Usually all persons want money for personal and commercial purposes. Banks are the oldest lending institutions in Indian scenario. They are providing all facilities to all citizens for their own purposes by their terms. To survive in this modern market every bank implements so many new innovative ideas, strategies, and advanced technologies. For that they give each and every minute detail about their institution and projects to Public. They are providing ample facilities to satisfy their customers i.e. Net Banking, Mobile Banking, Door to Door facility, Instant facility, Investment facility, Demat facility, Credit Card facility, Loans and Advances, Account facility etc. And such banks get success to create their own image in public and corporate world. These banks always accepts innovative notions in Indian banking scenario like Credit Cards, ATM machines, Risk Management etc. So, as a student business economics I take keen interest in Indian economy and for that banks are the main source of development.
The crucial role of bank economists in transforming the banking system in India. Economists have to be more ‘mainstreamed’ within the operational structure of commercial banks. Apart from the traditional functioning of macro-scanning, the interlinkages between treasuries, dealing rooms and trading rooms of banks need to be viewed not only with the day-to-day needs of operational necessity, but also with analytical content and policy foresight. Today, operational aspects of the functioning of banks are attracting intensive research by professional economists. In particular, measuring and modeling different kinds of risks faced by banks, the behavior of risk-return relationships associated with different portfolio mixes and the impact of fluctuations in financial markets on the financial performance of banks are areas which lend themselves to analytical and empirical appraisal by economists and econometricians. They, in turn, are discovering the degrees of freedom and room for analytical maneuver in high frequency information generated by the day-to-day functioning of banks. It is vital that we develop an environment where these synergies are nurtured so as to serve the longer-term strategic interests of banks. Even in real time trading and portfolio decisions, the fundamental analysis of economists provides an independent assessment of market behavior, reinforcing technical analysis.
• Banking is an essential industry.
• It is where we often wind up when we are seeking a problem in financial crisis and money related query.
• Banking is one of the most regulated businesses in the world.
• Banks remain important source for career opportunities for people.
• It is vital system for developing economy for the nation.
• Banks can play a dynamic role in delivery and purchase of consumer durables.
Rational of a Bank Structure
An organization consists of people who carry out differentiated tasks which are coordinated so as to contribute and achieves planned goals. Organizations are created mainly for producing goods and services to the society for which they have to incorporate a formal structure. Indian banking is now operating in a more competitive setting with the induction of new banks. Both Indian and foreign, who will be bringing in new work technology and specialist expertise and a variety of new financing instruments. Branch is the primary unit of the bank’s business, particularly for serving the weaker sections of the society. Branches have to develop close relationship they profess to serve. This leads to opening up or specialized branches, like industrial finance, small scale industries, and Hi-tech agriculture, overseas and non-resident Indian, according to market segmentation. This new vision entails a new chain of command, a new technology and specific delegation of authority.
This calls for the branch manger to concentrate on his/her styles, skills and subordinates, goals, to shape the branch in the competitive environment to become a profit centre and to render better customer service. This implies that the branch manager should have adequate supporting staff to relieve him from the routine table work to developmental activities. In order to serve the customer it is necessary that one should understand and accept role and relationship with other so as to make sure that none of the supporting staff would be deemed to be independent of the branch manger. So the structure of branch organization must, from time to time, conform to the demands and peculiarities of the locality in which the branch is functioning. Before looking in to the branch structure of bank, it will be worthwhile examining how a formal organizational structure of a bank appears.
The Concept of Retail Banking
The retail banking encompasses deposit and assets linked products as well as other financial services offered to individual for personal consumption. Generally, the pure retail banking is conceived to be the provision of mass banking products and services to private individuals as opposed to wholesale banking which focuses on corporate clients. Over the years, the concept of retail banking has been expanded to include in many cases the services provided to small and medium sized businesses. Some banks in Europe even include their private banking business i.e. services to high net worth net worth individuals in their retail Banking portfolio. The concept of Retail banking is not new to banks. it is only now that it is being viewed as an attractive market segment, which offers opportunities for growth with profits. The diversified portfolio characteristic of retail banking gives better comfort and spreads the essence of retail banking lies in individual customers. Though the term Retail Banking and retail lending are often used synonymously, yet the later is lust one side of Retail Banking. In retail banking, all the banking needs of individual customers are taken care of in an integrated manner.
The advent of new delivery channels viz. ATM, Interest and Telebanking have revolutionalised the retail banking activities. These channels enable Banks to deliver retail Banking products and services in an efficient and cost effective manner. Now-adays the banks are under great pressure to attract new and retain old customers, as margins are turning wafer thin. In these circumstances reducing administrative a transaction cost has become crucial. Banks are making special offerings to customers through these channels. Retail banking has been immensely benefited with the revolution in IT. and communication technology.
The automation of the Banking processes is facilitating extension of their reach and rationalization of their costs as well. They are the engine for growth of retail banking business of Banks. The networking of branches has extended the scope of banking to anywhere and anytime 24 * 7 days week banking. It has enabled customer to be the customer of a bank rather then the customers of a particular branch only. Customers can transact retail Banking transactions at any of the networked branches without any extra cost. As a matter of fact the Retail Banking per se has taken off because of the advent of multiple banking channels. These channels have enabled banks to go on a massive customer acquisition mode since transaction volumes spread over multiple channels lessen the load on the brick and mortar bank branches.
Though at present Retail Banking appears to be the best bet for banks to improve their top and bottom line, yet the future of Retail banking in general, may not be all roses as it appears to be. There are signs of slowdown in customer growth in some countries, which will inevitably have an impact on Retail Banking business growth. Secondly the possibility of deterioration in asset quality cannot be ruled out. With the boom in housing loan market, the sign of overheating has also started surfacing with potential problem for banks that have not exercised sufficient caution. Further the pressure on margins is mounting partly because of fierce competition and partly as a result of falling interest rates environment which has diminished to some extent the endowment effect of substantial deposit bases from which most retail banks have been deriving benefits. But banks, which have built a significant retail banking portfolio may fare relatively well in the current fiscal. Those banks which have a dynamic retail strategy and are well diversified in products, services and distribution channels and have at the same time managed to achieve a good level of cost efficiency are the ones that are most likely to succeed in the longer term.