Retail Operations in Banking

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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.

The Bank is also alive to the fact that mere customer acquisition is not enough – everything hinges on the quality of customer service rendered. To ensure the continuance of a high standard of service in the bank’s branches, there is an on-going monitoring of customer service standards. The report seeks to throw light upon the contribution of the Bangalore branch in the growth of the retail banking business of Axis Bank Limited.


Banking operations in India can be divided into corporate and retail banking.Retail banking refers to provision of banking services to individuals and small business where, the financial institutions are dealing with large number of low value transactions. It is typical massmarket banking, where individual customers use local branches of commercial banks and offer a variety of services that includes savings and checking accounts, mortgages, personal loans, debit cards, credit cards, so on and so forth. The main difference between corporate banking and retail banking is that in the former, small number of high value banking transactions happens between corporates, business enterprises and the bank, which is riskier than that of retail banking. Today’s retail banking sector is characterized by three basic characteristics: i) Multiple products (deposits, credit cards, insurance, investments and securities);


ii) Multiple channels of distribution (call centre, branch, Internet and kiosk); and iii) Multiple customer groups (consumer, small business).

The objective of retail banking is to provide customers a full range of financial products and banking services, give the customers a one-stop shop for all their financial needs. Retail banking segment is continuously undergoing innovations, product re-engineering, adjustments and alignments.

POTENTIAL FOR RETAIL BANKING IN INDIA .  INCREASINGLY AFFLUENT MIDDLE CLASS: About 320 million people will be added in the middle-income group by 2015 which can be tapped to improve the...
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