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Motives of Banks: Savings activities or Banks recovery activities?

, September 26, 2014, 0 Comments

Banks Motives-MarketExpress-inIn this modern world, banking technologies has developed in an efficient way from the traditional banking services. Due to the ease and the need; a customer opens a bank account to save their earnings. This helps the customer to give their children’s a better education, buy houses or a car or conducts a decent wedding.  Also customers earns nominal interest rate for their deposited amount. The aims of banking industry are to give loans to customers and industries and receive deposits.

Saving and recovery activities are the major ones for the banks.

Savings Activities:
Banking industries in India, concentrates on customer’s difficulties like recovering the amount from customer’s bank account without intimation for non-maintenance of bank balance. This affects customer’s saving habits and in turn affects the banking industry . Small customers worry about the deductions of the non-maintenance fee. Based on this issue many segments of customers do not opt for a savings bank account.

Recovery Activities:
After the advancement in banking industry, bankers have made an auto recovery of non-balance maintenance fee every month or every quarterly from the customer’s savings account.  This issue further effects the customer’s saving activities and the private banks namely ICICI Bank, HDFC Bank, Kotak Mahindra Bank, IndusInd Bank have recovered higher amount from customers. These banks have made their minimum opening balance as high as INR 10,000. A customer’s whose average salary starts from INR 6000, how it’s possible for him to  keep up INR 10,000 in their saving bank account.

This is one of the main challenges while opening a savings account.  Apart fromtheminimum balance, one needs an introducer to open an account.

Zero balance maintenance features for savings bank account would be boon for low-income group customers. These relaxations encourage customers to use savings account and stops the banks from collecting penalty for non-maintenance of minimum balance. This approach is followed by the western front. In India this has been recently proposed. This does not affect the banking procedures of Indian banking industry.

In general, very few percentages of customers have bank accounts. Below showing the charts for employment group.

From the graphical representation 95% accounts to businessmen and industrialists and next to it stands the government employees at 90%. Because without bank account, businessmen can’t do his trade and its also mandatory for filing tax returns. Bank also provides express services to business accounts. Some of the banks offer it as trade banking account for industrialist and entrepreneurs.

Employees who are working under government receives their salary through direct credit, to their bank account. For salaried worker, companies itself open a bank account. But the lowest level participation is the agricultural wage labour – 14%, wage labour –non-agriculture 25 % and street vendor 35 %. These people are unaware about the bank account advantage.

Banks need to concentrate on these segments like street vendor, own account worker, wages labor –non-agriculture and agricultural wage labour. These people are having regular wages. If the bank provides services to this, their saving habit might be increase.

In the near future, street vendor, own account worker, wage labour – non agriculture, Agricultural wage labour could have a bank account, then they can save their savings in these bank account. It is a good    encouragement and if any government benefits were to be received by these workers, it would be directly credited to their bank account. This solves a greater problem about the delivery and also brings in a greater degree of transparency. Bank account comes as a shield, to protect from fraudster, middlemen and agents while receiving the benefits from the government.

 Friendly banking services to the customers:

After RBI Governor took charge, some changes has been made in the Indian banking sector; these changes are improving banking industry in India. Children’s savings account motivates childhood savings behavior activities. Anywhere one can open savings bank account; there is some relaxation for opening a bank account and documentation procedures. Its brings the much-needed relief to the employees who are transferred regularly and those who people who move quite often for their livelihood

These changes will encourage the customers to use a bank account for all-purpose. Hopefully, many radical changes would happen soon.  Good days are ahead for Indian banking industries & its customers. Good times ahead.