Retail Banking in India [FULL]

RETAIL BANKING

DEFINITION:

“Retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so”

The
service

Retail Banking environment today is changing fast.

The changing customer demographics demands to create a differentiated application based on scalable technology, improved and banking convenience. Higher penetration of technology and increase in global literacy levels has set up the expectations of the customer higher than never before. Increasing use of modern technology has further enhanced reach and accessibility. The market today gives us a challenge to provide multiple and innovative contemporary services to the customer through a consolidated window as so to ensure that the bank’s customer gets “Uniformity and Consistency” of service delivery across time and at every touch point across all channels. The pace of innovation is accelerating and security threat has become prime of all electronic transactions. High cost structure rendering mass-

market servicing is prohibitively expensive. Present day tech-savvy bankers are now more looking at reduction in their operating costs by adopting scalable and secure technology thereby reducing the response time to their customers so as to improve their client base and economies of scale. The solution lies to market demands and challenges lies in innovation of new offering with minimum dependence on branches – a multi-channel bank and to eliminate the disadvantage of an inadequate branch network. Generation of leads to cross sell and creating additional revenues with utmost customer satisfaction has become focal point worldwide for the success of a Bank.

RETAIL BANKING AN INTRODUCTION

Retail banking is, however, quite broad in nature - it refers
to the dealing of commercial banks with individual customers, both on liabilities and assets sides of the balance sheet. Fixed, current / savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing, auto, and educational) on the assets side, are the more important of the products offered by banks. Related ancillary services include credit cards, or depository services. Retail banking refers to provision of banking services to individuals and small business where the financial institutions are dealing with large number of low value transactions. This is in contrast to wholesale banking where the customers are large, often multinational companies, governments and government enterprise, and the financial institution deal in small numbers of high value transactions. The concept is not new to banks but is now viewed as an important and attractive market segment that offers opportunities

for growth and profits. Retail banking and retail lending are often used as synonyms but in fact, the later is just the part of retail banking. In retail banking all the needs of individual customers are taken care of in a well-integrated manner.

Today’s retail banking sector is characterized by three basic characteristics:

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Multiple products (deposits, credit cards, insurance, investments and securities) Multiple channels of distribution (call center, branch, internet) Multiple customer groups (consumer, small business, and corporate).

ORIGIN OF BANKING

Banks

are among the main participants of the financial

system in India. Banking offers several facilities and opportunities.

Banks in India were started on the British pattern in the beginning of the 19th century. The first half of the 19th century, The East India Company established 3 banks The Bank of Bengal, The Bank of Bombay and The Bank of Madras. These three banks were known as Presidency Banks. In 1920 these three banks were In amalgamated and The Imperial Bank of India was formed.

those days, all the banks were joint stock banks and a large number of them were small and weak. At the time of the 2nd world war about 1500 joint stock banks were operating in India out of which 1400 were non- scheduled banks. Bad and dishonest management managed quiet a quiet a few of them and there were a number of bank failures. Hence the government had to step in and the Banking Company’s Act (subsequently named as the Banking Regulation Act) was enacted which led to the elimination of the weak banks that were not in a position to fulfil the various requirements of the Act. In order to strengthen their weak units and review public confidence in the banking system, a new section 45 was enacted in the Banking Regulation Act in the year 1960, empowering the Government of India to compulsory amalgamate weak units with the stronger ones on the recommendation of the RBI. Today banks are broadly classified into 2 groups namely— (a) Scheduled banks. (b) Non-Scheduled banks.

BENEFITS OF RETAIL BANKING

Traditional lending to the corporate are slow moving along
with high NPA risk, treasure profits are now loosing importance hence Retail Banking is now an alternative available for the banks for increasing their earnings. Retail Banking is an attractive market segment having a large number of varied classes of customers. Retail Banking focuses on individual and small units. Customize and wide ranging products are available. The risk is spread and the recovery is good. Surplus deployable funds can be put into use by the banks. Products can be designed, developed and marketed as per individual needs.

SCOPE FOR RETAIL BANKING IN INDIA

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All round increase in economic activity Increase in the purchasing power. The rural areas have the large purchasing power at their disposal and this is an opportunity to market Retail Banking.

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India has 200 million households and 400 million middleclass population more than 90% of the savings come from the house hold sector. Falling interest rates have resulted in a shift. “Now People Want To Save Less And Spend More.”

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Nuclear family concept is gaining much importance which may lead to large savings, large number of banking services to be provided are day-by-day increasing.

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Tax benefits are available for example in case of housing loans the borrower can avail tax benefits for the loan repayment and the interest charged for the loan.

ADVANTAGES AND DISADVANTAGES OF RETAIL BANKING

ADVANTAGES Retail banking has inherent advantages outweighing certain disadvantages. Advantages are analyzed from the resource angle and asset angle.

RESOURCE SIDE

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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.

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Retail banking increases the subsidiary business of the banks.

ASSETS SIDE
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Retail banking results in better yield and improved bottom line for a bank.

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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.

DISADVANTAGES

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Designing own and new financial products is very costly and time consuming for the bank. Customers now-a-days prefer net banking to branch banking. The banks that are slow in introducing technologybased products, are finding it difficult to retain the customers who wish to opt for net banking.

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Customers are attracted towards other financial products like mutual funds etc. Though banks are investing heavily in technology, they are not able to exploit the same to the full extent. A major disadvantage is monitoring and follow up of huge volume of loan accounts inducing banks to spend heavily in human resource department.

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Long term loans like housing loan due to its long repayment term in the absence of proper follow-up, can become NPAs. The volume of amount borrowed by a single customer is very low as compared to wholesale banking. This does not allow banks to to exploit the advantage of earning huge profits from single customer as in case of wholesale banking.

OPPORTUNITIES

Retail

banking has immense opportunities in a growing

economy like India. As the growth story gets unfolded in India, retail banking is going to emerge a major driver. The rise of Indian middle class is an important contributory factor in this regard. The percentage of middle to high-income Indian households is expected to continue rising. The younger population not only wields increasing purchasing power, but as far as acquiring personal debt is concerned, they are perhaps more comfortable than previous generations. Improving consumer purchasing power, coupled with more liberal attitudes towards personal debt, is contributing to India’s retail banking segment. The combination of above factors promises substantial growth in retail sector, which at present is in the nascent stage. Due to bundling of services and delivery channels, the areas of potential conflicts of interest tend to increase in universal banks and financial conglomerates. Some of the key policy issues relevant to the retail-banking sector are: financial inclusion, responsible lending, and access to finance, long-term savings, financial capability, consumer protection, regulation and financial crime prevention.

CHALLENGES TO RETAIL BANKING IN INDIA

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The issue of money laundering is very important in retail banking. This compels all the banks to consider seriously all the documents which they accept while approving the loans.

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The issue of outsourcing has become very important in recent past because various core activities such as hardware and software maintenance, entire ATM set up and operation (including cash, refilling) etc., are being outsourced by Indian banks.

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Banks are expected to take utmost care to retain the ongoing trust of the public. Customer service should be at the end all in retail banking. Someone has rightly said, “It takes months to find a good customer but only seconds to lose one.” Thus, strategy of Knowing Your Customer (KYC) is important. So the banks are required to adopt innovative strategies to meet customer’s needs and requirements in terms of services/products etc.

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The dependency on technology has brought IT departments’ additional responsibilities and challenges in managing, maintaining and optimizing the performance of retail banking networks. It is equally important that banks should maintain

security to the advance level to keep the faith of the customer.

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The efficiency of operations would provide the competitive edge for the success in retail banking in coming years. The customer retention is of paramount important for the profitability if retail banking business, so banks need to retain their customer in order to increase the market share.

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One of the crucial impediments for the growth of this sector is the acute shortage of manpower talent of this specific nature, a modern banking professional, for a modern banking sector.

If all these challenges are faced by the banks with utmost care and deliberation, the retail banking is expected to play a very important role in coming years, as in case of other nations.

STRATEGIES FOR INCREASING RETAIL BANKING BUSINESS

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Constant product innovation to match the requirements of the customer segments The customer database available with the banks is the best source of their demographic and financial information and can

be used by the banks for targeting certain customer segments for new or modified product. The banks should come out with new products in the area of securities, mutual funds and insurance.

o

Quality service and quickness in delivery

As most of the banks are offering retail products of similar nature, the customers can easily switchover to the one, which offers better service at comparatively lower costs. The quality of service that banks offer and the experience that clients have, matter the most. Hence, to retain the customers, banks have to come out with competitive products satisfying the desires of the customers at the click of a button.

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Introduction of new delivery channels

Retail customers like to interface with their bank through multiple channels. Therefore, banks should try to give high quality service across all service channels like branches, Internet, ATMs, etc.

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Tapping of unexploited potential and increasing the volume of business This will compensate for the thin margins. The Indian retail banking market still remains largely untapped giving a scope for growth to the banks and financial institutions. With changing psyche of Indian consumers, who are now comfortable with the idea of availing loans for their personal needs, banks have tremendous potential lying in this segment. Marketing departments of the banks be geared up and special training be imparted to them so that banks are successful in grabbing more and more of retail business in the market.

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Infrastructure outsourcing

This will help in lowering the cost of service channels combined with quality and quickness.

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Detail market research

Banks may go for detail market research, which will help them in knowing what their competitors are offering to their clients. This will enable them to have an edge over their competitors and increase their share in retail banking pie by offering better products and services.

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Cross-selling of products

PSBs have an added advantage of having a wide network of branches, which gives them an opportunity to sell third-party products through these branches.

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Business process outsourcing

Outsourcing of requirements would not only save cost and time but would help the banks in concentrating on the core business area. Banks can devote more time for marketing, customer service and brand building. For example, Management of ATMs can be outsourced. This will save the banks from dealing with the intricacies of technology.

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Tie-up arrangements

PSBs with regional concentration can reap the benefit of reaching customers across the country by entering into strategic alliance with other such banks with intensive presence in other regions. In the present regime of falling interest and stiff competition, banks are aware that it is finally the retail banking

which will enable them to hold the head above water. Hence, banks should make all out efforts to boost the retail banking by recognizing the needs of the customers. It is essential that banks would be imaginative in predicting the customers' expectations in the ever-changing tastes and environments. It is the innovative and competitive products coupled with high quality care for clients will only hold the key to success in this area. In short, bankers have to run very fast even to stay where they are now. It is the survival of the fastest now and not only survival of the fittest.

SPECIAL FEATURES OF RETAIL CREDIT

One of the prominent features of Retail Banking products is
that it is a volume driven business. Further, Retail Credit ensures that the business is widely dispersed among a large customer base unlike in the case of corporate lending, where the risk may be concentrated on a selected few plans. such factors : Ability of a bank to administer a large portfolio of retail credit products depends upon

o Strong credit assessment capability
Because of large volume good infrastructure is required. If the credit assessment itself is qualitative, than the need for follow up in the future reduces considerably.

o Sound documentation
A latest system for credit documentation is necessary pre-requisite for healthy growth of credit portfolio, as in the case of credit assessment, this will also minimize the need to follow up at future point of time.

o Strong possessing capability
Since large volumes of transactions are involved, today transactions, maintenance of backups is required

o Regular constant follow- up
Ideally, follow up for loan repayments should be an ongoing process. It should start from customer enquiry and last till the loan is repaid fully.

o Skilled human resource
This is one of the most important pre-requisite for the efficient management of large and diverse retail credit portfolio. of administrating a diverse and complex retail credit portfolio. Only highly skilled and experienced man power can withstand the river

o Technological support
This is yet another vital requirement. Retail credit is highly technological intensive in nature, because of large volumes of business, the need to provide instantaneous service to the customer large, faster processing, maintaining database, etc.

EMERGING ISSUES IN HANDLING RETAIL BANKING

O KNOWING CUSTOMER
‘Know your Customer’ is a concept which is easier said than practiced. Banks face several hurdles in achieving this. In order to that the product lines are targeted at the right customers-present and prospective-it is imperative that an integrated view of customers is available to the banks. The benefits flowing out of cross-selling and up-selling will remain a far cry in the absence of this vital input. In this regard the customer databases available with most of the public sector banks, if not all, remain far from being enviable. What needs to be done is setting up of a robust data warehouse where from meaningful data on customers, their preferences, there spending patterns, etc. can be mined. Cleansing of existing data is the first step in this direction. PSBs have a long way to go in this regard.

O TECHNOLOGY ISSUES
Retail banking calls for huge investments in technology. Whether it is setting up of a Customer Relationship Management System or Establishing Loan Process

Automation or providing anytime, anywhere convenience to the vast number of customers or establishing channel/product/customer profitability, technology plays a pivotal role. And it is a long haul. The Issues involved include adoption of the right technology at the right time and at the same time ensuring volumes and margins to sustain the investments. It is pertinent to remember that Citibank, known for its deployment of technology, took nearly a decade to make profits in credit cards. It has also to be added in the same breath that without adequate technology support, it would be well nigh possible to administer the growing retail portfolio without allowing its health to deteriorate. Further, the key to reduction in transaction costs simultaneously with increase in ability to handle huge volumes of business lies only in technology adoption. PSBs are on their way to catch up with the technology much required for the success of retail banking efforts. Lack of connectivity, stand alone models, concept of branch customer as against bank customer, lack of convergence amongst available channels, absence of customer profiling, lack of proper decision support systems, etc., are a few deficiencies that are being overcome in a great way. However, the initiatives in this regard should include creating flexible computing architecture amenable to changes and having scalability, a futuristic approach, networking across channels, development of a strong Customer Information Systems (CIS) and adopting Customer Relationship

Management (CRM) models for getting a 360 degree view of the customer.

O ORGANIZATIONAL ALIGNMENT
It is of utmost importance that the culture and practices of an institution support its stated goals. Having decided to take a plunge into retail banking, banks need to have a well defined business strategy based on the competitive of the bank and its potential. Creation of a proper organization structure and business operating models which would facilitate easy work flow are the needs of the hour. The need for building the organizational capacity needed to achieve the desired results cannot be overstated. This would mean a strong commitment at all levels, intensive training of the rank and file, putting in place a proper incentive scheme, etc. As a part of organizational alignment, there is also the need for setting up of an effective Corporate Marketing Division. Most of the public sector banks have only publicity departments and not marketing setup. A fully fledged marketing department or division would help in evolving a brand strategy, address the issue of alienation from the upwardly mobile, high net worth customer group and improve the recall value of the institution and its products by arresting the trend of getting receded from public memory. The much needed tie-ups with

manufacturers/distributors/builders will also facilitated smoothly. It is time to break the myth PSBs are not customer friendly. The attention is to be diverted to vast databases of customers lying with the PSBs till unexploited for marketing.

O PRODUCT INNOVATION
Product innovation continues to be yet another major challenge. Even though bank after bank is coming out with new products, not all are successful. What is of crucial importance is the need to understand the difference between novelty and innovation? Peter Drucker in his path breaking book: “Management Challenges for the 21st Century” has in fact sounded a word of caution: “innovation that is not in tune with the strategic realities will not work; confusing novelty with innovation (should be avoided), test of innovation is that it creates value; novelty creates only amusement”. The days of selling the products available in the shelves are gone. Banks need to innovate products suiting the needs and requirements of different types of customers. Revisiting the features of the existing products to continue to keep them on demand should not also be lost sight of.

O PRICING OF PRODUCT
The next challenge is to have appropriate policies in place. The industry today is witnessing a price war, with each bank

wanting to have a larger slice of the cake that is the market, without much of a scientific study into the cost of funds involved, margins, etc. The strategy of each player in the market seems to be: ‘under cutting others and wooing the clients of others’. Most of the banks that use rating models for determining the health of the retail portfolio do not use them for pricing the products. The much needed transparency in pricing is also missing, with many hidden charges. There is a tendency, at least on the part of few to camouflage the price. The situation cannot remain his way for long. This will be one issue that will be gaining importance in the near future.

O PROCESS CHANGES
Business Process Re-engineering is yet another key requirement for banks to handle the growing retail portfolio. Simplified processes and aligning them around delivery of customer service impinging on reducing customer touchpoints are of essence. A realization has to drawn that automating the inefficiencies will not help anyone and continuing the old processes with new technology would only make the organization an old expensive one. Work flow and document management will be integral part of process changes. The documentation issues have to remain simple both in terms of documents to be submitted by the customer at the time of loan application and those to be executed upon sanction.

O ISSUE CONCERNING HUMAN RESOURCES
While technology and product innovation are vital , the soft issues concerning the human capital of the banks are more vital. The corporate initiatives need to focus on bringing around a frontline revolution. Though the changes envisaged are seen at the frontline, the initiatives have to really come from the ‘back end’. The top management of banks must be seen as practicing what preaches. The initiatives should aim at improved delivery time and methods of approach. There is an imperative need to create a perception that the banks are market-oriented. This would mean a lot of proactive steps on the part of bank management which would include empowering staff at various levels, devising appropriate tools for performance measurement bringing about a transformation – ‘can’t do ‘to’ can do’ mind-set change from restrictive practices to total flexible work place, say. By having universal tellers, bringing in managerial controlling work place, provision of intensive training on products and processes, emphasizing, coaching etiquette, good manners and best behavioural models, formulating objective appraisals, bringing in transparency, putting in place good and acceptable reward and punishment system, facilitating the placement of young /youthful staff in front-line defining a new role for front-line staff by projecting them as sellers of products rather than clerks at work and

changing the image of the banks from a transaction provider to a solution provider.

O RURAL ORIENTATION
As of now, action that is taking place on the retail front is by and large confined two metros and cities. There is still a vast market available in rural India, which remains to be trapped. Multinational Corporations, as manufacturers and distributors, have already taken the lead in showing the way by coming out with exquisite products, packaging and promotions, keeping the rural customer in mind. Washing powders and shampoos in Re.1 sachet made available through an efficient network and testimony to the determination of the MNCs to penetrate the rural market. In this scenario, banks cannot lack behind. In particular PSBs, which have a strong rural presence, need to address the needs of rural customers in a big way. These and only these will propel retail growth that is envisaged as a key strategy for portfolio expansion by most of the banks.

SOME CRITICAL ISSUES

o CUSTOMER SERVICE
Customer service is perhaps the most important dimension of retail banking. While most public sector banks offer the same range of service with similar technology/expertise, the level of customer service matters the most in bringing in more business. Perhaps more than the efficiency of service, the approach and attitude towards customers will make the difference.

Front line staffs have to be educated in this regard. A scheme of entrusting a group of important customers to the care of each employee/officer with a person to person knowledge and intimacy can be implemented all sundry advices/notices such as Dr. /Cr. advices. TDR maturity advices, etc. whether signed by employees or officers should be identifiable by the name of those signing, and inviting customers to contact them for further assistance in the matter. A customer centred organization has to be built up, whose ultimate goal is to "own" a customer. Focused merchandizing through effective market segmentation is the need of the hour. A first step can be the organization of the various retail branches to enter for different market segments like upmarket individuals, traders, common customers, etc.. For the SIB (Small Industry and Business) sector banks, the focus should be on identifying efficient units and allocations of loans lo these units. These banks should try Merchant Banking services en a small scale. With agricultural output growing at a fast rate and mechanization setting in, banks should try to cater to the credit needs of the people involved in this profession. A wide network is absolutely imperative for this sector. Separate branches/divisions should be opened for traders and similar government businesses. Special facilities for cash tendered in bulk and immediate issue of drafts, by extending facilities like "guarantee bond" system, will go a long way in mitigating problems faced by traders who are the major customers for drafts issue. Provision for cash counting

machines in these branches will reduce the monotony of cashiers and unnecessary delays, thus resulting in better productivity and ultimately in improved customer service. The personal segment is however the most important one. With the urban segment moving away because of disintermediation and competition from foreign banks, retail banks should focus en the rural/semi-urban areas that hold the maximum potential. Innovative schemes like "paper-gold" schemes can be introduced. In the urban areas, private banking to affluent customers can be introduced, through which advisory and execution services could be provided for a fee. Foreign currency denominated accounts can also be introduced for them. Nationalized banks compare very poorly with the foreign banks when it comes to the efficiency in services. In order to improve the speed of service the bank should.  Improve the rapport between the controlling offices and the branches to ensure that decisions arc communicated fast.  Make sure that the officials as well as the staff are fully aware of the rules so that processing is faster.

o TECHNOLOGY
In the current scenario, the importance of technology cannot be understated for retail banks which entail large volumes, large queues and paperwork. But most of the banks are burdened with a large staff strength which cannot be done away with. Besides, in the rural and semi-urban areas,

customers will not be at home in an automated, impersonal environment. The objective would be to ensure faster and easier customer service and more usable information, instantly, economically and easily to all those who need it -customers as well as employees. Proper management information systems can also be implemented to aid in superior decision making. Communication technology is especially needed for money transfer between the same city and also between cities. There are inordinate delays in India because of geographical and other factors. Modem technology can make it possible to clear any check anywhere in India within three days. Installation of FAX facilities at all the big branches will facilitate speedy transfer of payment advices. Computerization will be of great help in improving back-office operations. At present, 60% of India's rural branches can have PCs. These can be used for quick retrieval and report generation. This will also drastically reduce the time bank staffs spend in filling and filing returns. Housekeeping operations can also be speeded up.

o PRICE BUNDLING
Price bundling is a selling arrangement where several different products are explicitly marketed together to a price that is dependent on the offer. As banks are multi-product firms this strategy is more applicable to retail banking. Price bundling offers several economic and strategic benefits to a bank. It offers economies of, utilization of the existing

capacities and reaching wider population of customers. Bank can get the benefits of information and transacting. In the process of extending variety of services, banks are acquiring enormous amount of customer information. If this information is systematically stored, banks can efficiently utilize this information in order to explore new segments and to crosssell new services to these segments. Cross-selling opportunities and larger customer base can also be the motive for merger against usually stated advantage of cost savings. Price bundling can be used in order to lengthen the relationship with a customer. It will reduce the need of resources to be put on acquiring new customers and saves time of the bank. Among the strategic benefits, price bundling may cause less aggressive competition; it differentiates its products compared to rivals in the same market where the products are sold individually or in other kinds of bundles. Retail banking offers many services and it gives an opportunity to the bank to combine different services in different kinds of bundles. In many cases demand for one service affects the demand for another service, for example current or savings account and payment services are highly related, and here price bundling is a better alternative than individual selling. Banks have to analyze the customer segment and bundle products before applying the pricing strategies. The first step in price bundling decision is to select the customer segment. The bundle is targeted to choose a strategic objective. If there are two products (A and B) that

are considered to be bundled together, the comprehensive strategic objectives for the different customer segments are: • Cross-selling to customers that only buy one of the products. • Retaining customers that already buy both of the products. • Acquiring new customers when they buy neither product for the time being.

o INNOVATION
The scope for innovation in financial services is unlimited. Although banks have introduced a variety of deposit and loan products, the basic features of all these products are almost one and the same. Among the delivery channels, ATMs have emerged as ubiquitous money centers. Almost all banks have established their ATMs. India had only 400 ATMs, which increased to 3,600. Out of this 881 ATMs have Swadhan connectivity. It is projected that the number of ATMs will reach up to 35,000 by the end of. The question arises is, are they cash cows? The answer is certainly no. For most of the banks the overhead costs on these ATMs are far higher than the revenue generated by them. ATM operation costs are largely fixed in nature - the cost of the machine, its maintenance, replenishment of currency, and the satellite (network) connection. There should be a minimum number of transactions to cover these costs. Banks have to innovate wide range of services in addition to cash withdrawals. ATMs should allow customers to buy postal and

revenue stamps, payment of bills, event tickets, sports tickets, etc. Banks can offer ATM screens for slide show advertising also. However, the advantage of the ATM has always been speed and convenience, probably on introduction of these new services customer has to spend more time at a point. ATMs can guide the customer also. For example, if a customer's account balance has reached to bare minimum the ATM can give a helpful suggestion that "we notice your balance is low, can we help with a loan?" ATMs can be either within the premises of a branch or at a remote place. On premises ATMs are highly immune to competition, but branches can reduce the staff, on installation of ATM. The scope for wider services through offpremises ATMs is very high; it provides great opportunity for fee revenue. The cost of maintenance of off-premises ATMs is higher in terms of replenishment, cash couriers, armed security etc. In the US, approximately 23 percent of ATMs are offering sale of postage stamps. It is the right time for banks to question themselves whether ATM is a service channel, sales channel, or branding opportunity. The future of retail banking lies more in mobile banking. Mobile telephone market is penetrating, and mobile phones are ideal to utilize Internet banking services without customer accesses to PC. By a tacit acceptance India has around three million mobile phone users and this number is expected to reach to eight million by 2003. Smart card revolution will further change the face of retail banking. Smart cards can store information; carry out local processing on the data stored and can perform complex

calculations. At present, India has around 3.4 million smart card users and it is estimated that by the end of 2004 it will reach 14.7 million.

GROWTH DRIVERS OF RETAIL BANKING
The growth drivers of retail lending are analyzed as under:

MACRO-ECONOMIC FACTORS

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Shift in the pattern of GDP from hitherto agriculture and manufacturing sectors to services sector with increase per capita income especially that of the younger generation. [India's industrial sector accounted for about 21.8% of GDP, where as the services sector accounted for around 56.1 of GDP in 2002-03 as per revised estimates released by Central. Statistical Organization].

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The lower uptake in the non-retail sector has compelled bans to shift their focus on retail assets - specially housing financefor deployment of funds for a longer period, which is considered as the safest within the retail portfolio. Housing loans and other retail loans are comparatively high yielding in terms of interest spread and safer, as risk is diversified among a large number of individuals across the geographic dimensions. The sector enjoys a privilege of lowest NPAs amongst all categories of banks.

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Depressed stock and real estate markets as compared to those prevailing in 1992-93 to 1995-96 thereby diverting deposits to the banking sectors.

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Comparatively stable real estate prices during last 4/5

years have laid to spurt in demand for housing loans.

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Inflation continued to be under control. Keenness shown by the consumer goods/ automobile manufacturers to -push up finance schemes through market tie-up with banks with a view to increasing their marketing share.

DEMOGRAPHIC / BEHAVIORAL FACTORS

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Growing concept of nuclear families than the joint families necessitating need for housing units as well as other items of consumer durables.

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Increased number of dual income families resulting in higher income and savings. Increased demand for dwelling units due to gradual shift of population from rural/semi-urban centre to urban/metro centre for employment.

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Shift in the attitude of the Indian household from "save and buy' theory to a `buy and repay' principle. Increased middle-income segment and their income levels. Emergence of new sectors such as Information

Technology, media, etc. In the economy that resulted in higher income opportunities and major impact on change in urban consumption pattern.

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Awareness and sophistication in urban and semi-urban households for urban convenience. Social security and status have also contributed to higher demand for housing

units, cars, etc.

FAVORABLE ROLE OF RBI

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Inclusion of housing loans within the priority sector. Direct finance up to Rs.10 -lakhs in case of rural and semi-urban areas now form part of the priority sector advances. This promoted banks to go for housing loans in a big way as it helped them to attain their targets of priority sector lending.

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Reduction in risk weight age bank's extending loans for acquisition of residential house properties to 50 per cent from 100 per cent. Reduction in Capital Adequacy Ratio requirement has effectively doubled the credit disbursement capacity of banks.

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Banks have elongated repayment periods of retail loans years to 50/20 years besides quoting fixed/ variable rate of interests based on their asset liability management structure and study of behavioral pattern of demand and time deposits.

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Deregulation of interest rate with option to quote fixed/ variable interest rate. Continuous reduction in bank rate, which resulted in reduction in lending rates as well. South ward movement in CRR and SLR ratios increasing lending capacity of banks.

CATALYST-ROLE OF GOVERNMENT

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Tax exemptions for payment of interest on capital borrowed for purchase/ construction of house property and principle repayment. This made housing finance affordable and within the reach of common man. [It is important to note that the housing sector has been recipient of a large number of fiscal incentives in the last 6`h budgets].

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These exemptions also changed the profile of the retail segment from hitherto cash transactions to book transactions.

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The Government could not ignore the importance of housing sector in overall development of the economy due to the following factors: • Housing construction activities can generate opportunities for employment. In the present context of jobless GDP growth, this issue assumes important as the housing construction provides massive job opportunities for both unskilled and skilled man power. • Mass construction of houses will result in the benefits of the nation by the way of healthy standard of leaving, motivation to save more and thereby providing sustainable economic recovery. • This would also lead to growth in related industries as well.

INITIATIVES ON THE PART OF BANKS

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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.

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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 o

Making financing attractive by offering free / concessional / value added services like issue of credit card, insurance, etc. 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.

BANKS IN INDIA

In India the banks are being segregated in different groups.

Each group has their own benefits and limitations in operating in India. Each has their own dedicated target market. Few of them only work in rural sector while others in both rural as well as urban. Many even are only catering in cities. Some are of Indian origin and some are foreign players. One more section has been taken note of is the upcoming foreign banks in India. The RBI has shown certain interest to involve more of foreign banks than the existing one recently. This step has paved a way for few more foreign banks to start business in India. This Public Sector Bank India has implemented 14 point action plan for strengthening of credit delivery to women and has designated 5 branches as specialized branches for women entrepreneurs.

The following are the list of Public Sector Banks in India Allahabad Bank Aadhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank

Indian Overseas Bank Oriental Bank of Commerce Punjab & Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank List of State Bank of India and its subsidiary, a Public Sector Banks State Bank of India State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Indore State Bank of Mysore State Bank of Saurastra State Bank of Travancore Banks are the most significant players in the Indian financial market. - They are the biggest purveyors of credit, and they also attract most of the savings from the population. Dominated by public sector, the banking industry has so far acted as an efficient partner in the growth and the development of the country. Driven by the socialist ideologies and the welfare state concept, public sector banks have long been the supporters of agriculture and other priority sectors. 'They act as crucial channels of the government in its efforts to ensure equitable economic

development. The banking sector in India has undergone remarkable changes since the economic reforms were initiated in 1991-92. The period has been marketed by a slew of reforms in the sector, which provided the much needed impetus for the growth of the sector as a whole. One of the remarkable reforms found crucial to study is emphasizes of public sector banks on retail banking.

RETAIL BOOM

Keeping pace with the average 8.5 per cent growth of the
Indian economy over the past few years, the retail banking sector in India has also witnessed phenomenal growth. It has faced up to the need of the hour and introduced anytime, anywhere banking, for its customers through ATMs, mobile and internet banking. It has also offered services like D-MAT, plastic money (credit and debit cards), online transfers, etc. This has not only helped in reducing operational costs but facilitated greater conveniences to its customers.

o High-Tech Banking
ATMs - With growing technological innovations, banks have significantly expanded their ATM network over the past three years. According to the RBI data as of end-June 2008, the number of ATMs in the country had climbed to 36,314 compared to 27,088 and 20,267 as at end-March 2007 and 2006, respectively.

o Loan disbursement
Technology has facilitated the growth in retail loan disbursements, making the whole process simpler and faster. The sector has delivered a growth of around 30 per cent per year over the past 4-5 years. As per the RBI data, although the retail portfolio of banks saw a slowdown to 29.9 per cent during 2006-07 from 40.9 per cent in 2005-06, the growth was faster than the overall credit portfolio of the banking sector (28.5 per cent).

o Plastic Money
Credit cards have also played an important role in promoting retail banking. The use of credit cards has been growing significantly over the last few years. The number of credit cards outstanding at the end- June 2008 stood at 27.02 million as against 24.39 million in June 2007, with usage increasing by 10.73 per cent during this period.

o Core Banking Solutions (CBS)
The concept of CBS, which allows a customer to fulfil a wide range of banking operation online, has come alive during the past four years. The number of bank branches providing CBS rose rapidly to 44 per cent at end- March 2007 from 28.9 per cent at end March 2006. Electronic fund transfer facilities and mobile banking are expected to provide a further fillip to the retail banking in the coming years.

o Future Outlook
Indian retail banking, according to a report, is likely to grow at a CAGR of 28 per cent till 2010 to Rs 97,00 billion. So, although the revolution in retail banking has changed the face of the Indian banking industry as a whole, it has still miles to go.

The reasons for this shift to retail, particularly the housing finance segment, are many. The important among these include—

 The poor credit off take to the corporate, commercial and other business sector because of industrial slowdown.  Risky nature of lending to corporate, given in industry recession and uncertainty prevalent in the economy.  High disintermediation pressure, leading many highly rated corporates to tap the domestic and/or overseas markets directly for finance, rather than approaching the banks.  Relatively safe nature of some of the retail credit finance with lesser incidence of loan turning bad.  Rising disposable income, changing lifestyles/aspirations and willingness to spend for more luxuries of the higher middle class.  Better availability of loans, because of the consultancy lowering interest rates, as a result of the low interest regime followed by the regulating authorities, the housing loans interest rates hailed to almost 7.5 – 8% in last 5 years.  Increased government incentives in form of tax rebates etc. in the case of certain loans like housing loans.  Banks are aware with abundant reserve requirement by RBI, they are searching revenues for packing the surplus funds.

FUTURE OF RETAIL BANKING

Retail banking has significant past and glorious future over

the years. Retail banking has proved as an effective tool not only to improve the bottom lines of the banks concerned but also to significantly contribute to the development of the individual consumers availing the services or products in particular and to the overall development of the society in general with the needs of the consumers ever multiplying. There is definitely a vast scope for the furtherance of the Retail Banking business. The society is made of the individuals and the environment surrounding him. As development takes place in the society, the needs of the people grow faster than ever. The wealth creation and its professional management are yet another distinct advantage the society or nation can derive from Retail Banking. The depth of the untapped resources in the retail segment is not yet measured. These resources could be channelized for nation building. On the whole, looking ahead, the prospects of retail banking are brighter than ever and the bankers have to give continued thrust to this area of banking. Thus, with the consumers ever multiplying needs there is definitely a vast scope for the furtherance of the retail banking business. Operationally, there is a possibility that technology go beyond merely reducing the cost & improving the quality of current products. It may prove possible, even profitable, to combine functions in new ways.

RETAIL BANKING AT CENTRAL BANK OF INDIA

Profile

Established in 1911, Central Bank of India was the first Indian commercial bank which was wholly owned and managed by Indians. The establishment of the Bank was the ultimate realisation of the dream of Sir Sorabji Pochkhanawala, founder of the Bank. Sir Pherozesha Mehta was the first Chairman of a truly 'Swadeshi Bank'. In fact, such was the extent of pride felt by Sir Sorabji Pochkhanawala that he proclaimed Central Bank of India as the 'property of the nation and the country's asset'. He also added that 'Central Bank of India lives on people's faith and regards itself as the people's own bank'.

During the past 99 years of history the Bank has weathered many storms and faced many challenges. The Bank could successfully transform every threat into business opportunity and excelled over its peers in the Banking industry.

A number of innovative and unique banking activities have been launched by Central Bank of India and a brief mention of some of its pioneering services are as under:

Introduction to the Home Savings Safe Deposit 1921 Schemeto build saving/thrift habits in all sections of the society. 1924 An Exclusive Ladies Department to cater to the Bank's

women clientele. 1926 Safe Deposit Locker facility and Rupee Travellers' Cheques.

1929 Setting up of the Executor and Trustee Department. 1932 Deposit Insurance Benefit Scheme. 1962 Recurring Deposit Scheme.

Subsequently, even after the nationalisation of the Bank in the year 1969, Central Bank continued to introduce a number of innovative banking services as under:

1976 The Merchant Banking Cell was established. 1980 Centralcard, the credit card of the Bank was introduced. 1986 'Platinum Jubilee Money Back Deposit Scheme' was launched.

The housing subsidiary Cent Bank Home Finance Ltd. 1989 was started with its headquarters at Bhopal in Madhya Pradesh. Quick Cheque Collection Service (QCC) & Express 1994 Service was set up to enable speedy collection of outstation cheques.

Further in line with the guidelines from Reserve Bank of India as also the Government of India, Central Bank has been playing an increasingly active role in promoting the key thrust areas of agriculture, small scale industries as also medium and large industries. The Bank also introduced a number of Self Employment Schemes to promote employment among the educated youth.

Among the Public Sector Banks, Central Bank of India can be truly described as an All India Bank, due to distribution of its large

network in 27 out of 28 States as also in 4 out of 7 Union Territories in India. Central Bank of India holds a very prominent place among the Public Sector Banks on account of its network of 3563 branches and 195 extension counters at various centres throughout the length and breadth of the country.

Customers' confidence in Central Bank of India's wide ranging services can very well be judged from the list of major corporate clients such as ICICI, IDBI, UTI, LIC, HDFC as also almost all major corporate houses in the country
Corporate Vision

To emerge as a strong, vibrant and pro-active Bank/Financial Super Market and to positively contribute to the emerging needs of the economy through consistent harmonization of human, financial and technological resources and effective risk control systems.
Corporate Mission

♦ To transform the customer banking experience into a fruitful and enjoyable one.

♦ To leverage technology for efficient and effective delivery of all banking services.

♦ To have bouquet of product and services tailor-made to meet customers aspirations.

♦ The pan-India spread of branches across all the state of the country will be utilized to further the socio economic objective of the Government of India with emphasis on Financial Inclusion.

PERSONAL BANKING

PRODUCT AT GLANCE LOANS

Retail Sale of Gold Coins

Purity: Coins of 24 Karat Swiss 999.9 purity fine gold imported from Switzerland with Assay Certification. Weight: The coins are in 5 gms and 10 gms weight, round in shape bearing Bank’s logo. Packings: The coins will be packaged in tamper proof laminated card. Rate: The Best Market Rate on the Day
Cent Vidyarthi

Purpose of Loan

For pursuing higher studies, in India & Abroad

Eligibility

Student should be an Indian National having secured admission to Professional / Technical courses through entrance test / selection process.

Nature of Facility

Term Loan

Calculation of Eligible Loan Amount

For payment of Hostel fee caution deposit, refundable deposit, admission, examination, library, laboratory, cost of books, equipments, uniforms, computer (Hypothecated). One-way air passage in case of studies abroad. Reimbursement of admission fee books airfare etc., if already incurred, within 1 month for studies in India / 6 weeks for abroad.

Maximum loan amount

Rs. 10 lacs for studies in India. Rs. 20 lacs for studies Abroad.

Margin

Upto Rs. 4 lacs : NIL, Above Rs. 4 lacs:In India - 5% ,Abroad - 15% Margin (scholarship may be included in margin.)

Rate of Interest & Processing Charges

Click here

Incentive

1% interest concession, if interest is serviced during study period when repayment holiday is specified for interest repayment. It should be given at the end of Financial Year i.e. 31st March. Interest is calculated at simple basis during Repayment Holiday / Moratorium Period. Interest will be compounded on monthly rests from due date of first instalment.

Disbursement

Payment directly to college / hostel / mess / airlines etc. In appropriate cases disbursement to be made to borrowers subject to satisfactory evidence. Original receipts to be submitted.

Repayment

Repayment to commence 12 months after completion of studies or 6 months after securing jobs whichever is earlier. Maximum period 5 to 7 years. Repayment on EMI basis.

Security

Upto Rs.4 Lakhs: Co-obligation of parents/ guardian/ parent-in-law/spouse Above Rs. 4 lakhs and up to Rs.7.50 lakhs: Co-obligation of parents/ guardian/ parent-in–law/spouse together with collateral security in the form of suitable third party guarantee. Above Rs.7.50 lakhs: Co-obligation of parents / guardian / parent-in–law / spouse together with tangible collateral security of suitable value, along with the assignment of future income of the student for payment of installments

Cent Doctor Scheme

Purpose

Purchase of equipments, setting up of Clinic, X-ray Lab, Pathological Laboratory, Nursing Home, Poly Clinics etc., clinic-cum-residence, expansion/renovation/modernization of existing premises. Purchase of vehicles, ambulance, computer etc. for medical practitioner. Working Capital requirement including stock of medicine /disposables.

Eligibility

Individuals/Partnership/Companies/Trusts. Applicants / Promoters should have recognized qualification in any branch of medical science like MBBS /BAMS/BDS/BHMS or any recognised degree in Physiotherapy / Radiology etc and should have minimum practical experience required to establish Hospital/Nursing Home/Clinic. In case Individual, he / she should be a qualified and registered medical practitioner and should have minimum practical experience required to establish Hospital/Nursing Home/Clinic. Partnership – Out of total partners at least 50% should be qualified and registered medical practitioners. Company – At least 50% of the promoter / directors should be qualified and registered medical practitioners. Trusts – Trusts should be registered and having power to borrow. At least one of the trustees should be qualified medical professional and Registered Medical Practitioner.

Quantum of Loan

Minimum – Rs.100,000/Maximum: Rs.2,00,00,000/Rural / Semi-Urban areas – Rs 50.00 lakh Working Capital limit of up to Rs. 5 lakh may be considered, if required, within overall limit of Rs.50.00 lakh Urban / Metro Areas – Rs.200.00 lakh Working Capital Limit of up to Rs.10 lakh may be considered, if required, within the overall limit of Rs.200.00 lakh.

Margin 25 % against the construction of Nursing Home/Clinic 15 % against equipments.

Security Primary Hypothecation of assets acquired out of bank finance. EM of property in case of construction of building. Collateral No guarantee /collateral for loans up to Rs.100.00 lakh, For loans above Rs.100.00 lakh, collateral up to at Least 50% of the loan amount to be taken.

Rate of Interest and Processing Charges Click here

Guarantee For loans above Rs.100.00 lakh, Personal Guarantee of all the Partners, Promoter Directors, Trustees to be taken in case of Partnership, Limited Company and Trust

account respectively.

Repayment Period For purchase of equipments etc., maximum period up to 84 months including moratorium period of 6 months. In case of Loan for construction of Nursing Home / Clinic-cum-residence, period of loan is 10 years maximum including moratorium of 12 months.

Prepayment Penalty If loan is prepaid from own sources or by genuine sale of the unit, no prepayment charges are levied. If loan is taken over by other Bank/FI, prepayment penalty is to be levied @ 1 % on loan outstanding on the date of such take over.

Insurance Comprehensive insurance of assets purchased out of bank loan including immovable property, with usual bank clause, preferably through Bancassurance.
Cent Vehicle

1 2

Purpose Eligibility

To purchase 2 wheeler or 4 wheelers solely for the purpose of personal use All Individuals age 18 years & above Finance spouse. is extended individually or jointly with

Minimum Income Criteria: Salaried For 4 wheelers – Rs.15000/- p.m. 2 wheelers – Rs.5000/- p.m. Other than salaried person For 4 wheelers –

Rs. 180000/- p.a. 2 wheelers – Rs. 60000/- p.a. 3 4 Margin 15% -new vehicle/ 40% - old vehicles(not more than 3 years old)

Loan Amount Salaried persons – 24 months gross monthly salary on the basis of last salary drawn Other individuals – 2 times average annual income as per IT return of last 3 years The max. loan amount is Rs.10 lakhs

5

Net takeAfter accounting for all deductions including present home pay loan net take home pay should be min 40% of Gross salary. Security Hypothecation of vehicle. Charges to be registered with RTO authorities. One set of key should be kept with bank. Personal Guarantee of persons with sufficient worth & acceptable to Bank to be furnished. Repayable Within months Beyond months 36 36 New vehicle BPLR – 2.00% BPLR – 1.00% Second vehicle BPLR BPLR hand

6

7 8

Guarantee Interest Rate

* 0.50% reduction in rate of interest provided liquid securities are offered at least to the extent of 50% of loan amt. 9 1 0 Processing Charges Repayment
• •

2-wheeler-Rs.500/- per proposal. 4-wheeler Rs.2000/-per proposal. New Vehicle Old Vehicle Old vehicleMore than 2 upto 2 yrsyrs old old

4 wheelers

Max months

84Max months

36Max months

24

2 wheeles

Max months

48Max months

36Max months

24

* Post-dated cheques should be submitted for the entire repayment period. 1 1 Documents to be submitted. Application in prescribed format with documentary proof of identification, Documentary Proof of Income, Proforma Invoice from Dealer, Undertaking from the Employer regarding repayment, Duly Signed Blank Transfer Form. Old vehicle to be valued by approved valuer. PDCs to be submitted for entire repayment period.

1 2

DisbursementPayment to be made to dealer/sub dealer directly by P.O./DD. 2nd hand vehicle should be disbursed to seller by PO/DD after collecting margin.

Cent Vyapari

Eligibility: All types of Traders including Retailers and Distributors.

Facility and Amt. of Finance Cash Credit against paid Stock and Receivable upto 90 days) up to a Maximum of Rs.20.00 Lakh per borrower. Margin A minimum margin of 25% on stocks and 50% on Receivables (upto 90 days) should be maintained. For limits up to Rs. 5.00 lakh margin of 25% should be kept on the combined value of stock and sundry debtors less sundry creditors. No Drawing Power is allowed on Receivables beyond 90 days. Security

Primary : Hypothecation of stocks and book debts wherever book debts are taken in to account for arriving at drawing power. Collateral : EM of land and building value of which is i. At least equal to limit sanctioned in case of limit/loan up to Rs.10 lakh.

ii.

At least 133% of sanctioned limits in case of limit/loan above Rs.10 lakh.

The Property should be self-occupied or vacant non- agricultural property.

Repayment Repayable on demand - to be reviewed / renewed every year.

Inspection Charge Rs.1000/- per Inspection for any loan amount.

Rate of Interest Click here to view Interest Rates

Processing Charges Click here to view Processing Charges

Other terms and conditions

•

Borrower to exclusively deal with our Bank

•

Credit report from the previous Bankers, if any, to be submitted.

•

Securities offered to Bank to be comprehensively insured for full value.

•

Drawing power is calculated on monthly basis on the basis of Stock Statement and/or Book Debt Statements submitted.

• Book debts to be certified by Chartered Accountant on quarterly interval Personal Loan Scheme (Corporate)

Facility to meet personal exigencies

Purpose

Personal / Domestic

Eligibility

Permanent employees of large corporate Clients.

Target Group

All employees of Corporate Clients who enjoy credit facility with our bank and employees of other Corporates also who are not enjoying any credit facility with us

Facility

Demand Loan

Loan Amount

10 times of Gross Salary. Max. Rs. 1,00,000/-. Net take home pay after taking into account the proposed loan installment should not be less than 50% of the gross salary

Security

Employer should give undertaking to recover the EMI from Salary and remit the same to our Bank directly. Employer also must give an undertaking to recover from the bonus/ex-gratia/ Terminal Benefits the entire Loan Amount, if the employee leaves the Company.

Repayment

36 Months -EMI

Rate of Interest

Click here to view Interest Rates

Processing Charges

Click here to view Processing Charges

Other Terms & Condition

Net Take Home Pay including this loan installment should not be less than 50% Net worth of the company and profits made by it will be taken into consideration for sanction of personal loans to the employees of the company. Personal Loan Scheme (Noncorporate)

Purpose Personal / Domestic Eligibility Permanent Employees of Railways, Government institutions central and State Government, schools, Hospitals etc, having completed 5 years of service and drawing salary through our branches. This condition of salary being routed through our branch can be waived in case of State and Central Government employees if concerned department gives an undertaking to deduct the monthly installments from salary of employees and remit the same to the bank till adjustment of the loan amount and also recovers bank's dues from terminal benefits of the employees in case of termination of employment due to any reason including death. Facility Demand Loan Loan Amount 15 times of Gross Salary. Max. Rs. 2,00,000/-. Net take home pay after taking into account the proposed loan

installment should not be less than 50% of the gross salary Guarantee Third party guarantee by a person having worth at least equal to loan amount and acceptable to Bank. Rate of Interest Click here to view Interest Rates Processing Charges Click here to view Processing Charges Repayment 48 Months -EMI or within the left over service whichever is less. Installments to commence one month after disbursement Post-dated cheques to be given for entire repayment period in case salary is routed thro' bank, in other cases employer's undertaking is taken. Other Terms & Conditions Salary Certificate and other Documents/Papers should be duly authenticated by the employer

ACCOUNTS & DEPOSITS
Savings Account with Personal Accident Cover
Sl No

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Parameters Features Name of the Scheme “Cent Savings Plus Account” Applicability Savings Accounts opened on or after 10th June 2010 but before 31st March 2011 in CBS branches of Central Bank of India Type of Insurance Personal Accident cover for death only Coverage Eligibility • Individuals-Single Accounts , Joint Accounts • However, only Principal Account Holder (First account holder) is covered under personal accident insurance. Minimum Balance Minimum Average Quarterly Balance (AQB) maintained in the Requirement account should be Rs.10,000/-to qualify for insurance cover Age of Account Principal Account Holder (First Account Holder) should be aged Holder between 18 years (completed) and 65 years. In case of accounts of minors, the guardian will be covered provided he/she is aged between 18-65 years. Multiple Accounts Scheme is not applicable for multiple accounts of Principal Account Holder. The Insurance cover is allowed only to one SB account of Principal Account Holder irrespective of the number of SB accounts he/she opens, either in one or multiple branch/es. Sum Assured Rs 1,00,000/- only, irrespective of the balance saving account. Nomination facility In the event of unforeseen demise of the Principal Account Holder, claim amount on settlement shall be paid to the nominee/s or legal heirs, as the case may be, on completion of the required formalities. Policy Period One year from the date of account opening. Bank may consider continuing the scheme at its discretion. Payment of premium To be borne by the bank. Insurance Cover • Insurance Cover is available for accident which means a sudden, unforeseen and unexpected physical event caused by external, violent and visible means. • The insurance is provided under the Group Insurance Scheme from declared Risk Start Date by the Bank. No individual certificate will be provided to the customer. Penalty for notA penalty of Rs.100/- will be charged per quarter for not maintaining maintaining a minimum quarterly average balance of Rs 10,000/-. minimum balance inFurther, if the customer fails to maintain the minimum average the account balance of Rs 10,000/- for three consecutive quarters, the insurance cover will lapse. Settlement of claims Insurance Company reserves the right for admission/rejection of claims. Further a claim is liable to be rejected in case of incomplete submission of documents and/or misrepresentation/ suppression of material facts. Other Terms andAll other terms and conditions applicable to normal HSS Accounts Conditions are also applicable to “Cent Savings Plus Account”

Recurring Deposit with Personal Accident Cover

Recurring Deposit Scheme with free personal accident cover being provided by Central Bank of India in association with Cholamandalam M S General Insurance Company Details of the Scheme are as under:-

Sl No Particulars 1 Recurring Deposit with Personal Accident Cover

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Accounts opened singly / jointly on or after 01.12.2009 Monthly InstallmentMinimum Rs 500/Period Maturity period of two years and above Rate of interest As applicable to RD Scheme Sum Assured Double the maturity value rounded off to the nearest thousand rupees subject to minimum of Rs.25,000 and maximum of Rs.5,00,000/- per RD a/c. Age of the account Not exceeding 65 year as on the date of opening of the holder account. Joint Accounts In case of joint accounts, PA Insurance Cover is given only on the life of the first named person. Multiple Accounts In case of multiple accounts, the coverage will be allowed per person for one RD a/c only, irrespective of the number of RDs he/she has with one or multiple branch of our Bank, in same or different period. Payment of Regular payment of monthly instalments is a instalments precondition for insurance cover. Rate of interest As applicable to Recurring Deposit accounts. Policy Certificate The Insurer will not provide certificate of insurance to individual customers. Others All other terms and conditions applicable to RD Scheme of the Bank are also applicable to this Special Scheme. Effective Date/ The policy shall commence on the Effective Date i.e. date of opening of Risk Start Date Recurring Deposit a/c. Limitation of In the event of accidental Injury resulting into death of the Insured Liability Person, the total benefit payable will be limited to amount stated in the schedule. Cholamandalam MS (Insurer) maximum liability however should not be more than 100% of the Principal Sum. Claims It shall be a condition precedent for any claim to be made by the Insured Notification under the policy or for liability attaching to Insurer hereunder that written notice of claim must be given to Insurer immediately upon the occurrence or commencement of any loss, or as soon thereafter as reasonably possible,

Details Eligibility

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and in any event not later than 40 days of such occurrence or commencement. Time For filing Completed Claim Form with written evidence of loss must be furnished to Claim Forms & Cholamandalam MS within thirty (30) days after the date of such loss. Evidence Failure to furnish evidence within such time as required shall not invalidate or reduce the claim if the insured satisfies that it was not reasonably possible to do so within such time. In any event, no proof furnished beyond one (1) year from the date of loss shall be accepted. List of Following documents are required in respect of the accident leading to documents death i. ii. iii. iv. v. Duly completed Claim form by the nominee Death Certificate Post Mortem Report/Coroner's report FIR / Police Report /Inquest Report Certificate from the bank confirming the validity of the account.

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Particulars Payment of Claims

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Invalid Claim

Details All Claims under the policy shall be payable in Indian currency and to Registered Nominee of Recurring Deposit a/c (Nomination registered with the Bank). The same shall be made after confirmation from Central Bank of India. Any claim paid by the Insurer and received will discharge the Insurer from any further payment for the same claim. All payment made in good faith will discharge to the extent of such payment. If the circumstances of death/contingency are doubtful, Cholamandalam MS may appoint an investigator to verify the authenticity of the accident. Failure to comply with any of the provisions contained in the policy shall invalidate all claims hereunder.
•

Fraudulent And/Or Dishonest And/Or Deceitful Claim(s) : If the Insured, the Insured Person shall make or advance any claim knowing the same to be false or fraudulent as regards amount or otherwise, the policy shall be void and all claims or payments hereunder shall be forfeited. Conditions Precedent To Liability For the avoidance of doubt, it is hereby expressly stipulated and made clear that compliance with the terms and conditions of the policy in so far as these relate to anything to be done by The Insured or on his behalf is a condition precedent to the Insurer liability there

•

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under. Cancellation of The policy may be cancelled by mutual consent by giving 30 days Cover written notice either by Cholamandalam MS or by Central Bank of India. Exclusions The policy does not provide benefits for any death, disability, expense or loss incurred in result of any Injury attributable directly or indirectly to the following:
•

Intentionally self-inflicted injury, suicide or any attempt thereat while sane or insane;

•

Injury or Disease directly or indirectly caused by or contributed by ionizing radiation or contamination by radioactivity from any nuclear fuel or from any nuclear waste from burning nuclear fuel; Injury or Disease directly or indirectly caused by or contributed by the radioactive, toxic, explosive or other dangerous properties of any explosive nuclear equipment or any part of that equipment; war, invasion, act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, mutiny, military or usurped power, seizure, capture, arrests, restraints and detainment of all kinds, princes, and people of whatsoever nation condition or quality, The Insured Person's participation in naval, military or air force operations whether in the form of military exercises or war games or actual engagement with the enemy with foreign or domestic;

•

•

•

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loss sustained or contracted in consequence of the Insured being under the influence of alcohol or drugs unless administered on the advice of a physician; any loss of which a contributing cause was the Insured's actual or attempted commission of, or willful participation in, an illegal act or any violation or attempted violation of the law or

•

resistance to arrest;
•

any loss sustained whilst engaging in aviation or ballooning, whilst mounting into, dismounting from or traveling in any balloon or aircraft other than as a passenger (fare paying otherwise) in any duly licensed standard type of aircraft anywhere in the world; any opportunistic infection and/or malignant neoplasm, if at the time of the accident or sickness the Insured had an Acquired Immune Deficiency Syndrome (AIDS) or having an antibody positive blood test to HIV (Human Immune-deficiency Virus). Opportunistic infection shall include but will not be limited to pneumosystis carinii pneumonia, organism of Kaposi's Sarcoma, central nervous system lymphoma, and/other malignancies now known or which become known as causes of death in the presence of Acquired Immune Deficiency Syndrome; any loss sustained while the Insured is participating in contests of speed using a motorized vehicle or bicycle and/or hunting and/or skiing and/or skydiving and/or gliding and/or mountaineering and/or winter sports; any loss resulting directly or indirectly from or, contributed or aggravated or prolonged by childbirth or from pregnancy. Murder (intentional and unintentional) and suicide

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In addition to the Exclusions listed above, this product shall not cover and no payment shall be made with respect to:
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loss caused directly or indirectly, wholly or partly by: o bacterial infections (except pyogenic infections which shall occur through an accidental cut or wound) or any other kind of disease;
o

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medical or surgical treatment except as may be necessary solely as a result of Injury Termination of Subject to provision relating to cancellation, the policy will terminate Policy on the earliest of the following occurrence:
• • •

The expiry date of the policy, In case of death of the Insured Any claim paid up to the Principal Sum Insured.

CENT Uttam Scheme

Easy

liquidity

&

high

returns-get

the

best

of

both

worlds

Cent Uttam scheme offers you the double benefits of easy liquidity and high returns. It is also a flexible scheme that allows you to withdraw a part of the deposit amount as and when required.

♦ Amount of deposit You can deposit a minimum amount of Rs. 5,000/- and multiples of Rs. 1,000/-. At the time of the acceptance of the deposit, the entire deposit will be placed in 'units' of Rs. 1,000/- each, so as to make available each 'unit' for payment at your option.

♦ Period of deposit You can open an account for a minimum period of 30 days and upto a maximum of 120 months.

♦ Rate of interest The rate of interest shall be the appropriate rate ruling on the date of the deposit for the period so selected.

♦ Pass Book You will be provided with a 'Pass Book' under the scheme. If the 'Pass Book' is spoiled/mutilated or lost, a duplicate 'Pass Book' will be issued after observing other formalities and recovering the usual 'Service Charges'.

♦ Premature payment You will be allowed to withdraw the 'units' as per your option. Such withdrawal of 'units' are treated as 'Premature Payment'. The rules governing 'Premature Payment' shall be applicable for the particular 'units' so withdrawn. The rest of the 'units' shall remain unaffected in the deposit account and shall carry the 'contracted rate of interest' till its maturity. You will be permitted to withdraw 'units' upto a maximum of 10 times during the entire period of deposit.

♦ Loan/advance Loan/advance facility is available under the scheme as per against

Deposit prevailing rules. Monthly Interest Deposit Receipt (MIDR)

Earn

monthly

interest

without

depleting

your

principal

The MIDR scheme provides you with monthly interest earnings, without affecting the principal amount.

♦ Amount of deposit You can deposit a minimum amount of Rs. 5,000/- and in multiples of Rs. 1000/-.

♦ Period of deposit You can open an account for periods ranging from 12 months to 120 months.

♦ Rate of interest The rate of interest shall be the appropriate rate prevailing on the date of the deposit for the period so selected.

♦ Certificate / Receipt After completion of formalities you will be issued a printed receipt (Monthly Interest Deposit Receipt) with all particulars filled in as sr. no., your name, amount of deposit, period of deposit, date of deposit, due date of deposit, interest rate and interest payable every month etc.

♦ Premature payment Payment before maturity is available as per prevailing rules.

♦ Loan/advance against deposits Loan/advance facility is available under the scheme as per prevailing rules. CENT Tax Saving Deposit

♦ Type of Deposit: An individual or a Hindu Undivided Family (HUF) who is an Income Tax assessee with Permanent Account Number.

♦ Mode of Holding: Deposits may be of following types: » Single holder type deposits. » Joint holder type deposits. » The single holder type deposit receipt shall be issued to an individual in personal name or in the capacity of the Karta of the Hindu undivided Family. » The joint holder type deposit receipt may be issued jointly to two adults or jointly to an adult and a minor, and payable to either of the holders or to the survivor Provided that in the case of joint holder type deposit, the Deduction from income U/S 80/C sub section 2(XXI) of the Act shall be available only to the first holder of the deposit.

♦ Tenure of the Deposit: Fixed period of 5 years.

♦ Amount: Minimum: Rs.100/- or multiples thereof. Maximum: Rs.1,00,000/- (Rs. One Lac only) in a financial year.

♦ Rate of Interest: The rate of interest to be applied to Cent tax Savings Deposit Scheme will be in accordance with the interest rate on domestic term deposits (upto Rs. 15 lacs) applicable to the five-year term. Click Here to view the interest rate on domestic term deposits.

♦ Deposit options: Deposit may be in the form of Monthly Interest Deposit/Quarterly Interest Deposit or Reinvestment Plan (Cumulative).

♦ Nomination facility: Available as per existing nomination rules. However, no nomination shall be made in respect of a Term Deposit applied for and held by or on behalf of a minor.

♦ Term Deposit Receipt: The receipt for such type of Term Deposits will be designed specially, which shall bear the name, address, permanent account number and signature of the depositor(s) etc. in addition to other features.

♦ Income Tax Benefits: Investments under this Scheme are eligible for deduction from Income up to a maximum of Rs.100,000/-U/S 80Cof the Act in a financial year. However, the interest accrued or paid in such deposit is taxable and subject to TDS as per existing rules.

♦ Premature Payment/Loan Facility: Premature payment and Demand Loan/Overdraft facility is not allowed. The deposit receipt cannot be pledged for any type of loan or as a collateral security for any facility. CENT Bal Bhavishya

Though existing Schemes for minors in our Bank namely Savings Account, Recurring deposit and all other Time deposit accounts are there, we need to have some attractive Scheme for the minors. Hence, with a view to attract more low cost deposit and cultivating habit of saving by minors for longer period and for their careers a new deposit Scheme has been formulated.

♦ Eligibility: Any child up to the age of 12 years can open this account with his parent (Father/Mother) or legal guardian.

♦ Initial Deposit: An account can be opened with initial deposit:

» In Rural & Semi Urban Branches: Rs. 50/» In Urban & Metro Branches: Rs. 100/-

♦ Minimum Credits & Balance: There should be at least one credit in the account every month and the minimum aggregate credit in the account during each half-year should be as under:

» In Rural & Semi Urban Branches: Rs.500 » In Urban & Metro Branches Rs.1000

There is no restriction on number of deposits in this account.

♦ Withdrawals: Withdrawal is not permitted in this account till the child attains the age of 18 years, except for the purpose of making fixed deposit.

♦ Issuance of Cheque Book: No Cheque Book is allowed in this account till the child attains the age of majority.

♦ Convertibility of Balance into Time Deposit: In this account there is option available to convert balance in excess of Rs.10,000/- from savings Account to cumulative time deposit scheme, i.e. MMDC for a period of six months to maximum ten years depending upon the age of the child. The guardian can exercise this option any number of times.

♦ Rate of Interest: » The Branches will allow the Savings Deposit Interest rate as per RBI guidelines from time to time, at present it is. @3.5% p.a. payable half yearly. » On Time Deposit made out from Bal Bhavishya Savings Account additional interest of 0.5% p.a. will be allowed over and above the card rates. This additional interest will be available only till the child attains the age of "majority" and thereafter normal rate will be paid. Senior Citizen Deposit Scheme

Making

life

easier

for

senior

citizens

The unique feature of the scheme is an incentive to senior citizens by way of additional interest over and above normal rate of interest on any of our existing term deposit schemes. This facility will be available to fresh deposits and renewal of maturing deposits. If you have completed the age of 60 years, you will be treated as a senior citizen for getting the benefit under this scheme.

♦ Amount of deposit The minimum amount of deposits accepted will be as per the criteria laid down for the deposit scheme which you opt for.

♦ Period of deposit Your deposits may be accepted for any period between 15 days (minimum period as applicable to various deposit schemes) and 120 months.

♦ Incentive on Rate of interest An additional interest rate of 0.50% p.a. over and above the normal rate of interest for any of the Time Deposit Schemes will be given as incentive for deposits of Senior Citizens who are above 60 years of age.

♦ Certificate / Pass Book Certificate or 'Pass Book' will be issued to you according to the deposit scheme such as 'Pass Book' will be issued for Khazaana and Certificate will be issued for MMDC, MIDR and QIDR.

♦ Premature payment Payment before maturity is available as per prevailing rules subject to withdrawal of incentive of relevant additional interest.

♦ Loan/advance against deposits Loan against deposits is available as per prevailing rules.

♦ Add-on facilities to Senior Citizens in savings bank account The following additional incentives are available to you. Money Multiplier Deposit Certificate (MMDC)

Multiply

Your

Deposits

The interest accrued gets added back to the principal giving you an effective interest rate that is higher than the contracted interest rate. This is an ideal scheme to increase your deposits exponentially.

♦ Amount of deposit You can deposit a minimum amount of Rs. 100/- and multiples of Rs. 100/-.

♦ Period of deposit You can open an account for a minimum period of 6 months and upto a maximum of 120 months.

♦ Rate of interest The rate of interest shall be the appropriate rate prevailing on the date of the deposit for the period so selected.

♦ Deposit certificate After opening of the account in the ledger, you will be issued a printed certificate (money multiplier deposit certificate) with full particulars filled in such as Sr. No., Your name, amount of deposit, period of deposit, date of deposit, due date of deposit, interest rate of deposit and maturity value etc.

♦ Premature payment Payment before maturity is available as per prevailing rules.

♦ Loan/advance against deposits Loan/advance facility is available under the scheme as per Prevailing rules. CENT Bachat Khata

With a view to make basic banking services available to vast section of the society, Central Bank of India has launched the No-Frills Savings Deposit Account "Cent Bachat Khata". The broad features of the product are:

♦ Any person of twelve years of age can open this account individually or joint with another person/s. Account can be opened in the name of minor with natural guardian.

♦ An account can be opened with initial deposit of Rs.50/-. Minimum balance of Rs.50/-

♦ No service charges for non maintenance of the minimum balance.

♦ 50 (Fifty) withdrawals per year free of charge.

♦ One cheque book per year free of charge.

♦ Total credits in a year should not exceed Rs.1,00,000/- lac and balance in the account should not exceed Rs.50,000/- in all accounts taken together.

♦ Nomination facility is available.

♦ For introduction simplified KYC procedure is applicable. Bank's existing client who has fulfilled full KYC norms can introduce the customer's identity and certify the address.

♦ Interest at Saving Bank rate i.e. @ 3.5% is allowed.

♦ Account can be opened in any Branch of Bank Quarterly Interest Deposit Receipt (QIDR) Principal QIDR provides you quarterly interest without affecting the principal amount. Intact

♦ Amount of deposit You can deposit a minimum amount of Rs. 5,000/- and in multiples of Rs. 1000/-.

♦ Period of deposit You can open an account for periods ranging from 12 months to 120 months.

♦ Rate of interest The rate of interest shall be the appropriate rate prevailing on the date of opening of the account for the period so selected.

♦ Certificate / Receipt After completion of formalities you will be issued a printed receipt (Quarterly Interest Deposit Receipt) with all particulars filled in as sr. no., your name, amount of deposit, period of deposit, date of deposit, due date of deposit, interest rate and interest payable every quarter etc.

♦ Premature payment Payment before maturity is available as per prevailing rules.

♦ Loan/advance against deposits Loan/advance facility is available under the scheme as per prevailing rules. Central's Flexi Yield Deposit Scheme

Reap higher returns Under this scheme depositors can avail floating rate of interest which is higher than the interest rate on normal Term Deposits.

♦ Amount of deposit Rs. 50,000/- and thereafter in multiple of Rs. 5,000/-

♦ Period of deposit One year and above and upto a maximum of 10 years.

♦ Rate of interest Rate of interest shall be the appropriate rate prevailing on the date of deposit.

♦ Premature payment Payment before maturity is available. However, in such cases the deposit will be treated as normal deposit and interest will be paid as per our prevailing rates applicable to normal deposits. Further, the extra interest paid on Central's Flexi Yield Deposit will be recovered.

♦ Loan/advance against deposits Loans and advances against deposit is available in the scheme as per prevailing rules

.

INTERNATIONAL BANKING

Facilities To NRIs Returning To India

A Non Resident Indian who returns to homeland (India), is allowed to open, hold and maintain account in foreign currency with Authorised Dealer banks in India. The account is called ‘RESIDENT FOREIGN CURRENCY (RFC) ACCOUNT’.

RFC account may be opened by an individual in the form of savings, current or term deposit account. Account can be opened singly or jointly.

Foreign exchange from following sources will be credited to RFC Account:

•

Pension or any other superannuation or other monetary benefits from his employer outside India;

•

Realisation proceeds of foreign assets currency notes, deposits, including foreign security or immovable property situated outside India acquired, held

or owned by such person when he was a person resident outside India;

•

Realisation proceeds of assets acquired as gift or inheritance from a person outside India;

•

Proceeds of Insurance Policy claims, maturity /surrender values settled in foreign currency from an insurance company in India permitted to undertake life insurance business by Insurance Regulatory and Development Authority.

•

Balances held in NRE Savings, Current Account is eligible for conversion into foreign exchange and crediting to RFC account.

•

NRE term deposit and FCNR(B) deposit held in the name of account holder can be credited to RFC account. No penal interest is charged for pre-mature closure of NRE/FCNR(B) deposit for crediting the funds to RFC account of the account holder.

Utilisation of funds lying in RFC Account

•

The funds in a RFC account are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment in any form, by whatever name called, outside India.

•

Remittance of foreign exchange from RFC account for the transactions totally prohibited by Government of India would not be allowed.

•

Funds can be utilized for all local payments by converting foreign exchange into Rupee.

Nomination Facility:

RFC account holder may nominate a resident or non-resident person as nominee.

In case of nominee being non-resident, funds to the extent of nominee’s share or entitlement from the deceased account is freely repatriable without approval of Reserve Bank of India.

A resident nominee, desirous of sending funds outside India to meet the liabilities of deceased account holder is allowed to do so after getting approval from Reserve Bank of India.

STATUS OF RFC A/c WHEN ACCOUNT HOLDER TURNS NRI AGAIN On RFC account holder’s becoming NRI again, he/she is entitle to transfer his RFC funds to Non-Resident External Account or convert it into FCNR (B) deposit. Facilties for Exporters & Importers Exporters

♦ Exporters are provided timely and adequate credit to meet the exports commitments. ♦ Exporters are allowed pre and post-shipment credit at competitive interest rates. ♦ Export Credit is made available both in Indian Rupee and Foreign Currency as well. ♦ All eligible exporters are issued ‘GOLD CARD HOLDER" status. In addition to better terms of credit, an additional ‘in principle' export credit (standby) limit of 20% is sanctioned to Gold Card Holder Exporters for a period of 3 years to meet their urgent credit needs for executing sudden export orders. ♦ ‘GOLD CARD HOLDER' Exporters' requests are processed quickly within 25 days / 15 days and 7 days for fresh applications / renewals of limit and ad hoc limits, respectively.

♦ ‘GOLD CARD HOLDER' exporters are given preference in disbursal of foreign currency loans under PCFC.

Importers

♦ We provide import loan at attractive rates to importers of imported inputs and capital goods. ♦ Import loan is allowed in Indian Rupee and in Foreign Currency. ♦ To enable importers avail of credit for their purchases, we also issue Documentary Credits (Letter of Credit and Standby Letter of Credit) favouring overseas supplier. ♦ Import LCs are issued and transmitted by fastest electronic means using ‘SWIFT' systems. ♦ "Trade Credit" is arranged for importers in line with RBI guidelines. We arrange ‘Buyers' Credit' and ‘Suppliers' Credit'. We issue Letter of Credit, Letter of Comfort, Letter of Undertaking to facilitate importer arrange for ‘Trade Credit' at better rates. Foreign Exchange Remittance Facilities to Resident Indians Available on the strength of Application cum Declaration Form A2. Foreign Currency Notes for Private Visits abroad

For Private visits – An Individual is eligible for total USD 10,000 or its equivalent per financial year for, for one or more such visits.

In case of private visits to Iraq and Libya, currency notes to the extent of USD 5000 or its equivalent may be released.

While entire amount of USD 10,000 or its equivalent can be released in the form of currency notes for private visits to Iran and Commonwealth Independent States

Countries ( i.e. former USSR).

Rest of the countries, currency notes would be released upto USD 2000 or its equivalent.

RESIDENTS ALLOWED TO RETAIN UNSPENT FOREIGN CURRENCY NOTES TO EXTENT OF USD 2000 or its equivalent.

RELEASE OF FOREING EXCHANGE FOR VARIOUS PURPOSES

Purpose Education Medical treatment Emigration Employment abroad Private Visits abroad Business Travel, training, conference, seminar, etc. Commission to agents abroad for sale of residential flats/ commercial plots in India

Ceiling upto which Authorised Dealer Banks can release foreign exchange to customers USD 100,000 or equivalent per academic year USD 100,000 or equivalent or to the extent of amount estimated by the Doctor in India or hospital/ doctor abroad. USD 100,000 or equivalent prescribed by country of emigration. USD 100,000 or equivalent per person going abroad. USD 10,000 or equivalent per financial year USD 25,000 or equivalent per trip irrespective of period of stay. USD 25000 or equivalent of the inward remittance whichever is higher.

LIBERALISED REMITTANCE SCHEME OF USD 200,000.00

All resident individuals are allowed to remit upto USD 200,000.00 or its equivalent per financial year for all permitted current and capital account purposes or combination of both. Acquiring immovable property, shares abroad, gift/ donation

included. Remittances under the scheme is not allowed to:

•

Nepal, Bhutan, Pakistan and Mauritius, and

•

Countries placed under 'Non Co-operative Countries and Territories' by Financial Action Task Force

MoneyGram / ExpressMoney Central Bank of India announces tie up arrangements with:

•

Thomas Cook (India) Ltd. for MoneyGram International Money Transfer, and

•

UAE Exchange Center LLC for XpressMoney Transfer Available to everyone - Resident in India need not have account, he/ she receives Cash payment* on production of photo identity

Payment received through these services cannot be credited to NRE Account

* Subject to Reserve Bank of India guidelines and limits prescribed as per rule

Non-Repatriable Investments on non-repatriable basis:

♦ Government dated securities (other than bearer securities) / treasury bills. ♦ Units of domestic mutual funds. ♦ Units of Money Market Mutual Funds in India. ♦ Non-convertible debentures of a company incorporated in India. ♦ The capital of a firm or proprietary concern in India, not engaged in any agricultural or plantation activity or real estate business. ♦ Deposits with a company registered under the Companies Act, 1956 including NBFC registered with RBI, or a body corporate created under an Act of Parliament or State Legislature, a proprietorship concern or a firm out of rupee funds which do not represent inward remittances or transfer from NRE/FCNR(B) accounts into the NRO account. ♦ Commercial paper issued by Indian Company. ♦ Shares and convertible debentures of Indian companies other than under Portfolio Investment Scheme.

Opening of NRI Accounts

As a Non Resident Indian, you can open:

•

NRE Savings / Current Account

•

NRE Fixed Deposits in Indian Rupees (NRE Time Deposit).

•

Fixed Deposits in Foreign Currency [FCNR (B)] in USD, GBP, EUR, CAD and AUD.

•

NRO (Non Resident Ordinary) Account for crediting your income in India, sales proceeds of immovable property), inward remittance.

•

A resident may be authorised to operate your account through a Power of Attorney / Letter of Authority to operate account.

•

Nomination Facility is available. Nominee can be a resident India or a nonresident. Payment and Repatriation of balance to non-resident nominee account will be as per extant RBI/Bank Rule.

How to open Account:

Complete the account opening form and mail it to the branch of your choice along with:

•

Passport Copy and Resident Visa - copies of these documents duly attested by Banker/ Notary Public/ India Embassy/ Employer to the satisfaction of the Bank.

Your signature on application form may be verified by anyone of the following:

•

Indian Embassy / Consulate.

•

Any person known the Bank.

•

Notary public.

During your temporary visit to India, you may open account even by tendering foreign currency notes / foreign currency travelers cheques by personal visit to Branch. Currency Declaration Form (CDF) will have to be produced if foreign currency notes is exceeding USD 5000 or its equivalent and combination of foreign currency notes and travelers cheque exceeding USD 10,000 or its equivalent.

Features of NRI accounts

NRE Who can open NRI or Person of Indian Origin*

FCNR(B) NRI or Person of Indian Origin* US Dollar, Euro, Pound Sterling, Canadian Dollar, Australian Dollar Time Deposit One Year to Five Years. Yes, provided joint account holders is also an NRI. Inward remittance from abroad through normal banking channel. Transfer from another NRE/FCNR Account held with other branch / Bank. Personal cheques, drafts in foreign currency. Travelers cheques in own name and foreign currency notes tendered in person while on a temporary

NRO NRI or Person of Indian Origin* Indian Rupee

Currency of Indian Rupee account

Type of A/c Savings, Current, Time Term of Deposit One Year to Three Years

Savings, Current, Time On par with domestic time deposit. Yes, joint holder may be a resident or a nonresident. Inward remittance from abroad through normal banking channel. Transfer from another NRE / FCNR Account held with other branch / Bank. Personal cheques, drafts in foreign currency. Travelers cheques and foreign currency notes tendered in person while on a temporary visit to India. And

Whether Yes, provided joint Joint A/c is account holders is Permitted also an NRI. Sources of credits in account Inward remittance from abroad through normal banking channel. Transfer from another NRE/FCNR Account held with other branch / Bank. Personal cheques, drafts in foreign currency. Travelers cheques in own name and foreign currency notes tendered in person while on a temporary

visit to India.

visit to India.

Local Income - Rent, interest, pension, dividend, sale proceeds of assets held in India including Immovable property. Current earnings from local sources like interest, rent, pension, sale proceeds of assets including immovable property, net of tax is repatriable upto USD 1.00 Million per financial year. Allowed, subject to conditions applicable to domestic deposits.

Whether repatriable

Yes. Principal and interest, balance in the account is fully repatriable.

Yes Principal and interest, balance in the account is fully repatriable

Pre-mature closure of time deposit

Allowed subject to 1% penal interest. No interest payable if deposit is closed before minimum period of one year. No.

Allowed subject to 1% penal interest. No interest payable if deposit is closed before minimum period of one year. No.

Is interest on deposit taxable

Yes, interest on deposit is taxed at source, at rates prevalent. Available

Nomination Available

Available

* Opening of account by Citizen of Pakistan, Bangladesh or Sri Lanka will be subject to approval from Reserve Bank of India

Repatriable Schemes Investments on Repatriable basis:

♦ Government dated securities/treasury bills.

♦ Units of domestic mutual funds.

♦ Bonds issued by public sector undertakings in India.

♦ Non-convertible debentures of a company incorporated in India.

♦ Shares in public sector enterprises being disinvested by the Government of India, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids.

♦ Shares and convertible debentures of Indian companies under FDI scheme (including automatic route & FIPB).

♦ Shares and convertible debentures of Indian companies through stock exchange under Portfolio Investment Scheme.

♦ Perpetual debt instruments and debt capital instruments issued by banks in India.

OTHER SERVICES
MasterCard Prepaid Gift Card

The Central Bank of India MasterCard® Prepaid Gift Card is a prepaid card designed to be given as a gift. Funds are loaded onto the card when purchased and then the card is able to be used to make purchase wherever MasterCard is accepted in stores, online and over the phone within India. A prepaid card is not a credit card as no credit facility is extended, nor is it a debit card as it is not linked to a bank account. Instead MasterCard Prepaid requires funds to be loaded onto a card before the user is able to make purchases with it.

Central Bank Gift Card Features

• • • • • • • •

Accepted in stores, online and over the phone wherever MasterCard is accepted Domestic use only No ATM use The card can be loaded with any amount between Rs. 500 to Rs. 50,000 Check card balance online and via mobile phone Card Expiry - printed on the card (36 months from date of production) MasterCard® SecureCodeTM protection for online purchases Not reloadable - once the balance has been spent or the card expires the card can be disposed of

Selling the Gift Card in Branch
• • • • • • •

• • • •

• • • • •

•

Cards are sold and issued instantly at Central Bank of India branches in values ranging from Rs.500 to Rs. 50,000 - whichever the purchaser chooses The gift value is loaded onto the card when it is purchased and the card is activated automatically within 12 hours of purchase The monetary value loaded onto the card can only be used by the card holder to make purchases at merchants in India where MasterCard is accepted Cards are not reloadable and once the value is used up the card can no longer be used and has no value The card is not linked to a bank account and is not a credit card Cards have an expiry date on the front of the card and cannot be used after that expiry date Any value remaining on the card when it expires is forfeited meaning the card holder can no longer use the card and the funds remaining on the card will not be returned Gift cardholders can login and register their personal details at the website Cardholders can check their balance and transaction history at the website or by using their mobile phone - need to register mobile phone at website first Cards can be used to make purchases on the Internet Cardholders can register for MasterCard® SecureCodeTM for added protection when shopping online by either visiting the card website and following the instructions provided or by being prompted to register when they shop at an online merchant who supports this service Purchasers are required to provide proof of identity at the time of purchase refer to the Identity Verification Form provided Cards are issued by the Central Bank of India Card is anonymous (i.e. it does not have cardholder's name on it) The card holder should sign on the reverse of the card immediately on receiving the card Once purchased Gift Cards should be treated like cash. If the card is lost or stolen it cannot be replaced and is the responsibility of the card holder. However, the card holder can call up the Customer Care Centre and freeze operations of the card Please direct all Central Bank Gift Card customer service inquiries to Rêv Card holder Services who can be contacted on 1800 209 9293 or direct them to the website at www.centralbankgiftcard.co.in

•

Any number of cards can be purchased as a gift by a customer / non-customer.

Frequently Asked Questions What is a Central Bank of India MasterCard® Gift Card? A Central Bank of India MasterCard® Gift Card is a MasterCard® Prepaid Gift Card that can be used at merchants where MasterCard is accepted for electronic transactions (excluding ATMs or cash withdrawals). Because the card is prepaid, spending on it is limited to the amount of money loaded on the card when it was purchased. Is it a credit card? No. Central Bank Gift Cards have a positive prepaid value so spending on it is limited to the amount that was loaded onto the card at the time it was purchased. There is no credit facility on a Gift Card. Where can I get a Central Bank Gift Card? Central Bank Gift Cards are for sale in select Central Bank of India bank branches. They cannot be purchased online. How much money can you load onto a Gift Card? You can purchase a gift value between Rs. 500 to Rs. 50,000. Who can buy or receive a Central Bank Gift Card? Anyone. To comply with Financial Services regulation in India personal identification will be required by the purchaser of the card. The purchaser of the card does not need to be a customer of the Central Bank. What are acceptable forms of identity verification? To complete successful identity verification the card purchaser must be able to verify their identity, signature and address. A range of documents are acceptable to achieve this. Where can Central Bank Gift Cards be used? Central Bank Gift Cards can be used at any merchant where MasterCard is accepted in store, online and over the phone. It cannot be used at ATMs. Can I withdraw cash? No. Your Central Bank Gift Card is for purchases only.

Does my Central Bank Gift Card require a PIN? No. When making a purchase in store you will need to sign the receipt each time you make a purchase. How do you make purchases online and over the phone with a Gift Card? You will be asked for the card number, expiry date and CVV2. The card's CVV2 number is the last three numbers on the signature strip on the back of the card. What happens if I want to purchase something that costs more than I have left on my card? You will need to ask the merchant if you can use your card for part of the payment and pay the remainder using another payment method. If you try to make a purchase that costs more than the available balance left on your card your transaction will be declined. Are there any fees to use a Central Bank Gift Card? No, there are no fees to make a purchase with your Gift Card. Can a Central Bank Gift Card be reloaded? No. Once the balance is used up the card is no longer of use. However, you can go to a participating Central Bank of India branch and purchase another card. What happens if a Central Bank Gift Card is lost or stolen? Your Central Bank Gift Card is like cash so keep your card safe at all times because it cannot be replaced if lost or stolen. What should I do to dispute a transaction on a Central Bank Gift Card? If you have any concerns about a transaction on your Central Bank Gift Card, you should in the first instance contact the merchant directly to resolve the issue. If you are unable to resolve the issue with the merchant you can complete a disputed transaction form available at the website. Does my Central Bank Gift Card expire? Yes. Every card has an expiry date printed on the front in a MM/YY format. Can unused funds be redeemed? No. Can funds be redeemed after a Central Bank Gift Card expires? No. We suggest the card holder uses all funds available before the card expires.

Can more money be added to a Central Bank Gift Card? No. Once funds on the card have been used or it expires, it is no longer valid and can be destroyed. Do cards need to be activated before they can be used? Cards purchased in branch will be activated within 12 hours of purchase. What is YAP? YAP is a mobile service that enables you to check your card balance and the last transactions made using your mobile phone. Do I register for YAP? YAP comes automatically loaded on your Gift Card; all that's required is your mobile number. To get YAP registered against your Gift Card login to the website and enter your mobile phone number. Once you have provided your mobile number you will receive SMS prompts to get you started. Who is Rêv? Rêv is an innovative payment solutions company who designs, markets and distributes a range of prepaid MasterCard and Visa cards designed to meet the needs of consumers underserved by traditional financial services. What does Rêv have to do with the Central Bank Gift Card? Rêv is the program manager behind the Central Bank Gift Card. They bring an integrated prepaid processing and mobile payment platform and worldwide expertise in providing innovative payment solutions. Visa Platinum Card Our Bank is the first Indian Public Sector Bank to launch Visa Platinum card with the following features:

Domestic and International Acceptance Global acceptance at more than 29 million Merchant outlets and 1 million ATMs. High-ended Premium card with all features, value additions that a corporate and global traveler expects Concierge Service in most of the countries 24*7*365

Air Accident Group Insurance coverage to the tune of Rs.20 lacs. Zero Lost card liability upto Rs.50000/- per day, post reporting Period and Seasonal discount offers at hotels, exclusive shopping offers all through the year Age criteria to apply for Visa Platinum - 21 years to 65 years Income Criteria: Above Rs.500000/- p.a. Revolving Credit facility is offered , as an option Availability of Corporate card facility for Limited Companies Auto Debit Facility available SMS alerts for payments due, received and online SMS alerts for high value and Cash transactions

Bank Visa Gold Card Another Premium card under the franchise of VISA from Central Bank of India with the following features

Card with Domestic and International Acceptance Revolving Credit facility Issued without any Enrolment/ Annual Fee Issued to cardholders with an annual income above Rs.1.5 lacs SMS alerts for payments due, received and online SMS alerts for high value and Cash transactions Age criteria to apply for Visa Gold - 21 years to 65 years Zero Lost card liability upto Rs.50000/- per day, post reporting Revolving Credit facility is offered, as an option Availability of Corporate card facility

Auto Debit Facility available Availability of Corporate card facility for Limited Companies 24*7*365 Helpline for cardholders

Cash Management Services We are offering Cash Management Services to Correspondent Banks and Corporate clients for managing their receivables and payments across the country. Our collection and payment services are as under.

A) Collections Products

Central's Cent QCC Cent QCC services offer faster collection of out station cheques drawn on 345 locations enhancing liquidity and better Cash Management with assured credit on Day 7 at lower cost. Under this services, Correspondent Bank deposits cheques at any of our 9 CMS Branches and 22 QCC locations.

•

Cent Non-QCC : Cent Non-QCC services are available on more than 2000 locations with assured credit on Day 12.

•

Cent Express : Cent Express services offer collection of cheques drawn on 110 major Metro and Urban locations with assured Day 4 credit.

Cent Instant : Cent Instant services offer Day 1 credit for cheques drawn on our 345 locations. Date of deposit in all cases is treated as Day-0. Local Cheque Collection (LCC) services:
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Under this arrangement, Local Cheques are deposited by representative of correspondent Bank/Corporate clients at the respective location with our branches before cut off time fixed for clearing (Day 0) and the clear funds are pooled at Nodal Branch, Mumbai on Day 2 by fax TT for payment to corporate/ correspondent banks.

Bulk Local Cheque Collection (BLCC) services : Post dated cheques of small value in large number are collected through our various locations as per correspondent Banks/corporate clients requirement. Under this arrangement the clear funds are pooled at Nodal Branch and credit is given on weekly basis / as per arrangement.

B) Payment Products

DD Drawing Arrangement : Correspondent Banks print the DD’s in favour of their customer at their cost and stationary on our 575 specified branches. Funding is made to the Nodal Branch on next working Day through RTGS alongwith list of DD’s issued. Nodal Branch prints the advice and send to the specified branches on the same day. On presentation of Draft, the specified branches pay the same on the basis of Signature album and advice. At Par Payment Of Dividend Warrants / Interest Warrants. Correspondent Banks with Mandate from their corporate customers make funding to our Nodal Branch, one day before Date of Dividend Warrant / Interest Warrant. Bank has selected 300 locations for payment of this facility. TT Payout Arrangement. Corporate clients/ Correspondent Banks make funding to the Nodal Branch through RTGS and furnish list of beneficiary alongwith list of locations for remittance through TT. The remittance is made to the concerned branch by 3 P.M. on the same Day / Next day 11 A.M. and accordingly the beneficiaries account maintained with paying branches is credited. Pricing Pricing is variable depending on the monthly volumes, average cheque amount etc. Who can avail Cash Management Services:

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Corporates

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Public, Private & Joint Sector Company

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Existing Partnership Firms

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Existing Proprietorship Firms

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Individuals & Institutions

Benefit to Customers:

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Better Cash Management

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Regular Computerized MIS/Reports

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Instant Liquidity

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Faster and Higher turnover

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Higher Income and Profitability

Bancassurance

With a view to provide " one stop banking" to the valued customers, Central Bank of India has undertaken selling and distribution of Life Insurance products and General Insurance products through it's branches. The Bank has tied-up with two most trusted insurers Life Insurance Corporation of India & The New India Assurance Co. Ltd.The arrangement is to undertake insurance business as corporate agent of both the insurance companies on fee basis without any risk participation. Insurance Regulatory & Development Authority (IRDA) has issued Bank composite corporate agency lisence, which is valid upto 24.03.2009. Life Insurance Corporation of India has allotted us agency code no.80001904 and The New India Assurance Co. Ltd has allotted agency code no.900073 authorizing Bank to distribute their various products through our branches accross the country. Bank has trained a good number of its officers who have been authorized by IRDA to act as specified persons for selling insurance products. The most popular products of Life Insurance Corporation of India and The New India Assurance Co. are as under: Life Insurance Corporation Of India (LIC) Products

LIC has a policy for every age, a scheme for every family, a plan for every need.Be it risk cover, provision for child's education, marriage, health care or pension, LIC has 40 plans to suit every need. Some of the most popular plans/products are as under:

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Unit linked plan

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Whole life plan

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Children's plan

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Money back plan

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Endowment

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Pension

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Health Insurance

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Group Insurance plan

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Jeevan Plus

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Bima bachat.

These products are sold through all our branches throughout the country besides other products of LIC New India Assurance Co. Ltd. (General Insurance) Products

Some of the products are as under:

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Fire insurance

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Burglary insurance

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Engineering insurance

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Marine insurance

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Motor insurance

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Rural insurance

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Overseas mediclaim insurance

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Package insurance

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Liability insurance

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Group personal accident insurance

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Group mediclaim

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Individual mediclaim

Customers may bank on us for their insurance needs too.

Mutual Funds About Mutual Funds

Mutual Funds pool money of various investors to purchase a wide variety of securities while pursuing a specific goal. Selection of Securities for the purpose is done by the specialists from the field. Returns generated are distributed to the Investors.

Mutual Fund Companies offer various schemes. The investors can choose any particular Fund/Scheme or mix of Funds/Schemes depending upon their perception towards risk. Investment is done on the basis of prevailing Net Asset Values of various schemes. Types of Funds Sold

We help you determine which types of funds you need to meet your investment goals. This may include the following types of funds:

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Debt: Liquid schemes, Income schemes, G-sec schemes, Monthly Income Schemes etc.

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Equity: Diversified Equity Schemes, Sector Schemes, Index Schemes etc.

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Hybrid Funds: Balanced Schemes, Special Schemes - Pension,, Child education Schemes etc.

At Central Bank, our AMFI (Association of Mutual Funds of India) certified advisors would help you to select the most suitable Mutual Fund schemes for your portfolio through asset allocation strategies. Through the selected Branches of Central Bank of India you can invest in various schemes of UTI Mutual Fund, Tata Mutual Fund Franklin Templeton Mutual Fund. All these fund houses have decent performance record. Mutual Funds Investments are subject to Market Risks

Depository Services What is a Depository?

A Depository is an organization, which holds investors' securities in electronic form. The depository also provides services related to various transactions in such securities. A depository interfaces with its investors through Depository Participants.

Depository Participants maintain investors' accounts (Demat accounts), which are similar to Savings Bank/Current accounts with a Bank. Purchase and sale of securities can be done through Demat account. Why open a Demat account? It helps you to avoid the trouble of storing share certificates, remember record dates, book closure period, validity date of transfer deeds, maintain record of securities held etc. It reduces paperwork and quickens the transactions and payment settlements. As a Depository Participant of Central Depository Services (India) Ltd. (CDSL), Central Bank of India facilitates to open Demat Account at any of the following Designated Branches and view your holdings through Internet.

Fees Schedule for Investers

Sr. PARTICULARS No. 1 Account Opening Charges 2 3 4 5 6 Account Maintenance Charges Documentation Charges Custody Charges Purchares (Market/Off Market) Sale ((Market/Off Market)

INVESTORS Nil Rs .200/- (For Corporate A/Cs Rs. 700/Actual Stamp Cost Nil Nil 0.20%of the transaction Value (Mini. Rs.20/- per transaction) Rs. 2/- Per Certificate Rs. 25/Rs.25/- Per Certificate Rs.25/0.02% of the transaction value (Minimum Rs 25/- per transaction.)

7 8 9 10 11

Dematerialization Postage per Demat Request Rematerialization Postage for Remat Request Creation /Confirmation of Creation of Pledge

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Closure / Confirmation of Closure 0.02% of the transaction value (Minimum of Pledge Rs 25/- per transaction.) Pledge Invocation 0.02% of the transaction value (Minimum Rs 25/- per transaction.) Nil Nil Rs.50/Rs. 10/- per Transaction Rs. 25/All Taxes/Services Tax/Levies/cess as applicable

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14 15 16 17 18 19

Account Closing Charges Securities Leanding Securities Borrowing Late Transaction Charges Failed Transaction/Rejulition Other Charges

Debit Card Convenience at your fingertips The debit card is the most convenient and secure way to access your account globally. With the debit card you can Withdraw money and check account balances from ATMs. Make purchases of goods and services at stores, restaurants etc. Your account with the Bank gets debited online after verification of your PIN and the cash or goods/services are dispensed to you. You will get a listing of these transactions on your account statements/passbook.

Features

Direct online debit to your savings or current account (in your personal name). Globally accepted at Merchant Establishments displaying the Maestro/Cirrus logos. Over 5.3 million Merchant Establishments and 600,000 ATMs are available for

accessing your account anywhere, anytime. 24-hour Customer Call Centers available in India. Zero lost card liability. Replacement Card. Itemised billing on your statement/passbook.

Validity The validity of the card is increased to ten years w.e.f. February 2009

Fees and Charges There are no transaction charges at the ATMs of Central Bank of India. No Transaction charges are levied at non-Central Bank Maestro/Cirrus ATMs.

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Service charge of 2.5% on Petrol Pump transactions.

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Transaction charges for usage of card at overseas ATMs: Rs. 150 for each cash withdrawal.

Lost Card Liability If your Debit Card is lost or stolen, you are protected from fraudulent transactions from the moment you report the loss to the Bank. You have to bear the loss sustained up to the time the Bank receives the information of any loss, theft or copying of the card. Replacement of Lost Card A new card will be issued and sent to you within a week of reporting the loss of the card for a fee of Rs. 100.

CONCLUSIONS

Retail banking is the fastest growing sector of the banking
industry with the key success by attending directly the needs of the end customers is having glorious future in coming years. Retail banking sector as a whole is facing a lot of competition ever since financial sector reforms were started in the country. Walk-in business is a thing of past and banks are now on their toes to capture business. Banks therefore, are now competing for increasing their retail business. There is a need for constant innovation in retail banking. This requires product development and differentiation, micro-planning, marketing, prudent pricing, customization, technological upgradation, home / electronic / mobile banking, effective risk management and asset liability management techniques. While retail banking offers phenomenal opportunities for growth, the challenges are equally discouraging. How far the retail banking is able to lead growth of banking industry in future would depend upon the capacity building of banks to meet the challenges and make use of opportunities profitably. However, the kind of technology used and the efficiency of operations would provide the much needed competitive edge for success in retail banking business. Furthermore, in all these customer interest is of chief importance. The banking sector in

India is representing this and I do hope they would continue to succeed in this traded path.