abhishreshthaa
Abhijeet S
o The growth in retail banking has been facilitated by growth in banking technology and automation of banking processes to enable extension of reach and rationalization of costs. ATMs have emerged as an alternative banking channels which facilitate low-cost transactions vis-à-vis traditional branches / method of lending. It also has the advantage of reducing the branch traffic and enables banks with small networks to offset the traditional disadvantages by increasing their reach and spread.
o The interest rates on retail loans have declined from a high of 16-18%in 1995-96 to presently in the band of 7.5-9%. Ample liquidity in the banking system and falling global interest rates have also compelled the domestic banks to reduce interest rates of retail lending.
o Banks could afford to quote lower rate of interest, even below PLR as low cost [saving bank] and no cost [current account] deposits contribute more than 1/3rd of their funds [deposits].The declining cost of incremental deposits has enabled the Banks to reduce their interest rates on housing loans as well as other retail segments loans.
o Easy and affordable access to retails loans through a wide range of options / flexibility. Banks even finance cost of registration, stamp duty, society charges and other associated expenditures such as furniture and fixtures in case of housing loans and cost of registration and insurance, etc. in case of auto loans.
o Offering retail loans for short term, 3 years and long term ranging term ranging from 15/20 years as compared to their earlier 5-7 years only.
o Making financing attractive by offering free / concessional / value added services like issue of credit card, insurance, etc.
o Continuous waiver of processing fees / administration fees, prepayment charges, etc. by the Banks. As of now, the cost of retail lending is restricted to the interest costs.
o The interest rates on retail loans have declined from a high of 16-18%in 1995-96 to presently in the band of 7.5-9%. Ample liquidity in the banking system and falling global interest rates have also compelled the domestic banks to reduce interest rates of retail lending.
o Banks could afford to quote lower rate of interest, even below PLR as low cost [saving bank] and no cost [current account] deposits contribute more than 1/3rd of their funds [deposits].The declining cost of incremental deposits has enabled the Banks to reduce their interest rates on housing loans as well as other retail segments loans.
o Easy and affordable access to retails loans through a wide range of options / flexibility. Banks even finance cost of registration, stamp duty, society charges and other associated expenditures such as furniture and fixtures in case of housing loans and cost of registration and insurance, etc. in case of auto loans.
o Offering retail loans for short term, 3 years and long term ranging term ranging from 15/20 years as compared to their earlier 5-7 years only.
o Making financing attractive by offering free / concessional / value added services like issue of credit card, insurance, etc.
o Continuous waiver of processing fees / administration fees, prepayment charges, etc. by the Banks. As of now, the cost of retail lending is restricted to the interest costs.