

• Retail banking includes deposit schemes, retail credit, retail loans, credit cards, debit cards, mutual funds, depository services and services according to customer needs.

• Asset side of retail banking includes wide range of loan products like housing loans, auto loans, consumption and educational loans, etc.

Objectives:1. To study and analyze the level of growth of

retail banking in Indian banking industry; and2. To give some suggestions to increase the

growth of retail banking. Research Methodology: This journal mainly focuses on the retail

portfolio of all the scheduled commercial banks(SCB’s). The whole banking industry has been divided into four parts:

G-1 : Public Sector Banks(27) G-2 : Old Private Sector Banks(17) G-3 : New Private Sector Banks(8) G-4 : Foreign Banks(29)

Parameters used to trace the growth

1. Cash-Deposit ratio

2. Deposit pattern of SCB’s

3. Banks group wise lending to sensitive sectors.

4. Retail portfolio of banks.

Cash-Deposit Ratio

Banks 2006(%)

2007(%)

2008(%)

Public Sector Banks

68.2 72.2 73.3

Old Private Sector Banks

63.7 67.2 67.4

New Private sector Banks

77.2 77.8 79.8

Foreign Banks 85.8 83.8 84.3

1. Bank’s group wise analysis reveals that the cash-deposit ratio of foreign sector banks grew up at the highest rate in 2008.

2. New Private Sector Banks have more cash-deposit ratio as compared to Old Private Sector Banks.

3. Cash-Deposit Ratio of foreign banks showed wider variations.

Bank’s group wise lending to Sensitive sectors

1. Among bank groups, lending to sensitive sectors indicates that New Private Sector Banks had largest exposure, mainly in lending to Real Estate Sector, followed by Foreign Banks.

2. Public sector banks has least contribution in Real Estate Sector.

3. Growth of PSB in sensitive sectors is 17.17% in 2008 and that of NPSB is 34.11%.

Retail Portfolio of Banks

2006-07

2007-08

Consumer Durables 63.3 34.2

Auto Loans 34.5 6.6

Other Personal Loans 31.1 27.5

Total Retail loans and Advances 29.9 17.1

Items % Variation

1. Within retail portfolio, credit for consumer durables experienced lowest growth during 2008.

2. Credit for Auto loan and Other personal loans also lowered as compared to previous years.

3. Share of Retail credit in Total loans and Advances declined from 29.9% to 17.1% in 2008

Strategies for the Success of Retail Banking

1.Advanced Technology.

2. Skilled Manpower.

3. Market Research and Intelligence.

4. Emphasis on Credit Quality and Risk Management.

5. Hitting the Customer Touch Points.

Conclusion

1. Banks need to be more aggressive about Retail Banking on a/c of changing customer needs, innovative financial products, IT upgradations, etc.

2. To remain competitive in financial services, banks are required to reengineer their operations.

3. Banks should plan more strategies to remove their weaknesses in Retail Banking.