Retail Banking

Harsh Dave (09119)

Randhir Padheriya (09117)
Mayank Vachhani(09121)
Jitandra Virpura (0955)
Retail Banking Channels
• Premises Banking/ Banking at Doorstep
• Automated Teller Machine
• Debit & Credit Cards
• Telephone Banking
• Internet Banking
• Mobile Banking
• Electronic Funds Transfer/ Electronic Clearing
System Debit
Retail Lending Schemes- Features
• Offers high yield, Quick return
• Low incidents of NPAs
• Monitoring is easier
• Products
▫ Housing Finance
▫ Consumer Durable Finance
▫ Vehicle (2-wheeler & 4- wheeler) Finance
▫ Personal Loan
▫ Advance against future lease rentals
▫ Mortgage Loans
▫ Pension Loan etc.
Retail Lending Schemes- Key
Terms
• Margin
▫ Contribution bought in by the borrower
▫ Differ according to type of finance & bank
• Interest
▫ De-Regulated by apex monetary authority
▫ Differs from bank to bank
Composition of Retail Lending
Housing Rs. 34654 Crores 50%
Consumer Durables Rs. 6904 Crores 10%
Loans to Individuals agt Rs. 1762 Crores 5%
Shares etc
Other priority sector/ Rs. 26089 Crores 35%
Personal Loans
TOTAL Rs. 69409 Crores 100%

Source: RBI’ report on Trend & Progress of Banks 2002-03

Liability Focused Segment
(Deposit Accounts)
Saving Fund Account/ Savings Bank
Account
• Opened by anyone properly introduced
▫ Individually
▫ Jointly
▫ Minors of 10 yrs & above
▫ Minor under legal guardianship
• Can not be opened in name of Business Concern-
▫ Proprietary
▫ Company
▫ Partnership or
▫ Association
Saving Fund Account/ Savings Bank
Account- Can’t be opened in Name of
• Government Departments
• Municipal Corporation
• Panchayat Samities
• State Housing Boards
• Industrial Development Authorities
• State Electricity Boards
Saving Fund Account/ Savings Bank
Account- Can’t be opened in Name of
• State Text Book Publishing Corp.
• Metropolitan Development Authority
• Housing Corporation/ Societies
• Any bank including Land Development Banks
• Industrial Development Authorities
• State Electricity Boards
• Water/ Sewerage & Drainage Boards
Saving Fund Account/ Savings Bank
Account- Can be opened in Name of
• Companies Licensed under Sec 25 of Companies
Act 1956, not having “Limited”
• Societies Registered under Societies Regulation
Act 1860
• Primary Co-operative credit society financed by
bank
• Any Govt. dept. in respect of grants released for
implementation of Schemes sponsored by
▫ Central Government
Saving Fund Account/ Savings Bank
Account- Can be opened in Name of
• Any trust whose income is exempt from payment of
Income Tax
• Institution permitted by RBI on application by Bank
• SF a/c in name of HUF, if not engaged in business
activity
• Development of children & women in rural areas
• Self Help Group
• Farmers Club
• Of State Govt dept. in respect of grants for
implementation of State Govt. plans
Minimum Balance/ Account Opening
Requirements
• Minimum Balance varies from bank to bank
▫ De-regulated by RBI
• Most banks do not insist on minimum balance
maintenance by
▫ Bank Staff
▫ Pensioners
▫ Students
▫ Salaried Accounts
Interest
• Calculated on Minimum Balance basis
▫ Interest will be calculated on the amount of Daily
Balance in the account
▫ Minimum Re 1/- per a/c to be paid in Interest
▫ Rate of interest is decided by the RBI
▫ Currently prevailing rate is 3.5% p.a. on Half
yearly basis
Withdrawal
• During half year not more than 50 withdrawals
are permitted
▫ By Cheque or otherwise
▫ However individual banks may allow more than
50 withdrawals
Transfer of Accounts
• May be transferred from one branch to another
of the same bank
▫ Generally Free of charge
▫ On written request of the depositor
Premature Closure of Account
• Account closed within a year
▫ Banks may levy certain charges, as per internal
guidelines
• No charges on closure on account of death of
account holder
Joint Accounts
• Account opened in Name of 2 or more persons
▫ All must sign the account opening form &
▫ Affix Photograph
• Joint accounts with either or survivor
▫ If any depositor is dead, the balance will get
transferred to the survivor
Minor Accounts
• Saving account in the name of minor of 10 yrs or
above
• May be opened in his/her own Name
▫ Post obtaining proof of age
▫ Cheque book may or may not be issued
• Minor below 10 years
▫ Account can be opened under guardianship
▫ Photograph of guardian should be affixed
• When minor attains majority
▫ Fresh account should be opened
Blind Customers’ Accounts
• May open Savings account jointly or singly
• Besides introduction a witness is required
• Number & details of multiple identification marks of
Blind person is noted
▫ In Account opening form &
▫ Specimen Signature Slip
• A stamp indicating the account holder is blind is
affixed on
▫ Account Opening Form
▫ Specimen Signature Slip
▫ Ledger Folio &
▫ Pass book
Withdrawal by the Illiterate
• For withdrawal
▫ Will personally call bank with passbook
▫ Thumb impression will be taken on the
withdrawal slip
 In presence of passing official
▫ Before making payment Bank official will ensure
reference of illiterates
 Photograph
 Passbook
 Identification mark
▫ Will also assertian the exact amount of withdrawal
Withdrawal by the Illiterate- Standing
Instructions
• Accepted for payments like
▫ Insurance Premium
▫ Taxes
▫ Rentals etc
• Intimation of compliance is sent to the customer
• If instruction not carried out for any reason
▫ Account holder is informed
• No charges levied, for transfer within the
accounts maintained in the same branch
Current Account
Current Accounts
• Is a running account
• Customers are free to make any number of
transactions
• Minimum Balance must be maintained in the
account
• Target group Business Segment
Current Accounts
• Opened by
▫ Individuals- Singly or jointly
▫ Partnership Firm
▫ Company
▫ Association
▫ Institution
▫ Trust
▫ Society etc.
• Illiterate/ Blind person can not open this account
• Minor in his/ her own name can not open the
account
Code of Conduct (KYC norms)
• Banks must attain the following declaration from
customers
▫ “That I/We/am/are not enjoying any credit facility
with any bank/ any other branch of your bank &
I/we undertake to inform you, in writing as soon
as credit facility is availed of by me/us from any
other bank/ any other branch of your bank”
• OR
▫ “That I/We/am/are enjoying any credit facility
with other banks(s)/ other branch of your bank as
per details given in the enclosed sheet”
Code of Conduct (KYC Norms)
• If account holder is enjoying credit facility from
any other bank
▫ Concerned bank should be duly informed
• Bank branches can not open bank accounts of
entities with credit facilities from banks without
▫ No-objection certificate from leading Banks
• Banks can open current account in case no reply
is received within a fortnight
Current Account
• Withdrawal
▫ No Restriction on number
▫ Below an amount cheques should not be drawn
 On non compliance bank may impose penalty as per
internal norms
• Interest
▫ No interest paid
▫ Banks may levy certain charges for services
rendered
Current Account
• Penal Charges
▫ Minimum balance as per banks norms must be
maintained
 On non-compliance charges may be slapped
Term Deposit
• Deposits made with bank for specific period
• Vary from min 7 days to max 10 years
▫ For more than 10 yrs in case of courts order
• Min in case of NRE 1 year
• Differential rates for term deposits above Rs. 15 Lacs
• Uniform rates for deposits below Rs. 15 Lacs
• On domestic deposits floating rate can be given on
an anchor rate
• Banks have to pay interest on Sundays/ Holidays/
non-business working days
Interest in Deposit of Decreased
Depositor
• In case of death before maturity
▫ Interest paid till maturity&
▫ From maturity till date of payment
 Simple Interest from maturity to date of payment
• In case of death after maturity
▫ Interest paid at Saving rate applicable on Maturity
date
 From Maturity till payment date of payment
Recurring Deposit
• Can be opened by
▫ Individual
▫ Minor of 10 years or above in own name or
guardianship
▫ HUF
▫ Firm/ Club/ Association
▫ Educational Institution
▫ Municipality/ Panchayat/ Society/ Trust
Recurring Deposit
• It can be opened for an installment of Rs. 100 &
more
▫ For a period ranging from 6months to 120 months in
multiples of 3 months
• Interest is deregulated by RBI
• Installments are deposited by the holder on or
before the last working day of month
• If no stipulation of payment is given than
▫ On or before last working day of the month
• In case of non payment on time bank levies penalty
Recurring Deposit
• Deposit shall mature 30 days after payment of
last installment or
▫ On due date, whichever is late
• Banks also provide loans against reccuring
deposit
RBI Model Policy on Bank Deposits
• RBI is empowered to issue directives on
▫ Interest rate on deposits
▫ Other aspects regarding conduct of deposit
accounts
• With de-regulation banks are now allowed to
formulate deposit products but
▫ Within the broad guidelines issued by RBI
Types of Deposit Accounts
• Demand Deposits
▫ Deposit withdraw-able on demand
• Savings Deposits
▫ Restrictions on number & amount of withdrawal
• Term Deposit
▫ Deposit made for specific period
▫ Withdraw-able only after expiry of period
▫ It includes
 Recurring/ Double Benefit Deposits
 Short Deposits/ Fixed Deposits
 Monthly Income Certificate/ Quarterly Income Certificate
Types of Deposit Accounts
• Notice Deposit
▫ Term deposit for specified period
▫ Withdraw-able on giving at least 1 days notice
• Current Account
▫ Withdrawal allowed any number of time
Account Opening & Operation of
Deposit Account
• Deposit account can be opened by individual in own
name or jointly
• Operation of Joint Account
▫ Can be operated by 1 individual or more jointly
▫ Operating mandate can be changed with consent of all
the holders
• Standing instructions can be given regarding closure
or further renewal of deposit Term Deposit
▫ In case no instruction is there
▫ Bank will seek instructions by sending intimation
15days prior to maturity date
Interest Payable on Term Deposit
Decreased Accounts
• Death before maturity
▫ Amount claimed after maturity
 Bank has to pay interest at contracted rate till
maturity date
 From date of maturity till payment date
 Bank will pay Simple Interest
• Death after date of maturity
▫ Bank will pay saving deposit interest rate from
date of maturity to date of payment