This document provides an overview of retail banking in India. It discusses key concepts related to retail banking such as what constitutes a bank and retail banking. It outlines the various forms of banking in India. It also discusses the Reserve Bank of India and its role in regulating the banking system and monetary policy. The document then covers public sector banks, private sector banks, regional rural banks, and new entities like payments banks in India. It provides historical information on the nationalization of banks and the evolution of the banking sector in India.

1. Retail Banking
By,
Vinay S
Faculty & Research Scholar,

2. Preamble of Retail Banking
 Retail means “ The sale of Goods or Services to the General Public or
“ Be sold for a specified price”
 Bank means “ An organization offering financial services, especially loans
and the safekeeping's of customers money
 The Term Bank has derived Latin “Banca Means Bench” French “ Bancus”
 Retail Banking “Typical mass-market banking in which individual customers use
local branches of larger commercial banks. Services offered include savings and
checking accounts, mortgages, personal loans, debit/credit cards and certificates of
deposit (CDs).

3. Forms of Banking
 Branch Banking
 Unit Banking
 Satellite Banking
 Mixed Banking
 Chain Banking
 Group Banking etc.

4. Reserve Bank of India (RBI): India Central
Bank)
 To regulate the issue of Bank notes and the keeping of reserves with a view to
securing monetary stability in India and generally operate the currency and credit
system of the country to it’s advantage.
 Banker to Government
 Bankers Bank and Lender of the Last Resort
 Controller of Credit
 Custodian of Foreign Reserves
 Subsidiary functions
 Currency Chests

5. Financial Sectors Reform
 A new phase of India Banking System with the advent of India Financial & Banking
Sector Reforms after 1991.
 Early Phase ( ??????????????????)
 RBI Act 1934,
 Banking and Regulation Act 1949,
 RRBs Act 1974,
 Co-Operative Societies Act 1965
 1955: Nationalization of State Bank of India
 1959: Nationalization of SBI and its Subsidiaries
 1969: Nationalization of 14 major Banks
 1975: Creation of Regional Rural Banks (RRBs)
 1980: Nationalization of Seven Banks

6. Cont.
 The important achievements in the following fields:
1. Financial Markets
2. Regulators
3. Banking and NBFCs Companies
4. Capital Market
5. Mutual Funds
6. Deregulation of Banking System
7. Capital Market Developments
8. Consolidation Imperative

7. Monetary Policy
 Monetary policy means the policy of the central bank which it introduced with the
object to administer and control the country’s money supply including currency,
demand deposits and foreign exchange rates.
 According to A G Hart “Monetary Policy is a policy which influences the Public’s
Stock of money substitutes or the public demands for such assets or both that is
policy which influences the public liquidity position”

8. Objectives of Monetary Policy
 Stability of Exchange rates ( Possible with a concomitant Domestic & Host Country
Growth and Investment)
 Full Employment ( Might be ? )
 Price Stability ( Slack & Busy Policies, Demand & Supply )
 High Rate of Economic Growth)
 Encourages saving and capital formation

9. Measures of Monetary policy
 Quantitative Measures:
1. Bank Rate
2. Open Market Operations
3. Change in Reserve Requirements: CRR & SLR
 Qualitative Measures:
1. Moral Suasion
2. Fixation of Margin Requirement
3. Credit Rationing
4. Regulation of Consumer Credit
5. Publicity
6. Direct Actions

10. Monetary Policy Instruments: De-Mystified
Instruments Comparative Rates Difference of
Rate Changes
Remarks
3rd Bimonthly
Report 2015
4th Bimonthly
Report 2015
Repo Rate 7.25% 6.75% 50 Basis Points Controlling
Inflation &
Hefting to
Increase
Investments
Reverse Repo
Rate
6.25% 5.75% 50 Basis Points
MSFR 8.25% 7.75% 0.5% A Potent Tool
for Facile
Lending
Bank Rate 8.25 % 7.75% 0.5%
CRR 4% 4% Nil
SLR 21.5% 21.5% Nil
Base Rate 9.70 – 10% 9.70 – 10% Nil
SDR 4% 4% Nil

11. Repo and Reverse Repo Rate Changes
Effect (29th September 2015)
 Home Loan,
 Vehicle Loan &
 Personal Loan ( Diminished, depending on the Banks)

12. Prime Minister opinion regarding Economic
Development with Angela Markel (Germany
Chancellor )dated: 6th Oct 2015

13. Limitations of Monetary Policy
 Underdeveloped Capital and Money Market
 No integrated rate of interest structure
 Illiteracy and Social Obstacles
 Lack of Cooperation among Bank
 Government Policies

14. Functions of Bank: Commercial Banks
(Public & Private Sectors), RRBs
 Commercial Means: Making or Intend to Make Profit
 Bank: ?
 Commercial Bank: Banks are the financial institution that mobilize the savings of
the community and make them available to the entrepreneurs, salaried employee,
pensioners, student, every individual household …
 Or
 A financial institution that provides services, such as accepting deposits, lending
the, mortgage lending, and basic investment products namely savings account and
certificate of deposit.
 The traditional commercial bank is a BRICK & MORTAR institution with tellers, safe
deposits and ATMs. However, some commercial banks do not have any physical
branches and require consumers to complete all transactions by phone or Internet.
In exchange, they generally pay higher interest rates on investments and deposits,
and charge lower fees.

15. Concepts of Commercial Banks
 A. Commercial Banks refer to both scheduled and non-scheduled commercial banks
which are regulated under Banking Regulation Act, 1949.
 (a) Scheduled Commercial Banks are grouped under following categories:
1. State Bank of India and its Associates
2. Nationalized Banks
3. Foreign Banks
4. Regional Rural Banks
5. Other Scheduled Commercial Banks.
(b) Non-Scheduled Commercial Banks

16. Functions of Commercial Banks
 Receipt of Deposits or Accepting the Deposit
 Lending of Money
 Agency Services:
1. Collection of Bills
2. Promissory Notes & Cheques or Pay Slips
3. Collection of Interest, Dividends, Premium etc.
4. Purchase and Sale of Shares and Securities
5. Acting as a Trustee
 General Services
1. Issue of letters of credit
2. Travelers Cheques
Bank Drafts
Safe Deposits

17. Nationalization was taken place due to following
reasons
 To expand Economic Supremacy
 Urban Bias
 Neglect Priority Sectors
 Violation of Norms
Progress of Commercial Banks
1. Expansion of Branches
2. Branches in Rural Area
3. Deposit Mobilization
4. Shortcomings of Commercial Banks

18. Commercial Banks Operates
 Metropolitan City
 Urban
 Semi Urban
 Taluks &
 Rural Area

19. Public Sectors Bank in India
 Public Sector Banks (PSBs) are banks where a majority stake (i.e. more than 50%) is
held by a government. The shares of these banks are listed on stock exchanges.
 Nationalized Banks: 19 + SBI & its Associates (1+5) = Total 25
 Other Public Sectors Bank: Bharatiya Mahila Bank, IDBI & Proposed Post Bank

20. Bharatiya Mahila Bank
 Bharatiya Mahila Bank Ltd is the first of its kind in the Banking Industry in India
formed with a vision of economic empowerment for women. Incorporated under
the Companies Act 1956 on 5 August 2013, the Bank received the certificate of
commencement of Business on 22 August 2013 and the Banking License from RBI
on 25 September 2013. The Bank’s Corporate Office is at the IFCI Towers, 9th floor,
Nehru Place, New Delhi .
 While the Bank focuses on the entire pyramid of Indian women, special attention is
given to economically neglected, deprived, discriminated, underbanked, unbanked,
rural and urban women to ensure inclusive and sustainable growth. The Bank with a
team of professionals with rich experience and expertise has designed and
developed new products and services to suit the needs of women of all segments
including Self Help Groups, women entrepreneurs, salaried women, HNIs and
Corporates

21. BMB Achievement

24. Private Sectors Bank in India
 The private-sector banks in India represent part of the Indian banking sector that is
made up of both private and public sector banks. The "private-sector banks" are
banks where greater parts of stake or equity are held by the private shareholders
and not by government.
 LPG is a Prime Tool for the development of Indian Private Sectors Banks
 Banking in India has been dominated by public sector banks since the 1969 when
all major banks were nationalized by the Indian government. However, since
liberalization in government banking policy in the 1990s, old and new private
sector banks have re-emerged. They have grown faster & bigger over the two
decades since liberalization using the latest technology, providing contemporary
innovations and monetary tools and techniques.
 Total 23 India Private Banks
 43 Foreign Private Banks Operating in India

25. Regional Rural Banks (RRBs) or Grameen Bank
 The Banking Commission – 1972 recommended establishing an alternative
institution for rural credit and ultimately Government of India established
Regional Rural Banks (RRBs), a separate financial institution for rural credit
on the basis of recommendation of the working group under the
Chairmanship of Shri M Narasimham that gave birth Regional rural banks
were established under the provisions of an ordinance promulgated on
the 26 September 1975 and the RRB Act in April 1976. The RRBs have been
identified as scheduled commercial banks under the RBI Act – 1934 and
are authorized to transact banking business as defined in the Banking
Regulation Act - 1949 with an objective of ensure sufficient institutional
credit for agriculture and other rural sectors.

26. Cont.
 The RRBs mobilize financial resources from rural, semi urban and urban
grant advances to small and marginal farmers, agricultural labourers and
rural artisans. The area of operations of RRBs is limited to the area as
notified by Government of India the concerned State Government and
Sponsor Banks. The issued capital of a RRB is shared by the owners in the
ratio of 50:15:35 percent respectively.
 Ex.
 Kaveri Grameena Bank ( Sponsored Bank SBM)
 Ratio: 50% = RBI Stake, 15% State Government (Karnataka) & 35%=
State Bank of Mysore

27.  Geographical Distribution of RRBs in India as on 7th May 2014
Sl. No. Name of the RRBs Head Office State
01 Allahabad UP Gramin Bank Banda Uttar Pradesh
02 Andhra Pradesh Grameena Vikas Bank Warangal Telangana
03 Andhra Pragathi Grameena Bank Kadapa Andhra Pradesh
04 Arunachal Pradesh Rural Bank Naharlagam Arunachal Pradesh
05 Assam Gramin Vikash Bank Guwahati Assam
06 Bangiya Gramin Vikash Bank Murshidabad West Bengal
07 Baroda Gujarat Gramin Bank Bharuch Gujarat
08 Baroda Rajasthan Kshetriya Gramin Bank Ajmer Rajasthan
09 Baroda UP Gramin Bank Raibareilly Uttar Pradesh
10 Bihar Gramin Bank Begusarai Bihar
11 Central Madhya Pradesh Gramin Bank Chhindwara Madhya Pradesh
12 Chaitanya Godavari Grameena Bank Guntur Andhra Pradesh
13 Chhattisgarh Gramin Bank Rajpur Chhattisgarh
14 Deccan Grameena Bank Hyderabad Telangana
15 Dena Gujarat Gramin Bank Gandhinagar Gujarat
16 Ellaquai Dehati Bank Srinagar Jammu & Kashmir
17 Gramin Bank of Aryavart Lucknow Uttar Pradesh
18 Himachal Pradesh Gramin Bank Mandi Himachal Pradesh
19 J & K Grameen Bank Jammu Jammu & Kashmir
20 Jharkhand Gramin Bank Ranchi Jharkhand
21 Karnataka Vikas Grameen Bank Dharwad Karnataka
22 Kashi Gomti Samyut Gramin Bank Varanasi Uttar Pradesh
23 Kaveri Grameena Bank Mysore Karnataka
24 Kerala Gramin Bank Mallapuram Kerala
25 Langpi Dehangi Rural Bank Diphu Assam

28. 26 Madhya Bihar Gramin Bank Patna Bihar
27 Madhyanchal Gramin Bank Sagar Madhya Pradesh
28 Maharashtra Gramin Bank Nanded Maharashtra
29 Malwa Gramin Bank Sangrur Punjab
30 Manipur Rural Bank Imphal Manipur
31 Meghalaya Rural Baank Shilling Meghalaya
32 Mizoram Rural Bank Aizawal Mizoram
33 Nagaland Rural Bank Kohima Nagaland
34 Narmada Jhabua Gramin Bank Indore Madhya Pradesh
35 Odisha Gramya Bank Bhubaneshwar Odisha
36 Pallavan Grama Bank Selam Tamil Nadu
37 Pandyan Grama Bank Virudhunagar Tamil Nadu
38 Paschim Banga Gramin Bank Howrah West Bengal
39 Pragathi Krishna Gramin Bank Bellary Karnataka
40 Prathama Bank Moradabad Uttar Pradesh
41 Puduvai Bhathiar Grama Bannk Puducherry Puducherry
42 Punjab Gramin Bank Kapurthala Punjab
43 Purvanchal Bank Gorakpur Uttar Pradesh
44 Rajasthan Marudhara Gramin Bank Jodhpur Rajasthan
45 Saptagiri Grameena Bank Chittor Andhra Pradesh
46 Sarva Haryana Gramin Bank Rohtak Haryana
47 Sarva UP Gramin Bank Meerut Uttar Pradesh
48 Surguja Kshetriya Gramin Bank Ambikapur Chhattisgarh
49 Sutlej Gramin Bank Bhatinda Punjab
50 Tripura Gramin Bank Agartala Tripura
51 Utkal Grameen Bank Bolangir Odisha
52 Uttar Banga Kshetriya Gramin Bank Coochbehar West Bengal
53 Uttar Bihar Gramin Bank Muzaffarpur Bihar
54 Uttarakhand Gramin Bank Dehradun Uttarakhand
55 Vananchal Gramin Bank Dumka Jharkhand
56 Vidarbha konkan Gramin Bank Nagpur Maharashtra

29. RRBs Journey Progress
1. Expansion Phase (1975 – 1986): Initial
Years
2. Declining Phase (1986 – 1994): A
difficult period
3. Turnaround Phase (1995 – 2005): Improving
Stage
4. Consolidation Phase (2006 – 2011):
Restructuring RRBs

30. Growth of RRBs as on 31st March 2013
Year No. of RRBs No. of Branches No. of District Covered
1975 6 17 11
1976 40 489 84
1977 48 1187 99
1978 51 1753 102
1979 60 2420 111
1980 85 3279 144
1981 107 4795 182
1982 124 6191 214
1983 150 7795 265
1984 173 10245 307
1985 188 12606 333
1986 194 12838 351
1987 196 13353 363
1988 196 13920 369
1989 196 14079 369
1990 196 14443 372
1991 196 14527 381
1992 196 14539 392
1993 196 14543 398
1994 196 14542 408
1995 196 14509 426
1996 196 14497 427
1997 196 14461 427
1998 196 14475 451
1999 196 14499 454
2000 196 14301 457
2001 196 14311 476
2002 196 14350 487
2003 196 14311 495
2004 196 14446 518
2005 196 14484 523
2006 133 14446 524
2007 96 14526 534
2008 91 14761 594
2009 86 15158 617
2010 82 15480 618
2011 82 16001 620
2012 82 16914 622
2013 62 17564 624

31. Post Amalgamation of Regional Rural Banks in
Karnataka, Till Date

32. Payments Bank in India
 The minimum capital requirement is ₹100 crore. For the first five years, the stake of
the promoter should be 40% minimum. Foreign share holding will be allowed in
these banks as per the rules for FDI in private banks in India.
 The bank should be fully networked from the beginning. The bank can accept
utility bills. It cannot form subsidiaries to undertake non-banking activities. Initially,
the deposits will be capped at ₹1,00,000 per customer, but it may be raised by the
RBI based on the performance of the bank.
 The bank cannot undertake lending activities. 25% of its branches must be in the
unbanked rural area. The bank must use the term "payments bank" in its to
differentiate it from other types of bank. The banks will be licensed as payments
banks under Section 22 of the Banking Regulation Act, 1949 and will be registered
as public limited company under the Companies Act, 2013.

33. On 19 August 2015, the Reserve Bank of India gave "in-principle" licenses to eleven
entities to launch payments banks:
 Aditya Birla Nuvo
 Airtel M Commerce Services
 Cholamandalam Distribution Services
 Department of Posts
 FINO PayTech
 National Securities Depository
 Reliance Industries
 Dilip Shanghvi, Sun Pharmaceuticals
 Vijay Shekhar Sharma, Paytm
 Tech Mahindra
 Vodafone M-Pesa
 The "in-principle" license is valid for 18 months within which the entities must fulfill
the requirements. They are not allowed to engage in banking activities within the
period. The RBI will consider grant full licenses under Section 22 of the Banking
Regulation Act, 1949, after it is satisfied that the conditions have been fulfilled.