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Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 12
November 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 663
Impact of Retail Banking In Indian
Economy: A Boom
Jangaiah. A
Department of Economics Osmania University
Abstract:
Retail banking is a bank executes transactions directly with consumers, rather than corporations or
other banks. Services offered include savings and transactional accounts, mortgages, personal loans,
debit cards, and cards. Today, retail banking is being considered as one of the most innovative financial
services provided by the various commercial Public Sector Banks (PSBs), private sector and foreign
banks. Retail banking has a huge potential considering the growing demand for its products namely,
term deposits, consumer durable loans, auto loans, debit card, credit cards, ATM facilities, insurance,
online banking, etc. The growing sector of retail lending has contributed significantly to the
development of the economy. Like other developed countries, India too, has a developed retail banking
sector which accounts for one-fifth of all banks credit. Retail lending across the globe has been a
showcase of innovative services in the commercial banking sector. Countries, like India, have emerged
as potential markets with changing investment opportunities. The higher growth of retail lending in
emerging economies can be attributed to the rapid growth of personal wealth, favorable demographic
profile, rapid development in information technology, the conducive macroeconomic environment,
financial market reforms and small micro-level supply side factors. The retail banking strategies of
banks are undergoing a major transformation, as banks are beginning to adopt a mix of strategies like
organic growth acquisition and alliance formation. This has resulted in a paradigm shift in the
marketing strategies of the banks. PSBs are adopting aggressive strategies, leveraging their branch
network to garner a large share oRetail banking in India has fast emerged as one of the major drivers of
the overall banking industry and has witnessed enormous growth in the recent past.
Key words: Retail banking in the World, Trends in Retail Banking, Challenges and opportunities of
Retail Banking in India, Retail Banking, Retail Banking Sector
INTRODUCTION:
The Retail Banking Report encompasses
extensive study & analysis of this rapidly
growing sector. It primarily covers analysis of
the present status, current trends, major issues &
challenges in the growth of the retail banking
sector.This report helps in Banks, financial
institutions, MNC Banks, academicians,
consultants and researchers to have a better
understanding of the booming opportunities in
retail banking in India. Retail banking can be
defined as.“Retail banking is typically mass
market banking where individual customers use
local branches of larger commercial banks.
Services offered include savings and checking
accounts, mortgages, personal loans, debit
cards, credit cards and so”. The concept of
Retail Banking is not new to banks but is now
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Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 12
November 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 664
viewed as an important and attractive market
segment that offers opportunities for growth and
profits. Retail banking andf the retail market.
This article attempts to highlight the prospects
and the future role of retail banking in India.
OBJECTIVES OF THE STUDY:
1. To study of Retail banking.
2. To find the impact of impact of retail banking
on Indian economy.
3. To study the various challenges and
opportunities of retail banking in India.
Objective
RESEARCH METHODOLOGY:
The researchers have adopted descriptive
methodology for this study Research has been
placed on secondary data sources such as books,
journals, newspapers and online database.
Retail Banking in The World
North America continues to lead the Customer
Experience Index with Canada (81%), and the
United States (80%) in the lead. Italy, Saudi
Arabia and China reported the largest relative
gains in share of customers with positive
experience this year. Fees, Mobile Capabilities,
Quality of Service or Knowledge of Customers?
This is the single most important factor driving
customers to switch banks. The World Retail
Banking Report provides insights into customer
attitudes towards retail banking using a
comprehensive Voice of the Customer survey
which polled over 18,000 retail banking
customers in 35 countries. The survey analyzes
customer experiences across 80 banking touch
points that span the products banks offer, the
importance of different channels for obtaining
services and the transactions that occur over the
lifecycle of a banking relationship some banks
turned to consolidation as a way of cutting
expenses in order to survive difficult economic
conditions. Often consolidation works as
intended, but it also has its limitations. Federal
law prohibits any single bank in the United
States from holding more than 10 percent of the
U.S. customer market. When banks merge, they
also make gains in their customer base. Several
banks in the United States are approaching the
10-percent mark, so for those banks, further
consolidation may not be a way to solve their
problems. Global Retail Banking 2020 study, up
to 50 percent of branches in today’s U.S. bank
networks may be declared obsolete -- although
not necessarily defunct -- by 2020. Given that
branches constitute 75 percent of a bank’s total
retail distribution costs, according to research
from Capgemini, implementing smart,
technologically savvy retail strategies will be
critical to driving shareholder value.
Trends in retail banking
According to the Report’s Customer Experience
Index, which surveyed over 18,000 bank
customers across 35 markets, 10% of retail
banking customers is likely to leave their banks
in the next six months while an additional 41%
say they are unsure if they will stay or go. To
re-build the customer-bank relationship, the
Report finds banks can become more customer- centric more personal interactions.ATM
machines and Internet Banking, many
consumers still prefer the personal touch of their
neighborhood branch bank. 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 transfer Retail
banking now encompasses not just branches,
but also anywhere that banking services can be
conveniently provided to consumers. Whether it
means a service kiosk in a train station, a
minibranch in a grocery store, a premium
Page 3 of 6
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 12
November 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 665
branch in a central business district, or a bank- on-wheels that visits corporate workplaces,
proximity to targeted customers ultimately
matters more than having a traditional bank
façade. Flexibility and agility will provide a
competitive advantage for bank. Technology is
becoming the centerpiece of retail bank
executives will expect their IT departments to
identify and implement technology-based
solutions to enhance the customer experience.
Some banks, are even experimenting with
quasiInternet cafes, offering high-tech lounge
environments with relaxing furnishings and Wi- Fi access along with ATMs, selfservice kiosks,
areas for plug-in consumer devices, tutorials for
obile and Web banking and videoconferencing
for service consultations delivered by call center
staff. Furthermore, the move to a cash-light
society will trigger still more changes in how
branches are deployed
The Impact of Retail Banking In Indian
Economy
Retail banking in India is not a new
phenomenon. It has always been prevalent in
India in various forms. For the last few years it
has become synonymous with mainstream
banking for many banks. 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. The loans are marketed under
attractive brand names to differentiate the
products offered by different banks. As the
Report on Trend and Progress of India, 2003-04
has shown that the loan values of these retail
lending typically range between Rs.20, 000 to
Rs.100 lack. The loans are generally for
duration of five to seven years with housing
loans granted for a longer duration of 15 years.
Credit card is another rapidly growing sub- segment of this product group. In recent past
retail lending has turned out to be a key profit
driver for banks with retail portfolio constituting
21.5 per cent of total outstanding advances as
on March 2004. The overall impairment of the
retail loan portfolio worked out much less then
the Gross NPA ratio for the entire loan
portfolio. Within the retail segment, the housing
loans had the least gross asset impairment. In
fact, retailing make ample business sense in the
banking sector. While new generation private
sector banks have been able to create a niche in
this regard, the public sector banks have not
lagged behind. Leveraging their vast branch
network and outreach, public sector banks have
aggressively forayed to garner a larger slice of
the retail pie. By international standards,
however, there is still much scope for retail
banking in India. After all, retail loans
constitute less than seven per cent of GDP in
India vis-àvis about 35 per cent for other Asian
economies South Korea (55 per cent), Taiwan
(52 per cent), Malaysia (33 per cent) and
Thailand (18 per cent). As retail banking in
India is still growing from modest base, there is
a likelihood that the growth number Seem to get
somewhat exaggerated. One, thus, has to
exercise caution is interpreting the growth of
retail banking in India .The following away the
retail Banking Contributing service to
development of Indian Economy
Credit Cards: While usage of cards by
customers of banks in India has been in vogue
since the mid-1980s, it is only since the early
1990s that the market had witnessed a quantum
jump. The total number of cards issued by 42
banks and outstanding, increased from 2.69 core
as on end December 2003 to 4.33 core as on end
December 2004. In view of this ever increasing
role of credit cards a Working Group was set up
