What is retail banking Retail banking refers to provision of banking services to individuals and small business where the

financial institutions are dealing with large number of low value transactions. The concept is not new to banks but is now viewed as an important and attractive market segment that offers opportunities for growth and profits.

Excess of liquidity, increased dependence of corporate on capital markets, the rising income of middle class with increase in purchasing power and ability to handle debts, the increasing amount of NPAs from corporate portfolio and the growth and future growth potential of the credit card business has induced banks to shift from wholesale banking to retail banking.

Retail banking has immense opportunities in a growing economy like India. As the growth story gets unfolded in India, retail banking is going to emerge a major driver. Some of the key policy issues relevant to the retail-banking sector are: financial inclusion, responsible lending, and access to finance, long-term savings, financial capability, consumer protection, regulation and financial crime prevention.

The credit portfolio of banking business is fast changing in India. Retail lending is becoming an important segment of bank credit. Large credit exposures are linked to banks capital. Limits have to be fixed for single exposure in relation to the capital funds. A paradigm shift from corporate lending and disintermediation are reasons responsible for resurgence. Banks are facing fierce competition not only amongst themselves but also from aggressive NBFC's. As a result, interest rates on retail lending too have come down.

Risk management for banks as far as retail banking goes should focus on risk and return characteristics of consumer loans, revenues from consumer loans, losses from consumer loans, and the collection strategies, product structuring and lending policies.

Retention of consumers is going to be a major challenge. Second, rising indebtedness could turn out to be a cause for concern in the future. Third, information technology

What is retail banking poses both opportunities and challenges. Even with ATM machines and Internet Banking, many of the customers still prefer the personal touch of their neighborhood branch bank. Fourth, KYC Issues and money laundering risks in retail banking is yet another important issue.

Customer service is perhaps the most important dimension of retail banking followed by constant product innovation. Quality and pace in delivery, introduction of new channels of delivery, cross selling of products, price bundling, and most important of all by become technology savvy.

Retail banking is, however, quite broad in nature - it refers to the dealing of commercial banks with individual customers, both on liabilities and assets sides of the balance sheet. Fixed, current / savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing, auto, and educational) on the assets side, are the more important of the products offered by banks. Related ancillary services include credit cards, or depository services. Today's Retail banking sector is characterized by three basic characteristics: Multiple securities); Multiple kiosk); and Multiple customer groups (consumer, small business, and corporate). What is the nature of Retail banking? In a recent book, Retail banking has been described as "hotter than vindaloo". Considering the fact that vindaloo, the IndianEnglish innovative curry available in umpteen numbers of restaurants of London, is indeed very hot and spicy, it seems that Retail banking is perceived to be the in-thing in today's world of banking. channels of distribution (call centre, branch, Internet and products (deposits, credit cards, insurance, investments and

What is retail banking There are various banks providing the retail services to the consenter all over India namely HDFC Bank, ICICI Bank, SBI, HSBC Bank, Axis Bank etc.

Features of Retail Banking:Let me briefly highlight some of the basic reasons. 1. Economic prosperity and the consequent increase in purchasing power have given a fillip to a consumer boom. Note that during the 10 years after 1992, Indias economy grew at an average rate of 6.8 percent and continues to grow at the almost the same rate not many countries in the world match this performance. 2. Changing consumer demographics indicate vast potential for growth in consumption both qualitatively and quantitatively. India is one of the countries having highest proportion (70%) of the population below 35 years of age (young population). The BRIC report of the Goldman-Sachs, which predicted a bright future for Brazil, Russia, India and China, mentioned Indian demographic advantage as an important positive factor for India. 3. Technological factors played a major role. Convenience banking in the form of debit cards, internet and phone- banking, anywhere and anytime banking has attracted many new customers into the banking field. Technological innovations relating to increasing use of credit / debit cards, ATMs, direct debits and phone banking has contributed to the growth of retail banking in India. 4. The Treasury income of the banks, which had strengthened the bottom lines of banks for the past few years, has been on the decline during the last two years. In such a scenario, retail business provides a good vehicle of profit maximization. Considering the fact that retails share in impaired assets is far lower than the overall bank loans and advances, retail loans have put comparatively less provisioning burden on banks apart from diversifying their income streams.

What is retail banking 5. Decline in interest rates has also contributed to the growth of retail credit by generating the demand for such credit.

ADVANTAGES AND DISADVANTAGES OF RETAIL BANKING:ADVANTAGES:Retail banking has inherent advantages outweighing certain disadvantages. Advantages are analyzed from the resource angle and asset angle. RESOURCES SIDE

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Retail deposits are stable and constitute core deposits. They are interest insensitive and less bargaining for additional interest. They constitute low cost funds for the banks. Effective customer relationship management with the retail customers built a strong a strong customer base.

Retail banking increases the subsidiary business of the banks.

ASSETS SIDE

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Retail banking results in better yield and improved bottom line for a bank. Retail segment is a good avenue for funds deployment. 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 credit. Retail banking involves minimum marketing efforts in a demand driven economy.

What is retail banking y Diversified portfolio due to huge customer base enables bank to reduce their dependence on few or single borrower y Banks can earn good profits by providing non fund based or fee based services without deploying their funds.

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.

Major disadvantages are 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.

What is retail banking

About HDFC Bank:The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an in principle approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBIs liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of HDFC Bank Limited, with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.

HDFC is Indias premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment.

Distribution Network:HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 761 branches spread over 327 cities across India. All branches are linked on an online real-time basis. Customers in allover 120 locations are also serviced through Telephone Banking. The Bank also has a network of about over 1977 networked ATMs across these cities. Moreover, HDFC Banks ATM network can be accessed by all domestic and international Visa / MasterCard, Visa Electron / Maestro, Plus / Cirrus and American Express Credit / Charge cardholders.

What is retail banking

Modern Technology:HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the banks branches have online connectivity, which enable the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs).

The bank has made substantial efforts and investments in acquiring the best technology available internationally, to build the infrastructure for a world class bank. The Banks business in supported by scalable and robust systems which ensure that the bank clients always get the finest services.

The Bank has prioritized its engagement in technology and the internet as one of its key goals and has already made significant progress in web-enabling its core business. In each of its businesses, the Bank has succeeded in leveraging its

Awards:HDFC Bank has won many awards for its excellent service. Major among them are Best Bank in India by Hong Kong based Finance Asia Magazine in 2005.

Company of the Year Award for Corporate Excellence 2004-05.

Asian Banker Best Retail Bank in India Award 2007 for outstanding performance.

Our MD Mr. Aditya Puri receives the

What is retail banking

Bloomberg UTV Best Bank award from the Union Finance Minister, Mr. Pranab Mukherjee.

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian Bank". We realised that only a single-minded focus on product quality and service excellence would help us get there. Today, we are proud to say that we are well on our way towards that goal. It is extremely gratifying that our efforts towards providing customer convenience have been appreciated both nationally and internationally. 2011

Asian Banker BloombergUTV's Financial Leadership Awards 2011 IBA Banking Technology Awards 2010

Strongest Bank in Asia Pacific Best Bank

Winner 1) Technology Bank of the Year 2) Best Online Bank 3) Best Customer Initiative 4) Best Use of Business Intelligence 5) Best Risk Management System Runners Up Best Financial Inclusion Excellence in Customer Experience

IDC FIIA Awards 2011

2010

What is retail banking

Outlook Money 2010 Awards Businessworld Best Bank Awards 2010 Teacher's Achievement Awards 2010 (Business)

Best Bank Best Bank (Large)

Mr. Aditya Puri

Best Private Bank in India The Banker and PWM 2010 Global Private Banking Awards Economic Times Awards for Corporate Excellence 2010 Forbes Asia NDTV Business Leadership Awards 2010 The Banker Magazine Business Leader of the Year - Mr. Aditya Puri

Fab 50 Companies - 5th year in a row Best Private Sector Bank

World's Top 1000 Banks

BEST BOTTOM-LINE I.T. Category MIS Asia IT Excellence Award 2010 Dun & Bradstreet Banking Awards 2010 Institutional Investor Magazine Poll IDRBT Technology 2009 Awards ACI Excellence Awards 2010 y Overall Best Bank y Best Private Sector Bank y Best Private Sector Bank in SME Financing HDFC Bank MD, Mr. Aditya Puri among "Asian Captains of Finance 2010" Winner - 1) IT Infrastructure 2) Use of IT within the Bank Runners-up - IT Governance (Large Banks) Highly Commended - Asia Pacific HDFC Bank

What is retail banking

Best performer in the Banking category FE-EVI Green Business Leadership Award Celent's 2010 Banking Innovation Award Avaya Global Connect 2010 Forbes Top 2000 Companies Model Bank Award

Customer Responsiveness Award - Banking & Financial Services category Our Bank at 632nd position and among 130 Global High Performers

Financial Express - Ernst & Young y Best New Private Sector Bank Survey 2009-10 y Best in Growth y Best in strength Asian Banker Excellence Awards 2010 y y y y Best Retail Bank in India Excellence in Automobile Lending Best M&A Integration Technology Implementation

The Asset Triple A Awards Euromoney Private Banking and Wealth Management Poll 2010 Financial Insights Innovation Awards 2010 Global Finance Award 2 Banking Technology Awards 2009

Best Cash Management Bank in India 1) Best Local Bank in India (second year in a row) 2) Best Private Banking Services overall (moved up from No. 2 last year)

Innovation in Branch Operations - Server Consolidation Project Best Trade Finance Provider in India for 2010 1) Best Risk Management Initiative and 2) Best Use of Business Intelligence.

What is retail banking