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Chapter 6

Retail and Wholesale Banking

Retail Banking

In pre-liberalisation era, banks mainly focused on providing credit to industries and business houses

With the liberalisation of Indian economy, bank saw a emerging opportunities in terms of young population, increased incomes, purchasing power and aspiration for better life style, quality products and services

This gave birth to ‘Retail Banking’……..

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Contd….

Retail Banking is defined as doing business with individuals by segmenting the individuals as a separate business market

In technical language, Retail Banking can be defined as dealing with individuals both on liabilities and assets side

Key features of Retail Banking:

- Multiple Products

- Multiple Channels

- Multiple Customer Groups 3

Contd….

Commercial Banks offers Retail Deposit Products, Retail Loan Products and Retail Services

Key Drivers for Retail Banking:

- Economic Prosperity

- Changing consumer demography

- Rise of convenience banking

- Low delinquency rate

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Contd….

Retail Banking Opportunities Contribution of retail loan to GDP stands at 6% as

compared to 15% in China and 24% in Thailand Housing Finance itself will require an estimated

3,61,000 Cr to meet the shortfall of 25 million houses

Opportunities lies in consumer finance and wealth management

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Wholesale Banking

Wholesale Banking refers to conducting banking business with industrial and business entities. This includes, corporates, trading houses, multinationals and domestic companies etc.

Key products under Wholesale Banking can be classified as:

- Fund-based services

- Non-fund-based services

- Value-added services and

- Internet Banking services 6

Contd….

Fund-based services - Term lending, Short-term Finance - Working Capital Finance, Bill discounting - Structured Finance, Export Credit Non-Fund-based services - Bank guarantee, Letter of credit - Collection of bills and documents Value-added Services - Cash management services, - Channel financing, vendor financing, - Real Time Gross Settlement, CSA etc….

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Contd….

Wholesale Banking Opportunities Commercial lending and small businesses are

expected to drive Wholesale banking Opportunities also lie in Investment banking and

structured finance Wholesale banking is highly profitable for top

performing banks contributing 35-40% to PBT

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