ACKNOWLEDGEMENT
The successful completion of any task would be incomplete without
mentioning the people who have made it possible. So it`s with the gratitude that I
acknowledge the help, which crowned my efforts with success.
Life is a process of accumulating and discharging debts, not all of those can
be measured. We cannot hope to discharge them with simple words of thanks but
we can certainly acknowledge them.
I owe my gratitude to miss. Priya Jainani for his constant guidance and
support.
I would also like to thank the various department officials and staff who not
only provided me with required opportunity but also extended their valuable time and
I have no words to express my gratefulness to them.
Megh
M.B.A. Part-I
EXECUTIVE SUMMARY
Banking in India originated in the last decades of the 18th century. The first
banks were The General Bank of India which started in 1786, and the Bank of
Hindustan, both of which are now defunct. The oldest bank in existence in India is
the State Bank of India, which originated in the Bank of Calcutta in June 1806, which
almost immediately became the Bank of Bengal. The three banks merged in 1921 to
form the Imperial Bank of India, which, upon India's independence, became the State
Bank of India.
Currently (2009), overall, banking in India is considered as fairly mature in
terms of supply, product range and reach-even though reach in rural India still
remains a challenge for the private sector and foreign banks. Even in terms of quality
of assets and capital adequacy, Indian banks are considered to have clean, strong
and transparent balance sheets, as compared to other banks in comparable
economies in its region. The Reserve Bank of India is an autonomous body, with
minimal pressure from the government.
Banking environment has become highly competitive today. To be able to
survive and grow in the changing market environment banks are going for the latest
technologies, which is being perceived as an ‘enabling resource’ that can help in
developing learner and more flexible structure that can respond quickly to the
dynamics of a fast changing market scenario. It is also viewed as an instrument of
cost reduction and effective communication either people and institutions associated
with the banking business.
The banking scenario has changed drastically. The changes which
have taken place in the last ten years are more than the changes took place in last
fifty years because of the institutionalization, liberalization, globalization and
automation in the banking industry. Indian banking system has several
outstanding achievements to its credit, the most striking of which is its
reach. Indian banks are now spread out into the remote corners of our
country.
In recent years the Indian banking system has come up with many
innovations in order to change the psychology of the customer.
PREFACE
Innovation in banking should be directed at improving the infrastructure that
fosters efficient financial services and international trade. In this work, innovation
theory is used to show how modern payment systems have transformed the
technology of banking and facilitated changes in the strategy and structure of
financial services organisations. Design, implementation and dissemination of
payment systems are described and the analysis of their costs and benefits is
combined with case studies of banks undergoing change. By studying firm
capabilities, competencies, and resources, the approach is extended to services in
general and linked to the ability of firms to compete and promote national
economies. Payment systems vary and advanced and developing economies face
obstacles in their legal and technical infrastructure, and maturity of banks. By
adopting an international perspective, the book offers a unique comparative analysis
that shows what kind of investments are likely to be effective.
CONTENTS
Acknowledgement
Executive Summary
Preface
Contents
About Banking 1
Banking In India 4
Current Structure of Indian Banking 5
Innovation In Indian Banking Sector 6
I. Types of innovative Banking. 7
II. Types of Product & Servies. 13
III. Electronic System 23
Conclusion
Bibliography
ABOUT BANKING
A bank is a financial intermediary and appears in several related basic forms:
a central bank issues money on behalf of a government, and regulates
the money supply
a commercial bank accepts deposits and channels those deposits
into lending activities, either directly or through capital markets. A bank connects
customers with capital deficits to customers with capital surpluses on the world's
open financial markets.
Banking is generally a highly regulated industry, and government restrictions
on financial activities by banks have varied over time and location.
The oldest bank still in existence is Monte dei Paschi di Siena, headquartered
in Siena, Italy, and has been operating continuously since 1472.
Standard activities :
Banks act as payment agents by conducting checking or current accounts for
customers, paying cheques drawn by customers on the bank, and collecting
cheques deposited to customers' current accounts. Banks also enable customer
payments via other payment methods such as telegraphic transfer, EFTPOS,
and ATM.
Banks borrow money by accepting funds deposited on current accounts, by
accepting term deposits, and by issuing debt securities such
as banknotes and bonds. Banks lend money by making advances to customers on
current accounts, by making installment loans, and by investing in marketable debt
securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is considered
indispensable by most businesses, individuals and governments. Non-banks that
provide payment services such as remittance companies are not normally
considered an adequate substitute for having a bank account.
Banks borrow most funds from households and non-financial businesses, and
lend most funds to households and non-financial businesses, but non-bank lenders
provide a significant and in many cases adequate substitute for bank loans, and
money market funds, cash management trusts and other non-bank financial
institutions in many cases provide an adequate substitute to banks for lending
savings too
Channels :
Banks offer many different channels to access their banking and other services:
ATM is a machine that dispenses cash and sometimes takes deposits without the
need for a human bank teller. Some ATMs provide additional services.
A branch is a retail location
Call center
Mail : most banks accept check deposits via mail and use mail to communicate to
their customers, e.g. by sending out statements
Mobile banking is a method of using one's mobile phone to conduct banking
transactions
Online banking is a term used for performing transactions, payments etc. over the
Internet
Relationship Managers , mostly for private banking or business banking, often
visiting customers at their homes or businesses
Telephone banking is a service which allows its customers to perform
transactions over the telephone without speaking to a human
Video banking is a term used for performing banking transactions or professional
banking consultations via a remote video and audio connection. Video banking
can be performed via purpose built banking transaction machines (similar to an
Automated teller machine), or via a videoconference enabled bank
branch.clarification.
Products :
Retail
Business loan
Cheque account
Credit card
Home loan
Insurance advisor
Mutual fund
Personal loan
Savings account
Wholesale
Capital raising (Equity / Debt / Hybrids)
Mezzanine finance
Project finance
Revolving credit
Risk management (FX, interest rates, commodities, derivatives)
Term loan
BANKING IN INDIA
Banking in India originated in the last decades of the 18th century. The first
banks were The General Bank of India, which started in 1786, and Bank of
Hindustan, which started in 1790; both are now defunct. The oldest bank in
existence in India is the State Bank of India, which originated in the Bank of Calcutta
in June 1806, which almost immediately became the Bank of Bengal. This was one
of the three presidency banks, the other two being the Bank of Bombay and
the Bank of Madras, all three of which were established under charters from the
British East India Company. For many years the Presidency banks acted as quasi-
central banks, as did their successors. The three banks merged in 1921 to form
the Imperial Bank of India, which, upon India's independence, became the State
Bank of India.
Nationalisation
Despite the provisions, control and regulations of Reserve Bank of India,
banks in India except theState Bank of India or SBI, continued to be owned and
operated by private persons. By the 1960s, the Indian banking industry had become
an important tool to facilitate the development of the Indian economy. At the same
time, it had emerged as a large employer, and a debate had ensued about the
nationalization of the banking industry. Indira Gandhi, then Prime Minister of India,
expressed the intention of the Government of India in the annual conference of the
All India Congress Meeting in a paper entitled "Stray thoughts on Bank
Nationalisation." The meeting received the paper with enthusiasm.
Thereafter, her move was swift and sudden. The Government of India issued
an ordinance and nationalised the 14 largest commercial banks with effect from the
midnight of July 19, 1969.
CURRENT STRUCTURE OF INDIAN BANKING
Innovation in banking
Innovation in banking should be directed at improving the infrastructure that
fosters efficient financial services and international trade. In this work, innovation
theory is used to show how modern payment systems have transformed the
technology of banking and facilitated changes in the strategy and structure of
financial services organisations. Design, implementation and dissemination of
payment systems are described and the analysis of their costs and benefits is
combined with case studies of banks undergoing change. By studying firm
capabilities, competencies, and resources, the approach is extended to services in
general and linked to the ability of firms to compete and promote national
economies. Payment systems vary and advanced and developing economies face
obstacles in their legal and technical infrastructure, and maturity of banks. By
adopting an international perspective, the book offers a unique comparative analysis
that shows what kind of investments are likely to be effective.
INNOVATIONS IN INDIAN BANKING SECTOR
Category I: Types Of Innovative Banking
Category II: Types Of Product & Services
Category III: Electronic Systems
I - Types of Innovative Banking
E-BANKING
Introduction:
With the trend of globalization all over the world, it
is difficult for any nation whether big or small, developed, to remain isolated from
what is happening around. The growth of e-commerce and Internet has transformed
the world into the GLOBAL VILLAGE. Fast development in electronic technology has
concerned the computers to take over the bank counters and to convert brick
banking into electronic banking.
Usage of technology by banks is due to challenge of competition, rising
consumer expectations and shrinking margins of banks, which lead to reduction in
cost, and enhancement of productivity, efficiency and customer convenience.
Meaning:
E-banking means, “application of electronic technology towards transfer of
funds through an electronic terminal, computer or magnetic tape to conduct various
transactions like cash receipts, payments, transfer of funds etc.”
It is often known as banking on net. It does not involve any physical
exchange of money, but it’s all done electronically, from one account to another,
using the Internet. With the advent of e banking, customers are benefited by
unlimited accessibility through the network of Automated Teller Machines, personal
computers or even through mobile phones. Customer can perform various banking
transactions such as balance enquires, bill payments, and transaction histories,
transfer money between accounts, without having to step to office of the branch.
Features of e banking:
Anywhere any time banking: customers can avail banking facility while
sitting at their home/office.
Globalization of service: E-Banking has a special feature of globalizing
bank’s services all over.
Intense competition: E-Commerce is a product of handling intense
competition among various banks.
Cash less banking: E-Commerce also provides feature of cash less
banking as cash is not require in raw form but electronic cash like debit or
credit cards may serve the purpose.
Promptness: Another feature of E-Commerce is provides promptness in
services.
Process of E-Banking/ procedure of E-Banking :
E-Banking process can be explained with the help of following diagram and
explanation as under:
Log on to
website Verification
Of password
Processing Of information
Credit Card request
Final Approval
Advantages of E-Banking:
Importance of E-Banking can be explained from four aspects:
Limitations of E Banking:
Problems of security:
High cost:.
Lack of awareness:
Lack of computerization:.
Wrong assumption by people:
CORE BANKING
Core banking is a general term used to describe the services provided by a
group of networked bank branches. Bank customers may access their funds and
other simple transactions from any of the member branch offices.
Core banking solutions :
Core banking solutions are banking applications on a platform enabling a
phased, strategic approach that is intended to allow banks to improve operations,
reduce costs, and be prepared for growth.
Core Banking Solutions is new jargon frequently used in banking circles. The
advancement in technology, especially internet and information technology has led
Advantages
To banks To customers
To
Govt.
To merchant
Trader
to new ways of doing business in banking. These technologies have cut down time,
working simultaneously on different issues and increasing efficiency.
CORPORATE BANKING
Financial services to large corporate & MNCs
Services:
Overdraft facility
Domestic and international payments
Funding
Channel financing
Letters of guarantee
Working capital facility for domestic & international trade
INVESTMENT BANKING
An investment bank is a financial institution that assists individuals,
corporations and governments in raising capital by underwriting and/or acting as the
client's agent in the issuance of securities. An investment bank may also assist
companies involved in mergers and acquisitions, and provide ancillary services such
as market making, trading of derivatives, fixed income instruments, foreign
exchange,commodities, and equity securities.
Main activities :
An investment bank is split into the so-called front office, middle office,
and back office. While large service investment banks offer all of the lines of
businesses, both sell side and buy side, smaller ones sell side investment firms such
as boutique investment banks and small broker-dealers focus on investment banking
and sales/trading/research, respectively.
Investment banks offer services to both corporations issuing securities and
investors buying securities. For corporations, investment bankers offer information
on when and how to place their to an investment bank's reputation, and hence loss
of business. Therefore, investment bankers play a very important role in issuing new
security offerings.
RURAL BANKING
It provides & regulates credit services for the promotion & development of rural
sector mainly agriculture, SSI, cottage and village industries, handicrafts and many
more.
Examples Of Regional Rural Banks are NABARD, HARYANA STATE
COPERATIVE APEX BANK LIMITED, SYNDICATE BANK, UNITED BANK
OF INDIA
KIOSK BANKING
NRI BANKING
This facility is designed for diverse banking requirements of the vast nri population
spread across the globe.
NRE (Non Resident External Account)
NRO (Non Resident Ordinary Account)
FCNR (Foreign Currency Non Resident Account)
RETAIL BANKING
Meaning Retail banking is activity devised in past few years and now used
extensively. It represents any banking, which be not wholesale based. It includes any
business that is conducted through branch network, which is mainly focused towards
personal sector. It encompasses all institutions that provide a related range of
banking services—money deposit, credit services and some form of financial advice.
Retail banking today is characterized by three areas:
Multiple products (deposits, credit cards, insurance, investment)
Multiple channels of distribution (call center, branch internet)
Multiple customer groups (consumer, small business)
Need for retail banking
Economic prosperity and the consequent increase in the purchasing power of
consumer.
Technological factors also added to the requirement convenience of using credit
cards, internet and phone banking anywhere and any time banking has also flood
customers into banking.
Decline in interest rates have also contributed to increase retail banking.
With the large corporate borrowers having diversified the sources to fund their
financial requirements, frequent reduction in cash reserve ratio resulting in
pumping in of liquidity, declining bank rate leading to decline in spreads un-
attractive yields on government securities etc. have all forced banks to be in
search of alternative opportunity to deploy their funds.
WHOLESALE BANKING
Wholesale banking is the provision of services by banks to the like of large
corporate clients, mid-sized companies, real estate developers and investors,
international trade finance businesses, institutional customers (such as pension funds
and government entities/agencies), and services offered to other banks or other
financial institutions. In essence, wholesale banking services usually involve high
value transactions.
Wholesale banking contrasts with retail banking, which is the provision of
banking services to individuals.
(Wholesale finance means financial services, which are conducted between
financial services companies and institutions such as banks, insurers, fund
managers, and stockbrokers.)
Modern wholesale banks are engaged in: finance wholesaling, underwriting,
market making, consultancy, mergers and acquisitions, fund management.
II. TYPES OF PRODUCTS & SERVICES
TOTAL BRANCH AUTOMATION
Speed up bank transactions and less error
More customer friendly and flexible
Towards paperless transactions
ANY BRANCH BANKING
It is a facility for customers to operate their account from any of the same banks
network branch
Facilities available:
Cash withdrawal & Cash deposits
Account statement
Facility to issue multi- city cheques
Fund transfer
Balance enquiry
Purchase of demand drafts pay order
Repayment of loan account
DEMAT SERVICES
It offers secure and convenient way to keep track your securities and
investment over a period of time without the hassle of handling physical
documents
It provide facility of online trading
“NO FRILLS” SAVING ACCOUNT
In an effort to make banking simpler and more accessible for customers,
many banks have introduced the 'No Frills' Savings Account, which offers you all the
basic banking facilities. You can even avail of services like NetBanking,
Mobilebanking free of cost.
Features & Benefits:
Access a wide network of branches and over a thousand ATMs across the
country to meet all your banking needs.
Bank conveniently with Free Net Banking
Enjoy Free IVR based Phone Banking. (Agent assisted calls will be charged*)
Get Free Quarterly Account Statements.
Access your account through a Free ATM Card.
Enjoy free Cash/ Cheque Deposits at Branch/ATM
Free cash withdrawal transactions at any Bank ATMS through Debit Card*
Free Cash withdrawal per month at the Branch. Additional Branch Cash
withdrawals in the month will be charged @ Rs.50/- per transaction.
International Debit Card available only on request at the branch @ Rs. 100/-
p.a. (plus applicable taxes) for each applicant.
First Chequebook consisting of 25 leaves free and subsequent cheque books to
be charged at the rate of Rs 5/- per cheque leaf.
Free InstaQuery facility
Take advantage of BillPay, an instant solution to all your frequent utility bill
payments. Instruct for payment over the phone or through the Internet*.
Enjoy Free InstaAlerts via e-mails or SMS
Avail facilities like Safe Deposit Locker, Sweep-In and Super Saver on your
account.
Free Email Statement facility .
MICROFINANCE
It refers to a movement that envisions a world in which low income
households have permanent access to a range of high quality financial service to
finance their income producing activities, build assets, stabilize consumption and
protect against risks.
KISAN CREDIT CARD
Kisan Credit Cards were started by the Government of India, RBI (Reserve
Bank of India), and NABARD (National Bank for Agricultural and Rural Development)
in 1998-99 to help farmers access timely and adequate credit.
The Kisan Credit Care allows farmers to have cash credit facilities without
going through the credit screening processes repeatedly. Repayment can be
rescheduled if there is a bad crop season, and extensions are offered for up to 4
years. The card is valid for 3 years and subject to annual renewals. Banks in India
that lend for agricultural purposes usually offer the KCC. Withdrawals are made
using slips, cards, and a passbook.[1]
KCC OFFERED BY IDBI Crop Loan with Kisan Credit Card
Credit to Farmers/ Group of farmers for Crop Loan, working capital or
investment credit for viable agriculture purpose.
Who is the eligible for the Loan? All Farmers/ Owner cultivators, tenant
cultivators and Share croppers / Individual farmer having agreement with institution.
Extent of Exposure :
As per scale of finance specific to the crop and KCC norms. Int rate is 7% (SI)
co-op bank nahan H.P.
Tenure
The card would be valid for 5 years, of which crop loan and working capital
components has to be renewed annually. Kisan Credit Card Scheme: Himachal
Pradesh
Details of Kisan Credit Card Scheme
ParticularsDescription Name of the Scheme Kisan Credit Card Scheme Sponsored
by State Government Funding Pattern Rs. 50000/- for Rabi Crops. Rs. 50000/- for
Kharif Crops. Ministry/Department State Government PSU Description 1 Maximum
Limits Rs. 50000/- for Rabi Crops. Rs. 50000/- for Kharif Crops. 2 Eligibility Individual
/ Society. 3 Purposes Agriculture. 4 Repayment period Kharif 31 January Rabi 31
July. 5 Collateral Security Charge on land in case loan is above Rs. 10000/- and two
sureties if loan is below Rs. 10000/-. 6 Margin Stipulation As per nature of the loan
Beneficiaries Individual,Community, Benefits Benefit Type Loan, Eligibility criteria
Individual / Society. How to Avail Approach to the State Headquarters and Branch
Manager at District Level Branches Validity of the Scheme Introduced On 31 / 03 /
2006 Valid Up to 31 / 03 / 2012
PLASTIC MONEY
Plastic money is the generic term for all types of bank cards, credit cards,
debit cards, smart cards, etc. They are the alternative to the cash or the standard
'money'. Plastic money is used to refer to the credit cards or the debit cards that we
use to make purchases in our everyday life.
There has been a growth on electronic payment due to the shift in technology,
growing access to internet among the customers and convenient modes of delivery
and payment. Plastic money also known as Plastic cards acts as a vital tool for every
day transaction of people today.
The various Plastic cards include ATM cards,Debit Card,ATM cum Debit
Card,Credit Cards, Smart Card, Charge Cards, Co-branded cards, add on cards and
so on.
ATM Cards :
Automated Teller machine (ATM) cards is capable of doing variety of
functions.It can perform both cash and non-cash transactions in secured
environment.
* ATM Cash Transactions includes deposits and withdrawals
* Non cash transactions incude
* Providing Mini Statement of last five transactions.In some banks upto last
ten transactions
* Balance enquiry
* Stop Payment instructions
* Transfer of funds between accounts
* Requisition of Cheque books,drafts etc.
* Bill payments ( electricity bills,Telephone bills etc)
Debit Card
The bank issues debit card only if the person has an account in the bank.This
card is useful to make payment from Member Establishments (ME) who have
arrangements with the card issuing bank or agency.They check the balance and
deduct the amount from the bank balance online. When a debit card is issued to
make the payment,the total amount charged is instantly reduced from the bank
balance of the account holder.
All credit and debit cards are affiliated to two major issuers-VISA and Master
Card.Master Card and VISA are global non-profit organizations who promote the
growth of the card business throughout the world.They have built vast network of
Member Establishments so that customers can use the cards worldwide for their
debit and credit purchases.
Debit Cum ATM Card:
This is most common nowadays.The same debit card can be used to draw
cash from the ATM and also make payment to the shops for purchases.This is two in
one card.
Credit Cards:
This card enables the client to obtain goods or services from the various
shops having arrangement with the issuing agency even if there is no balance in
his/her savings or current account.The bank assumes that the loan will be repaid by
the customers at later date.The credit card holder has to make payment for the dues
before the due date. Otherwise late payment fee is levied in the next billing
statement. Normally,a limit of the credit will be fixed by the bank for the amount of
purchases to be made by the customer based on the net worth of the customer.
Charge Cards :
A Charge card has all features of credit card.But, after using the charge card
the entire payments of the bills has to be made by the due date.If it is failed to be
done,then the client is likely to be considered as a defaulter and he has to pay a
steep late payment charges. But in case of Credit cards, the client is not declared as
a defaulter if he misses to pay by due date..In such case,a late fee is levied in the
next billing statements of the credit card holder.
AMEX (American Express) and Diners Club card are well known branded
charge cards.They have their own merchant establishments and tie ups and does
not depend on the network of Master card or VISA. These care are typically meant
for the high income group categories and companies. These cards are not
acceptable at many outlets. But wide variety of special privileges are enjoyed by the
AMEX card holders and Diners Club Cardholders.
Smart Cards :
A smart Card contains an electronic chip which is used to store Cash. This is
most useful to pay for small purchases for example in Fairs,coffee shops etc. No
identification,signature or payment authorization is required for using this card. The
exact amount of purchase is deducted from smart card during payment.Currently,
this product is available in very developed countries like US.
Affinity Card :
The card issuer has a tie up with popular organizations and institutions which
are often non-profit organizations like Stanchart Cricket Cards or City WWF
card.When a card is used, a certain percentage is contributed to the organization or
institution by the card issuer.
Photo Card :
When a Photo is imprinted on the card,it helps to identify the user of the credit
card and is considered to be safer. In many cases,Photo card can also be used as
identity card.
Global Card :
Global cards can be used as credit cards instead of cash and traveler
cheques while traveling abroad to foreign countries for business or personal
reasons.
Add On Cards :
It is a privilege offered to the spouse, parents, Children or other family
members of the original card holder.Normally, an issuing bank permits two add on
cards per credit card. All expenses incurred on add on card are billed to the primary
card holder.
Petro Card :
Some Petroleum companies allow customers to pay for the fuel through
electronic medium.It offers a scheme of gifting the points to the customers,when they
pay for the fuel using petro card.It is convenient, secured and speedy mode of
transaction. Co-branded credit cards like IOC-Citi bank and HPCL-ICICI bank are the
co-branded petro cards avaiable in the market.
Today,the Indian mode of payment has shifted from currency to electronic
mode.This is due to the high money valued transactions and more risk
involvement.The new electronic payment and settlement act should follow the strict
norms for banks and merchants to make secure payments and prevent money
laundering as the transactions through plastic money will be increasing and
increasing in the near future.
MOBILE BANKING
Mobile banking (also known as M-Banking, mbanking, SMS Banking) is a
term used for performing balance checks, account transactions, payments, credit
applications and other banking transactions through a mobile device such as
a mobile phone or Personal Digital Assistant (PDA). The earliest mobile banking
services were offered over SMS. With the introduction of the first primitive smart
phones withWAP support enabling the use of the mobile web in 1999, the first
European banks started to offer mobile banking on this platform to their customers [1].
Mobile banking has until recently (2010) most often been performed via SMS
or the Mobile Web. Apple'sinitial success with iPhone and the rapid growth of
phones based on Google's Android (operating system)have led to increasing use of
special client programs, called apps, downloaded to the mobile device.
A mobile banking conceptual model
In one academic model,[2] mobile banking is defined as:
Mobile Banking refers to provision and availment of banking- and financial
services with the help of mobile telecommunication devices.The scope of offered
services may include facilities to conduct bank and stock market transactions, to
administer accounts and to access customised information."
According to this model Mobile Banking can be said to consist of three inter-
related concepts:
Mobile Accounting
Mobile Brokerage
Mobile Financial Information Services
Most services in the categories designated Accounting and Brokerage are
transaction-based. The non-transaction-based services of an informational nature
are however essential for conducting transactions - for instance, balance inquiries
might be needed before committing a money remittance. The accounting and
brokerage services are therefore offered invariably in combination with information
services. Information services, on the other hand, may be offered as an independent
module. Mobile phone banking may also be used to help in business situations.
Trends in mobile banking :
The advent of the Internet has enabled new ways to conduct banking
business, resulting in the creation of new institutions, such as online banks, online
brokers and wealth managers. Such institutions still account for a tiny percentage of
the industry.
Over the last few years, the mobile and wireless market has been one of the
fastest growing markets in the world and it is still growing at a rapid pace. According
to the GSM Association and Ovum, the number of mobile subscribers exceeded 2
billion in September 2005, and now exceeds 2.5 billion (of which more than 2 billion
are GSM).
With mobile technology, banks can offer services to their customers such as
doing funds transfer while travelling, receiving online updates of stock price or even
performing stock trading while being stuck in taffic. Smartphones and 3G
connectivity provide some capabilities that older text message-only phones do not.
Mobile Banking Services :
Mobile banking can offer services such as the following:
Account Information :
Mini-statements and checking of account history
Alerts on account activity or passing of set thresholds
Monitoring of term deposits
Access to loan statements
Access to card statements
Mutual funds / equity statements
Insurance policy management
Pension plan management
Status on cheque, stop payment on cheque
Ordering cheque books
Balance checking in the account
Recent transactions
Due date of payment (functionality for stop, change and deleting of payments)
PIN provision, Change of PIN and reminder over the Internet
Blocking of (lost, stolen) cards
Payments, Deposits, Withdrawals, and Transfers
Domestic and international fund transfers
Micro-payment handling
Mobile recharging
Commercial payment processing
Bill payment processing
Peer to Peer payments
Withdrawal at banking agent
Deposit at banking agent
A specific sequence of SMS messages will enable the system to verify if the
client has sufficient funds in his or her wallet and authorize a deposit or withdrawal
transaction at the agent. When depositing money, the merchant receives cash and
the system credits the client's bank account or mobile wallet. In the same way the
client can also withdraw money at the merchant: through exchanging sms to provide
authorization, the merchant hands the client cash and debits the merchant's account.
Investments :
Portfolio management services
Real-time stock quotes
Personalized alerts and notifications on security prices
mobile banking
Support :
Status of requests for credit, including mortgage approval, and insurance
coverage
Check (cheque) book and card requests
Exchange of data messages and email, including complaint submission and
tracking
ATM Location
Content Services :
General information such as weather updates, news
Loyalty-related offers
Location-based services
Based on a survey conducted by Forrester, mobile banking will be attractive
mainly to the younger, more "tech-savvy" customer segment. A third of mobile phone
users say that they may consider performing some kind of financial transaction
through their mobile phone. But most of the users are interested in performing basic
transactions such as querying for account balance and making bill payment.
III. Type of Electronic Systems
ATM
Introduction:
ATM facility was started in early 1990’s by foreign banks like HSBC, City
bank. ATM is made to work 24 Hrs a day. For the purpose of withdrawing cash
from ATM machine, plastic currency and debit cards are used. The account number
and credit limit of customers are magnetically embedded on a strip of the tape on
the back of card.
ATM enables user to perform banking transactions by actually interacting
with the human teller. This is one of the unattended or unmanned devices usually
located on or off the bank’s premises. Its function is to receive and dispense cash
and to handle routine financial transactions.
An automated teller machine (ATM) is a computerized telecommunications
device that provides the customers of a financial institution with access to financial
transactions in a public space without the need for a human clerk or bank teller. On
most modern ATMs, the customer is identified by inserting a plastic ATM card with a
magnetic stripe or a plastic smartcard with a chip, that contains a unique card
number and some security information, such as an expiration date or CVC (CVV).
Security is provided by the customer entering a personal identification number (PIN).
Working of ATM
Real Time Gross Settlement
India has two main electronic funds settlement systems for one to one
transactions: the Real Time Gross Settlement system (RTGS) and the National
Electronic Fund Transfer system (NEFT). Transactions which are bulk and repetitive
in nature are routed through Electronic Clearing Service (ECS) which is further of
two categories viz ECS-Credit (one debit and multiple credits e.g. Salary, Dividends)
and ECS-Debit (one credit and multiple debits e.g. bill payments, SIPs etc.). ECS is
currently provided in around 75 centres in India.
The acronym 'RTGS' stands for Real Time Gross Settlement. The Reserve
Bank of India (India's Central Bank) maintains this payment network. RTGS system
is a funds transfer mechanism where transfer of money takes place from one bank to
another on a 'real time' and on 'gross' basis. This is the fastest possible money
transfer system through the banking channel. Settlement in 'real time' means
payment transaction is not subjected to any waiting period. The transactions are
settled as soon as they are processed. 'Gross settlement' means the transaction is
settled on one to one basis without bunching with any other transaction. Considering
that money transfer takes place in the books of the Reserve Bank of India, the
payment is taken as final and irrevocable.
Insertion ofCard into ATM
Activation
of account
Transmission of Tape
data to Processor
Actual
Transaction
Clicking of keys
of keyboard
Display of details
on screen
FINACLE
Finacle universal banking products are designed to address the core banking,
e-banking,Islamic banking, treasury, wealth management and CRM requirements of
retail, corporate and universal banks. It was developed by Infosys, and is one of the
major player in the arena of core banking in Indian and Asian banking domains.[1] CA. T.V. Mohandas Pai was closly associated with it.
CONCLUSION
The BANKING sector in India has become stronger in terms of capital and the
number of customers. It has become globally competitive and diverse aiming, at
higher productivity and efficiency.
Exposure to worldwide competition and deregulation in Indian financial sector
has led to the emergence of better quality products and services. Reforms have
changed the face of Indian banking and finance. The banking sector has improved
manifolds in terms of Technology, Deregulation, Product & Services, Information
Systems, Etc
“With new opportunities unfolding Banking Sector, India is emerging as
a global power in banking services in the next two decade."
BIBLIOGRAPHY
www.wikepeadia.com
www.google.com
www.lycos.com
www.central bank of india.com
Value notes.com
White papers.com
Banknetindia.com
Finance biz.com
Gahoo yoogle.com
Banking Law and Practice by Sharma publications.
Banking theory and practices by kalyani publishers.
Principles of banking by AIBA (All India banking associations)