It is in this backdrop that the Annual Policy for pointed out issues relating to financial exclusion and had announced that the RBI would implement policies to encourage banks which provide extensive services while disincentivising those which are not responsive to the banking needs of the community, including the underprivileged.
It has always been prevalent in India in various forms. Expressing concerns about the high growth witnessed in the consumer credit segments the Reserve Bank has, as a temporary measure, put in place risk containment measures and increased the risk weight from per cent to per cent Growth of retail banking in india the case of consumer credit including personal loans and credit cards Mid-term Review of Annual Policy, Tarapore has been invaluable and has provided great insight.
Almost all the categories of banks issue credit cards. As retail banking in India is still growing from modest base, there is a likelihood that the growth numbers seem to get somewhat exaggerated.
According to a research by Reichheld and Sasser in the Harvard Business Review, 5 per cent increase in customer retention can increase profitability by 35 per cent in banking business, 50 per cent in insurance and brokerage, and per cent in the consumer credit card market.
As the growth story gets unfolded in India, retail banking is going to emerge a major driver. Drivers of retail business in India What has contributed to this retail growth? In this backdrop let me now come two specific domains of retail lending in India, viz. What are the major attributes of the shape of things to come in this sector?
Banks also need to monitor their exposure and the credit quality. Inclusive retail banking Inclusive banking strategy providing basic banking services including credit to financially excluded sections of the society has several advantages largely to the banks themselves, apart from ensuring basic banking facilities to vulnerable sections of the society.
Credit Bureaus have been established not only in countries with developed financial systems but also in countries with relatively less developed financial markets, such as, Sri Lanka, Mexico, Bangladesh and the Philippines. The growth rate of bank credit was much higher than the retail credit resulting in reduced share of retail to total loans.
The typical products offered in the Indian retail banking segment are housing loans, consumption loans for purchase of durables, auto loans, credit cards and educational loans. Housing Credit in India In view of its backward and forward linkages with other sectors of the economy, housing finance in developing countries is seen as a social good.
In order for the banks to provide banking services to retail customers in a profitable manner, banks should follow an appropriate retail strategy.
Several supporting policy measures like tax benefits and the supervisory incentives instituted had played a major role in this market. Jun 16, The issue of retail banking is extremely important and topical. The combination of the above factors promises substantial growth in the retail sector, which at present is in the nascent stage.
Due to bundling of services and delivery channels, the areas of potential conflicts of interest tend to increase in universal banks and financial conglomerates.
Let me share with you some of my random thoughts. What is the nature of retail banking? The terms of reference of the Working Group were fairly broad and the Group was to look into the type of regulatory measures that are to be introduced for plastic cards credit, debit and smart cards for encouraging their growth in a safe, secure and efficient manner, as also to take care of the best customer practices and grievances redressal mechanism for the card users.
This shows that the slowdown began in itself and dropped to abysmal levels by First, customer service should be the be-all and end-all of retail banking.
Technology has made it possible to deliver services throughout the branch bank network, providing instant updates to checking accounts and rapid movement of money for stock transfers. Retail lending is often regarded as a low risk area for money laundering because of the perception of the sums involved.
Third, technological factors played a major role. Source — Yes Bank Website Customer Centric Retail Banking Service quality in retail banking is a critical factor to customer satisfaction which aid in customer retention. Credit cards have found greater acceptance in terms of usage in the major cities of the country, with the four major metropolitan cities accounting for the bulk of the transactions.
The percentage of middle to high income Indian households is expected to continue rising. The share of housing loans in total non-food credit of scheduled commercial banks has increased from about 3 per cent in to about 7 per cent in However, with growing competition in the housing finance market, there has been a growing concern over its likely impact on the asset quality.
However, this dependency on the network has brought IT departments additional responsibilities and challenges in managing, maintaining and optimizing the performance of retail banking networks.
For example, the chart below shows that from a share of First, retention of customers is going to be a major challenge. In addition, housing credit is also being provided by housing finance companies, which in turn are also receiving some bank finance.
The Board would function as an industry-wide watchdog of the banking code and ensure that the banks comply with the banking codes. What are the challenges for the industry and its stakeholders? The homemaker, the retail shop keeper, the pensioners, self-employed and those employed in unorganised sector - all need to get a place in the banks.
The Board will monitor compliance with the Codes by the affiliated banks.A snapshot of the Retail Industry in India, incl.
an overview of the retail sector, market size, growth potential, opportunities By India Brand Equity Foundat. Growth Of Retail Credit In India Posted in Finance Articles, Total Reads:During this period, retail credit grew at an average annual growth rate of % against % growth of the overall bank credit.
The key characteristics of this phase can be enlisted below as: a) Low risk perception of banks. b) Deregulation and increased. The issue of retail banking is extremely important and topical. Across the globe, retail lending has been a spectacular innovation in the commercial banking sector in recent years.
The growth of retail lending, especially, in emerging economies, is attributable to the rapid advances in information. 29 CHAPTER - 2 GROWTH AND DEVELOPMENT OF RETAIL BANKS IN INDIA Introduction Retail Banking Benefits of Retail Banking Scope for Retail Banking In India.
As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised and well-regulated. The financial and economic conditions in the country are far superior to any other country in the world.
the Retail Banking Industry and the research problem, the details of the work to be As the economic growth continues, the demands on the banking sector to cater to the needs of the economy are also growing consistently.
The growth in Chapter 3: Retail Banking in India-An Overview P a g e.Download