Fee-based retail financial services allow banks to derive income from fees rather than interest. They include services like tax counseling, credit/debit cards, ATMs, remittances, safe deposit lockers, and portfolio management. Banks facilitate these services and charge fees rather than providing loans and earning interest. Credit cards can be used to pay for goods, obtain cash, and access revolving credit. Debit cards directly debit funds from the linked bank account. ATMs provide convenient access to bank accounts anywhere. Safe deposit lockers and safe custody facilities securely store valuables for customers.

1. Fee based Retail
Financial Services

2. Fee-based Retail Financial
Services
 The financial institutions derive income by way of
fees instead of interest from these services
 No funds are involved, hence no interest charges
 These services are offered to retail customers
 They only facilitate or mediate to create assets.
2

3. Types of Services
 Personal Tax Counseling
 Credit Card, Debit Card and Smart Cards
 Barter Cards
 ATMs
 Foreign Inward Remittance
 Foreign Outward Remittance
 Fund Transfer Facilities
 Safe Deposit Locker
 Safe Custody Facilities
 Certifications
 Portfolio Management
 Bankcassurance
3

4. Services
 Tax advice
 Preparation of tax return and filing
 Attending to hearing representing the
assessee
 Filing necessary clarification with the income
tax department
 Helping the assessee to avail of tax benefits
4

5. Credit Cards
 The term credit originated about 3000 years ago
 The first credit card was the Charge Card launched by Diners
Club in 1950 in USA
 In 1970, the magnetic strip was introduced on the credit
cards
 Credit cards have three functions:
 A means of paying for goods and services;
 A means of obtaining cash;
 A source of revolving credit.
 At present, Visa and Mastercard are the organizations issuing
credit cards.
5

6. Credit Cards
 Types of cards:
 Bank-issued cards
 Charge cards(American Express & Diners)
 JCB Cards(Japan Credit Bureau)
 Gold cards
 Co-branded cards
 Affinity cards(5000 people to 2 million)
 Store cards
 Electronic Debit Cards
 Telephone cards
 Fuel cards
 Add-on-cards 6

7. Credit Cards
 Credit card agreements:
 Consensus of the parties (offer and acceptance)
 Consideration
 Capacity (the parties must be able legally to contract)
 Formality (the document must be correct)
 Legality (the purpose of the contract must be legal)
 Intention to contract (the parties must share the same
intention)
7

8. Credit Cards
 Clauses generally contained in bankcard contracts:
 Signature of the cardholder
 Agreement to debit the amount spent by the cardholder to his
account and pay the amount to the paying bank within a specified
period
 Daily interest calculation and monthly debit
 Agreement by the cardholder to pay a minimum payment each
month
 Card remains the property of the issuer
 Loss of card should be immediately notified to the issuer
 Issuer has no liability if the card is not accepted by the supplier
8

9. Debit Card
 Debit cards are generally known as ATM cards
 Unlike credit cards, the cardholder has to maintain sufficient
balance in his savings/ current account in order to debit the
amount as and when the bill is received
 No credit is available in the case of debit cards
 The withdrawals in the case of international debit cards will
be in the currency of the country where it is put to use.
 Debit cards enable the tracking of payment.
 Debit cards also save the interest charges.
 Debit cards also have daily limits
9

10. Debit Card
 RBI Guidelines:
 Banks with minimum net worth of Rs.100 crore
can issue debit cards
 No RBI approval is necessary for online debit
cards where Straight-through processing is done
 RBI approval is necessary for off-line debit cards
 The stipulation of minimum net worth of Rs.100
crore is applicable only in the case of off-line
debit cards.
10

11. Smart Cards
 Plastic card embedded with microchip
 Data can be stored
 Unlike credit/debit cards, the credit balance is
transferred to the card
 The merchant establishment can debit the
payment to the card using a chip reader
 The balance will be reduced as and when
payments are effected
 Recharge is possible through card encoders
11

12. Smart Cards
 Petro cards/ Loyalty cards are smart cards
 Multiple currencies carried in a smart card
 Smart card enables multiple uses through a single card
 Smart card is extensively used for payment of utilities
 Smart cards offer confidentiality and security
12

13. Barter Cards
 Cards issued for exchange of
commodities
 Barter Card International (BCI) is
providing the Barter Card service
 BCI was established in Australia in 1991
and in UK in 1996
 Medium of exchange is Trading Pound
 Barter card acts as a clearing house
 Barter card is operated through
franchisees who get a commission
 Barter card system is not common in
India
13

14. ATM Features
 Off-site banking
 Customer can operate his account from any where at any time
 No need of visiting bank branch for drawing cash or depositing cheques
and cash
 The ATM operations are controlled through ATM cards
 ATM card is a debit card containing a PIN code and a security password
 Less risk and lowest cost
 First ATM was installed in Mumbai in 1993 by Citi Bank
 Now ATM with biometric features are available.
 ATMs are installed in public places like Railway Stations, Airports,
Universities, Bus terminals etc.
14

15. Benefits of ATM
 Benefit to Customers
 Customer can access to his account from any place
 ATM works 24 hours on 7 days
 Convenience
 Cash withdrawal from any branch
 Benefit to Bank
 Innovative, secure and competitive
 Reduce of rush of customers at the counter
 Immediate inter-branch reconciliation
 Value addition to customers
15

16. Demerits
 Less personal interaction with bank staff
 ATMs are also not free from frauds. Mass withdrawal
of cash from stolen ATMs are now common
 Banks charge fee for withdrawal using another bank’s
card
 Statement for the full month cannot be extracted
 In India, maintaining ATM is costly on account of
security reasons.
16

17. Safe Custody-Type of
Services
 Banks generally offer the following types of safe
custody facilities:
 Safe deposit lockers
 Safe custody of valuables
 They charge commission for this service
 The advantage of this service that the asset will be safe
in the bank’s premises
 However, banks do not guarantee the safety of the
contents of the packets entrusted to them for safe custody
 Generally these facilities are offered to the customers
whom they know well
17

18. Safe Deposit Lockers
 Fire proof steel cabinets with cubicles
of different size
 Each cubicle has separate locking
system with a single master key to
control operations
 The bank holds the master key
 The cubicle can be opened only jointly
by the bank and the customer
 The locking can be done by the
customer alone
18

19. Safe Deposit Lockers
 Customer has to submit an application in the prescribed form
 Banks collect annual rent for cubicle and a security deposit
 The rent and amount of deposit varies according to the size of
the cubicle.
 The safe deposit lockers are kept in the strong room of the
bank and the area is separated from the place where cash and
valuables are kept; therefore customer enjoys complete
privacy.
 The operations are controlled through password protection and
the operations are recorded in a register noting the time and
date.
19

20. Safe Deposit Lockers
 If the key is lost the customer has to meet the cost of
replacement of the lock.
 Banks break open the cubicles which are remaining inoperative
for a long time after issuing notice to the customer
 The breaking open operation is done in the presence of two
witnesses and the contents in the cubicle are listed and certified
by the witnesses
 Using safe depositor locker for keeping drugs, explosives, stolen
articles etc. are prohibited and punishable under the law.
 Nomination facility is available for safe deposit lockers
20

21. Safe Custody Facility
 Banks undertake to keep under their safe custody
articles such as land documents, share certificates,
deposit receipts, insurance policies etc.
 The articles are entered in the safe custody register
and a receipt is issued.
 The receipt has to be produced for release of the
articles
 Banks charge fees for safe custody of articles
 The facility is offered to only customers known to
the bank.
21

22. RBI Guidelines
 RBI has issued the following guidelines regarding safe
deposit lockers/ safe custody of articles by banks:
 Banks are required to periodically review their operational systems
and procedures with regard to access to lockers/ return of safe
custody articles belonging to the deceases .
 Banks are required to give wide publicity and provide guidance to
locker hirers/ depositors of safe custody articles on the benefits of
nomination
 Such details should also be placed in the website of the bank.
22