Retail

Banking
Concepts

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 Bank
Definition
A bank is a financial institution and
a financial intermediary that accepts
deposits and channels those
deposits into lending activities,
either directly by loaning or
indirectly through capital markets.
It is the connection between
customers that have capital
deficits and customers with
capital surpluses.
Thus, the core activity is to act as
intermediaries between
depositors and borrowers.
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 Banking System
A system of trading money which:

Provides a safe place to save excess Supplies liquidity to the economy by

cash, known as deposits. loaning this money out to help
businesses grow.

Allows consumers to purchase

consumer products, homes, cars etc.

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Functions of Bank

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 Merchant Bank

A merchant bank is a
financial institution It also provides advisory In the United Kingdom,
providing capital to on corporate matters to the historical term
companies in the form of the firms in which they "merchant bank" refers to
share ownership invest. an investment bank.
instead of loans.

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Introduction
to
Retail
Banking

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 Agenda

 In this session, you will learn about:

• What is retail banking?

• What has contributed to Retail Banking?
• Scope for Retail Banking
• Retail Banking Products/Offerings

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 Retail Banking

Retail banking refers to

banking in which banking
institutions execute
transactions directly with
consumers, rather than
corporations or other
banks.

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 Retail Banking

Savings and transactional accounts

Mortgages

Personal loans

Debit cards

Credit cards
Retail Banking
Others 9
 Retail Banking
Today’s retail banking sector is characterized by 3 basic characteristics:

Deposits, credit cards, Call centre, branch & Consumer, small

insurance, investments & internet business & corporate
securities

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Private and Confidential 10

What has Contributed to
Retail Banking?
Economy
prosperity and
Changing
increase in
consumer
purchasing power
demographics.
which led to
consumer boom.

Lowering of
Technological
treasury income of
factors
banks.

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Scope for Retail Banking
The rural areas have the large
purchasing power at their disposal.
• All round increase in
economic activity.

• Increase in the purchasing

power. This is an opportunity to market
Retail Banking.

India has:

More than
90% of the

200 million 400 million savings come

from the
households middle class house hold
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population sector.
Scope for Retail Banking (Contd)
Falling interest rates Nuclear family Tax benefits are
have resulted in a concept is gaining available for example
shift. “Now People much importance in case of housing
Want To Save which may lead to loans the borrower
Less And Spend large savings, large can avail tax benefits
More.” number of banking for the loan
services to be repayment and the
provided are day- by- interest charged for
day increasing. the loan.

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Current Scenario in Retail banking
The Indian players are bullish on the Retail business.

VS

India compares pretty

poorly with the other
economies of the world that
are now becoming
comparable in terms of
spending patterns with the Retail loans in Retail loans in
opening up of our economy. Taiwan is around India is less than
41% of GDP. 5% of GDP.

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Opportunities in Retail Sector
Retail banking has immense opportunities in a growing economy like India.

The rise of Indian Increasing purchasing

middle class power

The above factors

promises substantial
growth to retail
banking sector which
is in the nascent stage. 15
Retail Banking Products/Offerings

Current Accounts/ Certificate of Deposit/

Savings Account
Checking Fixed Deposit
Accounts

Individual Retirement
Credit Card Debit Card
Account (IRA)
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Retail Banking Products/Offerings

Mortgage Home Equity Loan Mutual Fund

Personal Loan Time Deposits ATM Card

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Difference Between
Retail Banking and
Investment Banking

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Retail Banking vs.
Investment Banking
Differences

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Multiple Choice
Questions

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1. Which of the following Bank is a Central Bank? 
A. DOB 
B. SBI 
C. RBI 
D. BOI

2. Which of the following institutions is not a bank? 

A. BOB 
B. IDBI 
C. SBI 
D. BOI 

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3. Which of the following is a function of central Bank? –
A. Accepting deposits of money from public with a purpose of
lending or investment 
B. Agency function of the Bank 
C. Credit Creation
D. Banker to the Government 

4. Which of the following has retail banking concept? 

A. BOB 
B. RBI 
C. BOI 
D. A & C

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5. Which of the following is not the advantage/significance of
retail banking? 
A. loyalty 
B. Less fluctuation in demand 
C. Risk is spread 
D. Risk is more 

6. Which of the following targets to individual segment? 

A. Retail Banking 
B. Wholesale Bank 
C. Corporate Banking 
D. B & C both

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7. Which of the following is the character of Corporate Bank?
A. B to C approach 
B. Low returns
C. Less impact of NAP 
D. More laborious monitoring and recovery 

8. The size and cost of deposits in retail banking is______ as compared

to corporate banking? 

A. average size of deposit is small, and cost of deposit is relatively less 

B. average size of deposit is large and cost deposit is relatively high 
C. Both A and B 
D. None of the above

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9. The retail banks offer loans at ______ or _______ fact to the
consumers.
A. Prime, subprime 
B. A & B both 
C. Simple or flat 
D. None if these 

10. Which of the following is not a service provided by retail banks? 

A. Savings account 
B. Remittance 
C. Personal loans 
D. Consultancy 

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11. The evolution of retail banking in India can be traced back to the
entry of _______
A. retail-banks 
B. wholesale bank 
C. Foreign banks 
D. RBI

12. The entry of new generation of ____ in early 1990s has created a
new approach to retail banking by banks. 
A. foreign banks 
B. Private Sector banks 
C. Wholesale banks 
D. None of these

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Thank You By: Akshansh Singh
Chaudhary

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