Professional Documents
Culture Documents
• Appropriate targeting
– corporate customers;
– international customers;
– rural customers.
7.2.1 Retail Customers
• The key dimensions of the retail strategy of a bank include
– customer focus,
– a wide range of products: Cross selling of the entire range of
credit and investment products and banking services,
– customer convenience,
– widespread distribution,
– strong processes and
– prudent risk management.
• Fee income
retail loan processing fees,
credit card and debit card fees,
transaction banking fees and
fees from distribution of third party products.
Retail Lending Activities
• Retail credit has emerged as a rapidly growing opportunity
for banks
• Banks offer a range of retail products, including
– home loans,
– automobile loans,
– commercial vehicle loans,
– two wheeler loans,
– personal loans,
– credit cards,
– loans against time deposits and
– loans against shares.
• Banks also fund dealers who sell automobiles, two
wheelers, consumer durables and commercial vehicles.
• A few banks have set up home finance subsidiaries in order
to concentrate on this business in a more focused manner.
Retail Lending Activities
• Personal loans are unsecured loans provided for
– higher education,
– medical expenses,
– social events and
– holidays.
• Personal loans include micro-banking loans - small
value loans to lower income customers in urban and
rural areas.
• Credit cards
• The share of retail loans in total loans and advances
of Scheduled Commercial Banks (SCBs) was 21.3% at
end-March 2009.
Lending to Small and Medium Enterprises
• Strategy with regard to small and medium
enterprises is integrated by banks with their
strategy for retail products and services.
• Retail focus includes
– meeting the working capital requirements,
– servicing deposit accounts and
– providing other banking products and services
• Cluster or community based approach (apparel
manufacturers or jewellery exporters.)
7.2.2 Corporate Customers
• Corporate business covers
– project finance including infrastructure finance,
– cross border finance,
– working capital loans,
– non-fund based working capital products and
– other fee-based services.
• Large acquisitions abroad
• Foreign exchange services
• Fee-based products and services including
– Foreign exchange products – forward contracts and
interest rate and currency swaps. .
– Documentary credits (such as letter of credit) and
– Guarantees.
7.2.3 International Presence
The emphasis has been on supporting Indian
companies in
– raising corporate and project finance overseas
for their investments in India and abroad
(including financing of overseas acquisitions
by Indian companies), and
– extending trade finance and personal financial
services (including remittance and deposit
products) for non-resident Indians.
7.2.4 Rural Banking Customers
• Various customer segments operating in rural areas include
– corporates,
– small and medium enterprises and
– the individual farmers and traders.
• Primary credit products for the rural retail segment include
– farmer financing,
– micro-finance loans,
– working capital financing for agro-enterprises,
– farm equipment financing, and
– commodity based financing.
• Other financial services customised for rural areas
savings,
investment and
insurance products
7.3 Competition amongst Banks for Customers
The dimensions are
• relative strengths and weaknesses of different classes of
banks-such as
– public sector banks,
– new private sector banks,
– old private sector banks and
– foreign banks
• innovative products and services,
• use of technology,
• building customer relationships and
• developing a team of highly motivated and skilled
employees.
7.3.1 Competition for Retail
Products and Services
Type of Bank Advantage Disadvantage Remarks
Foreign Banks Product and Limited Branch Not much of
Delivery Network competition
Capabilities from them
– cooperative banks