25-08-2017, 09:32 PM
RETAIL BANKING FRONT OFFICE MANAGEMENT ACTIVITY For HDFC BANK LTD.
RETAIL BANKING.pdf (Size: 286.59 KB / Downloads: 20)
Executive Summery
Banking is the financial function which plays an important role not only for the
particular individual but also for the overall economy. With changing face of overall
economy the face of banking service is also changing now it has become more &
more attractive various newer functions has been added in the banking services to
attract more & more customers.
Earlier banking service is offered as ‘facility provider’ to customers to protect their
saving in the most effective mode. They were never concentrated on profit as a
business but with the changing time & with the highly growing economic condition
the role of banking is also been changed instead of only ‘Facility provider’ it has also
become a ‘profit maker’ with new attractive face
The business of banks is buying and selling money:
* They “buy” money (deposits) with interest rates
* They sell money (loans) for a fee (interest)
* The difference between what they pay for money and what they get for it
is called the “float” - the source of the banks revenues and profits
What has contributed to the retail growth?
There are some basic reasons which needed to highlight briefly they are;
1. Economic prosperity and the consequent increase in purchasing power have given
a fillip to a consumer boom. Note that during the 10 years after 1992, India’s
economy grew at an average rate of 6.8 percent and continues to grow at the
almost the same rate not many countries in the world match this performance.
2. Changing consumer demographics indicate vast potential for growth in
consumption both qualitatively and quantitatively. India is one of the countries
having highest proportion (70%) of the population below 35 years of age i.e.
younger population.
3. Technological Factors played a major role. Technological innovations relating to
increasing use of credit/debit cards, ATMs, direct debits and internet and phone
banking have contributed to the growth of retail banking in India.
4. The Treasury income of the banks, which had strengthened the bottom lines of
banks for the past few years, has been on the decline during the last two years. In
such a scenario retail business provides a good vehicle of profit maximization.
Considering the fact that retail’s share in impaired assets is far lower than the
overall bank loans and advances, retail loans have put comparatively less
provisioning burden on banks apart from diversifying their income streams.
5. Decline in Interest rates are has also contributed to the growth of retail credit by
generating the demand for such credit.
Conclusion:
Banks now need to use retail as a growth trigger. This requires product development
and differentiation, innovation, and business process re- engineering, micro- planning,
marketing prudent pricing, customization, technological up gradation,
home/electronic/mobile banking, and cost reduction and cross selling.
While retail banking offers phenomenal opportunities for growth, the challenges are
equally daunting. How far the retail banking is able to lead growth of the banking
industry in future would depend upon the capacity building of the banks to meet the
challenges and make use of the opportunities profitably. However, the kind of
technology used and the efficiency of operations would provide the much needed
competitive edge for success in retail banking business. Furthermore, in all these,
customers’ interest is of paramount importance.