A Guide on Retail Banking

Updated on June 11, 2022, 2:41 p.m.

Banking segment is one of the major segments of our economy dealing with financial transactions. The bank is a vital institution that accepts money from the general people and lends the money to the people.

The banks make money using the interest that is received from the customers. Hence it is very vital to lend the money to the people by using the loans and advances. Hence the importance of banks and banking segments cannot be underestimated.

They are good in offering various services in India like Debit Cards, Credit Cards, Transactional Loans and the Personal Loans as well. the activities like the Wealth Management, Safe Deposit Lockers and Currency Exchange are done using various banks in India.

What is Retail Banking?

The customer-oriented services offered by various commercial banks, consisting of the Savings and Checking accounts, Various kinds of loans and Mortgages, Educational, and the Retirement Planning is known as the Retail Banking.

If you closely analyse the term “Retail” means the store front shopping area of various commercial banking activities in India. Furthermore, most of the commercial banks have an exclusive retail banking services in order to reach a wider consumer network.

Retail banking is very huge and deals with the individual customers in understanding the liabilities and assets segments. They deal with the individuals in India and assist you in your financial activities. They do not deal with the Multinational Companies and it is said that if you are doing the online transactions, you are connecting with the bank at some levels in a systematic manner.

The best part of the Retail banking is that it helps you to meet day to day services like getting Statements, using the Credit cards, Debit cards, Doing Online Withdrawals, Changing Address, Mobile Number Update, E-statements, Cheque book request and other benefits.

Objectives of Retail Banking

Play a major role in the economic growth of the nation.
To enhance the coverage of this methodology to various parts of India.
Have a strong customer base and do the optimum utilisation of various resources.

Types of Retail Banks

There are 4 type of major retail banks. They ar Online Banks, Community Banks, Regional Rural Banks, Private Banks, Post offices. These banks provide retail banking services and are explained in details.

Online Banks

It is a unique format of banking giving the customers the complete access to their account details and functionality in a logical manner. The best part is that customers can sign in to Online banking from any corner of the world with an internet connection and a computer. You need to register with a customised User Id and Password. The customers can do various activities with online banking like

Paying the bills.
Check Account Balance
Transferring the money.
Obtaining old bank statements.
Changing mobile number and address.

Community Banks

A unique bank that is locally controlled owned and operated and helps to protect the families and business, where the bank is having various branches in various locations in a city. Furthermore, they transfer most of the funds to the nearby areas to keep the communities vibrant and growing. The community bankers are involved in local affairs. Some of the banks are Aradhana Credit Cooperative Limited, Ujwal Small Finance Bank, Suryodaya Small finance Banks, Fincare Small Finance Bank, Janalakshmi Bank and others.

Regional Rural Banks

The Regional Rural Banks are the commercial banks well equipped in conducting banking activities in the villages in various states of India. The first RRB was the Prathama Grameen Bank established on 2^nd October 1975. The RRB caters to the desires of the lower- and middle-income groups and offer services like loans and other banking services in a systematic manner. Till date, we have around 100 Regional Rural Banks in India.

Private Banks

These banks are established by various private parties in India and established mostly in big and small metros. These banks always serve the people from the cities, Small and Medium Enterprises, and other business houses. It is one of the major service providers in the field of Banking, Venture Capital and the Asset Managements. The examples of such banks are Axis, ICIC, HDFC, Kotak Mahindra, Dhanalakshmi Bank, Karnataka Bank, South Indian Bank and others.

Post Offices

The place where letters are dispatched to other parts of India also does banking services to people not having access to other banks. The activities like the Opening, Savings, Life Insurance, Recurring Deposits are done here. Post office is available in each and every part of our nation and is easily accessible.

Services Offered by the Retail Banks

There are various services offered by the Retail banks given below as follows:

Debit Cards
Credit Cards
Home Loans
Term Deposits
Fixed Deposits
Personal Loans
Savings Account
Current Account
Travellers Cheques
Zero Balance Salary Accounts

Advantages of Retail Banksin India

The advantages of the Retail Banking in India are given below as follows:

This gives a complete alternative for banks and customers.
This enhances the earnings and promotes the business for the banks.
These banks help in analysing financial need of the customer and effectively structure their moves towards product developments.
The external and the internal marketing strategies of the Retail banks are very excellent giving them an edge over other bank.
Helps in the economic growth of the nation through various productive activities.
They offer tremendous services to the customers using the advanced technologies.
This helps in offering various products and services like Personal Loans, Home Loans, Educational Loans to the customers in having life style.
This reduces the operational costs and helps the banks in creating the powerful brand image in the mind of the people of India.
This helps to develop a great customer relationship with the clients and powerup the customer base and generate cash flow.
The retail banks can earn awesome profits by offering the non-funds or the fee-based services without any restriction in a logical manner.

Challenges to Existence of Retail Banking in India

There are various challenges to the Retail Banking in India given below as follows:

To meet the desires of the customers in India and keep up the ongoing trust and reputation.
Less information and education given to people living in Rural areas as most of them are illiterate and don’t know to operate ATM’s.
Entire activities like hardware and Software upgradation and Cash filling in ATM is not done on a regular basis leading to cash crunch.
Strike a balance between the quality of asset management and the Credit growth and having profit during the increased interest rates.
The new Base Rate must be executed to ensure transparency in the operations and to increase lending above the Base rate.
Increase in the Cash Reserve Ratio and the Repo Rate is going to impact the lending rate of the banks.

To be honest, the Retail Banks in India must extend their influence to the rural areas and must have a matured banking strategy. More people in rural areas must be given training by the banks and this will increase their reputation and enhance their profits. The success will also be influenced by the use of advanced technologies used for smoother operations to have an edge over the competitors.