Retail in India is one of the fastest growing sectors, and is emerging as the most targeted countries for retail expansion for the international players. Banking as a whole is undergoing a sea change to cater to the demands of the retailers and, they are becoming a part of this promising sector. The economic slowdown gave them a better know-how of retail business which in turn led them to treat the retail sector with seriousness.
Retail banking refers to the services offered by the banking institutes to its customers. The customers include both consumers in general as well as the retail players. The difference lies with the amount of loan taken by each one of them. Retailers take loan to be able to market their products to its customers, whereas, customers take to be able to purchase these products. Thus, with time retail banking has evolved as a more customer–focused industry.
Customer holds the key
In the recent years, we saw the increasing buzz with everyone eyeing to get his or her share of profits. The most important aspect of retail banking is its ‘customer’. Indian consumers have changed with time. Savings have been converted into expenditures with the increasing choice and accessibility of various products. Thus, rising annual disposable income among individuals, growing awareness and changing lifestyle of the consumers have fuelled the growth of retail banking sector.
Indian retail banking is picking up pace. In the year 2004-05, retail contributed 42 per cent of overall credit growth and it is expected to grow at a rate of 30 per cent. Banks are waking up to cash in on the potential of this sector. It also gives the advantage of first mover benefit, so the faster they get into the zone, the quicker they are set to gain the benefits. The major product segments of retail credit include housing finance, auto finance, personal loans, consumer durable loans, and credit cards.
Public sector banks gaining ground
India’s public sector banks account for about 70 per cent presence in the retail sector. However, the retail segment was largely a private sector domain until recently. Off late the scenario is changing. Public sector banks have plans underway to give a big stimulus to retailers in the form of retail loans. Andhra Bank saw its retail loan growth of 40 per cent. SBI, PNB, Bank of Baroda and Union Bank of India still continue to offer loans to the retail domain. Union Bank of India has also opened several dedicated branches for retail loans.
The way ahead for retail banking depends on one major factor called ‘innovation’. Indian banks need to keep up the pace with the changing requirements of the ever changing retail space. To be a winner, the banking operations have to blend well with the retail business.
Indian retail banking is picking up pace.
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