BANK: A bank is a financial intermediary, usually a corporation that accepts deposits from customers, grant loans, issues credit

and debit cards, pays, cheques, and performs some other services. A bank acts as an intermediary between suppliers of funds (depositors) and users of funds (borrowers). History of banking in India: The banking in India has started during first decade of 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, both of which are now non-operational. The oldest bank in existence in India is the State Bank of India, which originated in the "The Bank of Bengal" in Calcutta in June 1806. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras which were established by East India Company. They merged in 1925 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. The first fully owned Indian bank was Allahabad bank established in the year 1865. In the 19th century lot more many banks were established and only few of those banks survive now like Punjab National Bank, Bank of India, bank of Baroda, Canara Bank, Indian Bank, Corporation Bank and central Bank of India. Nationalization of banks: In 1969, 14 banks were nationalized by the then prime minister Mrs.Indira Gandhi. And during 1980, seven more banks were nationalized. The objective of nationalizing the banks was to spread banking infrastructure to rural areas and make availability of cheap finance to Indian farmers. Emergence of Private Banks: With liberalization of Indian banking system, RBI encouraged setting up of new private banks and HDFC was first among them to get license. Other banks are ICICI Bank, UTI Bank (now AXIS bank), and Global Trust Bank etc.,. Retail Banking: It is division of a financial institution where the banks execute transactions directly with individual customers rather than corporate companies or other banks. The wide range of personal services rendered include savings account, current account, debit cards, credit cards, mortgage, personal loans, educational loans, term deposits, fixed deposits etc.,. It also aims to be one stop shop for as many financial services as possible to retail customers.

Today's retail banking sector is characterized by three basic characteristics: Multiple products (deposits, credit cards, insurance, investments and securities); Multiple channels of distribution (call centre, branch and Internet); and Multiple customer groups (consumer, small business, and corporate). Scope for Retail Banking In India: All round increase in economic activity With the change in the life style the purchasing power of customers is increasing at high pace. The rural areas have the large purchasing power at their disposal and this is considered an opportunity for retail banking. India has 200 million households and 400 million middleclass population more than 90% of the savings come from the house hold sector. The households who are risk averse will go for bank savings and banks are pushing new options for risk averse clients, thus resulting in more deposits in banks. 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. The customers can avail tax benefits on loan repayment andinterest charged on loan in case of housing loans. Advantages of Retail Banking: Retail deposits are stable and constitute core deposits as 80 to 90% of the deposits in the banks are made by retail customers. The major chunk of deposits from the retail customers is available at very low cost of debt to the bank. They are interest insensitive and less bargaining for additional interest. Effective customer relationship management with the retail customers builds a strong customer base. Retail banking increases the subsidiary business of a bank. Retail banking results in better yield and improved bottom line for a bank. Retail segment is a good avenue for funds deployment. The consumer loans are presumed to be of lower risk 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. Retail segment involves minimum marketing efforts in a demand- driven economy.

Disadvantages: Designing own and new financial products is very costly and time consuming for the bank. Customers now-a-days prefer net banking to branch banking. The banks that are slow in introducing technology-based products, are finding it difficult to retain the customers who wish to opt for net banking. Customers are attracted towards other financial products like mutual funds etc. Though banks are investing heavily in technology, they are not able to exploit the same to the full extent. A major disadvantage is monitoring and follow up of huge volume of loan accounts inducing banks to spend heavily in human resource department. Long term loans like housing loan due to its long repayment term in the absence of proper follow-up, can become NPAs. The volume of amount borrowed by a single customer is very low as compared to wholesale banking. This does not allow banks to exploit the advantage of earning huge profits from single customer as in case of wholesale banking.

The concept of Retail banking is not new but now it is viewed as important and attractive market segment that offers opportunities for growth and profit. All the banks realized that retail banking is most profitable as 6090% of deposits are made by retail customers, at very low cost of debt. The banks realized that customer satisfaction, service quality and loyalty are key factors for building long term relationship with customers. Banks having been realizing the strategic importance of customer value therefore continuously seeking new and innovative ways to enhance customer relationship. Many banks offer almost similar products and services but customers have more choice and they are like to spend and continue their relationship with those banks that provide them better quality of products and services as compared to their rivals. Later on, the banks have started using up of technology for smooth functioning of banks and to serve customers in better way. Internet banking can be defined as a facility provided by banking and financial institutions that enable the user to execute bank related transactions through Internet.

The Retail banking environment today is changing fast. The changing customer demographics demands to create a different application based on scalable technology, improved services and banking convenience. Higher penetration of technology and increase in global literacy levels

has set up the expectations of the customer higher than ever before. Increasing use of modern technology has further enhanced reach and accessibility.

The banking industry is growing rapidly. The different phases of evolution in retail banking: Firstly, banks started of with computerization of few key functions and departments in principal branches. Secondly, the next progress was automation of branches and thus providing Single Window Service facilities to its customers. Third, there was emergence of network based operations in the banking which were aimed at providing interbank connectivity. Fourth, the most important stage of evolution of banking in India as banks have started using Core Banking Solution and deployed ATMs thus transforming the way banking was done in India. Fifth, with setting up of Institute for Development and Research in Banking Technology (IDRBT) enhanced infrastructure, implementation of electronic data transfer and development of secured payment system in India. Sixth, there is massive innovation in the delivery channels like internet banking, mobile banking and pre-paid cards issued by non-banking entities. The introduction of these various technology products has had a beneficial impact on both banks and customers. For the customers, the important benefits are Anywhere banking, Internet banking, ATM banking and Mobile banking. It has also facilitated the use of secured debit and credit cards. With use of technology the banks have drastically reduced its cost of operations. Nowadays, customers across all segments expect highly personalized, convenient, and reliable service, along with 24/7 accessibility. Banks need to leverage technology to provide quick and personalized service to customers through various channels, while ensuring a consistent experience across all channels.

With the emergence of technology in Indian banking industry is changing and is having major effect on banking relationships with customers. It is advantageous for both banks and customers. The customer can bank from anywhere with more ease. The customer can make transaction from any branch of the respective bank. The customers can withdraw and deposit money anytime through ATMs The customers can transfer funds through online banking

The customers can make payment bill and can even book railway tickets The operation costs for banks have reduced to 1/10th. Standardization of process in banks.

Future of Retail Banking

Retail banking has significant past and glorious future over the years.

Retail banking has

proved as an effective tool not only to improve the bottom lines of the banks concerned but also to significantly contribute to the development of the individual consumers availing the services or products in particular and to the overall development of the society in general with the needs of the consumers ever multiplying. There is definitely a vast scope for the furtherance of the Retail Banking business. Overall, looking ahead, the prospects of retail banking are brighter than ever and the bankers have to give continued thrust to this area of banking. Thus, with the consumers ever multiplying needs there is definitely a vast scope for the furtherance of the retail banking business. Operationally, there is a possibility that technology go beyond merely reducing the cost & improving the quality of current products. It may prove possible, even profitable, to combine functions in new ways.

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