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INDEX
SR. TOPIC NO.
I II III INTRODUCTION ORIGIN Definition of retail banking What is retail banking? ORGANISATION THESIS Chapter 1 1.1 Need for retail banking 1.2 Growth of retail banking Chapter2 2.1 Retail banking in India 2.2 Advantages and Disadvantages of Retail Banking. 2.3 Opportunities of retail banking 2.4 Challenges for retail banking in India 2.5 Categorization of retail banking services 2.6 Special features of retail banking 2.7 Strategies for increasing retail banking. Chapter 3 3.1 Retail Banking Current Scenario. 3.2 Emerging Issues in handling retail banking. Page
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3.3 Future of retail banking.

A REPORT ON BANK VISIT IV CASE STUDY V

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ICICI Bank HDFC Bank Who is the banking king?

37 44 53 57

CONCLUSION VI QUESTIONAIRE VII

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EXECUTIVE SUMMARY
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Retail banking touches each and every stage of life cycle and the lifestyle of an individual. Retail banking is considered as the backbone of all banks. Customers are looking are looking for value added as well as advisory services, convenient ways through which to avail the services, universal financial services from banks which mean deposit products, loan products and protection services like life and general insurance. This project will explain the reasons behind the euphemism regarding the Retail-focus of the Indian banks and try to assess how much of it is worth the attention that it is attracting.

AIMS AND OBJECTIVES:

My prime objective regarding this project was to understand about Retail Banking and steps taken through which it achieved success in Indian Banks. SUB-OBJECTIVE:

To study in-depth the concept of retail banking, as its environment today is changing fast. The changing customer demographics demands to create a differentiated application based on scalable technology, improved service and banking convenience.

To

understand

about

the

various

retail

products

and

services

provided by banks. As the market today gives banks a challenge to provide multiple and innovative contemporary services to the customer through a consolidated window.

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To understand about the various technology driven distribution channels through which retail products are delivered to the customer as so to ensure that the banks customer gets Uniformity and Consistency of service delivery across time and at every touch point across all channels.

To study the comparative analysis of HDFC and ICICI Bank in respect of retail banking. Both the banks are at the neck to neck competition in order to be the king of banking in the market.

RESEARCH METHODOLOGY:

This project is a mixture of Secondary and Primary data, with Questionnaires

being my major instrument to collect data. DATA COLLECTION METHOD:

Primary Data: The primary data was collected by visiting ICICI Bank. Questionnaire was prepared and the branch manager was asked certain questions relating to the topic. The information was later analyzed to obtain the required information on the project.

Secondary Data: In order to have a proper understanding of the sector of Retail Banking an in depth study was done from the various books, magazines, journals, articles, newspapers written on the subject and extensive Library Research was carried out. Various Websites were referred.

I.

INTRODUCTION
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The issue of retail banking is extremely important and topical. Across the globe, retail lending has been a spectacular innovation in the commercial banking sector in recent years. The growth of retail lending, especially, in emerging economies, is attributable to the rapid advances in information technology, the evolving macroeconomic environment, financial market reform, and several micro-level demand and supply side factors. India too experienced a surge in retail banking. There are various pointers towards this. Retail loan is estimated to have accounted for nearly one-fifth of all bank credit. Housing sector is experiencing a boom in its credit. The retail loan market has decisively got transformed from a sellers market to a buyers market. Gone are the days where getting a retail loan was somewhat cumbersome. All these emphasize the momentum that retail banking is experiencing in the Indian economy in recent years. 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. This is in contrast to wholesale banking where the customers are large, often multinational companies, governments and government enterprise, and the financial institution deal in small numbers of high value transactions. The concept is not new to banks but is now viewed as an important and attractive market segment that offers opportunities for growth and profits. Retail banking and retail lending are often used as synonyms but in fact, the later is just the part of retail banking. In retail banking all the needs of individual customers are taken care of in a well-integrated manner.

II. ORIGIN OF RETAIL BANKING

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Banks are among the main participants of the financial system in India. Banking offers several facilities and opportunities. Banks in India were started on the British pattern in the beginning of the 19th century. The first half of the 19th century, The East India Company established 3 banks The Bank of Bengal, The Bank of Bombay and The Bank of Madras. These three banks were known as Presidency Banks. In 1920 these three banks were amalgamated and The Imperial Bank of India was formed. In those days, all the banks were joint stock banks and a large number of them were small and weak. At the time of the 2nd world war about 1500 joint stock banks were operating in India out of which 1400 were nonscheduled banks. Bad and dishonest management managed quiet a quiet a few of them and there were a number of bank failures. Hence the government had to step in and the Banking Companys Act (subsequently named as the Banking Regulation Act) was enacted which led to the elimination of the weak banks that were not in a position to fulfill the various requirements of the Act. In order to strengthen their weak units and review public confidence in the banking system, a new section 45 was enacted in the Banking Regulation Act in the year 1960, empowering the Government of India to compulsory amalgamate weak units with the stronger ones on the recommendation of the RBI. Today banks are broadly classified into 2 groups namely (a) Scheduled banks. (b) Non-Scheduled banks. Traditional lending to the corporate were slow moving along with high NPA risk, treasure profits were loosing importance hence Retail Banking became an alternative available for the banks for increasing their earnings. Retail Banking is Page
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an attractive market segment having a large number of varied classes of customers. Retail Banking focuses on individual and small units. Customize and wide ranging products are available. The risk is spread and the recovery is good. Surplus deployable funds can be put into use by the banks. Products can be designed, developed and marketed as per individual needs.

DEFINATION:

Retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so

WHAT IS RETAIL BANKING?

Retail banking generally refers to offering financial services, products related to deposits and assets to individual customers for personal consumption. Banks concentrate on various segments like professionals, housewives, pensioners, children, salaried class, etc. Different types of products like recurring deposits, savings bank deposits, fixed deposits, credit cards, housing and consumer loans and educational loans are offered by banks to the above mentioned market segment.

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III. ORGANISATION THESIS

CHAPTER 1

1.1 Need for retail banking 1.2 Growth of retail banking

1.1NEED FOR RETAIL BANKING:

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With narrowing investment opportunities and poor credit off take, banks turn towards retail banking which presents attractive opportunity with lesser risk and reasonable return. Growing consumerism in India also encourages retail banking. The domain of retail banking market has tremendous growth potential for banks and finance companies, as at present it is largely untapped. The penetration level is 2.5 to 3 percent. And this is in scenario when the requirements of the consumers are growing. In the past, people never believed in buying consumer products on credit. But today the attitude is changing. The demand for consumer products has increased. Today, about 70 percent of consumer goods purchased are through finance schemes / loans as against 40 percent about five to six years ago. Due to recession and industrial slowdown, many of the corporate have either shelved or postponed their development plans. A number of corporate borrowers are sidetracking banks and raising money through commercial paper and the debt market. These are not only cheaper than bank credit but at times they succeed in raising money at rates below bank rates. To overcome these problems banks have formulated strategies to go for retail banking as a major thrust area.

1.2 GROWTH OF RETAIL BANKING.

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The growth in retail banking has been facilities by growth in banking technology and automation of banking processes that enabled extension of reach and rationalization of cost. ATMs have emerged as an alternative banking channel, which facilitate low cost transaction visa-a-vis traditional branches. It also has the advantage of reducing the branch traffic and enables banks with small networks to offset the traditional disadvantages by increasing their reach and spread. The banking has both pros and corns. In the present situation, the bankers have very little option, but to chant the retail mantra. Banks today face complex challenges on multiple fronts. Customers expectations are higher than ever, with growing demand for more rapid service delivery and more flexible, personalized interaction. Retail industry is the fastest growing industry in India, whose growth is attributed to ideal breeding ground in the form of huge market, rising income levels, surplus disposable income, increasing awareness due to growth of advertisement and cable television channels and the entry of multinational brands. Standard Charted Bank has designed credit cards whose size is 43% smaller than the normal cards, in order to make shopping easy, convenient and hassle-free. Major Banks like HDFC, ICICI, and SBI has introduced reward points and cash back schemes on the amount spent through credit cards. Banks have also developed strategic relationship with retail businesses so that customers can pay their credit card dues in interest free installments. In addition, loans can be availed on credit cards. Banks have been aggressively trying to lure customers to transfer their credit card loans to their bank on attractive terms.

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CHAPTER 2

2.1 Retail banking in India. 2.2 Advantages and Disadvantages of Retail Banking. 2.3 Opportunities of retail banking. 2.4 Challenges for retail banking in India. 2.5 Categorization of retail banking services. 2.6 Special features of retail banking. 2.7 Strategies for increasing retail banking.

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2.1 RETAIL BANKING IN INDIA

Retail banking in India is not a new phenomenon. It has always been prevalent in India in various forms. For the last few years it has become synonymous with mainstream banking for many banks. The typical products offered in the Indian retail banking segment are housing loans, consumption loans for purchase of durables, auto loans, credit cards and educational loans. The loans are marketed under attractive brand names to differentiate the products offered by different banks. The loan values of this retail lending typically range between Rs.20, 000 to Rs.100 lakh. The loans are generally for duration of five to seven years with housing loans granted for a longer duration of 15 years. Credit card is another rapidly growing sub-segment of this product group.In recent past retail lending has turned out to be a key profit driver for banks with retail portfolio constituting 21.5 per cent of total outstanding advances as on March 2004.Within the retail segment, the housing loans had the least gross asset impairment. In fact, retailing make ample business sense in the banking sector. While new generation private sector banks have been able to create a niche in this regard, the public sector banks have not lagged behind. Leveraging their vast branch network and outreach, public sector banks have aggressively forayed to garner a larger slice of the retail pie. By international standards, however, there is still much scope for retail banking in India.After all, retail loans constitutes less than seven per cent of GDP in India. As retail banking in India is still growing from modest base, there is a likelihood that the growth numbers seem to get somewhat exaggerated. One, thus, has to exercise caution is interpreting the growth of retail banking in India. Page
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2.2 ADVANTAGES AND DISADVANTAGES OF RETAIL BANKING: ADVANTAGES:

Retail banking has inherent advantages outweighing certain disadvantages. Advantages are analyzed from the resource angle and asset angle.

RESOURCE SIDE Retail deposits are stable and constitute core deposits. They are interest insensitive and less bargaining for additional interest. They constitute low cost funds for the banks. Effective customer relationship management with the retail customers built a strong customer base. Retail banking increases the subsidiary business of the banks. ASSETS SIDE Retail banking results in better yield and improved bottom line for a bank. Retail segment is a good avenue for funds deployment. Consumer loans are presumed to be of lower risk and NPA perception. Helps economic revival of the nation through increased production activity. Improves lifestyle and fulfils aspirations of the people through affordable credit. Innovative product development credit. Retail banking involves minimum marketing efforts in a demand driven economy. Diversified portfolio due to huge customer base enables bank to reduce their

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dependence on few or single borrower .Banks can earn good profits by providing non fund based or fee based services without deploying their funds.

DISADVANTAGES:

Designing own and new financial products is very costly and time consuming for the bank. Customers now-a-days prefer net banking to branch banking. The banks that are slow in introducing technology-based products, are finding it difficult to retain the customers who wish to opt for net banking. Customers are attracted towards other financial products like mutual funds etc. Though banks are investing heavily in technology, they are not able to exploit the same to the full extent. A major disadvantage is monitoring and follows up of huge volume of loan accounts inducing banks to spend heavily in human resource department. Long term loans like housing loan due to its long repayment term in the absence of proper follow-up, can become NPAs.The volume of amount borrowed by a single customer is very low as compared to wholesale banking. This does not allow banks to exploit the advantage of earning huge profits from single customer as in case of wholesale banking.

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2.3 OPPORTUNITIES FOR RETAIL BANKING

Retail banking has immense opportunities in a growing economy like India. As the growth story gets unfolded in India, retail banking is going to emerge a major driver. The rise of Indian middle class is an important contributory factor in this regard. The percentage of middle to high-income Indian households is expected to continue rising. The younger population not only wields increasing purchasing power, but as far as acquiring personal debt is concerned, they are perhaps more comfortable than previous generations. Improving consumer purchasing power, coupled with more liberal attitudes towards personal debt, is contributing to Indias retail banking segment. The combination of above factors promises substantial growth in retail sector, which at present is in the nascent stage. Due to bundling of services and delivery channels, the areas of potential conflicts of interest tend to increase in universal banks and financial conglomerates. Some of the key policy issues relevant to the retail-banking sector are: financial inclusion, responsible lending, and access to finance, long-term savings, financial capability, consumer protection, regulation and financial crime prevention.

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2.4 CHALLENGES FOR RETAIL BANKING

The issue of money laundering is very important in retail banking. This compels all the banks to consider seriously all the documents which they accept while approving the loans. The issue of outsourcing has become very important in recent past because various core activities such as hardware and software maintenance, entire ATM set up and operation (including cash, refilling) etc., are being outsourced by Indian banks. Banks are expected to take utmost care to retain the ongoing trust of the public. Customer service should be at the end all in retail banking. Someone has rightly said, It takes months to find a good customer but only seconds to lose one. Thus, strategy of Knowing Your Customer (KYC) is important. So the banks are required to adopt innovative strategies to meet customers needs and requirements in terms of services/products etc. The dependency on technology has brought IT departments additional responsibilities and challenges in managing, maintaining and optimizing the performance of retail banking networks. It is equally important that banks should maintain security to the advance level to keep the faith of the customer. The efficiency of operations would provide the competitive edge for the success in retail banking in coming years. The customer retention is of paramount important for the profitability if retail banking business, so banks need to retain their customer in order to increase Page
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the market share. One of the crucial impediments for the growth of this sector is the acute shortage of manpower talent of this specific nature, a modern banking professional, for a modern banking sector. If all these challenges are faced by the banks with utmost care and deliberation, the retail banking is expected to play a very important role in coming years, as in case of other nations.

1. Customer focus The retail banks in future will try to aggressively market their products. To market these products, there will be innovative modes to reach customers like SMS, internet, and mobile phones. Some banks are also engaging the services of Direct Selling Agents (DSAs), Franchisees, etc for sourcing and appraisal of loan proposals, issue of Credit Cards, selling of insurance and mutual fund products, etc. Such methods may some times displease/disturb the customer. Moreover, banks generally pitch on higher levels of service but if the banks do not match up to what they have claimed, this may lead to unsatisfied customers and higher customer attrition rate. 2. Product focus The challenge here will be to design and innovate the financial products which cater to the target segment needs. In future, retail banking scenario will see a huge proliferation of products. This will in turn require devising product which is easy to understand and at the same time meet the financial goals of the customers. The

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problem that lies ahead is to gain a mindshare for ones product given a wide range of products.

3. Interest Rate Risk Interest rate risk can be defined as exposure of bank's net interest income to adverse movements in interest rates. A bank's balance sheet consists mainly of rupee assets and liabilities. Any movement in domestic interest rate is the main source of interest rate risk. 4. Non-Performing Assets The best indicator of the health of the banking industry in a country is its low level of NPAs. Given this fact, Indian banks seem to be better placed than they were in the past. A few banks have even managed to reduce their net NPAs to less than one percent 5. Competition A lot of foreign banks have already burnt their fingers in the retail game and have now decided to get out of a few retail segments completely. Notable examples are Bank Paribas and Oman International Bank in India. The consumer has never been so lucky with so many banks offering so many products to choose from with varying terms and conditions, rates of interest, etc. With supply far exceeding demand it has been a race to the bottom, with the banks undercutting one another.

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2.5 CATEGORIZATION OF RETAIL BANKING SERVICES.

CORE SERVICES Payment services FACILITATING SERVICES Cash, Foreign currency requirements, Traveler cheque, DD/Bankers cheque. SUPPORTING SERVICES Making payments at door step, Internet banking, Telephone banking.

Current A/c and ATM card, Standing savings A/c instructions from customers for making payments, Interbank transfer of funds, Safety vault. LOANS: Consumer Personal Housing Education Current A/c Savings A/c Time deposit A/c

Credit cards, Debit cards, Services to senior citizens, Telephone banking, Internet banking, Conversion of excess balance to time deposit.

Delivery of loan at promised time period, Interest rate option, Flexibility in pre-payment of loan, Counseling on Real-estate markets, Legal services for documentation, ECS for payment of loan installments.

INSURANCE: Life insurance, Pension schemes.

Current A/c, Savings A/c, Time deposit, Safety vaults.

Additional insurance facility for family members, Counseling on post retirement savings.

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Source: Professional Banker,January2003

R e ta il P ro d u cts A va ile d
O th e r s 11 % c r e d it ca r d s 25 % Ho u s in g lo a n 21%

Pe r s o n al lo a n 10%

Ed u c a t io n lo a n 6%

V e h ic le lo a n 27%

Keeping pace with the average 8.5 per cent growth of the Indian economy over the past few years, the retail banking sector in India has also witnessed phenomenal growth. It has faced up to the need of the hour and introduced anytime, anywhere banking, for its customers through ATMs, mobile and internet banking. It has also offered services like D-MAT, plastic money (credit and debit cards), online transfers, etc. This has not only helped in reducing operational costs but facilitated greater conveniences to its customers. High-Tech Banking: ATMs - With growing technological innovations, banks have significantly expanded their ATM network over the past three years. According to the RBI data as of end-June 2008, the number of ATMs in the country had climbed to 36,314 compared to 27,088 and 20,267 as at end-March 2007 and 2006, respectively Loan disbursement: Technology has facilitated the growth in retail loan THAKUR COLLEGE OF SCIENCE AND COMMERCE Page
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disbursements, making the whole process simpler and faster. The sector has delivered a growth of around 30 per cent per year over the past 4-5 years. As per the RBI data, although the retail portfolio of banks saw a slowdown to 29.9 per cent during 2006-07 from 40.9 per cent in 2005-06, the growth was faster than the overall credit portfolio of the banking sector (28.5 per cent). Plastic Money: Credit cards have also played an important role in promoting retail banking. The use of credit cards has been growing significantly over the last few years. The number of credit cards outstanding at the end- June 2008 stood at 27.02 million as against 24.39 million in June 2007, with usage increasing by 10.73 per cent during this period. Core Banking Solutions (CBS): The concept of CBS, which allows a customer to fulfill a wide range of banking operation online, has come alive during the past four years. The number of bank branches providing CBS rose rapidly to 44 per cent at end- March 2007 from 28.9 per cent at end March 2006. Electronic fund transfer facilities and mobile banking are expected to provide a further fillip to the retail banking in the coming years. Future Outlook: Indian retail banking, according to a report, is likely to grow at a CAGR of 28 per cent till 2010 to Rs 97, 00 billion. So, although the revolution in retail banking has changed the face of the Indian banking industry as a whole, it has still miles to go.

2.6 SPECIAL FEATURES OF RETAIL CREDIT

One of the prominent features of Retail Banking products is that it is a volume Page
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driven business. Further, Retail Credit ensures that the business is widely dispersed among a large customer base unlike in the case of corporate lending, where the risk may be concentrated on a selected few plans. Ability of a bank to administer a large portfolio of retail credit products depends upon such factors :

Strong credit assessment capability: Because of large volume good infrastructure is required. If the credit assessment itself is qualitative, than the need for follow up in the future reduces considerably. Sound documentation: A latest system for credit documentation is necessary pre-requisite for healthy growth of credit portfolio, as in the case of credit assessment, this will also minimize the need to follow up at future point of time. Strong possessing capability: Since large volumes of transactions are involved, today transactions, maintenance of backups is require Regular constant follow- up: Ideally, follow up for loan repayments should be an ongoing process. It should start from customer enquiry and last till the loan is repaid fully Skilled human resource: This is one of the most important pre-requisite for the efficient management of large and diverse retail credit portfolio. Only highly skilled and experienced man power can withstand the river of administrating a diverse and complex retail credit portfolio.

2.7 STRATERGIES FOR INCREASING RETAIL BANKING

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Constant product innovation to match the requirements of the customer segments The customer database available with the banks is the best source of their demographic and financial information and can be used by the banks for targeting certain customer segments for new or modified product. The banks should come out with new products in the area of securities, mutual funds and insurance. Quality service and quickness in delivery As most of the banks are offering retail products of similar nature, the customers can easily switchover to the one, which offers better service at comparatively lower costs. The quality of service that banks offer and the experience that clients have, matter the most. Hence, to retain the customers, banks have to come out with competitive products satisfying the desires of the customers at the click of a button. Introduction of new delivery channels Retail customers like to interface with their bank through multiple channels. Therefore, banks should try to give high quality service across all service channels like branches, Internet, ATMs, etc.

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Tapping of unexploited potential and increasing the volume of business This will compensate for the thin margins. The Indian retail banking market still remains largely untapped giving a scope for growth to the banks and financial institutions. With changing psyche of Indian consumers, who are now comfortable with the idea of availing loans for their personal needs, banks have tremendous potential lying in this segment. Marketing departments of the banks be geared up and special training be imparted to them so that banks are successful in grabbing more and more of retail business in the market. Infrastructure outsourcing This will help in lowering the cost of service channels combined with quality and quickness. Detail market research Banks may go for detail market research, which will help them in knowing what their competitors are offering to their clients. This will enable them to have an edge over their competitors and increase their share in retail banking Page
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pie by offering better products and services. Cross-selling of products PSBs have an added advantage of having a wide network of branches, which gives them an opportunity to sell third-party products through these branches.

Business process outsourcing Outsourcing of requirements would not only save cost and time but would help the banks in concentrating on the core business area. Banks can devote more time for marketing, customer service and brand building. For example, Management of ATMs can be outsourced. This will save the banks from dealing with the intricacies of technology.

Tie-up arrangements

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PSBs with regional concentration can reap the benefit of reaching customers across the country by entering into strategic alliance with other such banks with intensive presence in other regions. In the present regime of falling interest and stiff competition, banks are aware that it is finally the retail banking which will enable them to hold the head above water. Hence, banks should make all out efforts to boost the retail banking by recognizing the needs of the customers. It is essential that banks would be imaginative in predicting the customers' expectations in the ever-changing tastes and environments. It is the innovative and competitive products coupled with high quality care for clients will only hold the key to success in this area. In short, bankers have to run very fast even to stay where they are now. It is the survival of the fastest now and not only survival of the fittest.

CHAPTER 3

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3.1 Retail Banking Current Scenario. 3.2 Emerging Issues in handling retail banking. 3.3 Future of retail banking.

3.1 RETAIL BANKING CURRENT SCENARIO.

Banks are aggressively trying to become one-stop financial shop providing all types of financial services to suit their customer needs. They are selling products Page
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ranging from insurance policies to government securities to increase to increase their non- interest income. This helps them in acquainting themselves with products/segments where they do not have any experience. Banks are concentrating on vehicle loans, housing loans, other fee-based business like guarantees, remittances, gold banking, etc. Traditional branch banking has changed. A number of banks have adopted a new model of branch banking, where one would find that only a small space is reserved is reserved for self service area and the rest is used for activities related to sales. Some of the banks have opened special retail outlets called retail banking boutiques, which cater to the needs of consumer less than one roof. The customers avoid standing in queue in branches; instead they prefer transacting at offsite locations like supermarkets, petrol pump stations, etc. This is the reason why retail banking products like credit cards, vehicle loans are available at offsite locations also. In fact, this mode is becoming more popular these days. Banks are making tie-ups with shopping malls and supermarkets which are offering such retail banking products to the customers. Direct selling agents have also been appointed by the banks for promoting credit card services. These steps are taken to ensure customers convenience, which is the most important factor on the retail business agenda of banks. Indian retail banking sector, which mainly depends on transactions directly with consumers savings and lending, registered a decline in share of 5.02 per cent during the first quarter of 2009-10 as compared to the corresponding period last year as per an analyses of 30 public and private Indian banks by the Associated Chambers of Commerce and Industry of India (Assocham). Page
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The private banks are performing better than the public banks in terms of their revenue from retail segment. The private and public banks have registered about 54.27 per cent and 35.47 per cent share respectively in retail banking during the first quarter of the current financial year. The cut in banking interest rate for lending like housing and auto loans had impacted the revenue of Indian retail banking segment. The public sector banks registered a growth of 28.96 per cent in total income while their income from the retail segment grew only 9.92 per cent during the period. The share of retail banking for public sector banks declined from 41.61 per cent in the corresponding period in the previous financial year to 35.47 per cent now. The share of retail banking for private banks declined from 61.71 per cent in the first quarter of last year to 54.27 per cent now. Among the private banks, ING Vysya Bank Limited recorded the maximum share of retail banking in its total income contributing nearly 80.20 per cent, followed by Kotak Mahindra Bank Limited (75.36 per cent), HDFC Bank of India (74.82 per cent) and ICICI Bank Limited (53.52 per cent). Other private sector banks which recorded major share in retail banking segment from their total income were Axis Bank (47.16 per cent), South Indian Bank (46.92 per cent), J&K Bank (45.90 per cent), IDBI Bank (43.45 per cent) and The Bank of Rajasthan Limited (22.91 per cent).

3.2. EMERGING ISSUES IN HANDLING RETAIL BANKING

KNOWING CUSTOMER Know your Customer is a concept which is easier said than practiced. Banks face several hurdles in achieving this. In order to that the product lines are targeted at the right customers-present and prospective-it is imperative that an integrated view Page
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of customers is available to the banks. The benefits flowing out of cross-selling and up-selling will remain a far cry in the absence of this vital input. In this regard the customer databases available with most of the public sector banks, if not all, remain far from being enviable. What needs to be done is setting up of a robust data warehouse where from meaningful data on customers, their preferences, there spending patterns, etc. can be mined. Cleansing of existing data is the first step in this direction. PSBs have a long way to go in this regard. TECHNOLOGY ISSUES Retail banking calls for huge investments in technology. Whether it is setting up of a Customer Relationship Management System or Establishing Loan Process Automation or providing anytime, anywhere convenience to the vast number of customers or establishing channel/product/customer profitability, technology plays a pivotal role. And it is a long haul. The Issues involved include adoption of the right technology at the right time and at the same time ensuring volumes and margins to sustain the investments. It is pertinent to remember that Citibank, known for its deployment of technology, took nearly a decade to make profits in credit cards. It has also to be added in the same breath that without adequate technology support, it would be well nigh possible to administer the growing retail portfolio without allowing its health to deteriorate. Further, the key to reduction in transaction costs simultaneously with increase in ability to handle huge volumes of business lies only in technology adoption. PSBs are on their way to catch up with the technology much required for the success of retail banking efforts. Lack of connectivity, stand alone models, concept of branch customer as against bank customer, lack of convergence amongst available channels, absence of customer Page
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profiling, lack of proper decision support systems, etc., are a few deficiencies that are being overcome in a great way. However, the initiatives in this regard should include creating flexible computing architecture amenable to changes and having scalability, a futuristic approach, networking across channels, development of a strong Customer Information Systems (CIS) and adopting Customer Relationship Management (CRM) models for getting a 360 degree view of the customer. ORGANIZATIONAL ALIGNMENT It is of utmost importance that the culture and practices of an institution support its stated goals. Having decided to take a plunge into retail banking, banks need to have a well defined business strategy based on the competitive of the bank and its potential. Creation of a proper organization structure and business operating models which would facilitate easy work flow are the needs of the hour. The need for building the organizational capacity needed to achieve the desired results cannot be overstated. This would mean a strong commitment at all levels, intensive training of the rank and file, putting in place a proper incentive scheme, etc. As a part of organizational alignment, there is also the need for setting up of an effective Corporate Marketing Division. Most of the public sector banks have only publicity departments and not marketing setup. A fully fledged marketing department or division would help in evolving a brand strategy, address the issue of alienation from the upwardly mobile, high net worth customer group and improve the recall value of the institution and its products by arresting the trend of getting receded from public memory. . The much needed tie-ups with manufacturers/distributors/builders will also facilitated smoothly. It is time to break the myth PSBs are not customer friendly. Page
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The attention is to be diverted to vast databases of customers lying with the PSBs till unexploited for marketing. PRODUCT INNOVATION Product innovation continues to be yet another major challenge. Even though bank after bank is coming out with new products, not all are successful. What is of crucial importance is the need to understand the difference between novelty and innovation? Peter Ducker in his path breaking book: Management Challenges for the 21st Century has in fact sounded a word of caution: innovation that is not in tune with the strategic realities will not work; confusing novelty with innovation (should be avoided), test of innovation is that it creates value; novelty creates only amusement. The days of selling the products available in the shelves are gone. Banks need to innovate products suiting the needs and requirements of different types of customers. Revisiting the features of the existing products to continue to keep them on demand should not also be lost sight of.

PRICING OF PRODUCT The next challenge is to have appropriate policies in place. The industry today is witnessing a price war, with each bank wanting to have a larger slice of the cake that is the market, without much of a scientific study into the cost of funds involved, margins, etc. The strategy of each player in the market seems to be: under cutting others and wooing the clients of others. Most of the banks that use Page
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rating models for determining the health of the retail portfolio do not use them for pricing the products. The much needed transparency in pricing is also missing, with many hidden charges. There is a tendency, at least on the part of few to camouflage the price. The situation cannot remain his way for long. This will be one issue that will be gaining importance in the near future. PROCESS CHANGES Business Process Re-engineering is yet another key requirement for banks to handle the growing retail portfolio. Simplified processes and aligning them around delivery of customer service impinging on reducing customer touch-points are of essence. A realization has to drawn that automating the inefficiencies will not help anyone and continuing the old processes with new technology would only make the organization an old expensive one. Work flow and document management will be integral part of process changes. The documentation issues have to remain simple both in terms of documents to be submitted by the customer at the time of loan application and those to be executed upon sanction.

ISSUE CONCERNING HUMAN RESOURCES While technology and product innovation are vital, the soft issues concerning the human capital of the banks are more vital. The corporate initiatives need to focus on bringing around a frontline revolution. Though the changes envisaged are seen at the frontline, the initiatives have to really come from the back end. The top Page
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management of banks must be seen as practicing what preaches. The initiatives should aim at improved delivery time and methods of approach. There is an imperative need to create a perception that the banks are market-oriented. This would mean a lot of proactive steps on the part of bank management which would include empowering staff at various levels, devising appropriate tools for performance measurement bringing about a transformation cant do to can do mind-set change from restrictive practices to total flexible work place, say. By having universal tellers, bringing in managerial controlling work place, provision of intensive training on products and processes, emphasizing, coaching etiquette, good manners and best behavioral models, formulating objective appraisals, bringing in transparency, putting in place good and acceptable reward and punishment system, facilitating the placement of young /youthful staff in frontline defining a new role for front-line staff by projecting them as sellers of products rather than clerks at work and changing the image of the banks from a transaction provider to a solution provider.

RURAL ORIENTATION

As of now, action that is taking place on the retail front is by and large confined two metros and cities. There is still a vast market available in rural India, which Page
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remains to be trapped.

Multinational Corporations, as manufacturers and

distributors, have already taken the lead in showing the way by coming out with exquisite products, packaging and promotions, keeping the rural customer in mind. Washing powders and shampoos in Re.1 sachet made available through an efficient network and testimony to the determination of the MNCs to penetrate the rural market. In this scenario, banks cannot lack behind. In particular PSBs, which have a strong rural presence, need to address the needs of rural customers in a big way. These and only these will propel retail growth that is envisaged as a key strategy for portfolio expansion by most of the banks.

3.3. FUTURE OF RETAIL BANKING

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Retail banking has significant past and glorious future over the years.

Retail

banking has proved as an effective tool not only to improve the bottom lines of the banks concerned but also to significantly contribute to the development of the individual consumers availing the services or products in particular and to the overall development of the society in general with the needs of the consumers ever multiplying. There is definitely a vast scope for the furtherance of the Retail Banking business. On the whole, looking ahead, the prospects of retail banking are brighter than ever and the bankers have to give continued thrust to this area of banking. Thus, with the consumers ever multiplying needs there is definitely a vast scope for the furtherance of the retail banking business. Operationally, there is a possibility that technology go beyond merely reducing the cost & improving the quality of current products. It may prove possible, even profitable, to combine functions in new ways. Retail banking will witness far more challenges and competitive market place and it will grow in keeping with economic advancement. Hence, product and marketing thrust will have to be maintained and upgraded through innovative measure on an ongoing basis. The four pillars of the customer centricity for retail financier will have to be accessibility, affordability, convenience, and customer relationship management will be future differentiators in the market place. In view of the above, retail banking is all set to change the nuances of basic banking in a major way, as retail consolidation promises to be a powerful catalyst in managing the overall transformation of Indian Banking.

IV. A REPORT ON BANK VISIT

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The report on this project is been made by visiting ICICI Bank. The information on the project topic was given by Mr.Rakesh Mahato, Branch Manager-Retail Loans, ICICI Bank, Thaur Village, Kandivali (e), Mumbai-400101. ICICI Bank is India's second largest bank with over 50 years presence in financial services and with assets of over USD 67 billion. The Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries in the areas of investment banking, life and non-life insurance, private equity and asset management. ICICI Bank is a leading player in the retail banking market and services its large customer base through a network of over 780 branches and extension counters, 3300 ATMs, call centers and internet banking (www.icicibank.com) to ensure that customers have access to its services at all times. ICICIBank.com is the web channel of all ICICI retail products including Internet Banking. ICICI services allow customers to take care of daily chores in a few clicks. The highlights of the services offered are:

Consolidated view of all ICICI relationships by web enabling your ICICI relationships. Online application of ICICI products through ICICIBank.com and viewing application status online. Payment of Utility Bills Online. Transactions Online for Bank and Credit Card Accounts. Other Services are:
o o

Locate Us Contact Us.

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To avail the retail services on ICICI Bank.Com, customers can fill up the application forms directly from the homepage. Alternatively, they may choose to reach the application form from individual product pages. In case of online banking, popularity is a must as the merchant (seller) needs to approach a bank and tie-up with it in order to serve customers. And in case of popularity, ICICI bank tops the chart. Along with SBI and HDFC, ICICI Bank is available almost in all online shopping sites (EBay).Once a person becomes an online ICICI customer, they can transact using their bank account on their credit card. As a customer they can also transact on the accounts online, get automatic product alerts and execute online service requests. The Internet Banking User Id can be used to log on to ICICIBank.com to execute any customer transactions. For example, a credit card customer, can:

Pay their utility bills online through your credit card. If they already have an Internet Banking account, then they can automatically debit their bank account to pay their credit card bill. Receive their monthly statements by mail; check your payment status and much more.

A bank customer can do the following:

Transfer funds :
o o o

To own accounts in ICICI Bank. To Any ICICI Bank account. To any Bank account across 8 cities.
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Make their utility bill payments free of charge. View and query on their transactions. Query on the status of a particular check. Invest online in a few Listed Mutual Funds and GOI Relief Bonds. Do e-shopping on malls we have a tie up with. Make donations online.

The customers can ask for service request on ICICI Bank.Com, which includes; Credit Cards

Add-on Cards Change of Address Dial-a-Draft Auto-Debit Duplicate PIN

Bank Account

Apply for Bank Account Statement by email Order a new cheque book Stop Payment Request Intimation for loss of ATM Card Open a Fixed Deposit
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Open a Recurring Deposit Apply for Quantum Optima Apply for Mobile Commerce (You can apply even if you don't presently have a phone banking relationship number.)

Bill Payment Online is a facility to make online payment of the customers utility bills like telephone, electricity; mobile etc.It requires a customer to have, ICICI Bank account and ICICI credit card .The process of Bill Payment is customer friendly. Customers can locate any of the ICICI Bank branch, ICICI Center or an ATM in their neighborhood. Just clicking on the Locate us option on there home page. These locations are provided with online maps and driving directions. In case of any clarifications they can write to the bank using the "Email Us" option or call our Hello ICICI service, which is our 24-hour customer care center by clicking on Contact us option. Based on the Life Stage Segmentation Strategy ICICI has divided its market into various segments constituting people from different age group and income class. This has helped to decide which segment is to be targeted for which retail offering.

V. CASE STUDY

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ICICI Bank HDFC Bank Who is the banking king?

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ICICI BANK

Positioning: The banks initial positioning was mainly on service factor and now this has changed to a customers interest focused and a friendly bank.

Message: With the shift in positioning there has also been change in the message conveyed from service focused to customer interest focused. It is the first to sign up a celebrity Amitabh Bachchan for its advertising. This conveyed a message of the bank being as popular and famous as the celebrity.

Media: The general preference is for television, hoardings, newspapers, magazines, radio etc.ATMs also form an effective advertising tool as their mere presence makes the consumer aware of the bank. Besides this, ATM machines are also effectively utilized to cross-sell the banks retail offerings to its already existing customers

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A w a re n e ss O f IC IC I T h ro u g h V a rio u s M e d iu m s
B illb o a r d s / Ho a r d in g s 17% Te le v is io n 35%

W ord Of Mo u th 1 8 % Ra d io 3 %

Ne w s p a p e r s & Ma g a z in e s 27%

ICICI in general has a high level of awareness among the people owing to its extensive advertising.ICICI Bank aims to focus on rolling out branch network to enhance capability for retail deposit gathering & asset origination and actively monitor and manage existing portfolio for risks arising out of changing operating environment. It continues to look for opportunities to reduce costs and maintain high capitalization levels to be prepared for next round of growth. ICICI Bank is the Second largest bank in India. ICICI Bank is eyeing acquisitions of retail business of other banks and is likely to outsmart all banks in this segment by posting over 100 per cent growth at Rs 180 billion and raising its market share to 30 per cent by this fiscal, official. After the mega merger with its parent ICICI to Page
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become a universal bank last year, the country's second largest bank has decided to focus more on the Rs 700 billion retail segment

RETAIL PRODUCTS OFFERED BY ICICI BANK

LOANS: ICICI Bank offers a wide variety of Deposit Products to suit customers banking requirements. Their Loan Products provide flexible financing solutions to meet customers requirements by offering them attractive schemes at competitive interest rates. Types of loans include Online Loans, Home Loans, Loan against Property, Personal Loans, and Car loan, Two Wheeler, Commercial Vehicle, Loans against Securities, and Loan against Gold, Farm Equipment, Construction Equipment, Office Equipment, Medical Equipment, Pre-approved Loans, Retail Assets Branches, Flexi Cash, Farmer Finance, Rural Housing Finance, and Retail Warehouse Receipt Based Finance, Business Instalment Loans, Aquaculture Finance, Horticulture Finance, Self Help Group Finance, Channels Terminated. ON LINE SERVICES:

No online registration required to pay bills. Settle bills with the help of Quick Pay, a smart way to pay utility bills online. Pay Electricity, Telephone, Mobile bills and a lot more from the convenience of home through Internet Banking. Avail this service without registering. Also, this service is free for all ICICI Bank customers. No more hassles of personally visiting the Biller to pay the bills. Pay your bills for Utility Companies (Electricity and Telephone), ICICI Bank Credit Card, Mobile Page
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bills, Insurance Premiums and lot more. Avail free bill payment services through Internet Banking Account. Shopping at fingertips. ICICI Bank facilitates to buy variety of products online from more than 75 shopping websites. Payment can be made conveniently using your ICICI Bank Account. Visit partner websites, choose product and pay using Internet Banking Facility. With ICICI Bank you need not visit rain/ Air ticket booking reservation centers any more. You can now buy ticket online and pay using Internet Banking Facility. You can book your Railway Ticket on IRCTC and air tickets on Air Deccan. Recharge Prepaid Mobile anytime, anywhere in just a few minutes by logging into Internet Banking on ICIBank.com or by sending a simple SMS. The fastest & easiest way tore charge your prepaid mobile is now at fingertips. INVESTMENTS:

Trade in Securities Market Online through the unique 3in-1 account that integrates your banking, broking and demat accounts. Invest online in Mutual Funds, Initial Public Offers of the Companies and Postal Savings Schemes through www.icicidirect.com. ICICI Bank's power-packed, feature-rich investment options for meeting all your investment needs. Investments items include; ICICI Bank Bonds [ICICI Bank Tax Saving Bonds], GOI Bonds [Government of India Bonds], Mutual Funds [Investment in Mutual Funds], IPO [Initial Public Offers by Corporate], ICICI Bank Pure Gold [Investment in "Pure Gold"], Forex Services [Foreign Exchange Services], Senior Citizens Savings Scheme, 2004.

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CARDS:

A truly world class service as ICICI Bank cards have both national and international acceptance. There are different types of cards offered by ICICI like; Consumer Cards, Credit Card, Travel Card, Debit Cards, Commercial Cards, Corporate Cards, Prepaid Cards, Purchase Card, Distribution Cards, Business Card. INSURANCE:

Convenience has always been synonymous with ICICI Bank and keeping in line we offer the facility of buying online. There are different types of insurance policies offered by ICICI Bank like; Health Insurance, Overseas Travel Insurance, Student Medical Insurance, Motor Insurance, Home Insurance, Life Insurance.

ANY TIME ANY WHERE BANKING

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InstaBanking makes your banking simpler, faster, and more convenient. Through these 5 great channels - Internet Banking, Mobile Banking, ICICI Bank ATMs, Instant Voice Response (IVR) Banking and iMobile - you can do your day today banking anytime, anywhere. Internet Banking ICICI Bank brings convenience and security to your desktop. Now you can check account balance, transfer funds, download your account statement, and pay bills or even book tickets online, from the comfort of your home or in the middle of a busy day at the office. Mobile Banking ICICI Bank's Mobile Banking changes the way you bank. Making your mobile phone your branch. You just need to subscribe to convenient and easy to use SMS alerts & requests to make life simpler. Experience banking on the move. ATM Banking Bank 24/7 through a widespread network of ICICI Bank ATMs making life easy and convenient for you. With 4644 ATMs and 1416 branches set up within India, you are never too far from an ICICI Bank ATM. User-friendly graphic screens and easy to follow instructions available in a choice of local languages, makes ATM Banking with ICICI Bank a smoother experience. IVR Banking

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Find answers to all your banking needs from your phone. ICICI Banks Instant Voice Response (IVR) Banking is free of charge, fully automated and at the same time user-friendly. Just having an ATM PIN for your account and credit card ensures that your transactions are secure.

CHANGING RETAIL BANKING SCENARIO

There has been significant change in demographic profile, huge market potential and Increasingly challenging business environment in the banking sector. Competitive Tools are different and need to redefine delivery models and business processes. Benchmark is not only for banking and financial services industries but also for Winning companies across a wide range of industries. In future, banks need to equip themselves with internal capabilities and build efficient and viable business models to create the advantage of new opportunities available into a long term sustainable competitive advantage.

HDFC BANK

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Positioning: HDFC has expertise service. It tries to address the financial needs of the consumers.

Message: The banks presence in the housing sector for a fairly long period is portrayed in its advertisements. They also focus on promoting the simplicity in work procedure, superior service. Their ads also strive to bring the bank out of the only housing image.

Media: The most preferred medium by the bank are hoardings and print media. They rely on word of mouth and goodwill which they have created through 25 years of service.

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A w a r e n e ss O f H D F C T h ro u g h V a ri o u s M e d iu m
B illb o a r d s / Ho a r d in g s 22% Te le v is io n 13% Ne w s pa pers & M a g a z in e s 39%

W ord O f Mo u th 2 1 % Ra d io 5 %

HDFC being a private and an aggressive player, especially in the home finance arena, has taken the print media as its stalwart for a for awareness. HDFC Bank (India) won award for best retail bank in India in the year 2008.HDFC is not only able to increase retail asset market share without sacrificing margins but also maintained profitability. With the merger of Centurion Bank of Punjab,HDFC transformed into a sizeable financial power house, having largest branch network among all private sector banks in the country. In 2008 the bank was successful in enhancing product cross-selling capabilities by starting to engage customers earlier in lifecycle. Bank was able to capture large volume of core retail deposits with relatively lower cost of funds than its private sector peers. In highly challenging environment for retail financial services, HDFC Bank was able to manage its retail operations better than any of its competitors. The banks core customer retail deposit s grew by more than 60% during the year.

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RETAIL PRODUCTS OFFERD BY HDFC BANK

LOANS:

With HDFC Bank customers can borrow up to Rs 15, 00,000 for any purpose depending on their requirements with flexible repayment options, ranging from 12 to 60 months. Customers can repay with easy EMIs, one of the lowest interest rates.HDFC loans are Hassle free loans with no guarantor/security/collateral required, Speedy loan approval and convenience of service at customers doorstep. There are different types of loans available for the customers like; Personal Loans, Home Loans, Two Wheeler Loans ,New Car Loans, Used Car Loans ,Express Loans Plus ,Gold Loan, Educational Loan, Loan Against Securities, Loan Against Property, Loans Against Rental Receivables, Health Care Finance, Tractor Loans, Commercial Vehicle Finance, Working Capital Finance, Construction Equipment Finance, Warehouse Receipt Loans . ONLINE SERVICES:

The customers are always accessible to the bank by experiencing total control and convenience with the range of innovative services provided by HDFC bank. Net Banking is HDFC Bank's Internet Banking service. Providing up-to-the-second account information, Net Banking lets customers THAKUR COLLEGE OF SCIENCE AND COMMERCE Page
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manage their account from the comfort of their mouse - anytime, anywhere. HDFC leading service provides a host of features at the customers finger-tips. They can View Account Balances & Statements, Transfer Funds between accounts, Create Fixed Deposits Online, Request a Demand Draft, Pay Bills, Order a Cheque Book, Request Stop Payment on a Cheque, And lots more. Internet Banking is the most convenient and powerful way to manage bank account. Net Banking is Real Time, giving customers up-to-the-second details on their account. It can be accessed anytime, from anywhere, giving complete control over finances. There are no queues to stand in, or turns to wait for. With Net Banking customers are in control. HDFC Bank's Net Banking service is secure. Using industry-standard technologies and infrastructures, HDFC service gives customers peace of mind. So the customers can visit their bank branch by just switching on your PC. INVESTMENTS

When customers bank with HDFC, the bank ensures that customers money is not just in safe hands; it also works to their advantage. The bank helps the customers to invest wisely through financial and investment services provided by them. Relationship managers will help customers determine their investment profile, which will be based on their needs, possibilities and expectations. Customers investment profile will help them choose the type of investments that suits them the best. The analyzed funds are presented in the form of fact sheets from the bank which is updated on a monthly basis. There are different types of investment plans available to the customers like; Mutual Funds, Bonds, Page
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Knowledge Centre, Equities & Derivatives, Mudra Gold Bar.

CARDS:

HDFCs range of Cards help customers meets their financial objectives. So whether they are looking to add to their buying power, conducting cashless shopping, or budgeting their expenditure, they will find a card that suits them. Besides arming customers with unmatched spending power, HDFC Credit Cards are designed to meet customers unique needs. They can choose one that's tailored for them. The best credit cards are available here, including even the online credit cards service Net safe. HDFC Bank Debit Cards gives customers complete and instant access to the money in their accounts without the risk or hassle of carrying cash. HDFC Prepaid Cards have been tailored to answer customers travel and gifting needs.

INSURANCE: Life insurance is designed to offer financial protection for customers and their family during the times of uncertainties. They can choose from a range of traditional insurance and unit linked plans designed to help them with their savings, retirement, investment and protection needs. General & Health Insurance provide a complete Page
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protection for the customers business, health, travel & more.\

ANY TIME ANY WHERE BANKING

PHONE BANKING: When customers dial in to Phone Banking, a voice prompt will guide them through the various transactions. They may also talk to a Phone Banker, who will provide them with the required assistance. Customers can avail of the following services via Phone Banking; Check their account balance , Enquire on the cheque status, Order a Cheque Book / Account Statement, Stop Payment, Loan Related queries, Open a Fixed deposit or Enquire on your Fixed deposits / TDS, Transfer Funds between accounts, Pay your bills, Report loss of your ATM / Debit Card / ForexPlus Card, Learn about all our other products, Enquire about latest Interest / Exchange rates, Request a Demand Draft / Manager's Cheque, Demat Related Queries. INSTA ALERT: Now customers can get regular updates on their bank account on their mobile phone or email ID. Customers can just register for HDFC InstaAlert service and receive updates on their account as and when the selected transaction happens and all this can be done without visiting the branch or ATM! Customers can register for any or all of the following alerts like; Debit transactions greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000, Credit in account greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000, Account Balance below Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000, Weekly account balance, Salary Credits, Utility bill payment due Alert. MOBILE BANKING: Now can access their bank account and conduct a host of banking transactions and inquiries through their mobile, with HDFC unique Mobile Banking service. HDFC Mobile Banking service provides a host of features at finger-tips through SMS, customers can Get their balance details, Obtain their last 3 transaction details, Request a cheque book, Stop a cheque payment, Enquire cheque status, Request an Page
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account statement, Get Fixed Deposit details, Request for Internet PIN regeneration. Mobile Banking works through a set of text messages (SMS). With SMS customers can perform a wide range of query-based transactions from their mobile phone, without even making a call. The customers need to type in the specified code for the transaction as a text message and send it to 5676712. They will receive the response in the form of a text message on their mobile phone screen within a few seconds. INSTA QUERY: Now customers can access their bank account and conduct a host of enquiry based non financial transactions through their mobile, with HDFC unique InstaQuery service. InstaQuery works through a set of text messages (SMS). With SMS customers can perform a wide range of query-based transactions from your mobile phone, without even making a call.. The customers need to type in the specified code for the transaction as a text message and send it to 5676712. They will receive the response in the form of a text message on your mobile phone screen within a few seconds.

ATMs: With wide spread network of 3382 ATMs across India, customers can enjoy the following benefits at their convenience. Customers have 24-hour access to Cash as they can withdraw up to Rs.10, 000/- per day on their ATM Card and up to Rs. 15,000 on their Debit Card, Through Personalized Cash Withdrawals customers can save time on cash withdrawal transactions by pre-setting their preferred language / account / amount, Customers can View Account Balances & Ministatements as they can get details of the last 9 transactions on account with the ministatement along with account balance, Customers can change ATM PIN at any given point in time, Order a Cheque Book / Account Statement, Make payment of Page
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HDFC Bank Credit Card dues using the ATM. The primary account of Debit / ATM card will be debited, Deposit Cash or Cheques into their account without visiting the Branch. Available at Non-Branch HDFC Bank ATMs, Transfer money between their accounts. Both accounts must be linked to their ATM / Debit Card. Maximum of 16 A/cs (Savings / Current) can be linked to a card, Refill their prepaid mobile using Prepaid Mobile. Refill service instantly, Pay mobile, telephone and electricity bills through the ATM using Bill Pay, a comprehensive bill payments solution, there are no charges levied for use of other Bank cards on HDFC Bank ATMs for cash withdrawals and balance inquires. Password (IPIN) and the same will be dispatched to customers recorded mailing address. ONE VIEW: One View is a revolutionary service from HDFC Bank that allows customers to manage multiple accounts in different banks through one single online interface. If a customer is an HDFC Bank customer and have one or more accounts with Citibank, ICICI Bank, HSBC India, Standard Chartered Bank then One View is just right for them. There is no need to individually log on to internet banking of every account. Customers can just log on to One View and manage up to FIVE accounts in different banks. Customer has to remember only ONE password. No charges whatsoever, customers can enjoy this convenience, absolutely FREE! One View gives customers the world class banking security and technology sophistication they would expect of HDFC Bank.

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E-MAIL STATEMENTS: HDFC Bank introduces Email Statements for all its Savings & Current account holders. The good news is, customers can now receive their statements via email without any delays. They also have the option to maintain the statement on email, print it or save it on a CD. Essentially, customers will receive the same information they would normally receive by mail, but now at the click of a button. Customers receiving combined physical statement and registering for Email Statements will receive separate Email Statement for all accounts linked to the primary Customer ID. BRANCH NETWORK: Customers can open an account at any branch nearest to their residence or office and access it at any branch in the city or anywhere in the country. The sophisticated computerized network gives customers the flexibility of accessing their Savings or Current Account from any of HDFC over 1416 branches and over 3382 ATMs across India.

WHOs RETAIL BANKING KING ICICI or HDFC?

Even their offices reflect their attitudes. ICICI Bank's headquarters in suburban Mumbai is a huge, imposing structure in glass and granite. HDFC Banks office in central Mumbai is comparatively smaller and more sedately furnished. The two banks have carried forward their style statement in their approach to business. ICICI Bank thinks big, is all for growth and hungry for market share. THAKUR COLLEGE OF SCIENCE AND COMMERCE Page
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HDFC Bank is more conservative and cautious, grows at a measured pace, without taking any undue risks. ICICI Bank's assets in the retail space stand at Rs 56,000 crore (Rs 560 billion). In comparison, the tally for HDFC Bank is Rs 18,000 crore (Rs 180 billion). ICICI Bank also leads HDFC Bank in almost every segment they are present in. But that's just the current update. The DNA of the strategy : ICICI Bank began its retail banking venture in mid-1999. By January 2000, it had moved on to introducing home loans, car loans, personal loans and credit cards. Realizing the need for a bigger retail deposit base, the bank started building a branch and an ATM network. The acquisition of Bank of Madura in March 2001 added 263 branches, many of them in cities where ICICI Bank did not have a presence. The merger of the previous financial institution ICICI Limited with the bank in April 2002 gave it ready-made corporate customers. The flip side was that ICICI Bank had Rs 10,000 crore (Rs 100 billion) of restructured assets for which it had to make provisions. On the other hand, HDFC Bank kick started its operations in 1995 with a focus on corporate banking, targeting the top-end of the market. HDFC Bank ventured into retail lending in 1998, a year before ICICI Bank. But in products like credit cards, it was slow to get off the mark. For instance, its credit cards were launched only two years ago. By then ICICI Bank had been present in the credit card business for nearly three years. However, HDFC Bank was handicapped because it could not sell home loans (because its parent HDFC was in the business), though it has been originating them in the past one-and-a-half years. For ICICI Bank, home loans are 46 per cent of its retail assets. A banking consultant observes that ICICI Bank is far more aggressive. Though ICICI executives do not admit it, industry sources observe that ICICI's pricing has been far more competitive, which probably brought it more customers. According to some industry experts, growth for ICICI Bank may have come at the cost of quality. ICICI Bank denies this.

Calling the customer :

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Both players targeted the same customer -- the upper-middle class. The marketing channels used by both, including direct sales agents (DSAs), were the same. Yet, there was a difference. While ICICI settled for nothing less than film star Amitabh Bachchan as an ambassador, HDFC Bank chose to rely on the trusted lineage of its housing finance parent, Housing Development Finance Corporation (HDFC). In the past two years, the bank has spent less than Rs 100 crore (Rs 1 billion) on advertising and publicity (In comparison, ICICI has spent Rs 185 crore). HDFC Bank says that its spends have always focused on other channels such as direct sales and phone banking rather than mainstream advertising.

Better pick-up :

ICICI Bank's retail deposits are nudging Rs 60,000 crore (Rs 600 billion) and in FY05, it grew its deposits by 47 per cent compared with the industry deposit growth of 14 per cent. HDFC Bank's retail deposits are about Rs 23,000 crore (Rs 230 billion). Even in home loans, ICICI Bank commands 30 per cent of the market, having eaten into housing finance pioneer, HDFC's share.

Share of the wallet

HDFC Bank Branches ATMs Cities Retail assets (Rs crore) Deposits (Rs crore) Car loans (Rs crore) 467 1,147 211 18,000 38,000 2,500 ICICI Bank 565 2,000 371 56,000 99,800 11,500

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Credit cards (Mn) Retail customers (Mn) Cost of deposits (%)

1.3 6.4 3.2

3 13.7 4.5 2.4 2

Net interest margin (%) 3.2 Net NPLs (%) 0.2

ICICI Bank has issued 3 million credit cards -- that is more than twice the number of HDFC Bank's credit card users. However, industry observers point out that ICICI Bank's effective users for credit cards may not be high. Nonetheless, they concede that even with a discounted customer base, the numbers will still be strong. Even in businesses like online trading where the risks are relatively low, ICICI Bank commands a two-thirds market share.

'Tell all' street:

The stock market has always valued HDFC Bank at a huge premium -- at the current price of Rs 585, HDFC Bank is valued at 3.5 times price to forward book (valuation based on estimated book value in FY 06 of Rs 165).

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The multiple for ICICI Bank that quotes at Rs 415, is just 2.1 (estimated book value Rs 194). The reason: the impeccable quality of HDFC Bank's balance sheet. With NPLs of less than 0.2 per cent, compared with 2 per cent for ICICI Bank, its books are definitely in far better shape. HDFC Bank's operations are also more profitable -- its net interest margin at 3.2 per cent is way higher than that of ICICI Bank's 2.4 per cent. Also, it is able to access deposits at a lower cost. On an average, it pays an interest of 3.2 per cent while ICICI Bank shells out 4.5 per cent. Given its legacy, ICICI Bank has not done a bad job. Its net interest margin in FY05 at 2.4 per cent was an improvement from the 1.9 per cent that it posted in FY04. Moreover, net NPLs at 2 per cent in FY05 were down from 2.9 per cent in the previous year. ICICI Bank's cost of deposits, too, has come down by 90 basis points to 4.5 per cent.

Poised for take off :

However, consultants believe that HDFC Bank could have leveraged its parent's customers far more effectively to cross-sell products and grow faster. Says a banking consultant, "While HDFC Bank has about two years to get ready for the future, ICICI Bank probably has three years." Should HDFC Bank and its parent be merged, it could catapult them to a new league. But round one of the banking sweepstakes has clearly gone to ICICI Bank.

VI.CONCLUSION
Retail banking is the fastest growing sector of the banking industry with the key success by attending directly the needs of the end customers is having glorious future in coming years. Page
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Retail banking sector as a whole is facing a lot of competition ever since financial sector reforms were started in the country. Walk-in business is a thing of past and banks are now on their toes to capture business. competing for increasing their retail business. There is a need for constant innovation in retail banking. This requires product development and differentiation, micro-planning, marketing, prudent pricing, customization, technological up gradation, home / electronic / mobile banking, effective risk management and asset liability management techniques. While retail banking offers phenomenal opportunities for growth, the challenges are equally discouraging. How far the retail banking is able to lead growth of banking industry in future would depend upon the capacity building of banks to meet the challenges and make use of 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 customer interest is of chief importance. The banking sector in India is representing this and I do hope they would continue to succeed in this traded path. Banks therefore, are now

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VII.QUESTIONAIRE
1. What are the retail products and services offered to the customer by your bank? 2. What is ICICIBank.com? 3. How do customers apply for ICICI Bank products on ICICI Bank.com? 4. What is the reason that customers would go for ICICI online banking? 5. What are the transactions that customers can do online? 6. What are the service requests that customers can issue on ICICIBank.com? 7. What is Bill Payment online? 8. What else are the customers being offered on ICICIBank.com?

9. What is the marketing strategy of your bank? 10. ICICI is a pioneer in a distinct retail strategy and then implementing the same aggressively. Now every bank wants to do the same thing. Your view?

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BIBILIOGRAPHY
RETAIL BANKING Book ICFAI -Volume 1 Editor: Nageshwara Roa Kusturi Published year:2003 Pages refered: Pg.No:42,125,131,187. COMMERCIAL BANKING Book ICFAI Textbook Published By ICFAI University Year:2003 Pages refered: Pg. no.33

WEBILIOGRAPHY

www.ibef.org/artdisplay.aspx

www.en.wickipedia.com

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