Retail Banking has always been an integral part of the banking activities world over, but it is only in the recent past that it has gathered momentum. Though internationally this revolution started in the 1980’s, as far as India is concerned, the post- liberalization era marked the starting point of retail banking revolution with new generation private banks and foreign banks taking the lead.
Retail banking has been the focus of attention for the banking industry. Changing lifestyles, rapid improvements in information technology and other service sectors, as well as increasing levels of income, have contributed to the growth of retail banking in countries like India that are developing at a good pace.
An important driver of growth of the Axis Bank Limited has been the sustained thrust on retail banking because corporate loans give an average return of just 0.5 to 1.5 per cent only; the retail advances offer attractive interest spread of 3 to 4 per cent as the retail borrowers are less interest rate sensitive than the corporate. Another reason for large interest spreads on retail advances is that the retail customers are too fragmented to bargain effectively. While corporate loans are subject to ups and downs in trade frequently, retail loans are comparatively independent of recession and continue to deliver even during the sluggish phase of economy.
In the development of retail banking business of the bank, it has focused on increasing the share of retail deposits, especially demand deposits the share of retail assets and migration of low value transactions to selfservice channel, besides selling third party products. It has followed the retail banking sequence of first setting up a viable distribution network, 1
particularly by an expansion of ATMs; subsequently focused on the acquisition of low cost retail deposits; and finally putting in place the prerequisites for a major expansion in retail assets.
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