Retail Banking: Drivers of Retail Business in India
Retail Banking: Drivers of Retail Business in India
Retail Banking: Drivers of Retail Business in India
Wholesale banking
•Doing banking business with industrial and business entities. Also called Corporate
Banking/Commercial Banking.
Products:
1. Fund based: Term Lending, Short term Finance, WC Finance, Bill Discounting,, Export
Credit.
2. Non Fund based: BG, LC and Collection of Bills and Documents.
3. Value Added Services: CMS, Vendor Financing, RTGS, Corporate Salary accounts,
Syndication Services, Forex, Money Market & Derivative products, Tax Collection,
Bankers to Right/Public Issue, NEFT, and ECS
4. Internet Banking Services: Payment Gateway Services, Corporate Internet Banking
•Services to Financial Institutions: CMS •Services to Mutual Funds: Collection Services,
Payment services, Custodial services, & Fund transfers.
•Bank cater the needs of stock brokers: Clearing Settlement Bankers, Bank Guarantee
etc.
International Banking
•Banking services catering to cross border transactions is called International
Banking.
Services to exporters:
1. Export Packing Credit
2. Export Bill Negotiation
3. Export Bill Purchase and Discounting
4. Export Bill Collection Services
5. Bank Guarantee
6. Rupee Advance against FC Export Bills
7. Export LC Advising
8. Export LC Confirmation
9. Supplier’s Credit: Facility enables Indian exporters to extend term credit to importers
(overseas) of eligible goods at the post shipment stage.
Universal Banking
•Super Financial Hub for marketing of all financial products
•Benefit to Banks: – Cross selling of products – fee based and non-fee based income.
•Benefit to Customers: Saving of time and speedy delivery at one place
Progress of Universal Banking in India: •Year 2000: Allowing banks to venture
into the insurance business- Life & Non-Life. • Tie-up for mutual funds to market
their products. Issue of debit and credit card.
•Merger of ICICI with ICICI Bank and IDBI with IDBI Bank.
•Refinance institutions like SIDBI & NABARD also jumped into direct financing.
•Distinction between development finance institutions and commercial banks has greatly
disappeared. •Selling of Gold coins. Depository Services either with NSDL or CDSL.
•Merchant Banking Services •E-broking services directly or through tie up arrangement
with SEBI registered brokers.
Anonymity: Any entity investing in participatory notes is not required to register with
SEBI, whereas all FIIs have to compulsorily get registered. It enables large hedge funds
to carry out their operations without disclosing their identity.
Ease of trading: Trading through participatory notes is easy because they are like
contract notes transferable by endorsement and delivery.
Tax saving: Some of the entities route their investment through participatory notes
to take advantage of the tax laws of certain preferred countries.
Disadvantages of P-notes: Indian regulators are not very happy about participatory notes
because they have no way to know who owns the underlying securities. It is alleged that a lot of
unaccounted money made its way to the country through the participatory note route.