I.T revolution in Indian Banking

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CHAPTER-1

INTRODUCTION

I.T REVOLUTION IN INDIAN BANKING

It was in June 1999 that an information technology revolution

actually appeared in the India banking sector when the world of

information technology seemed to be wide open with introduction

of Indian Financial Net. This Indian Financial Net included a wide

area satellite based network, which used very Small Aperture

Terminals technology, was jointly set up by the Reserve Bank of

India and Institute for Development and Research in Banking

Technology. The Indian Financial Network initially comprised only

the public sector banks but was later on opened up for

participation by other categories of members including foreign

banks as well.

It was the payment system, which was the first segment of banking

system, benefited a lot from the introduction of the new

technology. This segment being the lifeline of a bank was later on

fully mechanized with introduction of Automated Teller Machines.

This facility was further enhanced by the Internet facility, which hasalso significantly influenced delivery channels of the banks.

Internet has emerged as an important medium for delivery of

banking products & services.



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ABOUT THE REPORT

TITLE OF THE STUDY

The present study is titled as a project report on

“INDIAN BANKING IN THE WAKE OF I.T. REVOLUTION” the

present study is made with special reference to IDBI BANK.

OBJECTIVES OF THE STUDY:

The following are the objectives of the present study:

To study about the banking services provided by bank.

To study about new innovations brought in bank.

To study about the customer satisfaction by using these services.

PERIOD OF THE STUDY:

The period of the present study is from June 2012 to September

2012.

LIMITATIONS OF THE STUDY:

The present study has got all the limitations of the case study

method.



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DATA AND METHODOLOGY:

For the purpose of present study both primary and secondary data

are used.

Primary data are collected from IDBI BANK.

Secondary data are collected from books and websites.

CHAPTER LAYOUT OF THE STUDY:

The present study is arranged as follows:

Chapter 1 – An Introduction: Gives an introduction to the title and

to the report.

Chapter 2 deals with profile of the concerned institution.

Profile – History, growth and development of that institution.

Chapter 3 deals with theoretical view of the table.

Chapter 4 deals with topic under study.

Chapter 5 summarizes the result of the study.



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CHAPTER-2

PROFILE OF IDBI BANK

HISTORY

IDBI Bank Ltd.is an Indian financial service company

headquartered Mumbai, India. RBI categorised IDBI as an "other

public sector bank". It was established in 1964 by an Act of

Parliament to provide credit and other facilities for the development

of the fledgling Indian industry. It is currently 10th largest

development bank in the world in terms of reach with 1514 ATMs,

923 branches including one overseas branch at DIFC, Dubai and

621 centers including two overseas centres at Singapore &

Beijing.IDBI BANK, which is owned by the Indian Government.IDBI

Bank is on a par with nationalized banks and the SBI Group as far

as government ownership is concerned.It is one among the 26

commercial banks owned by the Government of India.The Bank

has an aggregate balance sheet size of Rs. 2,53,378 crore as on

March 31, 2011. IDBI Bank's operations during the financial year

ended March 31

,

DEVELOPMENT

To meet emerging challenges and to keep up with reforms in

financial sector, IDBI has taken steps to reshape its role from a



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development finance institution to a commercial institution. IDBI

attained the status of a limited company viz. “INDUSTRIAL

DEVELOPMENT BANK OF INDIAN LTD" (IDBIL). Subsequently,

the Reserve Bank of India (RBI) issued the requisite notification on

30 September 2004 incorporating IDBI as a 'scheduled bank'

under the RBI Act , 1934. Consequently, IDBI, formally entered the

portals of banking business as IDBIL from 1 October 2004. The

commercial banking arm, IDBI BANK, was merged into.

In March 2008, IDBI Bank entered into a joint venture with Federal

Bank and Fortis Insurance International to form IDBI Fortis Life

Insurance, of which IDBI Bank owns 48 percent. The company

ended the year with over 300 Cr in premiums as on 31 March

2009.The name of IDBI Fortis Life Insurance is now changed

to IDBI Federal Life Insurance Co Ltd.Government of India now

owns 70.52% stake in IDBI Bank. Hence IDBI Bank is also referred

as 'The New Age Government owned Bank'

It has bought 10% stake in upcoming commodity bourse Universal

Commo-dity Exchange (UCX) for Rs 10 crore, the bank's top

official said. The deal was completed recently. RM Malla, chairmanand MD of IDBI Bank, confirmed that the bank had picked up 10%

in what will become the country's sixth commodity futures

exchange. "The idea behind acquiring equity is to push agriculture

loans through this venture," said Malla. "The other advantage is

IDBI will be the only bank among the promoters and therefore all

transactions of the exchange will be routed through IDBI

breakthrough initiative in customer service was taken by IDBI Bank



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(branded as 'Customer Delight Campaign' when it removed many

of the charges from its retail banking services. This step has

created a wave in banking industry and put the bank on a

developmental pedestal never seen before. Some of the charges

waived are- ATM-cum-Debit card annual charges, Transaction

charges on other banks' ATMs, Demand Draft/Pay Order charges,

RTGS/NEFT charges, Cheque book issuance and utilization

charges and many more other charges.It was the winner in two

categories in Dun & Bradstreet's Polaris Software Banking Awards

2011It has now a network of 977 branches, 661 centres and1547 ATMs as on April 18, 2012. The 977th branch is located at

Kagal near Kolhapur in Maharashtra.

GROWTH

Savings account strategy not ideal:

IDBI bank had waived off all Savings account (SA) related fees in

2QFY2011 to attain higher growth in SA deposits. While this

strategy led to substantial traction in saving accounts for the bank

in 2QFY2012, we believe, post the savings rate deregulation, it is

likely to attract all the “wrong” kind of customers. The strategy is

more oriented towards drawing retail customers with low savings

balances and higher servicing cost. On the other hand,

interestsensitive urban-centric customers with higher savings

balances are likely post the de-regulation to move to new private

banks offering higher savings rates. This is exacerbated by the

fact that unlike other PSU banks, IDBI‟s relatively newer network is



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also more skewed towards metro and urban areas (two-third of

total branches), exposing the same to elevated competitive

intensity especially from private banks. Notably, in 3QFY2012, the

bank in fact experienced the highest decline in savings balances

qoq of 7.2%. At present, IDBI Bank is unlikely to discontinue

its zero cost SA product, nor is a hike in savings rate, especially in

the less than `1 lakh category on the anvil. The bank plans to

have about 1,050- 1,070 branches by end-FY2013 (933 as on

3QFY2012).

Asset quality concerns remain an overhang:

The bank‟s exposure to stressed sectors specifically Power (15.0%

of overall exposure, primarily to IPPs), Iron and steel (9.3% of

overall exposure), Telecom (7.2% of overall exposure) and Textile(4.3% of overall exposure) have led to high NPAs for the bank

lately. The bank‟s restructured book at 6.1% of the overall

advances is on the higher end as compared to ~4.5% for the PSU

universe. The bank‟s exposure to companies expected to be

restructured using the CDR route in 4QFY2012 stands at ~`500cr

(excluding Air India)

The bank‟s outstanding telecom exposure is majorly to incumbent

operators,

while in metals segment, it is mainly to the larger corporates and

management



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does not expect material further delinquencies. About `1,500cr of

power

exposure is expected to come up for commissioning in

FY2013, where

management expects some restructuring and NPV losses. Overall,

the

management expects about `400-500cr run-rate of net additions to

GNPAs per

quarter going forward (excluding write-offs).



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CHAPTER-3

THEORETICAL VIEW

I.T REVOLUTION IN INDIAN BANKING

Technology is a boon to several industries in the post modern

world, and the banking industry is another one to benefit from the

multi dimensional efficiency levels of technology. Technology

banks helps in the process of clarity, simplicity and efficiency in

complex banking processes, also reaches out for something

superior and a wider range of customers. Services provided

through the means of computers, mobiles and other telecommunication mediums have also added upon the benefits

and multitude of tasking for the banks. The importance of

technology in the banking sector has made banking a very easy

affair.

The introductions of ATMs, internet banking and phone banking

are all the outcomes of the technological modifications. Banking

has definitely improved from just being somewhere one had to

rush every now and then to keep a tally of their accounts and to

deposit and withdraw cash, to something which is so easy and

efficient that it does not at all seek for added attention. Electronic

banking has also emerged as one of the most efficient delivery



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channel for the banking industry. Information technology of IT

revolution has essentially changed the face of the world and the

economic, financial and social status has taken a giant leap from

what it used to be previously. The financial operations are very fast

and reliable and that has eventually resulted into strengthening the

banking sector.

The importance of technology has eventually contributed a lot in

the way of cost reduction for the customers and has offered avaried number of products and services. Thus costs cuttings have

a direct effect influencing the profit margins therefore resulting into

a thriving business sector. Technology henceforth, is the main

reason of development and growth of the banking sector. Apart

from all this, technology aids the adept security measure for the

banking houses in order to secure the customer confidentialitiesand monetary details. Giant business houses have their important

papers, documents and passwords stored up in the banks which

are taken care of by the highly sensitive and skillful technological

security devices.

Evolution of technology in Indian banking

The technological development in banking can be traced as

follows:-

1960 - Mechanized banking introduced.

1970 – Introduction of computer based banking industry.

1980 – Introduction of computer-linked communication based

banking.



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Advent of computer technology has created a major impact on

working of banks. Â The computerization and subsequent

development in history of Indian banks can be traced back to 1966

when Indian Bankers Association (IBA) along with exchange banks

association signed first wage settlement with the unions, which

accounted for the use of IBM or ICT accounting machines for inter-

branch reconciliation etc. A committee on computerization and

mechanization was appointed by RBI in 1983 under chairmanship

of Dr. C. Rangrajan recommended that computerization and

installation of Advanced Ledger Posting Machines (ALPM) at

branch, regional and head offices of banks will bring around a new

era in banking. Narsimhan Committee in 1991 paved way for

reform phase in banking.

Saraf Committee was constituted by RBI in 1994 that

recommended the use of Electronic Fund Transfer System (EFT),

introduction of electronic clearing services and extension of

Magnetic Ink Character Recognition (MICR) beyond metropolitan

cities and branches. Today in every aspect of our life we are using

information technology to make our life comfortable. Due to ITrevolution various new technologies are introduced in production

and service sector. As Banking and Insurance sector are based on

the consumer data base, Banking and Insurance sector are also

affected by this and IT tools are introduced for the better

performance and faster growth rate.



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IT in Banking

Introduction:

In the five decades since independence, banking in India has

evolved through four distinct phases. During Fourth phase, also

called as Reform Phase, Recommendations of the NarasimhamCommittee (1991) paved the way for the reform phase in the

banking. Important initiatives with regard to the reform of the

banking system were taken in this phase, entry of new banks

resulted in a shift in the ways of banking in India. The growing

competition, growing expectations led to increased awareness

amongst banks on the role and importance of technology inbanking. With arrival of foreign and private banks with superior

technology pushed Indian banks to fallow the latest technology to

meet the growing competition and retain their customer base.

Now Indian banking industry is in the mid of IT revolution. The

Software Packages for Banking Applications in India had their

beginnings in the middle of 80s, when the Banks startedcomputerizing the branches in a limited manner.

The early 90s saw the plummeting hardware prices and advent of

cheap and inexpensive but high-powered PCs and servers and

banks went in for what was called Total Branch Automation (TBA)

Packages. Information Technology has basically been used under



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two different avenues in Banking. One is Communication and

Connectivity and other is Business Process Reengineering.

Information technology enables sophisticated product

development, better market infrastructure, implementation of

reliable techniques for control of risks and helps the financial

intermediaries to reach geographically distant and diversified

markets.

The New Era

The 21st century will bring about an all-embracing convergence of

computing, communications, information and knowledge. This will

radically change the way we live, work, and think. The growth of

high speed networks, coupled with the falling cost of computing

power, is making possible applications undreamed of in the past.

Voice, data, images, and video may now be transferred around the

world in micro-seconds. This explosion of technology is changing

the banking industry from paper and branch banks to' digitized and

networked banking services. It has already changed the internal

accounting and management systems of banks. It is now

fundamentally changing the delivery systems banks use to interact

with their customers. All over the world, banks are still struggling tofind a technological solution to meet the challenges of a rapidly-

changing environment. It is clear that this new technology is

changing the banking industry forever. Banks with the ability to

invest and integrate information technology will become dominate

in the highly competitive global market. Bankers are convinced that



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investing in IT is critical. Its potential and consequences on the

banking industry future is enormous.

Technology and Banks Transformation

Computers are getting more sophisticated. They have given banks

a potential they could only dream about and have given bank

customers high expectations. The changes that new technologies

have brought to banking are enormous in their impact on officers,

employees, and customers of banks. Advances in technology are

allowing for delivery of banking products and services moreconveniently and effectively than ever before - thus creating new

bases of competition. Rapid access to critical information and the

ability to act quickly and effectively will distinguish the successful

banks of the future. The bank gains a vital competitive advantage

by having a direct marketing and accountable customer service

environment and new, streamlined business processes. Consistentmanagement and decision support systems provide the bank that

competitive edge to forge ahead in the banking marketplace.

BANKING SECTOR REFORMS IN INDIA

The banking system has undergone significant change during last

17 years. There have been new banks new instruments, new

windows, new opportunities & along with all new challenges. Prior

to1991, commercial banks in India were functioning in a highly

regulated environment, there was insufficiency in the functioning of

banks, and productivity and profitability was low. In true with the

liberalization & privatizations wave sweeping across the world, the



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Government of India decided to review the banking policies in

early 1990‟s. With this background in view the Narsimha

Committee worked out the road map banking sector reforms. The

successful implementation its various recommendations have

given a new dynamism to the banking sector since 1992.

AN ASSESSMENT OF TECNOLOGICAL REFORMS

In recent years for improving the functioning and for providing

better customer services technological infrastructure in BankingSector has been updated. It was done to understand the need of

hour. For a long time Indian Banks faced or very little competition

and operated in protected economy. So no long term policy or

perspective for banking sector was formulated. But now in the

changing scenario when well computerized foreign banks are

coming to compete with the nationalized banks then introduction of technological changes have become very much necessary but in

our country the main agents affecting the introduction of new

technology have been unions, managements and the workforce

But these attitudes and strategies of Unions Vis-à-vis

computerization have begun to change especially since the 1980‟sManagement in many banks has been able to convince workers

and unions that such changes are beneficial for employees

enhance job security and improve employment conditions. So the

last decade seen several technological agreements or

„Computerization agreements‟ along with routines collective

bargaining agreements which contain clauses related to

technology.



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The Reserve Bank of India installed its first computer in 1968 and

a larger one in 1979. But the united commercial bank, the

Standard Chartered Bank, Lloyds Bank and others had installed

payrolls had been computerized fairly earlier. In 1983 two major

banking unions- The All India Bank Employees Association

(AIBEA) and National Confederation of Banking Employees

(NCBE) signed an agreement with the Indian Banks Association

(IBA) representing 58 bank managements. The unions wished to

maintain surveillance of the process and to protect job prospectusin banking sector. This agreement paved a way for individual

banks to make their own computerization agreement. But in March

1987 the new agreements was signed. This agreement allowed for

an extension of new technology in both the operations

computerized and equipment used but protection of existing staff

and prospects for future staff was taken into consideration. Takingadvantages of the „openness‟ clause in1983 and1987 agreements,

some of the AIBEA‟s own affiliates agreed to the installation of

ATM and fax machines. So a comprehensive policy was

completely absent.

STRATEGIES FOR AWARENESS IN RURAL AND SEMI-URBAN AREAS OF INDIA

The concept and idea of banking especially e-banking has been

completely modernized & revolutionized in the recent times. As a

matter of fact, this idea has already been completely implemented

in advanced countries.



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Indian Banking system has remained static, traditional and non-

competitive. But at the of globalization, Indian Banking authorities

and custodians of course government also, should take such steps

and policies which may completely overhaul the structure of Indian

Banking so that it may well fit in the cosmopolitan network of

Banking. One very important sad feature of Indian Banking has

been that it has completely ignored the rural and semi-urban areas

to spread the concept and services of banking especially E-

Banking.

FOLLOWING ARE THE MAIN SUGGESTIONS WITH RESPECT

TO E-BANKING IN INDIA

At the very outset it can be suggested that in order to spread E-

Banking in rural and semi-urban areas, education with respect to

banking should be given to the rural people. The main problem canbe of finance and then creating the banking educational

institutions. The government can take up the responsibility of

finance.

Second important suggestion to make E-Banking more versatile,

especially in rural and semi-urban areas is to make bankingservices more frequent and also free in the initial stages. Another

main suggestion about E-Banking is to make aware the rural

masses about loan and deposit facilities.

Another workable and practical suggestion with respect to E-

Banking is that technical banking experts should be invited from



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advanced countries to arrange group discussions and workshops

and seminars in India.

IMPACT OF COMPUTERIZATION

The basic impacts of such technological changes are:

Decline in employment level.

Increase in workload.

Pressure for flexibility.

Changes in job contents.

Loss of Union power.

Changes in pay scale.

Changes in information and control.

Changes in health and safety conditions.

Decline in Employment level

The introduction of new technology and its expansion the growth of

new jobs have dwindled. There has been a reduction in rate of

recruitment in the nationalized banks. VRS schemes have beenintroduced to lessen the number of workers.



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Increase in workloads

Most of the employees in insurance as well as banking industry

have experienced serious strain and heavy workloads.

Computerization coupled with non recruitment of retired staff, has

led to tremendous increase in workloads.

Pressure for flexibility

Computer technology demands functionally multiskilled workersrather than specialists. Only professionals and specialists benefit

from strategy and others have either to leave the station or to pot

another job.

Changes in job contents

A change in the methodology of work has affected the content of work as well as skills needed by employees. In places where the

skill level of the workers is high, such changes tend to strengthen

the tendency towards the integration of planning and production

tasks. But lower levels of skill seemed to be trend towards

polarization of skills. Some of the employees are of the view that

work has become monotonous. But some other suggests suchtechnological changes have no doubt increased efficiency but

decreased the feeling of teamwork.

Loss of Union Power

Many banks tend to early retirement of employees and does not

contain early recruitment of employees which has led to insecurity.



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There is no strong Union Power to stop this problem or to raise

such issues. The employees are forced to take VRS in some of the

banks.

Change in Pay Scale

The nationalized banks like State Bank Of India, State Bank of

Patiala, Punjab and Sind Bank, Punjab National Bank etc., have

provided special training to equip employees to deal with new typeof work related to new technological changes. The employees get

allowances per month for their work done.

Changes in information and control

With the advancement of technology management has total control

over all information. Profits, costs etc. are under secret codes.

Now employees are being watched and their work capabilities are

judged directly. No doubt it has increased the efficiency but now

working staff always work under strains. A strenuous work may

commit some mistakes and lose the job or get punishmentaccordingly.

Changes in Health and Safety Conditions

Some specific health and safety problems have been shown to

arise from the introduction of computer based equipments e.g.:



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Visual Display Units may cause a number of health problems if

they are operated continuously eg: eye problems varicose veins,

headache and skin problems, reproductive problems i.e.

Miscarriages, birth defects, low sperm counts etc. None of the

bank employees had been given any health training.

Banks face a serious challenge. The basic structure of the bank is

increasingly in conflict with the changing product, delivery, and

service needs of the customers The future belongs to financial

service providers not traditional banks. The vast majority of largebanks, will create value networks. Doing so presents tremendous

challenges. Banks will have to first develop a comprehensive

distribution system that will enable customers to touch them at

multiple points. Banks must also create performance measurement

systems to assure the mix products and services they offer are

beneficial to both the customer and the bank. They must determinewhether to deploy new technologies themselves or with other

service providers. Nevertheless, technology alone will not solve

issues or create advantages. This technology needs to be

integrated in an organization, with the change management issues

linked to people resisting new concepts and ideas. It also needs to

support a clearly defined and well communicated businessstrategy.

There is a probability of huge increase in employment

opportunities. A number of web-sites are coming up on insurance,

a few financial magazines exclusively devoted to insurance and

also a few training institutes being set up hurriedly. In the



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insurance sector various new tools are coming to facilitate the

business. E-crm, E-insurance leading a new way for the

development of this sector it leads to increase in the employment

opportunity in future. Technology has opened up new markets,

new products, new services and efficient delivery channels for the

banking industry. Online electronics banking, mobile banking and

internet banking are just a few examples.

The IT revolution has set the stage for unprecedented increase infinancial activity across the globe. The progress of technology and

the development of world wide networks have significantly reduced

the cost of global funds transfer. It is information technology which

enables banks in meeting such high expectations of the customers

who are more demanding and are also more techno-savvy

compared to their counterparts of the yester years. They demandinstant, anytime and anywhere banking facilities. It is information

technology which enables banks in meeting such high

expectations of the customers who are more demanding and are

also more techno-savvy compared to their counterparts of the

yester years.



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CHAPTER-4

REPORT ANALYSIS

INDIAN BANKING IN THE WAKE OF I.T. REVOLUTION - A

STUDY.

IMPORTANCE OF BANKS IN THE INDIAN ECONOMY:

The banking system which constitutes the core of the financial

sector plays a critical role in transmitting monetary policy impulses

to the entire economic system. Money and finance is an importantand necessary factor for economic development. Though finance

is by no means a substitute for real resources, it has a crucial role

in the economic development of the country. The segment of

capital and money market dealing with lending and borrowing of

funds, essentially for short-term purposes, is represented by

commercial banking institutions. The importance of commercialbanks in the process of economic development has been

recognized by all. The commercial banks play an important role in

all economies. The role becomes more important in planned or

developing economies like India. Banking Industry is the blood

vascular system of our economy. In a country like India,

constitutionally committed to socialistic pattern of society- bankshave important role to play i.e. in the reduction of regional

disparities, which is an important objective of the economic

planning. The structure of the Indian Banking System has

undergone numerous changes since Independence.



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STRUCTURE OF INDIAN BANKING SYSTEM:

The banking system occupies an important place in a nation‟s

economy. A banking institution is indispensable in a modern

society. It plays a pivotal role in the economic development of a

country and forms the core of the money market in an advanced

country. In India though money market is still characterized by the

existence of both the organized and the unorganized segments,

institutions in the organized money market have grown significantly

and are playing an increasingly important role. Amongst theinstitutions in the organized sector of the money market,

commercial banks and commercial co-operative banks have been

in existence for the past several decades.

COMPUTERSATION IN BANKS:

Banking which forms a core industry of any economy should be

growth oriented. Computerization is a positive step to bank growth.

With the aid of computers, the bank work can be done faster. Not

only the present workload can be reduced to a great extent but

also the bank can expand its working area with the same

manpower. Computerization in banking sector dates back to 1963when Life Insurance Corporation introduced computers for

maintenance and processing of insurance policies.

It was in 1975, when the working group on customer‟s services

headed by T.R. Vardarchay suggested introduction of modern

technology in specific banking areas to improve the customer‟s

services. It was as a result of changing banking scenario in India



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that these recommendations were made i.e. with nationalization of

14 major banks in1969 and subsequent explosion of banks region

wise and service wise the need for varied information system was

realized i.e. house keeping and control and macro level

information for policy formulation and control by central banking

authority. However, despite such a multi dimensional growth,

mechanization was still unknown in the industry in general.

COMPUTERIZATION IN NEW PRIVATE SECTOR/FOREIGN

BANKS:

After the liberalization of the Indian economy, a few new private

sector banks were set up. The main agenda of these banks is to

provide better services to the customer who can afford it. Their

approach can be termed as cherry picking banking, which aims at

the customers. Their perception is also strategically different. Theyview the customers as financial partners rather than custodians of

their customer‟s money- a shift from custodianship to

companionship. To achieve the goals these banks eliminated the

constraint of time and distance by expanding from eight to twenty

four and reducing the distance from infinity to near zero.

To achieve the above objectives, these banks introduced a high

level of automation right from inception. All the branches were

computerized from inception to insure efficient on-line transaction

processing. Processors were developed to attain the highest level

of customer satisfaction. High speed computer – mediated

communication networks were set up to reduce the communication

cycle time. Staff was carefully selected to play the role of business



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facilitators rather than processing clerks and accountants.

Employees attended to the customer proposal and problems, while

computer processed all the transactions and displayed the options

and assisted the employees by providing customized solutions.

INFORMATION TECHNOLOGY AND INDIAN BANKS:

With the development of information technology, the world has

become a global village and it has brought a revolution in the

banking industry. The banks appear to be on fast track for I.T.based products and services. The technology of

telecommunications and electronic data processing has

accelerated changes. The integration of information system with

communication technology and innovative applications to product

manufacturing, design and control.

The new technology has radically altered the traditional ways of

doing banking business. Increasingly, the customers in retail

sector are doing business with their banks from the comfortable

confines of their homes or offices.

IDBI BANK:

IDBI Bank commenced operations in November 1995. Its

corporate mission is to provide „Quality‟ Banking services to its

clientele. To this end, the Bank has equipped itself with state- of-

the- art- technology for its products and services. It has also built

up a team of dedicated professionals with a strong customer

service orientation.



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BRANCH NETWORK:

The bank has a carefully planned programme of enhancing its

reach by expanding its branch network and supplementing it with

offsite ATMs. The broad strategy is to cover adequately most of

the important locations in the country relevant to the Banking

business offsite ATMs are also proving an effective way to tap

scientific target audiences. In 1992-2000, the percentage growth

rate was 50%, 28.21% branches were located in semi-urbanareas.

INFORMATION TECHNOLOGY:

The Bank has been conceived on a high technology platform and

has been amongst the few banks which have, by using the currenttechnology recorded substantial efficiency gains and succeeded in

bringing down transacting costs. The Bank has invested

substantially in harnessing switching technology, which enables

linking of ATMs of different Banks, which will be pioneering

introduction of smart card technology.

Corporate Banking

In its continuing endeavor to effectively meet the requirements

of different Groups of Corporate Clients, IDBI Bank Ltd. has

organised its Corporate Banking Wing based on client's

turnover besides creating a separate specialized cell and Group



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each to cater to Corporates in Film Sector and Infrastructure

Sector respectively.

Based on scale, Corporates with turnover of more than Rs. 100

crores but up to Rs. 500 crore are looked after by Mid

Corporate Group (MCG) while Corporates with turn over of

more than Rs. 500 crore are looked after by Large Corporate

Group (LCG).

However, as sated earlier, with a view to effectively manage the

peculiar requirements of Film Finance, a specialized cell has

been set up in LCG to cater to Corporates in Film Sector regardless of their turnover.

Special focus for Infrastructure Financing

Further, considering the significance of the infrastructure sector

in the country‟s development, a specialized Group, namelyInfrastructure Corporate Group (ICG) has been created which

deals with Corporates from infrastructure, Industries accorded

infrastructure status by RBI, regardless of their turn over.

Since inception in 1964 [formerly as Industrial Development

Bank of India], IDBI Bank has been assigned to play a

distinctive role in the promotion of industrial development of thecountry. It has provided financial assistance towards setting up

of industrial estates. Being a prominent player in financing

infrastructure projects, IDBI Bank actively participates in

addressing policy-related issues in various forums including the

Committees constituted by the Government of India.

Finalization of model Power Purchase Agreement and Model



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Concession Agreement in road sector are some of the

significant contributions made by IDBI Bank in the development

of this sector. It has financed landmark first-of-its-kind projects

in the infrastructure sector such as Independent power project,

fixed and mobile telecom, port, road and airports in India.

The policy makers have identified power, telecom, ports (both

sea and airports), roads, transportation and urban infrastructure

facilities as infrastructure sector and are providing impetus for

the growth in these sectors, Reserve Bank of India has

accorded infrastructure status to select sectors, credit to whichis classified as financing to Infrastructure sector. These three

Groups in the Bank cater to the requirement of financial

assistance as also provide other services like Deposits products

to Clients from Corporate sector.

Phone Banking

At IDBI Bank, they endeavor to raise the bar to meet the rising

requirements of our customers, by providing quality products

and services to suit varied banking needs. Our Phone Banking

service is yet another, technology and customer centric step inthat direction. IDBI Bank Phone Banking service enables you

to access authentic, instantaneous information on your account

balances and transactions. The service is available totally free

of cost round the clock, 365 days a year. To view the different

services that are available through our Phone Banking

facility, click here.

http://www.idbi.com/icg_infra_sectors.asp


http://www.idbi.com/phonebanking_services.asp

http://www.idbi.com/phonebanking_services.asp




30

NRI SERVICES

Being an NRI (non-resident Indian) and privy to special benefits

and privileges in India, it‟s only but natural to expect world class

levels – be it banking or any other service.

While they offer basic NRI banking products like Non Resident

Rupee Checking Account, Non Resident Rupee Term Deposits

and Foreign Currency Non Resident Deposit, they realize that your

requirements are manifold. Hence, they provide seasoned

banking professionals to handle your queries and offer value

added services. The value-added services we provide range from

answers to online tax and foreign exchange related queries and

needs with special emphasis on FEMA guidelines issued by The

Reserve Bank of India from time to time.

Their International Debit Card is designed to offer the convenience

Account Alerts

IDBI Bank's new Account Alert service gives you all this and

more. With Account Alert, your bank account transactioninformation will be delivered to you automatically, wherever you

are. No more visiting the bank branch or ATM to check routine

things like account balances, cheque clearance, verification of

ATM transactions, bill payment verifications, etc. Account Alerts

allows you to monitor filely any type of activity on your accounts,

and be notified by e-mail or cell phone SMS as and when they

are executed.



31

of accessing the funds with us from any ATM and also pay for

purchases from any merchant establishments across the world.

We can avail of our advanced funds transfer facility to transfer

funds from our account to that of our family members' account held

with any IDBI branch across India.

Their other services, such as providing free nomination and

mandate facility enables hassle free banking operations to family

member authorized by you to operate the account. They provide

high-end solutions such as high yielding foreign exchange

products, wealth management and insuranceFor more information on our NRI-centric banking solutions, follow

the links below.

Non-Resident External (NRE)

Repatriable account for your investment needs

Access your account anytime, anywhere with Internet Banking

Shop at more than 8.3 million locations and withdraw funds in 140

countries

.

Non-Resident Ordinary (NRO)

An account for your local income and expenses

Access your account at more than 250 ATM's across the countryPay your bills in India from anywhere in the world



32

FCNR

Retain your funds in foreign currencyNo exchange risk

Earn attractive returns on your funds

.

DEPOSITS

IDBI Bank has made a foray into the overseas markets to leverage

its domestic banking strengths to offer competing products

internationally. The Bank's first international branch has been set

up at the Dubai International Financial Centre (DIFC), Dubai.

IDBI Bank's DIFC Branch which is regulated by the Dubai

Financial Services Authority (DFSA) provides a range of corporate

banking services including extending of foreign currency loans to

Indian Corporates (ECBs), foreign currency loan syndication and

trade finance products for meeting the foreign currency

requirements of Indian clients. The Branch also serves as the

nodal point for IDBI Bank for raising foreign currency resources.

The Category I branch offers the following products & services:-

Accepting Deposits

o Accepting deposits from high net worth individuals, corporate,

trusts etc. in currencies other than AED.



33

o Raising Foreign Currency Bonds including Perpetual Tier I and

Upper Tier II capital.

Providing Credit to corporate in currencies other than AED for

meeting their funding requirements

o To Indian Corporates for their funding requirements for their

overseas venture

o Participate in Loan syndications originating in the region.o Provide trade finance products & services to support India's trade

with UAE and other countries.

Arranging deals in credit / investment

Advising on financial products/ credits.

DYNAMIC CURRENCY CONVERSION

Dynamic Currency Conversion (DCC) is a facility which will

enable International MasterCard Cardholders (cards issuedoutside India) to transact using their cards in their home currency

at our ATMs.

Dynamic Currency Conversion (DCC) is an optional service

provided to International Cardholders by merchant

establishments, or at ATMs. It allows the cardholder, the option



34

to pay in either their home currency (in the currency where the

customers' account is maintained) or the currency of the country

they are visiting. In a nutshell, card holder gets to know instant,

real-time currency conversion to their home currency while they

pay for goods and services, withdraw cash through ATMs with

their Debit / Credit card.

The DCC facility would enable these Cardholders, while

withdrawing cash from IDBI Bank ATMs, to view the transaction

amount in their home currency and know upfront the foreigncurrency amount to be debited to their account. They will also get

a transaction slip mentioning the amount withdrawn in that

currency. Thus, this service reduces the hassle of reconciliation

of entries in the account statement and helps them to manage

their card account effectively. It is to be noted that the amount

will be dispensed by the ATMs in INR only.

This facility is currently rolled out on select ATMs (list attached)

on a pilot basis and will be rolled out on all our ATMs in a phased

manner by the end of June 2011. Such DCC service has already

been provided by our Bank in the merchant acquiring (ME)

business.



35

MSME Finance

MSME Finance takes care of the funding needs of Micro, Small

and Medium enterprises. Keeping in view the specific

requirements of these units, IDBI Bank has introduced a range of

attractive products. The products are designed to cater to various

segments among MSME borrowers. The Bank has the products

that cater to all the stakeholders in a value-chain viz.,

the vendors, the manufacturers as well as the dealers. Inaddition there are tailor-made products for special category of

borrowers such as Practitioners, Transport, and Professionals &

Self-employed etc. With a view to make business easy for the

Micro and Small Enterprises (MSEs), the Bank has

introduced collateral free loans . The Bank not only offers

finance to its MSME customers but also takes care of their allbanking needs under one roof with full range of other banking

products and services. The Bank is in constant endeavor to

introduce new products with a view to offer wide array of

solutions to the MSME units

IDBI BANK SME PRODUCTS:

Sulabh Vyapar/ Business Solutions (Loan for traders/Service

Sector)

Dealer Finance/ Dealer Solutions

Vendor Financing/ Vendor Solutions

Funding under CGFMSE (Collateral Free Loans)

http://www.idbi.com/sme_VF.asp



http://www.idbi.com/sme_Dealer_Finance_Programme.asp



http://www.idbi.com/sme_PS.asp




http://www.idbi.com/sme_CGFMSE.asp



http://www.idbi.com/sme_SV.asp

















36

Loans to Small Road & Water Transport Operators

Finance to Medical Practitioners

Loans to Professionals & Self-employed

Lending Against the Security of Future Credit Card Receivables

Laghu Udhyami Credit Cards (LUCC)

Property Power (Loan Against Property)

SME Smart Line of Credit

IDBI Bank Cash Card

IDBI Bank brings for the Corporates an easy solution for their

employees for salary Disbursement & other Reimbursements –

IDBI Bank Cash Card. The corporate opting for IDBI Bank Cash

Card can give this card to their employees for getting their Salary

Disbursed and the employees are not required to open an accountwith the bank for this. Now, Individuals can also apply for the IDBI

Bank Cash Card & can avail the services offered with this product.

Individuals need not be the customer of the Bank.

The IDBI Bank Cash Card allows the corporate employees/

Individual to use this card to make purchases at merchantestablishment in India and it can also be used to withdraw cash

from IDBI Bank ATMs & all shared network ATMs in India.

Features:

Visa Flag Card – Can be used to make purchases at over 5.5 lacs

merchant establishment in India. It can also be used to withdraw

http://www.idbi.com/sme_SRWTO.asp

http://www.idbi.com/sme_Finance_to_Medical.asp


http://www.idbi.com/sme_fcc.asp

http://www.idbi.com/sme_LUCC.asp

http://www.idbi.com/sme_Property.asp

http://www.idbi.com/sme_LOC.asp

http://www.idbi.com/sme_LOC.asp

http://www.idbi.com/sme_Property.asp

http://www.idbi.com/sme_LUCC.asp

http://www.idbi.com/sme_fcc.asp


http://www.idbi.com/sme_Finance_to_Medical.asp

http://www.idbi.com/sme_SRWTO.asp



37

cash from the large network of IDBI Bank ATMs and over 60,000

Visa / Plus ATMs in India.

Can be used more than once. The card can be used to make

repeated purchases / withdrawals till the specified value on the

card have been spent.

This card is available to IDBI Bank & non IDBI Bank Customers

(Corporates as well as Individual).

This card can be loaded for any amount up to Rs. 50,000/- per

card per month as per the instructions from the Corporate/

Individual.This card is valid for a period of 2 years from the date of issue.

IDBI BANK GIFT CARD

Presenting the perfect gift to your near and dear ones wasn‟t so

easy until now. IDBI Bank brings to you the perfect gift for every

occasion - the new IDBI Bank Gift Card. Be it a birthday,

weddings, anniversaries, festivals or achievements, the IDBI Bank

Gift Card gives your special one complete freedom to choose gifts

from their favourite stores across India.

The IDBI Bank Gift Card allows your loved one to purchases

goods and services at over 4.70 lac merchant establishments in

India that accept Visa cards. No heartaches of being bound to

specific stores with gift vouchers.

What's more, the Gift Card can be used more than once giving you



38

the flexibility to shop at will from different stores and at different

times.

Features:

The IDBI Bank Gift Card comes packed with a host of features:

No hassles of opening an account with us.

Instant card, sold over the counter

Accepted at over 4.70 lac shops that accept Visa cards across

India

Usable more than once, till the value on the card is exhausted Pre-wrapped and ready for gifting

Sold in different denominations to suit your needs

Royale Account

The IDBI Bank Royale Account has been designed to make

banking services more convenient for esteemed customers. This

new service guarantees you as our privileged customer elaborate

and personalized service of the highest order. For all the banking

requirements a dedicated relationship manager would be attachedto the account.

With the Royale Account comes the Platinum Debit Card that

provides enhanced daily cash withdrawal limit. This lifetime free

debit card provides you privileges, which span lifestyle pursuits like

shopping, dining and travel.



39

Features of IDBI Royale Account:

Zero balance Power Plus account for the any family member

Free Locker (Size: 5x6x19) or 50% discount in other locker rentals.

Free outward RTGS.

Free outward NEFT.

Higher limit of cash withdrawal from any bank ATM. (with

Platinum).

Higher Limit for Point of sale.

Free demand draft within network. Free pay order

No statement charges.

Doorstep banking.

Events to be held twice a year

DVD of movies/ songs.

Mobile alerts (Stock alerts/Daily NAV alert) Business magazine

Free Passbook facility available at home branch for account

holders (individuals)



40

CHAPTER-5

CONCLUSION

Information Technology Revolution is entirely the way banking

business is done and has considerably widened the range of

products and increased the expectations and demands of thecustomers. Risk Management, Asset Liability Management,

Innovation, Securitisation, Relationship Banking and Environment

Management are some of the new buzzwords which have

emerged in today‟s banking scene. In the banking sector,

technology has become one of the biggest drivers of change.

Technology is making 24 hours a day banking, all seven days in aweek a reality in facilitating the highest service levels. There will be

a shift from „Brick and Mortar‟ branches to „Click and Portal‟

banking. Adoption of technology will help banks to become more

responsive and flexible to the customer‟s needs and more efficient

in the management of resources. These changes and challenges

require totally new set of skills for competing in the future.



41

Information Technology has made the banking services faster,

more efficient, and more economical. Its impact can be seen on

the efficiency of banks, productivity, profitability, employment,

psychology of customers. The internet is taking banks in the

directions other than loans and deposits. With the introduction of

Information Technology, banking in India will never be the same

again.

In India around 73% of the bank branches are located in rural and

semi-urban areas. In the country, as a whole, only 10% of thebranches of the public sector banks are fully computerized and

22% are partially computerized. But on the other hand, some new

private sector banks are fully computerized and they are launching

a gateway to facilitate intra-bank transfer to funds through Internet.

They are bringing banking services to the very door step.

Especially HDFC Bank LTD, ICICI Bank LTD, GTB LTD, Citibankare very active on this front and concentrating on Internet and E-

Commerce to offer their clientele a whole range of products under

one roof. Their net profits are much more worse than other rival

banks.

Some new private sector banks like Bank of Punjab LTD, IDBILTD, UTI LTD, IndusInd BANK LTD. are fully computerized and

they are providing services like ATMs, Online services and they

are not lagging behind in any way. Recently, they have started to

penetrate in semi-urban and rural sector of India. Their profits,

branch network is on the increasing trend.



Most public sector banks have hundreds of branches without

computers and inter bank connectivity is a distant possibility. But

some have started moving in this direction. SBI plans to invest

$200 millions on technology over the next two years. Other public

sector banks too have started spending on Information

Technology. According to Ways India, a software company with

core strengths in Internet banking products, each public sector

bank will spend about $50 million over the next five years. But

these are the plans, and no public sector bank seems to be in a

position right now to make a serious foray into Internet banking.The gap regarding the productivity, profitability, and customer‟s

psychology of Internet using banks, fully computerized and

partially computerized banks is widening. New Private Sector

Banks have leveraged the Internet effectively in taking away the

customers from public sector banks and significantly increased

their revenue potential. Internet banking is just one manifestationtechnology capabilities of these banks.

Documents

I.T revolution in Indian Banking