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RETAI
LMODULE-A l
iabi
li
tysi
de;andmor
tgages,l
oans(e.
g.,
personal
,
Chapt
er1:RETAI
LBANKING-I
NTRODUCTI
ON housi
ng,aut
oandeducati
onal
)ontheassetside.
(
PART-
I) Additi
onall
y,r
etailbanki
ngalsoinvolv esoff
eringof
Whatwewi
llst
udy
? credi
tcards,
debitcards,deposit
oryser vi
ces,para-
bankingproductsandser vi
cesviz.
,insurance
*
Whati
sRet
ailbanki
ng? products,
capitalmarketproducts,
et c.,t
o
*
Whati
sAdv
ant
ageofRet
ailBanki
ng? i
ndividual
s.
*
Whatar
etheconst
rai
ntsofRet
ailBanki
ng? Typical
ly
, r
etai
lbanki
ngbeginswit
hatar
get
cl
ientel
e,whichisthecommonmasses,andit
I
NTRODUCTI
ON:
sl
owl ygraduat
esthroughastage,
whi
chcanbe
RetailBanki
ngreferstoprovi
sionofbanki ng call
edas“ cl
assretai
lbanki
ng.'
productsandservicesoff
eredt oindivi
dual
The‘massret
ailbanki
ng'ist
hestageinwhichthe
customer s,
typi
call
yfornon-entrepreneur
ial
bankprov
idesstandar
dizedbankingpr
oductsand
purposes.
serv
icest
oitsmasscust omers.
Ont heli
abil
it
yside,banki
nghasgeneral
lybeen
Int
hisphase,
thebanksatt
empttobui
lda
‘
retail
'
,i.
e.,
thebanksar er
aisi
ngr
esources
suf
fi
cient
lybr
oadcustomerbasewhi
chcanser
ve
generall
yfrom alar
genumberofretai
ldeposit
ors.
asastabl
esourceoffundi
ng.
I
nassetsi
deal
so,
thecasei
snotdi
ff
erent
.
The'classretai
lbanki
ng’,
ont heot
herhand,ist
he
Thus,onthewhole,r
etailbanki
nginvolvesoff
ering st
agei nwhi chthebankoffer
scustomized
ofproduct
sofbothsidesoft hebalancesheet,e.g.
, productsandser vi
cestar
getedata
fi
xeddeposit
,cur
rent/savingsaccountsonthe ni
che(speciali
zed)cust
omersegment ,
i.ethehi
gh

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networ
thi
ndi
vi
dual
s. 1-
Whati
sRet
ailBanki
ng?
Retai
lbanki
ngf
ocusedsolel
yatani
checustomer Retai
lBanki
ngisabankingservi
cethati
sgear
ed
segmentmayalsobeter
medaspriv
atebanking. pri
maril
ytowar
dsindi
vidualconsumers.
Agraphi
calrepr
esent
ati
onoftheposi
ti
oni
ngof Ret
ailbanki
ngisusual
lymadeav
ail
abl
eby
massret
ailbanki
ngvis-
à-v
isot
hersegment
sof commer ci
albanks.
banki
ngisasunder: Unl
ikewhol
esal
ebanki
ng,retai
lbanki
ngf
ocuses
st
ri
ctl
yonconsumermarkets.
Ret
ailbankingenti
ti
esprovideawi derangeof
per
sonalbankingservi
ces,incl
udingofferi
ng
savi
ngsandot heroper
ativ
eaccount s,bil
lpay
ing
ser
vices,aswellasdebi
tandcr editcards.
Thr
oughret
ailbanking,consumersmayal
soobt
ain
mort
gagesandper sonalloans.
Al
thoughretai
lbankingis,f
ort
hemostpart,mass-
marketdr
iven,manyr et
ail
banki
ngproduct
smay
al
soextendtosmal landmedium si
zedbusi
nesses.
Today ,muchofretai
lbankingisstreamli
ned
electr
onical
lyvi
aAutomat edTellerMachines
(ATMs) ,ort
hroughvir
tualret
ailbankingknownas
onlinebanki
ng.
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“Ret
ail
Banki
ngdeal
swi
thl
endi
ngmoneyt
o banki
ng”business(i.
e.,
servi
cestohi
ghnetworth
consumer
s. i
ndivi
dual
s)intheirdefi
nit
ionofr
etai
lbanki
ng.
”
Thisi
ncludesawidevariet
yofloans,includi
ng 2-
CHARACTERI
STI
CSOFRETAI
LBANKI
NG:
credi
tcards,
mort
gagel oansandaut oloans,and Thedef
init
ionsofr
etai
lbanki
ngasdi
scussed
canalsobeusedtorefertoloanstakenoutat
abov
ebringoutthefol
lowi
ngchar
act
eri
sti
cs:
ei
therthepri
merateorthesubprimer ate.
1.Banki
ngf
aci
li
ti
est
arget
edati
ndi
vi
dual
“Retai
lbanki
ngr ef
erstobankinginwhichbanki
ng cust
omers.
i
nsti
tuti
onsexecutetransact
ionsdir
ectl
ywith
consumers,r
atherthancorporat
ionsorother 2.Focusedtowardsmassmarketsegment
enti
ti
es”. cover
ingalargepopul
ati
onofi
ndivi
dual
s.

Retai
lBanki
ngrefer
sto“thepartofabank's 3.Offerdi
ff
erentl
iabil
it
y,assetandaplet
horaof
operat
ionspr
ovidi
ngservi
cesatitsbranchesf
or ser
viceproductst
ot heindiv
idualcust
omers.
small(i
nbankterms)accounthol
ders.” 4.Thedeliverymodelofret
ailbankingisbot h
“Banki
ngservicesof
fer
edtoindiv
idualcust
omer s physi
calandv ir
tual
,i
.e.
,ser
vicesareext ended
suchassavingsaccounts,
ret
aill
oans,remi
ttance thr
oughbr anchesandalsothrought echnology
servi
ces,
etc.” dri
venelectroni
coff-
sit
edeli
v er
ychannel slike
ATMs, I
nternetBanki
ngandMobi l
eBanki ng.
“Pur
er etai
lbanki
ngisgeneral
lyconcei
vedtobet
he
provi
sionofmassmar ketbankingserv
icest
o 5.Ext
endedt
osmal
l
-andmedi
um-
sizebusi
nesses.
pri
vateindi
vidual
s. 6.Today'
sRet
ailBanki
ngencompassesmult
ipl
e
Somebanksmayal
soi
ncl
udet
hei
r“pr
ivat
e product
s,mul
ti
plecustomergr
oups&mult
iple
channel
sofdi
stri
buti
on.

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3-
ADVANTAGESOFRETAI
LBANKI
NG: Af
ewoft
heconst
rai
ntsar
easl
ist
edbel
ow:
1.Cli
entbasewil
lbelargeandt
heref
orer
iski
s 1.Problemsi nmanagi
nglar
genumber
sofcli
ent
s,
spreadacrosst
hecustomerbase. especiall
yiftheav
ail
abl
eITsyst
emsarenot
2.Customerloyal
tywil
lbestr
ongandcustomers suff
ici
ent l
yrobust
.
tendnottochangefrom onebankt
oanotherver
y 2.Rapi
devolut
ionofpr
oduct
scanl
eadt
oIT
often. compli
cat
ions.
3.Attr
acti
veinterestspr
eadssi
ncespreadsare 3.Thecost
sofmai nt
aini
ngbranchnet
worksand
wide,si
ncecust omersaretoof
ragmentedto handl
ingl
argenumbersoflow-val
uetr
ansact
ions
bargai
neffecti
vely; tendt
ober el
ati
vel
yhigh.
Credi
tri
skt
endstobewel
ldi
ver
sif
ied,
asl
oan (Forthisreason,banksareencouragingcli
entsto
amountsar
erel
ati
vel
ysmal
l. usecheaperdi stri
buti
onchannels,suchasATMs,
themobi l
ebanki ngortheint
ernetbankingforthese
4.Therei
sl essvol
atil
it
yi ndemandandcr
edi
tcy
cle
transacti
onsandr eservet
hebr anchesforhigher
thanfr
om largecorporate.
valueaddedt ransact
ions)
.
5.Lar
genumbersofcl
ientscanfaci
li
tatemarket
ing,
4.Higherdel
inquenci
esespeci
all
yinunsecur
ed
masssel
li
ngandtheabili
tyt
ocategorize/
sel
ect
cl
ient
susi
ngscori
ngsystems/datamining. ret
aill
oansandcr edi
tcar
drecei
vables.
5.Anylossi
nf ai
thi
napar t
icul
arbankcanl
eadto
4-
CONSTRAI
NTSI
NRETAI
LBANKI
NG:
suddenoutf
lowofretai
ldeposi
tsresul
ti
ngi
n
Thoughret
ailbankingasasegmenthasanumber col
lapseofthebank.Thi
siscall
edabankrun.
ofembeddedadv antages,
thesegmentsuf
fer
s
fr
om const
raint
st oo.
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RETAI
LMODULE-A
Chapt
er1:RETAI
LBANKING-I
NTRODUCTI
ON Thetradit
ionalf or
msofbanki ngi
nt heaboveperi
od
(PART-
II
) wasrestrictedt ocl
asscl
ientsandsatisf
ythei
rtotal
Whatwewi
llst
udy
? banki
ngr equi rement
sintheform offi
nanci
ngfor
rawmat erials,worki
nprogress,f
ini
shedgoodsand
*
Evol
uti
onofRet
ailbanki
ng? bil
lsr
eceiv ables.
Fordeli
ver
ingtheseservi
ces,
v ari
ousproduct
s,
EVOLUTI
ONOFRETAI
LBANKI
NG: i
nstrumentsandfacil
it
ieswereintr
oducedtoser
ve
thecorpor
atecustomers.
Havingunderst
oodwhatretai
lbanki
ngisal
l
about,l
etusseetheev
olut
ionandhistor
yofret
ail
banking. Theoperat
iveaccount
s,li
kecurr
entaccountsf
or
ext
endi
ngtheabov eserv
ices,
formedanintegr
al
par
toftheservi
ces.
Ret
ailBanki
ngasaBusi
nessModel
:
Butoveraperiodofti
me, astheneedsandwant s
Retai
lBanki
ng,asabusi
nessmodelofbanks,had
ofthecust
omer sexpandedandmor eandmore
evolv
edovertheyear
sfr
om thet
radi
ti
onalbanking
product
sandser vi
ceswer eneeded,bankshad
space.
redesi
gnedtheirpr
oductandser vi
ceparadi
gm.
Histor
icall
y,banki
ngintheIndi
anscenari
obefore
Therewasanabsolut
eneedbybankstodevel
op
1960swasi dent
if
iedwit
hlendi
ngtobusinessand
speci
ali
zedandsophi
sti
cat
edproduct
stomeetthe
corporatecli
entsforworki
ngcapi
talandproj
ect
manifol
danddiv
ersegrowt
hoforgani
zat
ions.
fi
nancing.

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Thestagehadcomewher ethel
egacyar
chitect
ure redesi
gnthei
rproduct
sandservi
cesmodelsto
ofbankswasunabletoserv
icet
hediver
seneeds, catert
othesecustomersandf
ulf
il
lthei
rvar
ied
andhenceemergenceofbankswit
hfuncti
onal needs.
focuscameint
oexist
ence.
Thus,
camecor
por
atebanki
ngandr
etai
lbanki
ng.
From bei
ngplainvanil
lacommer cialf
uncti
ons,
Insomebanks, r
etai
lbanki
ngwaschr
ist
enedas
bankstooknewav atarsli
keInvestmentBanksand
consumerbanking,asthef
ocuswast
owards
MerchantBanks,t
ocar ryouttheinvestmentsi
deof i
ndivi
dualconsumers.
bankingandalsocorporatecapit
alrai
sing,f
und
rai
singanddebtstructur
ingacti
viti
es.
Investmentfuncti
onwashivedof fasaseparat
e Capgeminibr
ingsoutWor
ldRet
ailBanki
ngRepor
ts
activi
tyandalsostandal
oneinvestmentbankshad fr
om ti
met oti
me.
emer gedtotakecareofthemul t
idi
mensional “
TheWor l
dRetailBanki
ngReport2015”was
functi
onsofI nv
estmentBanking,Merger
sand r
eleasedbyCapgeminiandEuropeanFinanci
al
Acquisit
ions,et
c. Management&Mar keti
ngAssociat
ion(EFMA).
MerchantBanksweret
heanswerforCapit
aland Themaj
orf
indi
ngswer
e:
Debtrai
singandot
herrel
atedact
ivi
ti
es.
1-
Banksar
efal
li
ngshor
tofcust
omerexpect
ati
ons.
Ast heevoluti
onofbankingwasacont i
nuous
Customerexpect
ati
onsareont
her
iseataf
ast
er
process,withthebroadeni
ngofthecustomerbase,
pacethanbankscanhandl
e.
andt hecharacteroft
hecustomers'basechanged
fr
om homogenoust oheter
ogeneousoveraperiod Posi
ti
vecust
omerbehav
iouri
sal
soont
hedecl
ine.
oftime,bankswer eunderthecompulsi
onto
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Theshi f
tismai nl
yonaccountofyounger TheWorl
dRetai
lBanki
ngRepor
t2016by
generati
on,whoar elessli
kel
ytotakedebt,
more Capgemi
niandEFMA:
l
ikel
yt oleave,andlessl
ikel
ytoref
erfr
iendsorbuy Iti
sfoundt
hat63%ofcust
omersacr
ossthegl
obe
addit
ionalretai
lproduct
s.
arenowusi
ngfint
echpr
oduct
sorservi
ces.
2-Competi
tionf
rom non-
bankpl
ayer
sis
Penetr
ati
oniscurr
ent
lyhi
ghestintheemergi
ng
accel
erat
ing. marketsandamongyoungercustomersbuti
s
Banksarest
illunsur
eaboutt
heimpactofnon-
bank expect
edtoincr
easei
nallgeographi
esandages.
pl
ayersandthismayleadtot
hreatt
ocorebusi
ness
i
nfuture.
Whi l
e96%ofbankingexecuti
vesagreedt hatthe
3-Banksf
ocustoomuchonthef
rontendatt
he i
ndust r
yisevol
vi
ngtowardsadigit
al banking
costofbackendser
vice. ecosystem,onl
y13%sayt heyhav
et hesy stemsin
Banksneedt ocont
inuetoinvesti
nthefr
ontof
fi
ce placetosuppor
tit
.
becausethatist
hefirsti
nter
acti
onfort
he Fint
echprovi
der saregaini
ngpopul ari
tyamong
customerexperi
ence.
customers-thankst othepercept
ionthattheyar
e
But,att
hesamet i
me, t
heycannol ongerdeferthe easytouse,offerfastserv
iceandpr ovideagood
signi
fi
cantef
fort
srequir
edont hemiddl eandback- experi
ence.
endbecausethecli
entsdon'
twantt obeexposedat Onl
y36%ofbanksagreethatFi
ntechofferf
ast
thebackendanddonotacceptt hatittakesthr
ee ser
viceandonl
y40%agreei
ngthatFint
echprovi
de
weekstobepr ov
idedwithpaperwork,etc. agoodexperi
ence.

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Competit
ionisevol
vi
ngint
oaccept
ance,wi
th65% StandardChar
teredBankandGrindlay
sBankwere
ofbankexecuti
vessayi
ngtheyv
iewFi
ntechfi
rms thepioneer
sinintr
oduci
ngthesetypesofpr
oduct
s.
aspart
ners. Citi
bankcreat
edwav esi
ntheear
ly1980swiththei
r
Ret
ailBanki
ngScenar
ioi
nIndi
a: credi
tcardproduct
sandspurr
edtheretai
lbanki
ng
space.
Theevol
uti
onofret
ailbanki
nginIndi
acanbe
tr
acedbacktot
heent r
yofforei
gnbanks. StateBankofIndiaandsomepubl i
csectorbanks
l
ikeIndi
anOv erseasBank,
BankofI ndi
a,Bankof
Theconv enti
onal banki
ngbusi
nessbyPubl i
c
SectorBanks( PSBs)wasdoneonamor e BarodaandAndhr aBankdev el
opedandmar ket
ed
assetproduct
sandcar dproductst
ocatertoretai
l
generali
zedapproachandt her
ewasnospeci fi
c
demar cat
ionasr etai
landnon-
ret
ailact
ivi
ti
es. segment .

CustomerandIndustr
ysegment
ati
onwasadopt
ed I
nf act
,BankofBarodaandAndhr
aBankwer et
wo
wit
hintheover
allbusi
nesspl
anofbanks. oftheearl
ypl
ayersinthecr
edi
tcardbusi
nessi
n
thePSBspace.
Offeri
ngpr
oduct
sandser
vicesbasedonspeci
fi
c
Theentryofnewgenerat
ionpr
ivat
esectorbanksin
consumersegment
swasnotattemptedi
na
earl
y1990shascreat
edanewappr oachtoretai
l
focusedway.
bankingbybanks.
Foreignbanksoperat
inginIndi
asetthetrendand
i
nt helate1970andearly1980sandcameoutwi th Withtheadvantageoft echnologyr ightf
rom start
,
thesebankshadacl earposi ti
oningf orr
etail
theirconsumerbanki
ngmodel swithhybri
dliabi
li
ty
bankingandaggressivelystrategizedforcreati
ng
andassetpr oduct
sspecif
ical
lyt
argetedatthe
personalsegment. newmar ket
sf ortheretailsegment .
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I
naddition,thenewgener ati
onpriv
atebankshad Thesegmenthasbecomeanimport
antcomponent
posedat hreattotheretai
lbusi
nessofforei
gn i
nthebusi
nessdesignoft
hebanksi
nIndia.
banksthathadbyt henwell-
def
inedbusi
ness Thereisavir
tualgol
dminetobeunearthedand
modelsf orret
ailbanking.
eventhetoplayeri
snotyetscr
atchedf
ully
.
Toaddt ot hef uel,
PSBsalsowi thtechnology
Thereisawholelotofcust
omerpy r
amidtobe
i
niti
ati
vesandr edefinedbusi
nessmodelf orret
ail tappedandthepresentact
ivi
ti
esti
llr
ecent
lywer
e
hadaggr essivelyenteredt
hemar ketspace, confi
nedonlytothetopandhighermiddl
eendof
creati
ngar etailwarandcapt uretheirshareofthe thecustomerpyr
ami d.
pieintheliberali
zedeconomi cenv ir
onmentandt he
resul
tantoppor t
uniti
esinret
ailbanking.
Ther etai
lwari
si nful
lswingnowwithawin-wi
n
si
tuationforal
ltheplayer
sandthefocusison
capturingandi
mpr ovingt
hemarketshareand
customerbase.
Str
ongeconomi cfundament als,growingurban
popul
ation,hi
gherdisposablei ncomes, ri
sein
youngpopulati
on,emer genceofnewcust omer
segment sandri
seint hemassaf f
luentspace,
expl
osionofservi
ceeconomyi naddi ti
onto
manufacturi
ngspacehav ecatapul tedthescopef
or
ret
ail
bankingbusinessi nIndia.

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RETAI
LMODULE-A Asar esult
,att
heendofMar ch2017,gr
oss
Chapt
er1:RETAI
LBANKING-INTRODUCTI
ON out
standingcredi
tofschedul
edcommer ci
albanks
(PART-
II
I) i
ncreasedby8. 2%,asagai
nstanincr
easeof13.7%
dur
ingt hecorr
espondi
ngprevi
ousyear.
Whatwewi
llst
udy
?
PersonalHousi
ngLoanswitnessedhi
ghergr
owt
h
*
Per
for
manceofr
etai
lbanki
ngsegment
s? at20.6%in2015asagainst8.58%in2016.
*Whatar
ethepr
erequi
sit
eforsuccessofr
etai
l
banki
ng?
3.Thegeographi
creachofATMsi ncreasedf
urt
her
Perf
ormanceofDiff
erentSegment
sofRet
ail asthenumberofATMsi nst
all
edincreasedto
Banki
ngfrom 2015to2017: around0.
22mi l
li
onasatendofMar ch2017,an
1.Banks'r
etai
ll
oanpor
tfol
iosr
egi
ster
eddoubl
e- i
ncreaseof4.61%ov ert
heprevi
ousy ear.
di
gitgrowth. PSBsmai nt
ainedmor
ethana70per
centshar
ein
Thehousingl
oancomponentwhi chconst
itut
es thet
otalnumberofATMs.
morethan54%percentofthetot
alret
aill
oan Forei
gnBanks,
however
,cont
inuedt
oposta
por
tfol
ioofbanksi
ncreasedby15.17%. decli
nei
nthenumberofATMs.
Creditcar
drecei
vabl
esgr
ewbymor
ethan30 Asperthereport
s,allt
hebankbranchesare
percent. repor
tedl
yunderCBScov er
ageandIndi
atodayhas
2.Weakdomest i
cdemandandbadper
for
manceof aspreadofmoret han2,22,
000ATMsacr osst
he
thecor
poratesect
ormoder
atedt
hedemandfor countr
yasagainst1,32,
600ATMsi n2016.
bankcredi
t.
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ThenumberofATMsasaper centageofbank 5.Thespurti
ndebitcardgrowt
hwasat tr
ibut
edt
o
brancheswasat166%asonMar ch2017, thePradhanMant r
iJanDhanYojana(PMJDY)
i
ndicati
ngtheapproachofthebanksi ncust
omer underwhicheveryaccounthol
derunderthe
migrati
onfrom br
anchestoelectr
onicmode. schemewasi ssuedaRuPaydebitcard.
Toadd, t
henumberofonsi teandoffsit
eATMs Asthegrowthinaccountopeni
ngunderPMJDY
ref
lectsthatbanksareser i
ousinnotonlymaking decel
erat
ed,t
hisresultedi
nadecl
inei
nthegrowt
h
theATMsav ai
labl
eint hebranchesbutalsohad ofdebi
tcardissuances.
i
ncreasedt heconveniencefactort
oenabl et
he 6.PSBsmai
ntainedastr
ongleadi
nissuanceof
customert ousetheATMsi nawayf r
om branch debi
tcar
dswithashareof82.8%.
l
ocat i
onsalso,atdi
fferentandconvenientpoi
nts.
Ontheotherhand,
Pri
vateSectorBankhada
4.Duri
ng2015- 16t
henumber sofwhit
elabelATMs dominantposi
ti
onincr
editcar
di ssuanceswi
tha
(WLAs),whichareownedandoperatedbynon-bank
shar
eof60.1%.
enti
ti
es,i
ncreasedsi
gnif
icantl
yto12,
962from
7,
881dur i
ngtheprevi
ousy ear
. 7.Retailel
ectr
onicandcard-basedpayments
regi
steredaquant um j
umpint hepasttwoyear
s
ThisspurtinWLAscanbeattri
butedt otheentr
yof mainlyduet oincr
easeduseofReal TimeGross
newpl ayer
sint
hebankingspacesuchaspay ment
s Settl
ement( RTGS)andNationalElect
roni
cFunds
banksandSmal lFi
nanceBankswhi chare Transfer(NEFT).
col
laborati
ngwithWLAoperator
sr atherthan
havingthei
rownATMst ominimizecost s. Thewholesal
eremi
tt
ancesconstit
uteamaj
or
propor
ti
onofRTGStransact
ions.

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8.Duet ogreateruseofPr epaidPayment Pr
esenceofanef
fi
cientdel
iv
erymechani
sm:
Instr
ument s(PPIs)forpurchaseofgoodsand I
tisthemostimport
antpr
e-r
equi
sit
eforr
etai
l
servicesandf orfundt r
ansf er
s,t
hev al
ueof banki
ngtosucceed.
transactionsbyt heseinstr
ument shasincr
eased
consi derabl
yinrecenty ears. Whatessent i
all
ybindscustomerstothei
rbankis
thequali
tyofservi
cesof f
ered,
thefai
rnessand
Amongt heprepai
dinstrument s,
PPIcar ds(which
aff
ordabil
it
yofpr i
cingandthepromptnessof
i
ncludemobileprepai
di nstr
ument s,gi
ftcards, servi
ce.
social
benefi
tcards,f
or ei
gntravelcardsand
corporat
ecards)remainedthemostpopul armode Whilet hereisnotmuchscopef orthebankst o
fol
lowedbymobi l
e-wall
ets. dif
ferent i
atethei
rproductandser v
iceoffer
ings,i
n
sofarast hebasicproductsareconcerned,iti
s
Accordi
ngt oar esearchstudybyBostonConsul
ti
ng
i
mpor tantf orthebanktoenhancet hecustomer
Group,r
etailsegmentbr i
ngsi nnear
ly60%ofthe
experiencebyensur ingthatt
heser vi
cesaremade
tot
albankingrev enueswor l
dwide. avail
abl ewhenev erandwhereverthecustomer
demandst hem.
PREREQUI
SITEFORSUCCESSOFRETAI
LBANKI
NG: Inanutshel
l,
thebanksshoul
dbeabletodel
ivert
he
product
sandservi
cestothecustomer
sinsaf
e,
secure,
promptandcosteff
ecti
vemannerby
Therearevariousfactorst
hatcansubscr
ibet
othe l
ev er
agi
ngtechnol
ogy.
successofretailbankingi
nIndi
a,afewofwhich
areli
stedhereinbelow:
 Joi
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Pr
oductappr
opr
iat
eness: Credi
tscori
ngmodeli sast ati
sticalt
echniquet
hat
Anotheressenti
alpr
e-condit
ionfort
hesuccessof combinesseveralfi
nancialcharacter
isti
csto
ret
ailbanki
ngisappropri
atenessofproductand predi
ctthebehaviourofnewappl i
cants.
servi
cesforthecust
omer s. Somebanksstar
tedempl
oyi
ngcr
edi
tscor
ingev
en
i
nret
ailsegment
.
Asthebanksst ri
vetobr inginnewcust omersint
o
thei
rfol
dandal sotor etaintheexist
ingones,t
hey Mostofthebanksareusingcrediti
nformati
on
mustinvestheavil
yintodat aanalyti
csandassess repor
tstoassessthef
inanci
aldisci
pli
neofthe
whataretheappr opr
iatepr oductsandservi
cesfor appli
cant
s.Thisi
salsobasedonscor ing.
thespeci
ficgroupsoft heircustomers. Consumerpr
otect
ionenv
ironment
:
Thebankshavetobesensi
ti
veaboutthe Acr
osstheglobe,ther
egul
atorsandsuper vi
sors
cust
omers'needsandr
equi
rements. ar
eturni
ngincreasi
ngl
yint
olerantofunfai
rmar ket
Pri
cing:Thepr i
cingdemonst r
atest
hattheproduct
s pr
acti
cesadoptedbythemar ketpart
ici
pants.
andservices,bothont hel
iabi
li
tyaswellasonthe Ithasbeenobser vedthatlargeamountsof
assetsi
de, ar
eheav il
yweighedagainstther
etai
l
penalt
iesareleviedonbanksbyt her
egulators
customersasagr oup. mainlyforf
aili
ngt oprotectconsumers'
interests
andforunfairpracti
ces.
Scor
ingmodel
sforassessi
ngt
hecr
edi
twor
thi
ness: Morefocusneedstobegiventodev
elopconv
icti
on
Thescoringmodel sarebei
ngusedforassessi
ng onthecustomerst
hatthei
rri
ghtsar
eadequatel
y
thecredi
twor t
hinessofbor
rowerstobri
ngin pr
otected.
great
ertransparencyandef
fici
ency
.

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RETAI
LMODULE-A 1-
ConsumerPr
otect
ion&Pr
ici
ng:
Chapt
er1:RETAI
LBANKING-INTRODUCTI
ON Ther
ear
eseveralexampl
esreport
edonpr icing
(PART-
IV) bei
ngar
bit
rar
yand, t
oacert
ainextent
,il
logical
.
Whatwewi
llst
udy
? Therearechargesfornon-maintenanceof
*
Whatar
ethechal
lengesf
orRet
ailbanki
ng? mi ni
mum balance,chargesforchequeretur
nand
therearechargesevenwher enoservicehasbeen
*
Whati
sthescopeofRet
ailbanki
ngi
nIndi
a? provided–customer snotconducti
ngany
transact
ions,
etc.
CHALLENGESFORRETAI
LBANKI
NG: Fortheretailbankingmodeltobesuccessf
ul,
banks'pri
cingshoul dbenon-di
scri
minat
ory
,ri
sk-
based,compet it
iveandvalueadded.
1-
ConsumerPr
otect
ion&Pr
ici
ng
2-
InadequacyofMI
S:
2-
InadequacyofMI
S
Acruci
ali
nputforsuccessofanybusinessist
he
3-
Under
standi
ngofKYC/
AMLi
ssues accur
ate,
consist
entandgranul
arinf
ormat i
on
4-
Managi
ngRi
sk abouti
tsvar
iouscomponents.

5-
Eff
ect
sofdi
srupt
ivenewt
echnol
ogi
es Undertheci
rcumstances(
inadequat
eMI
S),the
bankswouldfindi
tverydi
ffi
cultt
omaketheir
6-
Cont
inui
nggr
owt
h
pri
cingri
skbased.
I
tiscr
uci
al,
ther
efore,
thati
fther
etai
lbanki
nghas
t
oberoll
edoutsuccessf
ull
y,t
hebankswouldneed
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t
obui
ldanappr
opr
iat
eMI
S. 4-
Managi
ngRi
sk:
Ther et
ailbankingbusinessinvolvesdeal
ingwitha
3-
Under
standi
ngofKYC/
AMLi
ssues: l
argenumberofcust omersoverv ar
ieddeli
very
Thebanksi nthedevel
opedcountr
ieshav
ef aced channels,ther
ebycr eati
ngsignif
icantvul
nerabil
it
ies
signif
icantamountofpenalt
iesfr
om theregulat
ors acrossbanks' syst
ems.
fortheirfai
luret
oconductadequateduedil
igence Thesecouldbei nthef or
m ofinadequacyof
ont heircustomers. i
nternalgui
deli
nesornon- adherencebystaf
f,
Even,i
nIndi
a,RBIhadi mposedpenal
ti
esonsome i
nadequacyi nthetechnologysystemssuppli
edby
ofthebanksforthei
rfail
uret
ohaveproperdue vendors,f
raudulentpracti
cesempl oy
edby
di
li
genceontheircustomers. customers,hackers,etc.

Iti
simpor t
ant,
theref
ore,
tounderstandand Thoughbankshavedev el
opedsuffici
ent
appreci
ateKYCr equi
rementsinallmani
fest
ati
ons saf
eguardstodealwit
hoper at
ionalri
skassoci
ated
–bei tfort
heproductsontheassetsideofthe wit
htradi
ti
onaldel
iver
ychannels.
balancesheetorontheli
abil
it
yside. Itisessentialt
ohav eadequatesafeguar
dsfornon-
Bankswoul dalsoneedtobemi ndfulabouttheKYC tradit
ionaldeli
verychannels,
asevidentf
rom l
arge
duedili
genceforthethir
d-part
ypr oductsthatthey numberoft echnologyrel
atedfr
audsbeing
sel
lfrom thei
rpremises/t
hrought heirdel
iver
y wi t
nessedacr ossIndianbanksint
hepastfewy ear
.
channel. Thebankswoul dalsoneedtorecogni
zeand
manager isksarisi
ngf r
om mi
s-sel
li
ng,et
c.,
besides
theotherbusinessr i
sksli
kemarketri
sk,
li
quidi
ty
ri
sk,i
nterestrateri
sk,etc.

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Unlessbanksaddr esstheseissuesquickly
,even Astheuseofnewdel iverychannel
sgetsmore
thelow-v
aluefraudswoul dhavethepot enti
alt
o popular
,thebankswoul dneedtoensur
ethatthei
r
causereputat
ional r
iskandunwar r
antedlit
igat
ion customerscontinuetohav egoodexperi
encewith
forthebanks. thei
rservi
ceofferingsandr emainl
oyal
tothem.
I
tis,
therefor
e,absol
utel
yimpor
tantthatt
hebanks
i
mprovet hei
rri
skmanagementsystemstoaddress
6-
Cont
inui
nggr
owt
h:
t
heseissues.
Despitebanks'concer
tedeffor
tsoni ncr
easingthe
5-
Eff
ect
sofdi
srupt
ivenewt
echnol
ogi
es: bankingpenetrati
onandbr i
ngingmor eandmor e
Withtheincreasedprol
if
erati
onofalter
natedeliv
ery adultpopulati
onundertheformalfinanci
alsystem
channels(ATMs, i
nter
netandt el
ephonebanking), overthelast7–8y ear
s,mor ethanhalfofthetarget
ret
ailbanki
nghasbecomet hesegmenti mpacted populati
onr emainsuncover
ed.
mostbyt echnology. Si
milar
ly,t
hecreditpenet
rat
ionf
rom t
hebanking
Whil
et heuseoftechnol
ogy-ai
deddel
iver
ychannel
s syst
em inthecountryi
sabysmall
ylowatabout
hasgrownmul ti
fol
d,sohasthescopefor 10%.
fr
audulenttr
ansact
ionsthr
oughimpersonat
ions
Inabsenceofaccesstofor
malsour
cesoffi
nance,
andidenti
tythef
ts.
thealt
ernatecostoff
undsfort
hepeopl
eis
Bankswoul dalsoneedtoquicklyputinplace exorbi
tantl
yhigh.
l
astingtechnology-
basedsoluti
onstothwar tt
he
Asthepri
cingofloansnolongerremainsrestr
ict
ed,
eff
ortsoff r
audster
sandmi nimizethecustomer
duetoanyregulat
ory/governmentfi
at,t
hebanks
complaints. aref
reetoreasonablychargethei
rcust
omer s.
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Allt
hesemeanst
hattheret
ailbanki
nghasahuge ScopeofRet
ailBanki
ngi
nIndi
a:
potent
ialt
ogr
owinIndi
aovertime.
a.I
ncr
easeineconomicacti
vi
tyi
staki
ngpl
acewi
th
somerecessi
onar
ytrends.
Iti
stherefor
eassumedt hatthechall
engeforthe
b.I
ncreaseinpurchasingpower.Ther ur
alIndi
ahas
ret
ailbanks/banki
ngi
snotoneoff indingnew
morepurchasingpoweratt hei
rdisposalandthi
sis
customersornewmar kets;i
tismoreofami nd-set
anopportuni
tytomar ketRetai
lBanking.
i
ssue.
c.I
ndi
ahas200mill
ionhousehol
dsand400mi
ll
ion
Thebanksneedt ogetconv
incedaboutfinancial
middl
ecl
asspopul
ation.
i
nclusionasav i
abl
eandprofi
t-
maki ngbusiness
proposit
ionandpursuet
hatobject
ivewit
ha Morethan90%ofthesavingscomefr
om thehouse
missionaryzeal
. hol
dsector
.Fal
li
ngint
erestrat
eshav
er esul
tedi
na
shi
ft
.
Inthecontextofret
aill
ending,depl
oymentof
scori
ngmodel swouldmi ni
mi zethesubject
ive “
NowPeopl
eWantt
oSav
eLessandSpendMor
e.”
elementandt her
ebyfast-
tr
ackt hedecisi
on-maki
ng d.Nuclearf
ami
lyconcepti
sgai
ningmuch
process. i
mpor t
ancewhi
chmayl eadtol
argesav
ings.
Qual
it
yofser v
icesoff
eredbythebanksi
sgoi
ngt
o Thenumberofbanki
ngser
vicest
obepr
ovi
dedi
s
beanotherkeydif
fer
enti
ator
. i
ncreasi
ngday
-by-
day.
Inulti
mat
eanal
ysi
s,prov
idi
ngbett
erserv
icetothe e.Taxbenef
itsar
eavail
able.Forexample,i
ncase
customer
swouldbethekeytogener
atelar
ger ofhousi
ngloanstheborr
owercanav ailt
axbenefi
ts
revenuef
ort
hebanks. fort
heloanrepay
mentandt heinter
estchargedf
or
thel
oan.

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RETAI
LMODULE-A Themai
nappr
oachesar
easf
oll
ows:
Chapt
er2:RETAI
LBANKI
NG: a.St
rat
egi
cBusi
nessUni
t(SBU)Appr
oach
THEROLEWI
THI
NBANKOPERATI
ONS b.Depar
tment
alAppr
oach
Whatwewi
llst
udy
? c.Int
egr
atedAppr
oach(
par
toft
heov
eral
lbusi
ness
*Whatar
ethedi
ff
erentappr
oachesi
nRet
ail plan)
.
Banki
ng? *
Bankcanoptanyst
rat
egybasedoni
t'
s
r
equi
rement
.
*
Whati
sRet
ailbusi
nessmodel
?
I
NTRODUCTI
ON:
(
a)St
rat
egi
cBusi
nessUni
t(SBU)
:
Banksfol
lowdi
ffer
entappr
oachesf
ort
hei
rret
ail
banki
ngacti
vi
ti
es. SBUapproachaimsatdi
vi
dingthebusi
nesson
Therol
eandi mpor
tanceofr
etai
lbanki
ngacr
oss l
inesofStr
ategi
cBusi
nessUnit
s(SBU).
banksdif
feranddi
ffer
entmodel
sareadopt
edby SBUsar eautonomousdivi
sions,smal
lenoughto
banks. beflexi
bleandlar
geenought oexerci
secontrol
Themodelsandpr ocessesdependupont he overmostoft hefact
orsaf
fectingi
tslong-
ter
m
perf
ormance.
i
mpor t
anceattachedtot heretailbankingspacei n
thei
rover
allcorporat
ebusi nessst r
ategiesandt he SBUscanbedefinedaspr
ofitcent
erswhichf
ocus
busi
nessprojecti
onov erthey earsforretailbanki
ng. onproductof
fer
ingandmarketsegment.
Themodelsadopt
edbybanksv ar
yamongt he AnSBUcanbeabusi
nessuni
tofal
arge
publ
icsect
or,
pri
vatesect
orandforei
gnbanks. cor
por
ati
onori
tcanbeabusi
nessi
nitsel
f.
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Asperar esearchstudyont hemodel sf
ollowedby (
b)Depar
tment
alAppr
oach:
about10bankscompr isi
ngofpubl i
c,pr
ivateand InDepart
ment alApproach,rat
hert handividi
ngon
for
eignbanks, theSBUappr oachisadoptedbyone strat
egi
corbusi nessli
nes,anor ganisati
oncan
ofthetopfivepublicsectorbanksbasedinMumbai
alsobedivi
dedont hebasi
soff unctions,var
ious
andtheirbusinessmodeli sinali
gnmentwi t
h teamsperform.
pri
vatesectorbanksandf or
eignbanks.
Thedepartmentalappr
oachi
saspeci
ali
sed
I
nnewgenerati
onpri
vatesectorbanks,
the funct
ionalappr
oachwithi
nanor
gani
sati
on.
busi
nessmodeli
sveryclear
.
Thisappr oachsegr egatesthef
uncti
onsofthe
TheyhadsetupStrat
egi
cBusinessUnits(SBU)t
o organisationintodepartmentssuchasaccounti
ng,
havecl
earfocusandbusi
nessobject
ives. mar keti
ng, f
inance,planni
ng,et
c.gener
all
y,ev
ery
I
nforei
gnbanksalso,
SBUisthebusinessmodel depar t
menthasi t
smanagerandchai nof
f
oll
owedwithdef
inedbusi
nessfocus. command.
Thedemar cationasaSBUi smoreaManagement Publi
cSectorBanksinIndi
ageneral
lyhaveadopted
ByObjectives(MBO)processwhereinthebusi
ness thedepar
tmentalApproachasthei
rretai
lbanki
ng
modelisdeal tasamodularstr
ategyforachi
evi
ng busi
nessmodel .
tar
getedprofitswit
haprovisi
ontoknockdownt he I
nol
dgenerati
onprivat
esect
orbankst
heappr
oach
module,iftheretai
lpl
ansarenottransl
atedasper i
smoreconservat
ive.
theobjecti
ves.
Thebusi nessmodelf orretai
lbanki
ngisbui
ltasa
partoftheov er
allbusinessplanandnotdoneasa
separat
edepar tmentalactivi
ty,
leav
ealoneSBU.

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(
c)TheI
ntegr
atedAppr
oach: I
tisbasedontheoverallbusi
nesspl
anandi
nli
ne
TheI
ntegrat
edApproachi
susual
lyadopt
edby wit
htheirsi
zeandscale.
smal
lerbusi
nesses. Thenewgenerat
ionpri
vatebankshav
ecl
earv
isi
on
I
tcombinesal
lsoci
oeconomicaspect
sandadopt
s aboutt
hei
rposit
ioni
ngplatf
orm.
acohesi
veappr
oachtotackl
eprobl
emsofthe Theywantt
obeinthetopsl
otacr
ossal
lcl
assof
busi
ness. banksandj
ust
if
iabl
yso.
I
tisassumedt hathavi
ngaunifi
edbusi nesswoul
d Ev enrecentent rantsinthepriv
atesectorsi
dehave
reducer i
skandi ncr
easeprof
it
abil
it
yt hr
oughscal
e clearposi t
ioningstrategiesaboutwheretheywant
ratherthanhavingseparat
eenti
ti
esf oreach tobe, goingf orward, i
nthenexttwo/thr
eey ear
s
businessline. andputsui tableactionplantoachiev
et hei
r
obj ect
ives.
For
eignbanksgeneral
lydonotgobyposi
tioni
ng
BUSI
NESSMODELS:
obj
ecti
vesbutpurel
yonbusinessobj
ect
ives.
Banksgeneral
lyst
ruct
uretheirr
etai
lbanki
ng
modelsmainlyonaposit
ioningplat
for
m. Theygobycust
omer
,busi
nessandpr
ofi
ttar
get
s.

Str
ategi
esarebasedontheposit
ioningobj
ecti
ves Theytakeacallont hebusinessmodelitselforone
andvaryfr
om banktobankdependingonthe segmentoftheov eral
lmodel ,i
fthesamei snot
prof
it
ableandeitherexitt
her etai
lbanki
ngsegment
i
mpor t
anceatt
achedtothebusi
nessmodel .
i
tsel
forexitaparticul
arbusinesslinewi
thinthe
I
ncaseofol
dgenerat
ionpri
vatebanks,
the model.
posi
ti
oni
ngpl
atf
ormisveryclear
.
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Theclassicexampl eisBNPPar ibaswhichentered RETAI
LMODULE-A
ther
etailbankingspacev eryaggressi
velyduri
ng Chapt
er3:APPLI
CABILI
TYOFRETAILBANKI
NG
thel
ate1990swi thafull
-f
ledgedbrandbuildi
ng CONCEPTS(PART-
I)
exer
cisebutqui tthespaceaftertheyfoundthatit
wasnotapr of
itablesegmentforthem withthe Whatwewi
llst
udy
?
busi
nesst heygener at
ed. *Whatarethei
mpl
ement
ati
onmodel
susedf
or
Likewise,
AmericanExpr
essBankcameoutof Ret
ailbanki
ng?
their
credi
tcar
dbusinessaf
tert
aki
ngstockofi
ts *Whatar
ethepr
ocessmodel
susedf
orRet
ail
viabi
li
ty. Banki
ng?
Ont heposit
iveside,thoughABNAmr oBankwasa
l
ateentrantintheretailbankingspacewit
htheir
ThisUnitdealswitht
hev ariousbusinessprocess
entryi
nmi d1990s, sti
lltheyhadaclearposi
ti
oning
str
ucture,productmodels,businessapproach,
focusforbuil
dingupt her et
ailbanki
ngfr
anchise.
ret
aill
iabil
it
yproduct
s,retailassetsproduct
s,etc.
,
ABNAmr oBankwasal at
eent r
antinthecredi
tcar
d i
ndet ail
.
spacealsobutt heyhadbuil
tupt hecardbase
aggressiv
elyandposedat hreattoother
establ
ishedcreditcar
dplayers. APPLI
CABI
LITYOFRETAI
LBANKI
NGCONCEPTS:

Retai
lbanki
ngasaconcepthasanumberof
el
ement swhichindi
vidual
lyandcol
lect
ivel
y
contr
ibutet
ot hesuccessofthesegment.

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I
tspansacrossi
mplementat
ionmodels,
busi
ness Incaseofoldpri
vatesect
orbanksalso,t
he
pr
ocessstr
uctur
e,pr
oductandprocessmodel
s,et
c. acti
vit
iesarecar
ri
edoutthroughi
n-house
Letushav ealookattheappl
icabi
li
tyofthe resourcesonl
y.
dif
ferentr
etai
lbanki
ngconceptsthatshapethe Incaseofnewgener at
ionpri
vatesectorbanks,the
successofthespace. modelisabalancedmi xofoutsour
cingandi n-
house,t
houghal i
tt
leskewedtowardsout sourci
ng.
I
mpl
ement
ati
onModel
s:(
inhouse&out
sour
cing)
I
nsomebanks, assetsi
deisoutsour
cedwher
eas
Banksadoptdiff
erentmodelsf
ori
mpl
ement
ing
thei
rret
ailbanki
ngini
ti
ati
ves. l
iabil
it
ysideisnotoutsour
ced,t
houghcent
ral
ly
processed.
Themostcommonst rat
egiesareendtoend
I
nfor
eignbanks,t
heimplement
ati
onmodeli
s
out
sour
cing,
predominantoutsourci
ng,
part
ial
out
sour
cingandin-
housesour ci
ng. most
lyout
sourcedbasedonthebusi
nessmodel
.
Toadd, i
nsomef oreignbanks, bot
hf r
ontandback
Theimplementationmodeldependsont heproduct
endoper at
ionsareoutsourcedandi nsomebanks,
range,
processrequirements,t
echnology
thebackendoper at
ionsareout sourcedwhil
ethe
prepar
edness,deliv
erycapabil
it
iesincl
udinghuman
frontendoperat
ionslikesourcingofHNIcli
entsare
resour
cesandr egulator
yprescr
ipti
ons.
donet hr
oughcaptiveresources.
MostofthePSBsuseonl
yin-
houser
esour
cesf
or
r
etai
lbanki
ng.
Onlyforsomeacti
vi
ti
esl i
keATM/Credi
tCar
ds/
DebitCards,
thei
ssuepartisout
sour
ceddueto
l
ackofi n-
housef
acil
it
ies.
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Busi
nessPr
ocessSt
ruct
urei
nRet
ailBanki
ng: Horizontal
lyorganizedmodeli samodular
BostonConsul ti
ngGr ouphadconductedastudyon st
ructureusingdi f
ferentprocessmodelsf
or
theretai
lbankingpr ocesses(
Transfor
mingRetail di
fferentproducts,offer
ingendt oendsol
uti
ons
pr
oductwi se.
BankingPr ocesses)anddeducedfourbroadly
defi
nedpr ocessmodel si
mplementedacrossbanks. Verti
cal
lyorganizedmodelpr ov
idesfunct
ional
it
y
acrossproductswithcustomerdatabase
ori
entat
ionandcent ral
izedcustomerdatabaseis
Thesemodel swer
edefi
nedbasedont he usedacrossproducts.
technol
ogyandcustomeri
nter
facecapabil
it
iesof
thebanksstudi
ed. Pr
edominantl
yhorizont
all
yorgani
zedmodeli
s
mostl
yproductori
entedwithcommoncustomer
Thef
ourbr
oadcl
assi
fi
cat
ionsar
e: i
nfor
mationforsomepr oduct
s.
i
. Hor
izont
all
yOr
gani
sedModel Inpredomi nantl
y,v
ert
ical
lyorgani
zedmodel,
i
i. Ver
ti
cal
lyOr
gani
sedModel commoni nformati
onisavail
ableformostoft
he
products.
i
ii
.Pr
edomi
nant
lyVer
ti
cal
lyOr
gani
sedModel
I
nmostofthePSBs,hor
izont
all
yor
gani
zedmodel
i
v.Pr
edomi
nant
lyHor
izont
all
yOr
gani
sedModel
i
sthest
andardnor
m.
Thehor i
zont alorver
ticalmodeldependsont he
Ofcour se,i
nsomebanks,predominantl
y
l
ev elofcustomeri nf
or mati
onav ai
labl
einasingl
e
hori
zont al
lyor
gani
zedmodeldoexi standref
lect
pl
at f
ormi nthedat abasef orof
feri
ngmul t
ipl
e
thel
ev elofcommoncustomeri nf
ormation
products/servicesacrossassets,l
iabi
li
ti
esand
avai
lableforsomeproduct
s.
otherservices.

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Inoneoft hePSBsbasedi nWest ,pr
edominant
ly cust
omerI
nfor
mat
ionacr
osspr
oduct
s.
vert
ical
lyorgani
zedmodeli sthescenari
oimplying
thatthecommoncust omerinfor
mat i
onisavai
labl
e
formostoft heproductst
herebyenlargi
ngthe Busi
nessAppr
oach(
Domai
nSpeci
fi
c)i
nRet
ail
scopef orcr
ossselli
ngandupsel li
ng. Banki
ng:

Thescenar
ioi
smi
xedi
ncaseofol
dpr
ivat
esect
or Thebusinessstr
ategieswit
hregardt
othedomai
ns
banks. tar
getedareapproachedindif
fer
entwaysby
dif
fer
entbanks.
I
nonebank, basedi nKarnataka,hori
zontal
ly
organi
zedmodel existsandinanot herTamil
nadu Themostcommonappr
oachesar
easf
oll
ows:
basedbank,
t helevelofcommoncust omer
i
nformati
onacrosspr oductsisrelati
vel
yhighwit
ha
a.Segment edAppr oach:wherebranchesar e
bl
endofpredomi nantl
yhor i
zontall
yandv er
ti
cal
ly
classif
iedbasedont hebusinesspotentialwit
h
organi
zedmodels.
regardt or
etailspaceandbusi nesstargetedin
Ifwecorrel
atethi
sinformationwi
tht
heposi
ti
oni
ng thesesegment sofbr anchesonlywit
hf ocused
object
iveofthebank,thebankhadst
rat
egi
zedfor mar keti
ngstrategies.
aggressi
veretai
lbankinggrowth.
Thesebr
ancheswil
lbeposi
ti
onedasresour
ce
Newpri
vat
esectorbanksgener
all
yfol
lowa cent
rebr
anchesandwil
lfor
m par
toftheoveral
l
ver
ti
cal
l
yorgani
zedmodel. segment
ati
ongameplanofthebank.
I
nf orei
gnbanks,iti
smostlypredominant
ly Branchesarecl
assi
fi
edasResourceCent
res,
Prof
it
ver
tical
lyor
ganizedmodelwhichi mpli
esthatr
etai
l Centres,
Pri
ori
tyCent
resandGeneral
Centr
esto
bankingwit
hinit
iati
vesar
eattempt edcommon haveaclearbusi
nessfocus.
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Thisconceptisaneff
ectiv
ebusinessmodelfor segmentat
ioni
sbui
lti
nthatmodel
onl
ytoal
imi
ted
PSBswi t
hlargenetworkandusefulf
orfocused extent
.
str
ategi
esandal r
eadygetti
ngi
mpl ementedin Innewgenerat
ionpriv
atesectorbanks,amixof
somepubl i
c-sect
orbanks.
segmentedmodelandclassif
icati
onbasedmodel
b.Geographybasedapproach:wher
eret
ailmodel
s i
sadoptedtocapturetheret
ailpotent
iali
na
arebui
ltbasedongeographies. str
uct
uredwayi nsegmentswher eitmatt
ers.
c.Cl
assi
ficat
ionbasedappr
oach:wherest
rat
egies I
nfor
eignbanks,t
hemodelnotr
estri
ctedt
oanyof
aredesi
gnedbasedont het
ypeofbranchvi
z., t
heabovebutisbasedont
heretai
lgameplanof
Rur
al,
SemiUr
ban,
UrbanandMet
ro. t
hebanks.

Thisst
rat
egyhelpsinbetterpr
oductst
ruct
uri
ngf
or
speci
fi
ctypesofbranches.
Mostoft hePSBshav enotdev
elopedanyspeci
fi
c
businessmodel ontheabovel
inesandgener
all
y
adoptaholisti
cmodelbasedont hecor
porat
e
objecti
vesforret
ail
.
Insomebanks,segmentedappr
oachisbei
ngbui
lt
i
nt hecor
porat
emodelbutnotastandal
one
segmentedapproach.
I
noldpri
vatebanksal
so,t
heoveral
lcor
por
ate
obj
ect
iveforr
etai
list
hebasi
sforthemodeland

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RETAI
LMODULE-A Themul t
ipl
epr oductsincludedv ar
ioustypesof
Chapt
er3:APPLI
CABILI
TYOFRETAILBANKI
NG deposits/accounts,CreditandDebi tcards,Loans
CONCEPTS(PART-
II
) (Personal,Auto,Housing,etc.)
,Insurance,mutual
funds,etc.
Whatwewi
llst
udy
?
Themul t
ipl
echannel
sofdistr
ibut
ioni
ncluded
*
Whatar
ethepr
oductmodel
sinRet
ailBanki
ng? I
nternetbanki
ng,Mobi
lebankingandbanking
outl
ets.
Pr
oductModel
sinRet
ailBanki
ng: Themul
ti
plecustomergr
oupsincl
udedIndi
vi
dual
cust
omer
s,MicroandSmallEnter
pri
ses(MSEs).
Ret ailBankingistheprocessofsel l
ingmul
ti
ple
retailbankingpr oduct
sand/ orservi
cestomult
ipl
e Thoughessent i
all
yretai
lassetsandl i
abil
it
y
cust omer sthroughmul ti
plechannelsof productsconsti
tutethebasicstr
uctureofr etai
l
distributi
ont oearnapr ofi
t. banking,t
hetrendhasbeenchangedi nther ecent
yearsandmar keti
ngofthirdpart
ypr oductshas
Demandi
screat
edthroughdiv
ersetar
getmarket
s
emer gedasoneoft heimportantconstit
uent sof
andpr
omoti
onalt
acti
cs,sat
isf
yingconsumer
s'
retai
lbanki
nginiti
ati
vesofbanks.
want
sandneeds.
Retai
lbankingi
nIndiaischaract
eri
zedbymul ti
ple
product
s,multi
plechannelsandmulti
plecustomer Ty
pesofRet
ailBanki
ngPr
oduct
s:
groupswhicharecustomizedandpersonali
zedt o 1-
Liabi
li
tyPr
oduct
s
suitt
heneedsoft hevari
ouscustomersegment s.
2-
AssetPr
oduct
s
3-
OtherPr
oduct
s/Ser
vices
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A)Li
abi
l
ityPr
oduct
s: GroupLi
fePol i
ciesasvalueaddi
ti
onsandgr oup
Li
abil
it
yproductsareofferedtor
etai
lbanki
ng healt
hpoli
ciesonaf l
oaterbasi
scov er
ingtheenti
re
cust
omer sbasical
lyunderthr
eespaces–Savings famil
yareoffer
edaspar toftheaccountpackage.
Accounts,Cur
rentAccountsandTerm Deposi
t Fundskeptinaccountsarenotall
owedtostayi
dle
Accounts. andundertakeacti
vetravel
li
ngbymeansofsweep
Att
emptsaremadebybankst oexpandthescope faci
li
ti
esfrom sav
ingsaccountstofi
xeddeposi
t
ofgeneri
cproduct
sfrom apl
ainvani
ll
aaccountt
o accountsaboveacertainspeci
fi
edlevel
.
avalueenri
chedaccount
. Thi
sincr
easestheear
ningpotent
ial
oft
hedeposi
t
Theday
sofsi
mpl
efunct
ionalpr
oduct
sar
egone. bal
ancesinSav
ingsAccount
s.

Functi
onal
it
yisnowper
cei
vedt
oincl
udechanged I
ncaseofCur
rentDeposi
tsal
somostoft
heabov
e
needs. f
eat
uresar
ebuil
tin.

Asimplepassbookandchequebookt
oaSav
ings I
naddi
ti
on,i
nsomebanksanautoov er
draf
tfaci
li
ty
Accountar
epassénow. i
sst
ruct
uredasapar
tofthepackage.

Bui
lti
nATM/ Debi
tCar
ds/
Credi
tCards/Mul
tiCi
ty I
nalmostal
lPSBsSavi
ngsBankwit
hATM/ Debi
t
Chequeshav
ebecomegeneri
cfeat
ures. Car
dsareoff
eredasastandar
dent
ryl
evel
product
.

Int
ernetBanki
ngandMobi
leBanki
nghav
ebecome Sweepfaci
li
ti
esandaddonli
fe/
heal
thcov
erar
e
essenti
alval
uepl
ay. of
feredonl
yinsomebanks.

Theval
uegamehasext endedtotaggi
nggroup SuperSavi
ngsAccountswit
hv al
uebouquetf
or
i
nsur
anceproductsi
nthelif
eandnonl i
fespaceat hi
ghValueCustomersarealsooff
eredbysome
aver
ycompetit
ivepr
emi um component. bankswit
hspecif
icbrandnames.

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I
ncurrentaccount
sal
so,
theabov
efaci
li
ti
esar
e Fi
xedDeposi
tsbuil
twit
hunit
soff
ixedamountar
e
of
fer
ed. al
sooff
eredbythebanks.
I
naddit
ion,
cur
rentaccountwi
thf
ixedover
draf
t Thisisint
endedt oi
njectanunfixedcomponentina
f
aci
li
tyi
salsooff
eredbymostofthebanks. fi
xeddepositandenabl ethedeposit
orstopar
ti
ally
withdr
awwi thoutdi
sturbi
ngtheent i
reamountand
Inol
dpri
vatesect
orbanks,
inaddit
iontost
andar
d
theresult
antlossofi
nterest.
savi
ngsaccount
s,addonli
fecoverisof
fer
ed.
Banksalsooff
erfixeddeposit
swithbui
lti
n
I
ncurr
entaccountsal
sothefaci
li
ti
esof
fer
edby
PSBsareof
feredbythem al
so. over
draftf
acil
it
iessothatitbecomesmoreofa
cashcredi
taccountthanaf i
xeddeposi
t.
Innewgener
ationpri
vatesect
orbanks,al
lthe
Theseproductreengi
neeri
ngmeasuresareadopted
abovepr
oductsareoffer
edbythem andthesame
i
sthecasewithforei
gnbanksalso. bybankstoenhancet hecomfor
tleveloft
heter
m
deposi
taccountholdersandoff
erconveni
enceasa
Ifwescant heproduct sandserv
icesacrossbanks, val
ueproposit
ion.
theproductdif
ferentiati
onamongbanksi sveryt
hin
Almostal
lthebanksacr
osssect
orsof
fert
heabov
e
andonlyvaluedifferenti
ati
onisthekeyfact
or
faci
li
ti
es.
acrossbanksandt hetechnol
ogy,pr
ocessand
deli
veryeff
ici
enciessepar at
emenf rom boys. Someoft hebanksof feraccidentall
ifecov
erfor
Al
lbanksoffert
erm deposi
tproductswi
th term depositsbutthegr ouplif
ecov erandheal
th
coverarenotnor mallyof f
eredtot er
m deposi
tsas
pr
ovisi
onformonthly,quar
ter
lyorcumul
ati
ve
theyarest r
ucturedasapar tofdemanddeposi t
i
nter
estpaymentoptions.
accountsduet ooper ati
onal r
easons.
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I
nshor
t: RETAI
LMODULE-A
*Ret
aildeposi
tsar
est
abl
eandconst
it
utecor
e Chapt
er3:APPLICABI
LITYOFRETAILBANKI
NG
deposi
ts. CONCEPTS(PART-
II
I)
*
Theyareint
eresti
nsensi
ti
veandl
essbar
gai
ning Whatwewi
llst
udy
?
f
oraddi
ti
onalint
erest
. *
Whatar
ethepr
oductmodel
sinRet
ailBanki
ng?
*
Theyconst
it
utel
owcostf
undsf
ort
hebanks. Ty
pesofRet
ailBanki
ngPr
oduct
s:
*
Eff
ecti
vecustomerr
elati
onshi
pmanagementwith 1-
Liabi
li
tyPr
oduct
s
t
heret
ailcust
omersbuil
dsastrongcust
omerbase.
2-
AssetPr
oduct
s
3-
OtherPr
oduct
s/Ser
vices

Ret
ailAssetPr
oduct
s:
Retailassetf
inanci
ngi
samaj orcomponentof
ret
ailbankingmodelofbanks.
Infactr
etai
lloansar
ethebackboneoft
her
evenue
str
eamsoft hebanks.
I
nanycustomerexpansionstr
ategy,r
etai
lloanis
packedasthemai
nattracti
onunifor
mlybyal l
banks.

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Product
,pr
ice,
processanddeli
ver
yinnovati
onsare pr
ofessi
onalr
equi
rement
s.
recei
vi
ngconstantat
tent
ioni
ntheretai
lassetsi
de. Somebankshav especialschemesforsmall
Thefocusissohight
hati
nsomebanksr
etai
l trader
sinthepersonalsegmentandal soschemes
asset
sconstit
uteashi
ghas40t
o45percentoft
he forextendi
ngloan/overdraf
tfaci
li
tyagai
nstcar
sfor
tot
alassetbase. enhancingthei
requit
y .
Themainadvantagei
sthestabil
it
yoftheasset Cars,
whichdonothavealoantagal
ready,wi
llbe
basebecauseofthel
argecustomerbase. consi
der
edforover
draftf
aci
li
tyagai
nstthemar ket
Otherimportantreasonsarethebett
erspreadsi
n val
ue.
i
ncome, ri
skdi ver
sif
icati
onandscopeforcaptur
ing Asalr
eadystated,retai
lloansar
ethebreadand
addit
ionalr
ev enuestreamsfrom ot
heravenues. but
terofret
ailbankingspaceforbanksandbanks
Thestandardret
ailassetpr
oduct
sof f
eredbybanks competewithoneanot herindesi
gning,
market
ing
areHousingLoans,ConsumerDurableLoans,
Car andexpandi
ngt heretai
lassetspace.
Loans,Credi
tCardsandPersonalLoans.
I
nshor
t:
Otherret
ailloansincl
udel oanagainstr
ental
recei
vabl
es, salar
yoverdrafts,
loanagainst *Ret
ailbanki
ngresul
tsi
nbet
tery
iel
d/i
mpr
oved
securi
ti
es,loansfortradersinthepersonal bott
om li
neforabank.
segment. *Ret
ailsegmenti
sgoodav
enuef
orf
unds
RetailLoansareal
sostructuredbysomebanksto depl
oyment.
targetspeci
fi
cprofessi
onalsegmentsli
kedoctor
s, *Consumerl
oansarepr
esumedt
obeofl
owerr
isk
archit
ectsandadvocates,etc,t
ofi
nancethei
r andNPApercept
ion.
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*
Helpseconomicrev
ivalofnati
ont
hrough Onesetoft hesepr
oduct
sareCreditCards,
Debit
i
ncr
easedproduct
ionactiv
ity
. Cards,ATM Cards,
Mobil
eBanking,Int
ernet
*I
mproveslif
est
yleandful
fi
lsaspi
rat
ionsoft
he Banking,Deposi
tor
yServ
iceandBrokingServi
ces.
peopl
ethroughaffor
dabl
ecredi
t. Distr
ibuti
onoft hirdpartyproduct sl
ikeli
feandnon-
l
ifepolici
es, mutualfunds,r
et ailsal
eofgoldcoins,
*Retai
lbanki
ngi
nvol
vesminimum market
ing
eff
ortsinademand-
dri
veneconomy. bil
lpaymentser v
ices,multi
-citycheques,payment
gatewayf orrail
,airt
icketbooki ngs,weal
th
*Diversi
fi
edpor
tfol
ioduetohugecustomerbase anagementser vi
ces,portf
oliomanagement
enablesbanktoreducet
heirdependenceonf
ewor servi
cesandpr i
vatebankingar esomeoft heot
her
singleborr
ower. servi
cesof feredbybanks.
*Bankscanearngoodprofi
tsbypr
ovidi
ngnon-f
und Theseser
v i
cesar eoff
eredwi
thtwinobj
ect
ivesof
basedorfee-
basedser
viceswit
houtdeploy
ingt
hei
r cust
omermul tipl
eneedsati
sfact
ionandal
soto
funds. augmentfee-basedincome.
C)Ot
herPr
oduct
s/Ser
vices: Therevenuemodel sf r
om thesefee-
basedser
v i
ces
Otherproduct
sandservicesbroadl
ycoverfi
nanci
al arequit
eat t
ract
iveandsomebanksi nthepr
ivat
e
servi
ceneedsofcustomer sothert
hanthose spacegeneraterevenuesofabov e50%ofthei
r
l
iabil
it
yproductsandassetproducts. tot
alrevenuesfrom fee-basedbusi
ness.
Theseenhancetheservi
ceexperiencesofthe Today
,ATMsar
eof
fer
edbyal
mostal
lPSBs.
customersbyprovi
dingprocessanddeli
very
effi
cienci
esbyaddi
ti
onalservi
cet ool
stothebasi
c
products.

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Mostofthebanksarenowacti
v el
ypay i
ngatt
enti
on RETAI
LMODULE-B
t
oInter
netBankingandMobil
eBanki ng,t
oreal
ize Chapt
er4:CUSTOMERREQUI
REMENTS(
PART-
I)
t
hehugepotenti
alavai
labl
einthisspace.
Whatwewi
llst
udy
?
Deposi
tor
ySer
vicesar
eof
fer
edbysomebanksas
al
soBroki
ngServi
ces. *Whatar
ether
etai
lpr
oduct
sthatweof
fert
o
cust
omer?
CorporateAgencyforLif
eandNon-Lifeinsur
ance
productsanddist
ri
butionofmutualfundsaredone *
Whati
sduedi
li
gence?
byalmostallPSBswhi l
esaleofgoldcoinsare Ret
ailPr
oduct
sOv
erv
iew:
donenowbyagoodnumberofbanks.
Targetcustomersaregeneral
lyi
ndi
vidual
sora
Bi
llPay
mentser
vicesar
eat
tempt
edbymanybanks. groupofindiv
idual
swhetheremployedorsel
f-
Pay
mentGatewayfaci
li
tyi
syett
omakeabi
g employedhav i
ngregul
arincome.
i
mpactandoff
eredonl
ybyfewbanks. I
nt hesecasesrepaymentisexpect
edtocomeout
WealthManagement,Port
foli
oManagement ofthecashflowsonaccountofsalaryorf
rom
Serv
icesarenotoff
eredbyanyoft hePSBsti
llnow businessorotheract
ivi
ti
es.
butthedaysarenotfarof
fforint
roduct
ionofthese Banksfi
nanceforpur
chaseofhouses,
vehi
cles,
etc.
,
ser
vicesbyPSBs. toi
ndiv
idual
s.
Newgenerat
ionpriv
atebanksandfor
eignbanks Theseassetsgeneral
lydonotgener
ateanyi
ncome
of
fert
hecompl et
ebouquetofallt
heabove tothecust
omer s.
pr
oducts/
ser
v i
ces.
Thi
stypeofbanki
ngwherethebankdealswit
h
i
ndi
vidualcust
omersi
sknownasRetailBanki
ng.
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Ret
ailBankingProduct
scanbebr oadlycl
assi
fied Thesear
escor
ecar
dbasedassessment
s.
i
ntoretai
lli
abil
it
yproducts,
ret
ailasset
sproducts, Appr
oachtor
etai
lisdi
ff
erentfr
om t hatofaloant
o
andotherproducts/
servi
ces. acor
porat
ewhereacredi
tappraisalexerci
se
Li
abi
li
typroductsarebasical
ly–Sav
ings,
Cur
rent pr
ecedest
hedeci
siontolend.
andTerm DepositAccounts.
Inthecaseofpersonall
oanscert
ainqual
ifi
cat
ions
Retai
lAssetpr
oductsareloanssuchasPer sonal areprescr
ibedandtheborrowermustfi
tinorhe
Loans,Aut
oLoans,HomeLoans, Educat
ionLoans, doesnotqualif
yforthel
oan.
Credi
tCardRecei
vables,
andot herRetai
lLoans.
OtherProduct s/Ser
vicesbroadlycovertheproduct
s Appr
ovalPr
ocessf
orRet
ailLoans:
andservicessuchasCr editCards,Debi
tCards,
ATM Cards, TelephoneBanki ng,I
nter
netBanking,
MobileBanki ng,Depositor
ySer vi
ces,Di
stri
buti
onof Inthecaseofretai
lloanseit
hertheappl
icantcoul
d
Thir
dPar tyPr oduct
sl i
keli
feandnon- l
if
epolici
es, approachthebankort hesel
li
ngteam orperson
mutualfundsandr et
ailsaleofgoldcoinsetc. couldappr
oachthepr ospecti
vecli
ent
.
Tar
getcustomersareindi
vidual
s, j
ointborr
owers, Someoftheexist
ingcust
omercoul
dbe
employ
eesofpropri
etary/
partnershipfi
rms, appr
oachedbythebankstaf
fori
tsagent
sforcr
oss
companies,NRI
s,HUFs,Trusts,Associat
ions,
etc. sel
li
ngmoreproducts.
Retailpr
oduct
sarevolumedriv
enandfeatur
es Whateverbethemethodthefir
ststepi
scollect
ion
rel
atedtowhowi l
lquali
fyandwhowi
llnotare ofappli
cati
onandinf
ormationthati
snecessaryto
predeter
mined. eval
uatethecust
omerast owhetherhe/
shei s
el
igi
bleforthepr
oduct.

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Asthebanksuseascorecardther
ecouldbe
Inthecaseofpersonall
oans,cer
tainel
igi
bil
it
y excepti
onswhereacustomercoul
dbeconsidered
cri
ter
iaareprescr
ibedandtheborrowermustf i
tin foraloanduet
ootherreasonsorthatt
hepersons
whocol l
ect
edthei
nfor
mat i
ondidnotdoagoodj ob.
tobeeli
gibl
ef ort
heloan.
Theseexcepti
onsshoul
dbehandledcaref
ullysuch
Ascoringsheet
,intheform ofatemplat
eis
thatt
hecustomerisnothar
assedorhasar eason
pr
eparedandusual l
yit
emsar echeckedofft
oseei
f
aprospecti
veborrowerquali
fi
esornot. tomakeacompl ai
nt.

I
naddi
ti
on,
theKYCnor
msdoappl
y.
I
nv i
ewoftheeaseofdeli
ver
yandsancti
on, DueDi
li
gence:
unscr
upul
ouscustomerscantakeadv
antage. Thenextstepi
stheduedi
li
gencewhereinthe
Bankhast
obecar
efuli
ntheduedi
li
gence. appl
icat
iondet
ail
saret
hor
oughlyver
if
ied.
Inthecaseofhousingl
oansforconstruct
ion,the
KYCshoul
dnotbedonebyt
hir
dpar
ty(
agent
s).
bankwouldliketoknowift
hepr oper
tydeveloper
KYCshoul
dnotber
elaxed. hasamar ketstandi
ngandispromptindeliver
y ,
etc.
Also,
wher eeverther
eisdispute,
anysuspi
cion Banksshouldalsov er
if
ywhethertheproj
ecthas
aboutdetail
s,banksshoul
dt akeext
racar
etov er
if
y beendul yr
egist
eredundertheRealEstat
e
thedetai
l
s. (Regulat
ionandDev el
opment)Act,2016(RERA)as
Normall
y,thebanksadvi
sethecust
omer sifhi
s/her i
sr equir
edbysomest atesnow.Banksalsopre-
appl
icat
ionisrej
ectedornotf
oundeli
gibl
e. approvesomepr opert
ies.
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I
ncaseofvehicl
el oans,
theinv
oicei
scoll
ect
edand d.Housev
isi
ttoensur
eresi
dent
ial
addr
ess
i
ncaseofeducationloans,
theadmissi
onandfee e.Telephoni
cveri
fi
cat
ionoft
heindi
vi
dualatt
he
det
ail
sar
ev er
ifi
ed. off
ice/busi
nessphonenumbers
Ther
eareal
argenumberofappl
icant
sforr
etai
l f.Veri
fi
cat
ionandi
nspecti
onofimmov abl
e
l
oans.
propert
yoffer
edassecur
it
y/col
lat
eral
Bankshavealsot
akent
oaggr
essi
vel
ymar
kett
he g.Tit
leinvesti
gati
onoft
hepr
oper
tyof
fer
edas
ret
ail
loans. securi
ty/col
lat
eral
Hence,duedi
li
genceoft
heappl
icantbecomes h.Val
uati
onofsuchpr
oper
tybyabankappoi
nted
i
mpor t
ant. val
uerand
Att heendoft heveri
fi
cati
onpr ocess,thebank i
.Vett
ingofsecur
it
ydocument
sbyt
hebank'
slegal
mustbeabl etoestabl
ishthatthepar t
icul
ars adv
iser
furnishedareauthenti
candt heapplicantquali
fi
es
fort heloan.

Thedet
ail
stobev
eri
fi
edar
easunder
:
a.Ver
if
icat
ionofKYCwi
thr
elev
antdocument
s
b.Ver
if
icat
ionofPANnumberf
rom I
Twebsi
te
c.Cr
edi
tRepor
tver
if
icat
ionf
rom Cr
edi
tInf
ormat
ion
Compani
es

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RETAI
LMODULE–B Repay
mentper
iod:
Chapt
er4:CUSTOMERREQUI
REMENTS(
PART-
II
) Therepay
mentper
iodmayvaryf
rom 3y
ear
sto30
year
sdependi
ngonthepur
pose.
Whatwewi
llst
udy
?
Loansforper
sonal
expensesar
etober
epai
dwi
thi
n
*
Howt
odeci
det
hequant
um ofLoan?
3years.
*
Repay
mentper
iodofr
etai
lloans?
Aut
oloansar
egi
venf
ordur
ati
onof5t
o7y
ear
s;
andhousi
ngl
oansf
or5t
o30y
ear
s.
Quant
um ofl
oan:
Inorderthatthel oanr
epay mentdoesnotr esulti
n
Quant
um ofl
oani
seit
herr
elat
edt
othepr
oductor anydiff
icult
yf orlif
est
yle,
banksi nsistthat,f
or
t
oincomeofthei
ndi
vi
dual
. borr
ower sfrom thesalari
edclass, ther
eshoul dbe
Thequantum isexpressedas12t i
mest hemont hl
y aminimum nett akehomepayaf terall
t he
i
ncomeint hecaseofl oansforper
sonalexpenses, deducti
onsi ncludingt
heloanr epay mentismade.
4ti
mest heannualincomei nthecaseofvehicles, Thi
sensur
esthatpeopl
edonotr
esor
ttoexcessi
ve
48to60t i
mest hemont hlyi
ncomef ort
hepur pose bor
rowi
ngs.
ofhousi
ng,etc.
Penalt
ies,i
fany,
forprepay
mentshouldbecl
ear
ly
Thesemul
ti
plescoul
dvar
yfr
om bankt
obank. spel
toutintermsofthefairpr
act
icescodef
or
Margi
nmayv aryf
rom 15%to30%oftheval
ueof bankers.
asset
,dependingonthetypeofl
oan/
Scheme. Bankscanl ev
ypr ocessingchar ges,
document at
ion
RateofI
nter
estvari
esaccordingt
oloan.
Rat
esar
e charges,mortgagechar ges,stampduty/fees,
any
gener
all
ystr
aightf
orwardintermsof%p.a. otherinci
dentalcharges,inspecti
oncharges,
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r
enewalchar
ges,
etc. Banksdevelopt
heirpr
oduct
sandser
vicesbased
Iti
simportantthatt
heseshoul
dbetranspar
entl
y onthecustomers'
needs.
mentionedintheschemeandexpl
ainedtothe Customersegment
ati
onisimpor
tantf
orr
etai
l
appli
cant. bankingt
obesuccessf
ul.
Uponfinal
izat
ionofthese,
theappl
icat
ionwi
th Appr
opri
atecustomersegmentat
ionwil
lhel
pbanks
recommendationispassedontosancti
oni
ng topi
tcht
herightproductt
otheri
ghtcust
omer.
author
ityf
orsancti
on. Letusnowtrytounder
standt
hecustomersegment
Uponsanct ion,otherf ormalit
iessuchas fi
rstbef
oredi
scussi
ngaboutt
hei
rrequir
ements.
document ation,creationofchar ge,inspection, Br
oadl
ycustomersaresegment
edbasedonthei
r
complianceofv ar
ioust ermsandcondi tions i
ncomelevel
sastheirpy
rami
dwillv
arywi
tht
herise
sti
pul
at edbyt hesanct i
oni
ngaut hori
ty,etc.areto i
nthei
rincomel
evels.
becompl etedandt hereafterdisbursementwoul d
beeffectedpr efer
abl ytothesuppl iers, Banksdevel
opandmar ketthei
rproductsbasedon
manuf actur
er sforfixedasset s,i
nst i
tut
ionsi ncase thi
ssegmentat
ionandtargettherelev
antsegment
ofeducationl oans,etc. formaxi
mum conversi
onofbusi ness.

Cust
omerRequi
rement
s: Thebasicsegmentati
onofcustomer
sbasedon
thei
rincomelev
elsispresent
edbel
ow:
Cust
omer
sar
ethekeyat
tri
but
eofar
etai
lbank.
Dif
fer
entcustomershav
edi
ff
erentneedsf
or
fi
nanci
alser
vices.

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I
ncomeLev
el Cust
omerSegment Thefundamentalassumptionsaboutcustomer
sfor
bui
ldi
ngretai
lbankingproductsandservi
cesar
e
(
InLakh)
bri
efl
yexpl
ainedasf ol
lows:
2-
10 2Lact
o10Lac MassMar
ket
i
.Cust
omer
sar
edi
ff
erent
.
10-
50 10Lact
o50Lac MassAf
fl
uent
i
i.Needsoft
hecust
omer
sar
edi
ff
erent
.
50-
400 50Lact
o4Cr SuperAf
fl
uent
i
ii
.Eachcustomerwi l
lhav
edi
ff
erentset
sofneed
400-
4000 4Crt
o40Cr HNW f
orfinanci
alser
vices.
4,
000-
1,20,
000 40Crt
o120Cr SUPERHNW i
v.Therequi
rement
sofcust
omer
sforf
inanci
al
Abov
e1,
20,
000 120Cr ULTRAHNW ser
viceswil
lbeuni
que.
v.Cust
omerscanbebroadl
ygroupedt
oget
her
basedont
heirneedpy
ramids.
Ifwel ookatthecustomersegmentsabove,t
he
fir
stthreesegmentsnamel yMassMarket,Mass vi.Customerscanbegroupedt ogetherbasedon
AffluentandSuperAffl
uentarethemostimport
ant theirincome,
age,geography,
pr of
ession,
segment sforbankswithregar
dt ot
hei
rretai
l empl oyment,
vocati
on,genderandf amilysi
ze.
bankinginit
iat
ives. vi
i.Productandserv
icescanbedevel
opedfora
Theproduct
sandserviceswi
llbest
ruct
uredmost
ly si
ngleoracombi nati
onoftheabov
eelementsto
tomeettherequi
rementsoft
heabovesegments. sati
sfymostoftheneeds.
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Theaboveassumpti
onsaboutcust
omershel
p RETAI
LMODULE-B
bankstodevel
opsuit
ablepr
oduct
sandservi
cest
o Chapt
er4:CUSTOMERREQUI
REMENTS(
PART-
II
I)
catert
otheneedspectr
um oft
hecust
omers.
Whatwewi
llst
udy
?
Tounder
standthisconcept
,alooki
ntothe
‘
Maslow'
sHierarchyofneeds’
theor
yisappropr
iat
e. *
Whati
sMasl
ow’
stheor
yofhi
erar
chyofneed?

Thetheorywil
lhel
pust ounder
standhowbanks
str
uctur
eproductstomatchthediff
erentst
agesof MASLOW'
STHEORYANDCUSTOMER
theneedpyramidofthecust
omer s. REQUI
REMENTS:
Customer sbuyt heproductsandser vi
cesofthe Abraham Maslow,i
nhist
heoryofmoti
vati
on,
had
bankpr i
maril
ytosat isf
ytheirneedsandiftheir stat
edthatpeoplear
emotiv
atedtoachi
evecert
ain
needsandbanks' productsmat ch,
therei
sabsolut
e needs.
synchronyandi fthebenefitspromisedbythebank
Whenoneneedi
sful
fi
ll
edaper
sonseekst
oful
fi
ll
tothecustomerar edeli
veredthentherewil
lbe
t
henextone,
andsoon.
absolutesati
sfactionfrom thecustomerend.
Theear
li
estandmostwi despreadversi
onof
Therequir
ementsofthecustomersi
ngener
alcan
Masl
ow'shierar
chyofneedsi ncludesfi
ve
berelat
edwiththeneedhier
archyt
heor
yby
moti
vat
ionalneeds,oft
endepict edashier
archi
cal
Abraham Maslow.
(nextv
ideo)
l
evel
swithi
napy ramid.
Hisfivestagemodelcanbediv i
dedinto
Physiologi
calneeds,
Safet
yneeds, Soci
alneeds,
Esteem needsandSelf-
actual
izati
onneeds.

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Theneedsaresai
dtomot
ivat
epeopl
ewhent
hey
arenotmet
.
Also,theneedtof
ulf
il
lsuchneedswil
lbecome
strongerwit
hthel
ongerthedurat
iont
heyare
denied.
Onemustsat
isf
ylowerl
evelbasi
cneedsbef
ore
pr
ogr
essi
ngont omeethi
gherlevelgr
owt
hneeds.
Oncetheseneedshavebeenr
easonabl
ysatisf
ied,
onemaybeabl etoreacht
hehi
ghestl
evelcall
ed
sel
f-
actual
izat
ion.
Everyper soniscapabl
eandhasthedesi
ret
omov
e
upt hehierarchyt
owardsalev
elofsel
f-
actuali
zat i
on.

Fi
g.Abr
aham Masl
ow'
sMot
ivat
ionTheor
y

Masl
owhasdefinedf
iveneedsofi
ndi
vi
dual
sin
t
hei
rvar
iousst
agesoflif
e.
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Theneedsstartfr
om thebasicr
equi
rementsand
mov eupthevaluechai
nduringthel
if
estage
progressi
on.
Obvi
ously
,theneedladderwil
lal
somov eupwit
h
t
hechangeintheli
festageofthecust
omers.
Ifbanksst r
uctur
eproduct
sandser vi
cest
omat ch
thediff
erentst
agesintheneedspectrum,banks
wil
lachievethetwinobj
ecti
vesofcustomer
sati
sfacti
onandbusinessconver
sion.
Letusdemonstrat
etheabov
econceptwi
tht
he
fol
lowi
ngil
lust
rati
on:

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RETAI
LMODULE–B
Theabovetabl
eisonl
ysuggest
iveandnotabsol
ute Chapt
er4:CUSTOMERREQUI
REMENTS(
PART-
IV)
andproduct
smaytendtooverl
apacrosst
heneed
Whatwewi
llst
udy
?
spect
rum.
*Whatar
ecust
omer
srequi
rementaboutser
vice
Thebanksmaycomeacr ossallt
hestagesrun qual
it
y?
concurrent
lyf
orthecustomerbaseandhencet her
e
i
st r
emendousoppor t
unityf
orbankstoconvertthe
potent
ialavai
labl
eacrossneedsfort
heirhuge CUSTOMERREQUI
REMENTSABOUTSERVI
CE
customerbase. QUALI
TY:
Serv
icequal
it
yiswhatcustomersexpectf
rom
Banksandithasdi
ff
erentdimensi
ons.
Foll
owingaresomeoftherequi
rements/
expectat
ionsoft
hecustomersaboutt
heser
vice
quali
tyofbanks.
1-Tangi
bil
i
ty
2-Real
ibi
lt
y
3-Responsi
veness
4-Assur
ance
5-Empat
hy
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1-
Tangi
bil
it
y: Arethechar
geswhi
charedebit
edwrongl
yar
e
Appear
anceofphysi
calfaci
li
ti
es,
equipment
, recr
edit
edtomyaccountpr
operl
y?
per
sonnelandcommunicati
onmat er
ial
s.
Ar
ebank'
sfaci
li
ti
esat
tract
ive? 4-
Assur
ance:
I
smycr
edi
tcar
dst
atementeasyt
ounder
stand? Competence–Possessionofrequi
redski
ll
sand
2-
Rel
i
abi
li
ty: knowl
edgetoper
form servi
ces.

Abi
li
tytoperf
ormt
hepr
omi
sedser
vicedependabl
y Courtesy–Poli
teness,
respect,
consi
der
ati
onand
andaccur
atel
y. fr
iendli
nessoft
hecontactpersonnel
.

Whereanoffi
cersaysthatt
heamountwi
llbe Cr
edi
bil
it
y–Tr
ust
wor
thi
nessaboutt
heser
vice
sanct
ionedi
n2day s,doeshef
oll
owupandinfor
m pr
ovi
der.
thest
atus? Secur
it
y–Fr
eedom f
rom r
iskanddoubt
.
I
smycr
edi
tcar
dst
atementaccur
ate?
5-
Empat
hy
3-
Responsi
veness: Access–Appr
oachabi
li
tyandeaseofcont
act
.
Wil
li
ngnesst
ohel
pcust
omer
sandpr
ovi
depr
ompt Communicati
on–Keepingcustomer
sinf
ormedi
na
ser
vice. l
anguagethatt
heyunderst
and.
Whenther
eisaprobl
em wi
ththebankstat
ement
, Under
standi
ngthecustomer–Makinganef
for
tto
doest
hebankresol
vethei
ssuequi
ckly
? knowcustomer
sandt hei
rneeds.

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Cust
omerRequi
rement
sandSat
isf
act
ionLev
els: i
i.Theobjecti
veofthest udyistomeasuret he
Fulf
il
lmentofthecustomer
s'requir
ementscanbe customerservi
cequal i
tyofthebanksbycr eati
ng
measuredonlyfrom t
hesati
sfacti
onlev
elofthe KeyPerformanceIndicators(KPI)onservi
cequali
ty
andmeasur ethequalit
ybasedont hebenchmark
customers.
val
ueoft heKPIforthatsector/segment.
Thesatisf
acti
onwillemanateoutofthecust
omers'
i
ii.Themeasur ementofsati
sfacti
onwasmadeon
exper
iencesoftheproduct
sandser v
icesoff
ered
bydif
ferentbanks. thet hr
eebasicparameter
sv i
z.,
Overal
lSat
isf
act
ion,
Adv ocacyandLoyalt
y.
Theexper i
encesmayvaryacr
ossbankslikepubl
ic
i
v.Therat
ingsshowheal
thyov
eral
lper
for
manceby
sectorbanks,pri
vat
esect
orbanks(ol
dandnew
generati
onprivat
esect
orbanks)andfor
eignbanks. t
heindust
ry.

Ast udyconductedbyal eadingresearchagencyin Rati

ngsonthe3overallmeasuresar
eabove80%
thepastt omeasur etheCust omerSer viceQuali
ty (sat
isf
act
ion)f
oral
l3-productsegment
s.
asar eflect
ionofthemeet i
ngofcust omer s' y.Whenaskedhowt hei
rexperi
encewi ththei
r
requirementsrevealedthef oll
owinginterest
ing bankshaschanged,i
nthelast1-2years,2/3r
d
fi
ndings: customerssai
dithasimprovedalot/somewhat
i
mpr oved.
i
.Thestudycoveredabout20000customer sacross
Met r
o,Ur
ban,Semi UrbanandRuralBranchesof vi.Al
most9outof10Sav i
ngsAccountandHome
BankshavingSavingsAccount
s,about4000 Loancustomersfi
ndexcell
entv
aluei
nthe
customerswhohav eavail
edHomeLoansand respect
ivebankof
fer
ing.
about3500customer swhohaveav ai
ledcredi
t Thi
sscor
eissi
gni
fi
cant
lyl
owerf
orCr
edi
tCar
ds.
cards.
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vi
i.Onthesati
sfact
ioni
ndex,Privat
eSect
orBanks RETAI
LMODULE-B
l
eadinSavingsAccountsandCr edi
tCar
ds; Chapt
er5:PRODUCTDEVELOPMENTPROCESS
whereasPubli
cSectorBanksleadinHomeLoans (
PART-I
)
andForei
gnBanksi nHomeLoansandCr edi
tCards.
Whatwewi
llst
udy
?
*
Whati
spr
oductdev
elopmentpr
ocess?
*
Whati
spr
oductl
if
ecy
cle?

I
NTRODUCTI
ON:
Today '
sr etailbankingsect orischaracterizedby
threebasi cel ement s,i
.e.,mult
ipl
eproduct s
(deposits,creditcar ds,insur
ance,investment sand
securit
ies);mul tiplechannelsofdistri
but i
on( cal
l
centre,branch, Internetandkiosk);andmul ti
ple
customergr oups( consumer ,
smallbusi ness).
Ret
ailbanki
ngdoesnotr
efert
olendi
ngonl
y.
Thehomemaker ,theretailshopkeeper
,the
pensioners,sel
f-
empl oyedandt hoseemployedi
n
unorganisedsector,allneedtogetaplaceinthe
banks.

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Therei
saneedofconst
anti
nnov
ati
oni
nret
ail Thedi
ff
erentdef
ini
ti
onsf
orpr
oductar
edi
scussed
banki
ng. bel
ow:
Banksnowneedt
ouser
etai
lasagr
owt
htr
igger
. Theodr
eLev
ittobser
vest
hat
Whileret
ailbanki
ngoff
ersphenomenal “Product sarealmostal wayscombi nati
onsoft he
opport
uniti
esforgrowt
h,thechal
lengesar
eequal
l
y tangibleandt heintangibl
e..
.tot hepotentialbuyer
,
daunti
ng. apr oductisacompl exclusterofv alue
satisfacti
ons...Acustomerat tachesv aluetoa
Fur
ther
more,i
nal
lthese,cust
omer
s'i
nter
esti
sof
par
amountimpor
tance. producti nproporti
ont oit
sper ceivedabi l
it
ytohelp
solvehi sproblemsormeethi sneeds. "
Abankproductcanbedefi
nedas“Anythi
ngthat
PRODUCT(
DEVELOPMENTPROCESS)
: hast
hecapacitytopr
ovi
dethesat
isfacti
on,
use
andr
etur
ndesiredbythecust
omer".
I
nretai
lbanking,pr
oducti
sthest
art
ingpoi
ntoft
he Thekeyfactorremainsthatifthebankproducti
s
market
ingprocess. nolongercapableofsatisf
yingcustomerneedsand
wants,t
heproductwi l
lfadeout .
Productist
heful
crum (base)onwhi
chtheent
ir
e
ret
ailbanki
ngr
evolves.Every
thi
ngi
scenter
edonit
.
Theadd- onandtheotherval
ueproposi
ti
onsar
e Tounderst
andmor eabouttheproducts,
and
taggedtotheproductstooff
erbett
erval
ueand devel
opproduct
s,weshoul dunder
standthe
acceptancetotheproduct
. concept
sofproductl
if
ecy cle.
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PRODUCTLI
FECYCLE: Thefirstst
ageist
he‘i
ntr
oduct
ion’
stagewhent
he
Ther
ear
evar
iousst
agesi
nthel
if
eoft
hepr
oduct
. productisi
ntr
oduced.

Theproductaft
erdevel
opmentgoest hrough Whenapr oductisint
roducedt
hesal esvolumewi l
l
di
ffer
entstagesini
tssalesj
ourneyandi neach belowandr evenuefr
om theproductswillnotbe
suf
fici
enttocoverthecostofproducing,
mar ket
ing
st
age,theimpactonsaleswil
lbediff
erent.
andservi
cingi
t .
1-
Int
roduct
ionst
age 2-
Growt
hst
age
I
nthei
ntroduct
ionst
ageithappensbecauseit
3-
Mat
uri
tyst
age 4-
Decl
inest
age t
akesti
mef ort
heproductt
ooccupythemi ndsof
Theproductl
if
ecy
clej
our
neyi
sil
lust
rat
edi
nthe t
hecustomers.
fol
lowi
ngdiagr
am. Inthe'gr
owt h’st
age, whichisthesecondstagein
Pr
oductLi
feCy
cleCur
ve: theproductlif
ecy cl
e,thesalesv ol
umeofthe
productpicksupandt heproductisli
kel
ytobreak
evenandst artgeneratingprof
itsfort
he
organi
zati
on.
Duri
ngthi
speri
odt
heconsumerawar enessoft
he
pr
oductwil
lbemor
eandthatwil
lresulti
ngrowth.
I
nthet
hir
dstagewhi
chisthe‘
matur
it
y'st
age,
ther
e
i
smoregrowt
handsalesv
olumepeaks.
Her
ether
eisawidecust
omerbasewhi
chwi
ll
r
esul
tinmaxi
mizat
ionofsal
eswi
thi
nfl
owof

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busi
nessandpr
ofi
ts. Banksshouldaimforkeepi
ngtheproducti
nthe
Inthefourt
hstage,whichisthe‘st
aleness'stageor maturi
tystageaslongaspossi
ble,
sothat
‘
saturati
on’st
ageordeclinestage,becauseof busi
nessandpr of
itmaxi
mizati
onhappens
conti
nuously.
compet i
ti
onandbet t
erproductsavail
ablefrom the
compet i
tor
s,stal
enesswillcr
eepin,whichwi ll Andanotheri
mportantpointi
sthatpr
oductl
if
e
resul
tinsatur
ationofsal
es. cycl
eisdif
fer
entf
ordiffer
entproduct
s.
Herethebusi
nessandprof
itsstagnat
e,customer Butiti
snotalwaysamustthataproductshoul
d
dev
elopatendencyofi
ndif
ferencetotheproduct
. tr
avelt
hroughtheproductl
if
ecycl
eprocess.
Thiswi
llr
esul
tinthefinalst
ageoft
hepr
oductl
if
e Someproduct
swi l
lhaveaninst
antdeat
h
cycl
ecal
ledas'decl
inestage'
. i
mmediatel
yafteri
ntr
oducti
onphase.
I
nthi
sstage,
productbecomesl essatt
ract
ivefor Thi
smayhappenduetowrongapproachtowards
t
heconsumersduetovariousreasonsandresult
s market
ingr
esear
chandconsumerpercept
ions.
i
ndropinsal
esvolumeandpr ofi
ts.
Li
ket hat,i
nsomecase,ther
ewillbeimmediat
e
Thisstageifnotat
tendedpr
oper
lywi
lll
eadt
o spurttothegrowthandmaturi
typhaseinavery
productdeath. shortperi
odandwi l
lst
aytherei
nt hematur
it
y
Thi
scanbeavoi
dedbyf i
netuni
ngandvalueaddi
ng peri
odf oraveryl
ongti
me.
tor
evi
tal
i
zetheproductf
orconti
nuedaccept
ance. Pr
oductobsol escenceoft
encontr
ibutest
ot he
pr
emat uredeathofproductsev
enaf t
ereff
ecti
ve
Thesestagesofproductli
fecycl
earever
y
i
mpor t
antforbanksinproductdevel
opment
. marketresear
ch.
I
nthecaseofcomput
erpr
oduct
s,t
hepr
oductl
if
e
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cyclewi
llbeveryshor
tbecauseoff
astchangi
ng Augment
edpr
oduct
s:
technol
ogies. Augment edproduct
sarepr oduct
swhichar e
Thisr
esult
sint
oahi
ghdegr
eeofpr
oduct devel
opedf r
om formalproductsbycombiningt
wo
obsol
escence. coreproduct
sandaddi ngvaluetotheproducti
n
ter
msofbenef it
sandcomf or t
stothecustomer.
I
nt hebanki
ngscenari
ot hepr
oductl
if
ecycl
e
dependsonwhethertheproducti
sacorepr
oduct Theaugment
edpr oductwhenavai
ledbythe
oraugmentedproduct. cust
omerwil
lresulti
nsomev al
ueaddit
iontot
he
Cor
epr
oduct
s: cust
omer.

Cor
eproductsareessential
lyt
hoseproduct
swhi
ch Adecadeback,off
eri
nganATM Car
dwas
def
inewhatkindofbusinesswearein. consider
edasavalueaddi
ti
ont
oenablet
he
customertowi
thdrawmoney24hour
s.
Inthebankingscenario,someofthecor eproducts
areSavingsBank,CurrentAccount,Term Deposit
, Butt
heimplement
ati
onoftechnol
ogyinit
iati
ves
Recurr
ingDeposit,CashCr edi
t,Ov
erdraft,
Retail aggr
essi
vel
ybybanksinthepastdecadehadmade
ATM/Debi
tCardasapartofthecoreproduct.
Loans,Term Loan,Draft
set c.
Thesecoreproductsar
eessenti
alpr
oductsand Int
hepr esentdayscenario,acoreSavi
ngsBank
neednothaveast r
ongmarketi
ngcontent
. wil
lincl
udeanATM/ Debi
tCar dandaChequeBook
andaugment edproductwil
lincl
udeInt
ernet
Theseproductswillhaveastabl
eli
feinthegrowt
h Banking,Mobi l
eBankingandagr ouphealt
horl
if
e
stageofproductli
fecycle,
becausetheyare i
nsurancepr oducttaggedtoit.
i
ndispensabl
ef ort
hediffer
entsegmentsof
customers.

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RETAI
LMODULE-B Theideaofthi
sist
omaket hecust
omeridenti
fy
Chapt
er5:PRODUCTDEVELOPMENTPROCESS thebankwit
hthepart
icul
arnameoftheproduct.
(
PART-
II
) Thisini
ti
ati
veofbankst
ocr eaterecal
lfort
he
Whatwewi
llst
udy
? product
sister
medas“ Branding”
.

*Whatar
edi
ff
erentt
ypesofpr
oducti
nRet
ail Banksbasical
lyadoptt
wot
ypesofbr
andi
ng
Banki
ng? exer
cises.

*
Feat
uresofSav
ingAccountandCur
rentAccount
? Productbrandingisattemptedbybankstocreate
productrecallandCorporat
eBrandingisi
ntended
tocreaterecallaboutt
hebanksitself
.
PRODUCTLI
NESOFABANKER: Brandingini
tiati
vesbybankswi ll
helpthem to
Tobesuccessfuli
nr et
ailbanki
ng,anybankhasto developdefinit
ebusinessthroughthatproductby
underst
anddi
ffer
entsegment sanddev el
op developi
ngpr oductspeci
fi
cst rat
egiesandtheydo
appropr
iat
eproductstomeett hesesegments. thatexerci
sef ordi
ff
erentproducts.
Thoughdif
ferentpr
oductscatertodif
fer
ent Thesepr
oduct
sincl
udecor
epr
oduct
saswel
las
segments,
therearecert
ainproduct
slikecor
e augment
edproduct
s.
product
swhichcatertoallsegments. Forcoreproductsthereneednotbemuch
Li
kewisedif
ferentbanker
smarkett
hei
rdif
fer
ent marketi
ngorientat
ionbutforaugmentedproducts
product
sindiff
erentnamest
houghtheyhave tosucceedthereshouldbeaconcertedeff
ortfrom
commonf eatures. themarketi
nganglef ort
heproductt
osucceed.
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Letustryt
ounderst
andthedif
fer
enttypesof (
a)DemandDeposi
ts(
CASADeposi
ts)
product
snormal
lymarketedbybanks.
Pr
oduct
scanbebr
oadl
ycl
assi
fi
edi
ntof
oll
owi
ng:
i
.Deposi
tPr
oduct
sorLi
abi
li
tyPr
oduct
s.
ü.AssetPr
oduct
sorRet
ailCr
edi
tPr
oduct
s.
i
ii
.Ot
herPr
oduct
sandSer
vices.
DEPOSI
TPRODUCTSORLI
ABI
LITYPRODUCTS:
I
nthedeposi tproductscategory,t
heproductscan
beclassif
iedint
oSav i
ngsDeposits,Curr
ent
Deposits,
andTer m Deposits.ACombi nati
onof
Depositproductisalsooff
er ed.

(
b)Ter
m Deposi
ts(
FixedDeposi
ts)

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Sav
ingsBankDeposi
tAccount
s: bebroughttothenoti
ceofprospect
ivecust
omers
Inter
msofRBIdi r
ect
ives“Savi
ngsDeposit”means attheti
meofopeni ngofsav
ingsbankaccountand
aform ofdepositwhetherdesi
gnatedas“savi
ngs thei
rassentobtai
ned.
account”,
“savi
ngsbankaccount ”
,“sav
ingsdeposi
t Assav i
ngsdeposi t
sar eabi gcomponentofCASA
account”oranyotheraccountbywhatevername deposi tsforPSBs, Cooperati
vebanksandmaj or
cal
led, pri
vat esect orbanks, theseaccountsprov
idethe
whichissubj
ectt
ot herestr
ict
iononthenumberof broadr etaildepositbaseandhel pbankst oshore
upt heirearningsthr oughlowcostdepositswhich
wit
hdrawals,
asalsotheamountofwi thdrawal
s
per
mi t
tedbythebankdur i
nganyspecifi
edperi
od. canbepr ofitabl
ydepl oyedintohighyi
eldi
ng
advancesandt herebypr ovi
debetteri
nter
est
Savi
ngsbankdepositi
spri
maril
ymeantfor spreadandmar gin.
dev
elopi
ngthehabitofsav
ingamongthepubl
ic.
Manybanksof fersweep-
inandsweep- outfaci
l
ityi
n
I
naddi ti
ontogetti
ngnomi nali
nter
estont he SBaccount swit
hmi ni
mum balancerequirements,
balanceintheaccount,
thedepositorhasthe faci
li
tati
ngpaymentofint
erestrateappli
cableto
fr
eedom t owit
hdrawtheamountdeposi tedasand term deposi
ts.
whenhe/ shedesir
essubjecttocertai
nrestr
ict
ions
Forcustomers,Sav
ingsBankaccountsof
fermany
ont henumberofwi t
hdrawals.
operat
ionaladv
antagessomeofwhi char
egiven
Therel
ationshi
pbet weenthebankandthe bel
ow:
deposi
torisessenti
allyt
hatof“debt
or”and
Savi
ngaccountencour
agessav
ingshabitamong
“cr
edit
or”respect
ively
.
sal
aryear
nersandother
swhohav ef
ixedincome.
Sav
ingsaccountr
ulesoft
hebankar
erequi
redt
o
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Itenabl
esthedeposi
tort
oear
nincomebywayof RETAI
LMODULE-B
savingbanki
nter
est. Chapt
er5:PRODUCTDEVELOPMENTPROCESS
Savi
ngaccounthel
psthedeposi
tort
omake (
PART-
II
I)
pay
mentbywayofi ssui
ngcheques. Whatwewi
llst
udy
?
Itshowsincomeofasalar
iedandot
herper
son *
Whati
sBSBDAAccount
?
earnedduri
ngtheyear
.
*
Whati
sSmal
lAccount
?
Savi
ngaccountpassbookactsasanident
it
yand
resi
dent
ialpr
oofoftheaccounthol
der. RBIhasal
sointroducedBasicSavingsBank
Deposi
tAccount(BSBDA)andSmal lAccount
s,
I
tprovi
desafaci
li
tysuchasElect
roni
cfund bei
ngpartofthefinanci
ali
nclusi
on.
t
ransf
er(EFT)t
ootherpeopl
e'
saccounts.
I
thelpst
odoonli
neshoppi
ngv
iaf
aci
li
tyl
ike
i
nter
netbanki
ng. Basi
cSav
ingsBankDeposi
tAccount(
BSBDA)
:

Itai
dstokeeprecor
dsofallonl
inet
ransact
ions “Nofri
ll
”Sav i
ngsbankaccounthasbeenr epl
aced
carr
iedonbytheaccounthol
der. by“BasicSavingsBankDepositAccount”byRBI
andaccordinglybankshav
ebeenadv isedtooff
era
I
tprovi
desi
mmedi
atef
undsasandwhenr
equi
red ‘
BasicSavingsBankDepositAccount'(BSBDA)in
t
hroughATM. August2012.
ATM Cards/
Debi
tCar
dsareissuedal
ongwitht
he BSBDAof
ferv
ari
ouscommonf
aci
li
ti
est
oal
lthe
Savi
ngsAccount
sasessent
ialtagsf
oroper
ati
onof cust
omer
sasunder
:
theaccount
.

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a.The‘
Basi
cSav
ingsBankDeposi
tAccount’
should g.Bankswoul dbef r
eetoevolveother
beconsi
der
edanormalbanki
ngser
viceavai
labl
eto requir
ement sincl
udi
ngprici
ngstructur
ef or
al
l. additi
onalvalueaddedservi
cesbey ondthe
stipul
atedbasicminimum serv
icesonr easonabl
e
b.Thi
saccountshal
lnothav
ether
equi
rementof
andt r
ansparentbasisandappli
edinanon-
anymini
mum balance.
discri
minatorymanner.
c.Theser vi
cesavail
abl
eint heaccountwilli
ncl
ude
depositandwi t
hdrawalofcashatbankbr anchas h.BSBDAi
ssubjectt
oKYC/
AMLgui
del
inesbei
ng
i
ssuedbyRBIf
rom ti
metot
ime.
wellasATMs, Receipt/creditofmoneythrough
elect
ronicpaymentchannelsorbymeansof i
.Holdersof'Basi
cSav i
ngsBankDeposi tAccount
deposit/Coll
ecti
onofchequesdr awnby wil
lnotbeeligi
bleforopeninganyothersavi
ngs
Central
/StateGovernmentagenciesand bankdepositaccountinthatbank.
departments.
I
facustomerhasanyotherexist
ingsavingsbank
d.Whil
etherewil
l benoli
mitonthenumberof deposi
taccounti
nthatbankorotherbank, he/
she
deposi
tsthatcanbemadei namont h,
account wil
lberequi
redtocl
oseitwit
hin30day sfrom the
hol
derswillbeal
lowedamaxi mum of4 dateofopeni
nga‘Basi
caSavingsBankDeposi t
wit
hdrawalsinamont h,
incl
udi
ngATM withdrawal
s. Account'
.
e.Faci
li
tyofATM car
dorATM-
cum-
Debi
tCar
d. j
.Theexist
ingbasicbanki
ng‘no-
fri
ll
s’account
s
shoul
dbeconv er
tedto‘Basi
cSavingsBankDeposit
f.Theabov efacil
iti
eswi
llbeprov
idedwit
houtany
Account
'aspertheinst
ructi
onscontai
nedabov e.
charges.Further,
nochargewil
lbelevi
edfornon
operati
on/activat
ionofi
n-oper
ati
ve‘Basi
cSavings k.Ifsuchaccounti
sopenedonthebasi
sof
BankDeposi tAccount'
. simplif
iedKYCnorms,t
heaccountwoul
d
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addi
ti
onal
lybetr
eatedasa‘Smal
lAccountand i
ii
.Thebalanceatanypoi
ntoft
imedoesnot
woul
dbesubjecttocondi
ti
onsst
ipul
ated. exceedRs.50,
000/-
.
i
v .For
eignr
emi t
tancescannotbecredi
tedt
oSmal
l
Smal
lAccount
s: Accountswithoutcomplet
ingnormalKYC
formali
ti
es.
Ifanindivi
dualcustomerdoesnotpossesseit
her
anyoft heOffi
ciall
yVal
idDocument s(OVD)as v.Smallaccountsarev al
idforaperi
odof12
noti
fi
edbyGov ernmentofIndi
aorthedocuments monthsinit
ial
lywhichmaybeext endedbyanother
appli
cableinrespectofsi
mpl i
fi
edprocedur
e,t
hen 12mont hsifthepersonpr ovi
desproofofhav
ing
‘
Smal lAccounts'maybeopenedf orsuchan appl
iedforanOf fi
cial
lyValidDocument.
i
ndivi
dual. vi
.Smal lAccountscanonlybeopenedatCBS
A‘smallaccount
’maybeopenedont hebasisofa l
inkedbr anchesofbanksoratsuchbranches
sel
f-
att
estedphotogr
aphandaff
ixat
ionofsignat
ure whereitispossibl
etomanuallymonit
orthe
f
ulfi
ll
ment softhecondit
ions.
ort
humbpr int
.
Asnoti
fi
edi
ntermsofGov tofI
ndianotif
icat
ion
dat
edDecember16,2010,SmallAccountswould I
nter
estRat
esonSav
ingsDeposi
tAccount
s:
besubj
ectt
othefol
lowingcondit
ions: Consequenttothederegulat
ionofinterestr
atesof
i
.Theaggregateofal
lcr
edit
sinaf
inanci
aly
ear domesti
csav i
ngsdepositsaccountshel dby
doesnotexceedRs.1Lakh. resi
dent
sinIndiawitheff
ectf r
om October25, 2011,
i
i.Theaggr
egat
eofallwit
hdrawal
sandtr
ansf
ersi
n banksarefr
eet odeter
minet hei
rsavingsbank
deposi
tint
erestrat
e,subjecttothefoll
owing
amonthdoesnotexceedRs.10,
000/
-.

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condi
ti
ons: Whil
ecalcul
ati
ngint
erestonsuchdeposit
s,banks
a.Thereshal
lbeacompr ehensiv
epoli
cyonint
erest ar
erequi
redtoapplytheunif
ormratesetbythem
rat
esondepositsdul
yappr ovedbyt
heBoardof onend-
of-daybal
anceupt oRs.1Lakh.
Dir
ectorsoranycommitteeoftheBoardt
owhich f.Foranyend- of-
daysav ingsbankbal ance
powershavebeendelegated. exceedingRupeesoneLakh, abankmaypr ovi
de
diff
erentialratesofinterest,i
fitsochooses,
b.Theratesshallbeuni f
orm acrossallbr
anches
andforallcustomer sandthereshallbeno subjectt otheconditiont hatbankswillnot
discriminateinthemat t
erofi nt
erestpaidonsuch
di
scriminati
onint hemat t
erofinter
estpaidont he
deposit
s,betweenonedeposi tandanotherof deposi t
s, betweenonedeposi tandanot herof
similaramount ,
acceptedont hesamedat e,atany
si
milaramount ,acceptedonthesamedat e,atany
ofitsoffices.
ofit
soffices.
g.Invi
ewoft hesatisfact
orylevelof
c.Interestr
atespayabl
eondeposi
tsshal
lbe
stri
ctlyaspertheschedul
eofi
nter
estrat
es computeri
zati
oni ncommer ci
albankbranches,
schedul
edcommer cialbankswer eadvi
sedt o
discl
osedi nadvance.
cal
culatei
nterestonsav i
ngsbankaccount sona
d.Therat
esshal
lnotbesubj
ectt
onegot
iat
ion dail
yproductbasiswi t
heffectfrom Apr
il1,2010.
betweent
hedeposi
torsandt
hebank.
e.Eachbankwi l
lhavetooff
eraunifor
mi nt
erest
rateonsavingsbankdeposi
tsuptoRs.1Lakh,
i
rrespect
iveoftheamountintheaccountwit
hin
thi
slimit
.
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RETAI
LMODULE-B Somebanksareof
fer
ingat
aggedLi
fecov
eror
Chapt
er5:PRODUCTDEVELOPMENTPROCESS heal
thcov
erorbot
h.
(
PART-
IV) Char
act
eri
sti
csofcur
rentaccount
:
Whatwewi
llst
udy
? Sincet hepurposeoft hedeposi
tisgeneral
lyfor
*
Whatar
ethef
eat
uresofcur
rentaccount
? ‘
Tr ading'and'Busi
ness’,i
tdif
fer
sfrom theobject
ive
ofot herdepositaccountswhicharemeantt o
*
Whatar
ethef
eat
uresoft
erm deposi
teaccount
? tap/mobi li
zethesavingsofthepeople.
RBIdir
ecti
vesprohi
bitpay
mentofinter
eston
Cur
rentAccount
: curr
entaccount
s,exceptwit
hthepri
orapprov
alof
theRBI.
Acurrentaccountisaform ofdemanddeposi
t
wherewithdrawalsareall
owedanynumberof Thir
dpartychequesandchequeswith
ti
mesdependi ngupont hebal
anceint
heaccountor endorsementsmaybedeposi t
edint
hecurr
ent
uptoaparti
cularagreedamount. accountforcoll
ecti
onandcredi
ttot
heaccount
,
subjectt
ocertaincondi
ti
ons.
Sincesuchdeposi
tsar
er epayabl
eondemand,t
hey
consti
tut
ethedemandliabil
it
iesoft
hebank. Therearenorest
ri
cti
onsonthenumberand
amountofwi t
hdr
awalsi
ntheaccount
,excepti
n
Currentaccount s,par
ticul
arlysuitt
herequir
ement
s
cer
taincases.
ofbusiness,trading,j
ointstockcompani es,
i
nstitut
ions,publicauthori
ti
esandpubl ic Overdr
aftf
aci
li
tyi
sper
mit
tedwi
thpr
ior
corporati
ons,etc.,who'sbanki ngtr
ansacti
ons ar
rangement.
happent obenumer ousonev eryworki
ngday .

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Chequebooksar
eissuedinal
lcur
rentaccount
s. Ter
m Deposi
tAccount
s–Feat
ures:
(wi
thcer
tai
nexcept
ions) “Term Deposi
t”isatimedeposi
tforaf
ixedperi
od
Curr
entdepositsareavi
talcomponentofCASA andwhi chiswithdr
awabl
eaftert
heexpir
yofthe
deposi
tsofallbanksandform par
tofCASA saidfi
xedperiod.
deposi
ts.
I
tdoesnoti
ncl
udedeposi
tswi
thdr
awabl
eatnot
ice
Thisbr
ingsdownt heov
eral
lcostoff
undsofthe (
demand).
bankandgivesthem al
otoffr
eedom togi
vecredi
t/
Deposit
sfor12monthsormor
eshoul
dbet
ermed
l
oansatlowerrates. as'Fi
xedDeposi
ts'
.
Thisimprovest
heNetInt
erestMar
gin(
NIM)and Deposit
sforl
essthan12mont
hsshoul
dbet
ermed
profi
tabi
li
tyoft
hebanks.
as'Shor
tDeposi
ts'
.
Eachbankstri
vestoensur
ethatCASADeposit
s “Over
dueDeposit
s”meant er
m deposi
tswhichare
for
m ahighpercent
agesharei
nthetot
aldeposi
ts
notwit
hdrawnonmat ur
it
ydatesandnoticemoney
ofthebank.
whichisnotwi
thdrawnontheexpir
yofthenoti
ce
Inthepr esentbanki
ngscenari
owi t
hintense giv
en.
compet iti
onbetweenthepublic,
pri
vateandforei
gn
Ov
erduedeposi
tisademanddeposi
t.
banksf oralargermarketshar
e,abankwi tha
higherCASAdeposi trati
o(above35%orone- t
hir
d) Term Deposit
sar eoff
eredtothecustomersasa
i
sbet terplacedtoperfor
m. hi
ghinterestyi
eldingproductf
orthedeposi
thel
d
wit
hthebankf oradef i
niteper
iodwit
hinter
est
dependingupont heperiodofdeposi
t.
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Therearedi
ffer
enttypesofterm deposit
soffered Asanadditi
onalproductextensionofRecurr
ing
bybankswithfacil
it
yforget
tingmont hly
/quart
erly Deposit
ssomebanksal soof fermorethanone
i
nterestaswellasdeposi
tswi t
hcumul ati
veint
erest opti
onregardi
ngthequantum ofmont hlydeposi
t,
attheendofthedepositper
iod. thefl
exi
bil
it
yofpay i
ngtheinst al
lment
sinbunch
Thesecondopt i
onbenefi
tst
hecustomerbecause andalsocombinati
onofbot h.
thequarter
lyi
nter
estaccr
uedonthedepositi
s Thi
swillattr
actbusinessfrom thesegmentswhi
ch
rei
nvestedagai
nt oear
nahighery
iel
dforthe donothav eregularper
iodi
ccashi nfl
owsbutwant
deposit
or. tosav
er egularl
yandear nhigheri
nterest
.
Recur
ri
ngDeposi
tAccount
s–Feat
ure
Anothertypeofter
m depositsisthe‘Recurr
ing Combi
nat
ionofdeposi
tschemes:
Deposit
’wherethedepositorisrequir
edtodeposi t Thefourt
himportantty
peofbankdeposi
tist
he
fi
xedsumsofmoneyev erymont hf
oraspeci fi
c combinat
iondeposit
.
peri
odandatt heendoftheper iod,t
heprincipal
al
ongwi ththeaccr
uedinterestarepaidbackt othe Thepr i
ncipalaim ofthebankmar keteri
scustomer
deposit
or. need/ comf ortmaximi zat
ionandbanksinnovatei
n
productdev el
opmentandsat i
sfythecustomerby
TheadvantageofRecurr
ingDepositisthatter
m offeringacombi nat
ionoft wotypesofdeposit
s,as
deposi
tint
erestr
atesforthespeci
fiedperiodare asi ngleterm deposit.
off
eredforthi
sdeposi
t.
Forexample,aproductisoff
eredinthi
stypein
I
thelpsthemonthl
yincomesegmentt osave whichthecustomerwillhav
eopt i
onofputti
ng
r
egular
lyafi
xedamountandear nhigherr
atesof separat
eamount sathiswil
landpleasure.
i
nter
estappl
icabl
etoterm deposi
ts.

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Apassbookwi
llbei
ssuedf
ort
hesame. CommonGui
del
inesonFD/
RD:
Eachofhisremitt
anceswil
lbetr
eatedasa IfaTerm Depositmaturesandpr oceedsar
eunpai
d,
separat
eterm deposi
tandi
nter
estwillbegi
venon theamountleftunclai
medwi t
ht hebankshall
acumul at
ivebasi
sdependi
ngont heperi
odof att
ractrat
eofinterestasappl
icabletosavi
ngs
deposit
. deposit
s.
I
nanot herpr
oduct ,
t hedepositwi
llbekeptin Eachtimedepositi
saseparat
econtractand
mul t
iplesofRs.1000i nter
m depositandwhen vari
ousdeposi
tsinthenameofthesamedeposi t
or
thereisanur gentneedf orsomemoney ,t
heycan orinthenamesofmember softhesamef amil
y,
withdrawpar tofthedeposi ti
nmul t
ipl
esofRs. shouldnotbetr
eatedasonedeposit
.
1000andt heremaini ngamountcont i
nuestoear
n Atimedepositr
ecei
ptisnotanegot i
able
thesamer at
eofi nterest
.
i
nstrumentand,t
her
efore,cannotbetransf
err
edby
Dif
fer
entbanksoffert
heseproductsindif
ferent endorsementbyadeposit
orinfavourofanother
.
namesli
keFlexiDeposi
tAccount,Multi
pleDeposit
Account
,Unfi
xedDeposit,Quantum Deposit
, et
c.
Fl
oat
ingr
atedomest
ict
erm deposi
ts:
Somebanksar eoffer
ingthesedeposi
tsto
customerstokeeptheirdeposi
tinmul
tiplesofRe. Banksoffert
erm deposi
tswi
thf
loat
ingr
ateof
1,sothatincaseofnecessit
y,hecanwithdrawthe i
nterest
.
exactl
yrequi
redamount . Int
erestrateshal
lbelinkedtoadir
ect
lyobser
vabl
e
andtransparentmarketdeter
minedexter
nal
benchmar k.
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RETAI
LMODULE-B TheKYCpol
icyshal
lincl
udef
oll
owi
ngf
ourkey
Chapt
er5:PRODUCTDEVELOPMENTPROCESS el
ement
s:
(
PART-
V) 1-Cust
omerAccept
ancePol
i
cy
Whatwewi
llst
udy
? 2-Ri
skManagement
*
Whati
sKYC? 3-
Cust
omerI
dent
if
icat
ionPr
ocedur
es(
CIP)and
*
Whati
sCDD&CKYCR? 4-Moni
tor
ingofTr
ansact
ions
Banksshal
lensur
ethat
:
KYCgui
del
ines: 1-Noaccounti
sopenedi
nanony
mousorf
ict
it
ious/
Inter
msoft heprovisi
onsofPreventionofMoney - benaminame.
LaunderingAct,2002andt hePreventionofMoney 2-Noaccounti sopenedwheret
hebanki sunable
Laundering(MaintenanceofRecords)Rul es,2005, toapplyappropri
ateCDDmeasures,ei
therdueto
banksarer equi
redtof ol
lowcert
aincust omer non-cooper
ationofthecust
omerornon-rel
iabi
li
ty
i
dentif
icati
onprocedur ewhil
etheopeni ngof ofthedocument s/i
nfor
mationf
urni
shedbyt he
accountsandal sorequir
edtomoni tortransacti
ons customer.
i
nt heaccount. 3-Notr
ansact
ionoraccountbasedrel
ati
onshi
pis
ThereshallbeaKnowYourCustomer(KYC)poli
cy under
takenwit
houtfol
lowingtheCDDprocedur
e.
dul
yappr ovedbytheBoardofDi
rect
orsofbanksor 4-Themandatoryinformat
iontobesoughtforKYC
anycommi tteeoftheBoar
dtowhichpowerhas purposewhil
eopeni nganaccountandduri
ngthe
beendelegated. peri
odicupdat
ion.(LowRisk:10Y,Medium Ri
sk8Y,

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Hi
ghRi
sk:2Y) Whileconsi
deri
ngcustomer'
sidenti
ty,
theabil
it
yto
5-CDDProcedureisf
oll
owedforal
lthej
oint confi
rmidenti
tydocumentst
hroughonlineorother
accounthol
ders,whi
leopeni
ngajoi
ntaccount
. serv
icesoff
eredbyissui
ngauthori
ti
esmayal sobe
fact
oredin.
6-Ci
rcumstancesi
nwhich,acust
omerispermitt
ed
Whil
eundertakingcust
omeri
dent
if
icat
ion,
banks
toactonbehalfofanot
herper
son/ent
it
y,i
sclearl
y
shal
lensur
et hat:
spel
tout.
1-Deci
sion-makingf
unct
ionsofdeter
mini
ng
7-Asuitabl
esy st
em isputi
nplacetoensur
ethat
theidenti
tyofthecustomerdoesnotmatchwith compliancewithKYCnormsshallnotbe
outsourced.
anypersonorent i
ty,
whosenameappear sint
he
sancti
onsl i
stsci
rcul
atedbyReserv
eBankofIndia. 2-I
ntr
oduct
ionshal
lnotbesoughtwhi
leopeni
ng
ForRiskManagement
,banksshallhav
earisk account
s.
basedappr
oachwhichincl
udesthefoll
owi
ng: 3-Thecustomer sshal lnotberequi
redtofurni
shan
addit
ionalOffi
cial
lyv ali
dDocument( OVD) ,
ift
he
Cust
omersshallbecategori
zedaslow,medium
OVDsubmi t
tedbyt hecust omerforKYCcont ai
ns
andhi
ghriskcategor
y,basedontheassessment
bothproofofidentityandpr oofofaddress.
andri
skpercept
ionofthebank.
Riskcat egori
zat
ionshal
lbeundertakenbasedon “Off
ici
all
yv al
iddocument ”(OVD)meanst he
par ameterssuchascustomer'
sidentit
y,social/ passport,t
hedrivi
ngl i
cense,thePer manent
AccountNumber( PAN)Car d,theVot er'
sIdenti
ty
fi
nanci alstat
us,
natureofbusi
nessactivi
ty,and
Cardissuedbyt heElecti
onCommi ssionofIndi
a,
i
nf ormat i
onaboutthecl
ient
s'busi
nessandt hei
r
l
ocat ion,etc. j
obcar dissuedbyNREGAdul ysignedbyanof f
icer
oftheStateGov er
nment ,l
etterissuedbyt he
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Uni
queIdent
if
icati
onAuthor
it
yofIndi
acontai
ning 8-Oner
ecentphot
ogr
aph
det
ail
sofname, addr
essandAadhaarnumber. 9-Anysuchot
herdocumentsper
taini
ngtothe
Cust
omer
s,att
heiropti
on,shal
lsubmitoneofthe natur
eofbusi
nessorfi
nanci
alst
atusshal
lalsobe
si
xOVDsforpr
oofofident
ityandproofofaddr
ess. cal
ledfor
.
4-Acustomershal
lnotberequiredt
of urni
sh Aspert heprovisi
onscontai
nedinRule114B,
separ
ateproofofcur
rentaddress,i
fitisdi
ffer
ent I
ncome- taxRules,Openi
nganaccountoraBasic
fr
om theaddressr
ecordedintheOVD. SavingsBankDeposi tAccount(
BSBDA)withabank,
5-I
ncaseitisobserv
edthattheaddressment
ioned requir
est oquotePermanentAccountNumber
asper‘pr
oofofaddress'
hasundergoneachange, (PAN).
banksshallensur
ethatf
reshproofofaddr
essis Cashdeposi
twithbankexceedi
ngRs.50,
000al
so
obtai
nedwithinaperi
odofsixmonths. requi
resPAN,i
ftheaccounti
snotseededwi
thPAN.
7-Thee- KYCser vi
ceofUni queI dentif
icat
ion Ifanyper sonwhodoesnothav eaper manent
AuthorityofIndia(UIDAI)shal
lbeaccept edasa accountnumberandwhoent ersint
oany
vali
dpr ocessf orKYCv eri
fi
cationundert hePML transacti
onspecif
iedinthisrule,
shallmakea
Rules,ast heinfor
mat i
oncont ainingdemogr aphi
c declarati
oninForm No.60givingtherei
nthe
detail
sandphot ographsmadeav ai
lablefr
om UIDAI
. parti
cularsofsuchtransacti
on.
Asaresult,
e-KYCprocessistreatedasanOffi
cial
ly AsperPr eventi
onofMoney -
launder
ing
Val
idDocument ,
andtransferofKYCdat a, (MaintenanceofRecords)SecondAmendment
el
ectr
onical
lytothebankfrom UIDAI,i
saccept
ed Rules,2017,i
fthepersonisanindiv
idualwhoi
s
asval
idprocessforKYCv eri
fi
cati
on. eli
gibletobeenroll
edforanAadhaarnumber,he
shallsubmittothebank,

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(
a)theAadhaarnumberi
ssuedbytheUnique KnowYourCust
omerFor
ms(
KYCFor
ms)
:
I
denti
fi
cat
ionAuthor
it
yofIndi
a(UI
DAI)and KYCFor ms,assaidearl
ier
,ar
erequi
redt
obe
(
b)thePer
manentAccountNumber(
PAN)orFor
m obtai
nedfrom al
ltheaccounthol
der
swhileopeni
ng
No.60asdef
inedi
nIncome-t
axRul
es,1962. theaccountit
sel
f.
Shar
ingKYCinf
ormat
ionwi
thCent
ralKYCRecor
ds I
tisobtai
nedasanAnnexur
etot
heAccount
Regi
str
y(CKYCR): Openi
ngForm.
CKYCR:Cent
ralKYCRegi
str
y Itt
hrowslightont
hedif
fer
entdi
mensionsofthe
customersandhelpst
hebankstodealwi
ththem
GovernmentofIndiahasauthori
zedtheCentral
Regist
ryofSecuri
tizati
onAssetReconst
ruct
ionand appropr
iat
ely.
Securi
tyI
nter
estofI ndia(
CERSAI),
toactas,andto Theimpor
tantdetai
lswhichar
et obef
urni
shedi
n
perf
ormt hef
unctionsoftheCKYCR. theKYCForm ar
ediscussedbelow:
BanksshallcapturetheKYCi nf
ormationforshari
ng i
. NameandAddr
essoft
heCust
omerandPAN
withtheCKYCRi nt hemannerment i
onedint he /TI
NNumber
Rules,asr
equi r
edbyt herev
isedKYCt emplates i
i. Det
ail
sofSpouse/
Fat
herandal
soSon(
s)
preparedf
or'Indiv
iduals'
and'LegalEnti
ti
es'asthe
/
Daughter
(s)
casemaybe.
i
ii
.Detail
sofDeposi
ts/
Loanshel
dwi
thot
her
Schedul
edCommer ci
alBanks(
SCBs)shall
br
anches/
banks
i
nvari
ablyuploadt
heKYCdat aper
taini
ngtoal
lnew
i
ndivi
dualaccount
sopenedonoraf t
erJanuar
y1, i
v.Detai
lsofforei
gncount
ri
esv
isi
teddur
ingt
he
2017withCERSAI. pastthreeyears.
 Joi
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v
. AnnualI
ncome Physi
calpr
esenceofl
owriskcustomeratt
heti
me
Basedont heabov einf
ormation,thebranchwil
l ofper
iodi
cupdati
onshal
lnotbeinsist
edupon.
recordintheForm endorsi
ngt heident
ityand Thetimeli
mitsprescr
ibedabovewoul dapplyfr
om
genuineness,addressveri
fi
cationandrisk thedateofopeni
ngoft heaccount
/lastver
if
icati
on
percepti
onandf ixathr
esholdf ortr
ansacti
onbythe ofKYC.
customer. Freshphot
ographsshallbeobt
ainedfr
om
customerf
orwhom accountwasopenedwhent
hey
Peri
odicupdationshallbecarri
edoutatleastonce wereminor,onthei
rbecomingamaj or
.
i
nev er
y2y earsforhighriskcustomers,
oncei n e-KYCpr ocessusi
ngOTPbasedaut henti
cat
ion,
for
ever
y 8y earsformedium riskcust
omer sand thepur poseofper
iodicupdati
onisall
owed,
onceinevery 10year
sf orl
owr i
skcustomers providedwhileonboarding,
thecustomerwas
subj
ecttothef ol
lowingconditi
ons: subjectedtoKYCpr ocess.
Freshpr oofsofi
dentit
yandaddr essshallnotbe I
nadditi
ontoful
fi
ll
ingaregulat
oryr
equir
ement,
soughtatt heti
meofper iodi
cupdat i
on,fr
om KYCFormsalsoserveasat oolt
ocrosssell
customer swhoar ecategori
sedas“ l
owr i
sk”,when di
ff
erentpr
oductsandservi
cestothecustomer
s.
thereisnochangei nstatuswit
hr especttothei
r
i
dent i
ti
esandaddr essesandasel f-
certi
fi
cati
onto
thateffectisobt
ained.
Acerti
fi
edcopyoftheproofofaddressf or
warded
by“l
owr i
sk'cust
omersthroughmail/post,
etc.
,i
n
caseofchangeofaddressshallbeacceptabl
e.

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RETAI
LMODULE-B Theabovest
atementemphasi
zest
heneedf
or
Chapt
er6:CREDI
TSCORI
NG(
PART-
I) bankst
otakeri
sks.
AssaidbyMr .Gr
eenspan,ri
skisembeddedin
Whatwewi
llst
udy
?
ever
yactionandinact
ionandthebestwayto
*
Whati
sacr
edi
tscor
e? counterr
iski
stomanaget heri
skinaprofessi
onal
*
Whati
sagoodcr
edi
tscor
e? way.

*
Evol
uti
onofCr
edi
tScor
ing? Tomanagetheri
sks,wehavet
ounderst
andthe
di
ff
erentt
ypesofr
iskandhowtomit
igat
etheri
sks.
Basicall
y,t
het y
pesofr
isksthatar
eappli
cablet
o
I
NTRODUCTI
ON:
corporatecredi
tar
eappli
cabletor
etai
lcr
edital
so.
Whati
scr
edi
tscor
ing?
Thety
pesofrisksandthet
ri
gger
sinr
iskanal
ysi
s
Whycr
edi
tscor
ing? arement
ionedbelow:
Whataret
hebenef
itst
othecust
omer
sandbanks i
.Cr
edi
tRi
sk-Cust
omerf
ail
stopay
t
hroughcr
edi
tscor
ing?
i
i.BusinessRi
sk-Loosi
ngmoneyduet
owr
ong
"Weshoul dnotf orgetthatt hebasi ceconomi c str
ategy.
functi
onoft heser egulatedent i
ties(banks)isto
i
ii
.Mar
ketRi
sk-Changei
nmar
ketpr
ices.
takeri
sk.Ifwemi nimizer i
skt akinginorderto
reducefail
ureratest ozer o,wewi l
l,bydefi
nit
ion, i
v.Oper
ati
ngRi
sk-Pr
ocessi
ngf
ail
uresandf
rauds.
haveeliminatedt hepur poseoft hebanki ng Toobviat
etheabov
erisksandtohavear eason
system."-Al
anGr eenspan, President,Federal basedandprof
essi
onalappr
aisalmechanism f
or
ReserveBoar d,NewYor k( May1996)
 Joi
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sancti
oni
ngofret
aill
oans,
theconceptofcr
edi
t experi
encewi
thani
ndi
vi
dualt
ofal
lbackonf
ort
his
scori
ngwasint
roducedbybanks. assessment
.
Sincebor r
owersmayav aildi
ff
erentr
etailcredit Thathaschangednowwiththeent
ryofagenci
es
productsfrom di
ffer
entbanksbasedont heirneeds, thatassesst
hecredi
twor
thi
nessofpeopl
e.
prici
ng,processi
ngspeedandot herfeatures,itwas
Thelendi
ngbankcanjudgehowgoodaborr
ower
feltt
hatacent r
ali
zeddatabaseforarri
vi
ngatt he canbebysourci
ngtheircr
edi
tscor
efr
om di
ffer
ent
creditscorewil
lbeaneffecti
veriskmiti
gat i
onst ep. agenci
es.
Thi
sresul
tedi
nadopt
ionofcr
edi
tscor
ing. Inthi
scontextcr
editrecor
doftheappl
icanti
s
Thedif
fer
entdi
mensi
onsofcr
edi
tscor
ingar
e cruci
albecauseagoodscor ecanmaketheloan
di
scussedbel
ow. fri
endl
ierwit
hlowerrates.
Cr
edi
tScor
ing–Concept
s: Alendingbankcansour cethecredi
tscoreofthe
Ever
yborr
owerseekst
hel
owesti
nter
estr
ate,
ever
y appl
icantfrom cr
editinf
ormati
onagenciesto
l
endert
hehighest
. supplementtheinformati
ontheyfur
nishinthei
r
l
oanappl i
cati
on.
Theretur
nalenderseeksf
actor
sin,apar
tfr
om hi
s
prof
it
,apremium f
ortheri
skhefeel
shebearsof Now,ifanyappli
canthadal
readydefaul
tedona
notbei
ngpaidback. l
oanfrom onebank,thedef
aultwoul
dbr i
ngdown
thecr
editscor
e,whichanyotherl
enderwouldal
so
Thisri
skper cepti
onisdif
fer
entfordi
ff
erent bepri
vyto.
borrowersand, i
deal
ly,
shouldbedeter
minedfr
om
thei
rcredithist
ory. Anditcoulddeter
minenotonlywhet
herthe
appl
icantwouldgetaloanornot,
butal
sother
ate
But
,ti
llr
ecent
ly,
lendi
ngbankshadonl
ythei
rown

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ofi
nter
est
. theamountofr i
skhebr i
ngstoapart
icul
ar
transact
ion.Cr
editscor
ev al
uesr
angefrom 300t
o
900.
WHATI
SACREDI
TSCORE?
RBIhasdi r
ect edtoensuret hatthecredit
Acr edi
tscorei
sthest at
ist
icalanalysi
sofa i
nformationr eport(CI
R)inr espectofabor rower,
person'
spastcreditdeal
ingsandr epresent
shi
sor fur
nishedtot heCr edi
tInsti
tutions,i
ncorporatesall
hercreditdi
sci
pli
ne. thecredi
tinfor mati
onav ai
lableinallmodul es,c.
g.,
Thecreditscoreisassessedbasedonthedeali
ngs consumer ,commer ci
al,
etc.,i
nr espectofthe
i
ncreditproductsli
kehomel oans,
autoloans, borr
ower.
cr
editcards,personall
oansandoverdr
afts.
Credi
tscorescanbegener
atedbycr
edi
t EVOLUTI
ONOFCREDI
TSCORI
NG:
i
nstit
uti
onsandevenbyself
.
I
nitsembry
oni
cdays,r
etai
lbanki
ngi
nIndi
ameant
ReserveBankofI ndi
a(RBI)hasmadei tmandat or
y l
endingt
other
ichandaff
luent
.
forallCredi
tInf
ormati
onCompani es(CICs)int he
countrytogiveaFreeFullCreditReport(FFCR) Butaslender
schasegrowt
h,t
heywerei
ncr
easi
ngl
y
expandi
ngtoloweri
ncomegroups.
withoutanycharge,onrequest,onceacal endar
yeartoindivi
dualswhosecredithist
oryisav ai
lable. Thiscall
sforsophist
icat
iontoaccur
atel
yassess
Thisrulehascomei ntofor
cef r
om 1Januar y2017. borrowersabi
li
tytorepayand,al
so,t
ocorrect
ly
pri
cet hel
oan.
Acr editscoretakesa‘snapshot
'ofaconsumer 's
creditreportandthroughadvancedanaly
ticsturns Toachi
evethi
s,bankssoughttheassi
stanceof
theinformat i
onintoa3-digi
tnumberrepresenti
ng cr
edi
tinf
ormati
oncompani eswhoprovidea
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compr ehensiv
ereportoneveryret
ailcredi
t InSouthKoreatoo,
ascredi
tcardusagerai
sedby
customercont ai
ningthei
rveri
fi
edaddress,the 90percentduri
ng1999–2001,del
i
nquentaccount
s
extentofloansthey'v
etakenandwhet herornot almostquadrupl
ed.
theyhav eeverdefaul
tedorfai
ledt
or epayany
l
oansont i
meandi nful
l.
ACr edi
tbureautrackstheindebtednessand
Globalexperi
enceshowsthatmanagi
ngriskand repaymenthist
or yofi
ndivi
dualborrowersonloans
knowingretai
lloancust
omersisi
mportantfor theyhavetakenf r
om banks,non-bankingfi
nanci
al
business. servi
cecompani esandf i
nanciali
nsti
tuti
ons.
Forinst
ance,whenret
ailcr
editt
ookof finSouth Ital
socontai
nscer t
ainper
sonali
nfor
mat i
onof
KoreaandHongKong, bothcountr
iesexperienced eachborrower
,likename,ageandveri
fi
ed
l
argeincreasesi
ndudloans(noreturn). permanentaddress.
AMcKinseystudyshowedthatl
ender
sinSout
h Theinformati
oniscol
lectedinacr
edi
tinfor
mati
on
Kor
eaandHongKongsuf feredhugel
ossesf
rom
repor
t,whichismadeav ai
labl
etol
oan-
issui
ng
def
aul
tsinret
aill
oans. member s.
Indi
vidualsi
nHongKongwhowentbankr uptwer
e Usi
ngt hecredi
tinf
ormat
ionrepor
t(CI
R)pr
ovided
holding,onanaver
age,14dif
fer
entcar
dsanddebts bythebureau,banker
sshoul
dbeabletoavoi
d
averaging$75,
000(Rs.32.
25lakh)
. di
sastersl
ikenonpaymentofdues.
Infact,bankr
uptindiv
idual
sinHongKongowed,on
average,42timestheirmonthl
yincomeas
compar edtotheav er
ageof21timesint
heUS.

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RETAI
LMODULE-B Butcredi
tscoreisonl
yanindicati
vet
oolfor
Chapt
er6:CREDI
TSCORI
NG(
PART-
II
) managingriskandit
seff
ectiv
enessdependsont
he
banksint
ernalcont
rolmechanism.
Whatwewi
llst
udy
?
Anobject
ivethi
nglikethecredi
tscorewil
lnotonl
y
*
Whati
sagoodcr
edi
tscor
e? hel
pthebankstor educedefaul
tsbutalsomake
*
Whatar
e4CI
Csi
nIndi
a? l
oandisbursi
ngfaster,i
mproveoperati
onal
eff
ici
encyandbringcostsdown.

CREDI
TSCORI
NGMODEL:
WHAT'
SAGOODCREDI
TSCORE?
CICst
ypical
lybui
ldscor
esusi
ngt
hreehi
stor
ical
Whetherascoreisgoodornotwi l
ldependonthe
dataf
il
es:
bank'
sint
ernalpol
icy,i
tscustomerprof
il
eandits
ri
skappeti
te.(
Creditscor
ev al
uesrangefr
om 300 1-
Def
aul
tsonpr
evi
ouscr
edi
ttr
ansact
ions.
to900) 2-
Pay
mentbehav
iour
/Pay
menthi
stor
y.
Somebankmayper
cei
ve700asagoodscor
eand 3-
Prev
ioussear
ches/
inqui
ri
es.
anot
hermaynot
.
I
nIndia,CI
Csareknownt oi
ncludehi
ghuti
li
zati
on
Thus,i
nIndi
a,di
ff
erentbankswi
llr
ankdi
ff
erent ofcr
editli
mit(
especi
all
yinthecaseofcr
editcar
ds)
.
scor
esasgood.
Akeyadvant
ageofcredi
tscoringistheCIC'
sabil
it
y
Sti
ll
,anyscor
eov
er700maybeconsi
der
edgoodby t
oestabl
ishaquant
ifi
abl
emeasur eofr i
skinwhat
banks. i
sother
wiseahighl
ysubject
iveprocess.
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Anumeri
cval
ueoncreditdi
sci
pli
neofaper
soni
s Ar
ethenumber
sofenqui
ri
esv
eryhi
gh?
ver
yusef
ulf
ortaki
ngcredi
tdeci
sions. Hav
eyouappl
iedf
oraddi
ti
onalcr
edi
tli
nes,
recent
ly?
Unnecessaryandfr
equentshoppingforcredi
tor
MANAGI
NGTHECREDI
TSCORE: toomanynewaccount scanbet akenasan
Wehavestudi
edaboutthethreeimpor
tant i
ndicatorofbei
ngoverhungryforloansandimpact
det
ermi
nantsoft
hecreditscori
ng. thescorenegati
vel
y.

1-
Def
aul
tsonpr
evi
ouscr
edi
ttr
ansact
ions. (
ii
)Pay
mentDef
aul
ts:

2-
Pay
mentbehav
ior
/Pay
menthi
stor
y. Howmanypastaccount
sar
edue,byhowmany
day
sandbyhowmuch?Thef ewer
,thebet
ter
.
3-
Prev
ioussear
ches/
inqui
ri
es.
(
ii
i)Tr
adeAt
tri
but
es:
Buttoeff
ect
ivelymanagethecr
edi
tscor
e,t
he
fol
lowi
ngpointsarever
yimport
ant
. Howol dar
eyourli
nesofcr
edi
tandwhattypeare
they?Doyouhaveagoodmixori
sit
,say,
allcredi
t
(
i)Cr
edi
tUt
il
izat
ion: cards?
Ef
fect
ivecredi
tuti
li
zati
onisav
eryi
mpor
tantst
ep Ahistor
yofconsi
stentrepaymentofv
ari
oust
ypes
i
nindi
vidual
'scr
editscore. ofcredi
twi
lli
mprovey ourscor
e.
I
fyoursaf
eli
mitisRs.10,
000andyouar
eusing
onl
yRs.5,
000,t
henyouareaverysaf
ecust
omer .
I
fyourl
imiti
sRs.10,
000andy ouar enotonlyf
ull
y
usi
ngit
,butal
soseeki
ngfurthercredi
t,y
oucould
beover
lev
eragi
ngyoursel
fandy ourscorecoul
dfall
.

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POSI
TIVESI
DEOFCREDI
TSCORE: WARNI
NGSI
GNSI
NCREDI
TSCORE:
Agoodcredi
tscor
ewi l
lindi
cat
ethechar
act
erof Thebehavior
alpatt
ernoft
heborr
ower
swi
l
limpact
t
heborr
owerinhisfi
nancialmatt
ers. thecr
editscoreoft
heborr
owers.
Thefol
lowi
ngar
esomeoft
hei
ndi
cat
orsofgood Thef
oll
owi
ngar
esomeoft
hesi
gnal
s.
scor
e. i
. Cr
avi
ngf
orcr
edi
t.
1-Ev
idenceoff
inanci
aldi
sci
pli
ne.
i
i. Fr
equentandunnecessar
yshoppi
ngf
or
2-I
ftheborrowerhasdef ault
edonceort wiceduet
o cr
edi
t.
reasonsbeyondt hei
rcontrol
,thosewouldshowup i
ii
.Severalnewaccount
sorrecentr
equestsfor
asclearaberrat
ionsinanov eral
lconsi
stent
l
oanscanbetakenassi
gnsofanov er-
hungry
paymenthistory. bor
rower.
i
ii
.Thelongert
hecredithi
stor
y,t
hebetter.The
i
v.Thelengthofcredithist
oryisal
soimpor
tant
.
l
ender
’sassessmentpresumablyimpr
ov esashe
Olderaccount
sar egenerall
ybett
er,
soyou
get
sbiggerspansofrepayment. shouldbejudi
ciousaboutclosingol
d
Oneshoul
dbejudi
ciousaboutcl
osi
ngol
daccount
s accountsandopeni ngnewones.
andopeni
ngnewones. v
. Tradeat
tri
but
es-doest
hecust
omerusea
goodmixofcredi
t?
Theaboveacti
vi
ti
eswi
llul
ti
mat
elybr
ingdownt
he
cr
editscor
e.
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Toovercomethi
s,theborr
owershouldmai
ntai
n Further
,Section17ofCr editInf
ormati
on
fi
nanci
aldi
sci
pli
ne,repayduesonti
meanddo Compani es(Regulati
on)Act ,
2005stipul
atesthata
notoverl
ever
agethemselves. CreditI
nformat i
onCompany( CIC)mayseekand
obtaincredi
tinformati
onf r
om itsmember s,i
.e.
,
Butthenhowtoknowone'scr
edi
tscor
eto
maintai
nfi
nanci
aldi
sci
pli
ne? CreditI
nstit
utions(CI
)only.

Everyindiv
idual
,onmakingarequestwil
lgeta AllCreditInst
it
uti
ons(CI
s)shallbecomemember s
crediti
nformati
onrepor
t,f
reeofcost,
onceina ofallCICsandsubmi tdat
a(incl
udinghi
stor
ical
calendaryear. data)tot hem,asperRBIdi
recti
ves.

CREDI
TINFORMATI
ONCOMPANI
ESI
NINDI
A: Furt
her,CICsandCl sshallkeept hecredit
i
nformationcollect
ed/mai ntai
nedbyt hem,
Cr
edi
tInf
ormat
ionCompani
es(
CIC)
: updatedregularl
yonamont hlybasisoratsuch
Presentl
y,4CI
Cshavebeengr
ant
edCer
ti
fi
cat
eof short
erinterv
alsasmaybemut ual
lyagreedupon
Regist
rati
onbyRBI
. betweent heCIandt heCICint ermsofRegulati
on
10(a)(i
)and( ii
)oftheCreditInformation
1-
TransUni
onCI
BILLi
mit
ed.
Compani esRegulati
ons,2006.
2-
Equi
faxCredi
tInf
ormat
ionSer
vicesPr
ivat
e
Limi
ted.
3-
Exper
ianCr
editI
nfor
mat
ionCompanyofI
ndi
a
Pri
vat
eLimit
ed.
4-
CRIFHighMarkCr
edi
tInf
ormat
ionSer
vices
Pri
vat
eLimit
ed.

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RETAI
LMODULE-B Fact
orsl
eadi
ngt
ofav
our
abl
ecr
edi
tscor
e:
Chapt
er6:CREDI
TSCORI
NG(
PART-
II
I)
Whatwewi
llst
udy
? 1-Ont
imel
oanEMIpay
ment
s.
*Whatfactor
simprovecredi
tscor
eandwhatf
act
or 2-Regul
arpay
mentofcr
edi
tcar
dbi
ll
s.
wil
lnegati
veyourcredi
tscor
e? 3-Payi
ngcr
edi
tcar
dbill
sinful
lrat
hert
hanpay
ing
*
Howt
ocor
rectt
hemi
stakesi
ncr
edi
tscor
e? mini
mum dueamountever
ytime.
4-Av
oidi
ngov
er-
lev
eragi
ng.
Benef
it
sofusi
ngcr
edi
tinf
ormat
ionr
epor
t: 5-Mai
ntai
ningst
rongf
inanci
alr
ecor
ds.
1-I
thelpsi
nanal
ysi
ngyourt
ruefi
nancialst
andi
ng 6-Toomanyf ormsofcr
edi
t(suchasunsecur
ed
(posi
ti
on)andmakepl
ansforf
uturefi
nances. personall
oans)amongf
amil
ymember s.
2-Onecanbeont
opofy
ourbor
rowi
ngsandav
oid 7-Pr
operut
il
izat
ionofappr
ovedcr
edi
tli
mit
.
debttr
aps.
8-Ensur
ingbanksandotherFI
,youaredeal
ingwith,
3-WithaCredi
tI nfor
mat i
onReportinhand, heor recordandsubmitposi
ti
veinf
ormati
ontoCI Cs.
shewi l
lbeinagoodposi t
iont
omakedeci sions
9-Request
ingandmaintai
nacopyper
sonal
lyr
ather
regardi
ngavail
ingnewf ormsofcr edi
t,whilealso
thanthr
oughfi
nanci
alinst
it
uti
ons.
beingabletoextractthebestpossibl
eratesf r
om
banksorotherlenders.
4-
Ithel
psi
ncul
ti
vat
ingf
inanci
aldi
sci
pli
ne.
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Fact
orsl
eadi
ngt
onegat
ivecr
edi
tscor
e: Adv
ant
agesofmai
ntai
ninghi
ghcr
edi
tscor
es:
1-Easyav
ail
abi
li
tyofcr
edi
tsuchasl
oans.
1-
Toomanycredi
trepor
tenqui
ri
esbybanksand 2-Accor
dingtotheoffi
cialCIBILwebsit
e,about
ot
heri
nst
it
uti
ons. 90%ofloanappli
cantswi t
hCI BILscor
egreater
2-
Chequebounces/
dishonour
s than700areapprov
edf orloans.

3-I
rr
egul
arl
oanr
epay
ment
s. 3-Quickprocessi
ngofl
oanandcr
edi
tcar
d
appl
icati
ons.
4-Def
aul
ti
ngoncreditcardbill
s/maki
ngl
ate
paymentorconsi
stentpartpayment. 4-Abi
li
tyt
onegoti
atei
nter
estr
ates,
owi
ngt
oyour
str
ongfi
nanci
alst
andi
ng.
5-Toomuchunsecur
edcr
edi
tsuchasmul
ti
ple
personall
oans 5-Thoughnotguar
anteed,t
hepossibi
li
tyof
negoti
ati
ngorwaiv
ingprocessi
ngfeesaswellas
6-Mul
ti
pleappl
icat
ionsf
orunsecur
edl
oanget
ti
ng choosi
ngprepaymentopti
ons.
rej
ect
ed.
7-
Def
aul
ti
ngasaguar
ant
or.
I
SSUESI
NCREDI
TSCORI
NG:
8-
Highuti
li
zat
ionofappr
ovedcr
edi
tli
mitor
over
shoot
ingthel
imit
. Credi
tscoringi
sanenablerforbankst
otakeacal
l
ontheriskassessmentbasedonthescoreand
9-
Err
orsinrecor
dbybanksandot
herf
inance accor
dinglydeci
deatthepricef
ortheri
sk.
i
nsti
tut
ions.
I
talsoenablest
hebankstospeedupcredi
t
deci
sionsanddisbur
sementbasedont
hescor
e.

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Withacr editinf
ormat
ionrepor
ti npl
ace, 1-
Conf
usi
onofNames:
responsi
blecust omer
scanexpectf ast
erandmore Therecanbel akhsofnamest hatar
esi
mil
arinthe
compet i
tiv
eser vi
cesatbett
ertermsandratesf
rom CC'sdatabase.Thingscangohay wi
rei
faperson
banksandot hercr
edi
tcompani es.
wit
hy ournamehasdef aul
tedandal
lhi
sdefaul
ts
Basedonthei
nfor
mat
ionav
ail
abl
ewi
thCI
Cs,
they getrecordedinyourfi
le.
i
ssuerepor
ts.
However,
apersoncanaccessthei
rcredi
trepor
ts
2-
HumanI
nputEr
ror
:
di
rect
lyaswel
lbyputt
inginarequesttoCIC.
Theinformationthatgoesfr
om thebankst othe
Onecant hengothr
ought
heirr
eportandi
fany CIConadef aultmayhav ebeenerroneousduet o
error
sfound,t
heycannot
if
ythebankandCIC
si
mpl einputerr
orbyoneoft hebankempl oyees.
regardi
ngthesame.
3-
Ident
it
yThef
t:
Thisist
hemostser iousofallcausesoferror
sand
MI
STAKESI
NCREDI
TSCORI
NG: canhaveadi sast
rousimpactonaper son'
scredi
t
Iti
sbutnat uralt
hatmi stakesmayoccuri nthe profi
lei
nrecentti
mes, i
denti
tytheftsareontheri
se.
creditscor
ingprocessduet ovariousfactorsandif Rightfr
om apet t
yshopkeeperwhoswi pesy our
wedonott akestepstocor rectit,
ourcr edi
tscor
e cardseveralt
imet osneakinanunof f
icialpay ment
willbearri
vedatwr onglyandwi llbeadet ri
ment
ortrackcredi
tcarddetail
s,whi
chhecanexpl oit
,to
whenweneedar etai
lloanorcr editcard.
aterror
istwhowant stoaccessabi l
li
onaire'
s
Letusseethecommonmi st
akesi
ncr
edi
tscor
ing accountinaremot ecorneroftheworld,identity
whichwil
laff
ectt
hescor
e. thefti
sbecomi ngaseriouscri
met hatneedscheck.
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TROUBLESHOOTI
NGCREDI
TSCORE: d.Thecontr
olnumberisaninedi
git(9)uni
que
Wehav etoacceptthatt herearechancesof numberthathel
pstotrackani
ndi
vidual'
scredi
t
mist
akeinarri
vingofcr editscoreormistaken repor
tfr
om CIC'
sdatabase.
i
denti
ti
escreati
ngconf usioni nthescor
ingprocess. Thecont
rolnumberisgenerat
edwhenbankspul
l
Er
rorsandinaccuraciesar epossibl
ewithCredit outy
ourcredi
trepor
tonar equi
rementbasi
s.
I
nfor
mat i
onRepor t. Thecontr
olnumberisauni
quenumber,
whichis
Thestepsforseeki
ngcl
ari
fi
cat
ionsi
nyourcr
edi
t gener
atedeveryti
meanybankorcr
edi
tinst
it
uti
on
repor
tareasfoll
ows. pul
lsoutacreditr
epor
tonyou.
a.Cont
actthebankt
hatdecl
inedacreditcardor e.CICrequi
resthisnumberbecauseitenabl
es
l
oanappli
cati
ononthebasi
sofy ourpoorcredi
t them t
ov i
ewt heexactdetai
lst
hatt
hebankhas
scor
e. seenwhent heydrewar epor
tonyou.
Askthem foraclar
if
icati
ononthepoorcredi
tscore Hence,i
tisi
mportantfory
outorequestt
hebankt
o
andrequestthem t
opr ovi
det
hecontrolnumberfor pr
ovideyouthecontr
olnumber.
yourcr
editrepor
t.
b.Thebankwi l
l pr
ov i
dey ouwiththecont
rol
numberoft hecreditreportandalsoshar
ethe
i
nformationont hecreditrepor
tthati
sresponsi
ble
foryourpoorcreditscore.
c.Provi
sionsareav
ail
abl
einthewebsi
teoft
he
CICsforresol
vi
ngdisput
es.

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RETAI
LMODULE-B Theimport
antaspectofDebitCardisthatatt
he
Chapt
er8:CREDI
TANDDEBI
TCARDS(
PART-
II
I) poi
ntofpurchaseit
sel
f,t
hepay mentismade
di
rect
lyf
rom thei
raccountbalances.
Whatwewi
llst
udy
?
Thedetai
lsoftheaccountareembeddedi nthe
*
Whati
sDebi
tCar
d? debi
tcardandcanbeusedatbot hmerchant
l
ocati
onsthroughaPOSMachi neforpur
chases
madeandal soinATMsf orwit
hdrawalofcash.
DEBI
TCARD:
Thetechnol
ogyaspect
sofcreditanddebi
tcards
Adebi
tcar
dpr ovi
desaccesst
oacar
dhol
dert
o
aresamewithregar
dtousage,size,
numberi
ng,
f
undsi
nhis/herbankaccount
.
et
c.,
Itcanbeusedtomakepur
chasesandt
owi
thdr
aw
butther
earedif
fer
encesbetweencr
editanddebi
t
cashfrom ATMs.
cardswit
hregar
dtofeatur
esandcharges.
Debitcardsof f
erconsumersafacili
tytopaywit
h
DebitCardsarei
ssuedwhenaccounti
sopened
own/exi st
ingfunds,subj
ecttobalanceavai
labl
ein
wit
ht hebankandhadbecomeanessenti
alval
ue
theaccount ,
whi l
eprovi
dingal
lthesecuri
tyand
addit
ionforSavi
ngsBankAccountandapar
tofthe
conveniencethatcomeswi thaplasti
ccard.
coreproduct
.
Thecharacter
isti
csofDebi
tCar
dsdi
ff
erv
ast
ly
Debi
tCar
dsar
eissuedbybanksi
ntwoway
s.
fr
om CreditCards.
1-
Attheti
meofissue,
agenericdebi
tcar
dwithout
Credi
tCardsdef
inetheconceptof“
BuyNow, Pay
embossi
ngthenameisissuedfori
mmediat
e
Later
”butDebi
tCardsexplai
ntheconceptof“
Buy
oper
ati
ons.
Now, PayNow”.
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2-Thesecondwayi s,aft
eropeni ngaccount,
the 2-
Debi tcardsshal
lbeissuedtocust
omershav
ing
accountdetai
lsareincorporatedand SavingBank/ Cur
rentAccount
sbutnott
ocash
embossed/loadedinthedebi tcardandissued credit
/loanaccounthol
ders.
withi
ntwo/threeweeksf rom theopeningofthe
3-
Banksshallissueonlyonlinedebitcar
ds
account. i
ncludi
ngco-brandeddebitscardswher ethereis
LikeCredi
tCards,
DebitCar
doper
ati
onsar
e i
mmedi at
edebi ttothecustomer '
saccountand
centr
ali
zedinbanks. wherestr
aightthroughprocessing(STP)isinvol
ved.
Thecardcanbeusedf oranyoperati
onsl
ike 4-Banksar
enotper
mit
tedt
oissueof
fl
ine-
debi
t
paymentofpurchases,
cashwithdrawal(
subjectto cards.
perdayli
mit
)throughATMs, Ut
il
it
yPay ment
s, et
c. 5-Banksshoul
densur
ecompl
iancewi
th
A-
KnowYourCust
omer(
KYC)Nor
ms/
B-
Ant
i-
MoneyLaunder
ing(
AML)St
andar
ds/
RBIGui
del
inesoni
ssuanceofDebi
tCar
ds: C-
Combat
ingofFi
nanci
ngofTer
ror
ism (
CFT)
/
D-Obl
igat
ionofBanksunderPMLA,
2002
Banksar eper
mitt
edtoi
ssuedebitcardsincl
udi
ng asbei
ngadv
isedbyRBIf
rom t
imet
oti
me.
co-brandeddebi
tcar
dswithoutRBIapproval
,
subjecttocer
tai
ncondi
ti
onsasunder : 6-Paymentofi
nter
estshoul
dbeinaccor
dance
withi
nter
estr
atedi
rect
ivesasi
ssuedbyRBIfr
om
1-Comprehensiv
eBoardappr
ov eddebi
tcar
d ti
metot i
me.
i
ssuancepolicyincl
udi
ngco-
brandeddebi
tcar
ds
shoul
dbeputi nplace.

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Otherter
msandcondi
ti
onsf
ori
ssueofcar
dst
o wi
thdr
aw,
ifhesochooses(
giv
ingsui
tabl
eper
iod)
.
customers:
1-Nobankshal ldi
spat
chacar dt
oacustomer
7-
Thetermsshal
lputt
hecar
dhol
deranobl
i
gat
ion
unsoli
cit
ed,exceptinthecasewher
ethecar
disa i
nrespectof
:
repl
acementf oracardalr
eadyhel
dbythe
customer. A)Saf
ekeepoft
hecar
dandt
hemeans(
suchas
PI
Norcode).
2-Therelat
ionshi
pbetweenthebankandt
hecar
d
holdershal
l becont
ract
ual
. B)Nottorecor
dthePINorcode,i
nanyf
orm whi
ch
enabl
esaccesstoanythi
rdpar
ty.
3-Eachbankshallmakeav ai
labl
etothecar
d
holder
sinwrit
ing,asetofcont r
act
ualt
ermsand C)Noti
fyi
ngt
hebanki
mmedi
atel
yaf
terbecomi
ng
condit
ionsgoverni
ngtheissueanduseofsucha awar
eof :
card. a.
Thel
ossort
hef
torcopyi
ngoft
hecard(
cloni
ng)
4-Theter
msshallspeci
fyt
hebasisofanychar
ges, ort
hemeanswhi
chenabl
eitt
obeused;
butnotnecessar
il
ytheamountofchar
gesatany b.Therecordi
ngonthecardholder
'saccountof
pointoft
ime. anyunauthori
zedt
ransact
ion;
and
5-Theter
msshallspeci
fyt
heperi
odwit
hinwhi
ch c.Anyerrororotheri
rr
egular
it
yint
hemai
ntai
ning
thecardhol
der
'saccountwoul
dnormal
lybe ofthataccountbythebank.
debit
ed.
6-Anyal
terat
iont
ot het
ermsshouldbe
communi cat
edwellint
imetoenablehi
mto
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8-Bankshal
lexer ci
secarewhenissui
ngPINsor
codesandshal lbeunderanobl
igati
onnotto
discl
osethecar dholder
'sPI
Norcode,exceptt
o
thecardhol
ders.
9-Bankshallberesponsiblefordi
rectlosses
i
ncur r
edbyacar dholderduet oasy stem
malfuncti
ondirectl
ywithinthebank'scontrolwit
h
theexcepti
onthebr eakdownr ecognizabl
eforthe
cardholderbyamessageont hedisplayofthe
deviceorother
wi seknown.
10-Nocashtransacti
onst hr
oughthedebitcar
ds
shouldbeoff
eredatt hePointofSal
eunderany
faci
li
tywit
houtpriorauthori
zat
ionofRBI,
etc.

Debi
tCar
dsVsCr
edi
tCar
ds:
Thei
mportantdi
ff
erencesbetweenCr
edi
tCar
ds
andDebi
tCardsaresummar i
zedbel
ow:

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RETAI
LMODULE-B
Chapt
er8:CREDI
TANDDEBI
TCARDS(
PART-
I) Chequesandt
ravel
ler
schequeshav
ebeenpopul
ar
aspaymentsy
stemsf oral
ongti
menow.
Whatwewi
llst
udy
?
Inr
ecentyears,
however,anot
herform ofpay
ment
*
Whati
sCr
edi
tCar
d?
hastakenthecent
re-
stageofbanking.
*
Whati
sChar
geCar
d?
Cr
edi
tCar
d:
Thi
sisthecr
edi
tcard.Creditcardsper
for
mther
ole
I
NTRODUCTI
ON: ofmoneywit
hrespecttotransacti
ons.
Apurchasei
scomplet
ewhent
hepriceorv
alueof Inot
herwords,creditcar
dscanbe,li
kemoney
,
pur
chaseispai
dwit
hmoneyorcheque. usedtocompletetransact
ionsandasameansof
Thisi
sbecausegoodsandpr
oduct
sar
eval
uedi
n payment.
ter
msofmoney . Moneyhasaccept
abi
li
tyasi
tisbackedby
Moneyperformsthefunct
ionsofastandar
d,st
ore Gover
nments.
ofv
alue,measurementofvalueorpr
iceand
medium ofexchange.
Chequesandpayorder
sareaccept
edasmeansof
Simil
artothecheque,
ther
ear eot
hermoney
-li
ke paymentastheyar
ebackedbybanks.
i
nstrumentswhichperf
orm oneormanyofmoney'
s
functi
ons. Thi
sshowst hatt
obeaccept edasameansof
payment
,themedi um/inst
rumenthastobebacked
Forexample,adeposi
taccountper
for
mst
he bystr
onginsti
tut
ionsandhav ewi
deaccept
abil
it
y.
funct
ionof'st
oreofval
ue’
.
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Inthecaseofcr edi
tcards,suchacceptabil
it
yi s Onlybankswit
hnetwort
hofRs.100croreand
enabledbylargenumberofbanksandf inancial aboveshoul
dundert
akecredi
tcar
dbusiness.
i
nstit
utions,
whi chare,
inturn,support
edbyt he Sett
ingupofsubsidi
ari
esforundert
aki
ngcredi
t
networkofpay mentservi
ceslikeVisa,MasterCard,
cardbusinesswoul
d,however
,requi
repri
or
Amer i
canExpr ess,
andRuPay ,etc. approvaloftheRBI
.
Thus,i
nviewofthehighcr edibi
li
tybroughtinbythe Eachbankmusthav eawel l
-documentedpol i
cyand
backi
ngofbanksandot herf i
nanciali
nstit
uti
ons, aFairPract
icesCodeforcreditcar
doper ati
onsof
credi
tcar
dsenjoythestatusofapopul ar“meansof suchnon-bankenti
ty,
toprotectthem againstt
he
payment'
. reput
ationr
iskwhichtheyareexposedt oinsuch
Cr
edi
tCar
dBusi
ness: anarrangement.
InI
ndia,banksareper
mi t
tedtoundert
akecredit Banksmayi ssuecr editcardsincludi
ngco-br
anded
cardbusiness,
eit
herdepart
mentall
yorthrougha credi
tcards,corporatecreditcardstothe
subsi
diarycompanysetupf ort
hepurpose. employeesoft heircorporatecustomers,
aswellas
Theycanalsounder t
akedomesti
ccreditcar
d add-oncredi
tcar ds.
busi
nessbyent er
ingint
otie-
uparr
angementwith DueDili
genceonthenonbankentit
yistobecarr
ied
oneofthebanksal r
eadyhavi
ngarrangementsf
or outtoprot
ectthemselv
esagainstther
eput
ati
on
i
ssueofcreditcards. ri
skwhichtheyareexposedt
oi nsuchan
arr
angement.
Pri
orapprovaloft
heRBIi snotnecessar
yforbanks
desir
ousofundertaki
ngcreditcar
dbusiness,
either
i
ndependentlyori
nt i
e-upar
rangementwithother
cardissui
ngbanks.

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Car
dscanbeclassi
fi
edont
hebasisoft
hei
r CHARGECARDS:
i
ssuance,
usageandpay
mentbythecar
dholder
. Achargecardal
lowscust
omerst
odefert
hecosts
ofpur
chasesmadeont hecar
dunt
ilt
heendofthe
Ther
ear
ethr
eet
ypesofcar
ds: paymentcycl
e.

(
a)debi
tcar
ds Accor
dingl
y,acardhol
derhasaf
ixedper
iodt
o
set
tl
ethebil
linful
l.
(
b)cr
edi
tcar
dsand
Achargecardaccountisnotdirect
lyl
inkedtoa
(
c)pr
epai
dcar
ds. customer
'saccount
,beitsavingsorcurrent,
Debitcar
dsareissuedbybanksandareli
nkedt
oa alt
houghwithmostcardsitispossibl
etolinkthe
bankaccount.Credi
tcardsarei
ssuedby twobymeansofadi rectdebitpayment.
banks/ot
herenti
tiesapprov
edbyRBI.
Thecreditli
mitsancti
onedtoacardholderi
sint
he Cr
edi
tCar
d Char
geCar
d
for
m ofar evol
vingli
neofcredi
t(si
mil
artoaloan
sanct
ionedbyt heissuer
)andmayormaynotbe Mi
nimum Amountdue Ful
lPay
ment
l
inkedtoabankaccount . Spendi
ngl
i
mitdef
ined Spendi
ngl
imi
tisnotset
Prepaidcardsar eissuedbyt hebanks/ non-banks Rol
li
ngbal
anceal
lowed Rol
li
ngbal
ancenotal
lowed
againstthev al
uepai dinadvancebyt hecardholder
andst oredinsuchcar dswhi chcanbei ssuedas
smar tcardsorchipcar ds,magnet icstr
ipecards,
i
nternetaccount s,
internetwallets,mobileaccounts,
mobi l
ewal l
ets,paperv ouchers,etc.
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RETAI
LMODULE-B Pr
epai
dPay
mentI
nst
rument(
PPI
):
Chapt
er8:CREDI
TANDDEBI
TCARDS(
PART-
II
) PPI
sar
epay
menti
nst
rument
sthatf
aci
li
tat
e
Whatwewi
llst
udy
? A-purchaseofgoodsandser
vices,
incl
udi
ng
*
Whatar
ePr
epai
dCar
ds? fi
nancialser
vices,

*
Whatar
edi
ff
erentt
ypesofcar
ds? B-r
emi
tt
ancef
aci
li
ti
es,
C-FundTr
ansf
eret
c.,
agai
nstt
hev
aluest
oredonsuchi
nst
rument
s.
PREPAI
DCARDS:
PrepaidCardsareissuedwit
ht heobj
ect
ivet
ooffer
aser v
icetotheunbankedaudienceandtoactasan PPIsthatcanbeissuedi
nthecount
ryar
ecl
assi
fi
ed
extensionofthecardmarket
. underthr
eetypesviz.
Prepai
dCar dscanbeissuedonsol
obasisor (
i)Cl
osedSy
stem PPI
s,
thr
oughco-brandedbasiswit
hbanksasphysi
cal (
ii
)Semi
-cl
osedSy
stem PPI
s,and
cards,
vir
tualcardsandmobil
ewall
ets.
(
ii
i)OpenSy
stem PPI
s.
NPCIoffer
sRuPayPr
epai
dcar
dsofdi
ff
erent
var
iant
s. PPI
scanbei
ssuedascar
dsorwal
let
s.

TheyareGiftcar
d,Pay
rol
lcar
d,St
udentcar
dand
Vir
tualcar
d.

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Cl
osedSy
stem PPI
s: Semi
-cl
osedSy
stem PPI
s:
ThesePPI sareissuedbyanenti
ty(
Reli
anceTrend) ThesePPIar enotissuedbyBanks(appr ovedby
forfacil
it
ati
ngthepurchaseofgoodsandser
vices RBI)andnonBanks( Author i
zedbyRBI )for
from thatent
it
yonly(Rel
ianceTr
end)&donot purchaseofgoodsandser v ices,incl
udi
ngf inanci
al
permitcashwi t
hdrawal. servi
ces,remitt
ancefacili
ties, et
c.,atagroupof
clearl
yidenti
fi
edmer chantl ocations/
Theseinst
rumentscannotbeusedforpay
ment
sor
set
tlementfort
hir
dpartyser
vices. establi
shmentswhi chhav easpeci fi
ccontractwith
theissuer(orcontr
actthroughapay ment
Theissuanceandoperat
ionofsuchi
nstr
umentsi
s aggregator/paymentgat eway )t
oacceptt hePPI s
notclassi
fi
edaspaymentsystemsanddoesnot aspay mentinstr
ument s.
requi
reapprov
al/aut
hori
sati
onfrom t
heRBI
.
Theseinstrument
sdonotpermitcashwi
thdr
awal,
i
rrespecti
veofwhethert
heyar
eissuedbybanksor
1-I
ssuedby:NonBank(
Del
hiMet
ro) non-banks.
2-Cashwi
thdr
awal
:Notal
lowed
3-Thi
rdPar
tyuse(
BigBazar
):NotAl
lowed 1-I
ssuedby:BankorNonBank(
Del
hiMet
ro)
2-Cashwi
thdr
awal
:Notal
lowed
3-Thi
rdPar
tyUse(
BigBazar
):Al
lowed
(
Onl
yifDel
hiMet
rohav
econt
ractwi
thBi
gBazar
)
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Whatar
ethet
ypesofSemi
-cl
osedPPI
s? 2-sel
f-decl
arat
ionofnameanduniqueident
it
y/
i
dentif
icati
onnumberofany‘mandator
ydocument
’
or‘of
fi
ciall
yval
iddocument
’(OVD).
Semi
-cl
osedPPI
scanbeoft
hreet
ypes:
Thepresentli
stofmandat orydocument/OVDs
1-PPIsupto₹10,
000/-wheremi
nimum detai
lsof i
nclude1-PAN, 2-passport,
3-dri
v i
ngl
icence,4-
PPIholderar
eobt
ained(mini
mum-det
ailPPI) Voter'
sIdenti
tyCard,
5-NREGAj obcard,6-proofof
2-PPI
supto₹10,
000/
-wi
thl
oadi
ngonl
yfr
om bank possessionofAadhaarnumberand7-l ett
erissued
account bytheNat i
onalPopulat
ionRegister
.
3-PPI
supto₹1,00,
000/
-wher
eKYCofPPIhol
deri
s
compl
eted(f
ull
-KYCPPI
)

Feat
uresofMi
nimum-
det
ailPPI
s:
Whatar et
hedetai
lstobeobtai
nedi
na‘mini
mum- a)Theamountloadeddur
inganymont
hshal
lnot
detai
l’
PPIandin‘PPIwit
hloadi
ngonl
yfr
om bank exceed₹10,
000/-
account’
?
b)Thetotalamountl
oadedduri
ngt
hef
inanci
aly
ear
Themini
mum detai
lsi
na‘ mi
nimum-detai
l’
PPIand shal
lnotexceed₹1,00,
000/
-.
i
n‘PPIwi
thl
oadingonl
yf r
om bankaccount’ar
e
sameandar
easunder : c)Theamountoutst
andi
ngatanypoi
ntoft
ime
shal
lnotexceed₹10,
000/-
.
1-Mobi
lenumberv
eri
fi
edwi
thOneTi
mePi
n(OTP)
and d)Thetotalamountdebi
teddur
inganygi
venmont
h
shal
lnotexceed₹10,000/-
.

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Featur
esofPPI
swi
thl
oadi
ngonl
yfr
om bank ser
vicesaswel
lasf
undst
ransf
er.
account: OpenSy
stem PPI
s:
a)Theamountloadeddur
inganymont
hshal
lnot
ThesePPI sareissuedonlybybanksandareused
exceed₹10,
000/-. atanymer chantforpurchaseofgoodsand
b)Thetotalamountl
oadedduri
ngt
hef
inanci
aly
ear serv
ices,
includi
ngf i
nancialser
vices,
remi
tt
ance
shal
lnotexceed₹1,20,
000/
-. faci
li
ti
es,etc.
c)Theamountoutst
andi
ngatanypoi
ntoft
ime Banksissui
ngsuchPPIsshallal
sofaci
l
itat
ecash
shal
lnotexceed₹10,
000/-
. wit
hdrawalatATMs/PointofSal
e(PoS)/Busi
ness
d)Loading/Rel
oadingshallbef
rom abank Corr
espondents(
BCs).
accountand/orcredi
tcard. 1-I
ssuedby:Onl
yBank
Fundstr
ansferf
rom t
heset
wot
ypesofPPI
sis 2-Cashwi
thdr
awal
:al
lowed
notper
mitt
ed. 3-Thi
rdPar
tyUse:Yes
Feat
uresofsemi
-cl
osed‘
ful
l-
KYC’
PPI
: Ty
pesofOpenSy
stem PPI
s:
1-
Rel
oadabl
einnat
ure. OpenSy
stem PPIscanbeissuedonlybybanks,
2-
Theamountout
standingshal
lnotexceed₹ whohaveRBIapprovalt
oissuesuchPPIs.
1,
00,
000/
-atanypointofti
me. Thereisonlyonetypeofopensystem PPIi
.e.PPI
3-Ther
ear
enoli
mitsprescr
ibedf
ort
otalcr
edi
tsor wit
hbal anceupto₹1,00,
000/
-,
whichcanbei ssued
debit
sdur
ingamonth. aft
ercompl et
ingKYCofthePPIhol der(
ful
l-
KYC
PPI).
4-
Theycanbeusedf
orpur
chaseofgoodsand
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Feat
uresofOpenSy
stem PPI
sar
easf
oll
ows: I
ncaseofsuchpr e-
regist
eredbenef
ici
ari
es,
the
1-Rel
oadabl
einnat
ure. fundt
ransf
erli
mitshallnotexceedRs.1,
00,
000/-
permonthperbenefi
ciary
.
2-Theamountoutst
andi
ngshal
lnotexceed₹
1,
00,000/
-atanypoi
ntofti
me. PPIissuer
sshallsetthelimit
swithi
nthi
scei
li
ng
taki
ngintoaccounttheriskprof
il
eofthePPI
3-Canbeusedforpurchaseofgoodsandser
vices, holder
s,otheroper
ationalri
sks,
etc.
fundst
ransf
erandcashwi t
hdrawal
.
Thefundtr
ansf
erli
mit
sforallot
hercasesshal
lbe
Isthereanyl
imitonl
oadi
ngofPPI
sbycashor rest
ri
ctedt
oRs.10,
000/-permonth.
elect
ronicmeans?
Gener
alGui
del
inesf
orPPI
:
Yes,t
hecashloadingofPPI sislimit
edto₹50, 000/
permonthsubjecttooveral
llimitofthePPI.The AllPPIsi
ssuedint
hecount
ryshallhav
eami ni
mum
l
imitonl
oadingofPPI sviaelectr
onic/onli
ne vali
dit
yperi
odofoneyearf
rom t
hedat eofl
ast
meansissubjecttooveral
lli
mi tofthePPI. l
oading/r
eloadi
ngi
nthePPI.

Gener
alGui
del
inesf
orOpenSy
stem PPI
: PPIissuer
sar
efr
eet
oissuePPI
swi
thal
onger
val
idit
y.
Theamountoutst
andingshal
lnotexceedRs.
1,
00,
000/-atanypoi
ntofti
me. IncasethePPIisi
ssuedinthefor
m ofacar d(wi
th
val
idit
yperi
odmentionedonthecard)
,thenthe
Banksshal lprovi
dethefacil
it
yofpre-
regi
stered customershal
lhavetheopt
iontoseekreplacement
benefi
ciari
eswher ebythePPIholdercanregister ofthecard.
thebenef i
ciari
esbyprovi
dingthei
rbankaccount
detai
l
s, detail
sofPPIsissuedbythesamei ssuer
(ordi
fferentissuer
sasandwhenper mit
ted),
etc.

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I
ssuance,
loadi
ngandr
eloadi
ngofPPI
s: 6-Banksshallbepermi
tt
edtoissueandreloadPPI
s
1-PPIi
ssuersshallhaveaclearl
aiddownpolicy, attheirbr
anches,ATMsandthroughthei
rBCs
dulyapprovedbytheirBoar
d,fort
heissuanceof appointedasperthegui
del
inesissuedbyRBIin
thi
sregard.
vari
oustypes/cat
egor i
esofPPIsandallact
ivi
ti
es
rel
atedther
eto.
2-PPIi
ssuer
sshal
lensur
ethatnoi
nter
esti
s PPI
sforcr
oss-
bor
derout
war
dtr
ansact
ions:
payabl
eonPPIbal
ances.
3-PPIsshal
lbepermitt
edtobeloaded/r
e-l
oadedby
Ful
l-
KYCsemi -
closedandopensy stem PPIsi
ssued
cash,bydebittoabankaccount
,bycredi
tanddebi
t byAuthori
sedDeal erCategory-
Ibanks,canbeused
cards,andotherPPI
s(aspermit
tedfrom t
imeto
i
ncross-borderoutwardtransacti
onsfor
ti
me) . per
missiblecurrentaccounttr
ansacti
onsunder
Theel ectr
oni
cloading/r
e-l
oadi
ngofPPIsshal
lbe FEMAv i
z.purchaseofgoodsandser vi
ces.
throughabovepay mentinst
rumentsi
ssuedonl
yby
Thisfaci
li
tyshal
lbeenabl
edonl
yonexpl
ici
t
regulatedent
it
iesinIndi
aandshallbei
nINRonly.
requestofaPPIholder
.
4-Cashloadi
ngt
oPPIsshallbel
imit
edt oRs.
50,000/
-permonthsubj
ecttoover
alll
imitoft
he
PPI. Tr
ansact
ionLi
mit
s:

5-ThePPIsmaybeissuedascards,
wal
let
s,and Pert
ransact
ionl
imi
tshal
lnotexceed₹10,
000/
-.
anysuchform/i
nstr
umentwhichcanbeusedto Permont
hli
mitshal
lnotexceed₹50,
000/
-.
accessthePPIandtousetheamountt
herei
n.
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Tr
ansact
ionsal
lowed: RETAI
LMODULE-B
Permissibl
ecurr
entaccounttransacti
onsunder Chapt
er8:CREDI
TANDDEBI
TCARDS(
PART-
IV)
Forei
gnExchangeManagementAct( FEMA)v i
z. Whatwewi
llst
udy
?
purchaseofgoodsandservices,subjectt
o
adherencetoextantnor
msgov er
ningsuch *
Whati
sco-
brandedcar
d?
tr
ansactions. *
Whati
scont
actl
esscar
d?

Tr
ansact
ionsnot
-al
lowed: CO-
BRANDEDCARDS:
Anycross-
borderout
war df
undtransf
erand/
orf
or Co-brandingi
saprocesswher
etwoormore
maki
ngr emit
tancesundertheLi
beral
ised faci
li
tiesarecombi
nedinacar
dwithadded
Remit
tancesScheme.(LRS) benefits.
Pr
efundi
ngofonl
inemer
chant
’saccount
. Anairl
ineorahotelchai
nco-brandedcar
dist
he
bestexampleofaco-brandedcard.

Incasethi
sf aci
li
tyismadeavai
lablebyi
ssui
ngthe Co-
brandedcar
dsoff
ert
heusual f
aci
li
ti
espl
us
PPIincardform, t
henthi
sPPIshallbeEMVChip somerewardsf
rom t
heco-
brandedenti
ti
es.
andPINcompl i
ant. Forexampl
e,anairl
ineco-br
andedcar
dwi l
lgi
ve
somespeci
aldiscountstothecar
dholderon
booki
ngti
cketswiththecard.
Co-br
andi
nghaspl
ayedacruci
alr
oleint
heshapi
ng
andgrowt
hofthecr
editcar
dbusi
ness.

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Co-br
andi
ngpart
ner
shipshavepr
ovedtobe Co-brandinginv
olvesapar
tnershi
pbetweena
ef
fecti
vei
ntappi
ngquali
tycar
dhol
der
s. corporateandaf i
nanci
ali
nsti
tuti
onand
Co-
brandi
nghelpsabankinaddi
ngtoit
scardbase, Visa/Mast er
.
ast
heco- br
andi
ngpart
neral
soundert
akes Co-brandedcardsuserewardprogr
ammesand
market
ingofthepr
oduct. specialoff
ers,
suchasr ebat
esanddiscount
sto
att
ractnewcust omersandgenerat
eloyal
tyamong
Oneoft
heknownco-
brandedcar
dsi
s
exi
stingcustomers.
“
TimesCar
d”–Ci
tiBank’
sti
ed-
upwi
tht
heTi
mesof
I
ndi
a. Co-brandingl
etstheret
ail
ermaket
hebi
ggest
i
mpr essionpossi
ble,
whichcanmeanamore
TimesofI ndi
acameoutwi t
hmassive successfulpr
ogramme.
advert
isementsintheirnewspaper
s,pr
omoti
ngthe
productandthishelpedCiti
bankconsi
der
abl
yin Thepr ofi
tpotenti
alofco-brandingisbeingreal
ized
i
ncreasingthecardholderbase. i
nmanyi ndustri
es,i
ncludingautomobile,
comput ers,
electr
onics,enter
tai
nment ,i
nsurance,
Otherco-
brandedcar dsi
ncir
culati
onareAmex-
Jet i
nternet,petr
oleum,retai
l,sport
s,supermarket,
Ai
rway sCard,Cit
ibank-I
ndi
anOi l,
ICI
CI–HPCL, tr
avel,etc.
BOI–TajHot els,SBI–Maruti
,etc.
Co-
brandingput
stheissuercompanynameand
Co-
brandedcardsofferalotoff
reebi
esand l
ogoont heworl
d'sl
eadingpaymentbrand.
ent
ici
ngoffer
s,whichv ar
ywitheachcar
d.
Co-brandi
ngcanincr
easer
evenuesandmar
ket
Theannualf
eesinsuchcardsaresli
ghtl
yhigher share,andbui
ldcust
omerl
oyalt
y.
thaninr
egul
arcredi
tcar
dsbutthef r
eebiesoff
ered
couldmakeupforthehi
ghercostthatonepays.
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CONTACTLESSCARDS: Moreover
,thespeedatwhi
chthetr
ansact
ioncan
ACont actl
esscar
disaf asterwaytopaywi t
ha becarr
iedoutisal
mostdoubl
ethatoft
radit
ional
credi
tordebitcar
df orpurchasesunderRs.2,
000/- car
ds.
atpart
icipat
ingst
ores.(Bestexample:Del
hiMetro) Thekeyadvant
ageist
hat;t
hiscar
dtakesl
esst
ime
forcompl
eti
onofthet
ransact
ion.
Insteadofdipping(orswiping)thecardatthe
bill
ingcounter,
simplywav eortapt hecardonthe Thecardneednotl
eavethecust
omer'
shandwhile
cont act
lesster
minalandpaywi t houtent
eri
ngaPIN i
noperati
onwhichenhancest
helev
elofsecur
it
y.
(foramountunderRs.2, 000/-)
. Contact
lesst
echnol
ogyusessecur
eencry
pti
on
Thesecar dsworkonNear -
Fiel
dCommuni cat
ion (t
hesameasCHI PandPIN)soitcanbeconf
ident
ly
(NFC)technology
, whi
chempl oysr adi
o used.
tr
ansmi ssiont
oascertai
ncont actwhenthecards Themaximum t
ransacti
onval
ueforacont
act
less
aretappedorwav ednearatermi nal. tr
ansact
ioni
scappedatRs.2,
000/-whi
chfur
ther
Theseenabl
ecust
omerstomakepayment
sby l
imit
sanypossi
bleloss.
wavingort
appi
ngthecar
dsi
nsteadofswi
ping
Furthermor
e, t
hecardholderi
sprotect
edi
ncaseof
them. l
ossort heftofthecard,
provi
dedthesameis
Afterthi
s,oneneedst
oent
erone'
sPI
Ntocompl
ete reportedt
ot heissui
ngbankontime.
thetransact
ion. Thecardi
ssuingbanksfi
xthedai
lyl
imitonthe
I
fneeded,t
hesecar
dscanal sobeusedint he pur
chasesdoneusingthecont
act
lesscards.I
t
t
radi
ti
onalway-byswipingordi
pping.I
tincreases var
iesf
rom banktobank.
t
heeaseandconvenienceoftr
ansacti
ons.

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Gener
alGui
del
inesonCar
ds: RETAI
LMODULE-B
Forexample,t
heanalysi
sofdebitcardtr
ansacti
ons Chapt
er9:REMI
TTANCEPRODUCTS(
PART-
I)
showsthatthecardsareincr
easi
nglyusedatthe
Whatwewi
llst
udy
?
ATMsf orwit
hdrawingcashthanforshoppi
ng.
*
Whatar
ether
emi
tt
ancepr
oduct
s?
I
nt hemonthofOctober(themonthforwhichthe
RBIdataisav
ailabl
e),
forexample,
ATMssaw *
Whati
sBanker
’schequeandDemandDr
aft
?
tr
ansacti
onvalueofRs.1,
92,300cror
ewher easthe
tr
ansacti
onsatthePOSwer eonlyRs.11,
956cr ore.
I
NTRODUCTI
ON:
Somebanker
ssayt
hatt
her
ear ecustomerswho
Remi t
tancesarei
mpor
tantandi
ntegr
alpar
tof
wit
hdr
awcashandpayf
oruti
li
tybil
ls,f
uelorshop.
ret
ailbanking.
I
nf act
,ther
ecentRBIgui
deli
neisastepi
ntheright
Remi t
tancepr oductshaveevol
vedov eraperi
od
di
recti
onwheretheregul
atorr
estr
ict
edATM usage.
from physicalmov ementofremit
tanceinst
ruments
I
thasr estr
ict
edbanks'ownATM usebycustomers toinstantelectr
onictr
ansferofr
emi t
tancesacross
tofiv
et r
ansacti
onspermonth,
whilereduci
ngthe thecount r
yandgl obe.
other-
bankusagefrom fi
vet
othreetr
ansacti
ons
Cheques,DemandDrafts,BankOr der
s,Telegr
aphi
c
permont h.
Transf
ersaresomeoft heearli
estremit
tance
Thecustomerswil
lhav
etopayRs.5t
oRs.20f
or pr
oductsthatconst
it
utedt hecoreremit
tance
exceedi
ngtheli
mit
. mechanism acr
ossbanks.
Beitproact
ivebanker
sorregul
ati
ons,
wear
e Butthei
nvasi
onoft
echnologyinbanki
nghas
ent
eringtheageofdigi
talmoney. per
meatedint
other
emittancesspacealso.
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Technologybroughtaboutaparadi
gm changei
n Useofpaper -
basedi
nstr
uments( chequesand
thewholeremittancespacewit
hnewer,speedi
er draf
ts)fornearl
y60%ofthevolumeoft otalnon-
andinnovati
veremi t
tancepr
oductsi
nbanking. cashtransact
ionsi
nthecountr
y .
I
nval
uet
erms,
theshar
eispr
esent
lyar
ound11%.
Retai
lelectronicandcardbasedpayment shave Thissharehasbeenst eadil
ydecr
easingovera
seenaquant um jumpinthepastf
ewy earsmainly peri
odoft i
meandel ectroni
cmodegai ned
duetothei ntroducti
onofNati
onalEl
ectronicFund populari
tyduetotheconcer t
edef
fortsofRBIto
Transf
er( NEFT)andRealTi meGrossSet t
lement populari
zetheelect
ronicpaymentproductsi
n
(RTGS). prefer
encetocashandcheques.
RBIhastakenmanyinit
iat
ivestowar
dsintr
oduci
ng Theiniti
ati
vestakenbyRBIi nthemi d-ei
ghti
esand
andupgradi
ngsafeandeffici
entmodesofpayment earl
y-ni
neti
esf ocusedont echnology-based
syst
emsi nthecount
rytomeett her
equi
rementsof sol
utionsfortheimpr ovementoft hepay mentand
thepubl
icatlar
ge. sett
lementsyst em i
nfrastr
ucture,coupledwiththe
Thedomi nantfeaturesoflargegeogr aphicspread i
ntroducti
onofnewpay mentpr oductsbytaking
ofthecountryandt hev astnet
wor kofbr anchesof advantageofthet echnologi
caladv ancementsin
theIndi
anbanki ngsy st
em requi
ret helogisti
csof banks.
coll
ecti
onanddel iveryofpaperinstrument s. Thecontinuedincr
easeinthevol
umeofcheques
addedpressureontheexisti
ngset-
up,thus
Theseaspectsoft
hebankingst
ruct
urei
nthe
count
ryhavealwaysbeenkepti
nmindwhil
e necessi
tati
ngacost -
eff
ecti
vealt
ernat
ivesyst
em.
devel
opi
ngt hepay
mentsystems. Whilet
heover
allt
hrustistor
educetheuseof
paperf
ort
ransact
ions,giv
enthefactt
hati
twoul
d

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takesometimetocompl etel
ymov et othe
elect
roni
cmode, t
heint
entionistor educethe 2.DemandDr
aft
:
mov ementofpaperbot
hf orlocalandoutstat
ion
clear
anceofcheques.
Abankdr af
tisanegotiabl
einst
rument,dr
awnby
onebranchofabankuponanot heri
nstr
ucti
ngt
he
Remi
tt
ancePr
oduct
s: l
attertopayacert
ainsum ofmoneyonlyortot
he
Thetwomosttradi
ti
onalfor
msofr emit
tances orderofacert
ainperson.
product
susedbythebanksformakinglocal
Abankdrafti
sabil
lofexchangebuti
snota
paymentsandf
orremitt
ingfundsoutst
ati
onare: chequeassuch.
Forthepurposeofvari
ousprotecti
onsavail
ablet
o
1.Banker
'sCheque: apay i
ngoracoll
ectingbankundertheNegotiabl
e
Inst
rumentsAct,1881iti
showev er,t
reat
edasa
Banker
'sChequesar
eissuedformaki
ngl
ocal
paymentsonbehal
fofcustomers. cheque.
Abankcannotmakei
tsdemanddr
aftpay
abl
eto
Alll
ocalpay mentsbybr anchesshouldbemadeby
meansofBanker ’
sChequesonaccountof bear
er.
purchaseofstationery,
furnit
ure,sundryart
icl
es, Thi
swillbeav
iol
ati
onofSec.31oft
heRBIAct
tel
ex/ t
elephone/ el
ectr
icit
ybill
s,etc.
,repay
mentof 1934.
bal
ancesi ntheaccount softhedeceased,
payment stootherlocalbanks.etc.
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ELECTRONI
CPAYMENTSYSTEMS: Pay
mentandSet
tl
ementSy
stemsAct
,2007:
Wit
hcomput erisat
ioninIndianbanksr apidl
y Theenact mentofthePaymentandSet tl
ement
pi
ckingupi
nt hef i
rstdecadeoft hiscentury
,the SystemsAct ,2007toprovi
def ortheregulat
ionand
RBIseti
nmot ionnecessaryr egulat
ionsand supervi
sionofpay mentsystemsi nIndi
aandt o
paymentsy
st emsf orelect
ronicfundst r
ansfer. designatetheReserveBankofI ndiaasthe
Ther
ear
etwoset
sofaccesscr
it
eri
aforbanks: authori
tyforthatpur
posef urt
herstrengt
henedthe
paymentsy stem.

ForCent
ral
isedPay
mentSy
stems(
CPC)
:
SettingupofNat i
onalPay mentsCor porat
ionof
Whichincl
udesRealTimeGr ossSet
tlement(RTGS) India(NPCI ),anumbr ell
aor gani
sationforoperati
ng
syst
em, Nati
onalEl
ectr
onicFundsTransfer(
NEFT), retailpayment sandset tl
ementsy stemsi nIndi
ais
Nati
onalElect
roni
cCleari
ngServi
ce(NECS)to ani nit
iati
veofReser veBankofI ndi
a( RBI)and
el
igi
bleli
censedbanks. IndianBanks' Association( I
BA)undert he
prov i
sionsoft hePay mentandSet t
lementSy st
ems
Act ,2007,forcr eat
ingar obustPayment&
ForDecent
ral
isedPay
mentSy
stems(
DPS)
:
SettlementI nfrastr
uct ureinIndi
a.
Whichincl
udeCleari
ngHousesatMI CRcentres
(i
ncl
udingChequeTruncat
ionSystem cent
res(CTS)
)
andElectr
onicCl
eari
ngServi
ce(ECS)opent oall
el
igi
bleli
censedbanks.

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RETAI
LMODULE-B NEFTSy
stem:
Chapt
er9:REMI
TTANCEPRODUCTS(
PART-
II
) NEFTisanati
on-wi
depaymentsy
stem f
aci
li
tat
ing
one-
to-
onefundstr
ansf
er.
Whatwewi
llst
udy
?
Undert hi
sscheme, indi
viduals,f
ir
msandcor porate
*
Whati
sNEFT?
canelectroni
call
ytransferfundsfrom anybank
*
Whati
sobj
ect
iveofNEFT? brancht oanyindi
vi
dual, f
ir
m orcor por
atehavi
ngan
accountwi t
hanyot herbankbr anchinthecountry
parti
cipati
nginthescheme.
NATI
ONALELECTRONI
CFUNDSTRANSFER(
NEFT)
:
NEFToperat
esonaDeferr
edNetSet
tl
ement( DNS)
Reser
veBankofIndi
ahasintroducedanElect
roni
c
basi
swhichset
tl
est
ransacti
onsi
nbatches.
FundsTr
ansf
erSy st
em cal
ledNationalEl
ect
roni
c
FundsTr
ansf
er(NEFT). Forbei
ngpartoft
heNEFTfundstr
ansf
ernet
wor
k,
abankbranchhastobeNEFT-
enabl
ed.
Theobj
ect
iveoft
heNEFTSy
stem i
s:
Indiv
idual
s,f
ir
msorcor
poratemai
ntai
ning
1.ToestablishanElectr
onicFundsTr ansfer
accountswit
habankbranchcant
ransf
erfunds
System t
of acil
it
ateaneffi
cient
,secure,economical
,
usingNEFT.
rel
iabl
eandexpedi ti
oussystem offundst r
ansf
er
andcleari
ngi nthebanki
ngsect ort
hroughoutIndia, Evensuchindi
vidualswhodonothav eabank
and account(
walk-
in-customers)canalsodepositcash
attheNEFTenabl edbrancheswit
hi nst
ruct
ionsto
2.Toreli
evethestr
essont heexi
sti
ngpaperbased
tr
ansferf
undsusi ngNEFT.
fundstr
ansferandclear
ingsyst
em.
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However,suchcashr
emi t
tanceswillberest
ri
cted NEFT.
t
oamaxi mum oflessthanRs.50,000/-per Howev er
,maximum amountpert r
ansactionis
t
ransact
ion. l
imitedtobel
owRs.50, 000/
-forcash-based
Suchcust
omershavetofurni
shf ul
ldet
ail
s remitt
anceswithi
nIndi
aandal soforremitt
ancest
o
i
ncludi
ngcompl
eteaddress,t
elephonenumber
,et
c. NepalundertheIndo-
NepalRemi t
tanceFacili
ty
NEFT,thus,f
acil
it
atesori
ginat
orsorr
emi
tt
ersto Scheme.
i
nit
iat
ef undstr
ansfert
ransacti
onsev
enwit
hout TheNEFTsyst
em takesadv
ant
ageoft
hecor
e
havi
ngabankaccount . banki
ngsy
stem i
nbanks.
Theremit
tancethroughNEFT/RTGSi sbeing Accor di
ngly,
thesett
lementoff undsbet ween
tr
ansmit
tedthroughSt r
uct
uredFi
nancial ori
ginatingandrecei
vingbankst akesplaces
Messagi
ngSy stem (SFMS). centrall
yatMumbai ,whereasthebr anches
Indivi
dual
s,f
ir
msorcorpor
atemai
ntai
ning parti
cipati
nginNEFTcanbel ocatedany where
acrosst hel
engthandbr eadt
hoft hecount r
y.
accountswit
habankbranchcanr
ecei
vefunds
throughtheNEFTsy
stem. Summar
y:
TheNEFTsystem alsofacil
it
atesone-
waycross- Mi
nAmount
:NoLi
mit
bor
dertr
ansf
eroff undsfrom Indi
atoNepal
. MaxAmount
:NoLi
mit
Thisi
sknownast
heI
ndo-
NepalRemi
tt
anceFaci
li
ty Tot
alnumberofhal
fhour
lybat
ch:48
Scheme.
Fi
rstBat
chSt
artat
:00:
30
Therei
snolimi
tei
thermini
mum ormaxi
mum on
theamountoff
undsthatcoul
dbetr
ansf
err
edusi
ng LastBat
chEndat
:00:
00

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Thestr
uct
ureofchargesthatcanbel
evi
edont
he NEFTTr
ansact
ionChar
ge:
cust
omerforNEFTisgivenbelow: Ori
ginatingbanksarerequir
edtopayanomi nal
a.Inwardtr
ansact
ionsatdest
inat
ionbank char
geof25pai seeachpertransact
iont
ot he
branches: ( f
orcredi
ttobenefi
ciar
yaccount
s) cl
earinghouse( 25paisa)aswellasdest
ination
bank( 25paisa)asservi
cecharge.
•Fr
ee,
nochar
gest
obel
evi
edonbenef
ici
ari
es
b.Outwardtransact
ionsator
igi
nati
ngbank However
,thesechar
gescannotbepassedont
othe
cust
omersbythebanks.
branches:(
chargesappli
cabl
etotheremi
tt
er)

NEFTTr
ansact
ionSet
tl
ementTi
me:
Tr
ansact
ionAmount Char
ge
Thetransact
ionsaresett
ledinB+2timingsand
Fortr
ansact
ionsupt
o Upt
oRs.2.
50 (
+GST)
hencethebenefici
arycanexpecttogetcredi
tfor
Rs.10,
000
theNEFTt r
ansacti
onswithi
nt wobusinesshours
Fortr
ansact
ionsabove Upt
oRs.5 (
+GST) from t
hebatchinwhi cht
hetransact
ionwasset t
led.
Rs.10,
000upt oRs.1
I
fNEFTamountnotcr
edi
tedi
n2Hour
s:
l
akh
I
fitisnotpossi bletoaffor
dcr edi
ttot heaccountof
Fort
ransacti
onsabov
e UPt
oRs.15 (
+GST)
thebeneficiar
yf orwhateverreason,desti
nation
Rs.1lakhanduptoRs.2
banksarer equiredtoreturnthetransacti
on(tothe
l
akh
ori
ginati
ngbr anch)withintwohour sofcompl eti
on
Fort
ransact
ionsabov
e Upt
oRs.25 (
+GST) ofthebatchi nwhi cht
het ransact
ionwas
Rs.2lakh processed.
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Penal
tyi
ncaseofdel
ay:
I
fNEFTamountsuccessf
ull
ycr
edi
ted: I
ftheNEFTtr
ansact i
onisnotcredit
edorret
urned
Incaseofsuccessf ulcreditt
othebenefici
ary'
s wit
hint
hesti
pulatedti
met henthebanksareli
abl
e
account ,thebankwhi chhadori
ginat
edthe t
opaypenali
nteresttotheaffect
edcustomers.
transactionisexpect edtosendaconf i
rmationto Banksar erequir
edt opaypenali nter
estatthe
theor i
ginati
ngcust omer( thr
oughSMSore- mail) currentRBILAFRepoRat epl ustwoper cent(
RR+2%)
adv i
singoft hecreditasalsoment i
oni
ngt hedate fortheperi
odofdel ay/ti
llt
hedat eofrefundasthe
andt i
meofcr edi
t. casemaybet otheaf fectedcustomer ’
saccount
Fort
hispurpose,r
emitt
ersneedtoprov
idethei
r withoutwaiti
ngf oraspeci f
icclai
mt obel odgedby
mobil
enumber /e-
mail
-I
Dt othebr
anchattheti
me thecustomeri nthisregard.
ofor
igi
nati
ngt hetr
ansact
ion.

Tr
acki
ngofNEFTTr
ansact
ion:
Ther emittercantracktheNEFTt ransaction
throughtheor igi
nati
ngbankbr anchori tsCustomer
Facili
tat
ionCent re(CFC)usi
ngt heUni que
TransactionRef er
ence(UTR)numberpr ov i
dedat
thetimeofi nit
iati
ngthefundtransfer.(UTRf or
NEFT: 16Di git
s&RTGS:22Di git
s)

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RETAI
LMODULE-B Oper
ati
ons:
Chapt
er9:REMI
TTANCEPRODUCTS(
PART-
II
I) Step1:Ani ndi
v i
dual/fi
rm/ corporateintendi
ngto
ori
ginatetransf eroffundst hroughNEFThast ofi
ll
Whatwewi
llst
udy
?
anappl i
cationf orm provi
dingdet ail
soft he
*
Whati
spr
ocessf
lowofNEFT? benefi
ciary( li
kenameoft hebenef ici
ary,nameof
*
Whati
sadv
ant
ageofNEFT? thebankbr anchwher ethebenef i
ciar
yhasan
account,IFSCoft hebeneficiarybankbr anch,
accountty peandaccountnumber )andt heamount
NATI
ONALELECTRONI
CFUNDSTRANSFER(
NEFT)
: tober emitted.
Theapplicat
ionf
orm wil
lbeav
ail
abl
eatt
he
NEFT–Pr
ocessFl
ow: ori
ginat
ingbankbranch.

Thepar
ti
est
oaf
undst
ransf
erunderNEFTSy
stem Theremit
terauthor
izeshi
s/herbankbrancht
o
are: debi
thisaccountandremitthespeci
fi
edamountt
o
thebenef
ici
ary.
a.TheSendi
ngBank,
Customersenjoyi
ngnetbankingfacil
it
yoff
eredby
b.TheSendi
ngSer
viceCent
re,
thei
rbankerscanalsoi
nit
iat
et hefundstr
ansfer
c.TheNEFTCl
ear
ingCent
re, requestonl
ine.
d.TheRecei
vi
ngSer
viceCent
re,
and Somebanksof
fert
heNEFTf
aci
li
tyev
ent
hrough
e.TheBenef
ici
aryBr
anch. theATMs.
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Walk-i
ncust omerswil
l,
however,havet
ogivethei
r accounti
ngentri
estorecei
vefundsfr
om the
contactdetail
s(compl
eteaddressandtel
ephone ori
ginat
ingbanks(debi
t)andgivet
hefundstot
he
number ,
etc.)tothebr
anch. desti
nati
onbanks(credi
t).
Thiswil
lhelpthebranchtor ef
undthemoneytothe Thereafter
,bank-wi
seremit
tancemessagesare
customerincasecreditcouldnotbeaf
for
dedt o for
war dedtothedesti
nati
onbanksthr
oughtheir
thebenefi
ciary
'sbankaccountorthetr
ansact
ionis pooli
ngCent re(NEFTServ
iceCent
re).
rej
ected/returnedf
oranyr eason. Step5:Thedesti
nati
onbanksreceiv
etheinward
remit
tancemessagesfr
om theClear
ingCentr
eand
St
ep2: passont hecr
edi
ttothebenef
ici
arycust
omers'
accounts.
Theori
ginat
ingbankbranchprepar
esamessage
andsendsthemessaget oi
tspooli
ngcent
re(
also NEFTcanbeusedtot
ransf
erf
undsf
rom ort
oNRE
cal
ledtheNEFTServi
ceCentre). andNROaccount
sint
hecountr
y.

St
ep3: This,however
,issubjectt
otheadherenceofthe
provi
sionsoftheForeignExchangeManagement
Thepool i
ngcentr
ef orwar
dst hemessagetothe Act,2000(FEMA)andWi r
eTransferGui
del
ines.
NEFTCl eari
ngCent r
e(operatedbyNati
onal
Clear
ingCell,RBI
,Mumbai )tobeincl
udedforthe Everyparti
cipati
ngbankandadmi t
tedinsti
tuti
on
nextavail
ablebatch. shallopenandmai ntai
nintheNEFTCl eari
ng
Centre,Mumbai ,asett
lementaccountf or
St
ep4: sett
lementofpay mentobligat
ionsarisingundert
he
TheCleari
ngCentresortsthefundst
ransf
er fundstransferexecut
edundert heNEFTsy stem.
tr
ansacti
on’sdest
inat
ion,bank-wi
seandprepar
es

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Thesettl
ementsoar ri
vedatthroughmulti
lat
eral 3.Theformatshal
lbecompl
etei
nal
lrequi
sit
e
netti
ngshal
lbef i
nalandirr
evocable,i
nter
msof part
icul
ars.
secti
on23oft he“PaymentandSet tl
ement 4.Thecustomershallberesponsi
blef
orthe
SystemsAct,2007”assoonast hesameis
accuracyofthepar
ti
cular
sgi v
eninthepayment
determi
nedint er
msoft heproceduresnot
ifi
edby
i
nstructi
on.
RBI.
5.Thecust omershallbeboundbyanypay ment
i
nstructi
onexecutedbyt hebankifthebankhad
NEFT-Right
sandObl
igat
ionsofCust
omer
sand executedthepaymenti nst
ructi
oningoodfai
thand
Banks: i
ncompl iancewiththesecurit
yprocedur
e.
Reserv
eBankofI ndi
ahasprescr
ibedther
ight
sand Customershallnotbeboundbyanypay ment
obl
igati
onsunderNEFTforbothcustomer
sand i
nstruct
ionexecutedbyt hebank,i
fheprov est
hat
banks. thesamewasnoti ssuedbyhim andthatitwas
causedeitherbynegli
genceoraf r
audulentactof
Thesamear
edet
ail
edbel
ow.
anyempl oyeeofthebank.
1.Everypar
ti
cipat
ingbankorinst
it
uti
onshall
6.Thecustomershal
lensureavai
labi
li
tyoffundsi
n
maintai
nthesecurit
y,i
ntegr
it
yandeffi
ciencyoft
he
hisaccountwhi
lei
ssui
ngt hepaymentinst
ructi
on
syst
em.
tohisbank.
2.Fundstr
ansf
eri
nst
ructi
onshallbei
ssuedbythe
7.Thepaymentinst
ruct
ionshal
lbecome
customeri
namannerprescr
ibedbythepart
ici
pant
i
rrevocabl
eonceiti
sexecutedbythebank.
bank.
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Thebanki snotboundbyanynot
iceofr
evocati
on Adv
ant
agesofNEFT:
unlessiti
snotincompli
ancewit
hthesecur
it
y NEFToff
ersmanyadvantagesov
ert
heot
her
procedure. modesoffundst
ransf
er,
suchas:
8.Intheev entofanydel ayinthecompl eti
onofthe a.Ther
emit
terneednotsendthephysi
cal
cheque
FundsTr ansf eroranyl ossonaccountofer ror,
the
orDemandDraf
ttothebenefi
ciar
y.
bank'
sliabilit
yshal lbelimit
edt ot heextentof
paymentofi nterestatt heBankRat efortheperiod b.Thebenef
ici
aryneednotvi
sithi
s/herbankf
or
ofdelayint hecaseofdel ayedpay mentandr ef
und deposi
ti
ngthepaperinst
ruments.
oftheamountt oget herwithinterestattheBank c.Thebenef
ici
aryneednotbeapprehensi
veof
Rateuptot hedat eofr efund,intheev entoflosson l
oss/thef
tofphysicali
nst
rument
sort hel
ikel
ihood
accountofer ror,negligenceorf r
audont hepartof offr
audul
entencashmentther
eof.
anyempl oyeeoft hebank.
d.Costeffect
ive.Cr
edi
tconf
ir
mat
ionoft
he
9.Thesender/origi
natorshal
lbeenti
tl
edt oclai
m remi
ttancessentbySMSoremail
.
compensationfrom thesendi
ngbankf ortheperi
od
e.Remit
tercani
nit
iat
ether
emi
ttancesfrom hi
s
ofdelayi
nthecompl et
ionoffundstr
ansferand/or
home/pl
aceofworkusingt
hei
nternetbanki
ngalso.
anyotherpenalt
ywhi chmaybel evi
ed/decidedby
RBI. f.Nearrealti
met r
ansferoft
hef
undstothe
benefi
ciaryaccounti
nasecuremanner
.
10.Cust
omerscancompl
aintotheBanki
ng
Ombudsmanifthecompl
ainti
snotresol
vedwi
thi
n
thi
rt
ydays(
30day s)
.

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RETAI
LMODULE-B RTGShasr epl
acedhighvalueclear
ingacrossall
Chapt
er9:REMI
TTANCEPRODUCTS(
PART-
IV) thecentr
esinIndi
a,t
hussav ingasigni
fi
cant
expenseinthemanualrunningofsuchactivi
ti
es.
Whatwewi
llst
udy
?
Wi t
ht heimplementati
onofCor eBankingSyst
ems
*
Whati
sRTGS? (CBS)i nallt
hebanks,manybankshav eenabl
ed
StraightThroughProcessing(STP)ofRTGS
REALTI
MEGROSSSETTLEMENT(
RTGS)
: transacti
onsf orcor
porateandretai
lcustomer
s
Theacr onym‘RTGS'st
andsf orRealTimeGr oss wi t
ht heuseofnetbankingt ool
s.
Sett
lement ,whi
chcanbedef i
nedast heinst
ant Thishasgreatl
yreducedoperati
ngexpensesand
(r
ealtime)settl
ementoffundstransfer
s consequentoperat
ionalri
sksfort
hebankswhich
i
ndividuall
yonanorder-
by-or
derbasis( wi
thout werehandli
ngremittancesinamanualmodet i
ll
nett
ing). recent
ly.
“RealTi
me”meanst heprocessingofinstr
uctions RTGS-Pr
ocessOv
erv
iew:
attheti
met heyarereceiv
ed" GrossSettl
ement ”
Remitt
ancesandFundstr
ansfer
st hr
oughRTGSare
meanst hesett
lementoff undstransf
erinstr
uctions
tr
ansmitt
edthr
oughaseriesofprocessi
nputsand
carri
edoutindi
vidual
ly(onani nstr
uct
ionby
tr
avelf
rom t
hecustomerendtothebenefi
ciar
yend.
i
nstruct
ionbasis).
Ther emi t
tancesar
ecommuni cat
edthrougha
Thisgl
obalpr
act
icewasint
roducedinIndi
afor
str
uct uredmessagingprocessandsettlementfor
changi
ngthemodelofremi
ttancesandtobri
ngin
themessagei smadeonagr ossbasi
sf rom t
he
eff
ici
encyi
nsett
lementoft
ransacti
onsonareal
l
iquiditymaintai
nedbythesenderbankwi t
hthe
ti
mebasis.
sett
lementbank.
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Theremitt
ancesar
ecr
edi
tedonadynamicbasi
s 4.“
Del
iver
yVsPaymentTransacti
ons"wil
lar
iseout
andsett
lemental
somadeonadynamicbasi
s. ofRBI
'
sSecur
it
iesSet
tlementSystem andi
ssett
led
Thatismessagecommuni cati
on,r
emitt
ance,credi
t i
ntheRTGSasaseparatetr
ansaction.
andsett
lementforthecr
editaredoneimmediately I
nterBankPayment sandTransact
ionsmai nl
yari
se
subj
ecttot hesy
stemsandproceduresprescr
ibed outoftr
easuryoperati
onssuchasmoneyanddebt
forr
emittancesthr
oughRTGS. marketdeal
sandf orei
gnexchangetransacti
ons.
I
nCustomert
oCustomerTransact
ions,
Typesofr
emi
tt
ancet
hroughRTGSi
sexpl
ained r
emit
tancesf
rom t
hecust
omert oabenefi
ciar
yin
bel
ow: t
hesamebank/ot
herbankarehandled.

1.Thetransacti
onscarri
edoutbyRTGSare“I
nter Thetransacti
onsarer outedfrom oneRTGS
BankTr ansact
ions”and“Cust
omerPayment enabledbranchtoanot herRTGSenabl edbr
anchof
Transacti
ons”and“ Del
iv
eryVsPayment thesamebank/ otherbankt hroughthecent
ral
ized
RTGSoper ati
onsoft hebankandr out
edthr
ougha
Transacti
ons”.
centr
ali
zedgatewayt oanot herbank.
2.Int
erBankTr ansacti
onsareusedtosett
lethe
parti
cipantbank’
sfinanci
alobl
igat
ionsonthei
rown Ownaccountt r
ansacti
onsrel
atetothetr
ansferof
account. fundsfr
om t hebank'soneRBIaccounttoanother
donebyt hetreasur
ydepartmentofbanksto
3.I
n“CustomerPaymentTransacti
on",
cust
omer maintai
nt heli
quidi
tyli
mitspr
escri
bedbyRBI .
i
nformat
ionalongwi
ththepaymentmessagecan
betr
ansmitt
edinastr
uctur
edf ormat. Inretai
lbanki
ngspace,customerbased
transact
ionsmai
nlyassumei mportanceandRTGS
hasemer gedasaveryeffecti
veremitt
ance

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mechani
sm i
nli
euofdr
aft
s,bankor
der
s. (
a)Amountt
ober
emi
tt
ed
(
b)Remi
tt
ingcust
omer
'saccountnumberwhi
chi
s
t
obedebi
ted
Themi
nimum amountt
ober
emi
tt
edt
hroughRTGS
i
sRs.2l
akh. (
c)Nameoft
hebenef
ici
arybankandbr
anch
Ther
eisnouppercei
li
ngf
orRTGSt
ransact
ions. (
d)TheI
FSCNumberoft
her
ecei
vi
ngbr
anch
Tr
ansact
ionAmount Char
ge (
e)Nameoft
hebenef
ici
arycust
omer
2Lact
o5Lac Upt
oRs.24.
50 (
+GST) (
f)Accountnumberoft
hebenef
ici
arycust
omer
Abov
e5Lac Upt
oRs.49.
50 (
+GST) (
g)Ot
heri
nfor
mat
ion,
ifany
.
2.Theori
ginat
ingbankwoulddebi
ttheaccountas
perthemandateandcreat
eastruct
uredmessage
Letusseethepr
ocessf
lowf
orcust
omerbased
underRTGS.
tr
ansact
ions.
3.Themessageaf
terdueauthent
icat
ionwoul
dbe
1-Thecustomerwouldrequesthi
sbankertodebi
t
communicat
edtothepaymentsystem gat
ewayof
hi
saccountandpayt hemoneyt othebenef
ici
ary
thebank.
provi
dingthedet
ail
sofbankaccountofthe
benefi
ciar
y. Thesamewoul
dbet
ransmi
tt
edt
otheRTGS
syst
em.
Theremitti
ngcust
omerhastofurni
sht
hefol
lowi
ng
i
nfor
mat iontoabankf
orini
ti
ati
ngaRTGS 4.Themessageswouldberout
edthr
oughacentral
remi
ttance: hubwhichwil
lrecei
vet
hemessagesinaqueueand
for
wardthemessagetothegat
ewayoftheother
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bank. RTGSasaf undst r
ansfermechani sm has
5.Afteraut
hent
icat
ion,themessagewillbe rev
oluti
onalisedtheconceptofr emittancest
hough
processedanddebit
edf rom t
hesenderbankand i
tismor erelevantforbigt
ickettransacti
onsand
appli
cableinal i
mitedwayf orretai
lbanking.
credi
tedtothebenefi
ciarybank.
TheRTGSsyst
em wil
lbeoper
ati
onalonal
lday
s
Aft
erthedebi
t,cr
editi
smadewi t
hthecust
omer
det
ail
sandbenefici
arydet
ail
s. 24*7*
365f
rom 14Dec2020.

6.Thebenef i
ciarybank(messagerecei
vingbank) Undernormalcircumstances,t
hebenefi
ciar
y
willt
hentransmi tt
hemessaget othebenefi
ciar
y branchesareexpectedtorecei
vethefundsinr
eal
branchforcreditofthebenef
ici
ari
esaccountwith ti
meassoonasf undsar
et r
ansfer
redbythe
thebranch. remitt
ingbank.

7.Foreff
ecti
ngRTGSdebi tsandcredit
s,banks Thebenefi
ciar
ybankhastocr
edi
tthebenef
ici
ary
's
wouldbemai ntaini
ngsettl
ementaccount s accountwi
thin30minut
esofr
ecei
vingt
hefunds
tr
ansfermessage.
separat
elywi
t hRBIandsuf fi
cientl
iqui
dit
yhastobe
maintai
nedint heseaccounts. Theremitt
ingbankr
ecei
vesamessagefr
om the
8.Ifthereareanyshor t
fal
lsint
heliquidi
tyofbanks RBIthatmoneyhasbeencr
edi
tedt
ot her
ecei
ving
i
nt heirsettl
ementaccounts,mechanismsar ei
n bank.
pl
acet opr ovidetemporar
yli
quidi
tysot hatt
he Basedonthis,t
heremitti
ngbankcanadviset
he
tr
ansact i
onpr ocessesarenotj
eopardized. remit
ti
ngcustomerthroughSMSt hatmoneyhas
beencredi
tedtotherecei
vingbank.

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Thef unds,recei vedbyaRTGSmemberf orthe Di
sti
nct
ionbet
weenRTGSandNEFT:
creditt oabenef i
ci arycustomer 'saccount,willbe 1-Thefundamentaldi
ff
erencebetweenRTGSand
returnedt otheor iginatingRTGSmemberwi thin NEFT, i
sthatwhi
leRTGSi sbasedongross
onehouroft her ecei ptofthepay mentatthe
settl
ement,NEFTisbasedonnet-set
tl
ement.
recipientbankorbef oretheendoft heRTGS
Busi nessday , whi cheverisear l
ier,i
fiti
snot Grossset
tl
ementiswher eatr
ansacti
onis
possi bletocr editt hefundst othebenef i
ciary complet
edonaone- t
o-onebasiswit
houtbunchi
ng
cust omer '
saccountf oranyr eason, e.
g.,
account withot
hertr
ansact
ions.
doesnotexi st, accountf r
ozen,et c. Ont heot herhand,aDeferr
edNetSett
lementBasi
s
Oncethemoneyi sreceivedbackbytheremi
tti
ng (DNS) ,orNetSettl
ementmeanst hatt
he
bank,t
heori
ginaldebitentryi
nthecustomer
's transacti
onsar ecompletedinbat
chesatspeci
fi
c
accounti
sreversed. ti
mes.Her e,al
ltr
ansfer
swi l
lbehel
dupuntila
specifi
ct ime.
I
ncaseofanyf ailureofthesystem r
esult
inginnon-
operati
onatthememberend, themembershoul d 2-RTGSt ransact
ionsi
nvolvelargeamount
s,
reportt
otheRBIatt heearli
estandnotlatert
han30 basicall
yonlyfundsofRs.2Lacandabov emaybe
minutesoftheincidence. tr
ansf er
redusingthi
ssystem forcust
omer
tr
ansact i
ons.ForNEFT,thereisnominimum or
Themembershavetoadheretot
heBusiness
maxi mum amountst i
pul
ated.
Conti
nuit
yPl
an(BCP)/
Disast
erRecover
y(DR)
gui
deli
nesasnot
if
iedbytheBankfr
om ti
met ot
ime. 3-
Totransf
erlar
gesumsofmoneyr ealti
me,RTGS
i
sbett
erbutforsmal
lamounts,wheretherei
snot
muchurgencyNEFTisabet
teropti
on.
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RETAI
LMODULE-B Var
iant
sofECS:
Chapt
er9:REMI
TTANCEPRODUCTS(
PART-
V) Ther
earet
wov
ari
ant
sofECS,
ECSCr
edi
tandECS
Whatwewi
llst
udy
? Debi
t.

*
Whati
sECS? ECSCr edi
tisusedbyaninsti
tut
ionf oraff
ording
credi
ttoalargenumberofbeneficiari
es,vi
z.,
ELECTRONI
CCLEARI
NGSERVI
CES(
ECS)
: employees,i
nvest
ors,
pensioner
s, etc.
,inthei
rbank
ECSisanelectr
onicmodeofpayment/recei
ptf
or accounts.
tr
ansact
ionsthatarer
epet
it
iveandper
iodici
n Thepaymenti
ncl
udessal
ary
,di
vi
dend,
int
erestand
natur
e. pensi
on.
ECSi susedbyi nsti
tutionsf ormaki ngbulk ECSCredi
tpay
ment
sar
eini
ti
atedbyECSCr
edi
t
pay mentofamount st owar dst hedistr
ibutionof User
.
divi
dend, i
nterest,salary,pension,et c.
,orforbulk
collect
ionofamount st owar ds ECSUserhast
oregi
steri
tsel
fwi
tht
hecl
ear
ing
tel
ephone/ elect
r i
cit
y/wat erdues, cess/ t
ax cent
re.
collect
ions,l
oani nstalmentr epayment s,peri
odi
c ECSCr edi
tpayment
scanbeputthroughbyt
heECS
i
nv estmentsi nmut ualf unds, i
nsurancepr emium, Useronlythr
oughhi
s/herbank(
knownasthe
etc. sponsorbank).
ECSincl
udestransact
ionsprocessedunder ECSCr editsareaffordedtothebenefi
ciaryaccount
Nati
onalAutomatedCleari
ngHouse( NACH) holders(knownasdest i
nati
onaccounthol der
s)
oper
atedbyNat i
onalPaymentsCor por
ati
onof throughthebenef i
ciaryaccounthol
ders'bank
I
ndia(NPCI)
. (knownast hedestinat
ionbank).

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Thebenef i
ciaryaccounthol
dersarerequi
redto Iti
stheresponsibil
it
yoftheuserinsti
tuti
onto
givemandat estotheuserinst
it
utionstoenabl
e communi catetothebenefi
ciaryt
hedet ai
lsofcr
edi
t
them toaff
or dcreditt
othei
rbankaccounts thatar
ebei ngaffor
dedtohis/heraccount,
throughtheECSCr edi
tmechanism. i
ndicati
ngthepr oposeddateofcredit
,amountand
rel
atedparticul
arsofthepayment.
Theusersubmi t
sdetail
softhebeneficiari
es(l
ike
name, bank/branch/
accountnumberoft he Incaseofdel ay
edcreditbythedestinati
onbank,
benefi
ciary,MICRcodeoft hedesti
nationbank thedestinat
ionbankwoul dbeliabl
et opaypenal
branch,etc.
),thedat
eonwhi chcreditistobe i
nt er
est(attheprev
ail
ingRBILAFRepor atepl
us2%)
affor
dedt othebenefici
ari
es,et
c.,i
naspeci fi
ed from theduedateofcreditt
il
lthedat eofact
ual
formatthroughitsbank(sponsorbank)t ooneof credit
.
theECSCent r
eswher ei
tisregi
ster
edasaUser .
Suchpenalint
erestshouldbecredi
tedtothe
TheECSCent rethendebitstheaccountofthe Desti
nat
ionAccountHol der
'saccountevenwit
hout
sponsorbankont hescheduledsett
lementdayand aclai
m bytheDestinat
ionAccountHolder.
credi
tstheaccountsofthedestinat
ionbanks,for
ECSDebi ti
susedbyaninsti
tut
ionforrai
singdebi
ts
onwardcreditt
ot heaccountsoftheult
imate toalargenumberofaccountsmaintai
nedwi t
h
benefi
ciar
ieswit
ht hedesti
nati
onbankbr anches. bankbranchesatvar
iousl
ocati
onswi t
hinthe
ECScanbeusedtotr
ansferf
undst
oNREandNRO j
urisdi
cti
onofaECSCent r
e.
account
sint
hecount
ry. ECSDebiti
susefulforpay mentoftelephone/
This,however
,issubjectt
otheadherencet
ot he el
ectr
ici
ty/waterbi
ll
s, cess/
taxcol
lections,l
oan
provi
sionsoftheForeignExchangeManagement i
nstal
lmentr
epayment s,peri
odici
nv estmentsin
Act,2000(FEMA)andWi r
eTransferGui
del
ines. mutualf
unds,i
nsurancepr emium,r
egul arpayment
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oflandli
ne/post
paidtel
ephonebi
ll
s,et
c.,
thatare Thecustomerhastomaintai
nadequatefundsin
peri
odicorrepeti
ti
veinnatur
eandpayabletothe hi
s/heraccountwit
hthedest
inat
ionbankbranchto
userinsti
tut
ionbylar
genumberofcustomers. ensur
etheECSDebi ti
nst
ruct
ionsarehonoured
whenpresented.
TheECSDebi tUserhast osubmi tdetail
soft he
customers(li
kename, bank/ branch/account Incaseofanyneedt owi thdraworst opamandat e,
numberoft hecustomer,MI CRcodeoft he thecustomerhast ogiv
epr i
ornoticetotheECS
desti
nati
onbankbr anch,etc.,)thedat eonwhi ch userinstit
uti
onwelli
ntime, soast oensurethatthe
thecustomer'saccountistobedebi ted,etc.
,ina i
nputf i
lessubmitt
edbyt heuserdonotcont i
nueto
specif
iedformatthroughit
ssponsorbankt othe i
ncludet heECSDebitdetai l
sinrespectofthe
ECSCent r
e. mandat eswithdr
awnorst oppedbycustomer s.
TheECSCent ret
henpassesont hedebitstothe Acustomer
,ifhe/
shechooses,
canstipul
atecei
li
ng
desti
nati
onbanksforonwarddebi tt
othe ontheamountofdebi
t,pur
poseorvali
dit
yperi
odof
customer'
saccountwit
hthedestinati
onbank themandat
eundertheECSDebitScheme.
branchandcredi
tsthesponsorbank'saccountf
or Iti
slef
ttot
hechoi
ceofthei
ndivi
dualcust
omer
onwardcredi
ttotheUserinst
it
ution. andtheECSusert
odeci
detheseaspects.
Destinat
ionbankbrancheswi l
ltr
eattheelect
roni
c Asnoti
fiedbyRBI,nof reshPostDatedCheques
i
nstructi
onsrecei
vedfrom theECSCent reonpar (PDC)/
EquatedMont hlyInstal
lment(EMI)cheques
wit
ht hephysi
calchequesandaccor dingl
ydebitt
he shal
lbeacceptedbyl endingbanksinlocati
ons
cust
omeraccount smai nt
ainedwiththem. wherethefaci
l
ityofECS/ RECS(Debi
t)isavail
abl
e.
Anymandat
einECSDebi
tisonparwi
thacheque Lendi
ngbanksshal
lmakeal
leff
ortst
oconver
t
i
ssuedbyacust
omer
. exi
sti
ngPDCsinsuchl
ocati
onsint
oECS/RECS

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(Debit
)byobt
aini
ngf
reshmandat
esf
rom t
he Cat
egor
iesofECSSchemes:
borrower
s. Basedonthegeogr
aphicall
ocat
ionofbranches
RECS:Regi
onalEl
ect
roni
ccl
ear
ingser
vice. cover
ed,t
herear
ethreebroadcategor
iesofECS
Schemes.

Di
shonourofel
ectr
oni
cfundstransf
err
equestf
or LocalECS,
Regi
onal
ECS(
RECS)andNat
ionalECS
i
nsuf
fici
encyoff
undsinbanks: (NECS).

Thepr ovi
sionscont ai
nedinSecti
on25oft he Nati
onalAutomat
edClear
ingHouse(NACH)i
salso
oneoftheformsofECSsystem of
fer
edbyNPCI
.
paymentandSet t
lementSy st
emsAct ,2007accord
thesamer ightsandr emediestothepayeeagainst LocalECSisoperat
ingat81cent
res/
locat
ions
dishonourofel ectronicf
undstransferasare acrossthecount
ry.
avail
abletot hepay eeundersection138ofthe AteachoftheseECScentres,thebranchcov erage
Negotiabl
ei nstrument sAct.
i
srestr
ict
edtothegeographicalcoverageoft he
Thesub-sect
ion(5)ofSect i
on25oft hePay ment cl
eari
nghouse,gener
all
ycov eri
ngoneci tyand/ or
andSett
lementSy stemsAct ,2007provi
desf or sat
ell
it
etownsandsuburbsadj oini
ngt heci
ty.
puni
shmentof2y ear sandtwi cet
heamountof
Theseareoper
atedei
therbyRBIordesi
gnat
ed
el
ectr
onicfundstransfer,
orbot hfordi
shonourof banks.
el
ectr
onicfundstransferhasbeenst i
pulat
edf or
di
shonourofchequesundert heNegoti
able Regi
onalECS(RECS)isoper
ati
ngat9centres
i
nstr
ument sAct. /l
ocat
ionsatv
ariouspar
tsofthecount
ry.
RECSfaci
li
tatest
hecoverageallcor
e-banki
ng-
enabl
edbranchesinaStateorgroupofStat
esand
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canbeusedbyinsti
tut
ionsdesi
rousofr
eaching Ther
ewouldbenost i
pul
ati
onont
hemi ni
mum
benef
ici
ari
eswithi
ntheStat
e/gr
oupofStates. numberoft
ransact
ionst
obeputt
hrough.
Theseareoper
atedbyRBI. Adv
ant
ages:
Nati
onalECS(
NECS)i
sthecent
ral
izedv
ersi
onof ECShast
hef
oll
owi
ngadv
ant
ages:
ECS.
1.Thereisnoneedfori
ssui
nganychequet
othe
Theschemei soperatedatMumbaiandf
acili
tat
es benefi
ciaryf
oreachpay
mentanddebiti
smade
t
hecoverageofallcore-
banki
ngenabl
edbranches automatical
ly
.
l
ocat
edany wherei
nt hecount
ry.
TheECSmandatewi
llsuff
icef
ort
heper
iodf
or
Thissyst
em toot
akesadvant
ageofthecore whicht
hemandatei
sgiven.
banki
ngsy st
em i
nbanks.Thi
sisoper
atedbyRBI
.
2.Paymentdefaul
tswil
lnothappeni
fther
eis
Theaccountholder/customerisalsoenti
tledt
o suff
ici
entbal
anceintheaccount
.
wit
hdrawthemandat e/debi
tinst
ructi
onfrom
hi
s/herbankerwithoutinvol
vementoft heUser 3.Nofol
lowupisneededbythebenef
ici
aryas
i
nsti
tuti
on. paymentwil
lber
eceiv
edautomati
call
ybasedon
themandat
eobtai
ned.
Thewit
hdrawal i
nstr
ucti
onsofacustomerinsuch
caseswouldbetreatedequi
val
entt
oa“ st
op 4.Hasslef
reeforthemandateissuer,
asitsaves
paymenti
nstruct
ioninchequecl
ear
ingsystem”. ti
mef orhi
mf ori
ssuingchequesforeachpayment.

Thedestinati
onbankbrancheswoul
dprov
idesuch 5.Theprocessisfl
exi
bleasthemandat
ecanbe
withdr
awal ofmandat
einformat
iont
otheUsers,
on changedalsoincaseofdebi
ttoanot
heraccountor
request
. debitofhi
gheramount,et
c.

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RETAI
LMODULE-B Nati
onalAutomat edCl ear
ingHouse( NACH)isa
Chapt
er9:REMI
TTANCEPRODUCTS(
PART-
VI) centr
ali
zedsy st
em, launchedwi t
hanai mt o
consoli
datemultipleECSsy stemsr unningacr
oss
Whatwewi
llst
udy
? thecountryandpr ovi
desaf ramewor kforthe
*
Whatar
eNACH? harmonizati
onofst andard&pr acti
ces.
NACHsy st
em wil
lprovideanat ionalfoot
pri
ntand
i
sexpectedtocovertheent i
recor ebanki
ng
NATIONALAUTOMATEDCLEARI
NGHOUSE(
NACH)
enabl
edbankbranchesspr eadacr ossthe
SYSTEM:
geogr
aphyofthecount r
yirrespectiv
eofthe
NationalPayment sCorporat
ionofI ndia(NPCI )has l
ocati
onofthebankbr anch.
i
mpl ement ed“Nati
onalAutomat edCl ear
ingHouse
Withtheimplement ationofNACHsy stem, NPCI
(NACH) ”forBanks,Fi
nancialInsti
tuti
ons, Corporat
e
i
ntendstopr ovi
deasi ngl
esetofrules( operati
ng
andGov ernment ,
awebbasedsol utiontof aci
lit
ate
andbusiness),openst andardsandbesti ndust
ry
i
nterbank,highvolume,elect
ronictransact i
ons
pract
icesforelect
roni ctr
ansacti
onswhi chare
whichar erepeti
ti
veandper i
odicinnat ur
e.
commonacr ossallthePar t
ici
pants,Serv i
ce
NACHSy stem canbeusedf ormakingbul k Provi
dersandUser s, etc.
transactionst owar dsdi
stri
buti
onofsubsi dies,
NACHsy stem al
sosupportsFinanci
alI
nclusion
dividends, i
nterest,sal
ary,
pension,etc.
,andal so
measuresini
ti
atedbyGov ernment,Gover
nment
forbul ktransactionstowardscoll
ectionof
Agenci
esandBanksbypr ovidi
ngsupportto
pay ment spertainingtotel
ephone,electr
icit
y ,
water
,
Aadhaarbasedtransact
ions.
l
oans, i
nvestment si nmutualf
unds, i
nsurance
premi um, etc.
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TheNACHsy stem facil
it
atesthememberbankst o Di
ff
erentpar
ti
est
oNACH:
desi
gnt hei
rownpr oduct
sandal soaddr esses SponsorBanks:
specifi
cneedsoft hebanks&cor poratesincl
udi
ng
arefinedMandat eManagementSy stem (MMS)and BanksinIndi
awhoar emember sofanyPay ment
anonl i
neDisputeManagementSy stem (DMS) System/Channelapprovedbyt heReserveBankof
coupledwithstronginformati
onexchangeand I
ndia,andwhoent erintoamut ualagreementwit
h
customisedMI Scapabili
ti
es. NPCIwi l
lbepermittedtoori
ginatetransact
ionsi
n
theNACHsy stem, as“SponsorBanks” .
NACH' sAadhaarPaymentBri
dgeSy stem (
APBS),
devel
opedbyNPCIhasbeenhel pingt he I
tisthebankwhichwil
lforwardthemandategiven
GovernmentandGov er
nmentAgenci esinmaking bythei
rcorpor
atecust
omert hroughNPCItothe
theDi
r ectBenef
itTr
ansfer
(DBT)scheme( LPG Desti
nati
onBankforapprovalofthemandate.
subsi
dy ,
MNREGAwages)asuccess. Dest
inat
ionBanks:
APBSy st
em hasbeensuccessful
lychannel
izi
ng AllbanksinIndi
awhoar emember sofanyPayment
theGovernmentsubsidi
esandbenefi
tstothe System/Channelapprov
edbyt heReserv
eBankof
i
ntendedbenefi
ciar
iesusingt
heAadhaarnumbers. Indi
awoul dbeallowedtopar
ti
cipateonNACH
TheAPBSy stem li
nkstheGov er
nment system as“Desti
nati
onBanks”,onsubmissi
onof
Depar
tmentsandt heirsponsorbanksononesi
de necessaryAgreement.
andbenef
iciarybanksandbenef i
ciar
yontheot
her Thesebankswouldbeall
owedtoprocess
hand. tr
ansacti
onst
hroughNACH,aswellas,pr
ocess
Mandatesandupdatet
heAadhaarMapper.

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I
tist
hebankwhichwillaut
hori
ze/r
ejectthe Set
tl
ementFi
nal
it
y:
mandat
esentt
ot hem andwil
lmakepay mentof Thesettl
ementshallbefi
nalandir
revocabl
e,as
t
heamountaspertheapprovedmandate. def
inedinSecti
on23oft he“Paymentand
Aspartofthemandateappr
ovalpr
ocess,
thebank Set
tlementSyst
emsAct2007”andwi l
lbehandled
shoul
dv al
idat
ethecust
omerdetai
lsgi
venint
he aspertheRBIGuideli
nesonSettl
ementandDef aul
t
mandate. Handli
ngMechanism.
User s:TheCorporates/GovernmentDepartment
s Mandat
eManagementSy
stem (
MMS)
:
willhavetoindicatethenamesoft heSponsorBank MandateManagementSy st
em (MMS)i
san
withwhom t heyar emaint
ainingaccountst
o
essent
ialpar
tofNat
ionalAutomat
edCl
ear
ing
faci
litatet
heset t
lementont hei
rbehalf
. House(NACH)servi
ce.
Theywoul dbeall
owedtopar t
icipat
eonNACH TheMandatesar
enecessar
yfrom t
her
egulator
y
system as“User
s”,onsubmissionofnecessar
y per
spect
iveinor
dert
oprocessNACHtransacti
ons.
Agreement,thr
oughtheirSponsorBank.
Eachmandateisuniquel
yident
if
iedbyUni
que
MandateRef
erenceNumber( UMRN)whichmakes
Cl
ear
ingTi
mes: tr
acki
ngofmultipl
emandat edetai
l
seasi
erfor
Thesy stem willhav ethecapabil
it
ytoundertake cust
omers.
mult i
plepresentationsandr et
urnsett
lements Mandat ereposi
tor
ycontainingMandatedetail
st o
duringaday ,but,initi
all
yitwil
lberest
rict
edtoone bemai ntai
nedforthepurposeofvali
dating
presentati
onset tl
ementsessi onandone mandat eUMRNav ail
ableont heNACHt ransacti
on
correspondingretur nsettl
ementsessionperday. fi
les,
att heti
meofNACHt ransact
ionprocessing.
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MMSwoul
dal
lowpr
ocessi
ngof
: Mandaterecor
dwouldneedtogetupdatedpost
a.Debi
tandCr
edi
tmandat
es, val
idat
ionofcust
omerdetai
lsatt
herespect
ive
bankend.
b.Debt
orandCr
edi
tori
nit
iat
edmandat
es,
Fore-
mandat
es,
amounti
scappedat1l
akhper
c.E-
mandat
esaswel
laspapermandat
es. mandate.
Wheree-mandateswoul
dconsistofdataf
il
e Penal
tyont
hemandat
espendi
ng:
upl
oadwhilepapermandat
eswoul dconsi
stof
mandateimageanddatafi
leuploads. NPCIl
evypenal
tyont
hemandat
espendi
ngbey
ond
t
heagreedTAT.
Mandat
eamendment
sandMandat
ecancel
lat
ions:
Mandat
esbel
ow3l
akh:
Anamendmentbyt hecustomerofmandat emay
beexecutedi nasimilarwayt henewmandat ei
s Pendi
ngfor0to7day
s–Nopenal
ty-i
ncent
iveof
i
niti
ated,Themandat eamendment /
cancellati
on Rs.5permandat
e
requestwil
lcontaintheUni queMandat e Pendi
ngf
or8t
o10day
s–Nopenal
ty-Noi
ncent
ive
ManagementRef er
ence( UMRN)numbert hatwas Pendi
ngbeyond10day
s-Noi
ncent
ive–Penal
tyof
communi catedtothecust omerbydest i
nationbank Rs.10permandat
e
whent hemandat erecordwasv al
idated,authori
zed
andpassedsuccessf ully
. Mandat
esabov
e3l
akh:

Therefor
ethecustomerwillsendmandate Pendi
ngfor0to10day
s-Nopenal
ty-i
ncent
iveof
amendment /
cancell
ati
onrequestthr
oughsponsor Rs.5permandat
e
bank,andthesamewi l
lreachdest
inati
onbank Pendi
ngbeyond10day
s–Noi
ncent
ive–Penal
ty
thr
oughNPCI . of10permandat
e.

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Mandat
epr
ocessi
ngchar
ges: T+0Cr
edi
t/Debi
t:
NPCIl
eviesmandat
eprocessi
ngchar
gesofNACH Debit/
Credi
tinst
ruct
ionfil
etobemadeav ai
lablef
or
wi
theff
ectfr
om 01.
01.
2018. theDesti
nati
onBankonl yaft
erdebi
ti
ng/
crediti
ng
Allt
heACHmandat es(basedonscannedcopyof sett
lementaccountoftheDesti
nati
on
Bank/SponsorBank,asappli
cabl
e.
thephysi
calmandat
es)pr esent
edwi t
hef
fectf
rom
Januar
y01, 2018wi
llat
tractcharges: TheSponsorBankshouldcredi
tthebenefi
ciary
accountonthesamedayf orNACH( Debi
t)andthe
Ty
peofser
vice NPCI Remar
ks
Desti
nati
onBankshouldcredi
tthebenefi
ciary
Char
ges
accountforNACH( Cr
edi
t)onrecei
ptoffundsinto
MandateIni
ti
ati
on/ Rs.1.
50per Rs.1oni
nit
iat
ing thei
rsett
lementaccount
.
mandate bank
Modif
icat
ion/ T+1Cr
edi
t/Debi
t:
cancel
lat
ion Rs.0.50on
Thisi
sappli
cabletoallt
heproductsthatar
ebeing
recei
vingbank
runonwarehousingbasi
sforvaluedatedcredi
ts
l
ikeECScredi
t,ECSdebitmigrat
edt oNACH, et
c.
Set
tl
ementofcl
ear
ingt
ransact
ion: Thei
nwardfi
lewi
llbemadeavai
labl
et ot
he
Set
tl
ementwi
llbehandl
edi
n2di
ff
erentway
s. memberbanksonthepr
evi
ousdayev eni
ng.

Oneforthetransacti
onsprocessedonT+0basi s NPCIwi l
lbedebiti
ng/credit
ingsettl
ementaccount
(samedaycredit)andtheotherfort
hetransacti
ons oftheDestinat
ionBank/ SponsorBank,as
t
obepr ocessedonT+1basi s(nextdaycredit
). appli
cable,
onlyont henextwor ki
ngdayonwhi ch
sett
lementbankshoul dposttheset t
lementf
il
es.
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Thememberbanksshoul densurethatt hey RETAI

LMODULE–AB
processthetr
ansacti
onsreceivedi
ni nwar dfil
es Chapt
er9:REMI
TTANCEPRODUCTS(
PART-
VII
)
onlyaft
erveri
fyi
ngthatthenecessaryset tl
ement
Whatwewi
llst
udy
?
entri
es(i
.e.
,debi
torcredit
,asappli
cabl e)are
si
ghtedinthesettl
ementaccount,mai ntainedwit
h *
Whati
sAePS?
sett
lementbank. *
Whati
sBBPS?

AADHAARENABLEDPAYMENTSYSTEM:
AePSi sabankl edmodelwhi chall
owsonl
ine
i
nteroperabl
efinanci
altransact
ionatPoS(Poi
ntof
Sale/MicroATM)t hroughtheBusiness
Correspondent(BC)/BankMi tr
aofanybankusing
theAadhaaraut hent
icat
ion.
Thi
sneedsaKYCcompl i
antbankaccounti
nwhi
ch
Aadhaarhasbeenl
inked.
I
tall
owsonlineinter
operabl
efi
nanciali
nclusi
on
tr
ansacti
onatPoS( MicroATM)throughthe
Busi
nesscorrespondentofanybankusingthe
Aadhaaraut
henticat
ion.

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Ser
vicesOf
fer
edbyAePS: Itisaone-stoppay mentplatf
ormf orallbi
ll
s,
providi
ngani nter
operableandaccessible“Anyt
ime
CashWi
thdr
awal
Any where”bil
lpaymentser v
icetoallcustomers
CashDeposi
t acrossIndiawithcertai
nty,r
eli
abil
ityandsafet
yof
Bal
anceEnqui
ry transact
ions.
Aadhaart
oAadhaarFundTr
ansf
er
Mi
niSt
atement Di
ff
erentPay
mentChannel
s:
BharatBillPaytr
ansact i
oncanbei ni
ti
atedt hrough
multi
plepay mentchannel sli
keI nt
ernet
,Internet
BHARATBI
LLPAYMENTSYSTEM (
BBPS)
:
Banking,Mobile,Mobile-Banking,PoS(PointofSale
Obj
ect
ives: ter
mi nal
),MobileWallets,MPoS( Mobil
ePoi ntof
Theobjecti
veoftheBBPSi st oimplementan Saleterminal)
,Kiosk,ATM, BankBr anch,Agent s
i
ntegratedbil
lpaymentsystem inthecountr
ythat andBusi nessCorrespondent s.
off
ersinter
operableandaccessibl
ebillpay
ment KeyPar
ti
cipant
s:
serv
icestocustomer st
hroughanet workofagents,
Bhar
atBi
llPay
mentCent
ralUni
t(BBPCU)
:(NPCI
)
enabli
ngmul t
ipl
epay mentmodes, andprovidi
ng
i
nstantconfir
mationofreceiptofpayment. NationalPay mentsCor porati
onofIndia(NPCI)has
beenaut horizedbyRBIast heBharatBil
lPayment
TheBharatBil
lPaymentssystem i
saReser v
eBank
CentralUnit( BBPCU)andi sresponsibl
eforsett
ing
ofI
ndia(RBI)concept
ual
isedsystem dri
venby
businessst andards,rul
esandpr oceduresfor
Nati
onalPaymentsCorporat
ionofIndia(NPCI)
.
technicalandbusi nessrequirementsforal
l
parti
cipants.
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TheBBPCUunder takesclear
ingandset
tl
ement CustomerBBPOUwi llon-boar
dAgentinst
it
uti
ons
act
ivit
iesrel
atedt
ot r
ansacti
onsrout
edthr
ough whichmayf ur
theron-boardagent
sand/orsetup
BharatBil
lPay. customerserv
icepointsinvari
ousregi
onsand
l
ocat i
ons.

Bhar
atBi
llPay
mentOper
ati
ngUni
t(BBPOU)
: Agent
s:

Bhar
atBil
lPay
mentOper at
ingUni
t(BBPOU)ist
he Agent saret hecustomert ouchpointsandservice
ent
it
ythati
sauthor
izedbyReserv
eBankofIndi
a. pointsint heBharatBillPayecosystem avai
lablein
thef orm ofagentoutlets,Busi
nessCor r
espondent
I
tcanbeaBankoraNon-
Bank. outlets,Bankbranches, Coll
ecti
oncentres,Retail
BBPOUmaychooset ointegr
ateeit
herwi t
ht he outlets.
cust
omer s,(
COU:CustomerOper at
ingUni t
)orwith Bi
ll
er/
Uti
li
tyCompany
:
thebi
ll
ers(BOU:Bil
lerOperat
ingUnit)ormaywi sh
Serv
icepr
ovider
s,whoshal
lrecei
vepay
ment
sfr
om
topart
ici
pateasbothwhichmeanssuchBBPOU
wil
lbeintegr
atedwithcustomersaswel lasbil
ler
s. cust
omersforserv
icesr
endered.
Bypar t
icipat
ingintheBharatBi
llPayscheme,the
bil
lerwillbeabletorecei
vepaymentsfrom t
hir
d
AgentI
nst
it
uti
ons: partychannelsfortheservi
cesprovi
dedtothe
Eli
gibl
eEntit
ieswhowisht ooff
erorthosewhoare customer .
curr
entlyi
nbillpay
ment,coll
ect
ionandaggregat
ion Abill
ermaytieupwi t
hupt otwoBBPOUst
oaccess
businesswouldoperat
eunderaCOU( Cust
omer theenti
reuni
verseofitsconsumer
sandal
l
BBPOU)onr eceivi
ngauthori
sat
ionfr
om RBI. paymentchannels.

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Cat
egor
yofBi
ll
ersi
nBhar
atBi
llPay
: RETAI
LMODULE-C
Thecategoryofbi
ll
ersel
igibl
etopar
ti
cipat
ein Chapt
er10:MARKETINGI
NRETAI
LBANKI
NG
Bhar
atBillPaywil
lbespecifi
edfr
om t
imetoti
me (PART-
I)
byReserveBankofIndi
a( RBI)
.
Whatwewi
llst
udy
?
Thecur
rentcat
egor
iesspeci
fi
edar
easf
oll
ows:
*
Whati
sbankmar
ket
ing?
1.El
ect
ri
cit
y
*
Whati
smar
ket
ingi
nret
ailbanki
ng?
2.Tel
ecom (Mobil
ePost
-pai
d,Landl
inePost
-pai
d
andBroadband)
I
NTRODUCTI
ON:
3.DTH
Retai
lBanki
ngunl
ikeCor
por
ateBanki
ngispr
imar
il
y
4.Gas
dri
venbynumberofcust
omerseachbank
5.Wat
er possesses.
Overaperi
odoft i
me,ot
hercategori
esli
ke Morethenumberofcust
omer
smorewi l
lbethe
i
nsurancepremium,mutualf
unds,schoolf
ees, pr
ofi
tabi
li
tyandst
rengt
hoft
heret
ailbanki
ng
i
nsti
tuti
onfees,cr
edi
tcards,
localt
axes,i
nvoi
ce models.
payments,
etc.,
maybecov er
edunderBharatBil
l
Sinceprofi
tshavetobederi
vedfrom al
arge
Pay.
cli
entel
ebase,bankswouldbemor ecomfortabl
e
withbroaderbaseandwouldfocusonbuil
dingup
thecustomerbase.
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Toachievethatmarketi
ngpromisesanddel
iv
eryof 3-Amor especifi
cdefini
ti
onspel
toutbyDer
yk
product
sandser vi
cesaret
hetoppr i
ori
ti
esof VanderWey erl
ooksatBankMar ket
ingasa
banksintheretai
lbanki
ngspace. ‘
proacti
vebusinessstrat
egyai
medat
organi
zati
onalexcel
lence’
.
Mar
ket
ingi
s,t
herefor
e,apr
ocessthr
oughwhicha
mar
ket
ercr
eates,communi
catesanddel
iv
ersval
ue Theexpl
anati
on,
moreaptt
oretai
lbanki
ngspace,
t
ocust
omers. asspel
toutbyhi
misasfol
lows:
Italsoinvol
vesbuildi
ngast r
ongcustomer i
. Ident
if
yingthemostpr
ofi
tabl
emar
ket
snow
relati
onshipwhichwillbenef
itt
heorgani
sat
ionand andinthefutur
e.
allit
sstakeholders. i
i. Assessi
ngthepr
esentandf
utur
eneedsof
cust
omer s.
Letusfir
stunder
standwhatismarketi
ngin i
ii
.Setti
ngbusinessdev
elopmentgoal
sand
bankingandtherel
evanceofmar
ketingtoa maki
ngplanstomeetthem.
customerbase: i
v.Adapti
ngtoachangi
ngenv
ironmenti
nthe
marketpl
ace.
1-SirFr
ederickSeebohmndef i
nesBankMarket
ing I
twillbecl
earthatal
ltheaboveconceptspoint
ed
as‘t
hecr eat
ionanddeli
veryofcustomer– outforawelll
aidmarketi
ngstr
ategyforret
ail
sati
sfyi
ngser v
icesataprofi
ttothebank'
. bankingf
ocusont hecustomer
.
2-Kennet
hAndrewdefi
nesBankMar ket
ingas‘t
he Assaidear
li
er,
customerist
hecentr
eof
matchi
ngofbank'
sresourceswi
ththecustomer'
s at
tract
ioni
nretai
lbanki
ngandMarketi
ngand
needsint
hemostprofi
tablemanner'
.

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Al
ltheact
ivi
ti
eshav
etobef
ocusedt
owar
ds: A)Mar
ket
ingAnal
ysi
s:
a.I
dent
if
yingt
hecust
omer
s'needs. I
nthi
sst age,anorganizati
onfocusesonanal
ysi
ng
t
hemar ketsandmar ketingenvi
ronment
sinwhich
b.Devel
opingappr
opr
iat
epr
oduct
stosat
isf
y
thei
rneeds. i
twouldbei ntr
oducingitsproduct
.

c.Provi
dingthem wi
theff
ici
entdel
iv
erychannel
s Forgaini
nginsi
ghtsintothemar ketand
foravai
li
ngtheproduct
s. compet i
tor
s,t
heStrength-Weakness-Oppor
tuni
ty-
Threat
s( SWOT)analysi
scomeshandy .
d.Maki
ngt
hem av
ailt
hepr
oduct
scont
inuousl
y.
B)Mar
ket
ingPl
anni
ng:
Theult
imateobject
ivesoftheaboveini
ti
ati
ves
Int
hisstage,theorgani
sat
ionpr
imari
lyfocuseson
aret
oachievethebusinessobject
ivesofgr
owth
andprofi
t. def
ini
ngt heStrat
egicBusi
nessUni
ts(SBU),goal
s
andobjecti
ves.
MARKETI
NGI
NRETAI
LBANKI
NG:
I
tal
sochal
ksoutt
hei
ssuest
hati
tmayf
ace.
Theprocessofmar
ket
ingcompr
isesdi
ff
erent
st
ages. Themarketi
ngplanf
oreachbusi
ness,pr
oductor
brandi
sdraft
ed.Thi
sdraf
tiscal
ledanoff
eri
ng.
Let
'sgot
hrought
hest
agesasunder
:
Iti
sfol
lowedbyset
ti
ngupanexecuti
vesummar
y,
1-Mar
ket
ingAnal
ysi
s acti
onprogr
ammes,budget
ingandcont
rol
s.
2-
Mar
ket
ingPl
anni
ng Therearespecif
icstr
ategiesfort
arget
ing,
3-
Mar
ket
ingI
mpl
ement
ati
on posit
ioni
ng,marketi
ngmi xandmar ket
ing
expendit
ureforeachbusiness,pr
oductorbrand.
4-
Mar
ket
ingCont
rol
 Joi
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C)Mar
ket
ingi
mpl
ement
ati
on: RETAI
LMODULE-C
I
nt hi
sstage,
anor gani
sat
ionanswer
squesti
ons Chapt
er10:MARKETINGINRETAI
LBANKI
NG
l
ike“who,where,
whenandhow”f ortheof
fer
ing. (PART-
II
)
I
tfocusesonper
for
mingact
ivi
ti
esi
nther
ight Whatwewi
llst
udy
?
manner. *
Whati
smar
ket
ingmi
xinRet
ailBanki
ng?
Thisdependsonbl
endi
ngpeople,
cul
tur
e,st
ruct
ure, *
Whatar
ethe7PsofMar
ket
ing?
decisi
onandrewar
dsystems.
Ski
ll
sandcohesi v
eacti
onprogr
ammest hat
supportst
rat
egiesal
soplayavi
talr
olei
n Letusseet hedif
ferentdi
mensi onsofmarketi
ngof
i
mpl ementat
ion. ret
ailbanki
ngservicesandt hechangingpar
adigm
ofdeli
verychannelsinret
ailbanking.
D)Mar
ket
ingcont
rol
:
Inthisstage,anor
ganisat
ionperf
ormst hejobof
regulat
ingitsgoal
sbyauditi
ng,measuri
ng, MARKETI
NGMI
XINRETAI
LBANKI
NG:
evaluat
ingandactinguponthedefinedparameter
s Marketi
ngmixinr et
ailbanki
ngr
efer
stothe
ofcontrol. dif
fer
entingr
edientsthatmakeupagoodmealf
or
Thi
scanbedoneintwoway s–r
eacti
ve thecust
omer .
methodol
ogyandpr
o-act
ivemet
hodol
ogy. Forthatt
heservi
ceanddel
iv
eryl
evel
sshoul
d
Finall
y,corr
ectiv
eacti
onistakenattheoper
ati
onal matchtheexpect
ati
onsoft
hecustomer
s.
l
ev elorthestrat
egi
cleveldependi
nguponthe Ift
hecust
omersli
ket hespr
ead,t
heywil
lgoon
relevanceofthecontr
olaspectofthepar
ameters. consumi
ngitcont
inuousl
y,t
hefeastof
fer
ed.

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Whatar
et hei
ngr
edi
entst
hatmakeupanaptand Thediff
erenceli
esinhowthedi
ff
erentdimensi
ons
goodmarketi
ngmealf
ort
hecustomer
s? i
nt heabovePsar et
weakedandre-
engineer
edby
theret
ailbanker
s.

Letusdiscussthefundamentali
ngredi
ent
sofan Thosewhodev elopwinni
ngcombinationsofthe
abovePsandal soeff
ecti
vel
ydel
iv
ert hepr omi
ses
eff
ecti
vemar ket
ingmixinret
ailbanki
ngwhichar
e
madewi t
hregardtotheabovePswillbet he
asfol
lows:(7Ps)
winner
s.
i
. Pr
oduct
I
tisafactt
hatther
eismor
ethanonewi
nneri
n
i
i. Pr
ice r
etai
lbanki
ng.
i
ii
.Pr
omot
ion Thatshowsthattheretailbanki
ngcanvasi
svery
i
v.Pl
ace hugeandthereisplaceforev er
ybodyt
oplayt
heir
gameandwi ntheircustomers.
v
. Peopl
e
Letusnowdiscussaboutt
hedi
ff
erentel
ement
sof
v
i.Pr
ocess
themarket
ingmix.
v
ii
.Phy
sicalev
idence
1.Pr
oduct
:
Basical
ly
,theabove7Pspl ayavit
alrol
efort
he
Abankproductcanbedefi
nedas“Anythi
ngthat
banksinthei
rret
ailbanki
ngstrat
egies.
hast
hecapacitytopr
ovi
dethesat
isfacti
on,
use,
Bankersgi
velotofi
mport
ancef
orthesefact
ors andr
etur
ndesiredbythecust
omer”.
whil
edesigni
nganddevel
opi
ngthemarketi
ng
Thediff
erentretai
lbanki
ngproduct
sli
keDeposit
,
st
rategi
es.
AssetandOt herServi
ceproduct
sareoff
ered.
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2.Pr
ice: Thisincl
udespersonalpr
omotionalmeasur
esand
‘
Price’i
nt hemarket
ingmixref
erstoresul
tant otherpromoti
onalmeasures.
tr
ansactioncosttobebor
nebyt hebankerorthe Butt
heulti
mateobject
iveofthesepr
omot i
onal
customerdependingupontheproductoff
eredor measuresi
sonlytowinthecustomerandmake
avail
ed. hi
mt oavai
lthebank'
sproducts&servi
ces.
I
nt hecaseofdeposi
tpr
oduct
s,‘
Pri
ce'r
efer
stothe Thevari
ouswaysi
nwhi
chthemar ket
erdev el
ops
i
nterestr
ateoff
eredbyt
hebankert
othecustomer
. promoti
onst
rat
egi
esar
ethroughPersonalSelli
ng,
I
nassetproducts,
'pr
ice'r
eferst
otheint
erestthe Adver
ti
sement,
Sal
esPr
omot i
ons,Publi
cit
y,etc.
bankisquot
ingtotheborrowercust
omerf or 4.Pl
ace:
off
eri
ngtheloanproducttothecust
omer. ‘
Place'
inret
ailbanki
nggeneral
lyref
erstot
hepl
ace
I
ncaseofot herser
vices,
pri
ceref
erstothe wherethebankisoffer
ingi
tsproduct.
fee/chargesthebankischar
gingforof
feri
ngt
he Theconceptofplacehasundergonedr
ast
ic
diff
erentservi
ces. changesduri
ngthepastdecade.
3.Pr
omot
ion: Earl
ier‘
Place’wasv erymuchli
mitedt
othepl
aceof
Promoti
on'
ref
erst
otheef
for
tsoft
hebankst
o bankers(i
.e.
)thelocationofbr
anchandwher
ethe
reacht
hecust
omers. serv
iceswer edel
ivered.
Thepromot i
onoftheproductwi
llbebasedona Buttechnol
ogyhaschangedt heconceptandplace
multi
prongedapproachbydevel
opingvari
ous hasshift
edfrom t
hebr i
ckandmor t
arformattoe-
promotionalst
rat
egies. for
matandhasr eachedt hecust
omerinhisplace
thr
oughinter
netbankingandmobi l
ebanking.

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RETAI
LMODULE-C 5.Peopl
e:
Chapt
er10:MARKETI
NGINRETAI
LBANKI
NG *People’
agai
nisav
ital
linki
nthemar
ket
ing
(
PART-
II
I) str
ategychai
n.
Whatwewi
llst
udy
? Ret ailBanking,basi cal
lybeingser
vicesmarketing
*
Whatar
ethe7PsofMar
ket
ing? addr essedt oal argecust omerbase,humanf actor
play sav eryessent ialr
oleinthesuccessofthe
retailbankingst rategy.
Letusdiscussthefundamentali
ngredi
ent
sofan Againifwet aket hemarketi
ngconcepts,t
he
eff
ecti
vemar ket
ingmixinret
ailbanki
ngwhichar
e i
mpor tantaspectofbankmar ket
ingisf
lowof
asfol
lows: servi
cesfrom t hebankertothecustomerthr
ough
i
. Pr
oduct eff
ectivemar keti
ngstrat
egies.
i
i. Pr
ice Inthechainofev entst
aki
ngplacei
nmar ket
ing,
the
eff
ortstart
sfrom humanf act
orandendswith
i
ii
.Pr
omot
ion
humanf actor(i
.e.)t
hebankerandt
hecustomer.
i
v.Pl
ace
So‘People’conceptinmar ket
ingr efer
stot he
v
. Peopl
e peopl
ewhoar edoingthemarketingst r
ategiesand
v
i.Pr
ocess al
sopeopl ewhoar et hebenefi
ciariesofthe
marketi
ngst rategi
es.
v
ii
.Phy
sicalev
idence
Thei
nsepar
abil
it
ypri
nci
pleofbankproductsadds
morei
mportancetot
hepeopleconceptbecause
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theef
fecti
venessofthepr
oductdependsonthe Ef
fect
ivenessof7Ps:
eff
ect
ivenessofthepeopl
edeli
veri
ngthepr
oduct. ThesevenPsarebothi
ndependentaswel las
6.Pr
ocess: i
nter
dependenti
nthemarket
ingeffect
iveness.
‘
Pr ocess’
isaconceptrunningthrought
heproduct EachoneofthePsisveryimport
antindeci
dingt
he
dev el
opment,
productstructur
inganddeli
ver
y market
ingst
rategi
esonitsownbecauseofthe
stage. bui
lti
nmechanism oft
hewhol estr
ategy
.
Processwil
lbesuccessfulonl
ywhentheoutput Theyi
ndividual
lycont
ri
but
ethei
rpar
tint
he
deri
vedfrom t
heprocessisdeli
ver
edinthe eff
ect
iveness.
expectedwaytoful
fi
ll
ingthepromise. Butt
hei
ndi
vi
dualcont
ri
but
ioni
snott
heonl
yfact
or.
Inshort,pr
ocessrel
atest oallorgani
sati
onal ThesePsar eint
erl
inkedinsuchawayt hatoneP
acti
vi
ti
eswhi chisdonef orthemar keti
ngofthe willbeadecidi
ngPf ortheeff
ect
ivenessofthe
fi
nalproducttothecustomeri ncludi
ngdeli
very otherP.
channels.
Forexample,thoughproducti
sanimport
ant
7.Phy
sicalEv
idence: elementofthemar ket
ingmix,
theeff
ect
ivenessof
Physi
calevi
denceref
erstodevel
opi
ngtangibi
li
tyt
o theproductandthestrat
egydependsontheprice.
thei
ntangi
bil
it
yconceptofbanki
ngser
vices. Li
kethat
,eventhoughpriceisanimportantel
ement
Especiallyi
nt heRetailBankingOper
ati
ons,
Debi
t i
nthemarketi
ngmi x,
thepr oductandpr
icewillnot
Card/ATM Car d,
Per sonali
sedChequeBooksar
e matt
ermuchifthepromot i
onort hepl
aceaspect s
classiccasesofat t
empt sbybanksfor ar
enotgivendueconsiderati
on.
tangibil
isat
ion.

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Togof ur
ther
,agai
nifthe‘
process'el
ementi
snot Thi
swil
lmakethecust
omert
othi
nkaboutt
he
takencar
eoftheotherPswillnotbeeff
ect
ive. compet
it
ors.
Thusitisnotonlyafactt
hatthePsi nmar keti
ng SothesuccessofthesevenPsandthemarketi
ng
mixcontribut
essubstant
ial
lytotheeffect
iveness str
ategiesar
emeasuredonlybyther
esponses
ofthemar keti
ngstr
ategi
esindiv
idual
lybutalso fr
om thecustomer
sfrom thepoi
ntofvi
ewofneed
contr
ibutesinanint
egrat
edway . sati
sfacti
on.
Thusmar ket
ingmixandt heelementsofmarket
ing
mixnamel yt
hesev enPsr epr
esent
saholist
ic
approachtoret
ailbanki
ngandmar keti
ng
eff
ectiv
eness.
Theef f
ecti
venesscanbemeasur
edbyt
he
responseofthecustomert
othemar
ket
ing
strat
egies.
Ifthecust
omerisr esponsive,avai
ledtheproducts/
servi
cesfrom t
hemar keterandsatisf
iedaboutit
,
thenthatwouldresultinrepeatedpurchases/
avail
mentofthepr oducts/servi
ces.
Ift
hecustomerisnotsat
isfi
ed,therei
snoreason
forhi
mt ocomeagainbecausehi sneedswerenot
sati
sfi
edwithy
ourproducts/ser
v i
ces.
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RETAI
LMODULE-C Therear
ev ar
iouschannelsavai
labl
eforret
ail
Chapt
er11:DELI
VERYCHANNELSI
NRETAI
L banki
nginordertoachievecustomersat
isf
acti
on,
a
BANKI
NG(PART-
I) fewofwhicharediscussedhereunder
.

Whatwewi
llst
udy
?
*
Whatar ethedif
fer
entdel
iv
erychannel
sav
ail
abl
e CHANNELEXPERI
ENCE:
i
nret
ailbanking? Customersat i
sfact
ionhastohappenthr
ough
dif
ferentchannelsandchoicesar
etobeofferedt
o
customerstoexper i
encetheopti
mum channelmi
x
I
NTRODUCTI
ON: formaximum sat i
sfact
ion.
Bankcust
omersexpectmor
ethanev
erf
rom Letusdiscussindetailtheef
fi
caci
esofdi
ff
erent
fi
nanci
ali
nst
it
uti
ons. channel
sinr et
ailbanking.
Pur
chasingandusingfi
nanci
alproduct
sand Mult
i-
channeldi
str
ibut
ionisthepract
iceadopted
ser
vicesrequi
resi
nter
acti
ngwiththebanki
nsome byal
mostallbanksfortot
alcustomerexperi
ence.
waythroughachannel.
Eachchanneleit
herdir
ectorremot ehasit
splusses
Customerswhoare“ver
ysati
sfi
ed”wi
thal
l andminusesandal sodependsont hecustomer
channel
sthatt
heyuse,tendt
oownmor epr
oduct
s segmentsusingthedif
ferentchannel
s.
fr
om thebankthancust
omerswhoarenotver
y
sati
sfi
ed. Dir
ectchannel
smaybethebestfi
tfora
conserv
ati
vecust
omerwhereasyoungandt ech
I
notherwords,channelsati
sfact
ionaff
ectst
he savvycust
omersmayoptforremotechannels.
numberofproductscustomerspurchase.
Letusunder
standt
hedi
ff
erentchannel
sinr
etai
l

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bankingandimportanceoft
hesechannel
sfor PHYSI
CAL/
DIRECTCHANNELS–BRANCH:
customerexper
ienceofproduct
sandservi
ces. Br
anch:
Branchisthepr
imar
ydi
rectchannelt
hatdr
ives
Thechannel
sthr
oughwhichret
ailbanki
ngser
vices ret
ailbanki
ng.
areof
feredar
eil
lust
rat
edbel
ow: Researchstudieshavepoi ntedoutt hat,wi
thal
lthe
remotechannel savai
labl
et oenhancet hecust
omer
experi
enceofr etai
lbankingservices, t
he
pref
erencefort hebri
ckandmor tarformathas
rei
gnedsupr eme( mostinfluent
ialthing)among
customers.
Themai
nreasonsf
ort
hesamear
e:
1-Br
anchtangi
bil
isest
hei
ntangi
blenat
ureof
banki
ngservi
ces.
Thet r
ansactionscarr
iedouti nthebranchpremises
i
nfuseasenseofconf idenceinthemi ndsofthe
customer sthatt
heyar enotonlyphy si
cal
lyi
nvolved
i
nt hetransacti
onsbutal sofeeltheservi
ce
experi
enceatt hebranch.
2-Personnelatthebranchr
elat
ewi
tht
hecust
omer
fortheirt
ransacti
ons.
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3-Communicati
onhappensdi
rect
lywit
hthebank Toputitshort
,theywantahumani nt
erv
entionfor
staf
fandcustomerandbett
erunder
standi
ngofthe thei
rservi
cesthansimplygothroughon-l
ineor
servi
ceexpect
ati
onsareachi
evedfr
om botht
he mechanicali
ntervent
ionsl
ikeATMsandI nternet
customerandthebankend. BankingandMobi leBanki
ng.
4-Physicall
yseeingt
hebankstaffandeff
ecti
ngt he Branchbeinganimport
antdeli
verychanneli
nret
ail
transacti
onsbringsi
nasenseofbondingwi t
hthe banking,l
etusseewhataretheessenti
alsofa
bankst affandwhichint
urnenhancestheloyal
ty goodbr anchl
ayoutandwhataret headvant
agesof
factor. agoodl ayoutandambienceatthebranch:
5-Pr
oductsandserviceswhenexplai
nedtothe
customerdi
rectl
yinthebranchbytheStaf
fcreat
ea Br
anchLayOutandAmbi
ence:
bett
erunderst
andingthanthroughot
herchannel
s.
Thel
ayoutoft
hebr
anchist
hedecidi
ngfact
orf
or
6-Agoodbr anchl
ayoutandambi enceenhances i
mprovi
ngtheambi
enceoft
hebranch.
thefeelgoodfact
oramongt hecustomersand
str
engthenstherel
ati
onshi
pwi t
ht hebank. Accordi
ngt oGeorgeTerry ,
“Layoutreferstothe
arr
angementofal lphy
sical component swithi
nthe
avai
labl
efloorspacetopr ovidemaximum
Resear chstudieshaveshownt hatthough eff
ecti
venessandcoor dinationofthese
customer shav eacceptedtheelect
ronicchannel
s component si
ntoanef f
icientandat t
racti
veunit”
.
ofdeliveryinretai
lbankingwithbothhands,they Br
anchl
ayouti
snotanexcept
iont
othi
sconcept
.
sti
llwantt otr
ansactper sonal
lyatt
hebr anchfor
theirbankingrequir
ement s. Br
anchlayoutmaybebroadlydef
inedasthe
sy
stem oflocat
ingt
hev
ariousservi
cefaci
li
ti
es

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wit
hintheBranchinor
dert
odeli
vert
hemost 4.Servesasani magebuildi
ngtoolf
orthebank
conveni
entservi
cetot
hecust
omers. becauset hel
ayoutcreat
esasgoodi mpressi
onand
Customersshouldfeelcomf
ort
abl
ewhent
heyar
e generatesgoodwil
linthemindsofthecustomer
.
i
nsidethebranch. 5.I
talsohel
psinreduci
ngcostasthef
acil
it
iesare
pl
annedformaximisi
ngeff
ici
enci
eswhichresul
ts
Theambienceofthebranchshoul
dbesuchthatit
i
ncostoptimi
zati
on.
i
ncreasesthecomfor
tfactor
’int
hemindsofthe
customers.
Adv
ant
agesofaGoodBr
anchLayOut
:
Agoodbranchlayoutandambi
encewi
llr
esul
tin
t
hefol
lowingadvantagesf
ort
hebank:
1.Promotesef
fi
ciencyasitwil
lensur
esmoot
hfl
ow
ofserv
iceswhi
chr esul
tsi
ntimebenefit
s.
2.Becauseoft heproperplaci
ngofv ar
iousser v
ice
faci
li
ti
estheinternalcommuni cationeffecti
veness
i
ncreasestherebyfacil
itat
ingbettercoordinati
on
amongt hestaffresult
inginbettercustomer
serv
ice.
3.Pr
ov i
desacomfort
ableandcongenialwor
k
envi
ronmentt
othestaffwhichresul
tsi
nhigh
employeemoti
vat
ionandact sasamor al
eboost
er.
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RETAI
LMODULE-C Tot
alautomationofbranchesacr
ossbanksandt he
Chapt
er11:DELI
VERYCHANNELSI
NRETAI
L i
mplementati
onofcor ebanki
ngsolut
ionshave
BANKING(PART-
II
) compl
etelychangedtheconceptofservi
cedel
ivery
i
nmostoft hebanks.
Whatwewi
llst
udy
?
Singl
eWindowConcepti
nbankshasbroughtthe
*Howdoesbr
anchLayoutaf
fectt
hebanki
ng customercl
oset
otheservi
ceper
sonnelofthebank.
ser
vices?
Thecounterswerei
ndividual
lydesi
gnedasdesks
*
AllaboutATMs? tocreat
eaonet oonerelati
onshipwit
hthe
Br
anchLayOutandSer
viceDel
iv
ery
: customersandthecustomercanav ai
lanyofhi
s
serv
icerequi
rement
sf r
om anyoft hedesks.
Theconceptofdel
iv
eryofser
vicesatt
hebr
anch
l
evelhaschangedovert
heyears. Thisdevel
opmenthashappenedacrossbanksinall
metroandurbancent
resmoreparti
cular
lyinpri
vat
e
Intheear
lydaysofbanking,astandardi
zedfront
banksandofcoursei
nmostpublicsectorbanks.
offi
cewit
hlengthycountersseparat
edthe
customer
sandst af
fwilldeli
vertheserv
icesacross Butthetradit
ionalbr
anchl
ayoutcont
inuesi
nmost
thecount
er. oftheruralandsemiurbanbr
anchesofpubl
ic
sectorbanks.
Withtheprogr
essi onofbankingovertheyear
s,t
he
conceptofcounterswiththecorporat
ecolour
schemeshasr eplacedthetradi
ti
onalcounter
s.
Buttheadventoftechnol
ogyi
nbanki
nghas
changedtheconceptofcount
ers.

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Per
sonal
(Speci
ali
zed)Banki
ngBr
anches: Br
anchasadeli
verychannelhasundergonev
ari
ous
Theconceptofbr
anchhasmov edf r
om apl
ain i
mprovement
sintheli
abil
it
iessideal
so.
vani
ll
aapproacht
oamor especial
isedappr
oach Foropeningofdif
fer
entli
abi
li
tyaccounts,
branches
overt
heyears. i
nthebr i
ckandmor t
arformatperf
orm onlyt
herole
ofthemar ket
ingf
uncti
onandfrontoff
ice
I
nsteadofoneshopf oral
l,br
anchdesignhas
operat
ions.
mov edtospeci
ali
zedbranchesli
keCor porate
Branch,MSMEorSMEBr anch,AgriFi
nanceBr anch, Inal
mostal lt
heprivat
esect orbanksaswel lasi n
PersonalBanki
ng/Retai
lBankingBranch,etc. somepubl i
csectorbanks,onl ythefor
maliti
esf or
openingtheaccountsarecompl et
edatthebr anch
Speciali
zed“Per
sonalBanki
ngBr anches”were
openedbyal mostal
ltheBanksexclusivel
yforr
etai
l l
evelandopeni ngofaccounts, i
ssueofPass
Book/ChequeBook, DebitCar d,
PIN,etc.
,are
customer st
omeetallthei
rret
ailbanking
carr
iedoutthroughacent r
alizedback-of
fice
requir
ements.
mechanism.
Inaddi
ti
onspeciali
zedRetai
lAssetProcessi ng
Center
s(RAPCs)wer eopenedforprofessionaland Thisisaimedtoachievest
andardi
zati
onaswellas
speedyprocessi
nganddisbursementofr etaill
oans. speediercompl
ianceofbank'
srequir
ementsand
customerexpectat
ions.
Theobj ect
iveofthebanksistousethespeciali
zed
branchasat ooltoenhancethedeli
very Thismethodenabl
esbankstoofferi
mproved
benefi
tsli
keper
sonal
izedchequebooks,
debit
effect
ivenessofservi
cesbyprescri
bingTAT( Turn
cards,
etc.
AroundTi me)fordif
fer
entret
aill
oansandt omar ch
aheadofot her
sinthecompet i
tiv
eretai
lbanking
scenari
o.
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AUTOMATEDTELLERMACHI
NES(
ATMs)
: Enqui
ryet
c.,
att
hebr
anchpr
emi
sesi
tsel
f.
AutomatedTellerMachines(ATMs)have OffSi
teATMsar edesignedtobesi t
uatedaway
complet
elyrevolut
ionar
iestheser
vicedel
iv
ery fr
om thebranchesatconvenientandbusylocat
ions
par
adigm ofbanks. toenabl
ethecustomerst oaccessitfort
heir
dif
fer
entneeds.
ATMsaret
hestar
ti
ngpoi
ntofremotechannel
sthat
movedt
hecust
omersawayfr
om thebranch. Off-
sitemodelofATMshasprovedtobev er
y
Themai
nobj
ect
ivesofbankst
osetupATMsar
e: popularastherewasnocompulsi
onforthe
customertov i
sitt
hebr
anchevenfort
ransact
ingi
n
a.Toofferconv
eniencet
ocustomersanaddi
ti
onal anATM.
choi
cetowi t
hdrawmoneydur i
nganyti
meofthe
dayaccordi
ngtotheirwi
llandpl
easur
e. Thetransact
ionsinATMsmainlyhappent
hrough
ei
therDebitCardsorCr
edi
tCards.
b.Tomov et
hecustomersawayf r
om thecount
ers
asservi
cecosti
scomparati
vel
ylessthroughATMs Ear
li
ert
herewer
erest
ri
cti
onsonusageofATMsby
thanacr
ossthecount
eratthebranch. Cust
omers.

Ther
ear ebasi
callytwotypesofATMst
odel
iv
er Customerswereal
lowedt
oaccessonl
ytheATMs
ser
vicestoret
ailcustomers. ofthebanktheyweremai
ntai
ningt
heaccount
s.

1.OnSi
teATMs,
and I
trest
ri
ctedt
hecustomerstoei
theruset
heof
f-si
te
oron-
sit
eATM oft
heirbankonl
y.
2.Of
fSi
teATMs.
Butther
ewasachangesubsequent l
yand
OnSit
eATMsarei
ntendedt
oofferthefaci
li
tyof cust
omer swerepr
ov i
dedwiththef
acil
it
yof
CashWit
hdr
awal
s,CashRemit
tances,Bal
ance wit
hdrawingfr
om otherbanks'
ATMsalsoandev
en

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f
rom whi
tel
abelATMs. b.Tr
ansact
ionsatanyot
herbank'
sATMsatMet
ro
Forthatpurpose,
acommonnet worki
ng l
ocati
ons:
arr
angement“ Nati
onalFinanci
alSwi
tch”(
NFS)was IncaseofATMsl ocatedinsixmet rolocat
ions,vi
z.,
i
niti
atedforATM transacti
ons. Mumbai ,NewDel hi,Chennai
,Kolkata,Bengalur
u
andHy derabad,banksmustof fertheirsavi
ngs
Twoofthei
mport
antnet
worki
ngarr
angement
s
bankaccounthol dersami ni
mum of3f ree
cal
led“
CashTr
ee”and“I
NFI
NET”.
transact
ions(i
ncludingbothfinancialandnon-
Banksthatar
emembersofthenetwor
kcanof
fer fi
nancialtr
ansactions)i
namont h.
thei
rcustomer
sthesai
dfaci
li
ty.
c.Tr
ansact
ionsatanyot
herbank'
sATMsatNon-
Butchargeswer
elev
iedf
oroper
ati
onsi
nATMsof Metr
olocat
ions:
otherbanks.
Atotherlocat
ions,banksmustof f
erthesavi
ngs
Theasechargeswerelevi
edfrom cust
omersf
or bankaccountholdersami ni
mum of5f ree
operat
ionsinATMsofot herbanksbasedont
he tr
ansactions(i
ncludi
ngbothfinanci
alandnon-
rev
isedguidel
inesofRBIasunder: fi
nancialtr
ansacti
ons)inamont hatotherbank
ATMs.
a.Tr
ansact
ionsatabank'
sownATMsatany d.Theceil
ing/
caponcust
omerchargesofRs.20/
-
l
ocati
on: pertr
ansacti
on(pl
usser
vicet
ax,
ifany)wi
llbe
appl
icabl
e.
Banksmustof fert
heirsavingsbankaccount
holder
sami nimum of5f reetransact
ions(
incl
udi
ng Theaboveguidel
inescamei
ntoef
fectf
rom
bothfinanci
alandnon-fi
nancial)i
namont h, 01.
11.2014.
i
rrespecti
veofthelocati
onofATMs.
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RBIhasmandat edonl
ythemi
nimum numberof RETAI
LMODULE-C
fr
eetransact
ionsatATMs. Chapt
er11:DELI
VERYCHANNELSINRETAI
L
Banksmayoff
ermorenumberoft
ransact
ionsf
ree BANKING(PART-
II
I)
ofcostt
othei
rcust
omers. Whatwewi
llst
udy
?
Forfai
ledATM t r
ansact
ion,bankshavebeen *
Whati
sWhi
teLev
elATMs?
mandat edtoresolv
ecustomercompl aint
sbyre-
credi
ti
ngt hecustomer'
saccountwithin7working *
ATM r
elat
edi
ssuesandRi
sks?
daysfrom thedateofcomplaint.
Effecti
vefrom Jul
y1,2011,bankshav etopay Whi
teLabelATM:
compensat ionofRs.100/-perdayfordelay
sinre-
WhiteLabelATMsarethoseATMssetup,owned
credit
ingtheamountbey ond7wor ki
ngday sfr
om
andoperatedbynon-
bankenti
ti
es.Don’
thav
e
thedat eofrecei
ptofcomplaintf
orfail
edATM
banks’l
ogo.
transacti
ons.
RBIhaspermitt
ednon-bankent
it
iesi
ncor
porat
edin
Thecompensat i
onhastobecr
edit
edtothe
Indi
aundertheCompaniesAct1956,t
osetup,own
accountofthecust
omerwit
houtanycl
aim bei
ng
andoperat
eATMsi nIndia.
madebyt hecustomer
.
Non-bankenti
ti
est
hatset
up,ownandoperate
Ifthecomplaintisnotlodgedwit
hin30daysof
ATMs, ar
ecall
ed“Whi
teLabelATM Oper
ator
s”
transact
ion,t
hecust omerisnotenti
tl
edforany
(WLAO)andsuchATMsar ecall
ed“Whit
eLabel
compensat i
onf ordelayi
nresol
vinghis/
her
ATMs”( WLAs).
compl ai
nt.

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Theyprovi
det hebanki
ngserv
icestot
hecustomers Moredamagingwi ll
bet hecashoutsi
tuat
ions
ofbanksinIndia,
basedonthecards(
debi
t/credi
t whichwil
lref
lecttheineff
ici
encyoft
hebanksto
/pr
epaid)i
ssuedbybanks. pr
edictt
hewi thdr
awalpat t
ernandamountsfr
om
ATMs.
TheWLAO' srol
eisconfinedt otheacquisit
ionof
transact
ionsofallbanks'customer sandhence Thesetwofaul
tswouldresul
tinr
eputat
ionri
skfor
theyneedt oestabl
ishtechnicalconnecti
vit
ywi th thebankandmayresulti
ncustomerswitchi
ngal
so.
theauthorizedsharedATM Net workOper ator
s Banksarevy
ingwithoneanot herinincreasi
ngt he
/CardPay mentNetworkOper at
ors.(Br
ownLev el
ATM numbers(bothon-si
teandof f-
site)i
nabi g
ATMs- setup,own,operatedbybanks wayasitist
hemostconv eni
entdeli
v erychannel
ATM i
ssuesandRi
sks: formostoft
her et
ailcust
omer s.
ATMsar eoneofthemostsuccessf
ulr
emot
e From thebankspoi
ntofviewalsoitconsi
derabl
y
channel
sforser
vicedel
iv
ery
. reducesthetr
ansact
ioncostsofservi
cedeli
very
throughthebri
ckandmortarformat.
Thi
scanbeseenbytheaggressi
vegr
owthin
vol
umesaswellasv
aluegenerat
edovert
heyear
s. Arev
iewofATM operat
ionsofbankswi
thlar
ge
ATM net
wor
kwasr ecentl
yconduct
edbytheRBI
.
ATMsareal
wayscomplai
ntpronebecauseoft
he
br
eakdownsandcashoutsi
tuati
ons. Therevi
ewmai nl
yaimedati denti
fyi
ngmaj
or
Thebreakdownmaybeduet omanyr easonsbut complai
nt-
proneoperat
ionalareasandst
epsto
over
comet hese.
thecustomeri
rri
tat
ionaboutbreakdownswould
resul
tinnegat
ivepubl
ici
tytothebank. Rev i
ewwasbasedonvar
iousgroundsi
dent
if
iedf
or
ri
singtr
endi
nATM complaint
sasunder:
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a.Fr
equentbr
eakdowns: 7-Cor
rect
iveact
ionont
hebasi
sofRootCause
Powerfail
ure,net
workfai
lur
e,Cashhandl
erf
aul
ts, Anal
ysi
s.
rej
ectbinful
l,
machinebreakdownsaresomeofthe b.Di
scr
epanci
esi
ncashdi
spensat
ion:
majorreasonsforATM br
eakdowns. FormajorATM networ
kbanks,t
heper cent
ageof
Toensurethatt
hesebreakdownsar
ekepttoa complai
ntsonaccountofshor
t/nondispensati
on
minimum,someoft hei
mpor t
antmeasur
es ofcashwaslessthan0.15%oftotalcomplai
nts.
i
nit
iatedbythebanksare: Regul
atoryprescripti
onofr esol
uti
onofsuch
1-Per
iodicvi
sit
sbyATM channel complai
ntswi thi
n7wor ki
ngday sandpenalt
y(Rs.
managers/v
endorst
oATMs. 100Perday)f orfail
uretodosohav eensur
edthat
2-Monit
ori
ngofupt
imeofATMsbyv endor
saswel
l mostofthesedi screpanci
esar erecti
fi
ed
asbythebanksonarealt
imebasi
s. i
mmedi at
elyandnotkeptpendi ngbey ond7
worki
ngday s.
3-Onli
nesystem enabli
ngi
mmediat
enot i
fi
cat
iont
o
vendorsabout‘down'ATMsforr
est
orat
ionona Onlinemoni tori
ngofATMshav inghighnumberof
dispenserpr obl
ems, fol
lowupwi t
hmanuf acturer
s
pri
ori
tybasis.
forper i
odicalpr
ev ent
ivemaint
enance, traini
ngof
4-TopManagement
'sov
ersi
ghtonDownTi
me custodianst oensurepropercashloadi ngand
repor
ts. oversightofSeniorManagementonr esoluti
onand
5-Detai
ledserv
ici
ngandrepl
acementofsy
stem i
f correcti
veact i
onar esomeoft hestepst akento
necessaryofATMswithmorethanafi
xednumber addr essthediscrepanciesi
ncashdi spensat i
on.
ofcompl ai
ntsi
namonth.
6-Per
iodi
cpr
event
ivemai
ntenance.

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c.Cash-
out(
Machi
nesr
unni
ngoutofcash)
: e.Accesst
oGr
iev
anceRedr
essalMechani
sm:
Regularmonit
ori
ngandforecasti
ngcash Systemsareinpl
acetoprovi
desmoothaccessto
requi
rementsensur
esthattheATMsar eloaded gri
evanceredr
essalmechani
sm f
orATM rel
ated
opti
mal l
ytoavoi
dcash-
outs(runningoutofcash)
. complaint
s.
ATMsar el
oadedwithcurr
encybasedonthe Thegri
evancer
edressalpr
ocedur
eisdi
spl
ayedi
n
fr
equencyofcashdi
spensati
ontoensur
et hatthe theATM premi
ses.
ATMsdonotr unoutofcashduri
ngpeakper i
od.
Bankshav eaut
omatedsy stemsenabli
ng
Cashlev el
saresetandmonit
oredatint
erval
sand regi
strat
ionofATM r
elatedcompl ai
ntatany
whencashi nthemachinefal
lsbelowapre- branch/Cal
lCentr
ebyv i
sit/cal
l.
deter
mi nedlev
el,t
hevendori
sinformedto
Theaut oescal
ati
onofcomplaint
sisalsoenabl
ed
repl
enishcashimmediatel
y. i
nt hesesystemswhichfaci
li
tat
esspeedy
resolut
ionofcomplai
nts.
d.Qual
it
yofNot
es: Secur
it
yMeasur
es:
Eff
ortsaremadet oensuret
hatATMsar eloaded Wit
hspreadofATM net
works,
thei
nst
ancesof
wit
heithernewlymintedorATM fi
tnoteswhichare f
raudsareal
soontheri
se.
sort
edandpr ocessedonhi-
technotesort
ing Ensuri
ngsecur
eenv i
ronmenti
samustforbui
l
ding
machinesbyagencycustodians/
vendorswhoare
customerconf
idenceinel
ect
roni
cbanki
ng.
i
mpar t
edr egul
artr
aini
nginthi
sregard.
Themeasuresini
ti
atedtost
rengthent
hesecur
it
yin
ATM t
ransact
ionsareenumerat
edbelow:
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1-Caretakersatoff
-si
teATMs( Guar
d)and RETAI
LMODULE-C
sensi
tiv
el ocati
onstodiscour
ageatt
emptsto Chapt
er11:DELI
VERYCHANNELSI
NRETAI
L
tamperwi ththeATMs. BANKING(
PART-I
V)
2-Arr
angementswithlocalpol
iceaut
hor
iti
esfor Whatwewi
llst
udy
?
regularv
isi
tincaseofATMsl ocat
edinsensi
ti
ve
areas. *
HowPOSwor
k?

3-Disabl
ingcashretr
acti
onf aci
li
tyatATMsasper *
Whati
sIMPS?
RBIguideli
nesinvi
ewofl argenumberoffrauds
commi tt
edbyfraudster
st aki
ngadvantageofthi
s
POI
NTOFSALETERMI
NAL(
POS)
:
faci
li
ty.
PointofSaleter
mi nal
sar
etheenabl
ersofpay
ment
4-Secur
it
yScreenont
heMachinerequi
ri
ngt
he
ofcreditanddebitcar
dsi
nmerchant
customertoconfi
rmt
hedi
git
sentered.
est
ablishments.
5-Reduct
ionofperscr
eent
ransact
iont
ime.
Whenev eracustomermakesapur chaseina
6-Loggingoutofacust
omeri
ncaseofev
ena merchantestabli
shment,Poi
ntofSaleterminal
s
si
ngleinval
idpi
n. faci
li
tat
esthepay mentofamountofpur chaseby
7-Di
p-cardreaders:DipCar
dReaders(car
disnot accessi
ngt heaccountandeff
ecti
ngpay ment.
swall
owedbyt hemachine)pre-
emptcaptur
eof POS–Pr
ocess:
datathroughextraneousdevi
ces.
PoSissi
mpl
yanelect
roni
ctr
ansact
ionter
minal
Manybanksar
enowusi
ngDi
p-car
dReader
s. usedi
nanel
ect
ronicPoi
ntofSal
esystem.
SBIhas100%Di
p-car
dReader
s. Thet
ermi
nali
nter
act
swi
thacomput
erf
il
eto

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appr
ovet
ransact
ionsandt
ransmit
ssales canbeusedf
orsev
eralot
herser
vicesl
i
kebal
ance
i
nfor
mati
onforposti
ngagai
nstcustomeraccount
s. enqui
ry.
Ther
ear
etwobasi
cty
pesofPoSt
ermi
nal
s: Inthi
scase,thebankpayschargeswhicharespli
t
Elect
roni
ccashregi
ster
sthatar
eusedbyhigh amongthecar d-
issui
ngbank,t
hebankt hatowns
thePoSterminal
, t
hePaymentCompany ,Master
volumemerchants,
suchasdepart
mentst
ores,and
cardorVi
saorRuPaycar d,andthepl
acewher ethe
Dial
-upter
minalsthataut
omati
callydi
alaspeci
al PoSterminalisl
ocated.
tel
ephonenumber ,of
tenatol
l-
freenumber,
to
obtainaut
hori
zati
on. Thegr
owt
hinPoSi
sexpect
edt
obehuge.

NetSet
tl
ement
: Bankshav
eagr eedt
oputacaponchar
gest
heywi
ll
l
evyonwithdr
awalofcashbycust
omer
susi
ngPOS.
Whenthetransferoffundsactuall
ytakespl ace,
mayoccuratthesamet i
meast het r
ansaction I
nJul y2008RBIhasallowedcashtobewithdr
awn
from anymerchantest
abli
shmentwit
haPoS
happenorsoonaf t
erward,ori
tmayoccurl ateri
n
terminalupt
otoaceili
ngofRs.1000/
-ir
respect
ive
thedayi
nPoSsy st
emst hatoperateOff-
Linei na
oftypeofcentres.
Stor
eandFor wardmode.
Subsequentl
ytheli
mi twasenhancedforcash
Thistypeofsystem oper
atesoff-
li
ne,
thatis,t
he
merchantterminali
snotconnecteddir
ectl
ytoa withdr
awalatPoS( fordebi
tcar
dsandopensy stem
centr
alcomput erf
orauthori
zat
ionorprocessingof prepai
dcardsissuedbybanksinIndia)f
rom Rs.
1000/-toRs.2000/-perdayinTi
erII
ItoVIcentr
es.
sal
esr ecei
pts.
APOSter
minali
spredominant
lyusedf
orpay
ment Theper-dayl
imiti
nTierIandIIcent
resremains
unchanged(Rs.1000/-onl
y)f
orthepresent
.
f
orsal
eandpur
chasetransact
ion,
whil
eanATM
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I
mmedi
atePay
mentSer
vice(
IMPS)
: appr
ovalf
rom RBIf
orMobi
leBanki
ngSer
vice
Majori
tyofi
nter
bankmobil
ef undtransf
er (MBS).
t
ransacti
onswerechannel
izedthr
oughNEFT Thisexcepti
onalf
eatur
eofIMPShasear nedhuge
mechanism. appreciat
ionamongstmaj
orcentralbanksinthe
world,whoarenowexplor
ingpossibi
li
ti
est o
UnderNEFT,
thetr
ansacti
onsareprocessedand
set
tl
edinbat
ches,hencearenotr
ealti
me. i
mpl ementsuchpaymentserv
icesintheirown
country.
So,t
heImmedi at
ePaymentServ
ice(I
MPS)servi
ce
waslaunchedbyNPCIinNovember2010andthi
s Theser
viceall
owsabankcust
omertotr
ansf
er
ser
viceisnowavail
abl
etotheI
ndianpubl
ic. moneyinfewsecondst
imeacross279I
MPS
membersinIndia.
I
MPSoffer
sani nstant
,24x7,int
erbankel
ect
roni
c
f
undt
ransferserv
icethroughmobil
ephones. Theserv
icewhichwasini
ti
allyl
aunchedasa
mobil
eli
nkedmoneyr emi
ttanceservi
cei
snow
IMPSi sangreattooltotransfermoneyi
nstantl
y evol
vedandisavai
labl
eonnet -
banki
ngandATM.
wit
hinbanksacr ossIndiathroughmobil
e,i
nternet
The279member si
ncl
ude59PSBs/ PSBs/Payment
andATM whi chisnotonl ysafebutal
so
economicalbothinfinancialandnon-
fi
nancial Banks,152Co-oper
ati
veBanks,and38RRBs
perspecti
ves. makingtheservi
ceavai
labl
efrom Kashmi
rto
Kanyakumariandfr
om KutchtoKohima-atrul
y
Thi
sfaci
li
tyi
sprovi
dedbyNPCIt hr
oughit
sexi
sti
ng panIndiaser
viceav
ail
abil
it
y.
NFS(Nat
ionalFi
nanci
alSwi
tch)swit
ch.
Besi
dest
his,
25PPI
sar
eal
somember
sofI
MPS.
Theel
igibl
ecri
ter
ionfortheBankswhocan
par
ti
cipatei
nIMPSi sthatt
heBankshoul
dhav
e

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Obj
ect
ivesofI
MPS: 3.Usi
ngAadhaarNumber(AadhaarBased
Toenablebankcust
omer stousemobi l
e Remit
tanceSer
vice-ABRS)
i
nstrument
sasachannelf oraccessi
ngthei
rbanks 1.Usi
ngMobi
le-
Money
-ID(
MMI
D)andMobi
le
account
sandremitfunds. number:
Maki
ngpaymentsi
mplerjustwi
tht
hemobi
le MMI
D:Mobi
leMoneyI
dent
if
ier
numberoft
hebenef
ici
ary
. I
MPSof feraninstant,24x7i
nter
bankelectr
oni
c
Tosub-
servethegoalofReser
veBankofI
ndi
a(RBI
) fundtransferservi
cecapableofprocessi
ngperson
i
nelect
ri
fi
cati
onofretai
lpayment
s. toperson( P2P),persontoaccount(P2A)and
Tofaci
li
tat
emobi l
epay mentsystemsalready persontomer chant( P2M)remit
tancesviamobil
e,
i
nternetandATMs.
i
ntr
oducedinIndiawit
ht heRBIMobi l
ePay ment
Gui
deli
nes2008t obeinter-
operabl
eacrossbanks Iti
samul ti
-channelpl
atf
ormt hatmakest he
andmobileoperat
orsinasaf eandsecuredmanner paymentspossi bl
ewit
hinaf r
actionofseconds
withal
lthestandardsandintegrit
ymaintainedfor
Tobuil
dthefoundat
ionforaf
ullr
angeofmobi
le
securi
tyrequir
edforevenhighv aluet
ransacti
ons.
basedbanki
ngservi
ces.
Sender&Receiv
erhav
etoregist
erf
orMobil
e
I
MPSof f
erst
hreeopt
ionsi
nwhi
chonecant
ransf
er
f
unds,
suchas: Banki
ng&getauniqueIDcal
led“MMID”(
7Digi
t
code)forbot
h.
1.Usi
ngMobi
le-
Money
-ID(
MMI
D)andMobi
le
EachMMI Disl
inkedt
oauni
queMobi
leNumber
/
number
accountnumber.
2.Usi
ngI
FSCCodeandAccountNumber
Di
ff
erentMMI
Dscanbel
inkedt
osameMobi
l
eNo.
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2.Usi
ngI
FSCCodeandaccountnumber
: ABRSwil
lactasacat
aly
sti
nexpandi
ngf
inanci
al
Incaseswher eRemitt
erisenabl
edonMobi le i
ncl
usi
onreach.
Banki ng,butt
heBenefi
ciar
ymobilenumberisnot Thesal
ientf
eat
uresofI
MPS:
registeredwit
hanybankaccount,I
MPSf unds 24x7x365Av
ail
abi
li
ty
transferhasbeenmadepossibleusingBenef
ici
ary
accountnumberandI FSCcode.(I
FSCCode–11- Cr
edi
t&Debi
tconf
ir
mat
iont
oSender&Recei
ver
digitalphanumer
icnumber) Si
mpl
e&easyt
ouse
3.Usi
ngAadhaarNumber(AadhaarBased Ti
me&costsav
ings,
Remit
tanceSer
vice-ABRS)
:
Saf
e&secur
e
InABRS, aremittercanini
ti
ateIMPStransacti
on
Easi
lyadaptabl
eformer
chantpay
ment
sand
usi
ngt hebeneficiar
y'sAadhaarnumber,whichacts
fi
nanci
alincl
usi
ons.
asafinancialaddress&whi chwil
lbeli
nkedt othe
benef
iciary
'saccountnumber . Whilei
niti
ati
nganI MPStransacti
onusi
ngei
ther
ATM orInter
netchannel,
mobi l
ebanki
ng
ABRSf aci
li
tatesi
nsimplif
yingt
heIMPSpay ment
regi
str
ati
onf oraremit
ti
ngcust omeri
snot
i
niti
ati
onprocessasi nthi
sservi
cethecustomer
mandatory.
wil
lhavetoinputonlyAadhaarnumberoft he
benefi
ciar
yf ori
nit
iat
inganIMPSt r
ansact
ion. Simil
arl
y,f
orcustomersreceiv
ingmoneyusi
ng
accountnumber/I
FSC,orusingAADHAARnumber
,
Anotherimport
antuti
li
tyofthi
sservi
cewil
lbein
mobilebanki
ngregist
rat
ionisnotmandat
ory.
di
sbursalofsubsi
dypay menti
.e.El
ectr
oni
cBenefi
t
Transfer(
EBT)/Di
rectBenef
itt
ransf
er(DBT)bythe
Government.

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RETAI
LMODULE-C It'
snotjustabouti
mpr ov
ingcustomerservi
ce,but
,
Chapt
er12:DELI
VERYMODELS(
PART-
I) i
t'saboutsati
sfyi
ngtoday'shyper-
connect
ed
consumerbydel i
ver
ingbot hserv
iceandsales
Whatwewi
llst
udy
? throughanychannel,t
heconsumerchoosest ouse.
*
Whatar
ethedel
iv
erymodel
s? Thefinancialinsti
tuti
onthatf
ail
stodeliversal
es,
aswel lasserv i
ce,thr
oughtheplat
form ofthei
r
consumer s'choiceisdoomedt ostagnantgrowth.
I
NTRODUCTI
ON:
Intheuni
t,wewoul
dbediscussi
ngvar
iousmodel
s
ThesuccessoftheRetai
lBanki
ngdependsonhow
banksareappl
yi
nginsat
isf
yingt
hecustomer
thepr
oductsandservi
cesaredeli
ver
edtothe
needs.
cust
omer.
DELI
VERYMODELS:
Deli
veryef f
ecti
venessi
nphysi
calchannel
sis
deter
mi nedmor ebytheper
sonswhoar edel
iver
ing RetailBankingi
sacust omerori
ent
edbusiness
theservices. modelandt hesuccessofthesamedependson
howt heproductsandservi
cesaredel
iver
edt ot
he
Ther
earediff
erentdel
iv
erymodel
sbothphysi
cal
customer .
andremote(
vir
tual
)arebei
ngmadeavail
abl
etothe
cust
omers. Ofcourse,del
iv
er ychannels,bothphysicaland
remote,pl
ayacr uci
alr ol
einthedeliv
erypar adigm
Today'sconsumersdemandfi
nancialser
vicestobe
butdeli
veryef
fectivenessinphysicalchannelsis
avail
ableanddel
iv
eredtothem asseamlesslyand
deter
minedmor ebyt heper sonswhoar edel i
veri
ng
ubiqui
tousl
y.
theservi
ces.
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I
nelectr
onicchannels,
likeATM,NetBanki
ngand Letusdiscussonebyone,
thepeopleinv
olvedi
n
Mobil
eBankinghumani nterv
ent
ionisnott
her
eand thedel
iverypr
ocesst
omaker et
ailbanki
ng
thedel
iver
yrequestedismetthr
oughthemachines eff
ecti
ve.
oronli
nesoluti
ons.
1-
INTERNALCUSTOMERS-STAFFATTHE
Butincasesofphy sicalchannelsl
ikeBranches, BRANCHLEVEL:
DirectMarketi
ng,et
c. ,
theindiv
idualsi
nv ol
vedinthe I
nretai
lbanki
ngdel
iver
y ,
staffmembersoft
he
servicedel
iver
yprocessar everyimportantforthe br
anchplayaver
ycrucialrol
eintheent
ir
edeli
ver
y
successoft hecustomerr el
ati
onshipandloy al
ty pr
ocess.
factors.
Theyareresponsiblefortheendtoendser
vice
Thethreeimport
anthumani
nter
vent
ionsi
n deli
veryandanydef i
ciencyindel
iv
erywi
llr
esulti
n
physi
calchannel
sare: customerdissat
isfact
ion.
i
.Int
ernalCust
omer-St
affoft
heBr
anch. Allt
hestaf
fmembersshouldai
m ataf ocused
i
i.Speci
ali
sedMar
ket
ingPer
sonnel
. approachf
oref
fect
ivedel
iv
eryofser
vices.
i
ii
.Di
rectSel
li
ngAssoci
ates(
DSAs)
. Buti
nanybranch,al
lthest
affwil
lnotbet
hesame
andther
eisboundtobediff
erenceint
hedel
i
very
qual
it
y.
Howt
oov
ercomet
hispr
obl
em?
Theint
ernalcust
omerismoref
ocusedi
nser
vice
del
iv
eryinnewpr i
vat
esect
orbanks.

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Butinpubl i
csect orbanks,evenwi thoutastrategic 4.Cust
omerEmpathy-Putti
ngyour
selfi
nthe
focustor et
ailbankinginmanybanksandcar r
ied shoesoft
hecustomerandlooki
ngtheserv
icel
evel
onasanact iv
itywi t
hinthetotalbusinessmodel , fr
om cust
omer'
perspect
ive.
theservicedeliveryisgeneral
lymor epersonalized
5.Understandi
ngtheproductfeat
uresandserv
ice
andcaringbecauseoft heloyaltyfactorofpublic
prescr
ipti
onsandconvicti
onaboutthebank'
s
sectorbankcust omer sandbet terpersonal productsservi
cesforr
ightsel
li
ngandbetter
understandingoft hecustomer s'profi
lebythest af
f
productandservi
cedeliv
ery.
i
nPSBs.
6.Att
it
udeforcust
omerser
viceandt
heconceptof
Thisismorepronouncedinsemiurbanandrural team i
ncustomerdel
i
ver
y.
brancheswhereret
ailcustomer
saremoreloyal
andv al
uethei
rrel
ati
onshipswit
hthebanks. Theabov ediscussedessenti
alsfrom thestaff
woulddefini
telyresulti
nbett
erreali
zationofretai
l
Foreff
ici
entser
vicedeli
very
,staf
fshouldpossess
bankingbusinessandal sowil
lhelpthebankst o
thefol
lowi
ngcharacter
ist
icsandtrai
ts. crosssel
l ef
fecti
v el
yotherr
elevantproducts.
1.Understandingthecustomer,hi
sincomelev
el,
hi
sfinancialprofi
le,
hisneeds,hi
srequir
ementsof
fi
nancialproductsandhisli
festage. DEDI
CATEDMARKETI
NGMANAGERS:

2.Crosssel
li
ngt
her
ightpr
oduct
stomat
cht
hei
r Theconceptofpeoplei
nretai
lbanki
nghas
requi
rement
s. undergonedramati
cchangesinthepastdecade
especial
lyi
npubli
csect
orbanks.
3.Postsalesser
vicef
oll
owupf
orcust
omer
sati
sfact
ion. From ani
ntegrat
edapproacht
oretai
lbanki
ng,
bankshavestart
edbui
ldingast
andalonefr
anchi
se
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andspecial
ist
swereappoi nt
edinthebanksto Thecompensati
onstr
uctureswer
ealsoatt
ract
ive
car
ryoutspecifi
cal
lyret
ailbanki
ngmarketi
ng andconsi
stedofbot
hf i
xedandvari
abl
e
i
nit
iat
ivesinthepastdecade. componentsmakingthem asper
formance
ori
ent
ed.
Inforei
gnandpr ivatebanks, sincetherewas
mismat chwi t
ht heirret
ailbanki ngobjectiv
esand
thehumanr esourcesav ailabletoachiev ethe Theexpect
ati
onsf
rom t
heseof
fi
cer
sar
eexpl
ained
objecti
ves,priv
at ebanksengagedext ernal bel
ow:
agenciestocar ryoutmar keti
ngandcust omer
acquisi
tions. i
.Mar
ketI
ntel
li
gence.

Publi
csectorbankshaveredesi gnedthei
r i
i.Pot
ent
ialSour
cing.
marketi
ngapproachandappoi nt edspeci
ali
st i
ii
.ProductandServi
ceDel
iv
eryPresent
ati
onst
o
off
icer
sformar ket
ingandretailbankingi
niti
ati
ves. t
heidenti
fiedcust
omersegments.
Separatevert
ical
sf ormarket
ingweresetupi
n i
v.Ri
ghtsel
li
ngt
othet
arget
edcust
omergr
oup.
banksanddedi cat
edMar keti
ngManagerswere
v
.Sal
esConv
ersi
ons
appointedinaddit
iontoexist
ingi
nter
nalhuman
resources. v
i.Cl
osi
ngt
hel
eadswi
thsal
es.

Thesespeci
ali
stMarket
ingManager
s(MBAsin v
ii
.Compli
anceofpromi
sesmadeandconf
ormi
ng
Marketi
ng)wereyoungandener
geti
candrecr
uit
ed t
otheser
vicedel
iv
eryst
andar
ds.
fr
om thecampusesofmanagementschool
s. v
ii
i.Foll
owingupwi t
htheoper
ati
onsdepar
tment
Somebanksappoint
edthem i
nJuni
orManagement f
oreffecti
veprocessanddel
iv
eryofpr
oductssol
d.
andsomeotherbanksi
nMiddleManagement
.

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i
x.CustomerRelat
ionshipManagementona RETAI
LMODULE-C
cont
inuousbasi
sfori mprov
ingt
heloyal
tyf
act
oras Chapt
er12:DELI
VERYMODELS(
PART-
II
)
wellasaddi
ti
onalsales.
Whatwewi
llst
udy
?
Sincetheseof
fi
cerswer egivendedi
cat
ed
assignmentsf
orbett
erandf ocusedmarketi
ng *
Whati
sthewor
kofDSAs?
approach,t
heconversi
onl ev
elsandser
vicedel
iv
ery
qualit
ywerebett
erachieved.
Thoughthest andalonemar ket
ingmodelwas
pract
icedinit
ial
lyonlybyaf ewbanks,sincethe
i
niti
ati
vesy i
eldedthedesiredresul
ts,morebanks
fol
lowedsuitandt hisphenomenoni shappeningi
n
almostallbanks.
Theef
fect
ivenessofdel
iverytor
etailcust
omer
s
hasi
mprovedv er
ywelli
nt hi
sdedicatedmodel
.
DI
RECTSELLI
NGAGENTS(
DSAs)
:
TheconceptofDi
rectSell
ingAgents(DSAs)was
pi
oneeredbyfor
eignbanksandnur tur
edwellby
newgenerat
ionpri
vatesectorbanks.
DSAsareagenci
esappoi
ntedbybankst
osour
ce
busi
nessfort
hem onafeebasi
s.
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Bankswhichdonothav eabranchpenetr
ati
onand t
rapbymi
susi
ngt
hecar
ds.
geography,t
oservi
cealargesect
ionofcustomers, Samei sthecasewithmis-sell
i
ngofr et
aill
oansand
theyseekthehel
pofDSAsf orsourci
ngbusiness i
nt hisspace,thepri
cingfortheloansarenot
onbehalfofthebankandalsocompletethe
explainedclearl
y.
prel
iminar
yformali
ti
esforacqui
ri
ngcustomers.
Ult
imatel
ythiswil
lresul
tindi
ssati
sfact
ionf
ort
he
DSAspositi
onedacr
ossgeogr
aphi
eswi
llmaket
he customersandreputati
onri
skforthebank.
taskseasi
erfort
hebanks.
Withlimitedbr anchnetworks,
pri
vat
esectorbanks
DSAsar
epri
maril
yengagedi
nsour
cingCr
edi
t areincreasinglydependingonoutsi
deagenci
esto
Car
dsandRetai
lLoans. sellt
heirretailproduct
s.
Theappoint
edDSAappoi ntsfiel
dpersonneland Despitethelackofloyalt
yandaccount abil
it
y
supplement
edbyt el
e-cal
ler
s,star
tthemarketing associat
edwi thdir
ectselli
ngagencies,new
processandfoll
owupt omeett hecust
omer sand generati
onpr i
vatesectorbanksseet hi
sast heonl
y
convertt
hem int
osales.
wayinwhi chtheycangr owt hei
rscaleof
Butthescruti
nyandKYCfor
mali
tiesf
ort
heabove operati
onsint hecountry
.
arebasical
lydonebyt
hebanksbefor
eof
fer
ingt
he Unmat chedwi t
hthepubli
csectorbanksintermsof
samet othecustomer
s. reach,pri
vatebanksneedfeetonthestreettosel
l
Butmis-sel
li
ngbyDSAsi
srampantespeci
all
yint
he andcross-sellt
heirpr
oductsandthesamei s
cr
editcardspace. achiev
edt hr
oughDSAs.
Theempl oy
eesoft
heDSAsmis-
sel
lcreditcar
d I
ncaseofal
argepr
ivat
eplay
erwhosemorethan
product
sandmakethecust
omersf
allint
oadebt 50%oft
heasset
saresour
cedfr
om ther
etai
lsi
de,

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DSAspl
ayavit
alrolei
nmobi li
singbusi
nessand ReputationRiskisalwaysat hr
eateni
ngf act
orin
moret
han70%oft heret
ailassetport
fol
ioi
ncl
uding theDSAmodelast hef i
eldpersonneldeployedby
HomeLoansaresourcedthroughDSAs. theDSAsf orsourcingbusinesstrytomakesome
fal
sepr omisesintheTurnAr oundTime( TAT)in
ThroughDSAs, pri
vat
ebankswer eabl
etoachi
eve
ret
ailassetprocessingandissueofcreditcards.
DoorstepBankinginabi
gwayasDSAsr eacht
he
customersforsourci
ngret
ailasset
sandother DSAsf ocusonpureselli
ngbypushingtheproduct
s
bankingproducts. thaneffect
ivemar
ketingaft
erveri
fyi
ngtheneedsof
thecustomersandtheiract
ualr
equirements.
Pri
vat
ebanker
simpl
ementsuff
ici
entchecksand
bal
ancest
okeepDSAsundercheck. Theclassiccasesaremis-
sell
ingcardproduct
sand
Banksoutsour
cet heendtoendmarketi
ngfunct
ion ret
ailassetproduct
sli
kePersonalLoans.
totheagencythatint
urnwil
lengagepeopl
efor Ulti
mat
elyitwoul
daffectthebankandnott
he
reachi
ngthecustomers. DSAssinceforDSAs,
t hi
sisoneofthej
obsand
theymaydoitformanybanks.
Bythi
sthecostofdeli
v er
yofservi
cewoul
dbe
consi
derablyr
educedforthepr
ivat
ebanksasDSAs Butforthebank,therelat
ionshipreputat
ionbui
lt
arenoti
nt hei
rpayrol
ls. overyearswil
lbeatst akeiftheDSAf ail
sto
perf
ormt heexpectat
ionspr ofessi
onall
y.
Thecompensat
ionfort
heDSAswillbasi
cal
ly
dependont
hevolumesofbusi
nesssourced.
DSAsachiev
ebusi
nessvol
umesbutther
eisal
way
s
ari
skatt
achedwit
hthei
rki
ndofsel
li
ng.
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RETAI
LMODULE-C Bankswillfol
lowupwit
hthecust
omer
sregar
ding
Chapt
er12:DELI
VERYMODELS(
PART-
II
I) thei
rloanrequir
ement
s.

Whatwewi
llst
udy
? Basedontheel
igi
bil
it
yofthebor
rower
sbankswi
ll
sanct
ionhomeloanstot
heappli
cant
s.
*
Tieupwi
thDeal
ers/
OEMs/
Inst
it
uti
ons?
Inanot herty
peoftie-up,bankswi l
lfi
nancethe
builder sforthei
rhousingpr oj
ectsandenterint
o
TI
E-UPWI
THI
NSTI
TUTI
ONS/
OEMS/
DEALERS: arrangementwi ththebuildersforr
epayingtheloan
from t heproceedsofsaleoff l
atstodif
fer
ent
Banksenterint
otie-upswit
hthefoll
owingagenci
es
buy ers.
forext
endingdif
ferentty
pesofloans.
Theyal
socoll
aboratewit
hthebuildersaspr
eferr
ed
i
.Tie-
upwithBui
lder
sasapref
err
edfinanci
erfor
fi
nanci
ersandsancti
onloansbasedonmer i
tsto
ext
endingHomeLoanstopr
ospecti
vebuyers.
thebuy
ersandtheloanproceedswi l
lbeadj
usted
Specialconcessi
onsli
kewaiverofprocessi
ng tothel
oansextendedtothebuil
ders.
charges,documentat
ioncharges,mort
gage
i
i.Ti
e-upswi
thaut
odealersisanothermethod
charges,etc.
,wil
lbeoff
eredasadditi
onal
adopt
edbybanksforexpandingret
ailcr
edit
.
att
racti
onsf ort
heseborrowers.
Thi
smodelismor epr
eval
entamongpr
ivat
esect
or
I
nt histypeofti
e-ups,bankwil
lapprovethespeci f
ic
andfor
eignbanks.
project
sofbui l
dersandexpressthei
rint
er estt
o
fi
nancet heindi
vidualorgr
oupbuy er
soft heproject. Banksti
e-upwit
haut
odealersasapr efer
red
fi
nanci
erandsetupacounter/deskinthe
Buil
dersi
nturnwil
lref
ert
heirbuyercust
omer
sto
showroom oft
heaut
odealerforsoli
cit
ing/
theBankforconsi
deri
nghomel oans.

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capt
uri
ngcust
omer
sforext
endi
ngl
oans. Thisi
sawi nwinsit
uat
ionf
orallconcer
ned,
Whenaper sonvisit
sat iedupcardeal er'
s manuf actur
eranddeal
erwil
lsel
lmor ecar
sand
showr oom,oncompl eti
onofhischoi ce,t
he bankerwi l
lext
endmoreret
aill
oansthusimprov
ing
theprofit
sforall
.
customerisr ef
erredt othebank'sstaffatthe
showr oom andthebankst af
fimmedi atel
ygetthe Butt hismodelisunderstrai
nasmanuf act
urers
detail
sandr equir
ement sandst artprocessingt
he throught hei
rfi
nancingarms( NBFCs)ext
endthe
l
oanbasedonmer i
ts. creditfacil
it
ytotheulti
matebuy er
sthusmaking
additionalprof
it
sfrom thesal
eofcars.
Asdiscussedincaseofhomel oan,banksextend
l
oanst othecardealerasloanagai
nstrecei
vables
andadjustthel
oanf rom t
heloanssancti
onedto i
ii
.Sancti
oningofPer sonalLoansundertie-
upwit
h
thei
ndivi
dualbuyersofcars.
di
ffer
entinsti
tut
ionsisanot hermodeladoptedby
Intheabovet
ie-ups,thedeal
erof
fer
ssome bankstoexpandr et
ailloans.
concessi
onsfrom theirpr
ofi
tmargi
ntoi
ncr
ease
Bankst i
e-upwi
thinsti
tut
ionsforextendi
ng
sal
es. PersonalLoantogroupofempl oyeesofthe
Banksofferconcessi
onalint
erestr
atesandalso i
nstit
utionsandtherepaymentofloanwillbe
waiverofprocessi
ngchargesforsuchloans. undertakenbythecompany .
Thereisanot hert
ypeofti
e-upwherethe Theinstit
uti
onswi
llr
ecovert
hesal
aryf
rom t
he
manuf actur
er,deal
erandbankercomingtoget
her employeesonamont hl
ybasi
sandremitt
othe
foroffer
ingloanswithmaximum concessi
on bankdirectl
y.
throughsharingoftheconcessi
onsbyallthet
hree. Thusr
epay
menti
sassur
edf
ort
hebank.
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i
v.Eveneducat
ionall
oansar
edi
sbur
sedonat
ie-
up
basi
s. LRETAI
LMODULE-C

Bankssetupspecialcounter
sdur i
ngtheadmissi
on Chapt
er13:CUSTOMERRELATI
ONSHI P
seasoninr
eputededucationali
nstit
uti
onsandoffer MANAGEMENTI NRETAILBANI
NG( PART-I
V)
educat
ionloansbasedonmer i
t. Whatwewi
llst
udy
?
Bythi
sway
,theycoul
dgar
nergoodnumberof *
Whatar
ethebenef
it
sofCRM?
l
oans.

BENEFI
TSOFCRM:
Aneffect
iveCRM impl
ement
ati
oninret
ailbanki
ng
Theservi
celevel
sthroughtheelect
roni
cand wi
llbenefi
tthebanksi
nmorethanoneway .
remoteandtie-
upchannelsareuptothe Thef ol
lowingaresomeoftheimport
antbenef
it
s
expect
ati
onsornotcanbegaugedbyt hebehav
ior thataccruetobanksandenhancethecust
omer
ofthecust
omer sandtheloyal
tyfact
or. focusoft hebanks:
Tostrengt
henthel
oyalt
yfact
or,
customersshoul
d i
.Improv
est hecustomersatisf
act
ionandcr
oss
bemadet oavai
lmaximum numberofpr
oductsand sel
li
ngpotenti
alforthebanks.
ser
vices.
i
i.Hel
psthebankst
oder
ivei
ncr
easedshar
eof
Toachievethi
s,ani
ntegr
atedCustomer wall
etfr
om t
hecust
omer.
Relat
ionshi
pManagement( CRM)progr
amme
i
ii
.Enhancest
heoper
ati
onalef
fi
cienci
esoft
he
shouldbeinpl
aceinbanks.
banks.

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i
v.Hel
pstotakeoncompet
iti
onasCRM r
esul
tsi
n I
MPACTOFCRM ONCUSTOMERSATI
SFACTI
ON:
morecust
omerfocusandr
etent
ion.
Customersatisf
actionhasi mport
antimpli
cati
ons
v
.Hel
pincr
osssel
li
ngi
tspr
oduct
s. fort
heeconomi cper for
manceofbanksbecausei t
v
i.Improvescustomerser
vicet
hroughef
fect
ive hastheabil
it
yt oincreasecustomerloyal
tyand
usagebehaviourandr educecustomercomplaint
s
i
ntegr
ationofallr
emotedeli
ver
ychannel
s.
andtheli
kel
ihoodofcust omerdefect
ion.
vi
i.Helpstomanagemultidel
iv
erychannelsi
na
betterwaytoadoptandmaint
ainuni
form ser
vice Theimplementati
onofaCRM approachislikel
yto
standardsacr
osschannel
s. haveanef f
ectoncust
omersati
sfact
ionand
customerknowledgef
oravari
etyofdif
ferent
v
ii
i.Enabl
estoachiev
eseamlessinf
ormat
ionf
low reasons.
t
argetedacr
ossfuncti
onsi
ndeli
very.
Fir
stl
y,banksareabl
etocust
omi
zet
hei
rof
fer
ings
i
x.Result
sinbett
errel
ati
onshipmarket
ingas foreachcustomer.
customersegmentsar
ebettertar
getbasedont
he
dataavai
labl
einCRM. Byaccumul at
inginformat ionacr
osscust omer
i
nteracti
onsandpr ocessi ngthi
sinformationt
o
ThusCRM isausef ultoolforamorecal
ibr
ated di
scov erhi
ddenpat terns,CRM applicati
onshel
p
appr
oacht ocustomersegment ati
onanddesign bankscustomi zetheirofferi
ngstosui tt
he
andoffermorerelevantproduct
sandservi
cesfor i
ndividualt
astesoft heircustomers.
thet
argetedsegment s.
CRM applicati
onsalsoenabl
efir
mst opr
ovide
CRM wil
ldef
ini
tel
yenhancethecustomerv
aluet
o ti
mely,accuratepr
ocessingofcust
omerordersand
thebankandal
soprofi
tabi
li
tyfort
hebank. request
s.
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Bot hanimprovedabil
itytocustomizeanda Eventhef i
nanceandl
egaldepar
tment
sshould
reducedv ar
iabi
li
tyoftheconsumpt i
onexper
ience underst
andhowt omanageandbuildr
elat
ionshi
ps
enhanceper cei
vedqualit
y,whichintur
nposi
tivel
y withcustomers.
affectscust
omersat i
sfacti
on.
ReviewingProcessesandDesi
gni
ngNew
Fur
thermore,
CRM appli
cati
onsalsohelpfi
rms Processes:
managecustomerrel
ati
onshipsmoreeffect
ivel
y Bankst hatdonothav
ewel l
-desi
gnedandl
ogi
cal
acr
ossthestagesofr
elati
onshipi
nit
iat
ion,
processescannotbesuccessfuli
nachi
evi
ngt
hei
r
maint
enance,andt
erminati
on. goals.
Tr
aini
ngofEmpl
oyeesi
nCRM: Theyshoulddef i
nethei
rbusinessgoalsand
Manybankshav eimpl
ementedtr
aini
ngpr ograms eval
uatetheirCRM processestoimproveand
totrai
nemployeestor
ecogni
zeandeffectivel
y expandtofitthei
rneeds.
createst
rongcust
omer-br
andrel
ati
onships. Applyi
ngnewt echnologiesi salsohel
pfulbecause
Employeeshav
eal sobeent rainedinSoci
al usi
ngCRM sy stemsr equireschangesin
psychol
ogyandthesoci alsciencestohel
pbol
ster i
nfrast
ructureoftheor ganizat
ionaswellas
str
ongcustomerrelat
ionships. deploymentofnewt echnol ogi
essuchasbusi ness
Customerservi
cerepr
esentati
vesmustbe rul
es,databasesandI nformationTechnol
ogy .
educatedt
ov al
uecustomerrelat
ionshi
ps,
and
tr
ainedtounderst
andexist
ingcustomerprof
il
es.

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RETAI
LMODULE-C Withtheshi
fttoabuyer'
smarketi
nbanking
Chapt
er13:CUSTOMERRELATI
ONSHI
P servi
ces,
ret
ainingexi
sti
ngcust
omersandwi nni
ng
MANAGEMENTI NRETAILBANKI
NG(PART-
I) newonesarepr ovi
ngtobeatoughchal
lengefor
banks.
Whatwewi
llst
udy
?
Thus, todaybanksarecommi t
tedtot
hebeliefthat
*
Whati
sCRM? alltechnology,
processes,product
sandskil
lsofi t
s
I
NTRODUCTI
ON: peopl emustbel ever
agedf ordel
iv
eri
ngsuperior
banki ngexperi
encetoitscustomersandtherefore
Inthehighl
ycompet i
ti
vebanki
ngenv i
ronmentof
toinnov ateandkeepintr
oducingcustomercentric
today,al
lbanksstri
vetoensur
ethateffi
cient
i
ni t
iativ
esf r
om ti
met oti
me.
customerservi
ceandcustomersatisf
acti
on
remainsthepri
mar yobj
ecti
vesoftheBanki ni
ts Thepri
mar yobjecti
veofCRM istoprov
idethe
daytodayoper at
ions. ent
ir
eorganizationwithacomplete,
360–degr ee
vi
ewofthecust omer ,
nomatterwherethe
Wi t
hthePSU, Pri
vateandForei
gnbanksallt
ryi
ng
i
nformati
onr esi
desorwherethecustomertouch
foralargermarketshare,
iti
sthequal
it
yof
poi
ntoccurred.
customerserviceandspeedofdeli
ver
ythat
disti
nguisht
hebet t
erbanks. Today,manybusi nessesmanagediff
erent
customerrelat
ionshipswi
thmulti
pleinfor
mati
on
Withthechangingeconomicandbankingscenari
o,
systems,whichweakencustomerserv i
ceand
thedemandsandneedsofcust omershav egrown
ult
imatereducetotalsal
espotent
ial
.
manifol
dwhichhav enecessi
tat
edacompl ete
changeinthefocusofbanksfordel
iv
er i
ngservi
ces Toreal
izet
hebenefi
tsofCRM, i
tisi
mpor t
antt
o
tosuitt
hei
rspecifi
crequir
ements. hav
eani nt
egr
atedsolut
ionacr
ossallcust
omers'
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i
nformati
onsyst
ems,tyi
ngtoget
hert
hefrontand CUSTOMERRELATI
ONSHI
PMANAGEMENTI
N
backoff
icesf
oracompletevi
ewofthecustomers RETAI
LBANKING:
i
nordertoser
vethem bet
ter
. Whati
sCustomerRel
ati
onshi
pManagement(CRM)
Thi
sunitcov
erstheneed,
process,st
agesin i
nbanki
ngingener
alandret
ailbanki
ngi
npar
ti
cul
ar?
i
mplementat
ionofCRM al
ongwi t
hbenefi
tsofCRM
Asweareal
lawar
e,t
her
ear
ethr
eeel
ement
sin
toagr
eatextent
. CRM,v
iz.
,
Customerr el
ationshipmanagement( CRM): a.Cust
omer
CRM i sat ermt hatreferstopr acti
ces,st
rat
egi
es
andt echnologiesthatcompani esusetomanage b.Rel
ati
onshi
p
andanal y
zecust omeri nteract
ionsanddat a c.Management
throughoutt hecustomerl i
fecycle,wit
hthegoalof
Theabovet hr
eef act
orsi
ndi
cat
ethatbankshav
eto
i
mpr ov ingbusinessr elat
ionshipswi t
hcustomers,
managet hecustomersandmanagethei
r
assistingincust omerr etenti
onanddr ivi
ngsal
es
rel
ati
onshipalso.
growt h.
Bankhastomanagethecust
omerbyoff
eri
ngt
he
Iti
samanagementphi losophyaccordingtowhich
ri
ghtpr
oduct
/smatchingt
heneedsoft
hecust
omer
.
acompany 'sgoal
scanbebestachi evedthrough
i
dentif
icat
ionandsati
sfacti
onofthecust omers' Relati
onshipwit
hthecustomermeansthatthe
stat
edandunst at
edneedsandwant s. servi
cequalit
yofthebankshouldmatchthe
customerexpectat
ionsintot
alandr
esulti
ntotal
sati
sfacti
onofthecustomer.
I
taddi
ti
onal
lyemphasi
zest
hatt
het
otalneed

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spectrum oft
hecustomersshouldbeaddressed Thest
agesi
nvol
vedi
naCRM i
nit
iat
ivear
e:
andser v
icedeli
ver
yshouldr
esultinabsol
ute i
.Customercent
ri
cit
y;Gett
hewhol
est
affmember
s
sati
sfacti
onforthecust
omer. onboard.
CustomerRel at
ionshipManagement( CRM)i s i
i.Capt
uringt
hecust
omers'pr
ofi
let
hrougha
basi
callyhavinga360degr eeviewofthe
t
echnologyenabl
edmodel
.
customersandt heirprofi
le,dy
nami cal
lytracking
thei
rrequir
ement s,off
er i
ngmat chi
ngpr oductsand i
ii
.Cr
eat
ea360degr
eev
iewofy
ourcust
omer
s.
serv
ices,crosssell
ingr el
evantproductstohi s Dissecti
ngt
hepr
ofi
lesi
ntocommoni
nfor
mat
ion
changingneedsandkeepi nghim happyf orever. buckets.
Letusnowseet
hedy
nami
csofCRM: i
v.Desi
gningsuit
ableproduct
sandservi
cest
o
Theobj ecti
vesofagoodCRM ar eaimedatt obuil
d cat
ertothedi
fferenti
nformat
ionbucket
s.
l
ong- t
erm profi
tabl
er el
ati
onshipswi t
hspeci f
ic v
.Offeri
ngtheproduct
sandservi
cestot he
customer sthr
oughabet t
erunderstandingofthe t
argetedandsegmentedcust
omersfrom the
customer sinordertodevelopcloserelati
onships, i
nformati
onbucketswit
htheri
ghtpr
icing.
off
eropt imalproductsandservicesonady namic
v
i.Pr
ovidi
ngtherightsal
esandser
vicepr
ocesses
basi
sandachi eveli
fe-t
imev al
uefrom customer s.
t
oachievetot
alcustomersat
isf
act
ion.
Thiswouldbeachi
evedbysy st
emat
icand
vi
i.Mi
nimiseresponseti
met
ocust
omer
's
technol
ogyori
ent
edprocessesandmodel
s.
enqui
ri
es/requir
ements.
ThepurposeofCRM istoincreaset
heshar eof
vi
ii
.Tracki
ngthecust
omerinf
ormationona
wal
letofthecustomerwit
ht hebanks'ser
vicesand
dynamicbasi
stodesignnewproductsandser
vices
i
ncreasetheper-
cust
omerpr ofi
tabi
li
tyofbanks.
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t
omeett
hechangi
ngdy
nami
csoft
hecust
omer
s. RETAI
LMODULE-C
i
x.Est
abl
ishhealt
hycust
omerr
elat
ionshi
pbased Chapt
er13:CUSTOMERRELATI
ONSHIP
onacomprehensiv
ecust
omerprof
il
e. MANAGEMENTI NRETAI
LBANING(PART-
II
)
Alltheabov einit
iat
ivesindicatethatCRM pr ovi
des Whatwewi
llst
udy
?
amechani sm forbanksf orbeingpr oacti
vein *
WhybankneedCRM?
addr essi
ngcust omerneedsandexpect ati
onsand
analy zi
nginformati
onf rom allchannelsanddat a
sourcest oprofil
ecustomer s,predictchurnand
predictcustomerpr ofi
tabil
ity
.
Cust
omeropti
misati
onistheessenceofCRM and
WHYCRM?
canbeaddr
essedthroughthr
eedimensi
onsvi
z.
WhyCRM?Thisi
sanimpor t
antquest
ionwhichhas
a.Acqui
sit
ionofNewCust
omerswhoar
e
t
obeanswer
edbyallconcernedi
nretai
lbanki
ng.
i
mmedi at
elyprof
it
abl
etot
hebank.
WithoutCRM,whetherbankscannottr
ackthe
b.Retent
ionofExist
ingCust
omerswhoaremost
customers'
prof
il
eandof f
erthoseproduct
sand
profi
tabl
eandvaluablet
otheBankf
orthelongest
servi
cestomatchthei
rexpectat
ionsandneeds?
durati
on.
c.Expansionofthecust
omerr el
ati
onshipwit
hthe
bankencour agi
ngmorepurchasesandshift
ingthe Butt
hefol
lowingneedsofbanksfor
l
esspr ofi
tablecust
omerst
ol ower-costdel
iver
y i
mplement
ationofaCRM program wi
llanswert
he
channels. abov
equesti
ons.

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i
.Needt
oincr
easeoper
ati
onalef
fi
cienci
es. (
i)Needt
oincr
easeoper
ati
onalef
fi
cienci
es:
i
i.Needt
oder
ivemor
eval
uef
rom empl
oyees.
i
ii
.Incr
easi
ngcompet
it
ioni
nret
ailbanki
ng. Operationalef
fi
cienci
esar ebasicall
ymanagi ng
operati
onalcostsforthebanki ngener aland
i
v.Ri
singNPAs.
del
iverycostinparti
cularasapplicabletoretai
l
v
.Incr
easi
ngI
mpor
tanceofFeeBasedI
ncome. banking.
v
i.Del
iv
eryChannelEf
fi
cacy
. Theclassi
cexampl
einbranchbanki
ngisshif
ti
ng
v
ii
.Appl
icat
ionofTechnol
ogy
. thecustomer
stoel
ectr
onicandremotechannel
s
l
ikeATM.
Thecostofdi
rectdel
iv
eryint
hebranchacr
osst
he
CRM i
snotjustanoptionforthebanksbuta
count
erismorecostl
ythandel
iv
erythr
oughATM.
compulsi
ontoachievebusinesssyner
giesand
opt
imizat
ionofresour
ces. Hencet heobjecti
veofbankswouldbetoshiftthe
customerf r
om thebranchtot
heATM thereby
CRM asat oolcanbeef fect
ivelyutil
izedtoexplor
e
reducingoperati
oncostandimproveoper
ational
newfront
iersinproductdev elopmentand
effi
cienci
es.
managementandi mpr ovetheper -customer
prof
it
abil
i
tyinadditi
ont obui l
dingandsust ai
ning CRM i
sanenablertoi
dent
ifythecust
omers
cust
omerl oyal
tyandbr andequi t
y. segmentswhi
chcanbemi gratedt
oATM asan
addi
ti
onaldel
iv
eryopt
ionf
ort hem.
Letusdiscusseachoftheseneedsi
ndet
ailf
ora
bett
erunderstandi
ngofCRM.
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(
ii
)Needt
oder
ivemor
eval
uef
rom empl
oyees: ov
eral
lempl
oyeepr
oduct
ivi
ty.
Thenextdimensionist
oimproveemployee (i
ii
)Incr
easingCompeti
ti
oni
nret
ailbanking:
product
ivi
tybyredef
ini
ngt
heirr
olestodeli
ver Compet i
ti
onisthebuzzwor
dinr
etailbanking.
servi
cetocustomerswhoaremor epr
ofi
table. Asretai
lbanki
ngisaprofi
tabl
ebusi
nessmodelfor
Thespat eofretir
ementsthr
oughVRSand pri
vateandfor
eignbanks,t
heyvi
ewitheachot
her
superannuati
onhasnecessitatedbankstogov er
y tograbthei
rmarketshar
e.
aggressi
v ei
nt echnol
ogyimplementat
ionandthe Forachiev i
ngt hi
s,customerori
entationistheirt
op
reducedmanpowerhast obemor eproduct
ivel
y mostpr iori
tyandt heyimplementawhol erangeof
deployedforderivi
ngmorev al
ue. acti
viti
esi nproductdev el
opment,process
Here,
thev
aluedi
mensi
onsar
etwof
old;
empl
oyee eff
iciencies,deli
verychannel
s,pr
icingandv alue
val
ueandcust
omerval
ue. additi
onst oacqui r
e,ret
ainandimpr ovetheir
Employeevalueisincreasedbydeployi
ngthem i
n customerbase.
marketi
ngandf orcrossselli
ng/
upsell
ing AgoodCRM progr
am hel
psbankst
oachi
evet
he
opport
unit
ies,bet
terbusinessvaluesandvolumes. abov
eobj
ect
ives.
Customerv alueisaderi
vat
iveofemploy
ees'out
put (
iv)Ri
singNPAs:
andper-customerprofi
tabi
li
tyi
nmakingthe Ret
ailBanki
ngandNPAsgot
oget
her
.
customersav ail
ingt
hemaximum numberof
product
s/serv i
ces. ThoughRetai
lBankingisanatt
ract
iverev
enue
modelforbanks,
ithasitsi
nher
entrisksi
n
Eff
ect
iveCRM sol
uti
onswouldi
mprovethequali
ty managingthebusiness.
ofout
putbyemployeesandwoul
dimprovethe

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Sensit
iveret
ailpr
oductsli
keCreditCardsand (
v)I
ncr
easi
ngI
mpor
tanceofFeeBasedI
ncome:
PersonalLoansarebasical
lyunsecur
edandar e NetInter
estMar gi
nsareont hedecl
ineformostof
suscepti
bletobecomeNPAs. t
hebanksduet opressurei
nspreadsandbanks
Infact,
somepr iv
atebanksareexperi
enci
nghuge werelookingoutforavenuestoimprovethebot
tom
deli
nquenciesinthi
ssegmentwhi chmadethem to l
ines.
switchoverthei
rstrat
egi
esfrom aggr
essi
vetothe
FeeBasedincomethroughThir
dPartyDi
str
ibut
ion
watchmodeandal soshr
inki
ngtheirr
etai
lasset i
sanattract
iveopt
ionforthebanks.
expansion.
I
nsomepr i
vat
ebanks,
morethan50%ofthei
r
Somepubli
csectorbanksalsoexper
ienci
ngr
isi
ng
r
evenuesar
egener
atedthr
oughthef
eebased
NPAsmainl
yintheHomeLoanssegmentduet o models.
def
aul
tsanddeli
nquencies.
Publi
csect orbanksal
soareaggr
essi
vel
yint
ofee
Thi
scall
sforaneff
ectiv
ecustomert
racki
ng basedincomegener at
iont
hroughThi
rdPart
y
mechani
sm formonit
oringandr
ecov
eryofret
ail
Dist
ri
bution.
l
oans.
Mar keti
ngofinsuranceproducts(bot
hi ntheli
fe
ThoughCredi
tScori
ngmodelsareadopt edwhil
e
i
nsur anceandnon- li
fei
nsurance)andalsomut ual
assessi
ngthecar
dlimi
ts,
loanli
mits,etc.,
theNPA
fundsof f
eredverygoodscopet oearnfeebased
phenomenonhappensi
nspiteofthis. i
ncomebysel l
ingtheseproductstotargeted
CRM hel
pst
otr
ackcust
omer
sandf
oll
owupf
or customersegment s.
recov
ery
.
Retai
lsal
eofI
ndi
anGoldCoi
nsisanot
herav
enue
toaugmentf
eebasedi
ncome.
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CRM datahelpsbanktosellSover
eignGol
dBonds (
vii
)Appl
icat
ionofTechnol
ogy
:
–anotherareaforfeebasedincome. Technologyisinsepar
ablef r
om retai
lbanki
ngand
CRM sol
uti
onshel
pt hebankt
oidenti
fypot
ent
ial i
nit
iati
veslikeCoreBankingSolutions(CBS),Mobi
le
cust
omersforsel
li
ngthesepr
oducts. Banki
ngandI nt
ernetBankingarediff
erent
manifestat
ionsoftechnology.
(
vi)Del
iv
eryChannelEf
fi
cacy
:
Dif
ferentchannelsbothphysi
calandremotear
e Banksi nordert
oopti
miseprofi
tshav etol
ever
age
off
eredtot hecustomersforenhanci
ngthei
r technologytomaximi
zebusinessthrougha
experi
enceandder iv
esatisf
acti
onfrom t
he structur
edapproacht
ocustomermi ningandcross
channelsexperi
enced. selli
ng.

Somecust omerswi llli

ketoexperiencedir
ect CRM solut
ionsenabl
ethi
sthr
oughappl
icat
ionof
channel
slikebrancheswher eassomecust omer technol
ogy.
segmentswi l
lgof orremot echannelsli
keATMs,
MobileBanking,andI nter
netBanking. Theabovepoint
sonl yhi
ghli
ghtt
heneedf
orCRM
Butsomeofthecustomerswil
lli
ket
ohaveablend fr
om di
ff
erentperspecti
ves.
ofchannel
sfort
otalsat
isf
act
ionoft
hei
rneeds. Al
lthi
swhenintegr
atedandadmini
ster
edwi
llmake
CRM solut
ionshelpbankstoof
fertheri
ghtchannel CRM ver
yrel
evantandprof
it
abl
ealso.
mixtothei
rdiff
erentcust
omersegmentsto ButthebackboneofCRM l
iesi
nther
obust
nessof
enhancecustomerloyal
tyandr
etenti
on. thecust
omerdata.
DataWar
ehouseandDataMini
ngaretwoimpor
tant
tool
swhi
charecri
ti
calf
oranymeani
ngfulCRM.

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Thesour ci
ngofdatafortheDataWarehousehasto RETAI
LMODULE-C
seamlesslyfl
owf r
om theCoreBanki
ngSoluti
ons Chapt
er13:CUSTOMERRELATIONSHI
P
(CBS)platf
orm wit
houtanymanualint
ervent
iont
o MANAGEMENTINRETAILBANING(PART-
II
I)
ensur
et heaccuracyofthedata.
Whatwewi
llst
udy
?
Thisaspectisveryi
mpor t
antinthecont extofhuge
vol
umeswhi charet
ypicali
nar etai
lbanking *
Impl
ement
ati
onaspect
sofCRM?
envir
onmentandmaj orbusinessdecisionsand
str
ategi
esar estemmingoutoft heMISgener ated
I
MPLEMENTATI
ONASPECTSOFCRM I
NBANKS:
fr
om thistool.
Hence,CRM pract
icewi
thoutr
obustcustomerdata
basewillnoty
iel
dthedesi
redresul
tsandnotserv
e
thepur
pose. HowdoesCRM Wor
k?
CRM systemsar edesignedt ocompil
ei nformation
oncustomer sacrossdiff
erentchannelsorpoi nts
ofcontactbetweenthecust omerandt hebank-
whichcouldincl
udet hebank'swebsite,telephone,
l
ivechat,di
rectmail,marketi
ngmat er
ialsandsoci al
media.
CRM sy st
emscanalsogivedetai
lsoncust
omers'
personali
nfor
mati
on,purchasehist
ory
,buyi
ng
prefer
encesandconcer
ns.
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Secur
it
yconcer
nsofCRM: oni
nfor
mat
ionl
oggedwi
thi
nthesy
stem.
Wi t
ht hegr
owt hoftheint
ernetandrelat
ed Commonf
eat
uresofCRM sof
twar
eincl
ude:
technologi
es,customersareconcernedoverthe a.Mar
ket
ingaut
omat
ion:
privacyandsafetyofthei
rpersonali
nformat
ion.
CRM tool
swithmar ket
ingautomati
oncapabili
ti
es
Theref
ore,busi
nessesneedt oensur ethatthe canautomaterepet
iti
vetaskstoenhance
stor
ageandanal ysi
soft hecustomerdat amust marketi
ngeff
ortstocustomersatdif
ferentpoi
nts
havethehighestlevel
sofprotecti
onagai nstcyber i
nthelif
ecycl
e.
cri
minals,
identi
tytheftandotherbreachesof
securi
ti
es. Forexample,assal
esprospectscomeintothe
syst
em, t
hesy st
em mightautomati
cal
lysendthem
Feat
uresofCRM Sof
twar
e: marketi
ngmat er
ial
s,t
ypical
lyvi
aemailorsoci
al
CRM sof
twareconsol
idatescust
omeri nfor
mati
on media,wit
hthegoalofturni
ngasalesleadint
oa
anddocumentsint
oasi ngl
eCRM dat abasesot
hat ful
l-
fl
edgedcustomer.
busi
nessuserscanmoreeasilyaccessand
manageit
.
b.Sal
esf
orceaut
omat
ion:
Theot hermai nfuncti
onsoft hi
ssof twareinclude
recordingv ari
ouscustomerinteractions(overemail
, Alsoknownassalesfor
cemanagement,sal
es
phonecal l
s,soci
almedi aorotherchannel s, forceaut
omat i
oni
smeanttoprev
entdupli
cate
dependi ngonsy st
em capabilit
ies)
, automating effor
tsbetweenasal
esper
sonandacustomer.
variouswor kfl
owpr ocessessuchast asks, ACRM syst
em canhelpachi
evet hi
sby
calendar sandalert
s,andgivingmanager sthe aut
omati
call
ytr
ackingal
lcontactandf
oll
ow-
ups
abili
tytot r
ackperformanceandpr oductivi
tybased bet
weenbothsides.

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c.Cont
actcent
eraut
omat
ion: d.Geolocat
iont
echnol
ogyorl
ocat
ion-
based
Designedt oreducet edi
ousaspect sofacontact ser
vices:
centeragent'sjob,contactcenterautomati
onmi ght SomeCRM sy stemsincludet echnol
ogythatcan
i
ncludepr e-r
ecordedaudi othatassistsi
ncustomer creategeographicmar keti
ngcampai gnsbasedon
problem-solvi
ngandi nf
ormationdisseminat
ion. customers'physicall
ocations,sometimes
i
nt egr
ati
ngwi t
hpopul arlocati
on-basedGPSapps.
Varioussoftwaretool
st hati
ntegr
atewitht
he
agent'sdesktoptool
scanhandl ecustomer Geolocat
iontechnologycanal
sobeusedasa
requestsinordertocutdownt heti
meofcallsand networki
ngorcontactmanagementt ooli
nor
dert
o
simplif
ycustomerserviceprocesses. fi
ndsalesprospectsbasedonlocat
ion.
SBIhasint
roducedar
ti
fi
ciali
ntel
li
gencebanking Mai
nComponentofCRM:
pl
atfor
m knownasSBIIntel
li
gentAssist
ant(SIA)
. Themai ncomponentsofCRM ar ebuil
dingand
SIAhasreport
edlybeensetuptohandlenearl
y managi ngcustomerrelati
onshipsthrough
10,000enqui
ri
espersecond,or864mi l
li
oninaday, mar keti
ng,observi
ngrelat
ionshipsastheymat ur
e
whichisnear
ly25percentofthequer
iesprocessed throughdisti
nctphases,managi ngthese
byGoogleeveryday. relat
ionshipsateachstageandr ecognizingt
hatthe
distr
ibuti
onofv al
ueofar elat
ionshiptothefi
rmis
nothomogenous.
Whenbuildingandmanagingcustomer
rel
ati
onshipsthr
oughmarketi
ng,banksmi
ght
benefi
tfr
om usingavari
etyoftool
stohel
p
organi
zati
onaldesi
gn,i
ncenti
veschemes,
cust
omer
 Joi
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st
ructur
es,andmor
etoopt
imi
zet
her
eachofi
ts RETAI
LMODULE-C
marketi
ngcampai
gns. Chapt
er14:SERVI
CESTANDARDFORRETAI
L
Whenbanksmanaget heserel
ati
onshi
psthrough BANKING(
PART-
I)
t
heirvari
ousstages,theygaincruci
ali
ntel
li
gence, Whatwewi
llst
udy
?
f
orexampl e,
whichproduct shavethehi
ghest
l
ikel
ihoodofpurchase.
Thefi
nalfactorofCRM highl
ight
stheimpor
tance I
NTRODUCTI
ON:
ofCRM throughaccounti
ngfortheprof
it
abi
li
tyof InNovember2003, RBIhadconsti
tut
eda
cust
omerr el
ationshi
ps. commi t
teeon“Procedure&Perfor
manceAuditof
Throughstudyi
ngt hepar
ti
cul
arspendi
nghabi
tsof Publi
cServi
ces”underthechair
manshipofShr
i
customers,abankmaybeabletodedicat
e S.S.
Tarapor
e(FormerDy .Gover
nor).
dif
ferentr
esourcesandamountsofatt
enti
ont
o Themai nobj
ecti
veofthecommitt
eewast o
dif
ferentt
ypesofconsumers. addressthei
ssuesrel
ati
ngtoavai
labi
li
tyof
Banksmaybegoodatcapt uringdemogr aphicdata, adequateBanki
ngServi
cestocommonpeopl e.
suchasgender,age,i
ncome,andeducat ion,and Themandat etotheCommi tt
eeincl
uded
connecti
ngthem wit
hpurchasinginfor
mat ionto i
dentif
icat
ionoffact
orsthati
nhibi
tedthe
categor
izecust
omersintoprofit
abil
it
ytiers. att
ainmentofbestcustomerservi
cesand
Iti
sasi gnthatbanksbeliev
et hatcustomersar e suggesti
ngstepstoimprovethequali
tyofbanki
ng
sti
llr
esourcesthatcanbeusedf orupsell
/crosssel
l servi
cestoindi
vi
dualcustomers.
opportuni
ti
es,rat
herthanhumansl ookingfor TheCommit
teefel
tthati
naneffortt
ocontinuousl
y
i
nteresti
ngandper sonal
izedinteract
ions. upgr
adet
hepackageofserv
icesthatbanksoffer
ed

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tothei
rcust
omers,t
her
ewasaneedf
or BCSBIi
snotaf
orum f
orr
edr
essalofi
ndi
vi
dual
benchmarki
ngofsuchser
vices. gr
iev
ances.
Afterani n-depthstudyatt hegrass-
rootslev
el,
the
Commi tteeconcludedt hatther
ewasan Const
it
uti
on:
i
nst i
tutionalgapformeasur i
ngtheperformanceof
banksagai nstabenchmar krefl
ecti
ngthebest BCSBIi
sregi
ster
edasaseparat
esoci
etyundert
he
practices(CodeandSt andards). Soci
eti
esRegi
str
ati
onAct1860.

Theref
ore,t
heCommi tt
eerecommendedset
ti
ngup I
tisanaut
onomousbody
.
oftheBankingCodesandStandar
dsBoar
dofIndi
a Itmonit
orsandassessesthecompliancewith
(BCSBI)
. codesandmi nimum st
andardsofservi
ceto
Accordi
ngly,
theBanki
ngCodesandSt andar
ds i
ndivi
dualcustomerstowhichthebanksagreeto.
BoardofIndi
a(BCSBI)wassetupon18t hFebr
uar
y ThenameoftheSociet
yis“TheBanki
ngCodesand
2006asacol l
abor
ati
veeff
ortofRBIandBanks. Standar
dsBoar
dofIndia”
.
BCSBIisavolunt
aryCodewhichsetstheminimum I
tsr
egi
ster
edof
fi
cei
satMumbai
.
st
andardsofbankingpr
acti
cesforbankstofollow
whentheyaredeali
ngwithi
ndiv
idualcust
omer s.
MEMBERSOFBCSBI
:
Thecodedoesnotr eplaceorsupersederegul
atory
orsuper
visor
yinst
ructionsofRBIandbankswi ll Member shi
poft heSociet
yshallbeopentoall
complywithsuchi
nst r
uctions/
dir
ectionsi
ssuedby banksthatsignthecovenant(wri
tt
enagreement)
RBIfr
om timetoti
me. wit
htheSoci et
yagreei
ngt ocomplywiththeCodes
andStandards.
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Abankagr eei
ngtocompl
ywiththeCodesand MAI
NAI
MSANDOBJECTS:
Standar
dsshallmakeanappl
icat
iontotheSoci
ety Toplan,evolve,
pr epare,
develop,pr
omoteand
alongwit
hsuchf eeasmaybespecif
iedfr
om ti
me publi
shvoluntarycompr ehensiv
eCodesand
totime.
Standar
dsf orbanks, f
orprovidi
ngforf
airt
reat
ment
TheSoci etyshal
lmaintai
narollorlistofmember tothei
rcustomer s.
bankswi ththei
raddressesi
naccor dancewitht
he Tofunctionasanindependentandaut onomous
provi
sionsofSocieti
esRegistr
ation( Mahar
asht
ra) watchdogt omonitorandt oensurethatthe
Rules,
1971. bankingCodesandSt andardsvolunt
aril
yadopt
ed
bybanksar eadher
edt o,intr
uespiri
tbybanksin
Amemberbankshal
lpaysuchannualsubscr
ipt
ion deli
veri
ngtheservi
ces, aspromised,t
ot hei
r
asmaybespeci
fi
edbytheSoci
etyfr
om timeto customers.
ti
me.
Toconductandunder
taker
esear
choftheCodes
Thepresentli
st(
ason18thMay2021)ofmember s andStandar
dscurr
entl
yinv
ogueinandoutsi
de
i
ncludes55ScheduledCommercialBanks(Publi
c Indi
a.
Sector
,Pri
vateSect
orandForei
gnBanks),18Ur ban Toenteri
ntocovenantswit
hbanksonobser vance
Co-oper
ati
veBanks,34Regi
onalRuralBanks(RRBs) ofthecodesandstandar
dsandforthatpurposeto
and3Smal lFi
nanceBanks. tr
ainemployeesofsuchbanksabouttheBanking
Codes.

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Ot
herAi
msandObj
ect
ives: Topubli
shjournal
s,repor
ts,pamphl
ets,
books,
Toadv erti
seandpublishpromot ionall
iter
atur
ein bookl
ets,
researchpapersinfur
ther
anceoft
he
newspaper sandotherwiseaboutt heCodesand obj
ectsoftheSociet
y .
Standardsfortheguidanceandknowl edgeofthe Tomai nt
ainclosecont actswi t
hI ndianBanks'
publi
ct hr
oughWebsi t
e,adverti
sement sinthe Associat
ion(IBA),othersimi l
arinsti
tuti
ons,Boar
ds
newspaper s,
magazines, j
ournals,TV/Radio, andorganizati
onshav i
ngsimi l
arobjectsorall
ied
hoardi
ngsoranyot hermodewhi chtheSociet
ymay object
sbywayofsubscr i
ption,enrolmentasa
deem fit. membert hereof,f
inancialorot herkindof
Tot akeupspeci fi
cassi gnment s,ifany,intheareas assist
ance,coll
abor at
ion,cooper at
ionandinany
mannerast heSoci etymaydeem f it
.
comi ngundert heSoci ety
'sobj ect saspr oj
ects,
turnkeysolutions(toimpl ementi ntocurrent Toinit
iate,
establi
shandparti
cipat
eincol
labor
ati
ve
businesspr ocesswi thoutdisrupt ion)oronany acti
vi
tieswithotheri
nst
it
uti
ons/ or
gani
zat
ions
othert er
msofcont ractswithin- houser esourcesor havi
ngsi mil
arobject
swithi
nandout si
det
he
withthepar ti
cipat
ionofout sideagenci esinor der countr
y .
tofullyimplementt heCode. Toestabli
sh,
acquire,maint
ainandmanage
Toor ganizeteachi
ngandtrai
ningcourses, faci
li
ti
essuchasof fi
ces,ot
heraccommodati
on,
conferences,seminar
s,l
ectur
esandsi milarot
her l
ibrar
y,computercenter
s,etc.
acti
viti
esr el
ati
ngtotheCodesandSt andardsor
i
mpl ement ati
onofthesai
dCodesandSt andards.
 Joi
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RETAI
LMODULE-C BCSBIhasbr
oughtoutt
wocodes,
viz.
,
Chapt
er14:SERVI
CESTANDARDFORRETAI
L 1.CodeofBank'
sCommi
tmentt
oCust
omer
sand
BANKI
NG(PART-
II
) 2.CodeofBank'
sCommi
tmentt
oMi
croandSmal
l
Whatwewi
llst
udy
? Enter
pri
ses.
*
Whati
scodeofbank’
scommi
tment
? Thedet
ail
edcodesar
eavai
labl
eatbankbr
anches
*
Whati
sobj
ect
iveofcode? andal
soonthewebsi
teofBCSBI.
CodeofBank'sCommi tmenttoCust
omers
(Januar
y2014)isavai
labl
ein10Regional
l
anguagesotherthani
nEnglishandHindi
.(Tot
al12)
CODEOFBANKS'
COMMI
TMENT: CodeofBank' sCommitmenttoMicroandSmal l
Acomprehensi
veBanker
s'Fai
rPr
acti
ceCode Enterpri
ses'i
savail
abl
ein11Regionallanguages
pr
eparedbyanIBAWorki
nggroupisusedasa otherthaninEngl
ishandHindi
.(Total13)
st
andardbyBCSBI. The‘CodeofBank'sCommi tmenttoCust
omer s'
Thi
scodewouldbeacovenantbet
weentheBCSBI wasreleasedbyDr.Y.V.Reddy,Gover
nor
,Reserve
andthebanksj
oini
ngasmembersoftheBCSBI
. BankofIndia,
inaninauguralf
uncti
onhel
datRBI
on1Jul y,
2006.
Throught hecov
enant
,thememberbanksbi
nd
themselvesfori
mplementi
ngt
heCodeand TheCodehasbeenr ev
isedinAugust2009,in2014
supervi
sionbytheBoard. andagai
ninJanuar y2018i nordertobr
ingabout
great
ert
ransparency,f
urtherenhancementsin
banki
ngpracti
cesrelati
ngtocust omerser
vice,
a

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moreresponsi
vegr
ievanceredr
essalsyst
em i
n Obj
ect
ivesoft
heCode:
banksandprovi
deaddit
ionalpr
otect
ionto TheCodehasbeendev
elopedt
o:
customers.
a.Promotegoodandfairbanki
ngpr
act
icesby
ThisisaCodeofCustomerRi ght
s,whichset
s sett
ingupminimum st
andardsinmemberbank’
s
minimum st
andardsofbankingpract
ices,
member
deali
ngswit
hcustomers.
bankshavetofol
lowwhiletheydealwithi
ndi
vidual
customer
s. b.Increasetransparencysothatcust
omerscan
haveabet terunderstandingofwhatt
heycan
I
tprovi
desprot
ecti
ont ocust
omersandexpl
ains reaseasonablyexpectf r
om memberbanks.
howbanksareexpectedtodealwi
thcust
omersin
thei
rday-
to-
dayoperati
ons. c.Encouragemarketf
orces,t
hroughcompet
it
ion,
toachiev
ehigheroper
atingst
andards.
TheCodedoesnotr epl
aceorsupersederegul
ator
y
orsuper
visor
yinst
ructi
onsoftheReserveBankof d.Pr
omoteaf
airandcordialr
elat
ionshi
pbet
ween
I
ndia(RBI
). cust
omer
sandtheirbanks.

MemberBankswillcompl
ywi
thsuchi
nst
ruct
ions/ e.Fost
erconf
idencei
nthebanki
ngsy
stem.
di
rect
ionsi
ssuedbyRBIfr
om t
imetot
ime. f.Pr
omotesaf
eandfai
rcust
omerdeali
ngi
ncase
Provisi
onsoftheCodemayhav esethigher ofbanki
ngi
nadigi
ti
zedenvi
ronment
;
standardst
hanthoseprescri
bedinther egulator
y g.I
ncreaseawar
enessofcust
omer
sandt
o
i
nstructi
onsandsuchhigherstandardswi l
lprevail enhancecust
omerprot
ecti
on.
astheCoder epr
esentsbestpract
icesv ol
untaril
y
agreedtobythememberbanksast heir
commi tmenttocust
omers.
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Appl
icat
ionoft
heCode: d.Demataccount
s,equi
ty,
Gov
ernmentbonds.
ThisCodeappliestoal
ltheproduct
sandser v
ices e.
Indi
ancur
rencynot
es/
coi
nsexchangef
aci
li
ty.
l
ist
edbelow, whethert
heyareprovi
dedbymember f.Col
lect
ionofcheques,saf
ecust
odyser
vices,
bankbranchesoragentsacti
ngont hei
rbehalf
. safedepositl
ockerf
acil
it
y.
Whetheracr
ossthecounter,overt
hephone,by g.Loans,
over
draf
tsandguar
ant
ees.
post
,thr
oughint
eract
iveelectr
onicdev
ices,
onthe
i
nter
netorbyanyothermet hod. h.Foreignexchangeser
vicesi
ncl
udi
ngmoney
changing.
However
,al
lpr
oductsdiscussedi
nthecodemayor
maynotbeoff
eredbytheMemberbanks. i
.Thir
dpar tyinsur
anceandinvest
mentproducts
marketedthroughbankbranchesand/ort
heir
aut
horisedrepresent
ati
vesoragents.
Pr
oduct
scov
ered: j
.Car dproductsi
ncludingcreditcar
ds,debi
tscar
ds,
a.
Cur r
entaccounts,savi
ngsaccount
s,ter
m ATM cards,smar tcar
dsandPoSser vi
ces
deposit
s,recurr
ingdeposit
s,PPFaccount
sandal
l (i
ncludi
ngcr edi
tcardsoffer
edbysubsi di
ari
esof
otherdepositaccounts. memberbanks/compani espr omotedbymember
b.Paymentserv
icessuchaspension,pay
ment banks).
order
s,remi
tt
ancesbywayofDemandDr afts,
wir
e k.Digi
talpr
oduct
ssuchase-
wall
et,Mobi
leBanki
ng,
tr
ansfer
sandallelect
roni
ctr
ansacti
onse.g.RTGS, Int
ernetBanki
ng,UPI
,BHI
M,AadhaarPay
.
NEFT.
c.Banki
ngservi
cesr
elat
edt
oGov
ernment
tr
ansact
ions.

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RETAI
LMODULE-C 1.Ri
ghtt
oSui
tabi
li
ty:
Chapt
er14:SERVICESTANDARDFORRETAI
L Thememberbankswi lloff
ertheirpr
oducts
BANKING(PART-
II
I) appropri
atet
ocustomerneedsandbasedonan
Whatwewi
llst
udy
? assessmentofthei
rfi
nancialcir
cumstancesand
consider
ingt
heClauseonThi rdPart
yProductsof
CodeofBank'scommi tmenttocustomers(Januar
y
*Whatar
ethecommi
tment
sofmemberbankst
o 2018).
cust
omers? 2.Ri
ghtt
oPr
ivacy
:
Thememberbankswi l
ltr
eatal
lthepersonal
i
nformationoft heircust
omersasprivateand
confi
dentialsubjecttoPriv
acyandConf i
dent
ial
it
y
Keycommi
tment
sofmemberbankst
ocust
omer
s:
ofCodeofBank' scommi tmentt
ocust omers
1.Ri
ghtt
oSui
tabi
li
ty (Januar
y2018) .
2.Ri
ghtt
oPr
ivacy 3.Ri
ghtt
oGr
iev
anceRedr
essalandCompensat
ion:
3.Ri
ghtt
oGr
iev
anceRedr
essalandCompensat
ion Thememberbankswi
lldeal
quickl
yand
4.Ri
ghtt
oFai
rTr
eat
ment sympat
het
ical
l
ywitht
hingsthatgowr
ongby
:

5.Ri
ghtt
oTr
anspar
ency
,Fai
randHonestDeal
ing a.Correct
ingthei
rmist
akespr omptl
yand
cancell
inganybankchargesthatt
heyapplyby
mistakeandcompensatet hecust
omerforany
fi
nanciall
osscustomersmayhav eincur
redduet
o
 Joi
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bank'
smist
ake,
inter
msoft
hebank'
s 4-Ri
ghtt
oFai
rTr
eat
ment
:
compensat
ionpol
icy
. Actfai
rl
yandreasonabl
yinal
lbanks'
deal
ingswi
th
b.Handl
ingcust
omercompl
aint
spr
ompt
ly. cust
omer sby
:
c.Tel
li
ngcust
omershowt otakethei
rcompl
aint a.Provi
dingminimum banki
ngf aci
li
ti
esofr eceipt
for
wardift
heyar
esti
llnotsati
sfi
ed. andpaymentofcash/cheques, remit
tances,
d.Provi
dingsuit
abl
ealternat
iveavenuest oall
evi
ate exchangeofsoil
ednotes,et
c.;atthebank'scounter
probl
emsar i
singoutoftechnologi
calfai
lures. andalsoprovi
dingcashl
esstransacti
onst hrough
alt
ernat
edeli
verychannels(
ADC) .
Thememberswil
ldispl
ayi
nthei
rbr
anchf
or
cust
omeri
nfor
mation. b.Meeti
ngthecommi t
mentsandstandar
dssetin
thi
sCode,forthepr
oduct
sandservi
cesMember
i
.Nameoftheof
fici
alatt
hebranchwhom Banksoff
er,andint
heprocedur
esandpract
ices
cust
omermayapproachi
ftheyhaveagr
iev
ance. theyf
oll
ow.
i
i.Nameandaddr essoftheRegional/Zonal c.Maki ngsur
eMemberBank' sproductsand
Manager/Pri
ncipalNodalOffi
cer(
PNO)whom servi
cesmeetr elev
antl awsandregulat
ionsi
n
customercanapproachifthei
rgri
evanceisnot l
etterandspiri
tandar eappropr
iatetocustomer
redr
essedatthebranch. needsandi nli
newi t
ht hebanki
ngscenar i
o,
i
ii.Nameandcont
actdet
ail
softheBanki
ng i
ncludingdigi
talbanki
ng.
Ombudsmanunderwhosejuri
sdi
cti
onthebr
anch d.Ensur
ingthatmemberbanksdeal i
ngswit
h
fall
s. customerrestonet
hicalpr
inci
plesofint
egr
it
yand
tr
ansparency.

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e.Offer
ingdigi
talbanki
ngandpaymentsystemsi
n 5.Ri
ghtt
oTr
anspar
ency
,Fai
randHonestDeal
ing:
asecure,conveni
entandrobustt
echnol
ogical Thememberbankswillhelpcustomerto
envi
ronment. underst
andhowbank'
sf i
nancialpr
oduct
sand
f.Notdiscr
iminati
ngagainstcust
omersont he serv
icesworkby
:
basisofage,race,gender,mar
it
alst
atus,r
eli
gion,
a.Givi
ngthecust
omerst i
mel
yandadequate
disabi
li
tyorfi
nancialstat
uswhenofferi
ngand
i
nformati
onaboutthem andt
henecessary
deli
veri
ngbank’spr oduct
sandservi
ces. safeguar
dsinanyoneormoreofthefol
lowing
g.Promoti
nggoodandfairbanki
ngpracticesby l
anguages-Hindi
,Engl
ishort
heappropri
atelocal
sett
ingmini
mum st
andardsinalldeal
ingswith l
anguage.
customer
s. b.Ensur
ingthatbank'
sadver
tisingandpr
omot
ional
h.Pr
omot
ingaf
airandequi
tabl
erel
ati
onshi
pwi
th l
iter
atur
eareclearandnotmisleadi
ng.
cust
omer
s. Thememberbankswi l
lmakeever
yeff
ortt
oensur
e
i
.Trainingbank' sst
affatt
endingtocustomers thatthecontr
act
soragreementst
heyfr
ameare
adequat elyandappropri
atelyandensuri
ngthat transpar
ent,
easi
lyunderst
oodbyandwell
bank'sst affatt
endstocustomerspromptlyand communi cat
edtocustomers.
courteouslyandt odealquickl
yandsy mpathet
ical
ly
Thepriceofthei
rproduct
s,theassoci
atedri
sks,
withthingst hatmaygowr ongbycor r
ecti
ng thetermsandconditi
onsthatgovernovert
he
mistakesandhandl ingcustomercompl ai
nts
product'
sli
fecycl
eandmut ualr
esponsibi
li
ti
eswil
l
expediti
ousl y.
beclearl
ydiscl
osed.
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Thememberbankswi l
lensurethatcustomer sar
e d.Givi
ngcustomers'
infor
mat i
ononthef aci
li
ti
es
notsubjectedt
ounfai
rbusinessormar keting prov
idedtothem andhowt heycanavailoft
hese
pract
ices,coer
civ
econtract
ualterms,negat i
ve andwhom andhowt heymaycont actfor
confi
rmationsormisl
eadingrepresent
ations. addressi
ngthei
rqueri
es.
c.Ensur i
ngthatcustomer sar egiv encompl ete e.Di
spl
ayi
ngintheMemberbankbr
anch,
for
i
nf ormationaboutthememberbanks' product sand cust
omeri
nformati
on.
ser v
ices,minimum balancer equirement s,t
he i
.Ser
vicesbankspr
ovi
de.
i
nt erestr
atesandser vi
cechar ges, besidest he
termsandcondi t
ionsappl i
cablet ocust omer sina i
i.Mini
mum balancerequirement,i
fany,f
orSavi
ngs
transparentmannert hrought hef ollowingmet hods BankAccount
sandCur rentAccountsandthe
aspert hepr ef
erenceoft hecust omer s. char
gesfornon-maintenancethereof.

i
.Bysendi
ngSMSore-
mai
ls i
ii
.Inf
ormat
ionav
ail
abl
einbookl
etf
orm.

i
i.Thr
oughel
ect
roni
corpr
intmedi
a f
.Di
spl
ayi
ngonbanks'
websi
tet
hei
rpol
ici
eson:

i
ii
.Di
spl
ayonourwebsi
te i
.Deposi
ts

i
v.Di
spl
ayonbr
anchnot
iceboar
d i
i.Chequecol
lect
ion

[
Displ
ayonwebsiteandbranchnoti
ceboardwi
llbe i
ii
.Gr
iev
anceRedr
essal
i
nadditi
ontotheothermodesofinf
ormati
on i
v.Compensat
ion
di
sseminat
ionmentionedabove.
]
v
.Col
lect
ionofDuesandSecur
it
yRepossessi
on
v
i.Char
terofCust
omerRi
ght
s

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vi
i.CustomerPr
otect
ionPol
icy(
incl
udi
ng RETAI
LMODULE-C
pr
ot ect
ionf
rom cy
berfr
aud) Chapt
er14:SERVICESTANDARDFORRETAI
L
vi
ii
.Li
mit
edLiabil
it
yinrespectofunaut
hor
ized BANKING(PART-
IV)
el
ectr
oni
cbankingtransact
ions Whatwewi
llst
udy
?
i
x.Faci
li
ti
esf
orseni
orci
ti
zensanddi
ff
erent
ly-
abl
ed *
Codef
orMi
croandSmal
lEnt
erpr
ises?
per
sons.
*
Whatar
ethef
unct
ionofBCSBI
?
g.Toincr
easeawar
enessoft
heCodeamong
cust
omersthememberbankswi
ll
:
i
.Providecust
omerswit
hacopyoft
heCodewhen CODEOFBANK'SCOMMITMENTTOMI
CROAND
theyopenanaccountwi
tht
hebankandot
her
wise SMALLENTERPRI
SES:
onrequest. ThiscodewasbroughtoutbyBCSBIi nMay2008
i
i.Makeavai
labl
ethi
sCodeatbanks'
ever
ybr
anch andsetsmini
mum st andardsofbanki
ngpracti
ces
andonthei
rwebsit
e. forbankst
ofoll
owwhent heyaredeal
ingwit
h
MicroandSmallEnterpr
ises(MSEs)asdefi
nedin
i
ii.Ensurethatt
heirst
affaret
rai
nedtopr
ovide
theMSMEDAct ,2006.
relevanti
nformati
onabouttheCodeandto
effecti
vel
yputtheCodei nt
opract
ice. Thecodehasbeenr
evi
sedi
n2015.

i
v.Hol
dcustomermeet
ingsonpr
ovi
sionsoft
he I
tprovi
desprotecti
ontoMSEsandexpl ainshow
Codeper
iodi
cal
ly
. banksareexpectedtodealwi
ththem f
ort hei
rday
todayoperat
ionsandintimesoffi
nancialdif
fi
cul
ty.
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Obj
ect
ivesoft
heCode: Appl
icat
ionoft
heCode:
a.Togiveaposi
ti
vethr
ustt
otheMSEsect orby Asdefi
nedint heMSMEDAct ,
2006,MSEscover
prov
idi
ngeasyaccesst
oeffi
cientbanki
ngser
vices. Micr
oandSmal lEnter
pri
sesengagedint
he
b.Topromotegoodandfairbanki
ngpr
acti
cesby manufact
uringorproducti
onorprocessi
ngor
pr
eservat
ionofgoodsandt hoseengagedin
sett
ingmini
mum standar
dsindeali
ngwit
hMSE
customer
s. pr
ovidi
ngorr enderi
ngofservi
ces.

c.Toincreasetranspar
encysothatMSEcanhavea Unlessi tsay sother wise,thi
sCodewi llapplytoall
bett
erunderstandingofwhatt
heycanreasonabl
y thepr oduct sandser vi
cesl i
stedbel ow, under
expectoftheser v
ices. currentr egulatoryinstructi
ons, whet hertheyare
providedbybr anches, subsidiaries,joi
ntv enturesor
d.Toimprovememberbanksunder
standi
ngof agent s,acrosst hecount er,ov erthephone, bypost,
thei
rbusi
nessthr
oughef
fect
ivecommunicat
ion. throughi nteracti
v eelectronicdev ices,ont he
e.Toencour
agemarketf
orces,t
hrough i
nternetorbyanyot hermode.
competi
ti
on,t
oachi
evehigheroperat
ingst
andar
ds. However
,al
lpr
oduct
sdi
scussedher
emayormay
f.Topromot
eaf airandcor
dialrelat
ionship notbeof
fer
edbymemberbanks.
betweenMSEandmemberbanksandal soensure a.Curr
entaccount
s,term deposit
s,recur
ri
ng
ti
melyandquickresponset
ot heirbankingneeds. deposi
ts,
andallotherdepositaccounts.
g.Tof
ost
erconf
idencei
nthebanki
ngsy
stem. b.Pay mentservicessuchaspay mentorders,
remi t
tancesbywayofDemandDr aft
sandwi re
transfers,
elect
ronictr
ansacti
onslikeRealTime
Gr ossSettl
ement( RTGS),
Electr
onicFunds

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Transf
er(EFT)
,NationalEl
ect
roni
cFundsTr
ansf
er h.ForeignExchangeServ
icesaspermittedunder
(NEFT)oranyothermode. Forei
gnExchangeManagementAct( FEMA) /
c.Banki
ngservi
cesr
elat
edt
oGov
ernment ReserveBankofI ndi
a'
sguidel
inesi
ncludingmoney
changing.
tr
ansact
ions.
i
.Thir
dpar tyinsur
anceandinvest
mentpr oduct
s
d.Demataccount
s,equi
ty,
gov
ernmentbonds.
marketedthroughourbranchesand/orour
e.I
ndi
ancur
rencynot
esexchangef
aci
li
ty. aut
horizedrepresent
ati
vesoragents.
f.Col
lect
ionofcheques/
inst
rument
s,saf
ecust
ody j
.Cardproduct
sli
keATM/
Debi
t/Cr
edi
tcar
ds,
and
servi
ces. ser
vices.
g.Loansandot hercr edi
tfaci l
it
ieswhi chinclude k.Fact
ori
ngser
vices.
fundbasedsuchascashcr edi t,
ov erdraft,cheque
andbillpurchase/di scounting( bothi nlandand l
.Mer
chantSer
vices.
forei
gn),negot i
ati
onunderr eser veofdocument s
tenderedunderLet terofCr edit(bot hinlandand FUNCTI
ONOFBCSBI
:
forei
gn)andnon- f
undbasedsuchasest abli
shment
ofinl
andand/ orforeignLetterofCr edit,issuingof Themai nfuncti
onoftheboardi
stoensure
Guarantee( bothinl
andandf oreign),Inlandor adherencetotheCodeofBank'sCommitmentto
forei
gnbillorchequef orcollection,buy er'
scr edi
t, Customers'andCodeofBank'sCommitmentto
etc. MicroandSmal lEnt
erpr
ises.
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HowdoesBCSBImoni
tort
hei
mpl
ement
ati
onoft
he i
i.Providesf
acul
tysupportt
otr
aini
ng
Codes? establ
ishmentsofbanks.
1.Byobtai
ninganAnnualSt
atementofCompl
iance i
ii
.Part
ici
pat
esi
non-locat
ionworkshopshel
d
(ASC)f
rom memberbanks. by/
formemberbankstoincr
easecoverage.
2.Byunder
takingVisi
tstobr
anchestofi
ndoutthe i
v.Pr
ovi
descr
edi
tcounsel
li
ngser
vicesi
nMumbai
.
stat
usofground-l
eveli
mplementat
ionofCodes. v.Publishesquart
erl
ynewslet
terent
it
led“Cust
omer
3.Byunder
taki
ngSt
udi
esofcompl
aint
srecei
ved Matters”,cont
aini
ngmatter
sofinter
estto
fr
om cust
omers. customer s.
4.Bygoi
ngt
hroughor
ders/awardsi
ssuedby Howdoest
heBCSBIi
mpactt
hecommonman?
Banki
ngOmbudsmen/Appell
ate. Boththecodesar evoluntaryandsetmi nimum
5.
BCSBIi
sauthor
itytofi
ndoutwhet
hert
her
eisany standardsofbankingpract i
cesforbankst ofol
low
sy
stem-
widedefi
ciency
. whent heyaredeali
ngwi thindiv
idualcustomers
6.Bydiscussi
ngimpl
ementat
ionissueswit
h andMi croandSmal lenterpri
sesintheirday-
to-
day
Pri
ncipalCodeCompl
ianceOffi
cersoftheMember operati
ons.
banks. Thecodesar enotonl
ymeanttoprovi
depr
otecti
on
I
nit
iat
ivest
akenbyBCSBIf
orpopul
ari
zingt
he tot
hecust omersbutareal
soexpect
edtogenerat
e
Codes: awarenessinthecommonmanabouthi sr
ight
sas
aconsumerofbankingservi
ces.
i
.Undertakescampai
gnsandini
ti
ati
vestospr
ead
awarenessoftheCodesamongstcust
omersand
banks.

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RETAI
LMODULE-C NFShasest abl
ishedastr
ongandsust ai
nable
Chapt
er15:TECHNOLOGYINRETAI
LBANKI
NG operati
onalmodelwi thi
n-housecapabil
it
iesand
(
PART-I
I) todaycanbecompar edatparwi t
hothermajorand
well-
establ
ishedswi t
chnetworks.
Whatwewi
llst
udy
?
Theoper
ati
onalf
unctionsandserv
icesar
eatpar
*
Whati
sNFS? wit
hmostoftheglobalATM net
works.
*
Whati
sIBCC? Eachmemberj oi
ningtheNFSnetworkwoul
dhave
topayaone-ti
mesubscr i
pti
onfeeof3,
00,
000(Rs.
thr
eelakh)pl
usapplicabl
etaxes.
NATI
ONALFI
NANCI
ALSWI
TCH(
NFS)
:
I
ntheNFSsponsorshi
pmodel ,
thesponsorbank
NFSATM networ
k,wasl
aunchedbyI
DRBTon
wil
lhav
etopayaone-ti
mef eeof6,
00,000(Rs.si
x
August27,
2004.
l
akh)pl
usappl
icabl
etaxes.
Thi
swastakenoverbyNati
onalPay
ment s
Submemberswil
li
ngt
ojointheNFSnetwor
k
Cor
por
ati
onofIndiaonDecember14,2009.
shoul
dcomethr
oughthesponsorbankt
oNFS.
Overthespanoffewy ears,NFSATM networ
khas
Thecar d-
issui
ngmemberpay stothecard-
gr
ownmanyf ol
dsandi snowt heleadi
ng
acquir
ingmemberani nter
changefeeforeach
multi
lat
eralATM net
wor kinthecountr
y.
approvedt r
ansact
ionf
orprovi
dingATM servi
ces.
Ason30t hApril
,2021,t
herewere1181members
Currently
,theint
erchangei sRs.15f orCash
thati
nclude107Directmemberbanks,1025Sub
Withdrawalandcar d-t
o-cardfundtransfer
,andRs.
memberbanks, 45RRBsand4WLAOsusi ngNFS
5forot hernon-f
inanci
altransact
ions.
networkconnectedto2.52LacATMs.
 Joi
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Card-i
ssui
ngmember swouldpaytransact
ion MobileBankingRegi
str
ati
on(MBR),Car
d-t
o-Card
switchi
ngfeesofRs.0.
45perapprovedtransact
ion FundTransfer(C2C)
,ChequeBookRequest(CBR),
toNPCIalongwiththeappl
icabl
etaxes. Stat
ementRequest(SR)AadharNumberSeeding
(ANS).
NPCIhasal soti
edupwi thInternationalcard
schemeslikeDiscoverFinancialSer v
ice(DFS), TheNFSwillmai
ntai
nlogsofal
ltr
ansact
ions
JapanCreditBureau(JCB)andChi naUni onPay passi
ngt
hroughtheNFSnetwork.
Int
ernat
ional(CUPI)whichall
owst heircardhol
der
s NPCIi
stheownerandco-
coordi
nat
oroftheNFS
touseATMsconnect edtoNFSnet wor k. net
workandi
twouldoper
ateandmaint
aintheNFS
net
work.
Ser
vicesof
fer
ed: NPCImayunder t
akethetaskofoperat
ionand
TheNFSnetworkwil
lfaci
li
tat
eATM transact
ion maintenanceofthenetworkonitsownori tmay
ser
vicesamongal
lmember spar
ti
cipati
nginthi
s usetheser vi
cesofathi
rd-par
tyser
viceprovi
derf
or
thi
spur pose.
net
wor k.
I
NDI
ANBANKI
NGCOMMUNI
TYCLOUD(
IBCC)
:
Thetr
ansact
ionswi
lli
ncl
udecardtransacti
onsat
ATMsofmember sandsett
lementoftransact
ions Cloudcomputingi
sapr omisi
ngtechnol
ogythat
atNPCI. provi
desvari
ousservi
cestothecustomerson
Apar
tfr
om basi
ctransact
ionsl
ikeCashWithdr
awal, demandov ert
heInter
net.
Bal
anceEnqui
ry,
PINChangeandMi niSt
atement. Theeaseoft hi
stechnol
ogyisi
ncreasi
ngly
NFSal
sooff
ersot
herVal
ueAddedSer
vices(
VAS) expandinginal
mostallt
heindust
riesacr
osst
he
globeforit
sresul
ti
ngbenefi
ts.
onATMs/
CDMsl i
ke:

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ACommuni t
yCloudcanpossi
blybeasolut
ion 3-I
nfr
ast
ruct
ureasaSer
vice(
IaaS)
wheretheCloudservi
cesar
emeantfor whichcanbedepl
oyedont
opofPubl
ic,
Pri
vat
eand
organi
zati
onshavingcommonobject
ivesand Hybri
dcloudmodel
s.
securi
tycontr
ols.
Tof ur
nishCloudser vicestosuchl
ike-
minded
organizat
ionsinIndia, I
DRBThassetupapilot Sof
twar
easaser
vice(
SaaS)
:
approacht obui
ldingCommuni t
yCloudfort
he SaaSi san“on-
demandsof twar
e”servi
cewherethe
Indi
anBankst opr ovideInf
rastr
uct
ureasaSer vi
ce. requir
edsoftwareispr
ovidedtotheendusersas
Cloudcomput i
ngisanemer gingInternet
-based anappl i
cat
iontorunontheirsy
stemsthrough
comput i
ngtechnologywher eal argepoolof Inter
net.
systemsareconnect edthroughpr iv
ateorpubl i
c Pl
atf
orm asaSer
vice(
PaaS)
:
networks,t
oprovidedy namicallyscalabl
e
InPaaS,acomputingenvir
onmentisprov
idedasa
i
nfrastr
uctur
eforappl i
cati
ons, dataandf i
lestorage.
servi
cetothecust
omer stobuil
dthei
rown
Cloudcomputingisoneoft hemostexci
ti
ng appli
cati
onsthatr
unont heprovi
der'
s
technol
ogiesusedtheseday swhi
chdeli
versI
T i
nfrastr
uctur
e.
capabil
it
iesasservi
ce-on-
demand.
I
nfr
ast
ruct
ureasaSer
vice(
IaaS)
:
Cloudcomputi
ngtechnol
ogypr
ovi
dest
hree
Apoolofequi pmentincludi
ngservers,st
orage
fundament
alserv
icesnamel
y
syst
ems, network,
datacent er
s,et
c.,provi
dedasa
1-Sof
twar
easaSer
vice(
SaaS)
, servi
cetothecustomer swhereproviderscan
2-Pl
atf
orm asaSer
vice(
PaaS)
,and handlecustomers'appli
cati
onworkloadsisrefer
red
asIaaS.
 Joi
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Thecust
omercanhostt
hei
rownsof
twar
eont
he RETAI
LMODULE-C
cl
oudinf
rast
ruct
ure. Chapt
er15:TECHNOLOGYINRETAI
LBANKI
NG
Acommuni t
ycloudisacol l
aborat
iveservicewher
e (PART-
I)
theinf
rastr
uctureissharedbetweensev eral Whatwewi
llst
udy
?
organi
zati
onst hatar
ef r
om afami l
iarsoci
etywit
h
commonconcer nsli
kesecurit
y,compl i
ance, *
Whati
sIDRBT?
j
urisdi
cti
on,etc. *
Whati
sSFMS?
I
tcanbemanagedi
nter
nal
lyorbyat
hir
d-par
ty. *
Whati
sINFI
NET?
I
DRBTprovi
descommuni
tycl
oudser
vicest
othe
I
ndi
anbanks.
I
NSTITUTEFORDEVELOPMENTANDRESEARCHI
N
BANKINGTECHNOLOGY(I
DRBT)
:
Bankingindust
ryisinthepat
hofgr owthleveragi
ng
Inf
ormationTechnologyinabigwayi nalli
ts
str
ategi
c, f
unct
ionalandoperat
ionalprocessesand
appli
cati
ons.
TheReserveBankofIndi
aconstit
utedacommi t
tee
on“Technol
ogyUpgradat
ioni
nt hePay ment
s
Syst
em”intheyear1994undertheChai r
manshi
p
ofShriW.S.Sar
af,
thethenExecutiveDir
ect
orof
RBI.

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Init
srepor tsubmittedinDecember1994, the Thesetechnol
ogyser
vicesarebeingut
il
izedbyt
he
commi tt
eeemphasi zedthatanapex-lev
elInst
itut
e Indi
anBankingandFi
nancialSect
ortoprovi
de
i
ssetupt ounder t
akedev el
opmentandr esearchin conveni
entbanki
ngservi
cestothecommonper son.
theareaofI nfor
mat ionTechnologyappli
edtot he
Theseserv
icesconsti
tutedthebackbonefor
fi
nancialsector,wit
haspeci fi
cfocusonbanki ng.
i
mpl ement
ationofI
nformat i
onTechnologyi
nthe
ReserveBankofI
ndi
aapprovedthi
s I
ndianBankingandFinancialSect
or.
recommendati
onandestabl
ishedanInst
it
uteto Ut
il
isati
onoftheseserv
icesenabl
edimprovi
ngt
he
catert
heneedofbanki
ngandf i
nanci
alsectorof
ef
fecti
venessandeff
ici
encyoftheSect
orinabi
g
thecountr
y. way.
Accor
dingl
y,t
heIDRBTst
art
edf
unct
ioni
ngf
rom Theseservi
cesalsoplayedthepi
votalr
olei
n
March06,1996.
faci
li
tat
ingandimprovingtheel
ect
ronicpay
ment
TheInsti
tut
e, overtheyears,
conceptuali
zed, syst
em inthecountr
y.
desi
gnedandl aunchedthefoll
owingtechnol
ogy
serv
icesforIndianbankingandf i
nanci
alsector
.
I
NDI
ANFI
NANCI
ALNETWORK(
INFI
NET)
:
a.I
ndi
anFi
nanci
alNet
wor
k(I
NFI
NET)
INFI
NET,acl
osedusergroupnetworki
snat
ionwide
b.St
ruct
uredFi
nanci
alMessagi
ngSy
stem (
SFMS) communicat
ionbackboneforbanki
ngandf
inanci
al
c.Nat
ionalFi
nanci
alSwi
tch(
NFS) sect
ors.
d.I
ndi
anBanki
ngCommuni
tyCl
oud(
IBCC) Variousi
nter
-bankandint
ra-bankappli
cations
rangingf
rom Str
uctur
edFinancialMessaging
System (
SFMS) ,
Elect
roni
cFundsTr ansfer(EFT)
,
 Joi
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Electr
onicCl earingSer vi
ce(ECS) ,
Electr
onicDebit
, 4-Reduct
ion/
eli
minat
ionofpay
mentr
isks.
OnlineProcessi ngandTr adi
nginGov er
nment 5-I
mpr
ovementi
ndeci
sionmaki
ngpr
ocess.
Securiti
es,Cent ral
izedFundsquer yi
ngforBanks
andFi nancialInsti
tutions,Anywhere/Any t
ime 6-I
nnovati
vecust
omer
-or
ient
eddel
iv
ery
BankingandI nter-
bankr econcil
iati
onhav ebeen mechanisms.
i
mpl ement edusi ngt heINFINET.
Fundstr
ansf
erunderNEFTandRTGSi
sbei
ngdone STRUCTUREDFI
NANCI
ALMESSAGI
NGSYSTEM
thr
oughINFI
NET. (SFMS)
:
Iti
sFinancialNet
wor kinthef or
m ofarel
iabl
e Str
ucturedFinancialMessagi
ngSy stem (
SFMS)i
sa
communi cati
onbackbone, facil
it
atesr
unning securemessagi ngstandar
ddevelopedtoserv
eas
dif
fer
entapplicat
ions/ser
v i
ces. aplatf
ormf orintr
a-bankandint
er-bank
appli
cati
ons.

Theadv
ant
agesofI
NFI
NETbei
ng: Iti
sanIndianstandar
dsi mil
artoSocietyf
or
WorldwideInt
erbankFinanci
alTelecommunicati
ons
1-BankingandFi
nanci
alser
vicesi
ndependentof (SWIFT)whichisthei
nt er
nati
onalmessagesy st
em
thei
rlocat
ion. usedforfi
nancialmessaginggloball
y.
2-Extendedbankingbusinessr
eachandhour sas SFMScanbeusedpr act
ical
lyf
oral
lpur
posesof
well asincr
easedbusinessvol
umeandbet t
erf und securecommunicat
ionwit
hint
hebankand
util
isati
on,ther
ebyfacil
it
ati
ngreducedoper
ational betweenbanks.
cost .
3-I
ncr
easedsecur
it
y.

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Bankscanl inkalltheiri
mpor t
ant,hi
ghvolume KeyFeat
ures:
branches,ir
respectiveoftheircat
egory,
tothe
SFMSt hr
oughappr opri
ateconnecti
vi
tyl
ikePubli
c
SwitchedTel ephoneNet work(PSTN)/I
ntegrat
ed Templat
eBuil
dertosupportf
lexi
bledefi
nit
ionof
ServicesDigitalNetwork(ISDN)orLeasedLines. messagessi
milart
oSWI FT,l
ikeuser
-to-
userand
syst
emsmessages.
UseofSFMSisnotr
est
ri
ctedt ocomputeri
zedor
par
ti
all
ycomput
eri
sedbranchesoroff
ices. Fl
exi
blearchi
tect
uret
hatfaci
li
tat
escent
ral
izedor
di
str
ibut
eddeployment.
Theintra-
bankpartofSFMS,whichismost
i
mpor tant,
canbest r
aight
awayusedbythebanks Di
rect
oryser
vicesformaintenanceofI
FSC
totakefulladvant
ageofthesecur
emessaging di
rect
ory,
net
wor kconfi
gurati
on.
faci
li
tyitprovi
des. Secur
edmessagingandrout
ingbasedonstoreand
Theinter
-bankmessagi ngpartisusedf or for
wardpr
inci
plesgover
nedbypushtechnol
ogy.
appl
icati
onslikeElect
ronicFundsTransf er(EFT), Messagescanbecl
ubbedandexchangedasa
RealTimeGr ossSettl
ement sSystem (
RTGS) , bat
choffil
es.
Deli
veryVersusPay ments(DVP) ,
CentralisedFunds
Smar
tcar
dbaseduseraccess.
ManagementSy st
em (CFMS) ,et
c.
Messageswi l
lbesecur
edv i
astandar
dencr
ypt
ion
Thebankscandev
elopcomprehensi
veand
andauthent
icati
onserv
icesconfor
mingt
oISO/
eff
ici
entt
ool
sandappli
cat
ionsandintegr
atet
hem
SWIFTstandards.
easil
ywit
hSFMSforuseontheircor
porat
eint
ranet
.
Compl
eteaudi
ti
ng,
loggi
ng,t
ime-
stampi
ngand
war
ehousi
ngofmessages.
 Joi
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RETAI
LMODULE-D
Per
iodiccomputati
onofchar
gesandbi l
li
ngoft
he Chapt
er16:RECOVERYOFRETAI
LLOAN(
PART-
I)
ser
vicesoff
eredtothepar
ti
cipat
ingbanks. Whatwewi
llst
udy
?
Mul
ti-
ti
eredsol
uti
oncover
ingI
NFI
NETHUB,
Bank *
Whati
sEMI
?
Gat
eway sandBanksi
tes.
*
Allaboutr
epay
menti
nret
aill
oan?
Amodul arizedWeb-enabledsoft
waretofaci
li
tat
e
t
hepar t
icipati
ngbankstosendandr ecei
ve I
NTRODUCTI
ON:
fi
nanci
al andnon-f
inancialmessagesthr
oughBank Anasset(
loan)pr
oductisonewher
ebanklendst
o
GatewaysandI NFI
NETHUB. cust
omersfundsforafeeorrat
eofi
nter
est.
Publ
icSectorBankshav ebeenrequest
edtouse I
nlendingtocust
omer
customer
,banksfacedefaul
t
SFMSforsendi ngandrecei
vingLett
erofCr
editand r
isk.Thisi
soneamongthemanyri
sksthatbanks
BankGuaranteesinst
ruments,byDepart
mentof f
ace.
Fi
nanci
alServices.
Strategybehindthel
aunchofanasset-productby
anyf inanci
ali
nsti
tut
ionisdevel
opedaroundmany
factorsofwhi cht
heriskappeti
tei
sthemost
i
mpor tant.
Highertheeffi
ciencyofthecol
lect
ionsdepartment
,
bett
erwoul dbet heabil
it
yoffi
nancial
i
nstitut
ion/
bankt olaunchanyassetproductwit
h
mor econfi
dence.

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ThisUnitwil
lfocusonv ari
ousrecover
yprocesses Publi
csectorbanksal
soexpandedtheirr
etai
lasset
beingini
ti
atedbybanksi nrecover
ingther
etai
l port
foli
oinabigwaybutnottotheextentofpri
vate
assetswhendef aul
ttakesplace. sect
orbanks.
REPAYMENTI
NRETAI
LLOANS: Thei
rret
ailpor
tfol
iosi
ze,
onanav
erage,
usedt
obe
i
ntherangeof30%.
Thesuccessofanybanki
ngini
ti
ati
veisj
udgedonl
y
bytheprof
itgener
atedf
rom t
hatbusi
nesssegment
. Accor
dingl
yprofit
sgeneratedfrom t
hatsegment
ar
ealsoatt
racti
vebutt hei
nherentri
skofdefaul
tis
Banksaggr
essiv
elybui
ldupthei
rret
ailasset
port
fol
iost
oexpandbusinessasret
ailasset
sar
e al
waystherei
nr etai
lasset
salso.
oneofthebestr
evenuedri
versi
nbanking. Theunsecur
ednat ureofretai
lassetsl
ikePersonal
LoansandCreditCardReceivablesmadet he
Mor eover,
sincethecustomerbasei
slar
geand
heterogeneousinnature,t
heri
skinr
etai
lasset portf
oli
omorev ul
nerabl
ef ordefaul
tasthereis
fi
nancingiswelldiver
sifi
ed. nothi
ngtoproceedagainstforbanksexcept
thr
oughmoneysui ts.
Bankstakeadvantageoft
hisphenomenonand
Thegrowt
hrat
esofret
ailassetscamedownas
expandexponenti
all
y,t
hei
rret
ailassetpor
tfol
io.
bankswer
emorecauti
ousint hei
rret
aill
endi
ng.
Apar tfrom forei
gnbanks, t
henewgener ati
on
privatesectorbanksaggr essi
velyexpandedthei
r Inaddit
iont
hedel
inquenci
esanddefaul
trat
eswere
retailassetpor t
fol
iointhepastdecadetothe alsoontheri
semakingthebankst
ogoont heback
foot.
extentt hattheretai
lassetport
foli
oofoneoft he
toppr ivatesectorbanksexceededabov e50%of Incaseofhousi
ngloansandeducat
ionall
oans
theirtotalassetportf
oli
o. r
eschedul
ingwasdoneinamajorwaysoast o
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avoidsl
ippagestotheNon-Per
formingAsset 5-TheHolidayperi
odisal l
owedwi t
hanintenti
ont o
categor
yandat t
ractloanl
ossprovi
sioni
ngand all
owt heborrowerstogetthemselvesequippedf or
aff
ectthebottom l
ines. repayments.Intheini
ti
alstagesofavail
ingtheloan,
theremaybesomemi scel
laneousexpenseswhi ch
Hol
idayper
iod/Mor
ator
ium per
iod:
theyneedt omeet.
Amor atori
um peri
od/holi
dayper
iodisatime
all
owedf ortheborr
owers,dur
ingtheloanter
m,
whent heyarenotrequi
redtomakeanypr i
ncipal Ty
pesofmont
hlyi
nst
all
ment
s:
repay
ment . Bor
rowerscanchooseamongthr
eetypesof
I
tisawait
ingper
iodbef
orewhi
chr
epay
mentby monthl
yinst
alment
storepayt
hei
rloan.
wayofEMIsbegi
ns. Repaymenti
ncludesthepri
nci
pall
oanamountand
Gener
all
y: thei
nter
estaccruedonit
.
1-Ther
epaymentbegi
nsonl
yaf
terdi
sbur
sementof 1-
Bul
letpay
ment
:
enti
rel
oan. I
nthi
scase,
thel
oanamountwi
thi
nter
esti
spai
din
2-
Terml
oanmaybedi sbur
sedeit
heri
nsingledebi
t asi
ngl
epaymentatt
heendoft
hel
oanperi
od.
ori
nmul
tipl
edebi
ts,
aspert her
equi
rements. Smal
lval
uegol
dloansar
epai
dint
hisway
.
3-Hol
idayper
iodi
nter
estneedst
obeser
viced
(accr
ued).
4-
Inr
espectofhousi
ngloans,ahol
idayper
iodupt
o
18monthsisal
lowedincaseofconstr
ucti
onand3
mont
hsincaseofpurchases.

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2-
Fixedi
nst
almentl
oan: thei
nit
ialmont
hsandt
hei
nter
estcomponentwi
ll
Thi
spay
menti
sinequalmont
hlyi
nst
alment
s. bemore.
Astherepay
mentpr ogr
esses,
thepri
ncipal
Theloanamounti
sdi
vi
dedi
ntoequalmont
hly
i
nstal
ments. componentwil
lincr
easeandtheint
erest
componentwil
lreduce.
I
nthismethod,t
heint
erestser
vici
ngbur
deni
s
moreini
niti
alst
ages. Thisisbecause,asther
epaymentprogr
esses,
the
pri
ncipalcomponentwil
lgetr
educedandhence
Theborr
owerhastopaytheloani
nstal
mentsalong i
nterestchargesal
sowil
ldecrease.
wit
htheent
ir
einter
estaccr
uedintheaccount
dur
ingt
hatperi
od. Hence,
thesubsequenti
nst
all
mentwi
llser
vice
moreofthepr
inci
pal.
LetusseehowEMIi
scal
cul
atedf
orl
oans.
3-
EQUATEDMONTHLYI
NSTALMENTS(
EMI
):
Thef
ormul
aforcal
cul
ati
onofEMI
:
Recoveri
esareeff
ectedi
nret
aill
oansbyEquat
ed n
MonthlyInst
all
mentsorsi
mplyEMIs. (1+r)
EMI
= P*
r--
--
--
---
--
--
----
n
I
nEMImodelofrepayment,
theloani
srepai
dinf
ull [(1+r) -1]
i
nuni
for
m monthlyi
nstal
lment
sspreadovert
he wher
e
r
epay
mentperi
od. P=pr
inci
pal(
amountofl
oan)
,
TheEMIwi l
lconsi
stoft
wocomponent
snamel
ythe n=no.ofi
nst
all
ment
s
pri
nci
palandinter
est
.
r=r
ateofi
nter
estpermont
h
I
nEMI
,thepr
inci
palcomponentwi
llbel
essdur
ing
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(e.
g.:i
fint
erestr
ateperannum i
s10%t
hen RETAI
LMODULE-D
10/(12*
100)) Chapt
er16:RECOVERYOFRETAI
LLOAN(
PART-
II
)
Byusingtheabovefor
mula,theEMIwi
llbe Whatwewi
llst
udy
?
cal
culat
edandadv i
sedtothecust
omersforpr
ompt
ser
vici
ngoftheloan. *
Whati
sdef
aul
tofl
oan?

Banksar eexpect
edtogi
vet
heamorti
zati
on *
Whati
swi
ll
fuldef
aul
ter
?
scheduletotheborr
ower
swhil
eadv
isingl
oan
sancti
on.
DEFAULTANDRE-
SCHEDULI
NGI
NRETAI
LLOANS:
Anamor tizat
ionschedulei
sacompl etetabl
eof
Whati
sdef
aul
t?
peri
odicloanpay ments,
showingtheamountof
pri
ncipalandt heamountofint
erestt
hatcompr i
ses Defaul
tist
heoccur
renceofaneventwhi
ch
eachpay mentunt i
lthel
oanispaidoffattheendof happensduet
onon-paymentofagreedi
nst
alment
s.
i
tsterm. Forasustainablegoodrel
ati
onshi
p,t
her
ear
esome
Incaseofaloanwithfl
oati
ngrat
eofi
nter
est
,any fundamentalrequi
rementssuchas:
changeini
nterestr
ateneedst
omakechangesin 1.Cr
edi
tisusedf
ort
hei
ntendedpur
pose;
EMIsaccor
dingly.
2.Thepay
mentofi
nter
estandpri
nci
pal
i.e
Changesar
etobemadeei
theri
nEMI
sori
nloan i
nstal
mentsi
sasperagreedt
erms;
tenor
.
3.Theborr
owergivesal
lsuchinfor
mationabout
secur
it
y/hy
pothecati
onandconductofbusiness
fr
om ti
metoti
measperr equi
rement;
and

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4.Neit
herthebanknort
heborrowertakesst
ep Themonthlyinstal
lmentsalsocal
ledasEMI sar
e
whichwil
lj
eopardi
zetherel
ati
onshi
p. fi
xedbasedont herateprevai
li
ngattheti
meof
Amongtheabov
e,i
tem number(
2)i
sthemost avai
li
ngtheloanandt heagreedrepaymentperi
od
basedontheser vi
cingcapaci
tyoftheborr
ower.
i
mport
ant.
Steepchangesi
ninterestrat
essay200t o300
I
ftherepay
mentschedul
eisnotadheredtoasper
basispoi
ntswil
lchanget heequi
li
bri
um of
thecommitment
smade,theni
ttransl
atesi
nto
defaul
t. repayments.

Thesev er
it
yofthedef aul
tvari
esaccor
dingtothe Anincreaseininter
estr
ateei
therfixedorfl
oati
ng
wil
lincreasetheEMIandhencet hecustomerhas
periodofdefaul
t,i
.e.
,from asi
mpleoverduet
ot he
stageofNPA. topaymor et
hanwhatwasor i
ginall
ycommi tt
ed
basedonhi srepayi
ngcapaci
ty.
Whatar
ether
easonsf
ordef
aul
tinr
etai
lloans?
Sincether
earechancesthatthecust
omerwoul
d
Letust
aket
hecaseofHomeLoans. notbeabletoserv
icethehigherEMI,
thel
oan
HomeLoansar
eof
fer
edi
ntwopr
icef
ormat
s. repaymentwil
lbeunderdefault
.
Oneisf
ixedpr
ici
ngandthesecondi
svar
iabl
e I
fthedefaul
tcont
inuesf
or90day
s,t
hent
hel
oan
pr
ici
ngorfl
oat
ingpr
ici
ng. becomesNPA.
Theironyisthatevenfi
xedpr i
cingt
akesthe Howt
oobv
iat
ethi
spr
obl
em?
char
acterofaf loat
ingpri
cingasint
erestisresetas Thereasonsforthei
ncreaseini
nter
estratesmay
pertheresetclauseagreedbetweenthelenderand beduetogenuinereasonsli
kemacro-economic
borr
ower . fact
orsortheassetl
iabi
li
tymanagementpol i
cyof
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t
hebanks. Theotheropt
ionistopayt hesameEMIforan
Ther
ear
etwoexpect
edout
comest
othi
ssi
tuat
ion. el
ongated(i
ncreased)repaymentper
iodand
serv
icethel
oanaccor di
nglysothatt
heasset
1.Topayt
hehigherEMIsothatther
epay
ment conti
nuestoremainasaper for
mingone.
peri
odi
skeptatthesamelevel
.
Mostoft hebankshadelongat
edtherepay
ment
2.Topayr educedEMIandexpandt herepayment peri
odsot hatcust
omersarenotunderext
ra
peri
odbey ondtheearli
ercommi tt
edrepayment pressur
et oserv
icethel
oan.
peri
odbutwi thi
nt het
otalrepay mentperi
od
permissi
bleforHousingLoan( say25years)or Somepr i
vat
ebanksalsogavetheopt
iont
othe
ext
endev enbey ondthatperiod. borr
owerstopayhigherEMIsorpayt
hesameEMI
s
underext
endedrepaymentperi
od.
Thisphenomenoni
scal
ledasr
e-schedul
ingof
Anyoneoft
heabov
etwohast
obeef
fect
edbyt
he ret
aill
oans.
bank:
I
nretaill
oans,r
e-schedul
ingmainl
yhappensin
Somecustomersmaybewil
li
ngtopaythehi
gher HousingLoansandeducat i
onall
oansastheyareof
EMIandkeepther
epaymentper
iodatt
hesame l
ongtenorloans.
l
evel
.
Re-schedul
inghappensi
nCr edi
tCardsand
Butmostoft
hecust
omersmaynotaffor
dtopay PersonalLoansegmentsalsowheretheint
erest
thei
ncr
easedEMIasthesamewi
llbesubst
ant
ial
. rat
esar equit
ehighandunsecuredi
nnature.
Thiswil
lresul
tint
hel
oansbecomi
ngov
erdueand
subsequentl
yNPAs.

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Her
edefaul
thappensmai
nlyduet
othef
oll
owi
ng Here,t
heint
ent
iontopayisi
ntactbuttheabi
l
ityt
o
r
easons: payisaff
ect
ed,andresul
tsi
ndefault
s.
a.Genui
nedefault
sduetor
easonsbey
ondt
he Theappr oachofthebanksf orr
ecoverywillbeone
borr
owers'
controland ofcareandconcer nandwi l
lbeacustomeror iented
approachbecausemanyt i
mest hesetbacksareof
b.Wil
lf
uldef
aul
tswheretheborr
ower
sdel
iber
atel
y
temporarynatureandgivenanoppor t
unityandt i
me
def
aultwi
thmalaf
idei
ntent
ion.
thecustomertidesovertheproblems.
Letusdi
scusst
heabov
etwot
ypesofdef
aul
tsi
n
detai
l
. I
tisessent
ialt
oret
ainsuchcl
ient
s.

(
a)Genui
neDef
aul
ts: (
b)Wi
ll
fulDef
aul
ts:

I
ngenuinedef
aults,t
hecust omersf ai
ltorepayt
he a.Defaul
tinpay ment/
repay
mentobli
gat
ionst
othe
l
enderev enwhent heuni
thascapaci
tyt
ohonour
EMIsduetopersonalsetbacks,j
obl osses,
theobli
gations.
unf
oreseenmedicalexpenses,etc.,
incaseof
b.Defaulti
nmeet i
ngpay ment/
repayment
bor
rowershavi
ngast eadysalaryincome.
obli
gationstothelenderandhasdiv
ert
edt hef
unds
Incaseofcust omer sfrom businesscommuni t
ythe forotherpurposesnotinter
msofsanction.
businesssufferssetbackduet onewcompet i
ti
on,
c.Defaul
tinmeetingit
spay ment/r
epayment
suddenchangei nl ocalcondit
ions/envi
ronmentof
obli
gati
onstothelenderandhassi phonedof
fthe
business/
trade,etc.,t
hattil
tthebalanceoftheir
fundsandthefundsarenotav ai
l
abl ewit
htheuni
t
mont hl
ypayout s/disposableincomeandr esul
tsin
i
nt hefor
m ofotherassets.
non-paymentofbanks' dues.
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d.Defaultedinmeet ingit
spayment/repayment notsobr
ight
.
obli
gati
onst othelenderandhasalsodisposedoff Sobankstakeasystemati
candf
ir
m appr
oachf
or
orremov edt hemov ablefi
xedassetsorimmov abl
e recov
eryofthesel
oans.
propert
ygi venforthepurposeofsecuringaterm
l
oanwi thoutt heknowledgeofthebank/ l
ender
.
Theidentif
icati
onofthewill
fuldefaul
tshoul
dbe
madekeepi nginviewthetrackrecordofthe PenalMeasur
esagai
nstWi
ll
fulDef
aul
ter
s:
bor
rower sandshouldnotbedeci dedonthebasi
s
a.Noaddit
ionalf
acil
it
iesshouldbegrant
edbyany
ofi
solatedt r
ansacti
ons/
incident
s.
bank/
FItotheli
stedwill
fuldef
ault
ers.
Thedefaul
ttobecategor
izedaswi l
lf
ulmustbe
b.Inaddi t
ion, suchcompani es(incl
udingthei
r
i
ntent
ional
,del
iber
ateandcalcul
ated.
entrepr
eneur s/ promoters)wher ebankshav e
I
nwill
fuldef
aul
ts,
thecustomersdel
iberat
elyf
ailt
o i
dent i
fi
edsi phoni ng/di
versionoff unds,
payt
heEMI sandtheat
ti
tudeisnegati
ve. misrepresent ation,f
alsi
ficationofaccountsand
Theintent
ionsofthebor
rowersaremalafideand fr
audulentt ransact i
onsshoul dbedebarredfr
om
ther
eisnoat t
emptfrom thebor
rowers’
sideto i
nstitut
ionalf i
nancef rom theschedul ed
serv
icetheloansasperthecommi t
tedrepayments. commer ci
albanks.

Theobj
ecti
veistodelayt
heEMI
sandputt
he c.Thelegalprocess,whereverwarranted,against
banksi
ntodif
fi
cult
ies. theborrowers/guar
antorsandforeclosurefor
recov
eryofduesshoul dbeiniti
atedexpedi t
iously
.
I
nwil
l
fuldef
aul
tst
heapproachofthebankswillbe
onar
ecover
ybasi
sasthechancesofrecover
yar e d.Thel
endersmayinit
iat
ecriminalproceedi
ngs
agai
nstwi
ll
fuldef
ault
ers,wherevernecessar
y.

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e.Wherev
erpossible,
thebanksandFIsshoul
d Di
ver
sionoff
unds:
adoptaproact
iveapproachforachangeof Theterm'di
ver
sionoffunds’
shouldbeconstr
ued
managementoft hewil
lf
ull
ydefaul
ti
ngborr
ower toi
ncludeanyoneoftheundernot
edoccurr
ences:
uni
t.
a.Uti
li
zati
onofshort
-t
erm wor
kingcapi
talf
undsf
or
f.Thebankcanproceedagai
nsttheguar
ant
or,i
f
l
ong-ter
m pur
posesnotinconformi
tywit
hthe
any,al
ongwitht
hepr i
nci
paldebt
oralsobyv
irt
ueof
ter
msofsanction.
theContr
actAct
.
b.Deployi
ngborr
owedfundsfor
Acov enanti nthel oanagr eement s,wit
ht he purposes/
act
ivi
ti
esorcreat
ionofasset
sothert
han
compani estowhi cht hebankshav egiven
thoseforwhi
chthel
oanwassanct i
oned.
funded/ non-fundedcr edi
tf acil
ity,
shouldbe
i
ncor poratedbyt hebankst ot heeffectthatthe C.Transfer
ri
ngborr
owedfundstothesubsi
diar
ies
borr owingcompanyshoul dnoti nductoni t
sboar d /Gr
oupcompani esorot
hercor
poratesbywhatever
aper sonwhosenameappear si ntheli
stofWi ll
ful modalit
ies.
Def aultersandt hati ncase, suchaper sonisf ound d.Routi
ngoff
undst
hroughanybankotherthant
he
tobeoni tsboar d, itwouldt akeexpediti
ousand l
enderbankormembersofconsor
ti
um wit
hout
effect i
vest epsforr emov aloft hepersonf r
om its pri
orpermi
ssi
onoft
helender.
boar d.
e.I
nv est
mentinothercompaniesbywayof
acquiri
ngequit
ies/debti
nst
rumentswi
thout
approvalofl
enders.
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Si
phoni
ngofFunds: RETAI
LMODULE-D
Theterm“ si
phoningoffunds’shouldbeconstrued Chapt
er16:RECOVERYOFRETAI
LLOAN(
PART-
II
I)
tooccurifanyfundsborrowedf r
om banksare Whatwewi
llst
udy
?
uti
li
sedforpurposesunrelat
edt otheoperat
ionsof
theborr
ower ,t
othedetri
mentoft hefinanci
al *
Whati
sAseetCl
assi
fi
cat
ion?
healt
hoft heenti
tyorofthelender. *
Whati
sNPA?
Thedeci
sionast owhet herapart
icul
arinstance MONI
TORI
NGOFLOANACCOUNTS:
amountstosiphoningoff undswouldhavet obea
TheMoni t
ori
ngprocessisascient
if
icaswellasan
j
udgmentofthel ender
sbasedonobj ect
ivefact
s
essenti
alt
oolformaint
aini
ngthequali
tyofr
etail
andci
rcumstancesoft hecase.
assets.
Thecut -
offl
imitf
orinvokingpenalprov
isi
onin
Ithastodedesignedi
nsuchawaythati
t
respectofwil
lf
uldefault
er/i
nstancesofsi
phoni
ng/
addressesbot
hgenuinedef
aul
ter
saswellaswi
ll
ful
diver
sionoffundsisRs.25l akhormore.
defaul
ters.
Whilegenui nedefault
ersarebehandledvery
sensit
ivelyast heyareother
wisegoodcustomers
anddefaul thavehappenedduet oci
rcumstances
beyondt heircontrol
.
Ther ecov er
yprocesshastobegentleand
prof
essi onalandulti
matel
yitshoul
dtransl
atei
nto
therecov eryofmonies.

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Incaseofwi l
lf
uldef
ault
ers,therecov
eryprocess CLASSI
FICATI
ONOFI
RREGULARLOANACCOUNTS:
shouldbestri
ctandatthesamet i
me,ver
y I
nl i
newi t
ht heint
er nationalpr
acti
cesandasper
professi
onalasalotofpressurehastobeputf or therecommendat ionsmadebyt heCommi tt
eeon
recoveri
ngthemonies.
theFinancialSystem ( Chair
manShr iM.
Banksar eadvi
sedtoputt heirmonitor
ingand Narasimham) ,theReser veBankofIndiahas
recover
ypolici
esinont heirwebsitesandalso i
ntroduced, i
naphasedmanner ,prudenti
alnorms
i
nf or
mt heborrowercustomer sabouttherecov
ery forincomer ecognition,assetcl
assifi
cati
onand
proceduresadoptedbyt hem. provisi
oni
ngf ortheadv ancesport
foli
ooft hebanks.
(
a)I
ncomeRecogni
ti
on:
I
rregul
arit
iesi
nLoanAccount
s-Speci
alMent
ion Thepolicyofi
ncomer ecogni
tionshoul
dbe
Accounts(SMA): object
iveandbasedonr ecor
dofr ecov
eryr
ather
Tohavemorecontr
olov
ermonit
ori
ngofaccount
s, thanonanysubject
iveconsiderat
ions.
thel
oanaccount
saregr
oupedusunder
: Whati
sNPA?
SMAsubcat
egor
iesSMA-
0SMA-
1SMA-
2 Aretai
lassetbecomesnon-
perf
ormi
ngwheni
t
ceasestogenerat
eincomefort
hebank.
Basi
sforcl
assi
fi
cat
ionisPri
nci
palorint
erest
paymentwholl
yorpart
lyov
erduebetween Anon-
per
formingasset(
NPA)i
sal
oanoran
adv
ancewhere:
1t
o30day
s(SMA0)
,
31t
o60day
s(SMA1)
, *Interestand/ori
nstal
mentofpri
nci
palr
emain
ov erdueforaperi
odofmor ethan90daysi
n
61t
o90day
s(SMA2) respectofat ermloan.
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*Theaccountr
emai
ns'outofor
der
’,i
nrespectofan Indi
raVikasPatr
as(IVPS),Ki
sanVi kasPatr
as
Overdr
aft
/CashCr
edi
t(OD/CC), (KVPs)andLifepol
iciesmaybet akentoincome
'
OutofOr
der
’St
atus: accountontheduedat eprov
idedadequatemargin
i
sav ai
labl
eintheaccounts.
Anaccountshouldbetr
eatedas“out
oforder
'ifthe
out
standingbal
anceismorethansancti
onedlimit
orDrawingpowerformorethan90days. (
b)AssetCl
assi
fi
cat
ion:
or Banksar erequiredtoclassi
fynon-perf
orming
Eithertherei
snocr edi
torcredi
tsarenotenoughto asset
sf urt
heri ntothefol
lowingthreecat
egori
es
recov erthei
nterest
.Thentheseaccount
sshould basedont heper iodforwhichtheassethas
bet reatedas'outoforder
'. remainednon- performi
ngandt hereali
sabi
li
tyof
thedues:
*Thebillr
emainsoverdueforaper
iodofmor
ethan
90day sinthecaseofbil
lspur
chasedand 1-Subst
andar
dAsset
s
discount
ed. 2-Doubt
fulAsset
s
Recogni
tionofi
ncomeintheseaccount
sisbased 3-LossAsset
s
ontherecordofr
ecov
ery. Subst
andar
dasset
:
I
ncomefrom non-
perfor
mingasset s(NPA)i
snot Asub-
standar
dasseti
sone,whi
chhasremai
ned
r
ecogni
sedonaccrualbasisbutisbookedas NPAforaperi
odlesst
hanorequalt
o12months.
i
ncomeonlywhenitisactual
lyreceiv
ed,
Suchanassetwil
lhavewelldefi
nedcredit
However,
int
erestonadvancesagainstTerm weaknessest
hatjeopar
disetheli
qui
dationoft
he
Deposi
ts,
NationalSav
ingsCert
if
icates(NSCs)
,

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debtandarechar act
eri
sedbythedist
inct Incasesofsuchseriouscredi
timpairment
,the
possi
bili
tythatthebankswil
lsust
ainsomeloss,
if assetshouldbestr
aightawayclassi
fi
edasdoubtf
ul
defi
cienci
esar enotcorr
ect
ed. orlossassetasappropriat
e.
Doubt
fulAsset
s: Erosionintheval
ueofsecur i
tycanbereckonedas
signif
icantwhenthereal
isableval
ueofthesecuri
ty
Anasseti
srequi
redtobecl
assi
fi
edasdoubt
ful
,i
fit
i
sl essthan50%oft hevalueassessedbythebank
hasr
emainedNPAf ormor
ethan12months.
oraccept edbyRBIatthetimeoflasti
nspecti
on,as
LossAsset
s: thecasemaybe.SuchNPAsmaybest rai
ghtaway
Anassetisconsidereduncoll
ect
ibl
eandofsuch classif
iedunderdoubtf
ulcategory
.
l
itt
leval
uethati
tscont i
nuanceasabankabl
easset Ift
hereali
sabl
ev al
ueoft hesecuri
ty,
asassessed
i
snotwar r
antedalthoughtheremaybesome bythebank/approv
edv aluer
s/RBIislesst
han10%
sal
vageorrecoveryv al
ue. oftheoutst
andingintheborrowalaccount
s,the
Classi
fi
cati
onofasset
sist
obebor
rower
-wi
seand exi
stenceofsecuri
tyshouldbeignoredandthe
notfaci
li
ty-
wise. assetshoul
dbest r
aightawayclassi
fi
edasloss
asset.
Inrespectofaccount swher etherearepot enti
al
thr
eatsf orr
ecoveryonaccountofer osioni nthe
val
ueofsecur it
yornon- avail
abili
tyofsecur i
tyand (
c)Pr
ovi
sioni
ngnor
ms:
exi
stenceofot herfactor ssuchasf rauds
(
Nextl
ect
ure)
commi ttedbybor r
ower s, i
twil
lnotbepr udentthat
suchaccount sshouldgot hroughv ari
ousst agesof
assetclassi
fi
cation.
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Thismakesaf
urt
herdenti
nthepr
ofi
tabi
li
tyoft
he
RETAI
LMODULE-D
bank.
Chapt
er16:RECOVERYOFRETAI
LLOAN(
PART-
IV)
TheReserveBankofI ndiaint
r oducedt hesy
stem of
Whatwewi
llst
udy
? assetcl
assifi
cati
onandpr ovisioninginli
newith
*
Whati
sPr
ovi
sioni
ngnor
ms? i
nternat
ionalpract
icesforthef i
rstti
mei n1993.
Thenormshaveunder
gonesev
eralchangesdur
ing
thel
ast27year
s.
PROVI
SIONI
NGNORMS:
Inconformi
tywit
htheprudenti
alnor
ms, pr
ovi
sions
Anon-
per
formingasset(
NPA)causest
wo-
fol
d
shouldbemadeont henon-per
formi
ngassetson
i
mpactontheprof
it
abil
it
yofabank.
thebasisofcl
assi
fi
cati
onofassetsint
oprescr
ibed
Ononehand,thebankceasestoearnint
ereston categori
es.
t
hisassetandthusisdepr
ivedofi
tslegi
ti
mate
Takingintoaccountt hetimel agbetweenan
i
ncomef r
om theasset.
accountbecomi ngdoubtfulofrecovery,
its
Ontheot herhand,t
hebankisrequir
edt
omake recognit
ionassuch, t
her eal
isati
onofthesecurit
y
provi
sionsforthi
sasset,
dependingonthe andt heerosionov erti
mei nthev al
ueofsecurit
y
cl
assifi
cati
on/categor
yoftheassetandvalueof chargedt othebank, t
hebanksshoul dmake
securi
ty,i
fany. provisi
onagai nstsubstandardassets,doubtf
ul
assetsandl ossasset sasment ionedbelow:

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St
andar
dAsset
s: (a)
(i
)Farm Cr
editt
oagr
icul
tur
alacti
vi
ti
esandSmall
andMi cr
oEnter
pri
ses(
SMEs)sectorsat0.
25per
(i
)Banksarerequi
redtomakegeneralpr
ovi
sionf
or
cent.
standar
dassetsatthefol
lowi
ngr
ates:
(a)(
ii
)TheMedium Enterpri
seswi
llat
tract0.
40%
LOAN(
Standar
dAsset
) Pr
ovi
sioni
ng
standar
dassetpr
ov i
sioning.
Nor
malRat
e 0.
4%
(b)
(i
)Advancest
oCommerci
alRealEst
ate(
CRE)
MSE 0.
25% Sectorat1.
00percent
.
Medi
um Ent
erpr
ise 0.
40% (b)
(i
i)AdvancestoCommercial
RealEst
ate-
Advt
oAgr
icul
tur
e 0.
25% Resident
ialHousi
ngSect
or(CRE-RH)at0.75per
cent.
Commer ci
alr
ealest
ate 1%
(shop,
offi
ce,
par
ketc.) (c)Housi
ngl
oansextendedatt
easerrat
esat2per
centi
nv i
ewoft
hehigherri
skassoci
atedwi
ththem.
Commer
cialr
ealest
ate(
Housi
ng) 0.
75%
Thepr ovi
sioningrateshallbereducedto0.40per
I
ndi
vi
dualHousi
ngl
oan 0.
25% centafter1y earfrom thedateonwhichtherates
Housi
ngl
oanatt
easerr
ate 2% areresetathi gherrat
esiftheaccountsremain
'
standard'.
Housi
ngl
oanatt
easerr
ate 0.
40%
(d)Al
lotherl
oansandadvancesnoti
ncl
udedi
n(a)
aft
er1yearf
rom thedat
eonwhi ch
and(b)aboveat0.
40percent.
t
herat
esareresetathi
gherr
ates
 Joi
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(
ii
)Theprovi
sionsonstandar
dasset
sar
enott
obe Ageneralprovi
sionof15%ont ot
aloutst
anding
r
eckonedforarr
ivi
ngatnetNPAs. shoul
dbemadewi thoutmakinganyall
owancefor
(i
ii
)Theprovisi
onst owardsStandar
dAsset sneed ECGCguar ant
eecov erandsecur
it
iesavai
labl
e.
notbenettedfrom grossadvancesbutaretobe The‘unsecuredexposures'
whicharei
dentif
iedas
shownseparatelyas'Conti
ngentProvisi
onsagainst substandar
dwoul dattr
actaddi
ti
onalpr
ovisi
onof
StandardAssets'under‘
OtherLiabi
li
ti
esand 10%,i.e.
,atotalof25%ontheoutst
andingbalance.
Provi
sionsOthers'i
nSchedule5oft hebalance
Unsecur
edl
oan:
sheet.
Aloanisconsider
edasunsecuredfrom begi
nning
TeaserRat
e: i
freal
isabl
ev al
ueofsecur
it
iesattheti
meof
Wheninst
resestr
atesarelowint
hebegi
nni
ngand sanct
ionofloanwas10%orl essthan10%oft he
af
tersometimeiti
ncreases. l
oanamountsanct i
oned.

Subst
andar
dAsset
s: Doubt
ful
Asset
s:
AssetTy
pe Pr
ovi
sioni
ng Per
iodf
orwhi chAssetwas Secur
ed Unsecured
doubtful Porti
on Porti
on
Nor
malSubst
andar
dor 15%
Upt
o1y
ear
(D1) 25% 100%
Secur
edSubst
andar
d 15%
1y
ear
+&upt
o3y
ear
s(D2) 40% 100%
Usecur
edSubst
andar
d 25%
3y
ear
s+(
D3) 100% 100%

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Summar
y:
(i
)100%oft heextenttowhichtheadv anceisnot St
andar
dAsset
s:
coveredbythereali
sablevalueofthesecurit
yto
LOAN(
Standar
dAsset
) Pr
ovi
sioni
ng
whichthebankhasav al
idrecourseandt he
real
isabl
evalueisesti
mat edonar eal
isti
cbasis. Nor
mal
Rat
e 0.
4%

(i
i)I
nregardtothesecuredporti
on,provi
sionmay Advt
oSME 0.
25%
bemadeont hef ol
lowingbasi
s,attherat
esr angi
ng Advt
oMedi
um Ent
erpr
ise 0.
40%
fr
om 25%t o100%oft hesecuredporti
ondepending
Advt
oAgr
icul
tur
e 0.
25%
upontheperi
odf orwhichtheassethasremai ned
doubtf
ul. Commer ci
alr
ealest
ate 1%
(shop,
offi
ce,
par
ketc.)
LossAsset
s:
Commerci
alr
ealest
ate 0.
75%
AssetTy
pe Pr
ovi
sioni
ngr
equi
rement
(Housi
ng)
LossAsset 100%
I
ndi
vi
dualHousi
ngl
oan 0.
25%
Housi
ngl
oanatt
easerr
ate 2%
*
Lossasset
sshoul
dbewr
it
tenof
f.
Housi
ngl
oanatt
easerr
ate 0.
40%
*Ifl
ossasset
sar epermit
tedtoremaininthebooks
aft
er1y
earfrom t
hedateon
foranyr
eason, 100%oftheoutstandi
ngshouldbe
whi
cht
heratesarer
esetat
provi
dedforprovisi
oni
ng.
hi
gherrat
es
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Subst
andar
dAsset
s: LossAsset
s:
AssetTy
pe Pr
ovi
sioni
ng
Nor
malSubst
andar
dor 15% AssetTy
pe Pr
ovi
sioni
ngr
equi
rement
Secur
edSubst
andar
d 15% LossAsset 100%
Usecur
edSubst
andar
d 25%

Doubt
fulAsset
s:

Per
iodforwhi
ch Provi
sioni
ng Provi
sioning
Assetwas Requir
ement Requir
ement
doubt
ful
Secured Unsecured
Porti
on Porti
on
Upt
o1y
ear 25% 100%
1y
ear
+&upto3 40% 100%
year
s
3y
ear
s+ 100% 100%

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RETAI
LMODULE-D i
ii
.Thepoli
cyi
sbui
ltoncour
tesy
,fai
rtr
eat
mentand
Chapt
er16:RECOVERYOFRETAI
LLOAN(
PART-
V) per
suasi
on.
i
v .Thebankbel ievesinfoll
owi
ngfai
rpracti
ceswith
Whatwewi
llst
udy
?
regardt ocol
lectionofduesandrepossessi
onof
*
Whatar
erecov
erypol
icyr
equi
rement
sofBank? secur i
tyandtherebyf ost
eri
ngcust
omerconf i
dence
andl ong-t
ermr elati
onshi
p.

RECOVERYPOLI
CYOFBANKS: v.Therepay
mentschedul
ef oranyloansancti
oned
bythebankwil
lbefi
xedtakingint
oaccountpay i
ng
Therecover
ypolicycl
ausesarecl
ear
lyspel
touti
n
capaci
tyandcashf
lowpatternoftheborrower.
ther
ecoverypol
icyofthebank.
vi.Thebankwi llexplaintothecust omerupf r
ontthe
Thef undamentalassumpti
onsandapproachest
o
met hodofcalculationofi nt
er estandhowt he
recoveryarecl
earlytobecommunicat
edt he
EquatedMont hlyInst all
ment s(EMI)orpayment s
customer s.
throughanyot hermodeofr epay mentwil
lbe
Letusseet
hedi
ff
erentcl
ausesoft
her
ecov
ery appropriat
edagai nsti nt
erestandpr i
ncipaldue
poli
cy. from thecust
omer s.
Pr
eambl
e: v
ii
.Thebankwoul
dexpectthecust
omer
stoadher
e
i
.Thedebtcoll
ect
ionpoli
cyoft
hebankisbui
lt t
otherepay
mentschedul
eagreedt
o.
ar
ounddigni
tyandrespectt
ocust
omers. vii
i.ThebankSecurityRepossessionPolicyaimsat
i
i.TheBankwi
llnotfol
lowpol
ici
est
hatar
eundul
y recoveryofduesintheev entofdefaul
tandi snot
coerci
vei
ncol
lecti
onofdues. aimedatwhi msicaldepri
vati
onoft heproperty.
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i
x.Thepol i
cyrecogni
zesfai
rnessandt ranspar
ency Bankst afforanypersonauthori
zedtorepresent
i
nr epossessi
on,val
uati
onandr eal
izat
ionof thebanki ncoll
ecti
onofduesor /andsecuri
ty
securi
ty. repossessionwilli
denti
fyhi
mself/her
selfand
displ
ayt heauthori
tylet
teri
ssuedbythebankupon
Allt
hepracti
cesadoptedbythebankf orf
oll
owup
andrecover
yofduesandr epossessi
onofsecur
it
y request.
wil
lbeinconsonancewit
hthelaw. 3.Bankwoul
drespectpr
ivacyofi
tsbor
rower
s.
Gener
alGui
del
ines: 4.Banki scommi tt
edtoensuret
hatal
lwrit
tenand
Allthemember softhestafforanyper
son verbalcommuni cati
onwithit
sborr
owerswillbei
n
authori
zedtorepresentthebankincol
lect
ion simplebusinesslanguageandbankwil
ladoptciv
il
or/
andsecur i
tyrepossessi
onwoul df
oll
owt he manner sforint
eracti
onwithbor
rower
s.
gui
del i
nessetoutbelow: 5.Nor mall
ybank'
sr epr
esent
ativ
eswi l
lcontactt
he
1.Thecustomerwoul dbecont actedordinari
lyat borrowerbetween0700hr sand1900hr s,unl
ess
thespecialcir
cumstanceofhis/
herbusinessor
theplaceofhi
s/ herchoiceandintheabsenceof
anyspecif
iedplace,attheplaceofhi s/
her occupationrequi
resthebanktocontactata
resi
denceandifunav ail
ableathis/herresi
dence,at dif
ferentti
me.
theplaceofbusiness/occupati
on. 6.Borr
ower'
sr equestst
oavoi
dcall
satapart
icul
ar
2.Identi
tyandauthori
tyofper
sonsauthor
izedto ti
meoratapar t
icul
arpl
acewoul
dbehonoredas
faraspossi
ble.
representthebankforfol
lowupandrecoveryof
dueswoul dbemadeknownt othebor
rowersatthe 7.Bankwil
ldocumenttheeffor
tsmadefort
he
fi
rstinstance. recover
yofduesandthecopiesofcommunicat
ion
settocust
omers,i
fany,wi
llbekeptonr
ecord.

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8.All
assist
ancewillbegi
vent
oresol
vedisputesor Therecoverypr ocessthr
oughrepossessi
onof
di
ffer
encesregar
dingduesinamutual
lyacceptabl
e securi
tywilli
nvolverepossessi
on,val
uati
onof
andinanorderl
ymanner . securi
tyandr eali
zati
onofsecuri
tythr
ough
appropri
atemeans.
9.Inappr
opriat
eoccasionssuchasber eav ementi
n
thefamilyorsuchothercalamitousoccasionswil
l Allt
hesewouldbecarr
iedouti
naf
airand
beav oi
dedformakingcalls/vi
sitst
ocollectdues. tr
ansparentmanner
.
Gi
vi
ngNot
icet
oBor
rower
s: Repossessi
onwi
llbedoneonl
yaf
teri
ssui
ngt
he
Whilewr i
ttencommuni cati
ons,tel
ephoni c noti
ce.
remindersorv i
sitsbyt hebank'srepresentati
vest
o Duepr ocessoflawwil
lbefol
lowedwhi
let
aki
ng
theborrower splaceorr esi
dencewi l
lbeusedas repossessionofthepr
oper
ty.
l
oanf oll
owupmeasur es,bankwi l
lnotiniti
ateany Bankwi l
ltakeall
reasonabl
ecareforensuri
ngthe
l
egal orotherrecoverymeasur esincluding safetyandsecuri
tyoftheproper
tyaft
ertaking
repossessionoft hesecur i
tywit
houtgi vi
ngdue
custody,i
nt heor
dinar
ycourseofthebusiness.
noti
cei nwr i
ti
ng.
Val
uat
ionandSal
eofPr
oper
ty:
Bankwil
lfoll
owal lsuchproceduresasrequir
ed
underl
awf orrecovery/
repossessionofsecur
ity
. Valuat
ionandsaleofpr
oper
tyr
epossessedbythe
bankwi l
lbecar
ri
edoutasperl
awandi nafai
rand
Repossessi
onofSecur
it
y: tr
ansparentmanner.
Repossessi
onofsecuri
tyi
saimedatrecov
eryof
Bankwi l
lhavetherightt
orecoverfrom t
he
duesandnottodepri
vetheborr
owerofthe borrowerthebalancedueifany
, af
tersal
eof
proper
ty.
propert
y.
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Bankshallhavet herightofset-of
fandl ien, andnotwi
thint
ent
ionofdepr
ivi
ngt
hebor
rowerof
i
rrespect
iveofanyot herlienorchar ge,presentas thepr
oper
ty.
wellasfutureallaccount/deposit
soft hedeposi t Accordingly,bankwillbewill
ingtoconsider
holderwit
ht hebank, whetherinsinglenameor
handingov erpossessionofpr opert
ytothe
j
ointname( s),
tot heextentofalloutstandingdues borr
oweranyt imeafterrepossessionandbefore
tothebank.
concl
udi ngsaletransacti
onoft hepropert
y,
Forsuchpur poses,bankmayati tssol
ediscr
eti
on provi
dedt hebankduesar eclearedinful
lwit
hinthe
closethedepositsprematurelyandappl
iesapenal ti
mef ramespeci fi
edbyt hebank.
rateofint
erestinrespectofthesame. Ifsat
isfi
edwi ththegenuinenessofborrower'
s
Thel
ienshallbeval
idandbi
ndingonthebor
rower i
nabil
itytopayt heloaninstal
ment sasperthe
andoperat
iveunt
ilr
epaymentinful
lofal
lmoney
s schedulewhi chresul
tedintherepossessionof
duetothebankfr
om theborr
ower . securi
ty,bankmayati t
sdiscret
ionconsider
Excessamounti fany,obt
ainedonsaleofproper
ty handingov erthepropertyaft
errecei
vi
ngt he
wil
lberetur
nedt otheborroweraftermeet
ingall i
nstalmentsi narrear
s.
therel
atedexpensespr ov
idedthebankisnot However,
thi
swoul dbesubjectt
othebankbei
ng
havi
nganyot herclai
msagai nstt
hecustomer. convi
ncedofthearrangementsmadebythe
Opport
uni
tyf
ort
heBor
rowert
oTakeBackt
he borr
owertoensuretimelyr
epaymentofr
emaini
ng
Secur
it
y; i
nstal
mentsinfut
ure.

Asindicatedearli
erinthepoli
cydocument,
bank Theabov eprovi
sionshighl
ightt
her
ecovery
wil
lresorttorepossessionofsecur
it
yonlyforthe processthatisst
ructur
edinasequenti
alwayt
o
pur
poseofr eal
izat
ionofitsduesasthel
astresort persuadetheborrowerforrepay
mentofduesi
n

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dif
f erentway sandi ftheexpect edresponsei snot RETAI
LMODULE-D
happeni ng, t
hent heprocedur ethatwillbefollowed Chapt
er16:RECOVERYOFRETAI
LLOAN(
PART-
VI)
byt hebanki ncludingt aki
ngpossessi onoft he
proper ty/
adjust mentofot herbalanceswitht he Whatwewi
llst
udy
?
bankf orrecover yofloansanddel i
veringbackor *
Whati
sDRT?
saleofpr oper tybasedont herepaymentofdues,
foradj usti
ngt hemoni esduet ot hebankand
returningt heamount s, i
fany,backt othebor rower
. DEBTRECOVERYTRI
BUNAL(
DRT)
:

Thepercent
ageofretai
lcredi
tinbanks't
otalloan *I
n1981,acommi tt
eeunderthechai
rmanshipofSr
i
por
tfol
iohasbeengrowingrapidl
ymor epart
icular
ly TTiwarihadsuggestedf
orsetti
ngupofspecial
i
nnewgener at
ionpri
vatesectorbanks. t
ribunalf
orrecov
eryofdebtsowingtobanks/FI
.

Wit
hthi
sthedef
ault
sinrepaymentoftheret
ail *
TheNar
asimhancommit
teeal
sosuppor
tedt
he
l
oans(i
ncl
udi
ngcredi
tcard)ar
ealsoincr
easing. r
ecommendat
ionofTi
war
icommit
tee.

Thenumberofr etai
lloansi
nbanksishugeandi
tis *In1993,par
li
amentenactedRECOVERYOFDEBTS
notpossibletomanuallymoni
tort
heaccount
sand DUETOBANKSANDFI NANCIALINSTI
TUTION
maintai
nt hem i
nstandardcat
egor
y. (RDBFI)Actal
sopopular
lycal
ledRDBAct2013.

Banksar epr
esent
lytaki
nghelpofInf
ormati
on *
Thi
sisal
sopopul
arl
yknowasDRTAct
.
Technologytomonit
ortheseaccountsandcoll
ect *
DRTi
squasij
udi
cial
.
overdueamountinir
regul
ar/outofor
deraccounts.
*
Appl
icabl
einwhol
eIndi
a.
Someoftheserecov
eryopt
ionsar
ement
ionedi
n
*
Mini
mum cl
aimi
nDRT:
20LacandAbov
e
nextl
ect
ures.
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*DRTandSARFAESIbot
hpr
oceedi
ngcanbedone Tot
alDRT:39
bybanksi
mult
aneousl
y. *DRTwil
lissuesummonstodefendantrequi
ri
ng
*
Cour
tfees: himtoshowcausewithi
n30day sofser
v i
ceof
Mi
nimum 12000/
-and summonsast owhytherel
iefpr
ayedforshouldnot
begrant
ed.
Maxi
mum:1.
5Lac
Thedefendanthastopresentawr
itt
enst
atement
Pr
esi
dingOf
fi
cer
: onorbeforethefi
rstheari
ngorwi
thi
nsuchti
meas
*
HeadofDRTi
scal
led:Pr
esi
dingOf
fi
cer theTr
ibunalmayper mit
.
*
Presi
dingOff
icershoul
dhavequali
fi
cat
ionequal Appealagai
nstDRTt
oDRAT:
t
otherankofjudgeofdist
ri
ctcour
t. Per
iodf
orappeal30daysf
rom dat
ewhencopyof
*ThePOisassi
stedbyr
egi
str
arandr
ecov
ery j
udgementi
sreceiv
ed.
off
icer
. I
fbor
rowermakeappeal
,thenheshoul
ddeposi
t
*
Appealagai
nstorderofRecov
eryof
fi
cercanbe 50%ofj
udgmentamountofDRT.
madetoDRTwi t
hin30daysofpassi
ngtheorder
. DRATcanr
educei
tto25%.
*Appealagai
nstor
derofregist
rarcanbemadet
o Modesofr
ecov
eryofdebt
sunderDRT:
DRTwi t
hin15daysofpassingtheorder
.
TheRecov eryOffi
cershal
l,onreceiptoft
hecopyof
Theter
m ofPOi
sfor5y
ear
sbutupt
oageof62 thecerti
fi
cateproceedtorecovertheamountof
year
s. debtspecifi
edinthecerti
fi
catebyoneormor eof
DRTt
odeci
decasewi
thi
n180day
s. thefol
lowingmodes, namely:

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a.At
tachmentandsal
eofthemovabl
eor i
npaymentofdebtshal
lbesubj
ectt
othe
i
mmov abl
epropert
yofthedef
endant
; pr
ovi
sionsoft
hatCode.
b.Takingpossessi
onofproper
tyoverwhich DEBTRECOVERYAPPELLATETRI
BUNAL(
DRAT)
:
securi
tyinter
esti
screat
edoranyotherproper
tyof *
Cour
tfees:
thedefendantandappoint
ingr
ecei
verforsuch
proper
t yandtosel
lthesame: Mi
nimum 12,
000/
-and

c.Arr
estoft
hedef
endantandhi
sdet
ent
ioni
n Maxi
mum:30,
000/
-
pri
son;
d.Appoi
nti
ngar
eceiv
erfort
hemanagementofthe *
Tot
alDRAT:5
movableori
mmovablepr
opert
iesoft
hedef
endant
.
*
Deci
sioni
ntwohear
ing.
Ther i
ghtsofsecur edcr edi
torstor eal
isesecur ed
Chai
rPer
son:
debtsdueandpay ablet othem byt hesaleof
assetsov erwhichsecur it
yinterestiscreated,shall *
HeadofDRATi
scal
ledChai
rPer
son.
havepr i
orityandshallbepai dinpr i
ori
tyov erall *Thet
erm ofchai
rper
soni
sfor5y
ear
sbutupt
o
otherdebt sandGov ernmentduesi ncl
uding ageof65years.
revenues,taxes,cessesandr atesduet othe
*
Chai
rpersonshoul
dhavequal
if
icat
ionequalt
othe
CentralGov ernment,StateGov ernmentorl ocal
r
ankofj
udgeofhighcour
t.
authori
ty.
*
Noappealagai
nstDRATj
udgment
.
Incaseswhereinsol
vencyorbankr
uptcy
proceedi
ngsarependingi
nrespectofsecur
ed
assetsoftheborr
ower,pr
ior
it
ytosecuredcredi
tor
s
 Joi
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Appealagai
nstDRTt
oDRAT: 1-
Nat
ionalLegalSer
vicesAut
hor
it
y
Per
iodf
orappeal30daysf
rom dat
ewhencopyof 2-
TheLegalSer
vicesAut
hor
it
yfort
heSt
ate
j
udgementi
sreceiv
ed. 3-
Dist
ri
ctLegalSer
vicesAut
hor
it
y
I
fborr
owermakeappeal,t
henheshoul
ddeposit 4-
Tal
ukLegalSer
vicesCommi
tt
ee
50%ofjudgmentamountofDRT.
DRATcanreduce
i
tto25%. EveryStateAuthor
it
yorDist
ri
ctAuthori
tyorTal
uk
LegalServicesCommitt
eemayor gani
seLok
Adalat
satsuchi nt
erval
sandplacesandfor
LokAdal
at: exerci
singsuchjur
isdi
cti
onandforsuchareasasi
t
Recover
yofNPAst hroughawardofLokAdal
ati
s thi
nksfit.
theeasi
est
,cheapestandfast
estmode. *
Maxi
mum cl
aim:20Lac
Oneti
meSet t
lement(OTS)canbeputthr
oughLok IfLokAdal
atisar
rangedbyDRTthenmaxi
mum
Adal
at,sot
hatincaseofdefaul
tinpaymentasper clai
m amountcanbemorethan20lac.
OTS,t
heawardcouldbeexecutedbytheCourt,
as LokAdal
atf
ee–zer
o(0)
.
i
nthecaseofexecuti
onofadecree.
Deci
sionofl
okAdalati
sdonewi
thmut
ualconsent
LokAdal
ati
sorgani
sedundert
heprov
isi
onsof ofbor
rowerandbank.
THELEGALSERVICESAUTHORITI
ESACT, 1987.
Deci
sionofLokAdalatwi
l
lhavesamef
orceas
Thefol
lowi
ngcommi
tt
eeshav
ebeenconst
it
uted deci
sionofanynor
malcourt
.
undert
heAct:
Appealagai
nstt
hedeci
sionofLokAdal
atcan’
tbe
fi
ledi
nanycourt
.

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RETAI
LMODULE-D DISTRI
BUTIONOFTHI
RDPARTYPRODUCTSI
N
Chapt
er18:OTHERFI
NANCI
ALSERVICES RETAILBANKING:
PROVIDEDBYBANKS(
PART-
I) Retai
lbanki
ngasabusi nessmodelisprimar
il
ybui
lt
Whatwewi
llst
udy
? onal ar
gecustomerbaseandt ar
getproduct
sand
servi
cestothi
scustomerbaseandder i
vesthei
r
I
NTRODUCTI
ON: profi
tfr
om t
hoseoperations.
Banksarepermit
tedtounder
takecer
taineligi
ble Buttheef f
ortsofthebanksinmaxi mizi
ngbusiness
fi
nanci
alserv
icesorpar
abankingact
ivit
ieseither percustomerandpr ofi
tabil
it
ypercust omerhav e
depart
mentall
yorbysett
ingupsubsi
diaries. thei
rli
mitationsasbankscoul dnotaddr essthe
Parabanki ngactiv
iti
es,incl
udingbancassurance, enti
reneedspect rum i
nfinancialserv
icesand
depositoryservi
ce,insurance,MFs,cr
editanddebit coul
dof feronlybanki
ngandr emi tt
ancepr oduct
sto
cards,etc,havehelpedincreasethereachoft he thei
rcustomer s.
banksandbr oughtav astsegmentofthe Butcustomer
s'needsext
endbeyondj
ustbanki
ng
populationintothefoldofbasicfi
nancialservi
ces. ser
vicesandencompassesi
nsur
anceandother
Theseact i
vi
ti
esf oundinev i
tableintherecentfi
erce i
nvestmentneeds.
compet i
ti
onbot hfrom inter
nallyandexternall
y Cust
omer shav etoapproachdif
ferentser
vice
banksarenow- a-daysfacing,compel sthem tolook pr
ovider
sf orthei
rdif
fer
entneedsl i
keinsur
ance,
forsomeot herfi
nancialactivi
tiesbeyondt hei
rcore i
nvestmentinmut ualf
undsandot herservi
cesli
ke
acti
vit
iestoimprov etheirbottom li
ne. br
okingservices,
dematser vi
ces,etc.
Letusdi
scussfewofsuchPar
abanki
ngact
ivi
ti
es Whil
esomeoftheservi
cescouldbeoff
eredona
bei
ngundert
akenbybanksi
ntheuni
t. pr
opri
etar
ymodel
,otherser
vicesl
ikei
nsurance,
 Joi
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mutualfundsschemes,et
c.,
coul
dnotbeof
fer
ed thei
rhugebranchnet
workint
odist
ri
bution
f
rom thebanks'ownproduct
. channel
sforaugmenti
ngfeebasedincome.
Banksar
eprohi
bit
edt
oof f
ersuchservi
cesont
hei
r Thisconceptofsel
li
ngproductsothert
hanbanki
ng
ownbecauseofr
egul
ator
yrestr
ict
ions. product
siscall
ed“ParaBanking”
.
Butbankscanoffertheabov
eservicesthr
ought
he Reserv
eBankofI ndiahaspr escr
ibedguidel
inesfor
rel
evantser
viceprov
ider
sthroughagency banksfordoi
ngdi f
ferentParabankingactiv
iti
es
arr
angementswiththem. andhasrestr
ictedthebankst odoPar abanking
Banksareper
mitt
edtooff
ertheseservi
cesby busi
nesswithintheambi toftheguidel
ines.
Reser
veBankofIndi
abyacti
ngasaCor porat
e
Agentandwit
houtanyr
iskpart
ici
pat
ion. MUTUALFUNDBUSI
NESS:
Offer
ingtheseser v
icesnotonl
ycoverstheenti
re Amut ualf
undpool
smoneyf r
om manyi nvestors
needspectrum ofthecustomersbutalsoimproves andinvest
sthemoneyinstocks,bonds,short-t
erm
thefeebasedi ncomeofthebanksasbanksr eceiv
e money -
marketi
nst
rument
s, othersecur
iti
esor
commi ssi
onf oracti
ngascorporat
eagentforthese
assets,
orsomecombinat
ionoft heseinvestments.
servi
ceproviders.
Thecombi
nedholdi
ngsthemut
ualf
undownsar
e
Thedist
ri
but
ionoft
hirdpar
typroductshas knownasi
tspor
tfol
io.
emergedasakeydri
verofrevenuefortheforei
gn
banksandnewgenerati
onpri
vatesectorbanks.
Publ
icsect
orbanksal
sohaveent
eredt
hir
dpart
y Eachunitrepr
esentsaninv
estor
'spr
oport
ionat
e
di
str
ibut
ioninaver
yaggr
essi
vewayandconver
ti
ng ownershi
poft hefund'
sholdi
ngsandthei
ncome
thoseholdi
ngsgenerat
e.

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Sal
ientFeat
uresofMut
ualFunds: d.Li
qui
dit
y–Justli
keindi
vidualshar
es,
mut
ual
a.ProfessionalManagement–Moneyi
sinv
est
ed funduni
tsar
econvert
ibl
eintomoneybywayof
throughf undmanagers. salei
nthemarket
.

Si
mpl
ici
ty-Buy
ingamut
ualf
unduni
tissi
mpl
e.
Anybankhasit
sownlineofmutualf
unds,
andt
he RBIgui
del
inesonmut
ualf
undbusi
ness:
mini
mum inv
estmentamounti
ssmal l
. a.
Banksshallnotunder
takemutualf
undbusi
ness
I
nvest
orsshoul
dexamineeachoft
heabov
e wit
hriskpart
ici
pati
onexceptt
hroughasubsi
diar
y/
j
ointv
enturesetupforthepur
pose.
f
eatur
escaref
ull
ybef
oreinv
esti
ngi
nmutualf
unds.
b.Wher easponsor i
ngbankunder t
akingthemut ual
b.Diver
sif
icat
ion–Diver
sif
icat
ioni
sani
nvesti
ng
str
ategythatcanbeneatl
ysummedupas“ Don'
t fundbusi nesslendsi tsnamet othebank
putally
oureggsinonebasket”. sponsoredmut ualfund, asuit
abledisclai
mer
clauseshal lbeinsertedwhilepubli
cisingnew
Byowningsharesinamut ualf
undinst
eadof schemest otheef f
ectt hatt
hebanki snotl i
abl
eor
owningi
ndiv
idualstocksorbonds,
theriski
s responsibleforanyl ossorshor t
fal
lresulti
ngfr
om
spr
eadout. theoperat i
onsoft hescheme.
c.Banksshal
lunder
takeagencybusinessofmutual
c.
Economi esofScale–Becauseamut ualfund fundcompaniesdepart
mentall
ysubjectto
buysandsel l
slargeamountsofsecuri
tiesatatime, compl i
anceoft
hefoll
owingaddit
ionalcondi
ti
ons:
i
tstransacti
oncostsarelowerthanwhatan 1.Theinvest
ors'appl
icat
ionsforpurchase/
sal
eof
i
ndividualwouldpayforsecur
it
iestr
ansactions. mutualfundunit
sshallbeforwardedtothemutual
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f
unds/
regi
str
ars/
transf
eragent
s. RETAI
LMODULE-D
2.Thepurchaseofuni
tsshal
lbeatt
hecustomers' Chapt
er18:OTHERFI
NANCIALSERVICES
ri
skwithoutt
hebankguarant
eei
nganyassured PROVIDEDBYBANKS(
PART-I
I)
ret
urn.
3Nomut ualf
undunitsshal
lbeacquir
edf
rom the Ty
pesofMut
ualFunds:
secondarymarketorboughtbackfr
om acust
omer
forsel
li
ngittoothercust
omers. Eachfundhasapr edeter
mi nedinvestment
object
ivet
hattai
l
or sthefund'sassets,opt
ionof
3.Ext
ensionofcreditfaci
li
tyt
oindi
v i
dualsagainst i
nvestmentsandinvestmentst r
ategies.
thesecurit
yofmut ualfunduni
tsshallbein
accordancewit
ht heMast erDi
rect
ionsonCr edit Att
hef undament
all
evel
,ther
ear
ethr
eev
ari
eti
esof
Management . mutualfunds:

4.Abankholdi
ngcustodyofmut ualf
unduni tson •Equi
tyf
unds(
stocks)
behal
fofit
scustomersshallkeeptheinvestment
s .Fi
xed-
incomef
unds(
bonds)
ofthecust
omersdist
inctf
rom itsowni nvest
ments.
•Moneymar
ketf
unds
Al
lmut ualf
undsar
evar
iant
soft
heset
hreeasset
cl
asses.
Forexample,
whi l
eequi t
yfundsthatinv
estinfast
-
growingcompaniesar eknownasgr owthfunds,
equit
yfundsthatinvestonlyi
ncompani esofthe
samesectororregionareknownasspeci alt
yfunds.

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MutualFundscanalsobecl
assi
fi
edasopen-
ended d.I
nvest
orsbuyandsel
ltheuni
tsamong
orcl
osed-ended,
dependi
ngonthematur
it
ydateof themsel
ves,att
hepri
ceprevai
li
ngi
nthest
ock
thef
und. market.
Open-
endedFunds:
(nomat
uri
tydat
e)
a.
Anopen-
endedf
unddoesnothav
eamat
uri
ty Cat
egor
izat
ionofmut
ual
fundschemes:
dat
e. Inordertobringthedesi
redunif
ormityinthe
b.I
nvestorscanbuyandsel luni
tsofanopen- ended practi
ce,acrossMutualFundsandt ostandardi
ze
fundfrom/ t
ot heAssetManagementCompany theschemecat egori
esandcharacteri
sticsofeach
(AMC), att
hemut ualfundoffi
cesortheirI
nvestor category
, SEBIadvi
sedtocategori
zetheopen-
Servi
ceCent res(I
SCs)orthroughthestock endedMFschemesasgi venbel
ow.
exchange. TheSchemeswoul
dbebr
oadl
ycl
assi
fi
edi
nto
c.
Thepricesatwhichpurchaseandredempti
on fol
lowi
nggr
oups:
tr
ansact
ionstakeplacei
namut ualfundarebased
a.Equi
tySchemes
ontheNetAssetVal ue(
NAV)oft hefund.
b.DebtSchemes
Cl
osed-
endedFunds:
c.Hy
bri
dSchemes
a.
Closed-
endf
undsr
unf
oraspeci
fi
cper
iod.
d.Sol
uti
onOr
ient
edSchemes
b.Onthespeci
fi
edmaturi
tydat
e,al
luni
tsare
redeemedandtheschemecomestoacl ose. e.
OtherScheme

c.
Theuni
tsshal
lbel
ist
edonast
ockexchanget
o Equi
tySchemes:
pr
ovi
deli
qui
dity
. TheyI
nvesti
nshar
esandst
ocks.
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a.
Repr
esentt
hel
argestcat
egor
yofmut
ualf
unds. DebtSchemes:Investi
ndebtinst
rumentsof
b.
Inv
est
mentobj
ect
ivei
slong-
ter
m capi
talgr
owt
h di
ffer
entmaturi
ties.Thi
sensuresregul
ari
ncome.
wi
thsomei
ncome. I
nvesti
nEquityanddebtinst
rument
sdependi
ngon
c.Manydif
fer
enttypesofequi
tyfundsbecauseof t
heobject
ivesoftheschemes.
thedif
fer
enttypesofinv
estmentobject
ive. Sol
uti
onOr
ient
edSchemes:
I
nequi
tyschemes,acompanyi
sref
err
edbasedon IncaseofSol
uti
onorient
edschemes,
ther
ewi
l
lbe
i
tsmar
ketcapit
ali
zat
ion. speci
fi
edperi
odoflockin.
Marketcapi
tal
isat
ionistheval
ueofthestockthat Exampl
esoff
undsi
ntheschemear
e:
youarr
iveatbymul t
ipl
yi
ngthestockpri
cebythe 1.Reti
rementfundscheme:Anopenended
company'sout
standingnumberofequi
tyshares. ret
ir
ementsoluti
onor i
ent
edschemehavingalock-
Ther
earethr
eemai
nclassi
fi
cat
ions,
viz.
,Lar
geCap, i
nof5y ear
sortil
lret
ir
ementage(whi
cheveri
s
MidCapandSmal
lCap. earl
ier
).
a.Lar
geCap:1st–100thcompanyi
nter
msoff
ull 2.Chi
ldr
en'sFund:Anopenendedf undfor
marketcapi
tal
izat
ion i
nvestmentforchil
drenhavingal
ock-i
nforatl
east
b.MidCap:101st–250t
hcompanyi
nter
msoff
ull 5yearsorti
llt
hechildatt
ainsageofmajori
ty
marketcapi
tal
izat
ion (whi
cheverisearl
ier
).

c.SmallCap:251st-companyonwar
dsi
nter
msof Ot
herSchemes:
fullmar
ketcapital
izat
ion Exampl
esoft hi
sSchemesareI
ndexfundschemes
andETF(ExchangeTradedmut
ualf
und).

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RETAI
LMODULE-D Busi
nessinsur
anceandt
rav
eli
nsur
ancear
eal
so
Chapter18:OTHERFI
NANCIALSERVICES avai
labl
e.
PROVIDEDBYBANKS(PART-I
II
) Apersonorent
it
ywhobuysinsur
ancei
sknownas
ani
nsuredorpol
icyhol
der
.

I
NSURANCEBUSI
NESS: Thede-regul
ari
zat
ionofthemar kethasfr
eedup
enor
mousambi tf
ortheadvancementofthe
Scopeofmar
ket
ingi
nsur
ancepr
oduct
s: i
nsurancebasedtradeinI
ndiaandaf reeopen
Insuranceisaf inancialr
iskmanagementtooli
n marketforentr
y.
whi chtheinsuredt r
ansfersari
skofpotenti
al
financi
allosstot heinsurancecompanythat
mi ti
gatesitinexchangef ormonetar
y Heal
thI
nsur
ance:
compensat i
onknownast hepr
emium. Heal
thinsur anceisacont r
actbetweent he
i
nsurancecompanyandt heinsuredpersontocover
AnInsur
ancepol
icyisacont
ractbet
weent
hepol
i
cy
hol
derandthei
nsurancecompany. themedicalcostt hatmightarisefr
om ill
ness,
acci
dentalinjuri
es,sur
geriesandot hermedical
I
nsurancepoli
ciesareofdi
ff
erentt
ypesdependi
ng compli
cations.
ontheriskt
heymi t
igat
e.
TheLi berali
zat
ionoftheinsurancesect oraswell
Br
oadcat
egor
iesofi
nsur
ancei
ncl
ude: asthei ncreasi
ngdemandf orheal t
hi nsurance
Heal
thI
nsur
ance covers,especiall
yfrom t
hemi ddleclass,hav egi
ven
afi
lli
pt othegr owthofhealt
hi nsur
ance.
Li
feI
nsur
ance
AssetI
nsur
ance
 Joi
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Todaythesectori
semer gi
ngasf astestgr
owi
ng Typi
calmatur
it
iesar
eten,
fif
teenort
went
yyear
s
segmentinthenon-l
if
einsuranceindustr
y. uptoacert
ainageli
mit
.
Theseinsur
ancecompaniespr
ovi
deindi
vi
dualas Somepoli
ciesal
sopayouti
nthecaseofcr
it
ical
wellasfl
oaterpol
ici
es.Gr
oupi
nsur
anceareal
soin i
ll
ness.
vogue.
(
b)Ter
mInsur
ancePol
ici
es:
Ty
pesofHeal
thI
nsur
anceCompany
: Thebasicpremiseofater
minsurancepol
icyi
sto
1.St
andal
oneheal
thi
nsur
ancecompani
es secur
et heimmediat
eneedsofnomineesor
2.Heal
thInsur
ancef
rom Gener
ali
nsur
ance benefi
ciar
iesi
ntheeventoft
hesuddenor
companies unfor
tunatedemiseoft
hepoli
cyholder
.

3.Heal
thI
nsur
ancef
rom Li
feI
nsur
anceCompani
es. Thepolicyhol
derdoesnotgetanymonet ary
benefi
tattheendofthepol
icyterm exceptf
ort
he
Li
feI
nsur
ancepr
oduct
s: taxbenefi
tsheorshecanchooset oav ai
lof
Therear
edif
f er
entLif
einsuranceproducts thr
oughoutthetenur
eofthepolicy
.
off
eri
ngscateri
ngtotheinvestmentneedsand Int
heev entoft
hedeat
hofthepoli
cyholder
,the
obj
ecti
vesofdiff
erentki
ndsofi nv
estors. sum assuredi
spai
dtohisorherbenef
ici
ari
es.
Thebr
oadcat
egor
iesofl
if
einsur
ancepr
oduct
sar
e: Terminsur
ancepol
ici
esareal
sorel
ati
velycheaper
(
a)Endowmentpol
ici
es: toacqui
reascomparedt
ootheri
nsurance
product
s.
Anendowmentpoli
cyisali
fei
nsur
ancecontr
act
desi
gnedtopayalumpsum af
teraspeci
fi
cterm
(oni
ts‘mat
uri
ty'
)orondeat
h.

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(
c)Moneybackpol
ici
es: GeneralInsurancecompr i
sesofinsuranceof
Moneybackpol ici
esarebasi
cal
lyanextensi
onof propertyagainstfi
re,
burglar
y,et
c.,personal
endowmentpl answhereint
hepoli
cyholder i
nsurancesuchasAcci dentandHealthInsurance
andliabil
it
yinsurancewhichcoverslegalli
abil
it
ies.
receivesafi
xedamountatspeci
ficint
erval
s
throughoutt
hedur at
ionoft
hepoli
cy. GeneralI
nsuranceactsastheaegi
s(pr
otect
ion)t
o
t
hefinancial
causali
ti
es.and
I
nt heeventoftheunfor
tunat
edeathofthepol
icy
holder
,theful
lsum assuredi
spai
dt ot
he
benefi
ciar
ies. Asseti
nsur
ance:
Thet
ermsagai
nmi ghtsl
ight
lyvar
yfr
om one Manymovabl
eandi
mmov
abl
easset
scanbe
i
nsur
ancecompanytoanother.
i
nsur
ed.
(
d)Pensi
onpl
ans: Iti
stheneedofanybankt
opr
otectt
heasset
s
Thesepoli
ciesar
emostsuitedforseni
orcit
izens chargedt
oit.
andthoseplanni
ngasecurefutur
e,sothatyou Theseassetsaretobesaf
eguar
dedbycov
eri
ng
nevergi
veupont hebestt
hingsinli
fe. underi
nsurance.
I
nsur
anceonvehicl
es,
machiner
y,l
iv
estock
Gener
ali
nsur
ancepr
oduct
s: i
nsur
anceet
c.aresomeoftheexamples.
Generali
nsuranceisty
pical
lydef
inedasany TheI nsuranceRegulat
oryandDevel
opment
i
nsurancethatisnotdeter
minedtobeli
fe Authority(IRDA),
anagencyoftheGovernmentof
i
nsurance. Indi
a, i
st heregul
ator
ybodyforthei
nsurance
sector'
ssuper vi
sionanddevel
opmentinIndi
a.
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RETAI
LMODULE-D Insur
ancebusinesswit
hriskpar
ti
cipat
iont
hrougha
Chapter18:OTHERFI
NANCI
ALSERVICES subsidi
ary
/joi
ntvent
ure:
PROVIDEDBYBANKS(PART-
IV) Bankcanunder t
akei nsurancebusinesswit
hrisk
parti
cipati
onthroughasubsi di
ary
/jointv
entur
eset
upfort hepurpose,subjecttofulf
il
mentofthe
I
nsur
ancebusi
nessbybanks: eli
gibi
lit
ycrit
eri
a( ascertai
nedasonMar ch31of
Withtheobj ect
iveofincr
easingi nsurance theprev i
ousyear)asunder :
penetrati
onusingtheentirenetwor kofbank *I
thasanetwor t
hof1000cr or
eandi
tsmini
mum
branches,theFinanceMinist
eri nthebudget networt
hshallnotbelesst
han500cror
eaft
er
speech2013–14announcedt hatbankswi llbe i
nvest
ingint
heequi t
yofsuchcompany;
permittedtoactasinsurancebr okers.
*I
thasthemi ni
mum prescri
bedcapi
tal(
incl
uding
Consequentt otheannouncement ,IRDAf or
mulated Capi
talConservat
ionBuff
er)af
teri
nvest
ment ;
andnotif
iedtheI RDA(LicensingofBanksas
Insur
anceBr okers)Regulati
ons,2013t oenabl
e *
Itsl
evelofnetnon-
per
for
mingasset
s(NPA)i
snot
morethan3%;
bankstotakeupt hebusinessofinsurancebroki
ng
depart
ment all
y. *
Ithasmadeanetpr
ofi
tint
hepr
ecedi
ng3f
inanci
al
Banksarenotal
lowedtoundert
akeinsurance y
ears;and
busi
nesswithri
skpart
ici
pat
iondepartmental
lyand *Thetr
ackr ecordoftheperfor
manceofi
ts
maydosoonl ythr
oughasubsidi
ary
/JVsetupf or subsi
diar
ies,ifany
,issati
sfact
ory
.
thepur
pose.

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Banksunder
taki
nginsurancebroki
ng/
cor
por
ate I
nsur
ancebr
oki
ngser
vicesdepar
tment
all
y:
agencybyasubsi
diary
/joi
ntventur
e: Abankmay ,
atitsopti
on,actasani
nsurance
Abankcansetupasubsi diary/j
ointventure br
okerdepar
tmentall
ysubjectt
othecondit
ions
companyforundert
akinginsurancebr oki
ngand menti
onedbelow:
corpor
ateagencybyfulf
il
li
ngt heeli
gibil
it
ycrit
eri
a
i
.ThereshallbeaBoardapprov
edpolicy
(asonMarch31oft hepreviousyear)asunder :
encompassingthemodelofi
nsurancedist
ributi
on
I
tsnetwor
thshal
lnotbelesst
han500cror
eaf
ter tobeadopted,i
ssuesofcust
omerappr opr
iateness,
i
nvest
ingi
ntheequi
tyofsuchcompany
; sui
tabi
li
tyandgriev
anceredr
essal
.
I
thasthemi ni
mum pr
escri
bedcapi
tal(i
ncl
udi
ng i
i.Bankshouldsecur
eal
icensef
rom I
RDAf
or
Capi
talConser
vat
ionBuf
fer)af
teri
nvest
ment broki
ngbusiness.
I
tsl
evelofnetnon-
per
for
mingasset
sisnotmor
e i
ii
.Thebankshallattheti
meofappl i
cat
ionof
t
han3%; l
icensepaynon-r
efundabledeposi
tand
subsequent
lyannualfeeonsecuri
ngli
cense.
I
thasmadeanetprof
iti
nthepr
ecedi
ngt
hree
f
inanci
aly
ear
s;and i
v.Thedepositof50lakhist obemai ntai
nedbyan
i
nsurancebrokeraspertheI RDA(Licensingof
Thetr
ackr ecor
doftheperf
ormanceofi
ts
subsi
diar
ies,i
fany
,issat
isf
actor
y. BanksasInsuranceBrokers)Regulati
ons, 2013,as
amendedfrom timetotime, shal
lbemai ntained
wit
haschedul edcommer cialbankotherthani t
sel
f.
Thedeposi
tshal
lhav
eal
ienwi
thI
RDA.
 Joi
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v.Thebankshal
lensur
ecust
omerappr
opr
iat
eness commi
ssi
ons/
broker
age/
incent
ives.
andsuit
abi
li
tyasunder
: Itshallal
sobeensur edthatnoincenti
ve(cashor
Allemployeesdeal
ingwithinsurance non-cash)ispaidtothestaffengagedininsurance
agency/br
okingbusinessshallpossessthe broking/corpor
ateagencyservicesbytheinsurance
requi
sit
equalif
icat
ionprescri
bedbyI RDA. company .
Thereshallbestandardi
sedsy st
em ofassessi
ng vi
i.Thebankshallnotf
oll
owanyr est
ri
cti
ve
theneed/suit
abili
tyofproduct
sforacustomerand pract
icesoffor
cingacustomertoeit
heroptfor
thei
niti
ati
on/transact
ionprocessesshal
lbe productsofaspecif
ici
nsurancecompanyorlink
segregat
ed. saleofsuchproductst
oanybankingproduct
.
Productswit
hinvestmentcomponent sshal
lrequi
re Itshallbepromi nentl
ystat
edi nallpubl
ici
ty
thebanktonecessar i
lyunder
takeacustomerneed mat eri
aldistr
ibutedbythebankt hatthepurchase
assessmentpri
ort osalewhereaspureri
skterm byabank' scust omerofanyi nsur
ancepr oduct
sis
productswit
hnoi nvestmentorgrowthcomponent purelyvoluntary,andisnotl
inkedt oavail
mentof
shallbedeemedasuni v
ersal
lysui
tabl
eproducts. anyot herfacil
it
yf r
om thebank.
Thebankshallt
reati
tscustomersf
air
ly,
honest
ly vii
i.Arobustinternalgr
ievanceredressal
andtr
ansparent
ly,wi
thregardt
osuit
abil
it
yand mechanism shal lbeputinplacealongwi thaBoar
d
appr
opri
atenessofthei
nsurancepr
oductsol
d. approvedcust omercompensat ionpolicyfor
resolv
ingissuesr el
atedtoservi
cesof fered.
vi.I
tshallbeensuredthatperformance
assessmentandi ncenti
vestructur
ef orst
affisnot Itshal
lbeensuredthattheinsur
ancecompani
es
viol
ati
veofSect i
on10(1)(i
i)oftheBRAct ,1949or whoseproductsarebeingsoldhaverobust
theguideli
nesissuedbyIRDAi npay mentof customergri
evanceredressalar
rangement
sin

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pl
ace. g.Acti
ngpromptl
yoninst
ruct
ionsf
rom acl
ientand
Thebankshal
lfaci
li
tat
ether
edr
essalofgr
iev
ances. provi
dinghi
m wri
tt
enacknowl
edgementsand
progr
essrepor
ts;
Funct
ionsofadi
rectbr
oker
:
h.Assisti
ngcli
entsi
npayingpremium under
Thefunct
ionsofadi
rectbr
okershal
lincl
udet
he sect
ion64VBofI nsur
anceAct,1938,the
fol
lowi
ng: prov
isionsofsecti
on64VBoft heactshall
a.Obtai
ningdetai
ledi
nfor
mat
ionofthecli
ent'
s conti
nuet odet
erminethequesti
onofassumpti
on
busi
nessandr i
skmanagementphi
losophy; ofri
skbyani nsur
er.
b.Famili
ari
singhimselfwitht
hecli
ent
'sbusi
ness i
.Assi
sti
ngi
nthenegot
iat
ionoft
hecl
aims;
and
andunderwriti
nginformati
onsothatt
hiscanbe j
.Mai
ntai
ningpr
operr
ecor
dsofcl
aims.
expl
ainedtoani nsurerandot
her
s;
c.Render
ingadv
iceonappr
opr
iat
einsur
ancecov
er
Cor
por
ateagencyofi
nsur
ancecompani
es:
andterms;
d.Maintai
ningdetai
ledknowl
edgeofav
ail
abl
e Banksundert
akecor
porat
eagencyofi
nsur
ance
companiesdepar
tment
all
y.
i
nsurancemar ket
s,asmaybeappli
cabl
e;
e.Submi
tti
ngquot
ati
onrecei
vedf
rom i
nsur
erf
or Banksneednotobt ainpr
iorapprovaloftheRBIt o
actascorpor
ateagent sonaf eebasis,withoutri
sk
consi
der
ati
onofacli
ent
;
part
ici
pat
ion/undertakei
nsurancebrokingact i
vi
ti
es
f.Provi
dingrequi
sit
eunder
writ
inginfor
mat i
onas depart
mental
ly,subjectt
oIRDARegul ations.
requir
edbyani nsur
eri
nassessingtheriskto
Banksof
ferinsurancepoli
ciestotheircust
omers
decideprici
ngtermsandcondi
tionsforcover;
basedontheirknowledgeoftheirsi
tuati
onand
 Joi
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needs. RETAI
LMODULE-D
Whenabankbecomest hecorpor
ateagentofan Chapt
er18:OTHERFI
NANCIALSERVI
CES
i
nsurancecompanyiti
sref
err
edtoasa PROVIDEDBYBANKS(
PART-V)
bancassur
ancear
rangementorpart
ner
ship.
Corpor
ateAgentscanr
epresentonel
if
einsurer
, SOMESOCI
ALSECURI
TYI
NSURANCESCHEMES:
onenon-l
if
einsur
erandonestandal
onehealt
h
i
nsurer
. TheCent
ralGov
ernmenti
ntr
oducedPMJJBYand
PMSBYunderfi
nanci
ali
ncl
usionpr
ogr
am.
I
naddit i
on,t
heycanrepresentthetwospeci
alised
i
nsurancecompanies,ExportCreditGuar
ant
ee Banksunder
takeagencybusi
nessoft
hese
Cor
por ati
onandAgri
cultureInsur
anceCorporati
on schemes:
ofI
ndia. PMJJBY
PMSBY
APY
1.Pr
adhanMant
riJeev
anJy
otiBi
maYoj
ana-
PMJJBY
PMJJBYisanInsuranceSchemeofferi
ngli
fe
i
nsur
ancecoverfordeathduetoanyreason.
I
twoul
dbeaoney
earcov
er,
renewabl
efr
om y
ear
t
oyear
.

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Theschemewoul dbeof fered/admini
stered Thosejoi
ningsubsequent
lywoul
dbeablet
odoso
thr
oughLI CandotherLif
eInsurancecompani es withpaymentofful
lannualpr
emium f
or
wil
li
ngt ooff
ertheproductonsimilart
ermswi th prospect
ivecov
er.
necessaryappr
ovalsandt i
e-upswithbanksforthi
s
Benef
it
s:
purpose.
Rs.2lakhi
spay
abl
eonmember
'sdeat
hduet
oany
Scopeofcov
erage:
cause.
Al
l i
ndiv
idualaccounthol
der
sofpar
ti
cipat
ingbanks
Pr
emi
um:Rs.330/
-perannum permember
.
i
nt heagegroupof18t o50year
swil
lbeenti
tl
edto
j
oin. Ter
minat
ionofassur
ance:

I
ncaseofmul ti
plebankaccountsheldbyan Theassuranceont
helif
eoft hemembershal
l
i
ndivi
duali
noneordi f
fer
entbanks,
theperson ter
minateonanyofthefol
lowingev
entsandno
wouldbeeli
gibl
etoj oint
heschemet hr
oughone benef
itwil
lbecomepayabl
et her
eunder:
bankaccountonly. a.Onattai
ningage55y earssubjectt
oannual
Aadharwoul
dbet
hepr
imar
yKYCf
ort
hebank renewaluptothatdat
e( entr
y,however,
wil
lnotbe
account
. possibl
ebeyondtheageof50y ears)
.

Enr
olmentper
iod: b.Cl
osureofaccountwit
hthebankorinsuf
fi
ciency
ofbal
ancetokeeptheinsur
anceinf
orce.
Forthecoverperiod1stJunet
o31stMay ,
subscri
bersarerequi
redtoenr
ollandgi
vethei
r c.Incaseamemberi scoveredunderPMJJBYwi t
h
auto-
debitconsentby31stMayofpoli
cy LICofIndi
a/ot
hercompanyt hroughmorethanone
commenci ngyear. accountandpremium i
sreceivedbyLIC/
other
companyinadver
tentl
y,i
nsurancecoverwil
lbe
 Joi
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rest
ri
ctedtoRs.2Lakhandthepremium paidfor Scopeofcov
erage:
dupli
catei
nsurance(
s)shal
lbel
iabl
etobef orf
eit
ed. Alli
ndiv
idualbankaccountholder
sint
heagegroup
of18to70y earsinpart
ici
pati
ngbankswi
llbe
Appr
opr
iat
ionofPr
emi
um: enti
tl
edtojoin.

a.I
nsurancePremium toLI
C/i
nsurancecompany
: I
ncaseofmul ti
plebankaccountsheldbyan
Rs.289/-perannum permember. i
ndivi
duali
noneordi f
fer
entbanks,
theperson
wouldbeeli
gibl
etoj oint
heschemet hr
oughone
b.ReimbursementofExpensest
oBC/Mi cro/ bankaccountonly.
Corporat
e/Agent:Rs.30/
-perannum permember
.
Aadharwoul
dbet
hepr
imar
yKYCf
ort
hebank
c.ReimbursementofAdmini
str
ati
veexpensest
o account
.
part
ici
pati
ngBank:Rs.11/
-perannum permember
.
Enr
oll
mentModal
it
y/Per
iod:
Thecov ershal
lbef ort
heoney earperiod
2.Pr
adhanMant
riSur
akshaBi
maYoj
ana(
PMSBY)
: str
etchingfrom 1stJuneto31stMayf orwhich
PMSBYwillbeanAccident
alI
nsuranceScheme opti
ont ojoi
n/paybyaut o-
debitfrom the
off
eri
ngaccident
aldeat
handdisabi
li
tyonaccount designatedbankaccountont hepr escribedf
orms
ofanacci
dent. wil
lber equi
redtobegi v
enby31stMayofev ery
year.
I
twoul
dbeaoney
earcov
er,
renewabl
efr
om y
ear
t
oyear
.
Benef
it
s:

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1.Deat
h:Rs.2l
akh Ter
minat
ionofcov
er:
2.Tot
alandi
rr
ecov
erabl
e Theaccidentcoverf
ort
hemembershallt
erminate
onanyoft hefol
lowi
ngevent
sandnobenefi
twillbe
l
ossofbot
hey
esor
payabl
ethereunder:
l
ossofuseofbot
hhandsandf
eetor
a.Onat
tai
ningage70y
ear
s.
l
ossofsi
ghtofoneey
eandl
ossofuseofhandor
b.Cl
osureofaccountwit
hthebankorinsuf
fi
ciency
f
oot:
ofbal
ancetokeeptheinsur
anceinf
orce.
Rs.2l
akh
c.Incaseamemberi scov eredthroughmor ethan
3.Totalandi
rr
ecover
ablel
ossofsightofoneey
e oneaccountandpr emi um isrecei
v edbythe
orlossofuseofonehandorfoot
:Rs.1lakh InsuranceCompanyi nadvertentl
y,i
nsurancecov er
willber est
ri
ctedtoonebankaccountonl yandt he
premi um paidfordupli
cateinsurance(s)shallbe
Pr
emi
um:Rs.12/
-perannum permember
.
l
iablet obef or
fei
ted.
Thepremium wil
lbededuct edfr
om theaccount
Appr
opr
iat
ionofPr
emi
um:
holder
'sbankaccountthrough'
autodebit
’faci
li
tyi
n
oneinstal
mentonorbef ore1stJuneofeach a.I
nsur
ancePr emium payabl
etoInsur
ance
annualcover
ageperiodunderthescheme. Company:Rs.12/-perannum permember.
However,i
ncaseswher eaut
odebittakesplace b.ReimbursementofExpensestoBC/Micro
aft
er1stJune,
thecovershallcommencef r
om the /Corpor
ate/Agentbyinsur
er:Rs.1/
-perannum per
dateofaut
odebitofpremium bybank. member .
Rei
mbur
sementofAdmi
nist
rat
iveexpensest
o
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par
ti
cipati
ngBankbyi
nsur
er:Rs.1/
-perannum per 5,
000permont
h,af
tert
heageof60y
ear
sunt
il
member . deat
h.
b.Cent
ral
Gover
nmentguarant
eedmi
nimum
At
alPensi
onYoj
ana(
APY)
: pensi
onamounttot
hespouse:

El
i
gibi
li
tyf
orj
oini
ngAPY: Aft
ert hesubscri
ber'
sdemise,t
hespouseoft he
subscribershal
lbeenti
tl
edt or
eceivethesame
APYisopentoallci
ti
zensofI
ndi
awhohav
ea pensionamountast hatofthesubscri
berunti
lthe
sav
ingsbankaccount. deathoft hespouse.
Themini
mum ageofj
oiningAPYi
s18y
ear
sand c.Retur
nofthepensi
onweal
tht
othenomi
neeof
maxi
mum ageis40years. thesubscr
iber
:
Feat
uresofAPY: Afterthedemiseofbot hthesubscr
iberandt he
APYisavoluntar
y,per
iodi
ccontri
buti
onbased spouse,thenomi neeofthesubscri
bershallbe
pensi
onsystem,underwhichthesubscr
iberwoul
d entit
ledtorecei
vet hepensi
onwealth,as
recei
vet
hefoll
owingbenefit
s: accumul at
edtil
lage60oft hesubscri
ber.
a.Cent
ral
Gover
nmentguar
ant
eedmi
nimum
pensi
onamount
: El
igi
bil
it
yforco-
cont
ri
but
ionbyCent
ralGov
ernment
:
Eachsubscr
iberunderAPYshal
lrecei
veaCentr
al Thesubscri
ber
sint heeli
gibl
eage,whoar enot
Gover
nmentguar ant
eedmini
mum pensionofRs. i
ncome-taxpayer
sandwhoar enotcoveredunder
1,
000permont horRs.2,
000permonthorRs. anystat
utor
ysocialsecuri
tyscheme,ar
eent i
tl
edto
3,
000permont horRs.4,
000permonthorRs. recei
ve:

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i
.Theco- cont
ri
but
ionbyCent r
alGov ernmentof RETAI
LMODULE-E
50%oft hetot
alpr
escribedcontri
bution,
uptoRs. Chapt
er20:HOUSI
NGFINANCEANDTAX
1,
000perannum, isavail
abl
eforthoseel i
gibl
e PLANNI
NG(PART-
I)
subscr
iberswhojoinedAPYbef ore31stDecember,
2015. Whatwewi
llst
udy
?

i
i.TheCentr
alGover
nmentco-contr
ibut
ionshal
lbe *
Whatar
ethet
axbenef
it
sofhousi
ngl
oan?
avai
labl
eforaper
iodof5y ear
s,i
.e.
,fr
om Fi
nancial
Year2015-
16to2019-20.
I
NTRODUCTI
ON:
Exi
t,wi
thdr
awalandpensi
onpay
ment
:
Ov ertheyear
s,announcementshavebeenmadein
Oncompl et
ionof60years,
thesubscr
iberwil
lget theUni onBudget
sf ort
axconcessi
ons,wai
ver
s,
theguarant
eedminimum monthl
ypension,or etc.,t
oencouragehousingfi
nancesoastocount
er
highermonthl
ypensi
on,dependi
ngont he theshor t
ageofhousesinIndi
a.
i
nv est
ment.
Thebenefit
savai
labl
eanduseoft
hebenef
it
st o
reduceone'
staxl
iabi
li
tyar
ebei
ngdet
ail
edbelow.
TAXBENEFI
TSI
NRESPECTOFHOUSI
NGFI
NANCE:
I
nr espectofLoantakenforPurchase/Constr
uct
ion
ofaResi denti
alUni
t,t
heborrowercanav ai
lTAX
benefitofpaymentofint
erestaswellasrepayment
ofprincipal
.
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HomeLoanTaxBenef
it
s: r
esi
dent
ialpr
oper
ty.
1-Taxdeduct
iononpay
mentofhomel
oani
nter
est Howev er
,incaseofl
oanforconstr
uct
ion,t
he
-Sect
ion24(b) [
Max2Lac] const
ructi
onshouldgetcomplet
edwithi
n35Year
s
2-Taxdeduct
iononpri
nci
palr
epay
mentofhousi
ng ofrai
singtheLoan.
l
oan-secti
on80C [Max1.
5Lac] Deducti
oncanbeclai
medonlyfr
om thefi
nancial
3-Taxdeduct
ionf
orf
ir
stt
imehomebuy
er– yearwhenthepur
chase/
const
ructi
oniscompleted.

Sect
ion80EE[
Max50k] c.Thelenderi
ssuesacer t
ifi
cateattheendoft he
fi
nanci
alyearmentioningther
eintheinter
estand
Taxbenef
itundersect
ion24(
b): pri
nci
palpaidduri
ngt heyearinrespectofthatloan.
Int
erestonhousi ngl oancanbecl ai
medasa d.I
nter
estpaymentofhomel
oant
akenf
orasel
f-
deduct i
onf rom incomef rom propert
y,sal
ary, occupi
edproper
ty.
business/pr ofession,capit
algains,oranyother
sourceupt oamaxi mum ofRs.2,00,000under Ift
heloani
savai
ledforr
epai
rorr
enewalofhouse
section24( b)oft heIncome-taxAct,1961every anamountofRs.30,
000isonl
yal
lowedunder
yearsubj ecttoful f
il
mentoft hefoll
owing Secti
on24(
b).
condi t
ions. Incasetheproper
tyforwhicht hehomel oanhas
a.Loanhasbeent
akenonoraf
ter1stApr
il1999. beentakenisnotsel
f-occupied,i
.e.
,Rentedor
deemedt oberent
ed,nomaxi mum li
mitfortax
b.Loanisf orpurchaseorconst r
ucti
onofa deducti
onhasbeenpr escri
bedandt hetaxpayer
resi
denti
al propertyorasre-f
inance(t
akeover
)of cantakethededucti
onoft hewhol eint
erest
thepri
ncipalamountout st
andingunderaloan amountundersecti
on24.
takenearl
ierf orpurchaseorconstr
ucti
onofa

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I
tisal soimport
anttonot
ethatthi
staxdeduction Thet axdeductiononprincipalr
epaymentisalsoa
ofInterestonHomeLoanundersection24is partofthevariousdeduct i
onsall
owedunder
deduct i
bleonapayabl
ebasis,
i.
e.,
onanaccr ual secti
on80Cwhi chincl
udesamounti nvestedinPPF
basis. Account ,
TaxSav ingFi
xedDeposi ts,
Lif
eInsurance
premi um,Nati
onalSavingsCer t
if
icat
e,Senior
Thetaxbenefi
tundersect
ion24isreducedf r
om Rs.
2lakhtoRs.30,
000,ift
hepropert
yisnotacqui r
ed Citi
zensSav i
ngScheme, etc.
orconstr
uct
ionisnotcompletedwit
hin5y ears Thededucti
onlimi
tofsect
ion80Ci
sincl
usi
veofal
l
fr
om theendofFinanci
alYearinwhichtheloan theseopt
ions.
wastaken. Thi
staxdeducti
onisav
ail
abl
eonpay mentbasis
“Incomef rom housepropert
y”int
hecaseofaself anddoesnotdependontheyearf
orwhichthe
occupi edpropert
ywi l
lbeei
therNi
l(ift
herei
sno paymenthasbeenmadebytheassessee.
i
nt erestonhousingloan)ornegat
ive(i
.e.
,l
oss)t
o
Theamountpai
dasStampDut
y&Regi st
rati
onFee
theext entofint
erestonhousingl
oan. i
salsoal
lowedasat
axdeduct
ionundersecti
on
Deducti
oninrespectofint
erestonhousi
ngloanin 80C.
caseofaself
-occupiedpropert
ycannotexceedRs. Thisdeduct
ioncanbecl
aimedwhet
hert
he
2,
00,000orRs.30,000,asthecasemaybe.
assesseehastakenal
oanornot
.
Taxbenefi
tonHomeLoanPr
inci
palRepay
ment Thiscanbeclai
medi
nthey
eart
heexpenseshav
e
undersect
ion80C:
beenincur
red.
Themaxi
mum t
axdeduct
ional
lowedundersect
ion
80Ci
sRs.1,
50,
000.
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Condi
ti
onsf
orcl
aimi
ngdeduct
ionundersect
ion Taxbenefi
tunder80Cwi
l
lnotbeel
igi
blef
orcl
aim
80C: i
nthatfi
nanci
alyear.
Certai
ncondit
ionsmustbesat
isf
iedtocl
aim Thetot
alamountoft axdeducti
onalreadyclai
med
deducti
onundersect
ion80Cforpri
nci
pal i
nrespectofear
li
eryearsshallbedeemedt obe
repaymentofhomeloan: i
ncomeofsuchy earinwhichthepropertyhasbeen
*Onl
yift
heconstruct
ionofpr
opert
yiscomplet
e sol
dandwi l
lbel
iabletopaytaxont hatincome.
andhaverecei
vedacompleti
oncert
if
icat
efort
he
same. Taxbenef
itunderSect
ion80EE:Deduct
ionf
orFi
rst
*Nodeduct
ionwouldbeall
owedunderthi
ssecti
on Ti
meHomeBuy ers
f
orrepaymentofpri
nci
palf
orthoseyear
sduri
ng Justl
ikededuct
ionundersecti
on24, t
hededuction
whi
chthepropert
ywasunderconstr
ucti
on. undersect
ion80EEisalsoavail
ableontheinter
est
*Deductionisal
soavai
labl
ewhet
hert
hepr
oper
tyi
s pai
dont hehomeloanbyt axpayerorassessee.
sel
f-occupiedorl
etout
. Butt
hisdeduct
ioni
sonl
yav
ail
abl
etof
ir
stt
ime
*Thebenefi
tcanal
sobecl
aimedf
ormor
ethan1 homebuyers.
housepropert
y. Thequant
um ofdeducti
oni
sRs.50,
000f
ori
nter
est
Rev
ersaloft
axbenef
it
sav
ail
edundersect
ion80C: pai
donthehomel oan.
Ifahousepropert
yforwhicht axbenefi
twas Thisdeduct
ioni
savail
abl
eoverandabovethe
avail
edundersecti
on80C, i
ssol dwit
hinaperi
odof deducti
onofsect
ion24andsecti
on80Cwhi char
e
5y ear
sfrom t
heendofthef inanci
alyeari
nwhich Rs.2,
00,000andRs.1,
50,
000respect
ivel
y.
thepropert
yhasbeenreceivedinpossession,
then:

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Condit
ionsNecessar
yforCl
aimi
ngDeduct
ionunder *
Asonthedateofsanct
ionofl
oannoot
herhouse
Sect
ion80EE: i
sownedbyyou.
Toclaimthi
sspecialt
axbenef
it
,thet
axpay
ermust *Theamountofclai
m deductedunderthi
ssect
ion
sat
isfythef
oll
owingcondi
ti
ons: wil
lnotbeeli
gibl
etocl
aimt hededuct
ionu/s24
agai
nforthesameamountofi nter
est.
*Thededucti
oncanbeav ail
edonhomel oans
sanct
ionedonlybet
ween1stApr i
l2016to31st El
igi
bil
it
yforCl
aimi
ngSect
ion80EEDeduct
ions
March2017int hef
inanci
alyear
.(I
ntr
oducedin
Thededuct
ionsundert hi
ssecti
oncanbeclai
med
budget2016) onl
ybyindi
vidualtaxpayer
sonpr oper
ti
es
*Thi
staxbenefi
tisnotavai
labl
eifyoutakehome pur
chasedeithersingl
yorjoi
ntl
y.
l
oanafter1Apri
l2017butifalr
eadytakenduri
ng
*
Secti
on80EEi
sappl
icabl
eonaperper
sonbasi
s
1stApri
l2016to31stMarch2017t henyougetthi
s i
nst
eadofaperpr
opert
ybasi
s.
benef
itti
lll
oani
snotpaidcompl et
ely.
So,supposeyouhav epurchasedpr
opert
yjoint
ly
*
Thevalueofpr
opert
yforwhicht
heloanhasbeen
wit
hy ourspouseandy oubotharepay
ingthe
t
akenshoul
dbelessthanRs.50l
akh.
i
nstalmentsofloanthenyoubothcanindi
vidual
ly
*
Thehomel
oanamountshoul
dnotexceedRs.35 cl
aimt hi
sdeduction.
l
akh. I
tisnotnecessar
ytoresi
deintheproper
tyf
or
*
Deducti
onisonlyappl
icabl
eonhomel
oanpai
dfor whichyouwanttocl
aimthisdeduct
ion.
f
ir
sthouseproper
ty.
So,borr
owersst
ayi
nginarent
edaccommodat
ion
*Theproper
tyi
nquestioncanbeei
thersel
f- canalsocl
aimthi
sdeduct
ion.
occupi
edornon-sel
f-
occupied.
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RETAI
LMODULE-E GrossAnnualVal
ue(GAV)ofaproper
tywhichi
slet
Chapt
er20:HOUSI
NGFI
NANCEANDTAX -
outthroughoutt
heyeari
sdet
erminedint
he
PLANNI
NG(
PART-
II
) fol
lowi
ngmanner :

Whatwewi
llst
udy
?
St
ep1:Comput
ereasonabl
eexpect
edr
entoft
he
pr
oper
ty
*
Whatar
ethet
axbenef
it
sofhousi
ngl
oan?
St
ep2:Comput
eact
ualr
entoft
hepr
oper
ty
Step3:Computegrossannualval
ue(GAV)(Gr
oss
I
ncomechargeabl
etotaxunderthehead“Income annualval
uewil
lbehigheroftheamountcomputed
fr
om housepr
opert
y”i
nthecaseofal et
-out atstep1orst
ep2).
proper
tyi
scomputedi
nthefoll
owingmanner :

St
ep1:Comput
ati
onReasonabl
eexpect
edr
ent
:
Reasonabl
eexpect
edr
entwi
llbehi
gheroft
he
fol
lowi
ng:
1-
Muni
cipalv
alueoft
hepr
oper
ty(
Not
e1)
;or
2-
Fai
rrentoft
hepr
oper
ty(
Not
e2)
.
3-I
faproper t
yiscover
edunderRentContr
olAct,
thenthereasonabl
eexpect
edrentcannotexceed
standar
dr ent(Not
e3).

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Not
e1:Meani
ngofMuni
cipalVal
ue St
ep2:Comput
eact
ualr
entoft
hepr
oper
ty:
Forthecollecti
onofmuni cipalt
axes, l
ocal Act
ualrentmeanstherentf
orwhi
cht
hepr
oper
tyi
s
authori
ti
esmakeaper i
odicsur veyofal lbuil
dingsi
n l
etoutduri
ngtheyear.
thei
rjuri
sdicti
on.Suchvaluedeter minedbyt he
municipalauthori
ti
esinrespectofapr opertyis
call
edast hemuni ci
palvalueoft heproper t
y. Whil
ecomput
ingact
ualr
entper
tai
ningt
ovacancy
per
iodi
snott
obededucted.
Howev er,unreal
isedrent(*
)istobedeductedfr
om
Not
e2:Meani
ngofFai
rRent
act
ualr entifcondit
ionsspeci
fi
edinthi
sregardare
Iti
sthereasonableexpectedr
entwhi chthe sat
isf
ied.
proper
tycanfetch.Itcanbedeter
mi nedonthe (
*)Unreal
izedrentistherentofthepropert
ywhich
basisofrentf
etchedbyasi mi
larpropert
yinthe t
heowneroft hepropertycouldnotrecoverfr
om
sameorsi mil
arlocali
ty.
t
hetenant,i
.e.
,rentnotpaidbythetenant.
I
ffol
lowingcondi
ti
onsaresati
sfi
ed,thenunreal
ized
Not
e3:Meani
ngofSt
andar
dRent r
enti
st obedeductedf
rom theactualrentoft
he
I
tisthemaxi mum rentwhichapersoncanl egall
y y
ear:
recoverfr
om histenantundert
heRentCont rolAct. 1-
Thet
enancyi
sbonaf
ide.
Standardrenti
sapplicabl
eonlyincaseof
2-
Thedefaul
ti
ngt
enanthasvacat
edtheproper
ty,or
propert
iescoveredunderRentControlAct
. st
epshavebeent
akentocompelhimtovacatethe
pr
oper
ty.
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3-
Thedefaul
ti
ngtenanti
snoti
noccupat
ionofany
ot
herpr
opertyoft
hetaxpay
er.
4-Thetaxpayerhastakenallstepstorecoversuch
amount ,
incl
udinglegalpr
oceedi ngsorhesatisf
ies
theAssessingOffi
certhatlegalproceedi
ngswoul d
beuseless.
Interestonl oant akenforcommer ci
alpropert
yor
onl oant akenforbusi ness/personalneedsagainst
themor t
gageofpr opertybyan
i
ndi vidual/HUF/ part
nershipf i
rm/company/any
otherper soncanbef ul
lyclaimedasdeduct i
on
from i ncomef rom rent/business/pr
ofessi
on/ ot
her
sour ces, asthecasemaybe.
However
,thebenef
itonaccountofpr
inci
pal
r
epaymentshal
lnotbeavail
ablei
nsuchcases.
I
nterestonunpai
dint
erest
,i.
e.,
penali
nter
est
,isnot
deducti
ble.

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Homel
oani
nJoi
ntNames: Taxi
mpl
icat
ionsi
nrespectofNRIHomeLoan:
I
ncaseofhomeloani
njoi
ntnames,thet
ax Li
kei nthecaseofar esi
dentIndiancanavail
atax
benef
it
sgetdi
vi
dedamongowners. benefitonrepaymentofupt oRs.1.50Lakhonthe
Thediv
isi
ontakespl
aceint
hesamepr opor
ti
onin pri
ncipalcomponentandRs.2. 00Lakhont he
i
nterestcomponent ,
anNRIwhor epayst
hehome
whicht
heassetisownedbyeachco-
appli
cant
.
l
oani salsoeli
gibl
efortaxrebate.
Eachco-appli
cantcancl
aim amaxi mum taxrebat
e
Howev er
,mostoft heNRIswhoar ecurr
ent
ly
ofupt oRs.1.
50lakhforpri
ncipalr
epay ment
(Sect
ion80C)andRs.2l akhforint
erestpayment ser
vici
ngt hei
rhomel oansarenotawareofthet
ax
i
mplicati
onsont heirl
oanrepayment.
(Sect
ion24).
Theyj
ustear
nthei
rincomeabr
oadandr
epayt
hei
r
Theveryfi
rstcondi
ti
onisthehousepr
opertyhast
o
beboughtbyt hei
ndiv
idual
sjoi
ntl
yandthi
sshould l
oan.
beinthei
rjoi
ntnames. Incasethesalaryearnedabr
oadist
heonlysour
ce
ofincome, anNRIdoesnothaveanopport
uni
tyto
Theshareofeachholdershoul
dbeclear
ly
clai
mt axexemptiononhomel oanr
epaymentashe
menti
onedsot hatt
hereisabsol
utecl
ari
tyont
he
i
snott axablei
nIndia.
per
centageownershi
pofeachco-owner.
Benefi
t,i
favai
labl
e,under80EEcanal
sobecl
aimed But,incaseifaNRIear nsanadditi
onaltaxable
i
ndivi
duall
y. i
ncomef rom I
ndi
aapar tfr
om thesalar
year ned
abroad,thenheiseli
gibletoclai
mt axexempt i
on
forthehomel oanrepay mentasavail
ablefor
Answerofqui
z(l
astpage):1-C,
2-B,
3-D resi
denthomel oan.
Joi
nCAI
IBWI
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nCAI
IBWI
THASHOKonYouTube&App
Ques1: AnIndi
vidualt
ookaLoanofRs.25Lakhf or RETAI
LMODULE-E
purchasi
ngaf l
atforself
-occupat
ionon Chapt
er22:VALUATI
ONOFREALPROPERT(
PART-
I)
30/03/2015&pai dRs.2,
20,000towardsInt
erest
Whatwewi
llst
udy
?
duri
ngF.Y.2016–17.Themaxi mum amountof
I
nterestwhichhecanclaim asadeductionwould *
Whati
sdepr
eci
ati
on?
be Depr
eci
ati
on:
(a)Rs.1,50,
000(
b)Rs.1,
20,
000(
c)Rs.2,
00,
000(
d) Depr
eci
ati
onmeansl
ossi
nval
ue.
Rs.30,000
Abuil
dinglosesval
ueduet odet er
ior
ati
oninit
s
physi
calcondit
ionasaresultofusage(wear&t ear
),
eff
ectofcli
maticcondi
ti
ons, poorstr
uctur
aldesign
orworkmanship.
Anest i
mat eoftheusef ull
if
eofthebuildi
ngis
madeaf t
erwhichitwillbecomeunserviceabl
eand
depreciati
onischargedaccor di
nglysothat
accumul ateddepr
eciationbecomesequalt othe
ori
ginalinvest
mentatt heendofi t
slif
e.Abuil
ding
al
sol osesv al
ueduet oobsolescence.
Thereiscontinualimprov ementi
nconstructi
on
technologyandar chi
tectureandnewbuildings
provi
demor ecomf or
tableliv
ingcondi
ti
onsby
provi
dingbetterameni t
iessuchasmodul arkitchen,

Joi
nCAI
IBWI
THASHOKonYouTube&App
washbasins,
hotandcol
dwat
er,
gey
ser
,li
ft
,bet
ter
vent
il
ati
on,et
c.
Therearesev
eralmet
hodstocal
cul
ate
depreci
ati
onbutt
hefoll
owi
ngtwomethodsar
e
usuall
yadopt
ed:
1-
Str
aightLi
neMet
hod(
SLM)
2-Wr
it
tenDownVal
ue(
WDV)Met
hod
St
rai
ghtLi
neMet
hod(
SLM)
:
I
nt hismethod,thedepreciat
ionisal
locat
ed
uniforml
yovertheli
feoft hepropert
yandi s
generall
yadoptedfortaxpurposesandpr epar
ing
fi
nancialst
atements.
Theannualdepr
eci
ati
oni
sgi
venby
:
D=(
C-S)
/n
Di
sannualdepr
eci
ati
on,
Cisor
igi
nalcost
,
Sissal
vagev
alue(val
uethatpr
oper
tymayfetchat
t
heendofusefull
if
e),
nisli
feofbui
ldi
ngi
ny ear
s.

1/3
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