JAIIB RBWM Short Notes PDF

www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 1 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAII...

www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 1 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… ALL THE VERY BEST FOR YOUR EXAMS SHORT NOTES FOR JAIIB RETAIL BANKING & WEALTH MANAGEMENT Though we had taken enough care to go through the notes provided here, we shall not be responsible for any loss or damage, resulting from any action taken on the basis of the contents. Creation of these short notes is the efforts of so many persons. First of all we thank all of them for their valuable contribution. We request everyone to go through the Macmillan book and update yourself with the latest information through RBI website and other authenticated sources. In case you find any incorrect/doubtful information, kindly update us also (along with the source link/reference for the correct information). Dr. K Murugan, DMS, MBA (Finance), MBA (HR), MCA, MSc (IT), CAIIB ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 2 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Retail Banking & Wealth Management Index S No Topic Page No 1 JAIIB & DBF – General Information 3 2 Syllabus 5 3 Module A – Retail Banking 10 4 Module B – Retail Products and Recovery 17 5 Module C – Support Services-Marketing of Banking Services/Products 53 6 Module D – Wealth Management 65 6 Additional Reading Material on Home Loans 79 ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 3 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… JAIIB / DBF – GENERAL INFORMATION  Consists of 4 papers : 1. Indian Economy & Indian Financial System 2. Principles & Practices of Banking 3. Accounting & Financial Management for Bankers 4. Retail Banking & Wealth Management  Only existing employees of banks can appear for JAIIB Exam.  People other than Bank Employees can appear for Diploma in Banking and Finance Exam. If Passed, JAIIB Examination certificate will be issued after joining the bank.  Syllabus & exam pattern for both JAIIB and DBF exams are mostly same.  Both JAIIB and DBF exams are conducted in on-line mode only.  The examination will be conducted normally twice a year in May / June and November / December on Saturdays/Sundays.  The duration of the examination will be of 2 hours.  Examination Pattern : Each Paper will contain 100 objective type MCQs, carrying 100 marks including questions based on case studies. The Institute may, however, vary the number of questions to be asked for a subject. There is no negative marking for wrong answers.  Passing Criteria - Minimum 200 in total and minimum 45 in each subject in any single attempt (not required to be the 1st attempt) is considered as pass. Else 50 in each subject. Passed subject gets carried forward to 5 attempts or 3 years (whichever is earlier) from the 1st attempt. If not passed in 5 attempts or 3 years, you need to appear in all the 4 papers.  First Class : 60% or more marks in aggregate and pass in all the subjects in the FIRST PHYSICAL ATTEMPT.  First Class with Distinction : 70% or more marks in aggregate and 60% or more marks in each subject in the FIRST PHYSICAL ATTEMPT.  Candidates who have been granted exemption in the subject/s will be given "Pass Class" only.  Cut-off Date of Guidelines /Important Developments for Examinations - The Institute has a practice of asking some questions in each exam about the recent developments/ guidelines issued by the regulator(s) in order to test if the candidates keep themselves abreast of the current developments. But, there could be changes in the developments / guidelines from the date the question papers are prepared and the dates of the actual examinations. In order to address these issues effectively, it has been decided that: ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 4 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 …………………………………………………………………………………………………………………………………………………………………  In respect of the exams to be conducted by the Institute for the Period from February to July of a calendar year, instructions/guidelines issued by the regulator(s) and important developments in banking and finance up to 31st December will only be considered for the purpose of inclusion in the question papers.  In respect of the exams to be conducted by the Institute for the period from August to January of a calendar year, instructions/guidelines issued by the regulator(s) and important developments in banking and finance up to 30th June will only be considered for the purpose of inclusion in the question papers.  Exam Fees JAIIB  First attempt fee Rs. 4,000/-*  2nd attempt fee Rs. 1,300/-*  3rd attempt fee Rs. 1,300/-*  4th attempt fee Rs. 1,300/-*  5th attempt fee Rs. 1,300/-* CAIIB  First attempt fee Rs. 5,000/-*  2nd attempt fee Rs. 1,300/-*  3rd attempt fee Rs. 1,300/-*  4th attempt fee Rs. 1,300/-*  5th attempt fee Rs. 1,300/-* DBF  First attempt fee Rs. 3,500/-*  2nd attempt fee Rs. 1,300/-*  3rd attempt fee Rs. 1,300/-*  4th attempt fee Rs. 1,300/-*  5th attempt fee Rs. 1,300/-* * Plus convenience charges and Taxes as applicable Please Note: Candidates are required to register for every attempt separately ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 5 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… SYLLABUS The details of the prescribed syllabus which is indicative are furnished below. However, keeping in view the professional nature of examinations, all matters falling within the realm of the subject concerned will have to be studied by the candidate as questions can be asked on all relevant matters under the subject. Candidates should particularly prepare themselves for answering questions that may be asked on the latest developments taking place under the various subject/s although those topics may not have been specifically included in the syllabus. Any alterations made will be notified from time to time. Further, questions based on current developments in banking and finance may be asked. Candidates are advised to refer to financial news papers / periodicals more particularly “IIBF VISION” and “BANK QUEST” published by IIBF. MODULE A: RETAIL BANKING Retail Banking : Introduction Characteristics of Retail Banking; Advantages of Retail Banking; Constraints in Retail Banking; Evolution of Retail Banking; Prerequisite for Success of Retail Banking; Challenges for Retail Banking; Future of Retail Banking Retail Banking: Role within the Bank Operations Business Models Applicability of Retail Banking Concepts and Distinction between Retail and Corporate/ Wholesale Banking Applicability of Retail Banking Concepts; Distinction between Retail and Corporate/Wholesale Banking Branch Profitability Banking System: An Introduction; Banking in India; What is Profitability; What is Profit; Gross Profit, Operating Profit and Net Profit; Profit and Profitability in the context of Banking; Traditional Measures of Profitability; The ROA (Return on Asset); Return on Equity (ROE) for Banks; Branch Operating Efficiency; Strategies for Improving Efficiencies of Banking Operations; Factors Affecting Profitability of Banks in India; Profitability Analysis of Bank Branches; Steps to Improve Branch Profitability; Essential Factors to Make Continuous Improvement in Profitability ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 6 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… MODULE B: RETAIL PRODUCTS AND RECOVERY Customer Requirements Maslow's Theory and Customer Requirements; Customer Requirements about Service Quality; Service Quality Product Development Process Product Development Process; Product Life Cycle; Product Lines of a Banker; Deposit Products or Liability Products; Credit Products or Asset Products; Other Products and Services; Other Fee Based Services — Distribution of third party products; New Product Development; Stages in New Product Development; Constraints in New Product Development; Product Management; Product Policy Credit Scoring What is a Credit Score?; Evolution of Credit Scoring; What's a Good Credit Score?; Credit Scoring Model; Managing the Credit Score; Positive Side of Credit Score; Warning Signs in Credit Score; Credit Information Companies in India; Issues in Credit Scoring; Mistakes in Credit Scoring; Troubleshooting Credit Score Important Retail Liability Products Demand Deposits : An Introduction; Current Deposit: An Introduction; Main features of Current Deposit Account; Advantage of Current Deposit Account; Documents required for opening various types of Current Accounts; Opening of Current Account; Operational Instructions in Current Account; Transfer of Accounts; Inoperative Accounts; Closure of Current Account; Savings Bank Account: An Introduction; Advantages and Importance of Savings Bank Deposits to Customers; Who Can Open a Savings Bank Account?; Deregulation of interest in Savings Deposit Account; Maintenance of Balance in Savings Bank Account and Interest Payment; Restrictions on Transactions in SB Account; Services offered in Savings Bank Accounts; Time Deposit — An Introduction; Periodicity of Time Deposit; Operational instructions; Interest on Fixed Deposit; Term Deposit accounts of minors; Premature Payment of FD; Operational Issues of FD; Advances Against Bank's own Time Deposit Receipts; Renewal of FD; Recent Rule of RBI on overdue FD; Form 15 G/ 15 H; Deposit of TDS to Income Tax Department by Banks; 2 in 1 Account; Recurring Deposit (RD) Important Retail Asset Products Home Loans; Housing Loan under Prime Minister's Awas Yojana (PMAY); Home Improvement Loans; Home Decor Loans; Auto Vehicle Loans; Personal Loans; Educational Loans; Other Retail Loans; Processing of Retail Loans ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 7 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Credit and Debit Cards Credit Cards; Charge Cards; Pre-paid Cards; Debit Cards; Co-branded Cards; Contactless Cards Remittance Products Electronic Payment Systems; National Electronic Funds Transfer (HEFT); Real Time Gross Settlement (RTGS); Electronic Clearing Services (ECS); National Automated Clearing House (NACH) System; Aadhaar enabled Payment System (AePS); Bharat Bill Payment System (B BPS); Benchmarking India's Payment System Digitisation of Retail Banking Products Technology in Retail Banking; Technology Processes in Retail Banking; Some Important User Friendly Features; Customer Analytics; Institute for Development and Research on Banking Technologies (IDRBT); Indian Financial Network (INFINET); Structured Financial Messaging System (SFMS); National Financial Switch (NFS); Indian Banking Community Cloud (IBCC); Wealth Management Solutions; Digital Lending Role of Al and Technology in Retail Banking Dimensions of Banking Technology; Banking Today; Relationship between Banking and Technology; Evolution of Banking Technology; A New Era in Banking; Evolution of Banking Technology in India; Challenges towards adoption of Technology by Indian Banks; Technology in Retail Banking; Benefits of Technology in Retail Banking; Artificial Intelligence (Al); Difference between Artificial Intelligence (AI) and Automation; Evolution of Artificial Intelligence; Artificial Intelligence Industry in India; Artificial Intelligence in Indian Banking Industry; Indian Banks and the Technology; Why Al in Banking Industry?; Benefits of Artificial Intelligence Technology in Banking and Finance; Artificial Intelligence in Retail Banking; Artificial Intelligence in Retail Banking in India; The Challenges Facing India's AI Development; Benefits of AI in Retail Banking Recovery of Retail Loans Repayment in Retail Loans; Default and Re-scheduling in Retail Loans; Monitoring of Loan Accounts; Classification of Irregular Loan Accounts; Recovery Policy of Banks; Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act); Debt Recovery Tribunal (DRT); Recovery through Lok Adalat; Engaging Direct Recovery Agents Management Information Systems The main elements of MIS; Role of Management Information Systems; Role of MIS in Improving decision making; Role of MIS in Banking Industry; Designing MIS for a Bank; Issues Related to Management Information System (MIS); Suggestions for Solution to MIS related Issues Securitization Securitization of Assets ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 8 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… MODULE C: SUPPORT SERVICES — MARKETING OF BANKING SERVICES/PRODUCTS Marketing: An Introduction Marketing in Retail Banking; Marketing Mix in Retail Banking Delivery Channels in Retail Banking Channel Experience; Physical/Direct Channels — Branch; Automated Teller Machines; Point of Sale Terminal; Mobile Banking; Internet Banking; Customer's Liability on Unauthorized Electronic Transactions Delivery Models Delivery Models; Internal Customers — Staff at the Branch Level; Dedicated Marketing Managers; Direct Selling Agents (DSAs); Tie-up with Institutions/OEMs/Dealers, etc. Customer Relationship Management in Retail Banking Customer Relationship Management in Retail Banking; Why CRM?; Implementation Aspects of CRM in Banks; Implementation Process of CRM in Banks; Implementation Stages in CRM; Benefits of CRM; Impact of CRM on Customer Satisfaction Service Standards for Retail Banking Members of BCSBI; Main Aims and Objects; Code of Banks' Commitment; Code of Banks Commitment to Micro and Small Enterprises; Function of BCSBI; Code Compliance Rating; Customer Grievances Handling Mechanism; General Information Marketing Information Systems- A Longitudinal Analysis Functions of MKIS; Components of MKIS; The MKIS Model; Observations; Usage of Computers in MKIS; Supports for Marketing Management; Supports for Marketing Mix Decisions; Use of Decision Models; Performance of MKIS; Recommendations; Advantages of MKIS MODULE D: WEALTH MANAGEMENT Importance of Wealth Management Wealth Management — Broad View; Wealth Management Business Structures; Wealth management process; Wealth Management Products and Services; Alternative asset; Bond; Insurance; Mutual fund; Real estate Service; Retirement Planning; Strategic Business Strategy; Will Writing; Private Wealth Management; Personal Financial Planning; Wealth Management Assessment; Private Banking; Benefits of Wealth management; Importance of Wealth Management ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 9 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Investment Management Element of Investment; Basics of Investment Management; Steps in Investment Management; Investment Banking; Services being offered by Full-service Investment Banks; Investment Bank Organizational Structure; Investment Management Vs Investment Banking; Portfolio Management; Objectives of Portfolio Management; Key Elements of Portfolio Management; Portfolio Management Vs Investment Banking; Role of Portfolio Manager; Portfolio Management Service Vs Mutual Funds (MFs); Types of Portfolio Management Services; Steps of the Portfolio Management Process; Adv of Portfolio Management Services; Disadvantages of PMS; Recent developments in the Portfolio Management Services area in India Tax Planning Classification of Tax Structure in India; Financial Year; Assessment Year; Previous Year; Concept of Previous Year & Financial Year vis-a-vis Assessment Year; Residential Status for Income Tax; A few important terms in Income Tax; Heads of Income for computation of the total income; Income Tax Slab rate for FY 2021-22 (AY 2022-23); Conditions for opting New Tax Regime; Example for Old Tax Regime Vs New Tax Regime & which is better; Income Tax Slabs for non- individual entities; Investment Products for Tax Savings; Estate Planning-Tax Planning through Wills/ Trusts; Capital Gains Tax Other Financial Services provided by Banks Distribution of Third Party Products in Retail Banking; Mutual Fund Business; Insurance Business; Some Social Security Insurance Schemes; Cross Selling; Depository Services by Banks; Portfolio Management Services; Factoring; Other Agency Business by Banks ADDITIONAL READING MATERIAL ON HOME LOANS Lender's Appraisal Procedure - Appraisal Procedures; Application Form; Documents to be Submitted for Availing a Home Loan; Application Received through Agent; Appraisal of Loan Request; Other Relevant Issues at Pre-sanction Stage; Documentation; Mortgage; Registration of Documents; Detection of Forged and Fabricated Title Deeds; Other Securities; Registration of Charges with CERSAI on Security Internet; Monitoring; Closure of Account; Home Loan Frauds Housing Finance and Tax Planning - Tax Benefits in Respect of Housing Finance Mortgage Advice - Development of "Home Information Packs"; Time Value of Money-interest and Annuities; Capital Gains; Loan Calculator and Loan Amortization Schedule Valuation of Real Property - Who does Valuation? Land with Building; Life of Structures; Sinking Fund; Reverse Mortgage ……………………………………………………………………………………………………………………………………….…. ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 10 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… RETAIL BANKING & WEALTH MANAGEMENT MODULE A – RETAIL BANKING Unit - 1. Retail Banking: Introduction  Banking services offered to a large group of individual customers is referred to as ‘Retail Banking’.  The delivery model of retail banking is both physical and remote through branches and also through remote channels like ATMs, Internet Banking and Mobile Banking.  Unlike wholesale banking, retail banking focuses strictly on consumer markets.  Although retail banking is, for the most part, mass-market driven, many retail banking products may also extend to small and medium sized businesses.  Pure retail banking is generally conceived to be the provision of mass market banking services to private individuals.  Attractive interest spreads since spreads are wide, since customers are too fragmented to bargain effectively; Credit risk tends to be well diversified, as loan amounts are relatively small.  There is less volatility in demand and credit cycle than from large corporates.  Higher delinquencies especially in unsecured retail loans and credit card receivables.  In some banks retail banking was christened as consumer banking as the focus was towards individual consumers.  Capgemini, ING and the European Financial Management & Marketing Association (EFMA) have studied the global Retail Banking market with the aim of providing insights to financial services community through the World Retail Banking Report(WRBR). Retail Banking has many advantages as a business segment for banks:  Risk is less as client base is large.  Income is relatively more as spreads are more.  Customer loyalty will be strong.  Stable model with less volatility in business as the client base is very large.  Higher potential for cross selling. But it has its own disadvantages also:  Huge clientele requires more efforts for monitoring and tracking.  Cost of servicing will be relatively high.  Delinquencies relatively higher in unsecured retail loans like Personal Loans and Credit Card Receivables. ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 11 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Globally the retail banking space had a great growth trajectory and the emergence of the new remote channels have changed the distribution paradigm of banks. Alternate channels have gained prominence to meet the growing customer demands.  The performance of banks in retail banking across the globe had a stable growth. The potential for retail banking based on customer segments and household incomes looks highly promising. The growth potential in Asia and South Pacific is very attractive and the numbers are expected to grow in the near future. Retail Banking as a concept in India has been initiated by foreign banks/new generation banks and nurtured by the PSBs and other private sector banks. It grew by a compounded annual growth rate between 2021 and 2022 and expected to grow further in the coming years. The penetration level of retail banking in India is still very low as compared to the other Asian countries like China, Malaysia, Thailand, etc. It’s been more than one and half year since the coronavirus first made its presence. Lot has changed in these past seventeen months. And, one thing that is quite evident is life has never been the same since then. Based on research and findings, here are a few pandemic-sparked retail banking trends worth keeping an eye on for 2021 and beyond. They are,  Blooming of Digital Banking  Rapid Adaptation of Blockchain by Retail Bankers  Artificial Intelligence, Machine Learning, Virtual Reality and Data Science in Banking  Cyber Security to be a top priority  Payment Innovations  Rise of Big Tech in Banking Industry ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 12 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Unit - 2. Retail Banking: Role within the Bank Operations  Business models are adopted by banks keeping in mind their overall business strategy, projections for future, business mix and corporate objectives.  The business models for retail banking adopted by banks vary among the public sector, private sector and foreign banks.  The main approaches are as follows:  Strategic Business Unit (SBU) Approach,  Departmental Approach,  Integrated Approach (part of the overall business plan)  Banks generally structure their retail banking models mainly on a positioning platform and to be the best/top three among the peer group players or across players.  Strategies are based on the positioning objectives and vary from bank to bank depending on the importance attached to the business model.  It is used as a barometer for all decisions that impact the marketing strategy of the bank.  Foreign Banks normally do not go by positioning objectives.  Rather strategy plays a big role in foreign banks.  Foreign banks had in the past have existed when their business objectives have not been met.  A classic example is BNP Paribas existing in the late 1990s.  Citibank is the recent example of exiting retail business in India. ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 13 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Unit - 3. Applicability of Retail Banking Concepts and Distinction between Retail and Corporate/Wholesale Banking  The most common strategies are end to end outsourcing, predominant outsourcing, partial outsourcing and in house sourcing.  Regulatory prescriptions are one of the major determinants of outsourcing or lack of it in these banks.  In some foreign banks, both front and back end operations are outsourced and in some banks, the back end operations are outsourced while the front end operations like sourcing of HNI clients are done through captive resources. The implementation models in retail banking are mainly built under the following broad classifications:  Horizontally Organised Model  Vertically Organised Model  Predominantly Vertically Organised Model  Predominantly Horizontally Organised Model  The horizontal or vertical model depends on the level of customer information available in a single platform in the data base side for offering multiple products/services across assets, liabilities and other services.  Horizontally organized model is a modular structure using different process models for different products, offering end-to-end solutions product wise.  Vertically organized model provides functionality across products with customer data base orientation and centralized customer data base is used across products.  Predominantly horizontally organized model is mostly product oriented with common customer information for some products.  In predominantly vertically organized model, common information is available for most of the products.  In most of the PSBs, horizontally organised model is the standard norm. New private sector banks generally follow a vertically organised model.  Sustainable Retail Banking Business models of the future: In light of the current challenges, retail banks need to focus on their strengths.  There are two core strengths that define a bank’s retail business model:  First, a clear customer centricity and second, a strong value chain focus.  Retail Banking Solutions are offered by banks by extending different retail asset products, retail liability products and plethora of other services covering the entire financial services and investment services and requirements of customers.  Banks implement these services mainly through their technology initiatives. ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 14 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 …………………………………………………………………………………………………………………………………………………………………  All banks have implemented their core banking solutions to offer their customers borderless banking and end-to-end solutions for total banking experience with virtual presence of the customer.  As a part of overall segmentation game plan of the bank, branches are classified as Resource Centres, Profit Centres, Priority Centres and General Centres to have a clear business focus.  This concept is an effective business model for PSBs with large network and useful for focused strategies and already getting implemented in public sector banks.  Liability products are offered to retail banking customers basically under three spaces - Savings Accounts, Current Accounts and Term Deposit Accounts. Product differentiation among these accounts is best achieved by adding different value propositions. (from a plain vanilla account to a value enriched account.)  Retail asset financing is a major component of retail banking model of banks.  Mostly all PSBs are in the credit card business since it is a big volume game and needs process efficiencies.  In the development process, geography is not given importance but type of branch and centre and business potential are given due importance.  The common form of process models are Centralised Retail Assets Processing Centres where all the retail loans sourced at the branches and marketing team are processed at a single point and assets are financed through that centre or processing alone done at the centre and financing done at the branches.  Opening of account, issue of Pass Book, Cheque Book, ATM Card/Debit Card, PIN Mailers for the Cards are the stages in the tangibilisation process.(Centralized Processing)  Process time is a major differentiator in the efficacy of retail banking operations. Process Time is business sensitive and customer sensitive.  Standalone pricing for different products and services is the basic structure.  Regarding Price Structuring quantum and volumes are two important determinants.  This structuring is a cross selling strategy to entice the customer to avail more products so that profitability per customer is enhanced.  The technology models basically adopted by banks are In House Models, Outsourced Models, Partially In House and Partially Outsourced Models.  As discussed elsewhere, retail banking is different from corporate banking.  In retail banking the impact of NPA will be less whereas in corporate banking, the NPA impact will be higher.  Likewise, the cost of deposits will be relatively less than corporate banking as the customer base is large in retail banking and hence pressure for finer rates will be less. ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 15 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Unit - 4. Branch Profitability  Banking System is a hub of a strong economy and needs to be both stable and profitable.  Commercial Banks act as a bridge between the depositors and the borrowers to meet requirement of employing and deploying funds.  An entity that transacts with the funds of the depositors, is exposed to various risks.  Responding to the need to meet the competitive global environment,  India, in the nineties opened its economy, largely by ending the Licence Raj and the permit system.  As of today, Indian Banking System consists of 12 Public Sector Banks, 21 Private Sector Banks, 45 Foreign Banks, 53 Scheduled Urban Cooperative banks, 1470 non-scheduled Urban Cooperative Banks, 43 Regional Rural Banks and around 96,000 Rural Cooperative banks in addition to Cooperative Credit Institutions.  According to the Reserve Bank of India (RBI), the banking sector in India is sound, adequately capitalized and well-regulated with High Quality Liquidity Assets (HQLA) and SLR investments as it is much better when compared to other economies of the world.  On the other hand, the quality of assets remains a matter of concern.  Profitability is a measure of an organization’s profit relative to its expenses.  It compares how much profit a company makes compared with its overall revenue and costs.  Profit and profitability are not the same, although the two terms are used interchangeably.  While profit is an absolute amount, profitability is a relative one. Profitability is a measurement of efficiency.  Profits can be measured as a Return on Assets and as a Return on Equity.  Because of leverage, banks earn a much larger return on equity than they do on assets.  Banks increase profits by using leverage.  When a bank increases its liabilities to pay for assets, it is using leverage, otherwise a bank’s profit would be limited by the fees that it can charge and its interest rate spread.  Branch level profitability differs from bank to bank, branch to branch, time to time depending on banks’ goals and objective.  Accordingly, there is no step(s) as such which may suit and effective to all the branches.  However, broadly, the strategies like the following can help the branches focus on generating income and maximizing overall branch profitability.  Focus on balancing profit  Growth and risk  Assessing the strategic fit and unique role for each branch in the network  Analysis of the current customer base for each branch  Identification of best new prospect (potential customers) opportunities  Proper analysis of the competition ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 16 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 …………………………………………………………………………………………………………………………………………………………………  Setting specific goals by branch for business and consumer markets  Execution of effective marketing campaigns to drive customer origination  Retention and expansion  Redefining the bank model of the future  Relentless focus on NPA reduction  More quality loans  Focus on non-interest income  Low cost deposit  Holding minimum cash balance  Cost management  Good customer relationship  Courteous behaviour by Branch Head  Finally instilling a culture that values efficiency  Improving profitability is not one time task rather it is a continuous process throughout the day and throughout the year.  Improved branch profitability can help to reduce costs, increase turnover and productivity, and help the officials to plan for change and growth. ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 17 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… MODULE B – RETAIL PRODUCTS AND RECOVERY Unit - 5. Customer Requirements The basic segmentation of customers based on their income levels is presented below. Income Levels (Rs. Lakhs p.a.) Customer Segment 2-10 Mass Market 10-50 Mass Affluent 50-400 Super Affluent 400-4,000 HNW 4000-120,000 Super HNW Above 120,000 Ultra HNW The fundamental assumptions about customers for building retail banking products and services  Customers are different and so are their expectations.  Needs of the customers are different.  Each customer will have different sets of need for financial services.  The requirements of customers for financial services will be unique.  Customers can be broadly grouped together based on their need pyramids.  Customers can be grouped together based on their income, age, geography, profession, employment, vocation gender and family size.  Product and services can be developed for a single or a combination of the above elements to satisfy most of the needs.  Products and services can be structured on a niche basis within one or any of the above elements. Maslow's Theory and Customer Requirements Maslow has defined five needs of individuals in their various stages of life Need Level Matching Banking Investment and Insurance Products Physiological Needs Core Savings Accounts Personal Accident Cover Housing Loans Security/Safety Needs Recurring, Fixed Deposit Products. Life Insurance Products: Endowment Products with low premium, long tenor and high maturity amounts. Tax Planning Banking, Insurance and Mutual Fund Products ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 18 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Social Needs Consumer Loans Personal Loans Home Loans Car Loans Loans for Professional Development for Doctors, Engineers, Lawyers, Chartered Accountants, Management Consultants, Architects etc., Insurance Cover tagged to above loans. Retail Gold Coins. Health Policies for self and family. Investment Products like Mutual Fund Schemes. Systematic Investment Plans of Mutual Funds. Unit Linked Insurance Products. Esteem Needs Special Term Deposit Products. Term Insurance Products. Second Housing Loans/ Home Improvement/ Home Decor Loans. Self Actualization Needs Pensioners Loans Retirement Solutions in Banking & Pension Plans in Insurance Senior Citizens Term Deposit Products Expectations from the customers about the service quality of the bank basically depend on the following factors: Tangibility in services Physical side of the service Reliability Sticking to agreed terms and promises. Responsiveness Willingness to help and extend prompt service. Assurance Competence, Courtesy, Credibility and Security. Empathy Understanding the service expectations from the customers' point of view. Value Customer, his business and time Welcome and greet the customer, Respect his/her time Provide solutions not excuses Take actions, Provide solution, Suggest alternative(s) Understand Customer queries and Listen, See the issue/problem from his/her point of concern view, Acknowledge his/her feelings ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 19 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Service quality and delivery parameters for savings accounts 1. Touch point Experience: Overall Measures – At an overall level, the PSBs are comparable to the Private Sector Banks average across touch points. 2. Branch-Layout and Cash transactions: Performance across parameters above Private Sector Banks average. 3. Savings Account: No serious concerns on savings account; Parameters at or above par visà-vis private banks. 4. Branch Non-Cash Transactions: Scores on most parameters at par with Private Bank’saverage. 5. Communication: Communication channels available along with information flow to customer meets average expectations. 6. Problem Incidence/Recurrence: Very low problem incidence just like the industry. 7. Key Performance Indicator – Savings Account Activation Time - Account activation within 3- day window similar to industry average. 8. Key Performance Indicator – Welcome Kit Receipt Time: Close to 90 percent receives welcome kit within 14 days. 9. Customer Mind space (Image Map) – The PSU Bank differentiated on problem resolution & delivering on promise, amongst its customers. Measures needed to enhance service quality 1. Banks need to focus on strengthening its performance across all parameters. 2. Banks need to have range of product features to make them more customer friendly. 3. Proactive customer communication from the bank needs to have a systemic approach. 4. Customer-friendly modules on branch network, new products and services. 5. Banks need to reorient its employees towards this key aspect of customer experience through proper training and feedback process. Customers’ requirement from Banks i. Right product mix to satisfy different customer segments. ii. Right channel mix (both direct channels and e channels). iii. Structured process time across products and adherence to the time prescriptions. iv. Delivery of the promises with regard to products/services and channels. v. Satisfactory service experience from the delivery channels and the service personnel. vi. Effective communication about the different products and services. vii. Transparent dealings and service charges. viii. Good ambience. ix. Effective and time bound grievance redressal mechanism ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 20 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Unit - 6. Product Development Process  Product is the fulcrum on which the entire retail banking revolves.  Product is "Anything that has the capacity to provide the satisfaction, use and return desired by the customer".  The first stage is the 'introduction' stage when the product is introduced. The sales volume will be low and revenue from the products will not be sufficient to cover the cost of producing, marketing and servicing it.  In the 'growth' stage, which is the second stage in the product life cycle, the sales volume of the product picks up and the product is likely to break even and start generating profits for the organisation.  In the third stage which is the 'maturity' stage, there is more growth and sales volume peaks. Here there is a wide customer base which will result in maximisation of sales with inflow of business and profits.  In the fourth stage, which is the 'staleness' stage or 'saturation' stage, because of competition and better products available from the competitors, staleness will creep in, which will result in saturation of sales.  The final stage of the product life cycle called as 'decline stage'. In this stage, the product becomes less attractive for the consumers due to various reasons and results in drop in sales volume and profits.  Augmented products are products which are developed from formal products by combining two core products and adding value to the product in terms of benefits and comforts to the customer. The marketer should develop a product policy which involves the following concepts:  Appraisal of the product line and individual products  Decisions on product differentiation  Product positioning  Brand decisions  Decisions on packaging  New Product Development ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 21 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Products can be broadly classified into following:  Deposit Products or Liability Products  Asset Products or Retail Credit Products  Other Products and Services.  The Generic Product - the core product.  The Expected Product - adding additional features.  The Augmented Product- adding value in addition to features.  The Potential Product - futuristic features in anticipation.  In the liability side, Banks offer different retail products like Demand Deposits, Time Deposits with different variations with regard to product features and duration.  In the asset side banks offer mainly Home Loans, Auto Loans, Personal Loans and credit lines against credit card receivables. ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 22 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Unit - 7. Credit Scoring The types of risks and the triggers in risk analysis are mentioned below:  Credit Risk – Customer fails to pay  Business Risk – Losing money due to wrong strategy  Market Risk – Change in market prices  Operating Risk – Processing failures and frauds  A credit score is the statistical analysis of a person’s past credit dealings and represents his or her Credit discipline  Cibil-TransUnion model gives scores ranging from 300 to 900.  Some bank may perceive 700 as a good score and another may not.  Thus, in India, different banks will rank different scores as good.  Still, any score over 700 may be considered good by banks Credit Information Companies (CICs) typically build scores using three historical data files  Defaults on previous credit transactions.  Payment behaviour/Payment history  Previous searches/inquiries Credit Scoring Models are based on the following details of applicants:  Family Size  Income Levels  Occupation/Business  Repayment History on earlier loans Factors leading to favourable credit score  On time loan EMI payments.  Regular payment of credit card bills.  Paying credit card bills in full rather than paying minimum due amount every time.  Avoiding over-leveraging.  Maintaining strong financial records.  Too many forms of credit (such as unsecured personal loans) among family members.  Proper utilization of approved credit limit.  Ensuring banks and other financial institutions, you’re dealing with, record and submit positive information to CICs.  Requesting and maintaining a copy personally rather than through financial institutions. ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 23 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Factors leading to negative credit score  Too many credit report enquiries by banks and other institutions.  Cheque bounces/dishonours.  Irregular loan repayments.  Defaulting on credit card bills/making late payments or consistent part payments.  Too much unsecured credit such as multiple personal loans.  Multiple applications for unsecured loan getting rejected.  Defaulting as a guarantor.  High utilization of approved credit limit or overshooting the limit.  Non-payment of utility bills may also have negative bearing on credit score. Utility companies report delinquent account to CICs very fast.  Errors in record by banks and other finance institutions. Advantages of maintaining high credit scores  Easy availability of credit such as loans. According to the official CIBIL website, about 90% of loan applicants with CIBIL score greater than 700 are approved for loans.  Quick processing of loan and credit card applications.  Ability to negotiate interest rates, owing to your strong financial standing.  Though not guaranteed, the possibility of negotiating or waiving processing fees as well as choosing prepayment options. The most common mistakes in credit score will be due to the following;  Confusion of names  Human Input Error  Identity Theft ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 24 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Unit - 8. Important Retail Liability Products  In simple language, the banking that takes place between our personal bank and us is nothing but retail banking.  Retail banking helps us to meet our day to day needs by services like debit cards, credit cards, online withdrawals, deposits, loans and many other benefits.  Intermediation is the primary function of banks and mobilisation of deposit is the first step to intermediation.  They accept deposit from public and lend it to the enterprise class engaged in productive activities.  Therefore, the deposited money is the banks liability as interest is paid on that sum to the depositor.  On the other hand, the loaned out money becomes the asset for the bank and earns interest.  Banks accept various types of deposits viz. Demand Deposit (Current and Savings), Term Deposit (Fixed deposit and Recurring Deposit).  Banks are the only financial intermediaries that are permitted to accept Demand Deposits which can be withdrawn by the customer at any time on demand.  Such deposits are repayable on demand; therefore, they are called Demand Deposits. Current Deposit account  Current Deposit account is opened by businessmen who have a higher number of regular transactions with the bank.  It includes deposits, withdrawals, and contra transactions.  Current deposits are vital deposit component of banks as it is almost no cost deposit for the bank.  The minimum balance required to be maintained in Current Account is comparatively higher than that of Savings Account because of higher transaction cost involved in Current Accounts due to unlimited transactions being allowed in Current Accounts.  In current accounts where there are no operations continuously for two years, should be treated as inoperative accounts. Main Features of Current Deposit Account  Current deposit accounts are meant to run a business.  It is a non-interest bearing bank account.  It needs a higher minimum balance to be maintained as compared to the savings account.  Penalty is charged if minimum balance is not maintained in the current account.  It charges interest on the short-term funds/overdraft borrowed from the bank. ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 25 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 …………………………………………………………………………………………………………………………………………………………………  It is of a continuing nature as there is no fixed period to hold a current account.  It does not promote saving habits with its account holders.  Banker requires KYC (Know your Customers) norms to be completed before opening a current account.  The main objective of current bank account is to enable the businessmen to conduct their business transactions smoothly.  There is no restriction on the number and amount of deposits.  There is also no restriction on the number and amount of withdrawals made, as long as the current account holder has funds in his bank account.  Generally, bank does not pay any interest on current account. Operational Instructions in Current Account (i) Accounts of Individuals: The column meant for “Operational Instructions” in Account Opening form should be crossed as a precaution to prevent its subsequent misuse while opening current Account in the name of individual(s). (ii) Joint Accounts: “Account will be generally operated upon by and the balance / securities, if any, will be payable/deliverable to:  Either or Survivor  Any one, or survivor  Former and survivor  Any two, three etc. jointly or survivors jointly or the last survivor  The operational instructions must be authenticated by all the joint account holders. (iii) Sole proprietorship firm: The operational instructions should be, “The account will be operated upon by Shri........... as the Sole Proprietor in the name of the firm/on behalf of the firm.” Cheque(s) to be signed in the name and style as For and On Behalf of (Firm’s name) (Signature) Sole Proprietor (iv) Partnership Firm: “The account will be operated upon by any one of the partners singly or any two or more partners jointly in the name of the firm/on behalf of the said firm.” Cheque(s) to be signed with stamp in the name and style as ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 26 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… For and On Behalf of (Firm’s name) (Signature) Partner (s) (v) Limited Company: The operational instructions should be as per board resolution given at the time of account opening. Cheque(s) to be signed with stamp in the name and style as For and On Behalf of (Company’s name) (Signature) Directors (s)/ Authorised Signatory SB accounts  Individuals can open SB Account singly or Jointly.  RBI prohibits banks from opening of SB accounts of business entities  RBI has allowed certain Government Departments and non-profit-organisations to open SB Accounts  Savings BMaximum balance to the credit of such account should not exceed at any time 1,00,000/-.ank account in the sole name of ‘minor’ to be operated by the minor can be opened provided the minor is 10 years of age or above  Maximum balance to the credit of such account should not exceed at any time 1,00,000/-.  However, for accounts of minors of 14 years and above, there is no limit of maximum balance.  No overdraft should be granted in Savings Bank accounts of minors held either singly or jointly with guardian/s.  Savings bank accounts of illiterate individuals who are otherwise capable of entering into a contract can be opened  For withdrawals, the illiterate person should come to the branch personally and affix his/her thumb impression in the presence of an officer  No cheque book facility should be extended in account of an illiterate person.  Joint account of an illiterate can be opened with a literate close relative i.e. father, son, husband, wife, mother and daughter but not two cousins  There is no any legal bar in opening savings bank accounts of blind persons by the banks as usual ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 27 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Advantages and Importance of Savings Bank Deposits to Customers  Saving account encourages savings habit among salary earners and others who have fixed income.  It enables the depositor to earn income by way of saving bank interest.  Saving account helps the depositor to make payment by way of issuing cheques.  It shows income of a salaried and other person earned during the year.  Saving account passbook acts as an identity and residential proof of the account holder.  It provides a facility such as Electronic fund transfer (EFT) to other people’s accounts.  It helps to do online shopping via facility like internet banking.  It aids to keep records of all online transactions carried on by the account holder.  It provides immediate funds as and when required through ATM.  Enables digital transaction 24*7*365 in ‘AAA’mode of bankin  “Know Your Customer” (KYC) guidelines should be followed in respect of opening of accounts and monitoring of newly opened accounts.  CASA deposits of all banks and these, i.e. Current Accounts Savings Accounts (CASA) Deposits are very importantperformance indicators for the Banks.  The rates of interest paid to the customers by the bank on CASA Deposits are very low i.e. NIL interest on Current Accounts and less rate of interest on Savings Accounts.  This brings down the overall cost of funds of the bank and gives them a lot of flexibility to give credit/loans at lower rates and still earn a good Net Interest Margin (NIM) and profitability.  In deposit accounts where there are no operations continuously for two years, should be treated as inoperative accounts.  Previously interest rate on Savings Bank Deposit was being regulated by RBI.  However, w.e.f. 25th October, 2011, RBI deregulated interest rate to be paid by the banks on domestic SB Deposit vide circular No. DBOD.Dir.BC.42/13.03.00/ 2011-12 dated October 25,2011.  Banks generally impose a limit on the number of withdrawals that can be made from the SB Account which varies from bank to bank.  Most of the banks insist on monthly average balance (MAV) to be maintained in the account failing which penalty is charged.  Banks pay interest on Savings Account balance on daily product basis normally at quarterly intervals.  Mostly banks insist on monthly average balance (MAV) to be maintained in the account failing which penalty is charged. ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 28 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Time Deposit  A time deposit receipt is not a negotiable instrument and, therefore, cannot be transferred by endorsement by a depositor in favour of another.  Interest on FDs is paid at quarterly intervals.  The customer can choose to have the interest reinvested in the FD account.  In this case, the deposit is called the Cumulative FD or compound interest deposit.  For such deposits, the interest is paid with the invested amount on maturity of the deposit at the end of the term.  If the customer instructs that the interest to be paid every quarter/month, it is credited to their Savings Account or sent to them by cheque.  This is called Simple FD.  Fixed deposit can be accepted by banks minimum for 7 days and maximum for 120 months (10 years).  Recently banks have come up with value added SB/current accounts and FD linked accounts.  They represent combination of two schemes, mostly a running account like SB Account or Current Account which offer flexibility of using the balance in FD accounts at the time of need.  Recurring deposit (RD) accounts help customers with regular income to save a fixed amount every month and at the same time earn interest at the rate applicable to FDs.  Balances in savings/current accounts which are not operated for 10 years, or term deposits not claimed within 10 years from date of maturity are classified as “Unclaimed Deposits” ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 29 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Unit - 9. Important Retail Asset Products  In the retail asset side, the important products offered by banks are Home Loans, Educational Loans, Personal Loans and other retail loans developed for specific customer segments.  Each loan is designed for a specific purpose and need and structured in such a way that the needs and requirements of different customers are taken care of. Home Loans  To purchase/construct house/flat.  To renovate/extend/repair existing house/flat.  To purchase a plot of land for construction of house.  To acquire household articles along with the house/flat – for furnishing the house/flat.  Mortgage/Equitable Mortgage on land/flat/house  Repayment (can be customized) : Highly flexible – maximum 30 years including moratorium period is considered by banks.  Maximum moratorium period of 18 months in case of construction and 3 months in case of purchase is allowed generally by banks Auto/Vehicle Loans  Purchase of two/four wheeler vehicles  Banks generally adopt a model involving the manufacturer, dealer and the financier (bank)  Hypothecation of vehicle to be purchased out of Bank finance. Charge to be registered with RTO.  Repayment For Individuals – for new vehicles : 4 wheelers – Max. 7 years, 2 wheelers – max. 5 to 6 years, generally.  For Corporate/Firms, etc. – Max. 5 years, generally.  For Second Hand vehicles – Max. 3 years Personal Loans  Personal Loans are basically unsecured in nature and are backed by personal enterprise/guarantees only  Marriage expenses of self, children or a dependent.  Medical Expenses incurred/to be incurred for self, spouse, children, other dependents.  For education of self/spouse/children.  For repairs/renovation/extension of existing flat/ house building.  For meeting social and financial commitments,  Purchase of consumer durables, etc.  Any other personal expenses of bonafide nature as approved by the Bank. ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 30 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Educational Loans  Education is the important tool for empowering youth  To realize this, a simple and hassle free model educational loan scheme was framed by IBA to make available educational loans to all the eligible students.  To provide need based finance to meet the expenses for pursuing higher studies to eligible students  Maximum upto 10 Lakh – Studies in India  Maximum upto 20 Lakh – Studies abroad  Margin : Upto 4 Lakh Nil, Above 4 Lakh – Studies in India 5%, Studies abroad 15%  Loan upto 7.5 lakhs is eligible for the Credit Guarantee coverage  Security :  Upto 4 Lakh No security; Parents to be joint borrower(s)  Above 4 Lakh upto 7.5 Lakh – besides the parent(s) as co-borrower, collateral security in the form of suitable third party guarantee will be taken.  Above 7.5 Lakh – Parent(s) to be joint borrower(s) & Tangible collateral security acceptable to the bank  Repayment Holiday/Moratorium: Course period + 1 year  Insurance : Mandatory to arrange for life insurance policy on the students availing Educational Loan- discretion of individual banks Eligible expenses for loan  Fee payable to college/school/hostel - Fees as approved. Reasonable for lodging/boarding  Examination/Library/Lab. fee - Actual  Travel expenses/passage money for studies abroad - One way (outward)  Insurance premium for student borrower - Actual  Caution deposit, Building fund/refundable deposit - Not to exceed 10% of the total tuition fees.  Purchase of books/equipment/instruments/ uniforms (a)  Purchase of computer at reasonable cost (b)  Any other expense – viz., study tours, project work, thesis, etc. (c)  (a)+(b)+(c) - A realistic assessment may be made by the banks and then fix a maximum of 20% of the total tuition fees  Banks process and sanction retail loans in two different ways.  They sanction retail loans on a standalone basis (through the branches) or through a centralised model (through retail loan processing hubs/centres).  Each model has its own advantages as well as disadvantages.  In the branch model, personal touch is more, in the centralised model, more professional approach is followed. ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 31 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 …………………………………………………………………………………………………………………………………………………………………  Standalone model for retail loan processing refers to processing of retail loans independently at the branch level, based on the discretionary powers  Centralised Model for retail loans processing refers to processing of loans at a centralised place depending upon the geography of branches. Banks adopt different centralised models for processing of retail loans. Some of the names, Banks give to these retail loans processing centres are :  Retail Loan Factory  Retail Loan Hub  Retail Loan Processing Centres  Retail Asset Processing Centres  Retail Loan Branches  The introduction of RLPCs has definitely helped banks to improve the quality of appraisal and also has reduced the gaps and deficiencies in the documentation side. ………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 32 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 ………………………………………………………………………………………………………………………………………………………………… Unit - 10. Credit and Debit Cards Credit Cards  Credit Card is plastic money with pre-set limits based on the credit score of the customer and can be used across merchant establishments for payment of purchases and in ATMs for withdrawal of cash.  The operational process of a credit card starts from the card issue, matures into card usage and closes with the payment of credit card dues. In the case of a credit card, parties to the ‘complete cycle of transaction’ are five in number.  The Customer (cardholder)  The Retailer  The Acquiring bank  The Clearing Network  The Issuing bank  Banks issue different types of cards with targeted volumes and business objectives after proper screening of applicants, arriving at the credit score and issuing the relevant card matching the credit score with fixing of appropriate limit.  The card issue will be justified if only the card is used frequently upto the limit made available.  Payments made by the customers for credit card usage are the deciders for revenue generation.  The payment may be made one time or in installments subject to the minimum payment due every month.  More the credit limit is used; more will be the revenue but is subject to payment without defaults and delinquencies.  Banks issue different types of cards like Classic, Silver, Gold, Platinum, Titanium, etc., in collaboration with card issuers like Visa, Master Card and RuPay and they mainly do it in two ways; proprietary cards and co-branded cards.  While proprietary cards are issued by banks generally, co-branded cards are issued with specific tie ups with other institutions like petroleum companies, travel companies, retail stores with the objective of focused marketing and extra benefits to the card user for using the facilities of the tied up institutions.  NPCI offers ‘RuPay Credit card’, ‘RuPay Debit card’, ‘RuPay Prepaid card’ & ‘‘RuPay Global card’  The variants of RuPay Credit card are:  ‘RuPay Select’ ………………………………………………………………………………………………………………………………………………………………… Telegram Links : JAIIB-https://t.me/jaiib2020_21, CAIIB-https://t.me/caiib2020_21, Rural Banking-https://t.me/caiib_rub HRM-https://t.me/caiib_hrm, IT-https://t.me/caiib_it, Risk Mgt-https://t.me/caiib_rm, CB - https://t.me/caiib_cb  www.jaiibcaiibmocktest.com, www.bankpromotionexams.com, www.onlyforbankers.in 33 Facebook Groups - JAIIB CAIIB STUDY MATERIALS / CAIIB DISCUSSION BANK PROMOTION EXAMS / ONLY FOR BANKERS [email protected], [email protected], 09994452442 …………………………………………………………………………………………………………………………………………………………………  ‘RuPay Platinum’  ‘RuPay Classic’  RuPay is the first of its kind global payment network of India with wide acceptance at ATMs, POS devices and e-commerce websites across India.  Banks advise the credit card users about the terms and conditions of the credit card usage and the standard terms used in the payment mechanisms.  These terms like Annual Fee, Minimum Payment Due, Credit Limit, EMI Payments, Interest and method of interest calculation, Penalties, etc., have their own implications in the credit card payments. Eligibility for credit card  At least 18 years of age  Compliance of KYC norms  A regular source of income to repay one’s credit card bills (whether salaried or self- employed)  A good credit history Charges i. Finance Charges Illustration  Balance outstanding as on the statement date – 20,000  Balance is not paid on the due date.  Interest – 3.5% per month  Daily Interest Charge for the above balance is  = 20,000 × (3.5% × 12 months)/365 = 23.01  Total interest payable by the next statement cycle (after 30 days)  = 23.01 × 30 = 690.41 + Tax ii. Minimum Amount Due  5% of the statement outstanding, or  Sum total of all installments billed, interest, fees, other charges, amount that is over limit and 1% of the principal, or  250/- in case of default or if the statement balance is less than 250/-, the entire outstanding amount has to be paid. iii. Max