Banking Products

Banking Products

Banks in India have traditionally offered mass banking products. Most common deposit products being Savings Bank, Current Account, Term deposit Account and lending products being Cash Credit and Term Loans. Due to Reserve Bank of India guidelines, Banks have had little to do besides accepting deposits at rates fixed by Reserve Bank of India and lend amount arrived by the formula stipulated by Reserve Bank of India at rates prescribed by the latter. PLR (Prime lending rate) was the benchmark for interest on the lending products. But PLR itself was, more often than not, dictated by RBI. Further, remittance products were limited to issuance of Drafts, Telegraphic Transfers, Bankers Cheque and Internal Transfer of funds.


In view of several developments in the 1990s, the entire banking products structure has undergone a major change. As part of the economic reforms, banking industry has been deregulated and made competitive. New players have added to the competition. IT revolution has made it possible to provide ease and flexibility in operations to customers. Rapid strides in information technology have, in fact, redefined the role and structure of banking in India. Further, due to exposure to global trends after Information explosion led by Internet, customers - both Individuals and Corporates - are now demanding better services with more products from their banks. Financial market has turned into a buyer's market. Banks are also changing with time and are trying to become one-stop financial supermarkets. Market focus is shifting from mass banking products to class banking with introduction of value added and customised products.


A few foreign & private sector banks have already introduced customised banking products like Investment Advisory Services, SGL II accounts, Photo-credit cards, Cash Management services, Investment products and Tax Advisory services. A few banks have gone in to market mutual fund schemes. Eventually, the Banks plan to market bonds and debentures, when allowed. Insurance peddling by Banks will be a reality soon. The recent Credit Policy of RBI announced on 27.4.2000 has further facilitated the entry of banks in this sector. Banks also offer advisory services termed as 'private banking' - to "high relationship - value" clients


ICICI Bank has launched `Global Indian Credit Card' for NRIs. It is an international credit card denominated in Indian rupees and will cater to NRIs visiting India. It can be issued in both India and overseas. The card is available in two variants — Silver with maximum credit limit of Rs 1,00,000 and Gold with maximum credit limit of Rs 3,00,000. The cards also provide insurance, which includes household insurance, baggage insurance and hospitalisation benefits for both primary and add-on cards up to Rs 20 lakh. The card will be accepted at 22 million merchant establishments and the re-payment for purchases can be made through an automatic debit of the customer's savings account.

Bank of Rajasthan (BoR) has launched international credit card operations in December 2005. Bank has joined hands with Visa International to facilitate real-time transaction through Visa gateway. Bank of Rajasthan will offer three types of international credit cards - Silver Card, Gold Card and Platinum card. Their features include hospitalisation expenses covered up to Rs 50,000, baggage insurance expenses up to Rs 30,000, purchase protection up to Rs 40,000 and 30 per cent credit limit against cash advance. It has also tied up with Electra Card Services (ECS) to provide complete back-end support for the bank’s credit card business.

SBI Card in March 2005, launched a credit card, SBI Social Card, the first affinity card in the country to feature four non-governmental organizations (NGOs). The social card allows the cardholder to donate to the NGOs every time they use it. The card will earn the customers double reward points. While one half will go to the NGOs. SBI Card will donate 20 per cent of the annual fees or renewal fees to the NGOs. Moreover, customers also have the option to issue standing instructions for a fixed amount to be donated to any of the NGOs.

The non-governmental organisations that have the tie-up with SBI Card are Cancer Patients Aid Association, National Association for the Blind, SOS Children's Villages of India and World Wildlife Fund, India.

National Securities Depository Ltd (NSDL) and IDBI Bank have launched country’s first online direct tax payment facility. This facility will enable individuals as well as corporate tax payers, to make payments for income tax, corporation tax, gift tax, tax deducted at source (TDS) etc over internet. The details entered by the assessee would be validated by NSDL and control would be passed to IDBI bank through a secure payment gateway. The bank will debit the customer account after authentication and completes the payment of tax to the government as an agency bank for which it will be paid a service charge.

IDBI bank also plans to migrate this facility to other channels like mobile phones and ATMs. State Bank of India (SBI), Corporation Bank, Punjab National Bank and Bank of India are expected to soon roll out online direct tax payment facility.