“Club of Knowledge Hunters”

RETAIL BANKING (Investment and lending pattern of consumer)

Posted by retailigence on September 7, 2008

Apart from real fruitful returns .today people are also looking for various benefits in this complicated financial system. This could be termed as an “Emerging era of investing heads”. Increasing awareness leads to willingly investing customers contrary to times where people are being motivated through a basic “chai paani” way to take vivid policies.

Those times are dominated by government where the returns are less for customers but agents able to pick out supernormal profits from “janta janardan”. Speaking of share market. It was not in a mood woo customers in a fashion attracting in today’s era. Thus, this gives birh of scientific approach to feel the touch points of customers which are not so technical but essential in every respect to build customer’s trust.
Consumer Investment patterns

  • Availability/Non availability of Sufficient funds (Disposable Income)
  • Wealth or other Benefits(to get returns)
  • Satisfaction level or   Reliability factor
  • Knowledge of Market

Everyone wants money to be money to be multiplied .Hence; Investments are on today’s scenario most likely to be applicable.The above factors are applicable, if a person is ready to pay, Nevertheless,Convincing people is nothing but a feature of retail banking.

Many Customers prefer less risky funds and for rest of them risk=profit/loss .There are another kind of customers who fall under category of safe return holders, Mostly people of age more than 45 fall into it. Many factors define the predictable pattern of consumer best suited for his investments. According to BASEL II norms the retail customers are being treated as a homogeneous set for customers.

“AGE” explains the extent up to which a person can bear risk. But, One cannot apply it for 100% masses because there are exceptions who having exceptions who having in depth  knowledge of market/funds are always ready to take risk in a calculated way. “INCOME” delineate the cost of risk one is ready to pay, there “cost of risk” means considering entire probabilities. How much one is ready to bring funds in market? The cost of risk is deliberately hyped by the fund sellers. “INTEREST” can be termed as a fluctuating parameter which changes according to can say volatile market. The interest generated can be of 3 types.
1)    Interest by self motivation.
2)    Interest by positive influence by fund sellers.
3)    Interest generated with the help of common masses.
“RESPONSIBILITIES”  this is very much related to disposable income of customers.


The revenue targets depend on the total annual contribution which is being divided monthly, accordingly managers get targets fulfillment of which offers incentive, the costing part includes all transaction costs like staffing cost, business sourcing cost etc. If we talk about in general fulfillment of targets are pretty tough not related to this world but yes if u talk about getting incentives it is there because manager at one time can target only one segment. The incomes are here being divided majorly in three parts these are float income, fee income, and Distribution income.

The returns and loans are complimentary to each other, at one hand returns will give wealth benefit to the individual where at other end consumer is fulfilling his long term needs in a short period. Thus the early problem of stagnate money has been solved by offering them both the products at the same time, ultimately entire money is revolving right from the pocket of consumer to government than to customer. In addition to this the economy has been growing at similar rate which is again an advantage of people investing money at diverse fields. The growth of all the fields are consecutive in nature one by one every sector has being benefited with this.

The important fact is this that the housing loan primarily depends on CRR that is Cash reserve ratio. It also depends on prime lending rate which is 3.5% now according to RBI regulations. The home loans are to be given mainly to salaried class because the processing of documents are bit easier in case of that, wherein contrary to self employed people. It is difficult because it needs to be verified in whole properly. So, In short, Home loans are basically is preferred by salaried class rather self employed people.

As far as today’s market is concerned banks are preparing to hike deposit are lending rates by 50 to 75 basis paisa, though some of them may keep rates untouched for home and auto loans, as well as farmers. Many people raised their prime lending rates by .50 bps to 14.25% .The bank will be forced to raise rates following the hike in CRR and the REPO rate. The house loans are now being wrapped out, In Contrary to state bank who fixed their lending rates at 12.25% and deposit rated 8.75%.

Written By:- Pooja Shrivastava


One Response to “RETAIL BANKING (Investment and lending pattern of consumer)”

  1. Rohit said

    definitely well attempt, i still feel she needs clarity on the whole concept a little much. and she should also work upon her sentence making as u need to be very much cautious while writing an article for the social or knowledge sharing sites. do well in future

    lookin forward to get the useful info’s from this damn good knowledge base in future as well…..

    hats off to u guys……

    carry on……

    asta la vista

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