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banks and the banks then lent out money for commercial function. At the moment they need
to put up for sale.
The retail section, which was earlier unobserved, is now the most important of the lot, with
the banks jumping over one another to provide elsewhere loans. The consumer has never
been so lucky with so many banks offering so many products to choose from. With supply far
exceeding demand it has been a competition to the bottom, with the banks undercutting
one another. A lot of foreign banks have already burnt their fingers in the retail game and
have now decided to get out of a few retail segments totally.
The private sector banks are posing a very stiff opposition to the public sector banks
through their initiatives for meeting customer prospect and gaining a cutting edge. This is
reflected by the growing market share and better profitability of private banks in comparison
to that of public sector banks. The growth posted by some of the private sector banks has
been such (a near doubling-up of retail credit in around two years which shows, yearly rate
of growth of around 35 per cent) as to outperform the more modest attainments on this face
by other banks - particularly the public sector banks.
It has also created the awareness that overall financial situation have so changed that a
major shift in business policy (such as the important focus on retail banking as against
wholesale banking) is quite unsurprising and the prospect lies only in retail banking
progress.
Due to growing competition in retail Banking Finance, November, 2009^— banking,
considering the customer awareness about service quality is becoming essential. Public
sector banks have also responded to the challenges posed by the private sector banks
through conscious efforts to get enhanced their service quality.
Retail portfolios of banks are growing by leaps and bounds, but the tie up of banks with
dealers and their promotion through call centers is unluckily not giving due weight to
customer care, thus, damaging the image of the banks. There is a need for exploring
reasonable routes like brand building across product categories, takeover from the dealer,
reverse the call center focus, etc. Strong brand name of products not only provides a
competitive edge, but also improves the long-term relationship with customers.
The nimble-footed new generation private sector banks have taken a lead on this front and
the public sector banks are trying to catch up. Housing loan accounts for a major hunk of
retail loan. The PSBs have been losing business to the private sector banks in this segment.
The distinctive products offered in the Indian retail-banking sector are housing loans,
consumption loans for purchase of durables, auto loans, credit cards and educational loans.
The loans are marketed under outstanding brand names to make a distinction of the
products offered by different banks.
Retails Portfolio of Banks
Hem Outstanding-March Percentage
End variation
2007 2008 2006-07 2007-08
1 Housing Loans 224481 252932 25.4 12.7
2 Consumer Durables 7296 4802 632 -34.2
3 Credit Card 18317 27437 47,3 49.8
Receivables
4 Auto Loan 82562 87998 34.5 6.6
5 Other Personal Loan 1,55,20 197879 31.1 27.5
4
Total Retail Loans 487860 571048 29.9 17.1
Total Loan Adv. of SCBs 189377 2332490 28.5 232
5
Source: RBI, Publication on Operators and Performance of Comm. Banks.
Percentage Variation
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0 60
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— 2006-°7
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