Retail Lending and Retail Deposits

8/3/2019 Retail Lending and Retail Deposits

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Presented by :Shilpi Dani

Tanisha JainShivani Tomar

Shivani Singhal

Shikha ShrivastavShilpi Singh

Sukesh SinghVinay Singh kushwah

Vivek singh Yadav


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Cont2) Community development bank:-It regulated banks that provide financial services and credit tounderserved markets or populations.

3) Private bank:- "Private banks" can also refer to non-government owned banks in

general, in contrast to government-owned (or nationalized) banks.

4) Offshore bank:-An offshore bank is a bank located outside the country of residence of

the depositor, typically in a low tax jurisdiction (or tax haven) thatprovides financial and legal advantages.

5) Savings bank:-It accept savings deposits.
http://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Tax_havenhttp://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Savingshttp://en.wikipedia.org/wiki/Savingshttp://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Tax_havenhttp://en.wikipedia.org/wiki/Bank


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Deposit account

Adeposit account is a current account, savings account,or other type ofbank account, at a banking institutionthat allows moneyto be deposited and withdrawn by the

account holder. These transactions are recorded on thebank's books, and the resulting balance is recorded asa liabilityfor the bank, and represent the amount owed bythe bank to the customer.
http://en.wikipedia.org/wiki/Current_account_(banking)http://en.wikipedia.org/wiki/Savings_accounthttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Liability_(financial_accounting)http://en.wikipedia.org/wiki/Liability_(financial_accounting)http://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Savings_accounthttp://en.wikipedia.org/wiki/Current_account_(banking)


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TypesFixed Deposit Account:-

These are deposit which are made with the bank for a fixed periodspecified in advance. The bank need not maintain cash reserves against

these deposits and, therefore, he bank offer higher rates of interest onsuch deposits.

Saving Bank Deposit Account:-

These deposit are mostly of small amounts and are accepted by banksto encourage persons of small means to make savings.

Current Deposit Account:-The primary objective of current account is to save big customer as big

businessmen, joint stock companies, public authorities, etc. from the riskhandling cash themselves. It is a running account.


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Opening of Current and Savings

Account1) Application on the prescribed form:-

The application is required o give his name, address and occupation,including bank rules in the form.

2) Photographs:-Submit two photographs.

3) Introduction or Reference:-

The applicant is also required to furnish in the application from thenames of the refers from whom the banker may make enquires regardingthe character, integrity and respectability of the applicant.

4) Specimen signature :-Even customer is required to supply to his banker with one or more

specimen of his signature in alphabetical order.


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Cont5) Mandate for an operation of the account by an agent:-

In case a customer desires to get his account operated upon by anotherperson, the bank will obtain a mandate in writing to that effect as well as the

specimen signature of the person in whose favour the mandate is given.6) Opening the account:-

After observance of these formalities, The applicant is required to depositalternative minimum amount ranging from Rs. 100- 1,000 in Saving accountand Rs. 5,000 20,000 in case of current account. Bank provides:-

A pay in slip book.A cheque book.

A pass book.


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Legal frmework the account holder retains rights to have their funds repaid on demand.

The customer may or may not be able to pay the funds in the accountbycheque, internet banking, or other channels depending on thoseprovided by the bank and offered or activated in respect of the account.

the term "deposit" is used by the banking industry in financialstatements to describe the liability owed by the bank to its depositor,and not the funds (whether cash or checks) themselves, which areshown an asset of the bank.

In the audited financial statements of the bank, on the balance sheet,the $100 in currency would be shown as an asset of the bank on the leftside of the balance sheet, and the deposit account would be shown as aliability owed by the bank to its customer, on the right side of thebalance sheet.
http://en.wikipedia.org/wiki/Chequehttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Cheque


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the bank has actually borrowed $100 from its depositor and hascontractually obliged itself to repay the customer according to theterms of the demand deposit account agreement.

By transferring the ownership of deposits from one party to another,they can replace physical cash as a method of payment. In fact,deposits account for most of the money supplyin use today.
http://en.wikipedia.org/wiki/Money_supplyhttp://en.wikipedia.org/wiki/Money_supply


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Banking Regulation Bank regulations are a form ofgovernmentregulation which

subject banks to certain requirements, restrictions and guidelines.

Objective:-

Prudential

to reduce the level of risk to which bank creditors areexposed (i.e. to protect depositors)

Systemic risk reductionto reduce the risk of disruption resultingfrom adverse trading conditions for banks causing multiple or majorbank failures

Avoid misuse of banks

to reduce the risk of banks being used forcriminal purposes, e.g. laundering the proceeds of crime

To protect banking confidentiality

Credit allocationto direct credit to favored sectors
http://en.wikipedia.org/wiki/Governmenthttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Systemic_riskhttp://en.wikipedia.org/wiki/Systemic_riskhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Government


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Regulatory protection Banks are normally subject to prudential regulation which

has the purpose of reducing the risk of failure of the bank.It may also have the purpose of reducing the extent of

depositor losses in the event of bank failure.
http://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Banking_regulationhttp://en.wikipedia.org/wiki/Banking_regulationhttp://en.wikipedia.org/wiki/Bank


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RetaillendingRetail lending is the practice of loaning money to

individuals rather than institutions . Retail lending hastaken a prominent role in the lending activities ofbanks, as the availability of credit and the number ofproducts offered for retail lending have grown. Theamounts loaned through retail lending are usuallysmaller than those loaned to businesses
http://www.investorglossary.com/retail-lending.htmhttp://www.investorglossary.com/retail-lending.htm


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Drivers of Growth Economic prosperity and consequent increase in

purchasing power. Changing consumer demographics.

Technology

Declining interest rates


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Other Drivers Growing disintermediation

Credit risk diversification Information asymmetry

Unequal resources


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Analysis of Retail Credit

Growth

Housing loan

Credit cards

Education loan

Auto loans

Personal loans


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Housing loanThese loans are secured by mortgage of residentialproperty which is quite easy to sell in the market. Up toINR 20 lacs such loans qualify as priority sectoradvances, and borrowers who live in these houses (self-occupied) are interested in retaining ownership, sodefault rates will be under control under normalcircumstances.


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Personal loan


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CREDIT CARDSForeign banks in India were the first to start the retaillending revolution in India. To overcome the restrictionimposed by the branch licensing policy of RBI, thesebanks began targeting retail customers through otherdelivery channels. Credit card was the first product thatforeign banks offered to retail customers in India. Thesebanks operated through franchisees for selling cards,

collections, and acting as customer contact points.


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EDUCATION LOANDue to the gradual reduction in government subsidies,and proliferation of private educational institutions forprofessional courses, higher education has become quitecostly. Education loans provide financial assistance todeserving students to enable them to pursue highereducation.


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Auto loan

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Retail Lending and Retail Deposits

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