Retail Banking and Wealth Management Flashcards

Comprehensive flashcards covering key topics, definitions, facts, metrics, and models from Module A and Module B of the Retail Banking & Wealth Management textbook.

When was the Indian Institute of Banking & Finance (IIBF) established?

April 30, 1928

What are the four compulsory subjects in the revised JAIIB examination syllabus?

1. Indian Economy & Indian Financial System
2. Principles & Practices of Banking
3. Accounting & Financial Management for Bankers
4. Retail Banking & Wealth Management

What is the primary difference between Mass Retail Banking and Class Retail Banking?

Mass Retail Banking provides standardized banking products and services to the general public to build a broad customer base, whereas Class Retail Banking offers customized products and services targeted at High Net Worth Individuals (HNIs).

What three core 'multiples' characterize Retail Banking?

Multiple products (liability, asset, cards, etc.), multiple channels of distribution (branches, ATMs, mobile, internet), and multiple customer groups (individuals and small businesses).

What is a 'bank run'?

A phenomenon where a sudden loss of faith in a bank causes depositors to rapidly withdraw their retail deposits, potentially leading to the collapse of the bank.

Which foreign banks pioneered consumer banking models with hybrid liability and asset products in India during the late 1970s and early 1980s?

Standard Chartered Bank and Grindlays Bank

Which public sector banks were early pioneers of credit card products in India?

Bank of Baroda and Andhra Bank

According to RBI data for 2020–21, what proportion of total bank retail loans is constituted by housing loans?

More than $52\%$

What was the total value of retail loans in the Indian banking system in 2021 according to RBI data?

\text{\mathbb{R}29,864\,billion}

What percentage of global banking revenue is generated by the retail segment according to Boston Consulting Group?

Nearly $60\%$

What proportion of India's population is under 35 years of age?

$$70\%$$

How did retail loan interest rates in the Indian money market evolve from 1995–96 to recent levels?

They dropped from a high of $16\% \text{ to } 18\%$ in 1995–96 down to a band of $7.5\% \text{ to } 9\%$.

What is Banking as a Service (BaaS)?

An end-to-end framework allowing fintech companies and non-bank financial institutions to integrate with a provider bank's regulated system using Application Programming Interfaces (APIs).

By how much are AI technologies expected to reduce operating costs for banks by 2030 according to Autonomous Research?

By $22\%$

What are the three organizational approaches banks use to structure their retail banking business?

1. Strategic Business Unit (SBU) Approach
2. Departmental Approach
3. Integrated Approach

What is a Strategic Business Unit (SBU) in retail banking?

An autonomous division acting as a profit center that is flexible enough to react quickly and large enough to control key factors affecting its long-term performance.

Which retail banking organizational structure is generally adopted by Public Sector Banks (PSBs) in India?

Departmental Approach

What four process models were identified by the Boston Consulting Group study on retail banking processes?

1. Horizontally Organised Model
2. Vertically Organised Model
3. Predominantly Vertically Organised Model
4. Predominantly Horizontally Organised Model

What defines a Vertically Organised Model in retail banking?

It provides process functionality across products centered around a unified customer database, making customer information accessible across all products.

How do Retail Banking and Corporate Banking differ regarding customer target, ticket size, and risk profile?

Retail Banking uses a B2C model with small ticket sizes and risk spread across a large population, whereas Corporate Banking uses a B2B model with large ticket sizes and concentrated risk across fewer clients.

What is the formula for Gross Profit?

$$\text{Gross Profit} = \text{Total Sales} - \text{Cost of Goods Sold}$$

What is the formula for Operating Profit?

$$\text{Operating Profit} = \text{Gross Profit} - \text{Operating Expenses}$$

What is the formula for Net Profit?

$$\text{Net Profit} = \text{Operating Profit} - (\text{Taxes} + \text{Interest})$$

What is the formula for Return on Assets (ROA) for a bank?

$$\text{ROA} = \frac{\text{Net Income}}{\text{Average Total Assets}}$$

What is the formula for a bank's Leverage Ratio?

$$\text{Leverage Ratio} = \frac{\text{Bank Assets}}{\text{Bank Capital}}$$

How is Return on Equity (ROE) expressed using Return on Assets (ROA) and Leverage Ratio?

$$\text{ROE} = \text{ROA} \times \text{Leverage Ratio} = \frac{\text{Net Income}}{\text{Bank Capital}}$$

When did the Banking Regulation Act come into force in India?

March 16, 1949 (originally enacted as the Banking Companies Act, 1949)

What were the Gross NPA and Net NPA figures for Scheduled Commercial Banks in India as of March 31, 2021?

Gross NPA was \text{\mathbb{R}8.34\,trillion} and Net NPA was \text{\mathbb{R}1.97\,trillion}.

What is a Credit Scoring Model?

A statistical technique combining multiple financial characteristics to predict the credit behavior of new applicants based on the historical performance of existing borrowers.

Why does a high CASA ratio enhance a bank's profitability?

Current and Savings Accounts (CASA) carry zero or very low interest costs, reducing the bank's overall cost of funds and boosting its Net Interest Margin (NIM).