ADVANTAGES
Retail banking has inherent advantages outweighing certain disadvantages. Advantages are analyzed from the resource angle and asset angle.
Resource Side
- Retail deposits are stable and constitute core deposits.
- They are interest insensitive and less bargaining for additional interest.
- They constitute low cost funds for the banks.
- Effective customer relationship management with the retail customers built a strong customer base.
- Retail banking increases the subsidiary business of the banks.
ASSETS SIDE
- Retail banking results in better yield and improved bottom line for a bank.
- Retail segment is a good avenue for funds deployment.
- Consumer loans are presumed to be of lower risk and NPA perception.
- Helps economic revival of the nation through increased production activity.
- Improves lifestyle and fulfils aspirations of the people through affordable credit.
- Innovative product development credit.
- Retail banking involves minimum marketing efforts in a demand –driven economy.
- Diversified portfolio due to huge customer base enables bank to reduce their dependence on few or single borrower
- Banks can earn good profits by providing non fund based or fee based services without deploying their funds.
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