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Commercial banking is becoming marketing-oriented

Banking in India is controlled by the Reserve Bank of India (RBI). Commercial Banks and Co-operative Banks are the two main categories of banks in the country. The commercial banking structure in India consists of:

  • Scheduled Commercial Banks
  • Unscheduled Banks

Scheduled commercial Banks constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. Only those banks are included in this schedule which satisfy the criteria laid down by section 42 (60) of the Act.

Commercial Banks can be further divided into four classes:

  • Public sector banks. There are 28 banks in the public sector, including the State Bank of India and its 7 associate banks.
  • Private sector banks. There are 38 Private sector banks.
  • Foreign Banks. The foreign banks number 24.
  • Regional rural banks. 196 Regional rural banks.

Commercial banks are in the business of providing banking services to individuals, small businesses and large organizations. Commercial Banking provides clients with complete financial services. In addition to business services such as lines of credit, term loans, mortgage and lease financing, the area also provides international trade services, treasury services, investment management, employee benefits and insurance products, plus expertise in investment banking areas such as structured finance, syndicated lending, M&A advisory, corporate finance, risk management and asset-based finance.

Today's commercial banks are more diverse than ever. There is a wide range of opportunities in commercial banking, starting at the branch level where you might start out as a teller to a wide variety of other services such as leasing, credit card banking, international finance and trade credit.

An emphasis on technology and industry and product-specific support has created specialized career opportunities
Commercial Banking offers a wide range of proprietary web-based tools that help clients manage their financial affairs with ease and efficiency. There are specialized industry groups that offer high level of expertise on the specific financial issues affecting companies within each industry. Industry specialists often work along with account managers and product specialists on client teams to address the requirements of each transaction.

These jobs are exciting and offer excellent opportunities to learn about business, interact with people and build up a clientele. Commercial Banking professionals typically develop their client management skills early and build expertise across lines of business.

Eight Major Commercial Banks account for more than half of the share of the banking industry. These eight major banks are:

FY04 (Rs bn)

Advances

Market share

SBI

1,955

22.7%

ICICI Bank

631

7.3%

Canara Bank

476

5.5%

PNB

472

5.5%

Bank of India

458

5.3%

Bank of Baroda

356

4.1%

HDFC Bank

177

2.1%

Standard Chartered

162

1.9%

Total

4,687

54.4%

Considering only scheduled commercial banks

(Source: CRISIL)

Remaining 46% is occupied by rest of the players. If you are well-prepared and enthusiastic about entering the field, you are likely to find a wide variety of opportunities open to you.

Commercial Banking: Select Job Options

Credit Analyst: This is an entry level job which requires you to evaluate business and consumer loan applications made to your bank. Your duties include projecting a company's future cash flow, evaluating its current financial soundness, visiting and interacting with financial people at businesses and dealing with lenders. You will learn a lot about business in this job. Your success in this job will depend on your detail-orientedness, your knowledge of accounting and your ability to communicate.

Loan Officer: This is a highly desirable job in banking. This involves making loans to businesses and consumers. Being a loan officer requires that you have good selling skills, an ability to understand a business and a solid understanding of how banking works.

Branch Manager: You would be responsible for overseeing all activities at your branch including opening new accounts, loan origination, solving customer problems, foreign exchange and safe deposit boxes. Most importantly, you are responsible for establishing relations with customers. Many bank managers start as tellers or customer service representatives and rise up to this level.

Key things to have for this position are customer service skills, empathy, quantitative ability, strong work ethic, organization and a solid understanding of banking.

Trust Officer: This job requires a lot of counselling. In this job you would deliver trust services, financial products and advice to bank customers (often more upscale ones). This work will give you knowledge of business, investing, estate planning, taxes, and probate law.

Mortgage Banker: Your job will be to make mortgage loans to homebuyers and businesses. This involves heavy contact with real estate professionals, credit checks, and dealing with new buyers. Today, many loans are sold to other investors in the mortgage backed securities market. This job has a good future because an increasing fraction of the population is likely to buy houses in the future.

High Grades less important than work ethic: Banking attracts a diverse group of people. You don't have to be a superstar student with a phenomenal academic record. You do have to be detail oriented, unafraid to sell and conscientious.

It is generally not necessary to get an MBA degree for getting into commercial banking. But at the higher levels MBAs are preferred.

Marketing Types Wanted: A new business model which is spreading into banking is that of the marketing-oriented consumer products company. Banks are trying to build valuable brand images with consumer-oriented advertising and distinct product lines. If you have good marketing skills and have taken marketing courses, you will be well-suited to this new environment. Because of the increasing marketing orientation, many banks have also been paying large amount of money to lure product managers away from consumer products companies.

Other jobs in banking involve accounting, marketing and advertising, commercial card operations, securities transfer, wire operations, private banking, cash management services, installment loans, loan servicing, personnel, operations and communications.

Those banks which have the skill to market their products, generate new income streams, de-risk their government securities portfolio and build the right technology platform to support all activities will flourish in this competitive environment.

For Comments: psjamwal@amity.edu

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