What is Retail Banking?

4 minute read

Retail Banking is a form of banking that engages directly with consumers. It involves an individual having access to their savings account, checking balance, managing money and depositing money in a safe and secure way. There’s a lot that this type of banking has to offer to its customers and students who wish to study abroad or settle abroad. This blog explores the various aspects of retail banking. 

What is Retail Banking?

Retail Banking takes care of the personal financial needs of individuals. These services are tailored to meet the interests of the individuals and include withdrawals and daily deposits, managing accounts etc. These services are offered by local branches or online. This type of Banking is also an important part of international student life as students must know how to manage their accounts while studying abroad. 

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Types of Retail Banks

Retail Banks can be categorised into the following types:

  1. Large Banks: These are the banks whose names you must be hearing at homes and the ones you’re familiar with. Large banks have branches across the city.
  2. Community Banks: Also known as small banks, these banks have a smaller share than large banks. They operate at multiple locations and grant loans easily.
  3. Online Banks: As the name says, these banks don’t have physical branches. However, the goal is to minimize fees.
  4. Regional Rural Banks: These banks are the ones established in rural areas to cater for the demands of the low-income groups. These banks provide retail banking services and loans to such groups.
  5. Private Banks: These are usually the banks that operate in urban areas and cater to the demands of the high-level income groups
  6. Post Offices: There are regions where people do not have access to regular banks. In such regions,  the National Postal System offers basic banking services like account opening, savings, recurring deposits, and more.

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Services Provided by Retail Banks

Retail banks provide various services to customers. These include – 

  1. Savings Bank Accounts: This banking service provides customers with the option to deposit money and obtain interest on it.
  2. Current Account: This service essentially includes a checking account, transaction account, and demand deposit account.
  3. Debit Card: This service is used to withdraw cash or make payments instead of cash from one’s saving accounts.
  4. Credit Card: Credit Cards are used just like debit cards to make payments. But here the payment goes from the bank and the one withdrawing the money has to pay back the amount with certain additional charges as levied by the bank.
  5. Loans: One of the most widely availed services under Retail Banking includes loan services. This includes home loans, auto loans for new/used vehicles, consumer loans, education loans, crop loans to farmers, business loans for small scale businesses.

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Some other services granted by retail banks in India to the individuals include – 

  • Term deposit account
  • Fixed deposit
  • Recurring deposit account
  • Zero balance salary accounts
  • Savings account for senior citizens at a higher rate of interest

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Advantages of Retail Banking

After having read about retail banking and the services offered by them, you might wish to know about the advantages of this type of banking. Listed below are the popular advantages of retail banking that make it so widely used – 

  1. It provides an alternative for banks as well as individual customers.
  2. The importance of retail banking lies in the advantages of the various services offered by banks. 
  3. Retail banking focuses on small units and individuals for earnings.
  4. It has significantly increased earnings and businesses for banks.
  5. In addition, it has also reduced operational costs and thus helped banks in creating a strong brand image in the market among the general public. 
  6. It has enabled banks to develop customer relationships with their clients which has strengthened the customer base.
  7. The retail sector contributes to the revenue earned by banks as well as economic development. 
  8. It also reduces the risk for banks if they depend on loans for their incomes.
  9. Most importantly, it provides a safe way to keep one’s savings and capital secure.

So, this is all that you need to know about retail banking. As an international student, you must thoroughly read through the terms and conditions of retail banking services. One can say, this is the most widely used banking option in India. We hope you found this to be informative and insightful. For more such content, stay connected with Leverage Edu!

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