CHAPTER1

1. Introduction to Banking
1.1 Definition of Banking…
1.2 What is Banking…?
1.3 Importance of Banking…

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1.1 Definition…

A bank is a financial institution and a financial intermediary that accepts deposits

and channels those deposits into lending activities, either directly or through capital
markets. A bank connects customers that have capital deficits to customers with capital
surpluses.
Banking provides the liquidity needed for families and businesses to invest for the
future. Bank loans and credit means families don't have to save up before going to college
or buying a house, and companies can start hiring immediately to build for future demand
and expansion. Credit has gotten a bad name, thanks to the 2008 financial crisis, but that's
only because it was unregulated, used for consumption instead of investment, and allowed
to create a bubble.
Due to their critical status within the financial system and the economy generally,
banks are highly regulated in most countries. Most banks operate under a system known as
fractional reserve banking where they hold only a small reserve of the funds deposited and
lend out the rest for profit. They are generally subject to minimum capital requirements
which are based on an international set of capital standards, known as the Basel Accords.

1.1. What is banking…?

Banking Industry is a service industry. It provides various services to its customers.
Traditionally the services were restricted to deposits and loans. The started by taking
deposits from people who had surplus of money and lending this money to borrowers who
wanted money to invest. They charged interest from borrowers and gave interest to
depositors. There was difference in rate of interest between deposits and lending and that
constituted the major source of revenue for banks. Banking is a service industry providing
services to those who want to lend, borrow or invest. This is putting it as simply as possible.
Banking started like this, but today banking industry is one of the most complex and hugely
diverse industries and offers a portfolio of large number of services.
Now a days banks are large and complex organizations. Their clients range from
individuals and corporate institutions, other banks and governments of entire nations.
Banking is a service industry, means that they don't produce physical things but provide
services to their clients.

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 1.2. Importance of Banking…
One of the major considerations that led to the nationalization of the fourteen major
commercial banks of India in 1969 was the fact that banks, in general, had been negligent
of the vital priority sectors of the economy, viz., agriculture and small-scale industries. The
commercial banks had remained largely indifferent to the credit needs of the farmers for
agricultural operations and land improvement. A handful of people were able to exploit the
bank finance to serve their own individual interests and convenience.

Very often, they used bank funds for the hoarding of essential articles and for
specialization, thus nurturing anti-social elements. Nationalization brought about a major
policy shift in the working of these banks.
The economic development of our country depends more on real factors like the
industrial development, modernization of agriculture, organization of internal trade and
expansion of foreign trade, especially exports, and less on the monetary factors contributed
by banking— Economic planning like laying down of specific targets and allocating
particular sums of money that constitute the economic policy of the government also plays
a significant role. Still we cannot under-estimate the importance of banking and the
monetary mechanism.
Bank stimulate the habit of savings amount people by the security and interest they
offer with these savings which are deposited by people are in position to utilize the
deposited amount more productively.

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 CHAPTER 2

2. Introduction to IT…
2.1 What is Information Technology…?
2.2 Role of IT in Modern World…
2.3 Advantages & Disadvantages…

4
2.1 What is Information Technology…?

IT stands for "Information Technology," and is pronounced "I.T." It refers to

anything related to computing technology, such as networking, hardware, software, the
Internet, or the people that work with these technologies. Many companies now have IT
departments for managing the computers, networks, and other technical areas of their
businesses. IT jobs include computer programming, network administration, computer
engineering, Web development, technical support, and many other related occupations.
Since we live in the "information age," information technology has become a part of our
everyday lives. That means the term "IT," already highly overused, is here to stay.
IT (information technology) is a term that encompasses all forms of technology
used to create, store, exchange, and use information in its various forms (business data,
voice conversations, still images, motion pictures, multimedia presentations, and other
forms, including those not yet conceived). It's a convenient term for including both
telephony and computer technology in the same word. It is the technology that is driving
what has often been called "the information revolution."
In the 1960s and 1970s, the term information technology (IT) was a little known
phrase that was used by those who worked in places like banks and hospitals to describe
the processes they used to store information. With the paradigm shift to
computing technology and "paperless" workplaces, information technology has come to be
a household phrase.

It defines an industry that uses computers, networking, software programming, and other
equipment and processes to store, process, retrieve, transmit, and protect information.
In the early days of computer development, there was no such thing as a college
degree in IT. Software development and computer programming were best left to the
computer scientists and mathematical engineers, due to their complicated nature. As time
passed and technology advanced, such as with the advent of the personal computer in the
1980s and its everyday use in the home and the workplace, the world moved into
the information age.
By the early 21st century, nearly every child in the Western world, and many in
other parts of the world, knew how to use a personal computer.
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Businesses' information technology departments have gone from using storage tapes
created by a single computer operator to interconnected networks of employee
workstations that store information in a server farm, often somewhere away from the main
business site. Communication has advanced, from physical postal mail, to
telephone fax transmissions, to nearly instantaneous digital communication through
electronic mail (email).

2.2 Role of Information Technology in Modern World & Banking…

Financial inclusion is delivery of banking services at an affordable cost to the vast

sections of underprivileged and low income groups. In a country like India where financial
services are a distant dream to millions of people, there has been a considerable lead from
the government and other financial institutions towards financial inclusion.

Technology is the key to providing low cost financial services in rural areas.
Disbursement of loans, Application processing and maintaining accounts can be made easy
as technology will help reduce transaction costs and time taken by banks. Outreach to the
distant customer is a tough challenge to the banks and this challenge can be overcome with
the help of IT. It has the potential to address the issues of outreach and credit delivery in
rural areas, in a cost effective manner.
Banks will have to find cost-efficient ways to reach the rural customers. They can
achieve this through a variety of technology devices like weekly banking, mobile banking,
satellite offices, rural ATMs and use of Post offices. Mobile phone penetration in rural
areas can be leveraged by banks to facilitate banking transactions.
Mobile phones can be used to transfer funds real time from and to bank accounts
and could make remittances and payments at very low cost. An array of financial services
such as savings, remittance, and transaction banking such as receipt of salaries, pensions
and payments for utilities, loan including home loans, insurance and MF products can be
provided once the technology infrastructure is in place. This allows the bank to provide
more services to existing customers. Besides that it also aids the bank in increasing the
customer base. Financial inclusion offers a huge potential for business in terms of resources
and assets and banks therefore need to take aggressive steps to use technology, business
processes and personnel to be able to exploit this potential in innovative and creative ways.
In fact use of technology is critical in building up a reliable credit information system, build

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up data base on customers for a variety of purposes, thereby reducing the transaction cost
involved in checking encumbrances and collaterals and also facilitating better pricing of
risk.

From the standpoint of ‘inclusive banking’, it needs to be realized that technology

per se is not an end in itself. It is to be made sure that technology aids the reform process
and acts as a ladder to achieve the ultimate goal of providing financial services to the
financially excluded.
Information Technology has basically been used under 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, and implementation of reliable techniques for control of risks and
helps the financial intermediaries to reach geographically distant and diversified markets.
In view of this, technology has changed the contours of three major functions performed
by banks, i.e., access to liquidity, transformation of assets and monitoring of risks. Further,
Information technology and the communication networking systems have a crucial bearing
on the efficiency of money, capital and foreign exchange markets. Internet has significantly
influenced delivery channels of the banks. Internet has emerged as an important medium
for delivery of banking products & services. Detailed guidelines of RBI for Internet
Banking has prepared the necessary ground for growth of Internet Banking in India.

2.3. Advantages & Disadvantages of IT…

1. ADVANTAGES…

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 Information technology (IT) benefits the business world by allowing organizations
to work more efficiently and to maximize productivity. Faster communication, electronic
storage and the protection of records are advantages that IT can have on your enterprise.
Information technology has to do with computer applications, on which nearly every work
environment is dependent. Since computerized systems are so widely used, it is
advantageous to incorporate information technology into your organization.

a. Storing and Protecting Information :

Information technology creates electronic storage systems to protect your
company's valuable records. According to the Graziadio Business Report, published
by Pepperdine University, secure maintenance of customer and patient files is vital to
business integrity. Storage systems, such as virtual vaults, keep information safe by
only allowing certain users within your company to access, withdraw, add or change
the documents. According to an article in Science Daily, IT security engineering
systems protect your electronic information from being hacked, or wiped out during a
technological disaster. Electronic security engineering means your valuable records
will remain untouchable.

b. Automated Processes :
In business, people look for ways to do more work in a shorter amount of time.
A November 2000 newsletter published by the Federal Reserve Bank of San Francisco
explains that information technology improves your company's efficiency by
developing automated processes to take burden off your staff. In turn, your employees
are free to work on other things while the computer runs their reports, creates queries,
tracks projects and monitors financials.

c. Work Remotely :
IT systems give you remote access to your company’s electronic network, so
that you can work from home or on the road. This accessibility allows you to increase
your productivity because you can still get work done, even when you aren’t physically
in the office.

d. Communication :
Communication is essential to the business world, and information
technology gives your company the resources it needs to communicate quickly and
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 effectively. Your IT department can hook your employees up with email, video
conferencing equipment and internal chat rooms, so that they always have an
efficient way to conduct business and communicate.

2. DISADVANTAGES…
Information technology has changed the way that the world does business.
Correspondence that once took weeks to get from one organization to another is now
delivered instantly with the push of a button. Advances in telecommunication allow
associates from all point of the globe to confer in a virtual environment, minimizing the
need for business travel. Although the benefits of integrating information technology in
business are many, there are also disadvantages to its use.

a. Implementation Expenses :
Every business must consider startup costs when implementing any type of
information technology system. In addition to the cost of hardware and software, some
technology vendors require businesses to purchase user licenses for each employee that
will be operating the system. Businesses must examine the cost of training employees
in unfamiliar technology. Although basic information technology systems may be user
friendly, advanced programs still require formal instruction by an expert consultant. In
addition to the startup expenses, information technology systems are expensive to
maintain. Systems malfunction, and when they do, businesses must engage skilled
technicians to troubleshoot and make the necessary repairs. These expenses present a
major disadvantage of information technology in business, particularly to businesses
that are entering the technology era for the first time.

b. Job Elimination :
Implementing information technology into business operations can save a great
deal of time during the completion of daily tasks. Paperwork is processed immediately,
and financial transactions are automatically calculated. Although businesses may view
this expediency as a boon, there are untoward effects to such levels of automation. As
technology improves, tasks that were formerly performed by human employees are now
carried out by computer systems. For example, automated telephone answering systems
have replaced live receptionists in many organizations. This leads to the elimination of
jobs and, in some cases, alienation of clients.

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c. Security Breaches:
The ability to store information in an electronic database facilitates quicker,
more efficient communication. In the past, an individual would sift through stacks of
paper records to retrieve data. With properly implemented technology, information can
be recovered at the touch of a button. Although information technology systems allow
business to be conducted at a faster pace, they are not without their flaws. Information
technology systems are vulnerable to security breaches, particularly when they are
accessible via the Internet. If appropriate measures are not in place, unauthorized
individuals may access confidential data. Information may be altered, permanently
destroyed or used for unsavory purposes.

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 CHAPTER 3

3. Objective of Study

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3. Objective of study…
The objectives of the paper are (i) to study bankers’ perspectives on e-banking
activities of respondents, (ii) impact of e-banking on banks (iii) promotional measures
used by banks to promote e-banking. Bankers’ perspectives on e-banking activities of
customers encompasses: frequency of adopting e-banking services by customers on
persuasion of bankers and on their own, age groups and occupations preferring e-
banking services, access rate, retention rate of e-banking customers and switch over
rate of bank customers from traditional banking to e-banking. Impact of e-banking on
relationship between bankers and customers and on overall performance of banks also
forms an important part of the analysis. Bankers’ viewpoints on promotional media
used by them to promote e-banking are covered in the last objective.
This study includes both primary a well as secondary data collected from 240
bankers equally representing public sector banks, private sector banks and foreign
banks in northern India with the help of well-drafted and pre-tested structured
questionnaire. Eleven public sector banks, four old private sector banks and four new
private sector banks and five foreign banks have been included in the study. Total 192
responses were received from the branch managers and finally used in the study by
following convenience sampling technique. The secondary information has been
obtained from the reports of RBI, different banks, websites, magazines, journals and
newspapers to study the relevant aspects. The data was analyzed using frequency
distribution.

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 CHAPTER4

4. Banking : Role of IT
4.1 Role of IT in Banks
4.2 Impact of IT on Banking System
4.3 Impact on Traditional Services

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4.1. Banking - Role of IT :

Technology has continuously played an important role in the working of banking

institutions and the services provided by them like Safekeeping of public money, transfer
of money, issuing drafts, exploring investment opportunities and lending drafts, exploring
investment being provided. Information Technology enables sophisticated product
development, better market infrastructure, implementation of reliable techniques for
control of risk and helps the financial intermediaries to reach geographically distant and
diversified markets. Internet has significantly influenced delivery channels of the banks.
Internet has emerged as an important medium for delivery of banking product and services.
These services rendered over electronic media include: Phone banking, Automatic
Teller Machines (ATM), Credit Cards, Electronic Fund Transfer (EFT), Shared Payment
Network System (SPNS), Electronic Clearing Services (ECS), Point of Sale (POS), D-Mat
Accounts, Electronic Data Interchange (EDI), E-Cheques, and Corporate Banking
Terminal. There are significant gaps between foreign and domestic banking institutions,
which need to be narrowed to achieve the orderly development of a viable and effective
domestic banking sector. Analysis of the usage of IT enabled banking services to customers
will be discussed in the full paper by collecting and analyzing primary data from 100
customers of different banks, giving equal representation for public and private sector
banks.

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
with people and institutions associated with the banking business.
The Software Packages for Banking Applications in India had their beginnings in the
middle of 80s, when the Banks started computerising the branches in a limited manner.
The early 90s saw the plummeting hardware prices and advent of cheap and
inexpensive but high powered PC’s and Services and banks went in for what was called
Total Branch Automation (TBA) packages. The middle and late 90s witnessed the tornado
of financial reforms, deregulation globalisation etc. coupled with rapid revolution in

14
communication technologies and evolution of novel concept of convergence of
communication technologies, like internet, mobile/cell phones etc. Technology has
continuously played on important role in the working of banking institutions and the
services provided by them. Safe keeping of public money, transfer of money, issuing drafts,
exploring investment opportunities and lending drafts, exploring investment being
provided.
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.
Internet has significantly influenced delivery channels of the banks. Internet has
emerged as an important medium for delivery of banking products and services.
The customers can view the accounts; get account statements, transfer funds and
purchase drafts by just punching on few keys. The smart card’s i.e., cards with
microprocessor chip have added new dimension to the scenario. An introduction of ‘Cyber
Cash’ the exchange of cash takes place entirely through ‘Cyber-books’. Collection of
Electricity bills and telephone bills has become easy. The upgradeability and flexibility of
internet technology after unprecedented opportunities for the banks to reach out to its
customers. No doubt banking services have undergone drastic changes and so also the
expectation of customers from the banks has increased greater.
IT is increasingly moving from a back office function to a prime assistant in
increasing the value of a bank over time. IT does so by maximizing banks of pro-active
measures such as strengthening and standardizing banks infrastructure in respect of
security, communication and networking, achieving inter branch connectivity, moving
towards Real Time gross settlement (RTGS) environment the forecasting of liquidity by
building real time databases, use of Magnetic Ink Character Recognition and Imaging
technology for cheque clearing to name a few. Indian banks are going for the retail banking
in a big way
The key driver to charge has largely been the increasing sophistication in
technology and the growing popularity of the Internet. The shift from traditional banking
to e-banking is changing customer’s expectations.

4.2. Impact of IT on Banking System :

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 The banking system is slowly shifting from the Traditional Banking towards
relationship banking. Traditionally the relationship between the bank and its customers has
been on a one-to-one 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 organisation’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.

Banks before computerization there was large number of queues in banks for
transactions, large number of files to record the data manually, even people wasted their
time due to work not done on time, and so on… but in today’s computerized world all the
mentioned problems have vanished to greater extent and even each customer has applied
the effortless banking with happiness. This is how the impact of Information Technology
on Banks and especially on customers have positively affected.

4.3. Impact on Traditional Services :

One of the issues currently being addressed is the impact of e-banking on traditional
banking players. After all, if there are risks inherent in going into e-banking there are other
risks in not doing so. It is too early to have a firm view on this yet. Even to practitioners
the future of e-banking and its implications are unclear. It might be convenient nevertheless
to outline briefly two views that are prevalent in the market. The view that the Internet is a
revolution that will sweep away the old order holds much sway. Arguments in favor are as
follows: E-banking transactions are much cheaper than branch or even phone transactions.
This could turn yesterday’s competitive advantage - a large branch network - into a
comparative disadvantage, allowing e-banks to undercut bricks-and-mortar banks. This is
commonly known as the "beached dinosaur" theory. E-banks are easy to set up so lots of
new entrants will arrive. ‘Old-world’ systems, cultures and structures will not encumber
these new entrants. Instead, they will be adaptable and responsive. E-banking gives
consumers much more choice. Consumers will be less inclined to remain loyal. E-banking
will lead to an erosion of the ‘endowment effect’ currently enjoyed by the major UK banks.

16
Deposits will go elsewhere with the consequence that these banks will have to fight to
regain and retain their customer base.
This will increase their cost of funds, possibly making their business less viable.
Lost revenue may even result in these banks taking more risks to breach the gap. Portal
providers are likely to attract the most significant share of banking profits. Indeed banks
could become glorified marriage brokers.

They would simply bring two parties together – e.g. buyer and seller, payer and
payee. The products will be provided by mono lines, experts in their field. Traditional banks
may simply be left with payment and settlement business – even this could be cast into
doubt. Traditional banks will find it difficult to evolve. Not only will they be unable to
make acquisitions for cash as opposed to being able to offer shares, they will be unable to
obtain additional capital from the stock market. This is in contrast to the situation for
Internet firms for whom it seems relatively easy to attract investment. There is of course
another view which sees e-banking more as an evolution than a revolution. E-banking is
just banking offered via a new delivery channel. It simply gives consumers another service
(just as ATMs did). Like ATMs, e-banking will impact on the nature of branches but will
not remove their value. Experience in Scandinavia (arguably the most advanced e-banking
area in the world) appears to confirm that the future is‘ clicks and mortar’ banking.
Customers want full service banking via a number of delivery channels. The future is
therefore ‘Martini Banking’ (any time, any place, anywhere, anyhow).Traditional banks
are starting to fight back. The start-up costs of an e-bank are high. Establishing a trusted
brand is very costly as it requires significant advertising expenditure in addition to the
purchase of expensive technology (as security and privacy are key to gaining customer
approval). E-banks have already found that retail banking only becomes profitable once a
large critical mass is achieved. Consequently many e-banks are limiting themselves to
providing a tailored service to the better off. Nobody really knows which of these versions
will triumph.

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 CHAPTER5

5. Types of Banking
5.1 Automated Teller Machines (ATM)
5.2 TELE Banking
5.3 Smart Card
5.4 Debit Card
5.5 E-Cheque
5.6 Mobile Banking
5.7 Other Electronic Banking

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5.1 Types of Banking with Information Technology :
 INTERNET BANKING:

Internet Banking lets you handle many banking transactions via your personal
computer. For instance, you may use your computer to view your account balance, request
transfers between accounts, and pay bills electronically.
Internet banking system and method in which a personal computer is connected by
a network service provider directly to a host computer system of a bank such that customer
service requests can be processed automatically without need for intervention by customer
service representatives. The system is capable of distinguishing between those customer
service requests which are capable of automated fulfillment and those requests which
require handling by a customer service representative. The method of the invention includes
the steps of inputting a customer banking request from among a menu of banking requests
at a remote personnel computer; transmitting the banking requests to a host computer over
a network; receiving the request at the host computer; identifying the type of customer
banking request received; automatic logging of the service request, comparing the received
request to a stored table of request types, each of the request types having an attribute to
indicate whether the request type is capable of being fulfilled by a customer service
representative or by an automated system; and, depending upon the attribute, directing the
request either to a queue for handling by a customer service representative or to a queue for
processing by an automated system.

a) Automated Teller Machines (ATM):

An unattended electronic machine in a public place, connected to a data system
and related equipment and activated by a bank customer to obtain cash withdrawals and
other banking services. Also called automatic teller machine, cash machine; Also called
money machine.
An automated teller machine or automatic teller machine (ATM) is an electronic
computerized telecommunications device that allows a financial institution's customers
to directly use a secure method of communication to access their bank accounts, order
or make cash withdrawals and check their account balances without the need for a
human bank teller. Many ATMs also allow people

19
 to deposit cash or cheques, transfer money between their bank accounts, top up
their mobile phones' pre-paid accounts or even buy postage stamps.
On most modern ATMs, the customer identifies him or herself by inserting a
plastic card with a magnetic stripe or a plastic smartcard with a chip, that contains his
or her account number. The customer then verifies their identity by entering a pass code,
often referred to as a PIN (Personal Identification Number) of four or more digits. Upon
successful entry of the PIN, the customer may perform a transaction.
If the number is entered incorrectly several times in a row , some ATMs will
attempt retain the card as a security precaution to prevent an unauthorised user from
discovering the PIN by guesswork. Captured cards are often destroyed if the ATM
owner is not the card issuing bank, as non-customer's identities cannot be reliably
confirmed. The Indian market today has approximately more than 17,000 ATM’s.

b) TELE Banking:
Undertaking a host of banking related services including financial transactions
from the convenience of customers chosen place anywhere across the GLOBE and any
time of date and night has now been made possible by introducing on-line Telebanking
services. By dialing the given Telebanking number through a landline or a mobile from
anywhere, the customer can access his account and by following the user-friendly
menu, entire banking can be done through Interactive Voice Response (IVR) system.
With sufficient numbers of hunting lines made available, customer call will hardly fail.
The system is bi-lingual and has following facilities offered :
 Automatic balance voice out for the default account.
 Balance inquiry and transaction inquiry in all
 Inquiry of all term deposit account
 Statement of account by Fax, e-mail or ordinary mail.
 Cheque book request
 Stop payment which is on-line and instantaneous
 Transfer of funds with CBS which is automatic and instantaneous
 Utility Bill Payments
 Renewal of term deposit which is automatic and instantaneous
 Voice out of last five transactions.

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c) Smart Card:
A smart card usually contains an embedded 8-bit microprocessor (a kind of
computer chip). The microprocessor is under a contact pad on one side of the card.
Think of the microprocessor as replacing the usual magnetic stripe present on a credit
card or debit card. The microprocessor on the smart card is there for security. The host
computer and card reader actually "talk" to the microprocessor. The microprocessor
enforces access to the data on the card. The chips in these cards are capable of many
kinds of transactions. For example, a person could make purchases from their credit
account, debit account or from a stored account value that's reload able. The enhanced
memory and processing capacity of the smart card is many times that of traditional
magnetic-stripe cards and can accommodate several different applications on a single
card. It can also hold identification information, which means no more shuffling
through cards in the wallet to find the right one -- the Smart Card will be the only one
needed.
Smart cards can also be used with a smart card reader attachment to a personal
computer to authenticate a user. Smart cards are much more popular in Europe than in
the U.S. In Europe the health insurance and banking industries use smart cards
extensively. Every German citizen has a smart card for health insurance. Even though
smart cards have been around in their modern form for at least a decade, they are just
starting to take off in the U.S.

d) Debit Card:
Debit cards are also known as check cards. Debit cards look like credit cards or
ATM (automated teller machine) cards, but operate like cash or a personal check. Debit
cards are different from credit cards. While a credit card is a way to "pay later," a debit
card is a way to "pay now." When you use a debit card, your money is quickly deducted
from your checking or savings account.
Debit cards are accepted at many locations, including grocery stores, retail
stores, gasoline stations, and restaurants. You can use your card anywhere merchants
display your card's brand name or logo. They offer an alternative to carrying a
checkbook or cash.

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e) E-Cheque:
 An e-Cheque is the electronic version or representation of paper cheque.
 The Information and Legal Framework on the E-Cheque is the same as that of the
paper cheque’s.
 It can now be used in place of paper cheques to do any and all remote transactions.
 An E-cheque work the same way a cheque does, the cheque writer "writes" the e-
Cheque using one of many types of electronic devices and "gives" the e-Cheque to
the payee electronically.
 The payee "deposits" the Electronic Cheque receives credit, and the payee's bank
"clears" the e-Cheque to the paying bank.
 The paying bank validates the e-Cheque and then "charges" the check writer's
account for the check.

f) Mobile Banking :
Mobile banking (also known as M-Banking, mbanking) 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).
Mobile banking and Mobile payments are often, incorrectly, used
interchangeably. The two terms are differentiated by their service provider-to-consumer
relationship; financial institution-to-consumer versus commercial institution-to-
consumer for mobile banking and payments, respectively. Mobile Banking involves
using mobile devices gain to access financial services. Mobile payments on the other
hand may be defined as the use of mobile devices to pay for goods or services either at
the point of purchase or remotely. Bill payment is not considered a form of mobile
payment because it does not occur in real time.
The earliest mobile banking services were offered over SMS, a service known
as SMS banking. With the introduction of the first primitive smart
phones with WAP 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.
Mobile banking has until recently (2010) most often been performed via SMS
or the Mobile Web.

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g) Other Forms Of Electronic Banking :
 Direct Deposit
 Electronic Bill Payment
 Electronic Check Conversion
 Cash Value Stored, Etc.

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 CHAPTER 6

6. Merits & Demerits of IT in Banks

24
6.1. Advantages of Technology :

1. From both customer and banking perspectives it shows that the Internet is a
convenience tool available whenever and wherever customers need it. It is also found
that the Internet has improved the factors in service quality like responsiveness,
communication and access. It is concluded that the Internet has an important and
positive effect on customer perceived banking services and the service quality has been
improved since the Internet has been used in banking sector.

2. It's generally secure. But make sure that the website you're using has a valid security
certificate. This lets you know that the site is protected from cyber-thieves looking to
steal your personal and financial information.

3. It gives twenty-four-hour access. When the neighborhood bank closes, you can still
access your account and make transactions online. It's a very convenient alternative
for those that can't get to the bank during normal hours because of their work
schedule, health or any other reason.

4. It allows us to access our account from virtually anywhere. If we're on a business trip
or vacationing away from home, we can still keep a watchful on our money and
financial transactions – regardless of our location.

5. Conducting business online is generally faster than going to the bank. Long teller lines
can be time-consuming, especially on a Pay Day. But online, there are no lines to
contend with. You can access your account instantly and at your leisure.

6. Many features and services are typically available online. For example, with just a few
clicks you can apply for loans; check the progress of your investments, review.

7. 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.

8. Information Technology has also provided banking industry with the wherewithal to
deal with the challenges the new economy poses.

25
9. Information technology has been the cornerstone of recent financial sector reforms
aimed at increasing the speed and reliability of financial operations and of initiatives to
strengthen the banking sector.

10. The IT revolution has set the stage for unprecedented increase in financial activity
across the globe. The progress of technology and the development of worldwide
networks have significantly reduced the cost and time of global funds transfer.

11. 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 demand instant, anytime and anywhere
banking facilities.

12. IT has been providing solutions to banks to take care of their accounting and back office
requirements. This has, however, now given way to large scale usage in services aimed
at the customer of the banks.

13. IT also facilitates the introduction of new delivery channels--in the form of Automated
Teller Machines, Net Banking, Mobile Banking and the like.

14. Use of de-mat account and online trading enables a person to buy and sell shares any
time. The share trading companies and AMC’s can give improved and faster service
with help of technology.

15. There are many useful features and services available online besides for the usual
transactions. For example, you can apply for credit cards, manage investments, and pay
bills through your online account portal. You can also perform more mundane tasks
such as ordering new checks, requesting additional deposit slips, or reporting a lost or
stolen debit card

.Certainly the above mentioned advantages if technology have improved the quality of
service in a banking and financial sector.

26
6.2. Disadvantages of Technology :

1. Yes, online banking is generally secure, but it certainly isn't always secure. Identity
theft is running rampant, and banks are by no means immune. And once your
information is compromised, it can take months or even years to correct the damage,
not to mention possibly costing you thousands of dollars, as well. This generally
does not happen in case of traditional method of banking.

2. Some online banks are more stable than others. Not all online setups are an
extension of a brick-and-mortar bank. Some operate completely in cyberspace,
without the benefit of a branch that you can actually visit if need be.
3. With no way to physically check out the operation, you must be sure to thoroughly
do your homework about the bank's background before giving them any of your
money.
4. Before using a banking site that you aren't familiar with, check to make sure that
their deposits are FDIC-insured. If not, you could possibly lose all of your deposits
if the bank goes under, or its major shareholders decide to take an extended vacation
in Switzerland.

5. Customer service can be below the quality that you're used to. Some people simply
take comfort in being able to talk to another human being face-to-face if they
experience a problem. Although most major banks employ a dedicated customer
service department specifically for online users, going through the dreaded
telephone menu can still be quite irritating to many. Again, some are considerably
better (or worse) than others.

6. Not all online transactions are immediate. Online banking is subject to the same
business-day parameters as traditional banking. Therefore, printing out and keeping
receipts is still very important, even when banking online.

7. If your bank operates only online or simply does not have a branch office in your
local area, you will not be able to reach a representative in person for discussion of
account issues.

8. Normally this is not a problem, but sometimes customer service by telephone or

email can be spotty and may prove to be more of a hassle if you have a serious issue

27
 that is not easily resolved. Some banks are better than others in this department, so
you will need to do some research if this is an important consideration for you.

9. Using online banking effectively requires some basic computer literacy and
familiarity with navigating the Internet. While this is not a problem for people like
me, those who are afflicted with technophobia or are simply inexperienced with this
particular genre may not be comfortable with this concept.

10. There are also a significant number of people who are suspicious of anything having
to do with the Internet because it is outside of their comfort zone. Others are simply
too stubborn to acquire the relevant knowledge and skills.

28
 CHAPTER 7

7. History of Internet Banking

29
 The story of technology in banking started with the use of punched card machines
like Accounting Machines or Ledger Posting Machines. The use of technology, at that
time, was limited to keeping books of the bank. It further developed with the birth
of online real time system and vast improvement in telecommunications during
late1970’s and 1980’s.
It resulted in a revolution in the field of banking with “convenience banking” as a
buzzword. Through Convenience banking, the bank is carried to the doorstep of the
customer. The 1990’s saw the birth of distributed computing technologies and Relational
Data Base Management System.
The banking industry was simply waiting for these technologies. Now with
distribution technologies, one could configure dedicated machines called front-end
machines for customer service and risk control while communication in the batch mode
without hampering the response time on the front-end machine. Intense competition has
forced banks to rethink the way they operated their business. They had to reinvent and
improve their products and services to make them more beneficial and cost effective.
Technology in the form of E-banking has made it possible to find alternate banking
practices at lower costs.
More and more people are using electronic banking products and services because
large section of the banks future customer base will be made up of computer literate
customer, the banks must be able to offer these customer products and services that allow
them to do their banking by electronic means. If they fail to do this will, simply, not survive.
New products and services are emerging that are set to change the way we look at money
and the monetary system.
The precursor for the modern home online banking services were the distance
banking services over electronic media from the early '80s. The term online became popular
in the late '80s and refers to the use of a terminal, keyboard and TV (or monitor) to access
the banking system using a phone line. ‘Home banking’ can also refer to the use of a
numeric keypad to send tones down a phone line with instructions to the bank. Online
services started in New York in 1981 when four of the city’s major banks (Citibank, Chase
Manhattan, Chemical and Manufacturers Hanover) offered home banking services using
the videotex system. Because of the commercial failure of video-tex these banking services
never became popular except in France where the use of videotex (Minitel) was subsidised
by the telecom provider and the UK, where the Prestel system was used.

30
 The UK’s first home online banking services were set up by the Nottingham
Building Society (NBS) in 1983 ("History of the Nottingham" Retrieved on 2007-12-14.).
The system used was based on the UK's Prestel system and used a computer, such as the
BBC Micro, or keyboard (Tandata Td1400) connected to the telephone system and
television set. The system (known as 'Homelink') allowed on-line viewing of statements,
bank transfers and bill payments. In order to make bank transfers and bill payments, a
written instruction giving details of the intended recipient had to be sent to the NBS who
set the details up on the Home link system. Typical recipients were gas, electricity and
telephone companies and accounts with other banks. Details of payments to be made were
input into the NBS system by the account holder via Prestel. A cheque was then sent by
NBS to the payee and an advice giving details of the payment was sent to the account
holder.
BACS was later used to transfer the payment directly. Stanford Federal Credit Union
was the first financial institution to offer online internet banking services to all of its
members in Oct, 1994.

31
 CHAPTER 8

8. Indian Scenario
8.1 Drivers of Change
8.2 Indian Banks on Web
8.3 Emerging Challenges
8.4 E-Banking World Wide

32
8.1. Indian Scenario :

a) Drivers of Change:

Advantages previously held by large financial institutions have shrunk

considerably. The Internet has leveled the playing field and afforded open access to
customers in the global marketplace. Internet banking is a cost-effective delivery channel
for financial institutions. Consumers are embracing the many benefits of Internet banking.
Access to one's accounts at anytime and from any location via the World Wide Web is
a convenience unknown a short time ago. Thus, a bank's Internet presence transforms from
'brouchreware' status to 'Internet banking' status once the bank goes through a technology
integration effort to enable the customer to access information about his or her specific
account relationship. The six primary drivers of Internet banking includes, in order of
primacy are:

 Improve customer access

 Facilitate the offering of more services
 Increase customer loyalty
 Attract new customers
 Provide services offered by competitors
 Reduce customer attrition

b) Indian Banks on Web :

The banking industry in India is facing unprecedented competition from non-
traditional banking institutions, which now offer banking and financial services over the
Internet. The deregulation of the banking industry coupled with the emergence of new
technologies, are enabling new competitors to enter the financial services market quickly
and efficiently. Indian banks are going for the retail banking in a big way. However, much
is still to be achieved. This study that was conducted by students of IIML shows some
interesting facts:

33
  Throughout the country, the Internet Banking is in the nascent stage
of development (more than 50 banks are offering varied kind of Internet banking
services).
 In general, these Internet sites offer only the most basic services. 55% are so called
'entry level' sites, offering little more than company information and basic
marketing materials. Only 8% offer 'advanced transactions' such as online funds
transfer, transactions & cash management services.
 Foreign & Private banks are much advanced in terms of the number of sites &their
level of development.

c) Emerging Challenges :
Information technology analyst firm, the Meta Group, recently reported "financial
institutions who don't offer home banking by the year 2000 will become marginalized." By
the year of 2002, a large sophisticated and highly competitive Internet Banking Market will
develop which will be driven by

 Demand side pressure due to increasing access to low cost electronic services.
 Emergence of open standards for banking functionality.
 Growing customer awareness and need of transparency.
 Global players in the fray
 Close integration of bank services with web based E-commerce or even
disintermediation of services through direct electronic payments (E- Cash).
 More convenient international transactions due to the fact that the Internet along
with general deregulation trends eliminates geographic boundaries.
Certainly some existing brick and mortar banks will go out of business. But that's
because they fail to respond to the challenge of the Internet. The Internet and its
underlying technologies will change and transform not just banking, but also all aspects
of finance and commerce. It represents much more than a new distribution opportunity.
It will enable nimble players to leverage their brick and mortar presence to improve
customer satisfaction and gain share. It will force lethargic players who are struck with
legacy cost basis, out of business-since they are unable to bring to play in the new
context.

34
d) E-Banking World Wide :
Since its inception, Internet banking has experienced strong and sustained growth.
World Bank report on leapfrogging in e-finance pointed out that the three countries with
impressive progress in information technology in this sense are Estonia, Republic of Korea
and Brazil. Creation of the world’s leading electronic banking systems has been done at a
remarkably low cost compared to other world-class internet banks.
In the European Union, 60 million people, representing 18 per cent of the adult
population, use online banking In France, the number of online banking accounts is
recording an annual growth rate of 75 per cent. However, Estonia is a country that has
become a leader in Internet banking (which now reaches 18 per cent of the population), not
only among Eastern European countries but in world rankings, through a combination of
easy to- use software, free-of-charge transactions and behavior changes resulting from the
influence of the Nordic countries’ IT culture on Estonia. Growth in this area has been driven
by traditional banks, which have used the online channel to generate customer loyalty and
improve their operating margins.

Two Brazilian banks, Bradesco and Banco do Brazil; have thus achieved more than
4 million online customers each. Mexico is another leader of Internet banking in Latin
America. It adopted legislation providing for the development of both E-Commerce and e-
finance. In Mexico, the number of online bank users more than tripled from 700,000 in
2000 to 2.4 million in 2001, and it could reach 4.5 million in 2005 (E-Marketer 2002b).
One reason for the success of Latin American banks’ online ventures seems to be
the attention they have paid to providing retail customers with multiple ways to access their
accounts (Internet, telephone, wireless). However, given that the share of the total
population that actually has a bank account is relatively small, the expansion of Latin
American online banking may be facing a bottleneck. Compared with overall Internet usage
estimated at 4.4 million in Australia, the major banks together have attracted only 1.2
million to online banking.
The Internet is a global phenomenon and so is e-finance. Its deployment is not
limited to developed countries, and indeed some developing countries – such as India and
the Republic of Korea – are experiencing particularly strong growth in E-Banking. In Asia
one of the most impressive records has been achieved by the Republic of Korea. The
Republic of Korea is leading in online brokerage and in mobile banking. In South-East Asia

35
Internet banking is also developing rapidly in Thailand, Malaysia, and Singapore and to a
lesser extent, in the Philippines.
In Bangladesh there is a large gap between the computerization of foreign banks
and that of local commercial banks and as regards the state of their intra- and inter-branch
online networks. However, 75 per cent of local banks are planning to introduce E-Banking,
which implies very dynamic improvements. Apart from North and South Africa the Sub
Saharan Africa is the region that is seriously lagging behind in Internet banking, although
it is giving to the rest of the world the good example of microfinance developments.

36
 CHAPTER 9

9. Examples of HDFC & ICICI Banks

37
 A. HDFC COMPANY PROFILE
I. Introduction HDFC Bank :

(NYSE: HDB), one amongst the firsts of the new generation, tech-savvy
commercial banks of India, was incorporated in August 1994, after the Reserve Bank of
India allowed setting up of Banks in the private sector. The Bank was promoted by the
Housing Development Finance Corporation Limited, a premier housing finance company (set
up in 1977) of India.

II. History :

The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to setup a
bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry
in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited',
with its registered office in Mumbai, India. HDFC Bank commenced operations as a
Scheduled Commercial Bank in January 1995.

III. Branch Network :

Currently HDFC Bank has 1416 branches, 3382 ATMs, in 550 cities in India, and
all branches of the bank are linked on an online real-time basis. The bank offers many
innovative products & services to individuals, corporate, trusts, governments, partnerships,
financial institutions, mutual funds, insurance companies. It is a path breaker in the Indian
banking sector.

In 2007 HDFC Bank acquired Centurion Bank of Punjab taking its total branches
to more than 1,000. Though, the official license was given to Centurion Bank of Punjab
branches, to continue working as HDFC Bank branches, on May 23, 2008.

IV. Business Focus :

HDFC Bank's Mission is to be a World-Class Indian Bank. The Bank's aim is to
build sound customer franchises across distinct businesses so as to be the preferred provider

38
of banking services in the segments that the bank operates in and to achieve healthy growth
in profitability, consistent with the bank's risk appetite. The bank is committed to maintain
the highest level of ethical standards, professional integrity and regulatory compliance.
HDFC Bank's business philosophy is based on four core values: Operational Excellence,
Customer Focus, Product Leadership and People.

V. Business Profile :

HDFC Bank caters to a wide range of banking services covering commercial and
investment banking on the wholesale side and transactional/branch banking on the retail
side. The bank has three key business areas:

 Wholesale Banking Services :

The Bank's target market is primarily large, blue chip manufacturing companies
in the Indian corporate sector and to a lesser extent, emerging midsized corporate. For
these corporate, the Bank provides a wide range of commercial and transactional
banking services, including working capital finance, trade services, transactional
services, cash management, etc.
The bank is also a leading provider of structured solutions that combine cash'
management services with vendor and distributor finance for facilitating superior
supply chain management for its corporate customers.
 Retail Banking Services:
The objective of the Retail Bank is to provide its target market customers a full
range of financial products and banking services, giving the customer a one stop
window for all his/her banking requirements. The products are backed by world-class
service and delivered to the customers through the growing branch network, as well as
through alternative delivery channels like ATMs, Phone Banking, Net Banking and
Mobile Banking. The HDFC Bank Preferred program for high net worth individuals,
the HDFC Bank Plus and the Investment Advisory Services programs have been
designed keeping in mind needs of customers who seek distinct financial solutions,
information and advice on various investment avenues. The Bank also has a wide array

39
 of retail loan products including Auto Loans, Loans against marketable securities,
Personal Loans and Loans for Two-wheelers.

It’s also a leading provider of Depository Services to retail customers, offering

customers the facility to hold their investments in electronic form.

HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit card as
well. The debit card allows the user to directly debit his account at the point of purchase at
a merchant establishment, in India and overseas. The Bank launched its credit card in
association with VISA in November 2001. The Bank is also one of the leading players in
the "merchant acquiring" business with over 25,000 Point-of-sale (POS) terminals for debit
/ credit cards acceptance at merchant establishments. The Bank is well positioned as a
leader in various net-based B2C opportunities including a wide range of Internet banking
services for Fixed Deposits, Loans, Bill Payments, etc.

 Treasury Operations:
Within this business, the bank has three main product areas-Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities With the
liberalization of the financial markets in India, corporate need more sophisticated risk
management information, advice and product structures, These and fine pricing on various
treasury products are provided through the bank's Treasury team. To comply with statutory
reserve requirements, the bank is required to hold 25% of its deposits in government
securities. The Treasury business is responsible for managing the returns and market risk
on this investment portfolio.

40
 HDFC BANK SERVICES
VI. Net Banking:

Net Banking is HDFC Bank's Internet Banking service. Providing up-to-the-second

account information, Net Banking lets you manage your account from the comfort of your
mouse - anytime, anywhere.

VII. HDFC Bank Net Banking Secure Access :

HDFC Bank has implemented a new security solution for its customers – Secure
Access .As your security is our top priority, we have initiated the Secure Access solution
to protect you from fraudsters and hackers - who are looking to find a way to access your
account. Currently following transactions are covered under Secure Access
 Transfer from one HDFC Bank account to other HDFC Bank account holders (under
distinct customer ID).
 Transfer from HDFC Bank account to any other Bank's account (also known as RTGS
& NEFT).
 Visa Money Transfer.
 Third Party Demand Draft through Net Banking.

VIII. Third Party Transfer :

Third-Party Transfer is a Net Banking feature for which you will need your unique
Customer ID and IPIN (password). Login to Net Banking to confirm that your ID is active
in our records.

IX. What is TPT…?

With Third-Party Transfer (TPT) you can transfer funds online from your HDFC
Bank account to another HDFC Bank/Other Bank account (beneficiary), anywhere in India.
This is a real-time transaction and the debit and credit will reflect in the respective accounts
immediately.

X. Third Party Transfer can be initiated :

From your Account to other Bank Accounts using :
 National electronic Funds Transfer (NEFT)

41
 Funds will be credited to the beneficiary account in two working days.
 Real Time Gross Settlement (RTGS)
Funds will be credited to the beneficiary account on the same working day.
 From your HDFC Bank account to other HDFC Bank accounts (different cuts ids).
 From your account to any Visa Card (Debit or Credit) within India.
 For issuance of Third Party Demand Drafts from your account.
You can transfer up to a maximum of Rs. 10, 00,000/- per cuts id per day using this
facility. This amount can be transferred in parts or on a single basis.

XI. INSTA IPIN Facility :

It has been our constant endeavor to make banking a hassle-free experience for you. At
HDFC Bank, we understand that it is quite possible to forget even important things like
your Net Banking password (IPIN). But that should not be holding you back from accessing
your bank account.

You can now re-generate your Net Banking password instantly with the help of your Debit
Card details and start using your new password (IPIN) immediately. No need to request for
a new password and await its arrival. And it is even better as you select your new HDFC
Bank password yourself so it becomes much easier to remember the same.

XII. Credit Cards Online :

We take great pleasure in announcing that the HDFC Bank Net Banking service is
now available for Credit Cards also. Now using your HDFC Bank Credit Card has become
more convenient and time saving. You can now access your Credit Card account from home
or office or even while traveling. With Net Banking you can view your card account
information and do much more just at the click of a button. Currently the following Credit
Cards Net banking features are available:-
 Account Information
 Unbilled Transactions
 Credit Card Statement
XIII. One View :
One View is a revolutionary service from HDFC Bank that allows you to manage
multiple accounts in different banks through one single online interface. If you are an

42
HDFC Bank customer and have one or more accounts with Citibank, ICICI Bank, HSBC
India, Standard Chartered Bank then One View is just right for you.

XIV. Features & Benefits :

No need to individually log on to internet banking of every account. Just log on to
One View and manage up to FIVE accounts in different banks.
 Remember only ONE password.
 No charges whatsoever

XV. How Secure is One view…?

One view gives you the world class banking security and technology sophistication
you'd expect of HDFC Bank, with features such as:
 Robust firewall protection makes it nearly impossible to break through.
 All information is transmitted using advanced 128 bit Secure Socket Layer (SSL)
encryption technology.
 Automatic time-outs ensure that your account details are not viewed by others.
 You can only view your accounts and cannot transact, so your money is absolutely
safe.

XVI. INSTA Alerts :

: Now you can get regular updates on your bank account on your mobile phone or email
ID. Just register for our Insta Alert service and receive updates on your account as and when
the select transaction happens - all this without visiting the branch or ATM. You can
register for any or all of the following alerts:

 Debit transactions greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000
 Credit in account greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000
 Account Balance below Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000-

43
  Weekly account balance
 Salary Credits
 Utility bill payment due Alert

XVII. Mobile Banking:

Your Mobile is now your bank! Now access your bank account and conduct a host
of banking transactions through your mobile, with our unique Mobile Banking service. You
can check your account level information such as balance details, mini statement, and
cheque status as well as carry out financial transactions such as Funds Transfer using
HDFC Bank Mobile Banking service.

XVIII. Features of Mobile Banking :

Using our Mobile Banking service, you can avail of a host of features at your fingertips
 Perform funds transfers
 Get your balance details
 Obtain your last 3 transaction details
 Request a cheque book
 Stop a cheque payment

 Enquire cheque status

 Request an account statement
 Get Fixed Deposit details
 Request for I-PIN generation
 Request a cheque book

XIX. Automated Teller Machine:

With wide spread network of 4,000 ATMs across India, enjoy the following benefits at your
convenience.

 24-hour access to Cash -

Withdraw up to Rs.10, 000/- per day on your ATM Card and up to Rs. 15,000 on your
Debit Card.

44
 Personalized Cash Withdrawals -
Save time on your cash withdrawal transactions by pre-setting your preferred
language / account / amount.

 View Account Balances & Mini-statements -

Get details of the last 9transactions on your account with the mini-statement,
along with your account balance.

 Change ATM PIN -

Change your ATM PIN at any given point in time.

 Order a Cheque Book / Account Statement

 HDFC Bank Credit Card Payment -
Make payment of your HDFC Bank Credit Card dues using the ATM. The
primary account of your Debit / ATM card will be debited.

 Deposit Cash or Cheques -

Deposit Cash or Cheques into your account without visiting the Branch.
Available at Non-Branch HDFC Bank ATMs

 Transfer Funds between accounts -

Transfer money between your accounts. Both accounts must be linked to your
ATM / Debit Card. Maximum of 16A/Cs (Savings / Current) can be linked to a card.

XX. Refill Your Prepaid Mobile :

Refill your prepaid mobile using Prepaid Mobile Refill service instantly. HDFC
Bank offers – Prepaid Mobile Refill, which allows you to recharge your prepaid mobile
phone anytime from anywhere and pay directly from your Bank account. Avoid hassles of
withdrawing cash or searching for a retailer for buying the recharge card.
You can avail of this service in two convenient ways:
 Prepaid Mobile Refill on Internet
 Prepaid Mobile Refill on ATM

Prepaid Mobile Refill on Internet :

45
 You can now recharge your Prepaid Mobile phone right here on the HDFC
Bank website.

Enjoy Convenience of:

Recharging your prepaid mobile phone from the comfort of your home or office
anytime

XXI. Phone Banking :

Your phone is now your bank. When you dial in to Phone Banking, a voice prompt
will guide you through the various transactions. You may also talk to a Phone Banker, who
will provide you with the required assistance.
Avail of the following services via Phone Banking:

 Check your account balance :

Get up-to-the-second details of your Savings or Current Accounts and your
Fixed Deposits. You can also get the details of the last 5 transactions on your account,
or have a mini statement of last 9transactions faxed across to you.

 Enquire on the cheque status :

You can use Phone Banking to check on the status of cheques issued
or deposited from anywhere in India.

 Order a Cheque Book / Account Statement :

Just call Phone Banking and get your Cheque Book or latest Account Statement
delivered at your doorstep.

 Stop Payment :
Stop payment of a single cheque or a series of cheques, 24hours a day.

 Loan Related queries :

46
 Get details of the outstanding loan amount, enquire about your loan account,
request for an interest certificate and repayment schedule, etc. Just call Phone Banking
in your city and dial 4 to speak to our Phone Banker

 Open a Fixed deposit or Enquire on your Fixed deposits / TDS :

Talk to our Phone Banker to easily open a Fixed Deposit over the phone, by
simply authorizing a transfer of funds from your Savings Account.

 Transfer Funds between accounts :

You can also transfer money from one of your accounts to another. Both
accounts must be linked to your Customer ID. You can transfer amounts up to Rs 1 Lac
in a single day.

 Pay your bills :

Pay your cellular, telephone, electricity and HDFC Bank Credit Card bills
through Phone Banking using Bill Pay, a comprehensive bill payments solution.

 Report loss of your ATM / Debit Card / Forex Plus Card :

If your ATM / Debit / Forex plus Card are lost, call any Phone Banking number
to deactivate your card(s).

 Learn about all our other products :

Get details on HDFC Bank products &services by talking to our Phone Banker.

 Enquire about latest Interest / Exchange rates :

Get latest Interest rates on Deposits and Foreign Exchange rates by talking to
our Phone Banker.

 Request a Demand Draft / Manager's Cheque :

Call Phone Banking and get a Demand Draft / Manager's Cheque delivered to
your doorstep.
 Demat Related Queries :
Gets the Account holding details, Transaction details, ISIN Number of a scrip,
Status of Depository Slips, details of Client Master list (Dividend account, Charges

47
 Debit account, PAN etc.) & others. Call Phone Banking in your city & dial 5 to speak
to our Phone Banker.

B. ICICI BANK PROFILE

I. Introduction
ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion
(US$ 7 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$648.8
million) for the nine months ended December 31, 2009. The Bank has a network of 1,723
branches and about 4,883 ATMs in India and presence in 18countries. ICICI Bank offers a
wide range of banking products and financial services to corporate and retail customers
through a variety of delivery channels and through hits specialized subsidiaries and
affiliates in the areas of investment banking, life and non-life insurance, venture capital and
asset management.

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada,
Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance
Centre and representative offices in United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia.

Our UK subsidiary has established branches in Belgium and Germany. ICICI

Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock
Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the
New York Stock Exchange (NYSE).

II. History

ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion
(US$ 77 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$648.8
million) for the nine months ended December 31, 2009. The Bank has a network of 1,723
branches and about 4,883 ATMs in India and presence in 18countries. ICICI Bank offers a
wide range of banking products and financial services to corporate and retail customers
through a variety of delivery channels and through hits specialized subsidiaries and

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affiliates in the areas of investment banking, life and non-life insurance, venture capital and
asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and
Canada, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance
Centre and representative offices in United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia.

Our UK subsidiary has established branches in Belgium and Germany. ICICI

Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock
Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the
New York Stock Exchange (NYSE).

 ICICI Bank Services

III. Mobile Banking:

Conducting banking operations using the mobile phone has been fast catching up
around the world for its convenience. We have launched mobile services in India to
convenience our customers. You can do your banking operations sitting anywhere,
anytime. It is discreet, personalized and on your phone. Use it when at a meeting, in a movie
hall, while having your Sunday brunch or at any other place you cannot usually expect to
get the information you want from your bank. It is an empowering and user-friendly mode
of accessing your bank account. To get started, take a look at the menu on the left and go
through our various services. Instant Voice Response (IVR) Banking and iMobile - you
can do your day today banking anytime, anywhere.

IV. Internet Banking :

ICICI Bank brings convenience and security to your desktop. Now you can
check your account balance, transfer funds, download your account statement, and
pay bills or even book tickets online, from the comfort of your home or in the middle
of a busy day at the office. Explore the power of simpler and smarter Banking
whether you area Banking, Credit Card, Loan or Demat customer.
V. ATM Banking :
Bank 24/7 through a widespread network of ICICI Bank ATMs making
life easy and convenient for you. User-friendly graphic screens and easy to follow
instructions available in a choice of local languages, makes ATM Banking with
ICICI Bank a smoother experience. ICICI Bank's widespread network of ATMs

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 makes it easy and convenient for you to bank 24/7. With over 4,883 + ATMs and
1,626 + branches setup within India, we ensure that you are never too far from an
ICICI Bank ATM. User-friendly graphic screens and easy to follow instructions in
a choice of local languages, makes ATM Banking with ICICI Bank a smooth
experience.ICICIBank.com also features the easy to access ATM Locator, making
it easy for you to find an ICICI Bank ATM in your neighborhood.

VI. The ICICI Bank edge :

 Cash withdrawal up to Rs. 25,000/- per day from your account (50,000 for HNI's). Fast
Cash option facilitates withdrawal of prefixed amounts; Ultra Fast Cash allows
withdrawal of Rs. 3000/- in one shot.
 Check your ledger balance and available balance.
 Print out your Mini Statement which displays your last 8 transactions and the current
balance.
 Deposit Cash / Cheques at all full function ATMs; cash deposited in ATMs will be
credited to the account on the same day if deposited before the clearing and cheques are
sent for clearing on the next working day.
 Transfer funds from one account to another linked account in the same branch.
 Change the Personal Identification Number (PIN) of your ATM or Debit card.
 Pay bills, make donations to temples / trusts, buy internet packs, air time recharges for
prepaid mobile phones, etc.
 Request for a cheque book from our ATMs; concerned branch dispatches it to reach
you within 10 working days.
 No charge is levied on ICICI Bank customers for transacting through ICICI Bank's
ATMs. But, if the minimum quarterly average balance is not maintained in your savings
account, first 6 transactions in the quarter are free and thereafter, Rs. 25 per
transaction is charged.

VII. I Mobile :

ICICI Bank's iMobile is a breakthrough innovation in banking that allows you to

transfer funds, make your credit card payments, pay utility bills, check your balance and
do lots more, for free. So why wait anymore. Just download the iMobile application on
your phone by sending us an SMS and experience iMobile. . ICICI Bank brings to you the

50
2nd generation iMobile that has newer features, smarter interface, quicker navigation and
enhanced functionality. ICICI Bank's iMobile is your answer to banking on the move. The
next generation iMobile is your key to a faster, easier and simplified banking service. Using
GPRS enabled on your mobile handset or through SMS, iMobile helps you to connect
directly to your bank account. This Rich Client Based Application needs to be installed on
your mobile thereby enabling a single click access to your account.

Services available with i Mobile:

 Payment of utility bills and credit card bills
 Transfer of funds to any bank account
 Payment of insurance premium
 Placement of service request such us ordering of cheque books, bank account
statements, cheque status and balance enquiry
Access the following ICICI Bank services via iMobile:

Bank Account
Funds transfer
 Bill Payment
 Balance Enquiry
 Last 5 transactions
 Cheque Book Request
 Stop Cheque request
 Cheque status Enquiry

Credit Card
 Balance Details
 Last Payment Details
 Payment Due Date
 Reward Point Status

Demat A/c
 Holding Enquiry
 Transaction Status
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  Bill Enquiry
 ISIN Enquiry

Loan A/c
 Provisional IT Certificate
 Final IT Certificate
 Reset Letter
 Rescheduled Letter
M Shop
 Prepaid Mobile Recharge
Other Services
 Status of Service Request Raised
 Locate US

VIII. IVR BANKING

Find answers to all your banking needs from your phone. ICICI Bank's Instant
Voice Response (IVR) Banking is free of charge, fully automated and at the same time
user-friendly. Just having an ATM PIN for your account and credit card ensures that
your transactions are secure.
 Saving A/C
 Credit cards
 Demat
 Bonds
IX. TV BANKING
At ICICI Bank, we've introduced India to an all new way of banking. TV
Banking. This pioneering initiative now enables you to get information regarding loans,
accounts, deposits and a lot more while you're watching that exciting cricket match or your
favorite sitcom.

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 CHAPTER 10

10.Future of IT in Banks

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It is an old cliche to say that "time equals money," but like virtually all cliches, there is a
significant grain of truth to the statement. To define the concept of time equaling money a
step further, one could point to the reality that opportunity costs play a significant factor
in the generation of prosperity and money.

From a definition that can be learned in any Economics 101 course, opportunity costs (on
a very baseline level) refer to the fact that if a person does something specific, the time
and money invested in such an activity result in the minimalizing of the ability to do
something else with the same time and money.

In other words, no one can commit resources to two courses of action simultaneously
without expanding the source (money) required to maintain a simultaneous venture. This
is why it is important to drastically reduce unproductive downtime from a person's life
and use the recaptured time for pursuits that will be productive. This is why internet
banking is such an important concept.

While we would all love to live in a world where banking and the time required to make a
banking transaction are greatly limited, we will never achieve such a goal unless we leave
the confines of traditional banking and veer towards internet banking instead. When it
comes to time costs, traveling to the bank, waiting in traffic, waiting in line, dealing with
poor or limited customer service all add minutes to the time wasted in one's day.
This is to say nothing of the hassles involved with having to conduct all business within
the framework of the hours of operation that the bank is open. Internet banking eliminates
virtually all of these needless hassles.

With the convenience of internet banking, one can conduct most simple
banking processes like withdrawals, transfers, checking one's balances, pay a loan or even
make monetary deposits 24 hrs a day, 7 days a week, 365 days a year. Literally, internet
banking is a world without limits! Well, of course, it does have certain limits as
oftentimes a human element will be required under certain customer service
conditions.But for many basic banking issues, internet banking .

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 Unfortunately, there will be those who have certain reservations against using internet
banking services.The main reason for such reservations is an unnecessary desire to avoid
dealing with something that is considered "new." While it is understandable that people
will have reservations against taking the great leap into trying something new, it also
must be understood that very little worth anything comes without taking a great step
forward.
So, do not continue to do things the hard way. Embrace the ease of internet
banking today.

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 CONCLUSION
On the basis of the above survey we can conclude that as an on the basis of a sample
of these 60 participants or members we can conclude that the Indian customers as
compared to the western trend do not rely more on the innovative services through
electronic medium or we can say services related to Banking and IT. But the trend
shows that as and when these kind of services are getting more and more popular, they
are gradually being accepted by the Indian customers who otherwise do not prefer to
use extra services with a myth of paying more or some say its hard getting adjusted
with new changes so they prefer to go on with t e same trends for years but the coming
generation is surely not going to accept the same trends. Now a day we see more and
more teenagers using Debit Cards to making them more popular as it is a kind of
card which will offer services only till you have balance in your Bank account So
finally I would like to conclude that in India, as a developing economy these kinds of
innovative IT and Banking Services will be welcomed by more and more people, they
get educated about the new products and their utilities. The IT and Banking products
which are expected to hit the Indian market in the coming years. are like Advanced
Core - Banking Solutions. Centralized Data Monitoring System (partly existing).
Storage Area Management. Innovative Software for Banking assistance and security.
etc. and as far as customers are concerned products like payments through mobile
phones. anywhere and everywhere Banking. and other customer friendly services

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