CORE Banking and Core Banking Solutions (CBS)CORE Banking

CORE or CORE Banking is a very important terminology used in Indian banking industry. The term CORE is used in two perspectives in Indian banking industry.

1) First Perspective of Core Banking In the first perspective CORE stands for Centralized Online Real-time Environment (CORE). It is a system of centralized banking under which all banks use a centralized data-centre for all their banking transactions. It can be said that all banks under this system share all information about banking transactions conducted by them. What is important is that all transactions are done in a real-time environment under CORE banking and all transactions are reflected in the central banking servers of the CORE system. Therefore CORE from this perspective means bringing highest level of transparency in all banking transactions by establishing a high-technology network of banks.

2) Second Perspective of Core BankingAnother perspective for CORE banking is used in Indian banking. In this perspective CORE Banking refers to the banking operations with retail and small businessmen, which are sometimes considered as the most-important or core segment for banks. Indian banking industry in this perspective simply refers to business operations with small traders and businessmen as its Core Banking operation. As far as banking with large business houses and businessmen is concerned, it is called by a different name – Corporate Banking

CORE Banking Solutions (CBS)Many times we can observe a board “CBS” or “CBS Branch” written outside a bank branch in India. CBS means Core Banking Solutions and it refers to the first perspective as discussed above. It is a modern platform established for Indian Banking industry with an objective of increasing the productivity and efficiency of banks, reducing manual errors which are committed while recording a banking transaction and increasing transparency in all banking transactions. CBS has completely changed banking scenario in India. It is due to the fact that with advent of internet and information technology, the way of banking has changed completely. CBS has networked all the constituents related to banking like bank branches, ATMs, internet technology, mobile technology and point-of-sale counters (PoS) and converted it into a highly complex but efficient and effective banking network. This networking of diverse technologies and hardware has resulted in a very smooth system of sharing information pertaining to banking transactions. Practical usage of CBS are many and are easily visible – We can operate our bank account from any other branch also and can do transactions through any medium like mobile phone or internet, we can use ATM of any bank according to our requirement and can easily transfer money from one account to another in a matter of seconds. Core Banking Solution or the CBS uses an advanced networked software to record transactions and share them amomg all the banks attcahed with CBS in a highly secure manner. These services are called Core Banking Solutions because they form the core operation of any bank, i.e., recording and sharing information. CBS software are installed at all bank branches and are interlinked through many modes such as telephone, internet or satellite. Many times CBS is also called by the name of Back-End-System (BES) Following are the important features of CORE Banking

Core Banking is a terminology use specifically for Banking industry Core Banking emphasizes on the most important (Core) operations of banks Core Banking Solutios (CBS) has emphasized on the tasks which are the core operational

works of banking Information technology and internet is the main base behind Core Banking Core Banking has successfully integrated all mediums of banking to a single platform which

has resulted in considerable transparency in banking operations Core Banking has played important role in dispensing information to bank managements. It

has become the most important tool for Banking Management Information System (BMIS)

What is Financial Inclusion?

Financial Inclusion is a term which is often used in Indian Banking industry and in manifestos and announcements of govt. and banks.

What is Financial Inclusion? – Financial Inclusion is a process or concept formulated with an objective of providing financial products and services to every constituent of our society, especially economically backward people. This concept has been developed and implemented keeping in mind the mainstream banking service providers. This is because it was felt that burden of financial services to downtrodden and poor people has been made a prerogative of rural banks and cooperative banks, who are not the mainstream players. And if mainstream players are not involved in this initiative it would be the traditional quasi-banking establishments, who would again take undue benefit of this situation.In simple language financial inclusion stands for including the people lying on the lowest strata of our social pyramid into the financial mainstream. These people have remained aloof from financial and banking mainstream and they don’t possess bank account, don’t have knowledge about financial and saving instruments and are unable to reap benefits on whatever large or small amount of money they have at their disposal. Various financial experts argue that bank account is the most basic step of bringing such people under financial mainstream. So it is sometimes proposed that primary objective of financial inclusion should be to open bank accounts of unbanked people.But financial inclusion also implies a very important point. It is felt that a majority of the unbanked people are not used to frills, now normally associated with modern banking. These people require the most basic banking facilities which are free of frills. That means financial inclusion is no-frill banking.Financial inclusion also includes the objective of providing cheap loans to the most downtrodden people because their essential requirement from banking system is get access to funds to sustain their livelihood.

The Reserve Bank of India (RBI) constituted a committee under SH Khan to give recommendations on Financial Inclusion. On recommendations of this committee, RBI appealed to all commercial banks to come out with a no-frill bank account that would attract the downtrodden unbanked masses of the country for its simplicity of operations. However, financial inclusion as a formal banking policy was implemented from 2005 on recommendations of Kamlesh Chandra Chakrabarty committee’s report. After this report, the terms and conditions to open bank account by marginalised people were eased by banks.Financial Inclusion is necessary for India mainly due to agrarian nature of Indian economy and her huge population. People belonging to this sector suffer a lot due to high interest rates, uncertain nature of agriculture, absence of sufficient agricultural insurance services, rising production costs and exorbitant amount of interest paid by them to traditional moneylenders. And these are the primary reasons that banking sector is also look upon with suspicion by agriculturists as they have been looking at moneylenders through ages. It was therefore important to put a better picture of banking industry before them to break their perceived notions about this sector. Financial inclusion therefore was formulated with the main objective of providing basic hassle free financial services such as bank account. Bank accounts are perceived as first important step in providing financial empowerment to the downtrodden and policies of financial inclusion were envisaged keeping in mind the target of brining more and more people under mainstream banking and financial services.In the recent times initiatives under financial inclusion have been pressed upon as they are perceived as major tools in achieving sustainable growth.

Important features of Financial Inclusion a)Financial inclusion means the process of availing a minimum set of financial and banking services to the people residing in the lowest ladder of social paradigmb)Financial inclusion presses upon including the mainstream banking and financial initiatives in this initiativec) Opening a bank account is the most popular and simple tool of attaining objectives of financial inclusiond)Financial inclusion is being promoted as an important tool to achieve the target of “sustainable growth”e)Mangalam village of Puducherry became the first village to achieve 100% financial inclusion