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RETAIL AND WHOLESALE BANKING | RETAIL BANKING | CAIIB STUDY MATERIAL 2023

RETAIL BANKING FREE NOTES | RETAIL VS WHOLESALE BANKING

In this article, we will discuss a bit about Retail Banking vs Wholesale Banking, how they are both different from each other and how we will be able to help you out with our notes 2023.

WHAT IS CAIIB EXAM:

IIBF offers a variety of exams for the banking sector. CAIIB is one of those exams. CAIIB is known as the Certified Associate of the Indian Institute of Bankers. This exam is for those candidates who want promotions, but only those who are a member of IIBF and have already cleared JAIIB are eligible to appear in this exam. This exam is held twice a year. CAIIB EXAM 2023 includes two compulsory subjects ABM (Advanced bank management) and BFM (banking and financial management) and one optional subject out of the six options being – human resource management, retail banking, rural banking, Central banking, information technology, and risk management.

READ MORE: WATCH OUR DAILY IIBF JAIIB/CAIIB LIVE CLASSES

RETAIL BANKING MEANING:

The word “retail banking” is used to refer to banking that is referred to as “consumer banking” or “personal banking” in the banking sector, and it relates to financial services supplied to people rather than companies. Customers can use retail banking services to manage their money, obtain credit, and deposit money in a safe and secure environment. In other terms, retail banking is when financial institutions provide financial services to individuals known as “institutional consumers.”

Read Also: CAIIB EXAM PREPARATION 2023

The Importance of Retail Banking in 2023:

Retail banks lend money to other businesses with the money they receive from their depositors. Rather than charging higher deposit interest rates, these financial institutions make money by charging higher lending interest rates. The Reserve Bank of India (RBI) regulates the Indian banking sector, which is overseen by the Banking Regulation Act, which was enacted in 1949. 

Retail banking is a system that allows customers to get products and services all in one place and from any branch location. Large retail banks are sometimes known as international retail banks because they provide services to people worldwide. Internet banking offers individual product and service information via mobile or online retail banking through websites. Small company banking and personal banking are the most common types of retail banking.

READ MORE: HOW TO CLEAR CAIIB IN 2023 EASILY ON THE FIRST ATTEMPT

After discussing retail banking, we would like to move on to wholesale banking.

WHOLESALE BANKING

Wholesale banking refers to financial services provided to institutions, government agencies, municipal governments, and businesses with large balance sheets, among others. Interbank loans and borrowing are also included. This business segment is often used by Indian banks and is referred to as corporate banking or commercial banking in India. Retail banking, on the other hand, provides banking services to individual customers. Large trade transactions, among other services, are included in wholesale banking. – liquid assets, – financial backing, – M&A (mergers and acquisitions), – currency conversion, – fleet and equipment leasing, – loan participation, – M&A (mergers and acquisitions), – trust services, – merchant banking.

The Benefits of Wholesale Banking:
  • Depositors get an extra layer of protection.
  • Improved cash management
  • Large businesses’ massive working capital requirements can be met.
  • Customers that use wholesale banking benefit from lower transaction fees.
  • It will assist businesses with large-scale transactions.
  • The main benefit of wholesale banking is that a client can easily access all its funds and information in one place. Internal stock transfers, money transfers, allocations, and distributions are simplified.

Read Also: ORGANIZATIONAL COMMUNICATION | FREE NOTES ON HRM

Wholesale Banking’s Drawbacks:
  • Interest rates are at an all-time high.
  • Fees for processing are likewise very high.
  • You must pay for services even if you do not use them.
  • Maintaining accounts and records is costly.
  • If the bank fails, there is a risk of a large-scale loss.
  • Because all their funds are parked at one institution and businesses rely on the bank’s financial health for a successful operation, wholesale banking increases the risk it poses to clients.
  • If the banks fail during an economic downturn, all of their reliant businesses come to a halt immediately.

Now that we have cleared our concepts about retail banking and wholesale banking. We should know the difference between them.

RETAIL BANKING VS WHOLESALE BANKING:

The primary basis of the difference between the two can be explained through the following few points:

  • Retail banking deals with individuals and primarily with retail customers, whereas wholesale banking is concerned with a broader group of people, organisations, or businesses.
  • Retail banking necessitates a broad network, whereas wholesale banking does not necessitate as many branches; as a result, just a few wholesale bank branches exist.
  • The size of the loans offered to retailers and wholesalers differs, as a retail customer receives a minor credit. The wholesale consumer, on the other hand, is given a considerable sum of money as a loan to start their own business, including machines and other equipment.
  • The loan is offered to retail bank customers at a relatively low-interest rate. This is because retailers cannot bargain. Wholesale bank holders, on the other hand, are required to pay a massive amount of interest. Banks do this to attract funds.
  • Retail banking loans include things like education, housing, and car loans, whereas wholesale banking loans include things like loans to start a business, machinery, and exporting.

Read Also: DELIVERY CHANNELS | RETAIL BANKING FREE NOTES

Now that we have cleared our concepts about wholesale banking and retail banking and their differences. To summarise the whole thing, we can tabulate the difference between the two. 

Compared based on:  Wholesale banking  Retail banking 
What does it mean? It is also called Corporate banking. It indicates that the division of the bank that deals with corporate clientele and offers them specialised services  Retail banking is that unit of the bank that deals with various retail customers and provides them with basic banking services.
Client base Small Huge
Loan  More than five crores Up to 5 crores
Transactional value Higher as compared to retail Lower as compared to corporate 
Cost of processing High Low 
Type of services provided Custom- made Standardized
Profit Comparatively more Less

 

READ MORE: WILL I GET CREDIT FOR MY PREVIOUS CAIIB EXAM IN 2023

Now that we have gone over our topics, I would like to discuss the study material we provide. 

RETAIL BANKING STUDY MATERIAL 2023

The IIBF LEARNING CENTER provides CAIIB applicants with materials and tools to help them pass the exams. Use these CAIIB study aids and quick notes to gain conceptual knowledge. These notes will assist you in quickly covering the complete CAIIB EXAM 2023 syllabus while clarifying the topics. CAIIB SYLLABUS 2023 is the basis for the notes you’ll receive in the form of ePDFs.

You can go to our website Learning Sessions for exam-related details & IIBF.info for study material-related details, the portal has been divided into four sections: JAIIB, CAIIB, Bank Promotions, and Certifications. We provide free notes in addition to recorded videos that are only available on our applications and not on our website. 

We have two Android apps: ‘Learning Sessions pro.’ and ‘IIBF learning centre,’ plus an iOS app called ‘My institute app‘. Registering for our retail or CAIIB’s other papers classes would be beneficial for your preparation for CAIIB 2023.

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