Journal Press India^®

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The commercial banks in India have been shifting their focus from traditional banking that involved primarily corporate and commercial loans and priority sector advances as mandated by the Reserve bank of India to retail loans in the recent few decades. The share of retail loans has been increasing steadily year on year basis. On an average, the retail loans have been increasing around 30 per cent with a marginal variation for individual banks. The reasons for increase in the extent of retail loans are many such as, low risk of default, easy handling and management, increased demand from consumers, better returns on retail loans, reduced level of non-performing assets etc. The increased level of non-performing assets also enthused banks to seek alternative ways for less riskier and safe financing. The boom started with home loans being provided by the commercial banks on liberal terms and lower costs. This was followed by the vehicle loans, consumer loans, personal loans, credit cards and so on. The private sector banks’ marketing strategies are more aggressive as compared to public sector banks. But many customers still feel to deal with public sector banks for retrial loans on account of more transparency in the transactions and reasonable terms and conditions. This paper attempts to analyze different aspects of retail loans that made this boom to happen, efficiency of retail loans and its impact on banks performance.

Keywords

Retail loans, non performing assets, efficiency, priority sector, recovery.

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