Shared benefits

The practice of banks entering into tie-ups with corporates brings benefits to both the parties involved.....

These days a number of banks enter into strategic tie-ups with corporates. The benefit that such an arrangement offers to the bank is that at one stroke it acquires a large number of customers. Normally,it would have taken the banks personnel a lot of time and energy to acquire so many customers. In return,the bank offers a number of special privileges and concessions to the corporates employees.

The value-added services a bank may provide its corporate clients take several forms. It begins by opening salary accounts of all the employees with the bank. Normally,one has to maintain a minimum balance in the savings account,which could range from Rs 1,000 in the case of a public sector bank to Rs 5,000 or more in the case of a private sector bank. But in case of such tie-ups the employees of the corporate are exempted from the stipulation of maintaining a minimum balance in their salary accounts.

Debit and credit cards are also offered to employees. The annual fee on these cards is waived,often for lifetime. The bank may also provide home loans,vehicle loans and personal loans to corporate clients at concessional rates.

If the bank belongs to a financial service giant that also has a securities broking arm,then salesmen of the broking company set up a desk within the companys premises and solicit employees to open broking accounts. Company employees may not normally find the time to open a broking account. But when the facility becomes available within their office premises and all they have to do is fill up the application form and provide a couple of documents,many employees avail of the opportunity. Usually,in the case of a broking account,the first years fee is waived. Life and general insurance products from the group are cross-sold to employees.

Since these are long-term relationships,corporates must examine the offers from several banks to see which one will give their employees the maximum benefits. Such tie-ups should be struck only with reputed and large financial services groups that are in a position to offer a wide gamut of benefits and services to employees. Also,as the recent crisis in the financial sector has revealed,the group with which such tie-ups are struck should be financially strong,so that employees savings and investments are not jeopardised. u

S. K. Singh