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CHAPTER 1 INTRODUCTION TO STUDY 1.1 Introduction

Retail banking is quite broad in nature - it refers to the dealing of commercial banks with individual customers, both on liabilities and assets sides of the balance sheet. Fixed, current / savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing, auto, and educational) on the assets side, are the more important of the products offered by banks. Related ancillary services include credit cards, or depository services. 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.

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CHAPTER 2 INDUSTRY AND COMPANY PROFILE

2.1.1 Industry Overview
In India, all the retail banking segments are expected to witness a tremendous growth owing to the low cost of borrowing, changing customer attitudes towards borrowing and optimism regarding economic growth. Retail lending constitutes just 12.36% of the Indian banking system. Given this macroeconomic scenario, the share of retail banking will grow dramatically and it is expected that about 35% of the incremental growth in net credit will come from retail banking. In the next five years ie till 2010, retail banking is expected to grow by a CAGR of 25% to touch the figure of Rs575,000 crore. This requires expansion and diversification of retail banking product portfolio, better penetration and faster service mechanism. Hitherto, the growth had come from metros and tier I cities. However, there are some areas of concern like rising NPA in consumer loans particularly, the delinquency rates in credit cards, and frauds in home loans. Housing prices have grown rapidly. Deflation of asset value is a possibility in certain areas. Aggressive credit growth in retail has increased the requirement for measuring and managing this risk. These require extremely skilled workforce and highly evolved credit delivery and monitoring processes. The other concern is of suicidal pricing by the aggressive banks. This is bringing the margins under pressure. Though rational pricing is critical, the competitive market shall continue to see the pricing pressure. There is also a need for a database and management information system to identify the right type of borrowers. Keeping pace with explosive changes will pose challenge to regulatory authorities. This will not limit only to increase of risk weight of consumer loan by 25 basis points which the regulator announced in mid-term policy review 2004-05. Revision of credit cards issue regulations, and recent draft guidelines on outsourcing are the steps in the right direction. Lack of consensus on definition of retail and transparency in declaration by the players as well the coverage of retail by the central banker in its reports; all of this needs a thorough re-look.

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Opportunities and Challenges in Indian Retail Banking:The subject matter of retail banking is of prime importance. In recent

years, commercial banks have witnessed development in the form of retail lending, all over the world. The growth in the field of retail lending is primarily because of the speedy advancement in the IT sector, evolving macroeconomic environment, numerous micro level demand and supply side factors and financial market reform. This criterion is based on the market research report on retail banking. India has also experienced growth in the field of retail banking. The retail loan accounted for approximately one-fifth of the entire bank credit. The housing sector is undergoing a boom in its credit. The retail loan market has detrimentally undergone a change, from the sellers market to the buyers market. The time is no more the same, when it was difficult to get loans from the bank. This indicates that the retail loan market has shown phenomenal growth and development over recent years. The market research reports that were made exclusively for the Indian retail banking market indicated, that India offers tremendous opportunities in this field. It further indicated that retail banking market is a booming sector in India. One of the key contributors for the boom in the Indian retail banking industry is the increasing ratio of the Indian middle class. The number of people who fall in the category of the middle class is increasing rapidly. The younger population of the country has increased not only its purchasing power; it is also comfortable acquiring personal debts as compared to their older generations. This dual combination of increased purchasing power and comfort acquiring personal loans has contributed majorly in the development of the retail loan sector in India If retail banking on one hand offers development opportunities, it also offers challenges on the other hand. These challenges are listed in the market research reports made on retail banking. Further growth and success of the retail market (in the banking sector) will depend upon the capacity and ability of the banks to meet with the challenges and make the best use of the opportunities.

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MMS PROJECT The technological base and efficiency in operations would give the retail banking market a competitive edge and will contribute in the success of the business in India. Prime importance has to be given to consumer interest. The biggest challenge faced by the Indian banks in the field of retail banking is going to be the rising indebtedness and lack of technological advancements, a report by Federation of Indian Chambers of Commerce and Industry (FICCI) pointed out. A report of FICCI, namely, Status of the Indian Banking Industry - has identified these two areas as the factors which may affect the future of retail banking in India. The study has said majority of the respondents do not anticipate any fall in demand due to hike in interest rates. On the interest rate front, 64% interviewed, foresee a rise in the interest rates in the future. Out of these, 74% expect the interest rate to increase by 0.5% and the remaining expects it to increase by 1%. The increased interest rates are likely to have an adverse impact on the corporate sector lending to some extent, especially AAA rated borrower, as highlighted by 62% of the banks. The study has also outlined other issues like customer information and distribution network, the areas banks need to address. 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, the report said. India is as the second most attractive retail destination of the most 30 emerging economies of the world with a retail market growing at a rate of 33% (compound annual growth rate). Over 50 million people of the country are now credit card holders and the sector is growing at rate of 30%. About 53% of the respondents of the study have said that they will increase their retail portfolio by more than 25% in the year 2005-06. Housing finance, one of the largest the retail component in terms of growth with a rate of 112% over the last year, is expected to continue the momentum, though 73% of the bankers interviewed felt that the lending rate for the housing sector is going to rise.

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2.2 COMPANY PROFILE 2.2.1 Introduction to company

Name of the Bank: Registered Office: Model Co-op. Bank Ltd. 14-B, Vatsa House, Janmabhoomi Marg, Fort, Mumbai400023. Administrative Office: Pangala House, 108/108A, Kalina Village, Santacruz (E), Mumbai-400029. Registration No: 1107 dated 28-04-1916, registered under section 9 of the Co-operative Societies Act 1912 as Mangalorean Catholic Co-operative Credit Society Ltd. The name of the society was changed to The Mangalorean Catholic Co-operative Bank Ltd. on 02-09-1998 and as Model Co-operative Bank Ltd. on 14-12-1998. RBI Approval: Included in the list of Primary Co-operative Banks under the Banking Regulation Act, 1949 (As applicable to Cooperative Societies) on 15-06-1998. RBI License: License No. UBD.MUM (MAH) 0034/P 2006-07 dated 28-05-2007. Jurisdiction: Greater Mumbai & Thane Districts.

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2.2.2 History of Model Co-operative Bank:-

Model co-operative bank ltd This banking institution has a history of 93 years. It

started has a community institution in the name of MANGALOREAN CATHOLIC COOPERATIVE CREDIT SOCIETY. As so the community for 8 years as a credit society, meeting the needs of catholic community and helping them in all possible ways to improve its members financial condition. As it was a small credit society it would only help a small group of individuals, primary institution and small scale firms. But then this institution already has been recognition among catholic community which help the institution to reach its goal to convert it into urban co-operative bank. In the year 1998 MODEL CO-OPERATIVE BANK LTD. got the status of the BANK from credit co-operative society. Hence it got the chance to widen its horizon and serve not only one community but to serve every Indian citizen. If service in one hand, even we can observe the progress of the bank on the other hand. We can see the progressive graph is always move upward direction. That it-self proves the commitment of its staff and management towards the welfare of whole nation. Self service rendered by this institution to all the people. Today model co-operative bank is well recognized among all financial institution. It has a strong support from 17000 shareholders. The share capital tremendously increased to 1368.04 lakhs. It has a total deposit Rs.30001.13 lakhs and advanced Rs.14111.17 lakhs, simultaneously the non performing assets of the bank is negligible and its shows 2.46% increase in this year.

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2.2.3 Mission Statement of the Bank

At Model Co-operative Bank Ltd., there are some Core Values we bring to work every day, from the Chairman to the office boy our Vision & Mission are imbibed in the spirit of the bank. We can articulate them as:

By the end of 2012, we envision ourselves as one of the Best Customer Service Providers in the Co-operative Banks sector.

Providing services with a smiling face as well as to make our Customers smile with our service, is what we constantly endeavor.

We shall take our services to the doorsteps of our Customers and provide all financial needs and planning support under one roof.

We intend to take over small-scale Co-operative Banks and expanding thereby we shall make ourselves strong.

Cohering to our commitment, we shall be a temple of our shareholders' trust. We shall walk ahead of the times in offering quality products and services. We assure that our Human Resource management shall generate high level of Team Spirit, Enthusiasm, Efficiency and Excellence among our staff members.

With the involvement of our committed, loyal & hard working staff members, we can and we shall mobilize aggressively, invest wisely, disburse loans prudently and reduce costs effectively.

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2.2.4 Core Values of the Bank

We do believe in our core values and have succeeded in developing a truly participative and completely transparent way of work that has enables in each and every member really living our core values.

Core Values
An accent on Thrift Create development of the customers Complete transparency and accountability Mutual respect and mutual trust A progressive mindset Participative management Enthusiasm for work Education and clear communication The society is of, by and for the member. Self Discipline and honesty

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2.2.5 Department of the Bank

Human Resources Division Marketing Division Personal banking Division Treasury Division Operations Division Computer and Information Technology Division Credit Division Finance & Accounts Division Recovery Division

2.2.6 Product and Services of the Model Co-op. Bank

Model Co-op. Bank provides different types of banking product and services to satisfy its valuable customer. The products of the bank to its customer are described below:

Deposit Scheme:
Besides Fixed Deposits, Savings and Current Account Deposits, the Bank has introduced the following customer friendly deposit schemes: Monthly Savings Scheme Fixed Deposits Recurring Deposits scheme

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2.2.7 Management Structure of the Bank

The bank has appropriate organizational structure manned with qualified professionals for proper planning, executing, controlling and monitoring functions. Chairman Vice-chairman Board of director Shareholders General Manager (CEO) Deputy General Manager Senior Manager Branch Manager Deputy Manager Assistant Manager Senior Officers Junior Officers Probationary Officers Trainees Office boy Cleaner

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CHAPTER 3 OBJECTIVES OF THE STUDY

The basic idea behind undertaking the Project on Retail Banking was to: To study the core concept of Retail Banking. To study the customer behavior towards the service provided by Model Co-Op. Bank.

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CHAPTER 4 NEED FOR THE STUDY

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 The Retail Banking environment today is changing fast. The changing customer demographics demands to create a differentiated application based on scalable technology improved service and banking convenience. So by this project I will be able to get banking knowledge and how the customer management can be done which will help both, me and the Model Co-op. bank.

Loan Scheme:
The loan portfolio of the Bank is well diversified and covers funding to a wide spectrum of business and industries including readymade garments, textile, steel & engineering, chemical, pharmaceuticals, cement, construction, health-care, real-estate and loans under consumers credit schemes allowed to the middle-class people of the country for acquiring various household items. Education loan scheme Commercial Lending Working Capital House Building Loan Consumer Credit Scheme SME Finance Large/Medium Scale Industry

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CHAPTER 5 LITERATURE REVIEW

5.1 BASIC CONCEPTS 5.1.1 Meaning of Banking
Banking has come to occupy a pivotal position in a nations economy. According to the modern concept, banking is a business which not only deals with borrowings, lending and remittance of funds, but also an important instrument for fostering economic growth. The Banking Regulation Act, 1949 defines the term banking as the accepting of deposits for the purpose of lending or investment of deposits of money from the public or otherwise and withdraw able by cheque, draft, order or otherwise. Thus, the essentials of banking are: (1) There should be acceptance of deposited. (2) Deposits should be from the public. (3) Deposits should be repayable on demand or expiry of a term or after a specified period. (4) The purpose of deposits should be lending or investment. Bank is an institution which deals in money and credit.

5.1.2 Meaning of Retail

Retail means sale of goods in small quantities, it is concerned with buying of goods in small quantities from the wholesaler and selling them in small quantities to the ultimate consumers as per their requirements. The person engaged in this trade is called the Retailer. He acts as a link between the wholesaler and the customers. In retail trade goods are sold to the ultimate consumers for personal use and for the use of the business in small quantities only.

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5.1.3 Definition OF Retail Banking

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

Retail banking environment today is changing fast, the changing customer demographics demands to create a differentiated application based on scalable technology, improved service and banking convenience. Higher penetration of technology and increase in global literacy levels has set up the expectations of the customer higher than never before. Increasing use of modern technology has further enhanced reach and accessibility

The market today gives us a challenge to provide multiple and innovative contemporary services to the customer through a consolidated window 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. The pace of innovation is accelerating and security threat has become prime of all electronic transactions. High cost structure rendering massmarket servicing is prohibitively expensive.

Present day tech-savvy bankers are now more looking at reduction in their operating costs by adopting scalable and secure technology thereby reducing the response time to their customers so as to improve their client base and economies of scale.

The solution lies to market demands and challenges lies in innovation of new offering with minimum dependence on branches a multi-channel bank and to eliminate the disadvantage of an inadequate branch network. Generation of leads to cross sell and creating additional revenues with utmost customer satisfaction has become focal point worldwide for the success of a Bank. 1

D. Gilbert 2 Edition (2003) Retail Marketing Management Financial Times/ Pearson Education

nd

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5.1.4 Retail Banks: Their Structure and Function

Definition:
Retail banks offer a range of services to individual customers and small businesses, rather than to large companies and other banks. The services can include current accounts, savings accounts, investment advice and broking, and loans and mortgages. Retail banks perform two crucial functions for customers: firstly, they enable customers to bank their money securely, access it easily, and conduct transactions; and secondly, they provide access to additional money to fund large purchases, such as buying a home. In return for holding customers funds, which they can then invest, banks pay customers interest. Traditionally, retail banks have provided these services directly to the customer via branches. While many still do this, retail banks now offer their services by telephone and the internet as well. Some operate solely via the internet and do not have facilities to serve customers at physical outlets. Other organizations, such as supermarkets, have now entered the banking sector and also offer a wide range of banking services. It has become more difficult to identify the traditional retail banka bank that funds itself through customer deposits and lendingbecause retail banks now often combine retail and wholesale banking. It is therefore more relevant to todays banking structure to regard retail banking as a series of processes rather than as an institution. The intermediation services offered by retail banks (such as looking after customers money and making loans) and the payment services (allowing customers to make transactions using debit cards, checks, etc.) mean that they have to make funds available to customers at very short or immediate notice. This inevitably means that a retail bank has to manage the risk that more money will be requested by customers than it has available and of customers defaulting on loans. Banks do this by holding stocks of liquid assets, maintaining a cushion of capital, lending to different types of borrower, adjusting interest rates, and screening potential borrowers (credit scoring).

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Advantages:
Your money is much more secure than in a box under your bed and you can buy goods, be paid, and sell things without cash changing hands. The bank you are familiar with and which knows you can also offer you a wide range of other services, such as mortgages and insurance. Your bank may be able to offer you competitive deals in return for your loyalty as a customer. Retail banks offer a variety of ways you can access your account and manage your money, most notably via internet banking. This means that you can keep a close eye on your finances and avert many potential problems.

Disadvantages:
Banks are a business, and they need to make money from looking after yours. If the bank decides to apply charges to your account (within the terms of the account), we may only find out about it afterwardsfor example if we accidentally go overdrawn without permission. If we disagree with a charge, we will need to contest it to recover the money.

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Commercial Bank and Its Important Function

Generally, the term Commercial Bank refers to that category of banks that raises funds by collecting deposits from businesses and consumers such as savings deposits, and time (or term) deposits. It makes loans to businesses and consumers. It also buys corporate bonds and government bonds. Some important among various function of commercial bank are: 1) Accepting Deposit 2) Advances of Loans 3) Credit Creation

7.1 The table below shows the deposits for the years (2005 to 2010).

Years Deposit growth (in lakhs)

2005

2006

2007

2008

2009

2010

14,334

15,957

17,166

22,430

26,430

30,001

Series 1
35000 30000 25000 20000 15000 10000 5000 0 2005 2006 2007 2008 2009 2010

15%
Series 1

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7.2 The table below shows the types of deposits and their interest rates Term deposits Period
Saving bank deposits Std-30 days (auto renewal) 6 months to less than 1 year 12 m0nths (specific period) 13 months to 17 months 18 months (specific period) 19 months to 24 months 25 months to 47 months 48 months (specific period)

General Public
4.00% p.a. 5.50% p.a. 6.50% p.a. 10.00% p.a. 8.00% p.a. 9.50% p.a. 8.25% p.a. 8.50% p.a. 8.75% p.a.

Senior Citizens
4.00% p.a. 6.00% p.a. 7.00% p.a. 10.50% p.a. 8.50% p.a. 10.00% p.a. 8.75% p.a. 9.00% p.a. 9.75% p.a.

Recurring deposits Period

1 year 2 years to 4 years

General Public
8.00% p.a. 8.25% p.a.

Senior Citizens
8.50% p.a. 8.75% p.a.

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Share Capital & Reserves

The share capital has increased to Rs. 1,368.04 as on 31.03.2010 from Rs. 984.80lakhs as on 31.03.2009, an increase of Rs. 383.24lakhs (38.92% increase). There is an urgent need to increase share capital to meet the increase capital adequacy requirements of advances, which are on the rise. We urge the members to kindly subscribe for additional shares, which helps us in further development and branch expansion of the bank. The reserves has increased to Rs. 1,148.06 as on 31.03.2010 from Rs. 963lakhs as on 31.03.2009, an increase of Rs. 185.06lakhs (23.19% increase). 7.3 The table below shows the share capital and reserves

1600 1400 1200 1000 800 600 400 200 0 2005 2006 2007 Share capital 2008 Reserves 2009 2010 469 529 520 598 577 703 777 777 985 963 1365 1148

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Loan & Advances

The advances have increased to Rs. 14,111.17lakhs from Rs. 13313.84lakhs, an increase of Rs. 797.33lakhs (5.99% on year on year basis). CD ratio as on 31.03.2010 is 47.04%. The advances are expected to be increased substantially during 2010 - 2011 and the CD ratio would improve during 2010 2011.

Loans & Advances

16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2005 2006 2007 2008 2009 2010 Loans & Advances

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Investment
We have invested in Government Securities as per rules and all our investments in Govt. Securities are in Demat Form. The categorization, valuation and depreciation on Government is done as per RBI instructions. The investments has increased to Rs. 16,255lakhs as on 31.03.2010 from Rs.12,682 as on 31.03.2009, an increase of Rs.3,573 (35.73% increased).

Investments (in lakhs)

18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2005 2006 2007 2008 2009 2010 Investments

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The future of retail banking: A global perspective:As we have been working with our existing bank clients inside and outside the country, we have been struck by the rapid and provocative changes facing the retail sector. While the pace and direction of change seems to vary somewhat from country to country, retail banks everywhere are working vigorously to address new technological, regulatory and competitive realities. Collectively, they are trying to determine strategies and tactics needed to secure their franchises and their futures. This project addresses three questions from a global perspective. First, what are the key factors driving the almost universal changes in retail banking? Secondly, where will these drivers take the industry in the future? Thirdly, what are the general strategies that retail banks can undertake to succeed over the next decade? This study is not an academic exercise. Rather, it has grown out of a common thread of themes which are emerging from client assignments worldwide. These themes have been assessed and micro-economic analysis undertaken in order to understand how they operate and where they are taking the industry. Trends underway: So what are the trends that we see in retail banking? Our core conclusion is that the retail banking industry, owing to a variety of factors, is currently not susceptible to scale economies. By this, we mean that retail banks do not seem to get any more efficient as they get larger. If anything, the reverse appears to be the case. However, there are a number of strong reasons to suppose that this will change in the future. We believe that retail banking will increasingly be susceptible to scale economies. In turn, this will create pressure for the industry to restructure. Analogies from other industries support this train of thought. Modifying the driving forces for these industries to those circumstances which are particular to retail banking, we have been able to come to a vision of how the retail banking industry is likely to restructure over the coming decade. We have also looked at other trends. Technology in particular will change the retail banking industry fundamentally in the years to come. The first key consequence is that

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MMS PROJECT banks will lose their monopoly as centers for money transmission. In other words, the activity of transmitting money from one person or company to another will increasingly be able to be carried out be a variety of providers. As with telecommunications, vigorous cost competition will result. The second key consequence of technology will be the proliferation of distribution channels for retail banking products. Whereas in the past, the bank branch was the only channel for distributing most financial services products, in the future a number of different channels will continue to erode the branch's predominance. Many of these we are currently familiar with -- telephone, especially Mobile phone, ATM's, email etc. In addition, however, new channels are slowly emerging from the primordial soup of the information superhighway. Although we can only guess at how they will affect the distribution of retail banking products, we are confident that these will ultimately supplement the other alternative channels and further erode bank branch's share. Consequences of these trends: The consequences of the above will be wholesale restructuring. We believe that retail banking will disaggregate into an interlinked portfolio of activities with three broad categories:

l. Product Formulators:
Within retail banking there will increasingly be divisions or stand-alone companies who focus on formulating products such as mortgage or savings, for delivery either direct to clients or to intermediaries.

2. Customer Gateways:
We believe that there will be an opportunity for an intermediary to capitalize on superior customer knowledge and efficient delivery channels to sell and service a range of products to individual customers through a range of delivery channels of the customer choosing.

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3. Industry Services:
Increasingly the support functions which are at present woven in to the fabric of the bank will be seen as peripheral supporting activities, and spun off to either separate divisions within a bank or to third party "outsource" providers. This will eventually create an industry for bank services, with new providers offering a broad range of support activities. The evolution outlined above will vary significantly by country. This is firstly because the structure of the retail banking industry today is different in each nation -- a legacy of historical market evolution and regulation. In addition, the manner and rate at which markets will be deregulated in the future will also vary. This means that not only does the retail banking industry in different countries start from a different point, but that its change trajectory in the future will also vary as the result of nationally-idiosyncratic deregulation. The bank of the future will not win by creating a single strategy. Rather, each of its activities within products, customer channels, and support services will be the subject of a discreet "business unit" strategy, which will be benchmarked against marketsegmented customer demand and profitability, and competitors' businesses in this area. Let's site an example i.e. how many people/customer visit departmental store a day? Answer is simple, much more people visit store than the bank branch. What does it mean and who has more information in this respect? Naturally the store has much more information compare to the bank. A corollary of this evolution will be that branches will increasingly be but one of a number of channels of distribution to customers. As a result, their numbers will decline both as a percentage of all banking transactions, and in absolute numbers. Winning banks will actively address this issue, migrating their customers to alternate channels where appropriate. As with any global-oriented study, the above conclusions are broad and must be interpreted by any financial institution in the light of its unique circumstances. Nevertheless, we are confident that the answers to the questions posed will be of value to

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MMS PROJECT banks and to other financial industry executives as they ponder their strategic alternatives in the future.

Scope for Retail Banking in India:All round increase in economic activities, increase in the purchasing power. The rural areas have the large purchasing power at their disposal and this is an opportunity to market Retail Banking.

India has 200 million households and 400 million middleclass population more than 90% of the savings come from the house hold sector. Falling interest rates have resulted in a shift. Now People Want To Save Less and Spend More.

Nuclear family concept is gaining much importance which may lead to large savings, large number of banking services to be provided are day- by-day increasing.

Tax benefits are available for example in case of housing loans the borrower can avail tax benefits for the loan repayment and the interest charged for the loan.

This document analyzed the key policy issues relevant to the retail banking sector and highlighted the role of financial inclusion, responsible lending, access to finance, and consumer protection. It is in this context that that one is reminded of the needs to develop the standards and codes for banking.

The contribution of the Committee on Procedure & Performance Audit on Public Services (CPPAPS) (Chairman: Shri S.S. Tarapore) has been invaluable and has provided great insight. Based on the recommendation of the CPPAPS, the Annual Policy Statement for 2005-06 announced the decision to set up an independent Banking Codes & Standards Board of India on the model of the mechanism in the UK in order to ensure that comprehensive code of conduct for fair treatment of customers is evolved and adhered to. The codes and standards, together with the institutional mechanism to monitor them, are

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MMS PROJECT expected to enhance the quality of customer service, to the individual customer in particular. The codes will bring about greater transparency in the system and also tackle the issue of information asymmetry. The Board would function as an industry-wide watchdog of the banking code and ensure that the banks comply with the banking codes.

The codes would establish the banking industry is key commitments and obligations to customers on standards of practice, disclosure and principles of conduct for their banking services. The Board will monitor compliance with the Codes by the affiliated banks.

Second, sharing of information about the credit history of households is extremely important as far retail banking is concerned. Perhaps due the confidential nature of banker-customer, banks have a traditional resistance to share credit information on the client, not only with one another, but also across sectors. Globally, Credit Information Bureaus have, therefore, been set up to function as a repository of credit information both current and historical data on existing and potential borrowers. The database maintained by these institutions can be accessed by the lending institutions. Credit Bureaus have been established not only in countries with developed financial systems but also in countries with relatively less developed financial markets, such as, Sri Lanka, Mexico, Bangladesh and the Philippines. In Indian case, the Credit Information Bureau (India) Limited (CIBIL), incorporated in 2000, aims at fulfilling the need of credit granting institutions for comprehensive credit information by collecting, collating and disseminating credit information pertaining to both commercial and consumer borrowers. At the same time banks must exercise due diligence before declaring a borrower as defaulter.

Third, outsourcing has become an important issue in the recent past. With the increasing market orientation of the financial system and to cope with the competition as also to benefit from the technological innovations such as, e-banking, the banks are making increasing use of outsourcing" as a means of both reducing costs and achieving better efficiency. While outsourcing does have various cost advantages, it has the potential to transfer risk, management and compliance to third parties who may not be

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MMS PROJECT regulated. A recent BIS Report on Outsourcing in Financial Services developed some high-level principles. A basic requirement in this context is that a regulated entity seeking to outsource activities should have in place a comprehensive policy on outsourcing including a comprehensive outsourcing risk management programme to address the outsourced activities and the relationship with the service provider. Application of these principles in the Indian context is under consideration.

Finally, retail banking does not refer to lending only. In the whole story of retailing one should not forget the role played by retail depositors. The home maker, the retail shop keeper, the pensioners, self-employed and those employed in unorganized sector - all need to get a place in the banks. It is in this backdrop the Annual Policy for 2005-06 pointed out issues relating to financial exclusion and had announced that the RBI would implement policies to encourage banks which provide extensive services while disincentivising those which are not responsive to the banking needs of the community, including the underprivileged. Furthermore, the nature, scope and cost of services need to be monitored to assess whether there is any denial, implicit or explicit, of basic banking services to the common person and banks have been urged to review their existing practices to align them with the objective of financial inclusion.

Future of Retail Banking:Retail banking has significant past and glorious future over the years. 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. 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.

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MMS PROJECT 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. The future of retail banking lies more in mobile banking. Mobile telephone market is penetrating, and mobile phones are ideal to utilize Internet banking services without customer accesses to PC. By a tacit acceptance India has around three million mobile phone users and this number is expected to reach to eight million by 2003. Smart card revolution will further change the face of retail banking. Smart cards can store information; carry out local processing on the data stored and can perform complex calculations.

At present, India has around 3.4 million smart card users and it is estimated that by the end of 2004 it will reach 14.7 million.

Branch Services
Welcome to the networked world of Model Co-Operative Bank. You can open an account at any branch nearest to your residence or office and access it at any branch in the city.

Accounts & Deposits:Banking should be effortless. With Model Co-Operative Bank, the efforts are rewarding. No matter what a customers need and occupational status, we have a range of solutions that are second to none.

Whether youre employed in a company and need a simple Savings account or run your own business and require a robust banking partner, Model Co-Operative Bank not only

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MMS PROJECT has the perfect solution for you, but also can recommend products that can augment your planning.

Savings Accounts:-

These accounts are primarily meant to inculcate a sense of saving for the future, accumulating funds over a period of time. Whatever your occupation, we are confident that you will find the perfect banking solution. Open an account in your name or register for one jointly with a family member today.

Current Accounts:
Now, with a Model Co-Operative Bank Current Account, experience the freedom of multi-city banking. You can have the power of multi-location access to your account from any of our 13 branches in Thane. Not only that, you can do most of your banking transactions from the comfort of your office or home without stepping out. We make it our business to help you with your business by offering you a Current Account with all the benefits you need to stay ahead of your competition.

At Model Co-Operative Bank, we understand that running a business requires time and money, also that your business needs are constantly evolving. That's where we come in. We provide you with a choice of Current Account options to exclusively suit your business - whatever the size or scope.

Fixed Deposits:-

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MMS PROJECT Long-term investments form the chunk of everybody's future plans. An alternative to simply applying for loans, fixed deposits allow you to borrow from your own funds for a limited period, thus fulfilling your needs as well as keeping your savings secure.

Retail Banking services :The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to customers through the growing branch network, as well as through alternative delivery channels like ATMs, net banking and Mobile banking. The MODEL CO-OPERATIVE Bank Preferred program for high net worth individuals, the MODEL CO-OPERATIVE Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against mortage , Housing Loans and Loans for Two-wheelers.

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Conclusions: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. There is a need for constant innovation in retail banking.

Retail Banking is a booming sector. It is dynamic in nature. There has been a significant change in demographic profile of customers. There is huge market to cover so banks have greater opportunity. There is scope for the development of new innovative products. Banks have to come with the new innovative products and service to retain market.

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QUESTIONNAIRE
Dear Sir/ Madam, As part of my MBA curriculum, I, Agree Rodrigues, am conducting a market research regarding the RETAIL BANKING in MODEL CO-OPERATIVE BANK for which I need your personal views regarding banking products &services in shape of a questionnaire designed by me. The data being collected are solely for academic purpose. I request you to kindly extend your co-operation. 1) Name: 2) Profession: 3) Age group :(please tick). A) 18-30 yrs B) 31-40 yrs. C) 41-50 yrs. D) 51-60 yrs.

4) Annual Income (in Rs.):A) 60000-200000 b) 200000-400000 c) 400000-1000000 d) Above 1000000

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MMS PROJECT 5) What kind of service or services do you expect from MODEL CO-OPERATIVE BANK? A) Quick Response B) Good Customer Relation C) Extra Facility for Existing Customer

6) What influence you at taking loan from MODEL CO-OPERATIVE BANK? A) Advertisement B) Friend/Relative C) Easy availability loan D) Trust

7) How do you find the processing procedure while availing the loan? A) Excellent B) Good C) Average

8) How do you find the cooperation of the bank employees in processing and helping you with documentation? A) Excellent B) Good C) Average

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9) How do you find the interest rate charged upon the loan available? A) Excellent B) Good C) Average

10) Would you like to take another loan from MODEL CO-OPERATIVE BANK in future? A) Yes B) No

11) Your overall level of satisfaction with MODEL CO-OPERATIVE BANK: A) Satisfied B) Normal C) Dissatisfied

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UNIVERSITY OF MUMBAI