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Retail Banking

Retail Banking Overview

Retail banking, also known as Consumer banking, is personal banking provided by financial institutions to the public. It includes typical banking services intended for retail customers, not corporations or other financial institutions. 

Services and Products

Here are some specific services provided by retail banking: 

  • Savings accounts
  • Transactional accounts
  • ATM cards
  • Debit cards
  • Credit cards
  • Cheques
  • Personal loans
  • Home equity loans
  • Certificates of Deposit
  • Mortgages

Retail Banking Categories

Retail banking is sub-divided into five key types: 

  • Community Banks or Small Banks
  • Large Banks
  • Private Banks
  • Online Banks
  • Post Offices

Retail Banking Alternatives

1. Commercial Banks

There are 21 private banks in India, such as ICICI Bank and HDFC Bank, offering retail banking services. Their main goal is to generate revenue through transaction fees and interest rates. 

2. Credit Unions

Credit Unions are non-profit organizations, where depositors are also shareholders. They offer the same services as retail banks, including deposit payments, loans, savings accounts, and credit cards. 

3. Investment Funds

Investment funds are another retail banking alternative. They provide tax-saving options that appeal to various income groups. 

Retail Banking Examples

Examples of Retail Banking Services in India include Post Offices, Large Banks, Community Banks or Small Banks, and Online Banks. 

Pros and Cons of Retail Banking

Retail Banking benefits: 

1. Stable and core deposits. 

2. Low-cost funds source. 

3. Insensitivity to additional interest rates. 

4. Excellent customer service. 

Retail Banking drawbacks: 

1. Dependence on human resources, slowing loan monitoring. 

2. Not suitable for developing cost-effective new financial products.