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Unit 3: Concept of Retail Banking

Consumer durable finance. Notes
Vehicle (two-wheelers and four-wheelers) finance
Personal Loan

Advance against future lease rentals
Mortgage Loan
Pension Loan etc.
Margin: The contribution brought in by the borrower is termed as margin. Margin requirements
differ from one type of finance to others and they differ from one bank to the other. There is no
standard capsule of margin in this segment.
Interest: The rate of interest has been deregulated by the apex monetary authority which suggests
that the rate of interest offered by one bank for a retail lending scheme may not match with the
one offered by the other bank. The rate of interest is decided by the individual banks.

Composition of Retail Lending

1 Housing ` 34654 crores 50%
2 Consumer durables ` 6904 crores 10%
3 Loans to Individuals agt Shares etc. ` 1762 crores 5%
4 Other Priority Sector/ Personal Loans ` 26089 crores 35%
5 TOTAL ` 69409 crores 100%

Source: RBI’ report on Trend & Progress of Banks 2002-03

3.2.2 Retail Banking – Liability Focused Segment (Deposit Accounts)

Saving Fund Account/Savings Bank Account

A saving fund account may be opened by a properly introduced individual singly or jointly,
minors of the age of 10 years and above and minors under natural/legal guardianship.
Saving fund account cannot be opened in the name of any business concern whether proprietary/
company/partnership or association. Savings fund account cannot be opened in the name of:

Government departments
Municipal corporations
Panchayat Samitis
State housing boards
Industrial Development Authorities

State Electricity Boards
Water/Sewerage and Drainage Boards
State Text Book Publishing Corporations
Metropolitan Development Authority
Housing Corporations/societies
Any bank including land development banks

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