Name: Anwar Ashraf

Course: BBA(ACCA)
Setion: D
System ID: 2016007359

“E-BANKING IN INDIA AND ITS PRESENT SCENARIO AND

FUTURE PROSPECTS”
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UGC SPONSORED NATIONAL CONFERENCE ON
INFORMATION TECHNOLOGY AND ITS IMPLICATION
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transactions. Instead, you can access your account

any time and from any part of the world, and do so

when you have the time, and not when the bank is

open. For busy executives, students, and

homemakers, e-banking is a virtual blessing.

ELECTRONIC BANKING AND ITS UTILIZATION

Electronic Banking also known as Internet Banking is the latest in the

series of technological wonders of the recent past. ATMs, Tele-Banking,
Internet Banking, Credit Cards and Debit Cards have emerged as
effective delivery channels for traditional banking products. Banks know
that the Internet opens up new horizons for them and moves them from
local to global frontiers. IB refers to systems that enable bank customers
to get access to their account sand general information on bank products
and services through the use of bank's website, without the intervention
or inconvenience of sending letters, faxes, original signatures and
telephone confirmations. It is the types of services through which bank
customers can request information and carry out most retail banking
services such as balance reporting, inter account transfers, bill-payment,
etc., via telecommunication network without leaving their
home/organization. It provides universal connection from any location
worldwide and is universally accessible from any internet linked
computer. Information technology developments in the banking sector
have speed up communication and transactions for clients. It is vital to
extend this banking feature to clients for maximizing the advantages for
both clients and service providers. Internet is the cheapest delivery
channel for banking products as it allows the entity to reduce their
branch networks and downsize the number of service staff. The
navigability of the Website is a very important part of IB because it can
become one of the biggest competitive advantages of a financial entity.
Bankers consider ‘minimizes inconvenience', 'minimizes cost of
transactions' and 'time saving' to be important benefits and 'chances of
government access', 'chances of fraud' and 'lack of Information security'
to be vital risks associated with electronic banking. Due to increase in
technology usage the banking sector's performance increases day by day.
IB is becoming the indispensable part of modern day banking services.

PROBLEMS BEFORE ELECTRONIC BANKING

1. A Customer may have to face some risky transaction & frauds.

2. Failure or interruption of power supply cause to break down in e-
banking.
3. Financial Loss of heavy income at times of settlement of higher
magnitude.
4. Cost to be incurred for training the staff may not be profitable.
FEATURES OF ELECTRONIC BANKING

1. Easy Electronic Fund transfer facility.

2. Better efficiency in Customer relationship management.
3. Making the Payments of bills like electricity, telephone bills, and
mobile recharge.
4. It introduces virgin & innovative banking products & services.
5. It can view of balance of accounts and statements;
6. E-banking can bring doorstep services.
7. Balance and transaction history search.
8. Transaction history export.
9. Order mini statements.
10. Mobile banking.
11. Pay anyone payments Multi payments .
12. SMS banking services.

IMPACT OF IT ON BANKING SYSTEM

The banking system is slowly shifting from the Traditional Banking

towardsrelationship banking. Traditionally the relationship between the
bank and its customers has been on a onetone level via the branch
network. This was put into operation with clearing and decision making
responsibilities concentrated at the individual branch level. The head
office had responsibility for the overall clearing network, the size of the
branch network and the training of staff in the branch network. The bank
monitored the organization's performance and set the decision
making parameters, but the information available to both branch staff
and their customers was limited to one geographical location.
BENEFITS OF E-BANKING

To the Customer:

-Anywhere Banking no matter wherever the customer is in the world.

Balance enquiry, request for services, issuing instructions etc., from
anywhere in the world is possible.

-Anytime Banking- Managing funds in real time and most importantly,

24 hours a day,7days a week.

-Convenience acts as a tremendous psychological benefit all the time.

-Brings down “Cost of Banking” to the customer over a period a period

of time.

-Cash withdrawal from any branch / ATM

-On-line purchase of goods and services including online payment for

the same.

To the Bank:

-Innovative, scheme, addresses competition and present the bank as

technology driven in the banking sector market

-Reduces customer visits to the branch and thereby human intervention

-Inter-branch reconciliation is immediate thereby reducing chances of

fraud and misappropriation

-On-line banking is an effective medium of promotion of various

schemes of the bank, a marketing tool indeed.
-Integrated customer data paves way for individualized and customized
services.

OPPORTUNITIES

1. Internet facilities.
It gives an ever-growing market both in terms of number of potential
customers and geographical reach. Latest Technology and productive
development has made access to
Internet both cheaper and faster. More and more people across the globe
are accessing the net either through PCs or other devices. The
purchasing power and need for quality service of this segment of
consumers are considerable. Anybody accessing Internet is a potential
customer irrespective of his or her location. Thus, any business targeting
final consumers cannot ignore the business potential of Internet.

2. Unique opportunities.
Internet offers a unique opportunity to register business presence in a
global market. Its effectiveness in disseminating information about one's
business at a relatively cost effective manner is tremendous. Time
sensitive information can be updated faster than any other media.
A properly designed website can convey a more accurate and focused
image of a product or service than any other media. Use of multimedia
capabilities, i.e., sound, picture, movies etc., has made Internet as an
ideal medium for information dissemination. However, help of other
media is necessary to draw the potential customers to the web site.

3 Costs

Cost is an important issue in an e-venture. It is generally accepted that

the cost of overhead, servicing and distribution, etc. through Internet is
less compared to the traditional way of doing business. Although the
magnitude of difference varies depending on the type of business
and the estimates made, but there is unanimity that Internet
provides a substantial cost advantage and this, in fact, is one of the major
driving forces for more number of traditional businesses adapting to e-
commerce and pure e-commerce firms to sprout.

4 The quality of service.

It is a key feature of any e-commerce venture. The ability to sell one's

product at anytime and anywhere to the satisfaction of customers is
essential for e-business to succeed. Internet offers such opportunity,
since the business presence is not restricted by time zone and
geographical limitations. Replying to customers' queries through e-mail,
setting up (Frequently Asked Questions) FAQ pages for anticipated
queries, offering interactive help line, accepting customers' complaints
online 24 hours a day and attending to the same, etc. are some of the
features of business.

5 Cost of communication

Cost of communication through WWW is the least compared to any

other medium. Many a time one's presence in the web may bring in
international enquiries, which the business might not have targeted. The
business should have proper plans to address such opportunities.
THE FUTURE SCENARIO

Compared to banks abroad, Indian banks offering online services still

have a long way to go. For online banking to reach a critical mass, there
has to be sufficient number of users and the sufficient infrastructure in
place. The 'Infinity' product of ICICI Bank Ltd. gets only about30,000
hits per month, with around 3,000 transactions taking place on t he Net
per month through this service. Though various security options like line
encryption, branch connection encryption, firewalls, digital certificates,
automatic signoffs, random pop-ups and disaster recovery sites are in
place or are being looked at, there is as yet no Certification Authority in
India offering Public Key Infrastructure which is absolutely necessary
for online banking. The customer can only be assured of a for its online
activities if an authority certifying digital signatures is in place. Users of
Internet Banking Services are required to fill up the application forms
online and send a copy of the same by mail or fax to the bank. A
contractual agreement is entered into by the customer with the bank for
using the Internet banking services. In this way, personal data in the
applications forms is being held by the bank providing the service. The
contract details are often one-sided, with the bank having the absolute
discretion to amend or supplement any of the terms at any time. For
these reasons domestic customers for whom other access points such as
ATMs, telebanking, personal contact, etc. are available, are often
hesitant to use
Internet banking services offered by Indian banks. Internet Banking, as a
n additional delivery channel, may, therefore, be attractive / appealing as
a value added service to domestic customers. Non-resident Indians for
whom it is expensive and time consuming to access their bank accounts
maintained in India find net banking very convenient and useful. The
Internet is in the public domain whereby geographical boundaries are
eliminated. Cyber crimes are therefore difficult to be identified and
controlled. In order to promote Internet banking services, it is necessary
that the proper legal infrastructure is in place. Government has
introduced the Information Technology Bill, which has already been
notified in October 2000.Section 72 of the Information Technology Act,
2000 casts an obligation of confidentiality against disclosure of any
electronic record, register, correspondence and information, except for
certain purposes and violation of this provision is a criminal offence. Th
e Department of Telecommunications (DoT) is moving fast to make
available additional bandwidth, with the result that Internet access will
become much faster in the future. This is expected to give a fillip to
Internet banking in India. The proposed setting up of a Credit
Information Bureau for collecting and sharing credit information on
borrowers of lending institutions online would give a fillip to electronic
banking. The recommendations of the Vasudevan Committee on
Technological Upgradation of Banks in India have also been circulated
to banks for implementation. In this background, banks are moving in
for technological upgradation on a large scale. Internet banking is
expected to get a boost from such developments. Reserve Bank of India
has taken the initiative for facilitating real time funds transfer through
the Real Time Gross Settlement (RTGS) System. Under the
RTGS system,transmission, processing and settlements of the instruction
s will be done on a continuous basis. Grosssettlement in a real time
mode eliminates credit and liquidity risks. Any member of the system
will be able to access it through only one specified gateway in order to
ensure rigorous access control measures at the user level. Generic
Architecture both domestic and cross border, aimed
at providing interconnectivity across banks has been accepted for imple
mentation by RBI. Following a reference made this year, in the
Monetary and Credit Policy statement of the Governor, banks have been
advised to develop domestic generic model in their
computerization plans to ensure seamless integration. The abovemention
ed efforts would enable online bankingto become more secure and
efficient. With the process of dematerialization of shares having gained
considerable ground in recent years, banks have assumed the role of
depository participants. In addition to customers' deposit accounts, they
also maintain demat accounts of their clients. Online trading in equities
is being allowed by SEBI. This is another area which banks are keen to
get into. HDFC Bank Ltd., has tied up with about 25 equity brokerages
for enabling third party transfer of funds and securities through its
business-to-business (B2B) portal, 'e- Net'. Demat account holders with
the bank can receive securities directly from the brokers' accounts. The b
ank has extended its webinterface to the software vendors of National
Stock Exchange through a tie-up with NSE.IT- the InfoTech arm of the
exchange. The bank functions as the payment bank for enabling funds
transfer.

CONCLUSIONS

E-banking is a generic term for delivery of banking services and

products through electronic channels, such as the telephone, the internet,
the cell phone, etc. The concept and scope of Ebanking is still evolving.
It facilitates an effective payment and accounting system thereby
enhancing the speed of delivery of banking services considerably. While
E-banking improved efficiency and convenience, it has also posed
several challenges to the regulators and supervisor. Several initiatives
taken by the Government of India, as well as the Reserve Bank Of India,
have facilated the development of E-banking in India. The existing
regulatory framework over banks has been extended to E-banking. It
covers various issues that falls within the framework of the technology,
security standard and legal, and regulatory issues.
BIBLIOGRAPHY
Ray Vareen, A Green Dream, 4P’S of Marketing, 21st November, 2008.
Websites of various banks.
E- Banking in India by R.K.Uppal, Western Books Corporation.
Financial Markets and Services by E. Gordon, Himalaya Housing
Publication
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