“A STUDY ON RETAIL BANKING WITH

SPECIAL REFERENCE TO UNITED

BANK OF INDIA”
Prepared By
Basanti Bag
PC15MBA-034
 United Bank of India

United Bank of India (UBI) is an Indian government-

owned financial services company headquartered in
Kolkata, West Bengal, India. Presently the bank has a
three-tier organizational setup consisting of its Head
office in Kolkata, 35 Regional offices and 2005 branches
spread all over India. UBI played a significant role in the
spread of banking services in different parts of the
country, more particularly in Eastern and North-Eastern
India. UBI has sponsored 4 Regional Rural Banks (RRB)
one each in West Bengal, Assam, Manipur and Tripura.
These four RRBs together have over 1000 branches.
United Bank of India has contributed 35% of the share
capital/ additional capital to all the four RRBs in four
different states
 Introduction
 Retail banking-
 Retail banking refers to banking in which banking
institutions execute transactions directly with consumers,
rather than corporations or other banks.
 Services offered include:
 Savings and transactional accounts
 Mortgages
 Personal loans
 Debit cards
 Credit cards…………etc………….
Today’s retail banking sector is characterized by 3 basic
characteristics:
 multiple products (deposits, credit cards, insurance,
investments and securities);
 multiple channels of distribution (call centre, branch,
Internet); and
 multiple customer groups (consumer, small business, and
corporate).
The typical products offered in the Indian retail
banking segment are housing loans, consumption
loans for purchase of durables, auto loans, credit cards
and educational loans.
Rs 20,000-100 lakh
Duration 5 to 7 years with housing loan up to 15 years.
What has contributed to retail banking?
Economy prosperity and increase in purchasing power
which led to consumer boom
Changing consumer demographics
Technological factors
Lowering of treasury income of banks
Decline in interest rates
PRODUCTS
1) CREDIT CARDS:
 A credit card is a small plastic card issued to users as
a system of payment. It allows its holder to buy goods
and services based on the holder's promise to pay for
these goods and services.
 The issuer of the card creates a revolving account and
grants a line of credit to the consumer (or the user)
from which the user can borrow money for payment
to a merchant or as a cash advance to the user.
Interest charges on credit card:
Credit card issuers usually waive interest charges if the
balance is paid in full each month, but typically will
charge full interest on the entire outstanding balance
from the date of each purchase if the total balance is
not paid.
2) DEBIT CARDS:
Debit cards are similar to credit cards, except debit cards pull
money out of your checking or brokerage account. Debit cards
do not create or increase a loan like credit cards do.
Debit Cards and the ATM
For some people, the main reason to have a debit card is to
use it at an ATM. For a while, banks issued "ATM Cards"
which were only useful if you were standing in front of an
ATM trying to take out cash. Eventually, banks started to add
more features so that a debit card can now be used at almost
any location.
 Debit card v/s credit card

SIMILARITIES:
Both cards offer special rewards, such as points and
cash back on purchases made through the card.
Debit cards and credit cards can be used to make
online payments with the help of the Pin number
assigned to them.
They can be used to withdraw money from ATMs,
depending on the cash limit available on these cards.
DIFFERENCES
In the case of a credit card, the issuer offers credit and
overdraft facilities. This facility is not available with a
debit card, which will only debit payments from existing
and available funds within the cardholders account.
A credit cardholder therefore has a monthly bill to pay in
every month that the card is used. If they don’t pay that
bill, high interest charges are applied. A debit card holder
is free from the hassle of paying those bills, and from the
risk of building up large debts to credit card companies.
CREDIT CARDS:
Usage increased since early 1990s
Total number of cards increased from 2.69 crores in
December 2003 to 4.33 crore in December 2004.
Working group was set up for regulatory mechanism
of the credit cards
RBI received many complaints regarding various
undesirable practices by credit card issuing
institutions and their agents.
The working group has given recommendations
regarding the terms and conditions to be highlighted
and advertised to the customers
These recommendations are being processed within
RBI guidelines for healthy growth in the development
of plastic money in India.
 HOUSING FINANCE

Impact on the economy:

— one of the top employment generator

— forward and backward linkages with over 250 industries like cement,
steel, timber, ceramics, tiles etc…

— a small initiative can boost multiplier effects in the economy

through generation of demand

— the most preferred avenue of investment in recession prone economy

 Housing finance institutes

Scheduled commercial banks (SCBs)

Scheduled co-operative banks

Regional rural banks

Agriculture and Rural development banks

Housing finance companies

National co-operative housing federation of India

 Types of housing loans
Home-equity loans

Home extension loans

Home improvement loans

Home purchase loans

Land purchase loans

Home loans to self help groups/ Micro finance institutions

Loan to NRIs
the loan amount and interest rates depends on:

― Loan tenure
― Purpose of loan
― Repayment capacity of borrowers
― Estimated value of property
― Clear title deeds of the borrower
― Cost of the fund to the financier

The repayment of loan is done through equated

monthly installments(EMIs)
CURRENT SCENARIO IN RETAIL BANKING
 The Indian players are bullish on the
Retail business.
 India compares pretty poorly with the
other economies of the world that are
now becoming comparable in terms of
spending patterns with the opening up
of our economy.
 Retail loans in Taiwan is around 41% of
GDP, the figure in India stands at less
than 5%.
Opportunities in retail sector
Retail banking has immense opportunities in a
growing economy like India.
 The rise of Indian middle class
 Increasing purchasing power
The above factors promises substantial growth to retail
banking sector which is in the nascent stage
Scope for retail banking
All round increase in economic activity
Increase in the purchasing power. The rural areas have the large purchasing
power at their disposal and this is an opportunity to market Retail Banking.
India has 200 million households and 400 million middleclass population
more than 90% of the savings come from the house hold sector. Falling
interest rates have resulted in a shift. “Now People Want To Save Less And
Spend More.”
Nuclear family concept is gaining much importance which may lead to large
savings, large number of banking services to be provided are day- by-day
increasing.
Tax benefits are available for example in case of housing loans the borrower
can avail tax benefits for the loan repayment and the interest charged for
the loan.
Challenges in the retail sector
Retention of customers
Rising indebtness
Information technology poses both opportunities and
challenges
KYC issues and money laundering risks.
Future……!!!!!!

 Customer service should be the be-all and

end-all of the retail banking.
 Sharing of information about the credit
history of the households.
 Outsourcing.
CONCLUSION
 There is need for constant innovation in
retail banking
 This requires product development and
differentiation, innovation and business
process reengineering, micro-planning,
marketing, prudent pricing, customization,
technological up gradation, home /
electronic / mobile banking, cost reduction
and cross-selling
 Furthermore, in all these customers’ interest
is of paramount importance.