What is Wholesale Banking? Wholesale banking refers to the banking services offered by banks to larger customers. The customers are various entities and the list is given below.
- Mortgage banks
- Commercial Banks
- Large Corporations
- Mid-sized Companies
- Real Estate Developers and Investors
- Institutional Customers
- Government agencies
Wholesale Banking includes currency conversions and large-scale transactions. Wholesale banking is also called corporate banking or commercial banking, as opposed to retail banking which involves small customers like individuals.
This article aims to discuss in detail the concept of wholesale banking which holds relevance for various competitive exams as well as the IAS Exam.
Aspirants can check their preparation by attempting the UPSC Previous Years Question Papers now!!To complement your preparation for the upcoming exam, check the following links:
- PIB Summary and Analysis
- UPSC Notes PDF
- IAS Mock Tests
- NCERT Notes PDF
- Static GK
- Daily Current Affairs
- Comprehensive News Analysis
- 100 Difference between Articles
- All India Radio Spotlight for UPSC
- List of Government Schemes in India
Wholesale Banking Services
- Specialised Finance.
- Loan Syndications.
- Structured Transactions.
- Securitisation.
- Credit Structuring.
- Public Sector Infrastructure financing.
Advantages of Wholesale Banking
- There is additional safety for depositors.
- Lending to Government to carry out long term projects with heavy investments.
- Better Cash management.
- Massive working capital requirement of large businesses can be fulfilled.
- Customers of wholesale banking have the advantage of having lower transaction fees.
- It will help companies have transactions on a large scale.
- The major advantage in wholesale banking is that a client can have easy and one-place access to all its finances and their details. This makes internal stock transfers, fund transfers, allocations and distributions simpler.
Disadvantages of Wholesale Banking
- Interest Rates are very high.
- Processing Fees are also very high.
- Have to pay for services even if they are not availed.
- It is expensive to maintain accounts and records.
- Risk of large scale loss if the bank closes down.
- Wholesale banking increases the risk it poses to the clients as all their funds are parked in one institution and the businesses depend on the financial health of the bank for a smooth run.
- In cases of economic downturns, if the banks crash, all the dependent businesses come to a standstill instantly.
Thus, businesses usually diversify into several financial institutions to remain afloat during any crisis.
Aspirants can check the following relevant links to assist their upcoming UPSC Exam preparation –
| Types of Banks in India – Category and Functions | RBI – Reserve Bank of India |
| History of Banking In India | |
| RBI Initiative for Small Banks |
| Bad Banks – Idea Proposed by Indian Banking | Financial Inclusion: Strategy and Relevant Facts |
| India Post Payments Bank – IPPB | Monetary Policy – Objectives, Roles and Instruments |
| BCM-Banking Correspondents in India | Banks Board Bureau For PSBs |
| Bank Rate: Notes for UPSC Indian Economy | (MSF) – Marginal Standing Facility Rate in India |
| Statutory Liquidity Ratio (SLR) | |
Wholesale Banking in India
Some of the major banks in India, involved in Wholesale Banking are given below-
- State Bank of India (SBI)
- ICICI
- IDBI Bank
- Punjab National Bank
- Bank of Baroda
- Central Bank of India
- Bank of India, etc.
The status of Wholesale Banking in India is as follows –
- India presents a strong case for the growth of wholesale banking due to the continued globalization of Indian companies.
- India is seen as a favourable investment destination, with increasing infrastructure spending, robust markets, stable government and currency, low deficits, etc.
- Wholesale banking thus comprises a major share of the banking revenues due to the above factors and also due to an increased inclination of government towards mid-segment companies which have increasing banking requirements.
- Even in wholesale banking, it is corporate banking that comprises a lion’s share i.e. about 85%. Likewise, with the rebound of the economy and a positive outlook, the possibility of growth in investment banking, M&A etc. is highly likely.
Wholesale Banking- UPSC Notes:- Download PDF Here
The above details would help candidates preparing for UPSC 2021
Related Links
| UPSC Prelims Syllabus | Download Indian Economy Notes PDF |
| Previous Years Economy Questions in UPSC Mains General Studies Paper – 3 | UPSC Monthly Current Affairs Magazine |
| Topic-Wise GS 2 Questions for UPSC Mains | Topic-Wise GS 3 Questions for UPSC Mains |
| Topic-Wise GS 4 Questions for UPSC Mains | list of Regional Rural banks in India |
FAQs
Wholesale banking is the provision of services by banks to larger customers or organizations such as mortgage brokers, large corporate clients, mid-sized companies, real estate developers and investors, international trade finance businesses, institutional customers (such as pension funds and government entities/ ...
What is a brief overview of the banking industry? ›
The major role of banks is to intermediate resources from the depositor to the lender for their mutual benefit while allocating them in an efficient manner, thereby contributing to economic growth through enhanced efficiency in usage of resources.
What does TBG wholesale banking stand for? ›
Since these are services offered to businesses, yes, Transaction banking falls under the broad umbrella of wholesale or corporate banking, though it will be a distinct division. Under the Transaction Banking Group or TBG, roles will be sales, product management/product specialist and operations.
What are wholesale banking's advantages and disadvantages? ›
Advantages of Wholesale Banking
There is additional safety for depositors 2. Lending to Government to carry out long term projects with heavy investments. 3. Better Cash management 4. Massive working capital requirement of large businesses can be fulfilled.
Why is it called wholesale banking? ›
Wholesale bank means a bank that is not in the business of extending home mortgage, small business, small farm, or consumer loans to retail customers, and for which a designation as a wholesale bank is in effect.
What are the wholesale banking departments? ›
Wholesale Banking is split into four key business divisions: Industry Lending, General Lending and Transaction Services, Financial Markets, as well as Bank Treasury, Real Estate and Other.
What is the basic understanding of banking? ›
The banking industry covers credit, cash, and various other types of financial transactions for its customer base. A bank can be literally defined as a financial institution that works to extend credit to its customers as well as accepting deposits.
What is banking and its functions overview? ›
Banking services mainly include accepting deposits, lending money, facilitating transactions, and offering various financial products like savings accounts, loans, and credit cards.
What is the difference between retail and Wholesale Banking? ›
Retail banks deal with individual customers who have a lower risk profile, while wholesale banks deal with large corporations and financial institutions that have a higher risk profile.
What is group Wholesale Banking? ›
Group Wholesale Banking helps companies and institutions optimise their business operations and cash flow, manage risks, expand into new markets and manage their capital needs by providing tailored financial solutions, services and sector insights.
Capital markets are financial markets where securities, such as stocks, bonds, and derivatives, are traded among investors. Wholesale banking, on the other hand, refers to the services provided by banks to other financial institutions, such as investment banks, hedge funds, and pension funds.
What are the risks of wholesale banking? ›
Disadvantages of Wholesale Banking
It is expensive to maintain accounts and records. Risk of large scale loss if the bank closes down.
What is the difference between wholesale banking and investment banking? ›
Investment Banking is a 'markets business': raising capital, long term funds, broking and advisory services. Wholesale Banking is core commercial banking that serves large institutions. It involves giving loans, taking deposits and facilitating transactions such as payments and trades.
What is a wholesale banking pdf? ›
Wholesale banking refers to providing banking services to large corporations and institutions rather than individual consumers. It involves borrowing and lending large sums of money. Wholesale banks deal with large multinationals, firms, public sectors, and other banks/financial institutions.
What is the difference between retail and wholesale banking? ›
Retail banks deal with individual customers who have a lower risk profile, while wholesale banks deal with large corporations and financial institutions that have a higher risk profile.
What is the difference between wholesale banking and capital markets? ›
Capital markets are financial markets where securities, such as stocks, bonds, and derivatives, are traded among investors. Wholesale banking, on the other hand, refers to the services provided by banks to other financial institutions, such as investment banks, hedge funds, and pension funds.
How does a wholesale account work? ›
They purchase goods from manufacturers in bulk at a discount and sell to retailers. Wholesalers also provide cost savings to retailers when retailers buy in bulk from the wholesaler. The retailer then repackages the bulk items into smaller quantities for sale directly to consumers.
