Page 70 - DMGT303_BANKING_AND_INSURANCE

Unit 3: Concept of Retail Banking

Retail lending, a departure from conventional advance, offers higher yield, quicker turn, Notes
the possibility of less incidence of the account going bad or non performing if it is
monitored on an ongoing basis.
Corporate banking represents a wide range of banking and financial services provided to
domestic and international operations of large local Corporates and local operations of
multinational corporations.
In order to administer a client company’s banking business and anticipate further financial
needs, you must be informed about its business situation.
Corporate bonds are often listed on major exchanges (bonds there are called “listed”
bonds) and ECNs like Bonds.com and Market Axes, and the coupon (i.e. interest payment)
is usually taxable. Sometimes this coupon can be zero with a high redemption value.

3.12 Keywords

A corporate bond: It is a bond issued by a corporation. It is a bond that a corporation issues to
raise money in order to expand its business.
Current Account: It means a form of demand deposit wherefrom withdrawals are allowed any
number of times depending upon the balance in the account or up to a particular agreed amount
and will also include other deposit accounts which are neither Savings Deposit nor Term Deposit.
Demand deposits: It means a deposit received by the bank which is withdrawable on demand.

Notice Deposit: It means term deposit for specific period, but withdrawable on giving at least
one complete banking day's notice.

Retail Banking: It refers to the efforts of the bankers to reach up to the customers on both fronts
of the balance sheet i.e., Liabilities side as well as Assets side.

Savings deposit: It means a form of demand deposit which is subject to restrictions as to the
number of withdrawals as also the amounts of withdrawals permitted by the Bank during any
specified period.
Term deposits: It refers to such deposits which are placed with the bank for a definite time
period, although the customers are free to withdraw their deposit as per their requirements.
3.13 Review Questions

1. Discuss the operation of opening an account in a bank.
2. Discuss in detail the concept of retail banking.

3. Define the following terms:
(a) Term loans
(b) Current account

(c) Fixed account
(d) Saving deposit
(e) Demand deposit

4. Explain the types of loans provided by commercial banks.

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