EXICUTIVE SUMMARY

Electronic banking also known as E-Banking is a term for the process by which a
customer may perform banking transactions electronically without visiting Bank.

E-banking is still evolving. It facilitate an effective payment and accounting system

thereby enhancing the speed of delivery of banking services considerably. E-banking
has improved efficiency and convenience to those customer segments which are more
educated and tech savvy.

Now days banking have changed completely from traditional banking to banking at
home.

Today, banks seem to be jumping on the bandwagon of Internet banking. Why is there
a sudden increase of bank interests in the Internet? The first major reason is because of
the improved security and encryption methods developed on the Internet. The second
reason is that banks did not want to lose a potential market share to banks that were
quick to offer their services on the Internet

. Many of the banks like ICICI, HDFC, IndusInd, IDBI, Citibank, Global Trust Bank
(GTB), Bank of Punjab and UTI were offering E-banking services. Based on the above
statistics and the analysts’ comments that India had a high growth potential for e-
banking the players focused on increasing and improving their E-Banking services. As a
part of this, the banks began to collaborate with functions online.

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 BANKING PROFILE
Although the antiquated Indian banking system has its roots in the nineteenth century,
the character and structure of the system has, however, changed substantially since
1969, when the major banks were nationalized. Prior to nationalization, banking was
concentrated only in urban areas. It was clear that a better banking system was needed
to promote the economic goals of the new Indian state. Rural markets for industrial
goods could not be developed so long as money lenders charge high rates of interest,
which was the main source of rural credit. Moreover, the 'green revolution' depended on
farmers finding substantial sources of credit to pay for fertilizers and hybrid seeds.

Since the mid-1970s, there has been a spectacular growth in the number of bank
branches and in the size of their deposits and advances. According to experts in
banking this transformation has no parallel anywhere in the world. After nationalization,
there was also a change in recruitment policy. For the first time, the doors of the banks
were opened to everyone, irrespective of family status, caste, community, religion or
gender. Recruitment was done on a more systematic basis, with merit assessed by
conducting aptitude tests by an external agency in a relatively impartial manner.

As the size of the banking sector increased, the industry became difficult to manage and
Computer technology offered a possible solution. In India in the early 1960s, a small
number of industrial houses and a few educational, research and development
institutions started using computers. During the late 1960s and 1970s, service-oriented
industries such as airlines, railways and insurance companies introduced computers in
order to 'improve their functioning' and 'to provide better customer service’. However,
Banks in India did not introduce computers on a large scale because of the fear that
these would result in retrenchment and unemployment.

For a long time Indian banks faced very little competition and operated in a protected
economy and so no long-term policy or perspective was formulated for the banking
sector. Banking sector was simply treated as a part of the public sector. But now, well-
computerized foreign banks are beginning to compete seriously with the nationalized

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banks. They target at the profitable and wealthy part of the market and, in contrast to
the nationalized banks, do not recognize any social responsibilities to small account
holders or to a rural and semi-urban client.

The banking and financial services Industry in India is in a state of inevitable and rapid
growth. The market for banking products and services has become more competitive
than ever before. With the steady fall in interest rates over the two years, customers
started looking for alternate avenues for savings and investments such as pension
funds, mutual funds, life insurance products etc. Furthermore, interest margins and
hence revenue opportunities have become very thin which are driving banks and
financial services companies to look for lending opportunities where intrinsically the
delinquency rates on loans are low and where the risk can be spread across a large
base of customers. Simultaneously, a rapidly growing middle class having an enormous
appetite to borrow from Banks for a better and improved lifestyle, has given banks and
financial services companies an opportunity to finance the demand side of the
Economy. 
The multinational banks and some of the new private sector banks in the country have
entered the Indian market and seized the opportunity very well. The public sector banks
and the old private sector banks, who command over 80% market share in the banking
industry, must seize the opportunity in a big way and respond aggressively to market
demands if the growth in Retail Banking has to be accelerated in the country itself.
To be successful in Retail Banking, banks will need to revamp their business model to :-

(a) build a large volume, highly scalable operation,

(b) package and deliver products rapidly in a dynamic market,

(c) leverage effectively on multiple delivery channels (branch, internet, ATMs etc.) with
a view to contain the cost of operations

(d) build collaborative relationships with providers of related financial products and
services and move towards converting the network of bank branches into ‘financial
supermarkets’.

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INTRODUCTION TO BASIC BANKING

WHAT IS BANKING?

Banking, in traditional sense is the business of accepting deposits of money from public
for the purposes of lending and investment. These deposits can have a distinct feature
of being withdrawn able by Cheques, which no other financial institution can offer.

In addition, banks also offer various other financial services, which include

 Issuing Demand Draft & Traveler Checks

 Credit Cards
 Collection of Cheques, Bills of exchange
 Safe Deposit Lockers
 Issuing letter s of Credit & letters of Guarantee
 Sales and Purchase of Foreign Exchange
 Custodial Services
The business of banking is highly regulated since banks deal with money offered to
them by the public and ensuring the safety of this public money is one of the prime
responsibilities of any bank. That is why the banks are expected to be prudent in their
lending and investments activities. Every Bank has a Compliance Department, which
we responsible to ensure that all the services offered by the bank, and the processes
followed are in compliance with the local regulations and the Bank’s corporate policy.

The major regulations and acts that govern the Banking business are

 Banking Regulations Act 1949

 Foreign Exchanges Management Act 1999
 Indian Contract Act
 Negotiable Instruments Act, 1881

Banks lend money either for productive purposes to individuals, firm’s corporate etc. for
buying houses property, cars and other consumer durables and for investment

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purposes to individuals and others .However banks do not finance any speculative
activity. Leading is a Risk taking. Having prudent norms for lending should cover the risk
.The depositors of banks are also assured of safety of their money by deploying some
percentage of deposits in statutory reserves like SLR &CRR.

SLR & CRR

The regulations like Banking Regulations Act and Reserve Bank of India Act govern the
business of banking .It is obligatory on the part of a Bank to invest a fixed proportion –
known as Statutory Liquidity Ratio (SLR) – of their liabilities which include time and term
Deposit in certain approved government Securities.

A certain proportion –know as Cash Reserve Ratio (CRR)- of the net time and demand
liabilities of the bank is also to be placed Reserve Bank of India as cash reserve. This
can very between 3 to20 percent announced by RBI.

Both, SLR & CRR are subject to change by RBI and normally the changes, if any are
made between RBI announce its busy season (October-March) and slack season (April-
September) credit policy. The objective of CRR & SLR requirements is to minimize the
risk of exposure and to make certain portion of funds available in liquid form at a point of
time. Reserve Bank also uses this as a monetary tool to monitor and control money
supply to the economy.

The Treasury Division of a Bank, being the custodian of all funds of the bank, manages
and maintains CRR and SLR on regular basis. Dealers in the treasury sell and purchase
securities eligible under SLR portfolio to maximize the yield on these statutory
investments.

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COMPANY PROFILE

IndusInd Bank derives its name and inspiration from the Indus Valley civilization - a
culture described by National Geographic as 'one of the greatest of the ancient world'
combining a spirit of innovation with sound business and trade practices.

Mr. Srichand P. Hinduja, a leading Non-Resident Indian businessman and head of the
Hinduja Group, conceived the vision of IndusInd Bank - the first of the new-generation
private banks in India - and through collective contributions from the NRI community
towards India's economic and social development, brought our Bank into being.

The Bank, formally inaugurated in April 1994 by Dr. Manhmohan Singh, Honourable
Prime Minister of India who was then the country’s Finance Minister, started with a
capital base of Rs.1,000 million (USD 32 million at the prevailing exchange rate), of
which Rs.600 million was raised through private placement from Indian Residents while
the balance Rs.400 million (USD 13 million) was contributed by Non-Resident Indians.

IndusInd Bank, a new-generation private-sector bank in India. The bank has a network
of branches and other offices across India in addition to two overseas representative
offices, one each in London and Dubai. It carries out commercial banking activities
spanning a full range of business segments including retail, non-resident Indians
(expatriates), wholesale, treasury, foreign exchange, commodities, capital markets, and
investment banking. The bank is recognized for its technology capabilities and is well
regarded for its commitment to quality customer service. IndusInd Bank recently won
two awards for being the most productive bank in India and for its outstanding
achievements in technology.

The Bank has a net worth of Rs 2165 crore as at March 31, 2010. Driven by advanced
technology, IndusInd Bank has taken steps to establish and upgrade its support

6
systems for the introduction of retail banking products and alternative delivery channels,
while continuing to expand its network of branches. The Bank posted a growth of 115%
in its Branch expansion wherein 70 additional branches were opened within a span of
fifteen months. As on date, the Bank has 246 outlets, including branches, extension
counters, offsite ATMs and Vehicle Finance Division. The Bank has recently carried out
a change in its corporate identity, unveiling a new corporate logo with bright colours –
reflecting the vibrancy of growth and its new retail focus.

In its decade-long existence, IndusInd Bank has displayed its commitment to global
benchmarks in retail banking and introduced novel products such as Indus International
Mahila Card and Indus Young Saver Scheme. The thrust is to cater to the needs of all
segments of society and of all age groups. The range of services recently introduced by
the Bank includes utility bill payments, mobile phone top-ups and overseas remittance
products. The Bank has a wide range of products to meet the requirements of all client
segments. Some of the products are unique in nature and designed by keeping the
service philosophy in mind ‘we care…Dil se’. The rank and file of Bank is geared to
delight the customer.

IndusInd Bank was one of the first banks to go live on the RTGS platform. The Bank’s
product on this platform is christened Indus AIM (Anywhere Instant Money).

The Bank has been given the highest P1+ ratings for its Fixed Deposits and Certificates
of Deposit by CRISIL. The Bank has also received the highest rating F1+ for its
Certificate of Deposits from Fitch Ratings India Private Limited. The Bank has also
become a clearing banker for NCDEX recently.

A NEW ERA

The merger with the Bank in June 2004 of Ashok Leyland Finance Ltd., among the
largest leasing finance and hire purchase companies in India, set in motion a process of
consolidation through the combined customer base of the merged entity and its
increased geographical penetration. IndusInd Bank has become one of the fastest-
growing banks in the Indian banking sector today with its branch network expanding
from 61 as on March 31, 2004 to 210 as on March 31, 2010 – reflecting an increase in
excess of 344% in 72 months. The Bank has approximately 497 ATMs of its own, and
has concluded multilateral arrangements with other banks with a total network of 21,000
ATM outlets. All the outlets of the Bank, including its branches and ATMs, are
connected via satellite to its central database that operates on the latest version of
IBM’s AS400-720 series hardware and Midas Kapiti (now, Misys) software.

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IndusInd Bank’s broad lines of business include Corporate Banking, Retail Banking,
Treasury and Foreign Exchange, Investment Banking, Capital Markets, Non-Resident
Indian (NRI) / High Networth Individual (HNI) Banking, and (through a subsidiary)
Information Technology.

Business Achievements at a Glance

2009-10

 Total business crossed Rs 47000 crores

 Net worth moved to Rs 2166 crores
 Net Profit up by 136% to Rs 350.31 crores
 Net Interest Income up by 93% to Rs 886.41 crores
 Core Fee Income up by 44% to Rs 432.27 crores
 Capital Adequacy Ratio ( Basel II) stood at 15.33%
 Return on Assets at 1.14% as against 0.58%
 Net NPA at 0.50 % as compared to 1.14% as on March 31, 2009
 The provision of Coverage Ratio against NPAs stood at 60% as against 29.76%
 Raised Maiden QIP issue for Rs 480 crores with an overwhelming response from
the investor community
 Network increased to 210 branches and 497ATMs spread over 168
geographical locations in 28 states and union territories across the country as
against 180 branches and 356 ATMs spread across 147 geographical locations
 Earning per Share ( Basic ) increased to Rs.9.01 from Rs 4.28
 Dividend declared 18% - up from 12%
 

8
 Achievements
 Received the prestigious ‘Technology Bank of the Year-2009’ award in the
private and foreign bank category from the Indian Banks’ Association (IBA).
 The State Forum of Bankers Clubs, Kerala, bestowed the “Excellence Award”, as
the second best new generation Bank in Kerala.
 Ranked No. 1 for “Credit Quality” amongst all banks in India by Financial Express
and Ernst & Young study.
Ratings

 Highest P1+ rating for its Fixed Deposits and Certificates of Deposit (up to 1 year
contracted maturity) by CRISIL
 Lower Tier II bonds have been rated “CARE AA-“ by CARE
 Bank’s Lower Tier II bonds ratings have been upgraded to "A+(ind)" and  Upper
Tier II bonds ratings upgraded to "A-(ind)" by Fitch Ratings
Rating of "LA+" to Lower Tier II bonds and “LA” to Upper Tier II bonds by ICRA

2008-09

 Total business crossed Rs. 37,800 crores 

 Net Profit up by 98%. to Rs. 148.34 crores
 Net Interest Income up by 53% to Rs. 459.03 crores
 Fee and Other Income up by 53% to Rs. 456.24 crores
 Net NPA at 1.14 % as compared to 2.27% as on March 31, 2008
 Net worth moved to Rs. 1429 crores
 Earning per share (Basic) increased to Rs 4.28 from Rs 2.35
 Capital Adequacy Ratio stood at 12.33 % as against the minimum regulatory
norm of 9%.
 Highest A1+ rating for its Certificates of Deposit by ICRA and the highest P1+
rating for its Fixed Deposits and Certificates of Deposit by CRISIL.
 Dividend declared 12% up from 6%. Bagged The Economic Times Acer Intel
Smart Workplace Award, in the Financial Services category.

Mandated as Settlement Banker for Tea auctions at Kolkata, Siliguri, Coonoor and
Guwati.

2007-08

 Business Turnover touched a figure of Rs 31833.16 crores

 Network of Branches increased to 180 along with 183 off-site ATMS, thus having
presence in over 147 geographical locations spread over 28 States including
Union Territories
 Highest A1+ rating for its Certificates of Deposits by ICRA and the highest P1+
rating for its FDs by CRISIL

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  A strategic tie-up with Religare Securities for offering a value-added 3-in-1
savings accounts-linked package to customers – comprising a savings bank
account, a depository account, and an Internet trading account
 Signed an agreement with National Multi Commodity Exchange Ltd. (NMCE) to
become their Clearing Bank; It already had such agreements with MCX and
NCDEX
 Strategic partnership with Cholamandalam MS for bancassurance
 Bestowed with the prestigious 'Corporate Excellence' award by Amity
International Business School during its 10th International Business Summit
(INBUSH) 2008. The award was presented by H.E. Mr. Salohoddin Nasriddinov,
Ambassador, Embassy of Tajikistan
 Received recognition in the form of a Certificate of Nomination for the Avaya
Global Connect Customer Responsiveness Awards. The participants for the
award were evaluated on various parameters such as Responsiveness,
Intelligence Generation, Intelligence Dissemination, Customer Education, Top
management Emphasis, Innovation and learning
 Received recognition by BSE and NASSCOM Foundation for the Best Corporate
Social Responsibility Practice Category

Featured in The Standard & Poor ESG India index which provided the investors with
exposure to liquid and tradable index of 50 of the best performing stocks in the Indian
market as measured by environmental, social, and governance(ESG) parameters

2006-07

 Net worth crossed a milestone figure of Rs. 1000 crores at Rs. 1056 crores
 Successful completion of GDR issue of Rs. 145.96 crores
 Business Trunover touched a figure of Rs 28.700 crores registering a growth of
18.14% over the previous year.
 Network of Branches increased to 170 along with 99 off-site ATMs, thus having
presence in over 141 geographical locations spread over 27 States including
Union Territories.
 Highest A1+ rating for its Certificates of Deposits by ICRA and Highest P1+
rating for its FDs by CRISIL.
 Bestowed with the prestigious IBA Award for technology implementation (STP).

Added a number of new business and product lines, viz the launch of Indus GOLD and
Indus Gift Card, E-Remittance facility, tie-up with number of Banks for ATM usage, tie-
up with Religare Securities to extend Portfolio Management services and
Bancassurance tie-up with Aviva Life Insurance

2005-06
  Ranked among the top ten banks in the country in the ET500 list of leading
companies in India.

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  Rated as “The best among the top 10 private-sector banks” in a survey
covering 79 banks conducted by Business Standard in its November 2005 issue.
Ranked sixth in the overall list, the Bank was also identified the “Most Efficient Bank”
among all banks in India.
 Bestowed “India’s Most Productive Bank” status by a Business Today-
KPMG Survey
 Presented “Outstanding Achiever of the Year 2005- Corporate” (Runner up-
Banking Technology Award) by IBA, Finacle (from Infosys) and TFCI (Trade Fair and
Conference International).
 Honoured with the “Award for Corporate Social Responsibility (CSR)” at the
India Brand Summit 2005, Mumbai.

2004-05
 Business Turnover crossed Rs. 22000 crores
 Network grew to 115 branches, 9 extension counters and 195 ATMs,
spread over 95 geographical locations.
 bestowed with highest ratings for deposits from reputed rating agencies
 Highest rating “P1+” - on Fixed Deposits from CRISIL
 Highest rating “P1+” - on Certificate of Deposits from CRISIL
 Highest rating “F1+” - on Certificate of Deposits from Fitch Ratings India
Pvt. Ltd.

2003-04
 Total business volume touches Rs. 19,000 crores.
 Completes 10 years of banking excellence.
 Ashok Leyland Finance merges with the Bank.
 The first Indian Commercial Bank to achieve certification for its “Entire
Network of Branches” under the ISO 9001:2000 Quality Management System.
 Launch of Debit Card- International Power Card.
 Bank’s first International Representative Office in Dubai.
 One of the first banks to go live on RTGS platform.

2002-03
 One of the first banks to implement the RBI- Electronic Funds Transfer
scheme.

2001-02
 Total business volume touches Rs. 14,000 crores. Highest productivity in
the Indian banking sector with Rs. 16 crores of business per employee.

2000-01
 Total business volume crosses Rs. 10,000 crores.

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1998-99
 IndusInd again rated as one of the Top Performing Banks in various survey
reports, for the second year in succession.

1997-98
 IndusInd rated as one of the Top Performing Banks in various survey
reports.

1996-97
 Pioneer in launching Internet Banking

1994-95
 IndusInd Bank comes into existence. Completes first profitable year of
operations.

Jodhpur branch at a Glance

Jodhpur branch is a retail banking branch having business of around rs.105 Crore
comprising of deposits amounting to rs. 7500 lacks and advances rs. 3000 lacks.

At Jodhpur branch various facilities are provided to its various clients via:-

Current and saving accounts

Deposits in Indian rupees as well as foreign currency

Personal loans, business loans, loan against shares-LIC policies

Cash credit limits

RTGS facilities

Selling insurance policies- life and non life

Selling of mutual fund

Selling of svarna mudra (gold coins)

Locker facilities

Depository services etc.

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The bank is run by professionals. The corporate office of Indusind Bank limited (IBL) is
in Mumbai in Maharashtra and registered office in Pune. It has 210 branches all over
the country.

Customer satisfaction is the main aim at IndusInd bank; bank provides personalized
services to client.

Introduction to E banking

This section of project covers following parts

1. What is E Banking
2. Technology in Banking & Role of RBI
3. Computerization in Public Sector Banks
4. History Of E-Banking In India
5. Indian E-Banking Scenario
6. Different levels of Internet in E-banking
7. E-Banking offerings of different Banks

What is E Banking

Electronic banking is an umbrella term for the process by which a customer may

perform banking transactions electronically without visiting a brick-and-mortar institution.

The following terms all refer to one form or another of electronic banking: personal
computer (PC) banking, Internet banking, virtual banking, online banking, home
banking, remote electronic banking, and phone banking. PC banking and Internet or
online banking is the most frequently used designations. It should be noted, however,
that the terms used to describe the various types of electronic banking are often used
interchangeably.

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Electronic banking is an activity that is not new to banks or their customers. Banks
having been providing their services to customers electronically for years through
software programs. These software programs allowed the user’s personal computer to
dial up the bank directly. In the past however, banks have been very reluctant to provide
their customers with banking via the Internet due to security concerns.

Today, banks seem to be jumping on the bandwagon of Internet banking. Why is there
a sudden increase of bank interests in the Internet? The first major reason is because of
the improved security and encryption methods developed on the Internet. The second
reason is that banks did not want to lose a potential market share to banks that were
quick to offer their services on the Internet.

Many of the banks like ICICI, HDFC, IndusInd, IDBI, Citibank,Global Trust Bank (GTB),
Bank of Punjab and UTI were offering E-banking services. Based on the above statistics
and the analysts’ comments that India had a high growth potential for e-banking the
players focused on increasing and improving their E-Banking services. As a part of this,
the banks began to collaborate with functions online.

Technology in Banking & Role of RBI

The introduction of new technologies has radically transformed banking transactions. In

the past, customers had to come physically into the bank branch to do banking
transactions including transfers, deposits and withdrawals. Banks had to employ several
tellers to physically make all those transactions. Automatic Teller Machines (ATMs)
were then introduced which allowed people to do their banking on their own, practically
anytime and anywhere. This helped the banks cut down on the number of tellers and
focus on managing money. The Internet then brought another venue with which
customers could do banking, reducing the need for ATMs. Online banking allowed
customers to do financial transactions from their PCs at home via Internet. Now, with
the emergence of Wireless Application Protocol (WAP) technology, banks can use the
infrastructure and applications developed for the Internet and move it to mobile phones.
Now people no longer have to be tied to a desktop PC to do their banking. The WAP
interface is much faster and convenient than the Internet, allowing customers to see
account details, transaction details, make bill payments, and even check credit card
balance.

The cost of the average payment transaction on the Internet is minimum. Several
studies found that the estimated transaction cost through mobile phone is16 cents, a
fully computerized bank using its own software is 26 cents, a telephone bank is 54
cents, a bank branch, $1.27, an ATM, 27 cents, and on the Internet it costs just 13
cents. As a result, the use of the Internet for commercial transactions started to gain

14
momentum in 1995. More than 2,000 banks in the world now have transactional
websites and the growth of online lending solutions is making them more cost efficient.
Recent developments are now encouraging banks to target small businesses as a
separate lending category online.

Banks are increasingly building payment infrastructure with various security

mechanisms (SSL, SET) because there is tremendous potential for profit, as more and
more payments will pass through the Internet. However, the challenge for banks is to
offer a payments back-bone system that will be open enough to support multiple
payment instruments

(credit cards, debit cards, direct debit to accounts, e-checks, digital money etc.) and
scalable enough to allow for a stable service regardless of the workload.

The market for Electronic Bill Presentment and Payment (EBPP) is growing. According
to a study, 18 million households in the US are expected to pay their bills online by 2003
compared to 2 million households in 2001. As more number of bill payers are getting
online, several banks are making efforts to find ways to meet the growing needs of
EBPP. Established banks can emerge as key online integrators of customer bills and
can capitalize on this high potential market. Growing with the popularity of EBPP is also
the paying of multiple bills at a single site known as bill aggregation. Offering online bill
payment and aggregation will increase the competitiveness and attractiveness of e-
banking services and will allow banks to generate service-fee income from the billers.

In the B2B segment, the customer value proposition for online bill payment is more
compelling. B2B e-commerce is expected to grow from $406 bn in 2000 to $2.7 tn by
2004, and more than half of all transactions will be routed through online B2B
marketplaces. There is a need for automated payment systems to reduce cost and
human error, and enhance cash-flow management. To meet this need, a group of banks
and non- financial institutions led by Citibank and Wells Fargo have formed a company
called FinancialSettlementsMatrix (FSMx). It provides business buyers and sellers with
access to secure payment processing, invoicing and other services that participating
financial services firms offer.

A B2B marketplace would provide minimum value to its customers if it just matches
buyers and sellers, leaving the financial aspects of transactions to be handled through
traditional non-Internet channels. Hence, the marketplace must be capable of providing
the payments processing, treasury management services, payables/receivables data
flows, and credit solutions to complete the full cycle of a commercial transaction on the
Internet. The web-based B2B e-commerce offers tremendous opportunities for banks,
payment technology vendors and e-commerce companies to form strategic alliances.

15
This new form of collaboration between partners with complementary core
competencies may prove to be an effective business model for e-business.

We have been witnessing since about the early Eighties the phenomenon of
widespread use of computers and communication technology in the industrial, as well
as emerging market economies. This has resulted in faster funds movement across
nations and borders. Globalisation of economies and financial liberalisation within the
economies have opened new opportunities of growth for techno-savvy institutions, while
for the others these have resulted in shrinkage of revenues. The use of IT in the
banking industry in our country has however been somewhat limited and has, as a
result, restricted our presence in international operations. Even in critical spheres such
as those involving funds transfer, and MIS based decision making, there has been little
evidence of proactive movement towards wholesale computerisation upnto the middle
of the Nineties

Howver Indian Banks have come to start this process after a decade or so. It is only
with the growing recognition of the need for having in place financial reforms, has the
interest in IT application in the banking sector in India increased. But though the
process started late, computerising the vast net work of branches of several banks is
planned and being executed methodically and the benefit is expected to be fully
perceived by the year 2010.

The RBI Report on Banking published on 15.11.2001 starts with the opening narration-

"In recent years, the banking industry has been undergoing rapid changes, reflecting a
number of underlying developments. The most significant has been advances in
communication and information technology, which have accelerated and broadened the
dissemination of financial information while lowering the costs of many financial
activities. A second key impetus for change has been the increasing competition among
a broad range of domestic and foreign institutions in providing banking and related
financial services. Third, financial activity has become larger relative to overall economic
activity in most economies. This has meant that any disruption of the financial markets
or financial infrastructure has broader economic ramifications than might have been the
case previously".

The report gives a brief summary of the progress made in the usage of information
technology and networking of different branches and different banks.

The text of the report dealing with Technology in Banking is reproduced as under-

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Payment and Settlement Systems

As part of restructuring of the banking sector, special emphasis has been accorded to
improvements in payment and settlement systems. Prominent among the measures
initiated in these areas include introduction of Electronic Funds Transfer (EFT), Real
Time Gross Settlement System (RTGS), Centralised Funds Management System
(CFMS), the NDS and the Structured Financial Messaging Solution (SFMS). The SFMS
would be the backbone for all message-based communication over the Indian Financial
Network (INFINET)

Electronic Funds Transfer (EFT)

The EFT scheme enables transfer of funds within and across cities and between
branches of a bank and across banks. The scheme, which is operated by the Reserve
Bank is available for funds transfer across thirteen major cities in the country, as on
September 30, 2001. The facility is being extended to two more centres. The scheme
was originally intended for small value transactions. However, with effect from October
1, 2001, even large value transactions (as high as Rs. 2 crore) have also been
permitted.

Real Time Gross Settlement System (RTGS)

The work on operationalisation of RTGS system continued during the year. The major
project components completed during the year included the finalisation of the design for
RTGS system, issue of the tender for the development of the software, evaluation of the
technical components of the bids received, site visits and evaluation of the commercial
proposals. The implementation of RTGS is targeted to be accomplished within 12 to 15
months of award of the contract for software development and implementation.

Centralised Funds Management System (CFMS)

The CFMS would enable the funds and treasury managers of commercial banks to
obtain the consolidated account-wise, centre-wise position of their balances with all the
17 Deposit Accounts Departments (DAD) of the Reserve Bank. The system has been
tested prior to installation and phase-wise implementation commenced from November
2001. The CFMS would enable better funds management by constituent current
account holders of the Reserve Bank .

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Structured Financial Messaging Solution (SFMS)

At the base of all inter-bank message transfers using the INFINET is the SFMS. SFMS
would serve as a safe, secure communication carrier built with templates for
transmission of intra and inter-bank messages in fixed message formats, which would
facilitate "Straight Through Processing". SFMS comprises the central server in the form
of a hub located at the Institute for Development and Research in Banking Technology
(IDRBT), Hyderabad and individual bank gateways to which the branches of the banks
would be connected with a provision for banks to have multiple bank level gateways.
The SFMS would provide for all inter-bank transactions to be stored and switched at the
central hub, while intra-bank messages will be switched and stored by the bank
gateway. Adequate security in the form of smart card authentication apart from the
Public Key Infrastructure (PKI) would be an integral part of the SFMS. All these would
result in the security levels matching those of international standards.

Working Group on Improvements in Monitoring Clearing Systems

Following the recent developments in the banking sector, a Working Group on

'Improvements in Monitoring of Clearing Systems' was constituted by the Reserve Bank
to examine the major issues pertaining to management and operation of the Clearing
Houses and make necessary recommendations. The Group submitted the Report in
May 2001. The recommendations of the Group were discussed with a select group of
bankers and regulators. Based on these discussions, a roadmap has been drawn for
implementation of these recommendations which fall under the following

Major areas of control / monitoring viz.

a. Monitoring presentations by banks;

b. monitoring
b. Returns by banks;
c. accounting of the clearing settlements;

d. formation of an Internal Group at each Regional Office of the Reserve Bank to

review the trends reported by the clearing house and plan follow up action as deemed
necessary;

e. formation of a central monitoring cell to monitor the trends on a national basis

and provide warning signals wherever necessary; and

18
f. implementation of MIS to serve as early warning signals for better surveillance

over the activities of the clearing member banks.

The recommendations which could be implemented immediately are being taken up

with the four major metropolitan clearing houses managed by the Reserve Bank. Action
on implementing these at the clearing houses managed by State Bank of India / other
banks would also be taken up concurrently.

Imaging of Instruments

A process of capturing the images of the instruments as they are being processed was
introduced during the year at the four metropolitan National Clearing Cells managed by
the Reserve Bank. Imaging facilitates in quicker balancing during the cheque-
processing cycle and also in reducing clearing reconciliation differences.

Electronic Clearing Services

Emphasis on widespread usage of Electronic Clearing Service (ECS) is being
prescribed by the Reserve Bank to encourage non-paper based funds movement. The
prime thrust areas forming part of this vital activity include the extension of ECS to more
centres, inclusion of more customers under the ambit of the scheme and provision of a
centralised facility for affording payments.

Indian Financial Network (INFINET)

The INFINET has been operational for almost two years. Started as a closed user group
communication network for the banking sector in India, the members of this network are
the public sector banks. During the year 2000-01, the membership was opened up for
other banks and financial institutions that need to communicate with one another.

Computerisation in Public Sector Banks

The progress in implementation of the directive of the Central Vigilance Commission

(CVC) on the need to computerise 70 per cent of the banking business by public sector
banks before January 1, 2001 revealed that as on December 31, 2000, 13 banks had
achieved the desired level. Figures as at end of March 2001, indicated that 23 banks
have achieved the target, while two banks have computerisation levels ranging between
60 per cent and 70 per cent and two others were at a level below 60 per cent.

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Cheque Clearing

Magnetic Ink Character Recognition (MICR) based cheque-clearing accounts for about
65 per cent of the value of cheques processed in the country. In addition, Magnetic
Media Based Clearing Systems account for about 10 per cent of the remaining value
while claim-based processes cover the rest of clearing. It may be pertinent to note that
growth in cheque volumes has decelerated to 10 per cent in 2000-01 from 12 per cent
during the previous year. This is reflective of general trends the world over, indicating
the migration towards electronic funds transfer mechanisms.

Why is there a sudden increase of bank interests in the Internet?

The first major reason is because of the improved security and encryption methods
developed on the Internet. The second reason is that banks did not want to lose a
potential market share to banks that were quick to offer their services on the Internet.

History of E- banking In India

The E-banking was firstly introduced in India by the ICICI around 1996. There after
many other banks like HDFC, IndusInd bank, IDBI, Citibank Trust Banks, UTI, etc.
followed the service. As today private and foreign bank had started capturing the market
through e-banking hence “the competition is heating up and the lack of technology can
make a bank loose a customer” so now the public banks are breaking the shackles of
traditional set-up and gearing up to face the

competition posed by the private sector counterparts.

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Your cash or cheques can be deposited into your account and the ATM will immediately
print a receipt for the same.

Indian E-banking Scenario

25
As per the international report the banking transactions on a brick and mortar banking
costs around $ 1.1. While through ATM it costs around $ 0.27 and just 1 percent of over
the counter banking in case of Internet banking. Statistics such as these have woken
the Indian Banking Industry. Thus, the Indian banking system is seeing a fabulous
change in the quality of service provided by them. Technology is the root of this change,
which is implemented by the banks’ to win more business from customers.

Almost all the private sector banks are moving towards e-enabling their existing
products. HDFC Bank and ICICI Bank have taken a lead in introducing e-banking in
India.

Internet banking starts from migrating existing products to the net. This started initially
with simple functions such as getting information about interest rates, checking account
balances and computing loan eligibility. Then the services were extended to online bill
payment, transfer of funds between accounts and cash management services for
corporates. Recently, banks started setting up payment gateways for B2B and B2C
transactions. This is to facilitate payment for e-commerce transactions by directly
debiting bank accounts or through credit cards. Banks can earn a commission based
income, on the transaction or sale value resulting in higher other income. This could be
more than the revenues they can generate from credit card transactions.

Private sector banks have leveraged the Internet effectively in taking away the
customers from public sector banks and significantly increased their revenue potential.
Internet banking is just one manifestation of these banks’ technological capabilities.
They have a complete automation, an electronic customer database, real time
transaction processing capabilities and the latest technological platforms. Management
of these banks is very focused in using technology as a key competitive tool. The
capability of the management is also visible in terms of their profitability. Among the
private sector banks HDFC Bank and ICICI Bank have excellent returns on equity
compared to their peers in the industry.

These banks commenced operations few years and have negligible excess in terms of
branches and employees. Therefore unlike most other banks around the world, e-
banking is not an added cost for them. In fact it is expected to contribute significantly to
their revenues and profits in years to come. The distribution of banking business in India
is highly skewed both geographically and in terms of customer segment. Geographically
the top 100 centres account for around 70 percent of the loans disbursed. This are
expected to account for mostly early Internet users. In terms of customer segment, key
focus on the asset side is the corporate sector. This segment accounts for a high share

26
of profits of banks and is likely to be an early adapter to the Internet. On the liability side
Internet banking is expected to boost customer acquisition and profitability significantly
in the top corporate segment and in the urban high/middle income retail segments.

Apart from e-banking, future prospects of e-commerce is also strong as it is set for
explosive growth rates. According to the NASSCOM’s survey, e-business transactions
in India are expected to reach to Rs 12 billion by 2000-01 from Rs 4.5 billion in the
previous year. For e-commerce to take off there is a need for real time financial
intermediation and there are very few banks offering this in India. The right combination
of customer relationship and technological competency is required to dominate the
financial intermediation of e-commerce. Who else than private sector banks can provide
such services? They are all set to lead the segment with a marginal competition from

foreign banks. Going forward, as the share of e-commerce in the economy increases,
these banks should be able to move up their market share apart from generating higher
fee based income.

But one does wonder what difference e-banking make with only 22 percent of the
Internet uses globally utilizing e-banking services. In India also the penetration is less
than 1 percent. It is not all win-win case for Internet banking in India. A number of
uncertainties surround e-banking and e-commerce ventures. Among the others, hurdles
like low Internet penetration, security issues, tax considerations and credit issues
continue to depress the growth of the segment. Even if the government has passed the
cyber laws, still there is a lack of clarity about legislative aspects governing the sector
and the effectiveness of the administration to track & punish cyber crimes. It all depends
on the ability of banks to enter these businesses successfully.

Those banks which have already started e-banking will have to continuously update
their services to retain the potential customers since any customer is just a click away
from a competitor elsewhere. Also, one cannot afford to depend only on Internet
banking; brick and mortar will continue to play an important role. For those, which are
yet to begin, are ignoring the potential customers by remaining away from the latest
technology.

In the above background Reserve Bank of India constituted a Working Group to and
operational standards keeping in view the international best practices. The Group
examine different issues relating to E-banking and recommend technology, security,
legal standards is headed by the Chief General Manager–in–Charge of the Department
of Information Technology and comprised experts from the fields of banking regulation
and supervision, commercial banking, law and technology. The Bank also constituted

27
an Operational Group under its Executive Director comprising officers from different
disciplines in the bank, who would guide implementation of the recommendations.

The Working Group, as its terms of reference, was to examine different aspects of
Internet banking from regulatory and supervisory perspective and recommend
appropriate standards for adoption in India, particularly with reference to the following:

1. Risks to the organization and banking system, associated with Internet banking and
methods of adopting International best practices for managing such risks.

2. Identifying gaps in supervisory and legal framework with reference to the existing
banking and financial regulations, IT regulations, tax laws, depositor protection,
consumer protection, criminal laws, money laundering and other cross border issues
and suggesting improvements in them.

3. Identifying international best practices on operational and internal control issues, and
suggesting suitable ways for adopting the same in India.

4. Recommending minimum technology and security standards, in conformity with

international standards and addressing issues like system vulnerability, digital
signature ,information system audit etc.

5. Clearing and settlement arrangement for electronic banking and electronic money
transfer; linkages between i-banking and e-commerce

6. Any other matter, which the Working Group may think as of relevance to Internet
banking in India

The first meeting of the Working Group was held on July 19, 2000. The Group held that
E-banking did not mean any basic change in the nature of banking and the associated
risks and returns. All the same, being a public domain and a highly cost effective
delivery channel, it does impact both the dimension and magnitude of traditional
banking risks. In fact, it adds new kinds of risk to banking. Some of the concerns of the
Regulatory Authority in E-banking relate to technology standards including the level of
security and uncertainties of legal jurisdiction etc. Its cost effective character provides
opportunities for efficient delivery of banking services and higher profitability and a
threat to those who fail to harness it.

The Group decided to focus on above three major areas, where supervisory attention
was needed. Accordingly, three sub-groups were formed for looking into three specific
areas

i. technology and security aspects,

ii. legal aspects and

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iii. regulatory and supervisory issues.

The Working Group had a number of deliberations. The views of the Group were

crystallized in its report, which cover the following by way of its contents:

i. The basic structure of Internet and its characteristics

ii. International experience in E-banking, particularly with reference to USA, United

Kingdom and other Scandinavian countries, who are pioneers in this form of banking.

iii. The Indian Scenario with reference to E-Banking.

iv. different types of risks associated with banking in general and E-banking in
particular. Emphasis is given on normal risks associated with banking which gets
accentuated when the services are delivered through Internet. Risks relating to money
laundering and other cross border transactions are discussed .

v. Technology and security standards are discussed with emphasis onpolicy issues
rather than on products and technical tools.

vi. The legal environment in which E-banking transactions are carried out is an
important regulatory concern. The group has identified gaps in the existing framework
and has suggesed changes required.

vii. Operational aspects like internal control, early detection system, IT audit, technical
manpower, etc are also discussed along with addressing the impact of E- banking on
clearing and settlement arrangements.

viii. The specific recommendations of the group were given at the end of the report.

The report is thus a comprehensive document to covering all aspects/considerations

that should govern successful delivery of banking services through Internet. The broad
sub missons on the working group on the above listed items and its recommendations
are given in the following articles.

Different Levels at Which Internet could be Used in Banking Services

Broadly, the levels of banking services offered through INTERNET can be categorized
in to three types:

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i. The Basic Level Service is the banks’ websites which disseminate information on
different products and services offered to customers and members of public in general.
It may receive and reply to customers’ queries through e-mail

ii. In the next level are Simple Transactional Websites which allow customers to submit
their instructions, applications for different services, queries on their account balances,
etc, but do not permit any fund-based transactions on their accounts,

iii. The third level of Internet banking services are offered by Fully Transactional
Websites which allow the customers to operate on their accounts for transfer of funds,
payment of different bills, subscribing to other products of the bank and to transact
purchase and sale of securities, etc. The above forms of Internet banking services are
offered by traditional banks, as an additional method of serving the customer or by new
banks, who deliver banking services primarily through Internet or other electronic
delivery channels as the value added services. Some of these banks are known as
‘virtual’ banks or ‘Internet-only’ banks and may not have any physical presence in a
country despite offering different banking services

From the perspective of banking products and services being offered through
Internet
Internet banking is nothing more than traditional banking services delivered through an
electronic communication backbone, viz, Internet. But, in the process it has thrown open
issues which have ramifications beyond what a new delivery channel would normally
envisage and, hence, has compelled regulators world over to take note of this emerging
channel. Some of the distinctive features of E-Banking are:

It removes the traditional geographical barriers as it could reach out to customers of

different countries / legal jurisdiction. This has raised the question of jurisdiction of law /
supervisory system to which such transactions should be subjected,

• It has added a new dimension to different kinds of risks traditionally associated with
banking, heightening some of them and throwing new risk control challenges,

• Security of banking transactions, validity of electronic contract, customers’ privacy,

etc., which have all along been concerns of both bankers and supervisors have
assumed different dimensions given that Internet is a public domain, not subject to
control by any single authority or group of users

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• It poses a strategic risk of loss of business to those banks who do not respond in time,
to this new technology, being the efficient and cost effective delivery mechanism of
banking services

E Banking Offerings Of Different Bank

IndusInd Bank

 See up-to-date account information

 View transaction details

 View account statement for up to 12 months

 Order demand drafts to couriered free to over 200 locations

 Order a cheque book

 stop payments

 Request a deposit

 Pay utility bills

 E-mail queries

 RTGS Facility

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ICICI Bank

 Account information – summary of account and transactions

 Bills payment

 Funds Transfer including third-party transfers

 Requests for cheque books, stop payment, account opening,

 Reporting loss of ATMs card

 Online e-shopping payments

 Communication with Account Manager

HDFC Bank

 Real-time account information in .transactions

 Transfer money between accounts

 Bill payment facility

 Third party funds transfer–with in HDFC bank

 Request for Draft/Banker Cheque

 Stop payment requests

 Opening fixed-deposit accounts

 Sending messages to the bank via e-mail

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VARIOUS TYPES OF E-BANKING

This section of project covers following parts

2. Mediums of E-banking
1. Internet Banking

2. ATM

3. Phone Banking

4. Mobile banking

5. Payment Cards

2. E-Age Advantages

Mediums of E-banking

(Various products and services )

Electronic banking, also known electronic fund transfer (EFT), uses computer and
electronic technology as a substitute for checks and other paper transactions. EFTs are
initiated through devices like cards or codes that let you, or those you authorize, access
your account. Many financial institutions use ATM or debit cards and Personal
Identification Numbers (PINs) for this purpose. Some use other forms of debit cards and
personal Identification Numbers (PINs) for this purpose. Some use other forms of debit
cards such as those that require, at the most, your signature or a scan.

Following are the electronic medium by which services are generally provided by the
banks as a part of e-banking services.

1) Internet Banking

2) ATM (Automatic Teller Machine)

3) Phone Banking

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4) Mobile Banking

5) Payment Cards (Debits/Credit Card)

All the above mediums provide services, which can be, also know as “any time any
where banking”. This facilitates the customer of the bank to operate their account from
any corner of the world, without visiting local or any subsidiary branch of their banks.
Efforts are made by the bank not only to provide the facility to the customer, but also to
reduce the operational cost of the bank by providing e-banking services. So with this,
banks have to employ less staff and still would be able to deliver service to the
customer, round the corner.

Internet Banking

Net banking is a web-based service that enables the banks authorized customers to
access their account information. It allows the customers to log on to the banks website
with the help of bank’s issued identification and personal identification number (PIN).
The banking system verifies the user and provides access to the requested services,
the rage of products and service offered by each bank on the internet differs widely in
there content. Most banks offer net banking as a value-added service. Net banking has
also led to the emergent of new banks, which operate only through the internet and do
not exists physically, Such banks are called “virtual” banks or “Internet Only” banks.

A couple of years ago, there was a belief even among bankers that customers opening
new accounts wanted the online banking facility, just to ‘feel good’ and very few of them
actually used that services. Today, bankers believe that the trend from ‘nice to have’ is
changing to ‘need to have’ .after all it depends on how busy a person is.

Services provided through Internet Banking

1) Account information

2)E-cheques (Online Fund Transfer)

3)Bill Payment Service
4)Requests And Intimations
5) Demat Account share trading

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Account information

Provides summary of all bank accounts . Allow transaction tracking which enables
retrieval of transaction details based on cheque number, transaction amount, and date.
Provide account statement and transaction reports used on user-defined criteria.
Customers can even download and print the statement of accounts.

E-Cheques ( Online Fund Transfer)

Customer can transfer funds:

Transfer funds between accounts, even if they are in different branches’ cities Customer
can also transfer funds to any person having an account with the same bank anytime,
anywhere, using third party funds transfer option.

Bill Payment Service

Banks Bill Pa is the easiest way to manage bills. A/c holder can pay their regular
monthly bills i.e. telephone, electricity, mobile phone, insurance etc. at anytime,
anywhere for free.

Saves time and effort. Make bill payments at customer’s convenience form their home
or office.

Lets a/c holders check their hill amount before it is debited form their account. No debits
to account without their knowledge.
No more missed deadlines, no more loss of interest – a/c holder can schedule their bills
in advance, avoid missing the bill deadlines as well as earn extra interest on their
money.

Track payment history – all payments to a biller are stored automatically for future
reference.

No queuing up at collection centers or writing cheque any more! Just a few clicks and
customers account will be debited for the exact amount they ask.

Requests And Intimations Can electronically submit a request for:

Cheque-book
Stoppayment instructions
Opening a fixed deposit
Opening a recurring deposit
Intimate for the loss of ATM card

35
Register online for phone and mobile banking
Cheque status
Online application for debit card

Issue a DD or a Banker’s cheque form account at special rates. Just select the account
to be debited form and give details of the amount, location and beneficiary. The demand
draft will be couriered to a/c holder at their mailing address.

Customers can get their applications for issuance of Letters of Credit and Bank
Guarantees processed online
Book your Railways Ticket Online

Demat Account and Share Trading

Demat Account

Demat is commonly used abbreviation of ‘Dematerialisation’, which is a process where

by securities like share, debentures are converted from the ‘material’ (paper documents)
unto electronic data and stored in the computer of an electronic Depository.

A depository is a security ‘banks,’ where dematerialized physical securities are held in

custody, and form where they can be traded. This facilitates faster, risk-free and low
cost settlement.

Share Trading

In share trading a customer can buy and sell securities online without stepping into a

broker’s office. Once the share are dematerialized then the trading can be done from

home or office. As demat a/c are directly linked to the customer’s bank a/c, so there is
no need to write cheque for the payments or to fill up the slips to deposit the cheque.
Amount for the purchase and sale of securities is automatically debited or credited to
their bank a/c. it also brings the same convenience while investing in Mutual funds also
Hassle free and Paperless

ATM

Automated Teller Machines or 24-hour Tellers are electronic terminals that let you bank
almost anytime. To withdraw cash, make deposits, or transfer funds between accounts,
you generally insert an ATM card and enter your PIN. Some financial institution and
ATM owners charge a fee, particularly to consumers who don’t have accounts with them

36
or on transactions at remote locations. Generally, ATMs must tell you they charge a fee
and its amount on or at the terminal screen before you complete the transaction. Check
the rules of our institution and ATMs you use to find out when or whether a fee is
charged.

It won’t be just if I start explaining what an ATM is. ATMs and cash dispensers are by
far the largest investment ever made in electronic self-service by financial institutions.
Over US$ 40 billion has been invested in simply buying these machines and many
times that in running them. There are now over 1.1 million machines operating in over
140 countries worldwide.

The banks are losing the cashiers checks, check cashing and even cash dispensing to
the c-stores and grocery stores. They are asleep at the switch and watching more
transactions walk away to convenience stores and supermarkets that provide 24 hour
access and integrated transactions.

ATMs do provide a larger set of functions, such as check cashing, ticket sales or money
orders. We already know that cash dispensing as a dedicated function is a sustainable
applications, the question is whether that application can be incorporated successfully
into a more complex consumer product that offers multiple applications.

It is worth noting that, due to market saturation, overall ATM usage is increasing while
transaction volume on a per-ATM basis is now in decline.

Cash withdrawal: Withdraw upto Rs.25,000/- per day from your account.

Fast cash options provides the facility of withdrawing prefixed amounts.

Ultra Fast Cash option allows you to withdraw Rs.3000/- in one shot

Balance Enquiry: Know your ledger balance and available balance

Mini Statement: Get a printout of your last 8 transactions and your current balance.

Deposit Cash / Cheques : available at all full function ATMs. Customers can deposit

37
both cash and cheques. / Cash deposited in ATMs will be credited to the account on the
same day (provided cash is deposited before the clearing) and cheques are sent for
clearing on the next working day.

Funds Transfer: Transfer funds from one account to another linked account in the same
branch.

PIN Changes: Change the Personal Identification Number (PIN) of ATM or Debit card.

Payments: The latest feature of our ATMs, this functionality can be used for payment of
bills, making donations to temples / trusts, buying internet packs, airtime recharges for
prepaid mobile phones and much more…

Others: Request for a checkbook from our ATMs and our concerned branch will

dispatch it such that it reaches you within 10 working days.

ATM Advantages

 24-hour access to cash

You can withdraw up to Rs. 1,00,000/- per day on your ATM Card. The fast cash

option saves your time by providing the cash in denominations of Rs. 500/-

 Balance inquiry

Your updated balance will appear on the screen and will also be printed on the

transaction slip.

 Mini-statement request

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

with your balance.

 Cheque book request

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Send us a request for a cheque book or account statement it will arrive at your

doorstep.

 Funds transfer

Transfer money from one of your accounts to another. It’s easy, select the acoount from
which you want to transfer, then indicate the amount and the accont to which your want
it transferred. Both accounts must be linked to your ATM card and customer ID. A
maximum of 5 saving and 5 Current accounts can be linked.

 PIN change

Your can conveniently charge your (PIN) given at the time of opening your account)
whenever you wish. Stay totally in control and ensure complete security for your ATM
Card.

 Bill Pay

Pay your cellular, telephone and electricity bills using your ATM Card.

 Anytime cash deposits

Your cash or cheques can be deposited into your account and the ATM will

immediately print a receipt for the same.

Phone Banking

Now your bank account is now just a phone call away. Through Phone Banking you

can: Check your account balance.

 Checkthelast5transactionsinyouraccount.

 Enquire on the cheque status.

 Have a mini statement faxed across to you.

 Request for a cheque book/Account statement.

 Enquire on your Fixed deposits/TDS.

39
 Open a fixed deposit

 Request for Demand Draft / Managers Cheques.

 Transfer funds amongst your linked accounts

 Pay utility and HDFC Bank Credit Card bills.

 Do a stop cheque payments.

 Report loss of your ATM /Debit Card.

 Product information.

 Enquire on the interest / Exchange rates.

E-age Advantages

 Security

When you use the Phone Banking facilities, your transactions are completely secure.
When you open an account with us, you are given a unique Telephone Identification
Number (TIN), which is completely confidential.

 Choose your language

You can choose between English and Hindi for guidance through the Interactive

Voice Response (IVR) menu of services, at the time of calling the bank.

 Account derails/balance enquiry

Get up-to-the-second details of your Savings or Current Accounts and your fixed
Deposits. Get details of the last five transactions (on the IVR), which would be read out

40
to you at the touch of a button,. What’s more, you can even have a mini account
statement of the last 9 transactions faxed to you.

 Cheque book / account statement requests

Register a request for statement of accounts for the current period through the IVR

and the same will be mailed to you on the next working day.

 Stop payment requests

Stop payment of a cheque, 24 hours a day. You have the facility to stop a single

cheque or a series of cheques.

 Fixed Deposits

You can easily open a Fixed Deposit over the phone, by simply authorizing a transfer of
funds from your savings Account. The deposits can be opened in the names of the
account holders in the funding account. You may also book the Fixed Deposit in your
name alone in the funding account. You may also book the Fixed Deposit in your name
alone and maintain a sweep-in facility. You can also enquire about the details of your
Fixed Deposit, or tax deducted at Source, if any, using the Phone Banking service.

This facility is available only during Phone Banking hours.

 Reporting of lost ATM / Debit Card

If you happen to lose your ATM/Debit card, call your local Phone banking number

right away. This facility is available 24 hours a day, 7 days a week.

 Demand Drafts

You can now place a request for a Demand Draft or Manager’s Cheque worth up to Rs.
50,000/- per customer ID per day, on the phone. For HDFC Banked Preferred clients
the limit is Rs. 100,000/- per day. The draft or cheque will be sent to the address on our
records by courier on the next working day.

 Fund transfers

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If you hold multiple accounts with us, all you have to do is call in to transfer funds
between accounts, provided the same are linked to the same Cost ID number. There is
no fund transfer limit.

 Talk to a Phone Banker

You can talk to a phone Banker for all the financial transactions and for any other

account related details over the phone.

DEVELOPMENT OF E-BANKING

(TYPES AND TECHNICAL COMPONENTS)

This section of project covers following parts

1. Types of Web Sites

2. E-Banking Components

3. E-Banking Support Services

1. Web Linking

2. Account Aggregation

3. Electronic Authentication

Types Of Websites

Informational website:

Informational websites provide customers access to general information about the

financial institution and its products or services. Risk issues examiners should consider
when reviewing informational websites include

 .. Potential liability and consumer violations for inaccurate or incomplete

information about products, services, and pricing presented on the

42
 .. Potential access to confidential financial institution or customer information if the
website is not properly isolated from the financial institution’s internal

network;

 .. Potential liability for spreading viruses and other malicious code to computers
communicating with the institution’s website; and

 .. Negative public perception if the institution’s on-line services are disrupted or if

its website is defaced or otherwise presents inappropriate or offensive material.

Translational Website

Transactional websites provide customers with the ability to conduct transactions

through the financial institution’s website by initiating banking transactions or buying
products and services. Banking transactions can range from something as basic as a
retail account balance inquiry to a large business-to-business funds transfer. E-banking
services, like those delivered through other delivery channels, are typically classified
based on the type of customer they support..

Since transactional websites typically enable the electronic exchange of confidential

customer information and the transfer of funds, services provided through these
websites expose a financial institution to higher risk than basic informational websites.
Wholesale e-banking systems typically expose financial institutions to the highest risk
per transaction, since commercial transactions usually involve larger dollar amounts. In
addition to the risk issues associated with informational websites, examiners reviewing
transactional e-banking services should consider the following issues:

 .. Security controls for safeguarding customer information;

 .. Authentication processes necessary to initially verify the identity of new

customers and authenticate existing customers who access e-banking services;

 .. Liability for unauthorized transactions;

43
 .. Losses from fraud if the institution fails to verify the identity of individuals or

businesses applying for new accounts or credit on-line;

 .. Possible violations of laws or regulations pertaining to consumer privacy, anti-

money laundering, anti-terrorism, or the content, timing, or delivery of required
consumer disclosures; and

 .. Negative public perception, customer dissatisfaction, and potential liability

resulting from failure to process third-party payments as directed or within specified time
frames, lack of availability of on-line services, or unauthorized access to confidential
customer information during transmission or storage.

E-Banking components

E-banking systems can vary significantly in their configuration depending on a number

of factors. Organisations should choose their e-banking system configuration, including
outsourcing relationships, based on four factors:

 .. Strategic objectives for e-banking;

 .. Scope, scale, and complexity of equipment, systems, and activities;

 .. Technology expertise; and

 .. Security and internal control requirements.

Organisations may choose to support their e-banking services internally. Alternatively,

Banks can outsource any aspect of their e-banking systems to third parties. The
following entities could provide or host (i.e., allow applications to reside on their servers)
e banking-related services for Organisations:

 ..Another financial institution,

 ..Internet service provider,

 ..Internet banking software vendor or processor,

44
 .. Core banking vendor or processor,

 .. Managed security service provider.

 .. Bill payment provider,

 .. Credit bureau, and

 .. Credit scoring company

E-banking systems rely on a number of common components or processes. The

following list includes many of the potential components and processes seen in a typical
Organisations:

 .. Website design and hosting,

 .. Firewall configuration and management,
 .. Intrusion detection system or IDS (network and host-based),
 .. Network administration,
 .. Security management,
 .. Internet banking server,
 .. E-commerce applications (e.g., bill payment, lending, brokerage),
 .. Internal network servers,
 .. Core processing system,
 .. Programming support, and
 .. Automated decision support systems.

These components work together to deliver e-banking services. Each component

represents a control point to consider.

Through a combination of internal and outsourced solutions, management has many

alternatives when determining the overall system configuration for the various
components of an e-banking system. However, for the sake of simplicity, this booklet
presents only two basic variations. First, one or more technology service providers can
host the e-banking application and numerous network components as illustrated in the

45
following diagram. In this configuration, the institution’s service provider hosts the
institution’s website, Internet banking server, firewall, and intrusion detection system.
While the institution does not have to manage the daily administration of these
component systems, its management and board remain responsible for the content,

Second, the organisation can host all or a large portion of its e-banking systems
internally. A typical configuration for in-house hosted, e-banking services is illustrated
below. In this case, a provider is not between the Internet access and the
organisation’s.

core processing system. Thus, the oranisation has day-to-day responsibility for system
administration.

46
E-Banking Support Services

In addition to traditional banking products and services, organizations can provide a

variety of services that have been designed or adapted to support e-commerce.
Management should understand these services and the risks they pose to the
organization. This section discusses some of the most common support services: web
linking, account aggregation, electronic authentication, website hosting, payments for e-
commerce, and wireless banking activities.

Web linking.

A large number of Organisations maintain sites on the World Wide Web. Some websites
are strictly informational, while others also offer customers the ability to perform
financial transactions, such as paying bills or transferring funds between accounts.

Virtually every website contains “weblinks.” A weblink is a word, phrase, or image on a

webpage that contains coding that will transport the viewer to a different part of the
website or a completely different website by just clicking the mouse. While weblinks are
a convenient and accepted tool in website design, their use can present certain risks.
Generally, the primary risk posed by weblinking is that viewers can become confused
about whose website they are viewing and who is responsible for the information,
products, and services available through that website. There are a variety of risk
management techniques institutions should consider using to mitigate these risks.
These risk management techniques are for those institutions that develop and maintain
their own websites, as well as institutions that use third-party service providers for this
function. The agencies have issued guidance on weblinking that provides details on
risks and risk management techniques financial institutions should consider.

Account Aggregation

Account aggregation is a service that gathers information from many websites, presents
that information to the customer in a consolidated format, and, in some cases, may
allow the customer to initiate activity on the aggregated accounts. The information
gathered or aggregated can range from publicly available information to personal
account information (e.g., credit card, brokerage, and banking data). Aggregation
services can improve customer convenience by avoiding multiple log-ins and providing
access to tools that help customers analyze and manage their various account
portfolios. Some aggregators use the customer-provided user IDs and passwords to

47
sign in as the customer. Once the customer’s account is accessed, the aggregator
copies the personal account information from the website for representation on the
aggregator’s site (i.e., “screen scraping”). Other aggregators use direct data-feed
arrangements with website operators or other firms to obtain the customer’s information.
Generally, direct data feeds are thought to provide greater legal protection to the
aggregator than does screen scraping. Organisations are involved in account
aggregation both as aggregators and as aggregation targets. Risk management issues
examiners should consider when reviewing aggregation services include

 .. Protection of customer passwords and user IDs – both those used to access the
institution’s aggregation services and those the aggregator uses to retrieve customer
information from aggregated third parties – to assure the confidentiality of customer
information and to prevent unauthorized activity,

 .. Disclosure of potential customer liability if customers share their authentication

information (i.e., IDs and passwords) with third parties, and 1 See the interagency
guidance titled “Web linking : Identifying Risks and Risk Management Techniques”
issued

 .. Assurance of the accuracy and completeness of information retrieved from the

aggregated parties’ sites, including required disclosures.

Electronic Authentication

Verifying the identities of customers and authorizing e-banking activities are integral
parts of e-banking financial services. Since traditional paper-based and in-person
identity authentication methods reduce the speed and efficiency of electronic
transactions, financial institutions have adopted alternative authentication methods,
including

 .. Passwords and personal identification numbers (PINs),

 .. Digital certificates using a public key infrastructure (PKI),
 .. Microchip-based devices such as smart cards or other types of tokens,
 .. Database comparisons (e.g., fraud-screening applications), and
 .. Biometric identifiers

The authentication methods listed above vary in the level of security and reliability they
provide and in the cost and complexity of their underlying infrastructures. As such, the
choice of which technique(s) to use should be commensurate with the risks in the
products and services for which they control access.2 Additional information on

48
customer authentication techniques can be found in this booklet under the heading
“Authenticating E-Banking Customers.”

The Electronic Signatures in Global and National Commerce (E-Sign) Act establishes
some uniform federal rules concerning the legal status of electronic signatures and
records in commercial and consumer transactions so as to provide more legal certainty
and promote the growth of electronic commerce.3 The development of secure digital
signatures continues to evolve with some financial institutions either acting as the
certification authority for digital signatures or providing repository services for digital
certificates.

Website Hosting Some organisations host websites for both themselves as well as for
other businesses. Organisations that host a business customer’s website usually store,
or arrange for the storage of, the electronic files that make up the website. These files
are stored on one or more servers that may be located on the hosting financial
institution’s premises. Website hosting services require strong skills in networking,
security, and programming. The technology and software change rapidly. Institutions
developing websites should monitor the need to adopt new interoperability standards
and protocols such as Extensible Mark- Up Language (XML) to facilitate data exchange
among the diverse population of Internet users.

Risk issues examiners should consider when reviewing website hosting services include
damage to reputation, loss of customers, or potential liability resulting from:

 .. Downtime (i.e., times when website is not available) or inability to meet

service levels specified in the contract,

 .. Inaccurate website content (e.g., products, pricing) resulting from actions

of the institution’s staff or unauthorized changes by third parties (e.g.,

hackers),

 .. Unauthorized disclosure of confidential information stemming from

security breaches, and

 .. Damage to computer systems of website visitors due to malicious code

(e.g., virus, worm, active content) spread through institution-hosted sites.

Payment for E-commerce

49
E-BANKING FOR CORPORATES

This section of project covers following parts

1. E-Banking for Organisations and Business Houses

2. Bill Payment and Presentment

E Banking For organisations and business houses

Many businesses accept various forms of electronic payments for their products and
services. Financial institutions play an important role in electronic payment systems by
creating and distributing a variety of electronic payment instruments, accepting a similar
variety of instruments, processing those payments, and participating in clearing and
settlement systems. However, increasingly, financial institutions are competing with
third parties to provide support services for e-commerce payment systems. Among the
electronic payments mechanisms that financial institutions provide for e-commerce are
automated clearing house (ACH) debits and credits through the Internet, electronic bill
payment and presentment, electronic checks, e-mail money, and electronic credit card
payments. Additional information on payments systems can be found in other sections
of the IT Handbook.

Most organisations permit intrabank transfers between a customer’s accounts as part of

their basic transactional e-banking services. However, third-party transfers – with their
heightened risk for fraud – often require additional security safeguards in the form of
additional authentication and payment confirmation.

Bill Payment and Presentment

Bill payment services permit customers to electronically instruct their financial institution
to transfer funds to a business’s account at some future specified date. Customers can
make payments on a one-time or recurring basis, with fees typically assessed as a “per
item” or monthly charge. In response to the customer’s electronic payment instructions,
the financial institution (or its bill payment provider) generates an electronic transaction
– usually an automated clearinghouse (ACH) credit – or mails a paper check to the
business on the customer’s behalf. To allow for the possibility of a paper-based transfer,

50
financial institutions typically advise customers to make payments effective 3–7 days
before the bill’s due date.

Internet-based cash management is the commercial version of retail bill payment.

Business customers use the system to initiate third-party payments or to transfer money
between company accounts. Cash management services also include minimum
balance maintenance, recurring transfers between accounts and on-line account
reconciliation. Businesses typically require stronger controls, including the ability to
administer security and transaction controls among several users within the business.

Here we discusses the front-end controls related to the initiation, storage, and
transmission of bill payment transactions prior to their entry into the industry’s retail
payment systems (e.g., ACH, check processing, etc.). The extent of front-end operating
controls directly under the financial institution’s control varies with the system
configuration. Some examples of typical configurations are listed below in order of
increasing complexity, along with potential control considerations.

 .. Organisations that do not provide bill payment services, but may direct

customers to select from several unaffiliated bill payment providers. Caution customers
regarding security and privacy issues through the use of on-line disclosures or, more
conservatively, e-banking agreements.

 .. Organisations that rely on a third-party bill payment provider including Internet

banking providers that subcontract to third parties.

- Set dollar and volume thresholds and review bill payment transactions for suspicious
activity.

- Gain independent audit assurance over the bill payment provider’s processing
controls.

- Restrict employees’ administrative access to ensure that the internal controls limiting
their capabilities to originate, modify, or delete bill payment transactions are at least as
strong as those applicable to the underlying retail payment system ultimately
transmitting the transaction.

- Restrict by vendor contract and identify the use of any subcontractors associated with
the bill payment application to ensure adequate oversight of underlying bill payment
system performance and availability.

51
- Evaluate the adequacy of authentication methods given the higher risk associated with
funds transfer capabilities rather than with basic account access.

-.. Organisations that use third-party software to host a bill payment application

internally.

- Determine the extent of any independent assessments or certification of

the security of application source code.
- Ensure software is adequately tested prior to installation on the live
system.
- Ensure vendor access for software maintenance is controlled and
monitored.
..
- Organisations that develop, maintain, and host their own bill
payment system.
-Organisations can offer bill payment as a stand-alone service or in
combination
with bill presentment. Bill presentment arrangements permit a business to submit a
customer’s bill in electronic form to the customer’s organisation. Customers can view
their bills by clicking on links on their account’s e-banking screen or menu. After viewing
a bill, the customer can initiate bill payment instructions or elect to pay the bill through a
different payment channel.

In addition, some businesses have begun offering electronic bill presentment directly
from their own websites rather than through links on the e-banking screens of a
organisation. Under such arrangements, customers can log on to the business’s
website to view their periodic bills. Then, if so desired, they can electronically authorize
the business to “take” the payment from their account. The payment then occurs as an
ACH debit originated by the business’s organisation as compared to the ACH credit
originated by the customer’s organisation in the bill payment scenario described above.
Organisations should ensure proper approval of businesses allowed to use ACH
payment technology to initiate payments from customer accounts.

Cash management applications would include the same control considerations

described above, but the Organisation should consider additional controls because of
the higher risk associated with commercial transactions. The adequacy of authentication
methods becomes a higher priority and requires greater assurance due to the larger
average dollar size of transactions. Institutions should also establish additional controls
to ensure binding agreements – consistent with any existing ACH or wire transfer
agreements – exist with commercial customers. Additionally, cash management
systems should provide adequate security administration capabilities to enable the
business owners to restrict access rights and dollar limits associated with multiple-user
access to their accounts.

52
 Objective of study
Electronic banking also known as E-Banking is a term for the process by which a
customer may perform banking transactions electronically without visiting Bank.

Now days banking have changed completely from traditional banking to banking at
home.

Like all other sector on in the banking sector has increased and entry of private sector
banks and foreign banks has made this competition more intense. Banks has to provide
more than traditional banking to retain customer base and sustain in this era of global
competition.

With increasing use of technology in day to day life and globalistation banks also need
to change accordingly and adopt these technologies in their work.

The prime objective of this study is to understand what the E banking is how it works
what all facilities it provides to the customers and the impact of it on traditional banking
i.e. how it has changed the face of traditional banks.

What is future of E banking in India and why our banks also need to adopt the E-
banking.

Since penetration of internet and other technology is very low in India compared to
western countries and other developed nations so how this factor affects the E-banking
services provided by the banks in I

53
 RESEARCH METHODOLOGY 

DURATION OF PROJECT:- 

Time duration for the study is long for the project like this because the collection of
current data is much needed. Overall time duration for the study was around 6 weeks
which included the phases from selection of topic to the submission of final report.  

      This is a very long term project so we have been provided with the period of one
and half month for the completion. 

To make it easy this period was divided into four weeks as follows.

Week1:- submission of blue print for study.

Week2:-need to submission of final abstract and synopsis.

Week3 & week4 & week5:-we have collection of data through primary data
(preliminary assessment).

Week6:-selection and final completion and finalization of report. 

 

TYPE OF RESEARCH:- 

As earlier mention that the study was object oriented so the type of research was
Descriptive research. 

      Descriptive research, also known as statistical research, describes data and

characteristics about the population or phenomenon being studied. Descriptive research
answers the questions who, what, where, when and how... 

      Although the data description is factual, accurate and systematic, the research
cannot describe what caused a situation. Thus, Descriptive research cannot be used to
create a causal relationship, where one variable affects another. In other words,
descriptive research can be said to have a low requirement for internal validity. 

    

  The description is used for frequencies, averages and other statistical calculations.
Often the best approach, prior to writing descriptive research, is to conduct a survey
investigation. Qualitative research often has the aim of description and researchers may

54
follow-up with examinations of why the observations exist and what the implications of
the findings are. 

      In short descriptive research deals with everything that can be counted and studied.
But there are always restrictions to that. Your research must have an impact to the lives
of the people around you. For example, finding the most frequent disease that affects
the children of a town. The reader of the research will know what to do to prevent that
disease thus; more people will live a healthy life.

      Descriptive research is used to obtain information concerning the current status of

the phenomena to describe "what exists" with respect to variables or conditions in a
situation. The methods involved range from the survey which describes the status quo,
the correlation study which investigates the relationship between variables, to
developmental studies which seek to determine changes over time. Statement of the
problem 
 

 Identification of information needed to solve the problem

 Selection or development of instruments for gathering the information
 Identification of target population and determination of sampling procedure
 Design of procedure for information collection
 Collection of information
 Analysis of information
 Generalizations and/or predictions

This research is the most commonly used and the basic reason for carrying out
descriptive research is to identify the cause of something that is happening.   For
instance, this research could be used in order to find out what age group is buying a
particular brand of cola, whether a company’s market share differs between
geographical regions or to discover how many competitors a company has in their
marketplace. However, if the research is to return useful results, whoever is conducting
the research must comply with strict research requirements in order to obtain the most
accurate figures/results possible. 
 

SCOPE:

The concept and scope of e-banking is still evolving.It facilitate an effective payment
and accounting system thereby enhancing the speed of delivery of banking services
considerably. E-banking has improved efficiency and convenience to those customer
segment which are more educated and tech savvy.

55
DATA ANALYSIS AND INTERPRETATION

SECONDARY DATA ANALYSIS

Table 1

Comparative Analysis –

Indusind Bank Vs. Other Multinational Banks

Bank INDUSIND ABN-AMRO Citibank HSBC

Services BANK

1. Branches 68(Metros) & 17(Metros) & 25(Metros) & 30(Metros) &

83(India) 19(India) 35(India) 39(India)
2. ATM’s 165 78 376 158
3.ATM/Debit Yes Yes Yes Yes
Card
4.Charges for Rs. 200 p.a. Rs. 200 p.a. Rs. 100 p.a. Rs. 150 p.a.
ATM card
5.ATM/Debit Yes Yes Yes Yes

56
Card access
to other
banks
6.Charges 4 transaction 2 transaction Rs. 50 per Rs. 50 per
per free/month free/month transaction transaction
transaction and then Rs. and then Rs.
from ATM’s 20 per 40 per
of other transaction transaction
banks
7.Locker Yes, Rs. Yes Yes Yes
Facility 2000 per
annum
8.Cheque Yes Yes Yes Yes
deposit
boxes
9. Global Yes Yes Yes Yes
Debit card
10. Global Yes Yes Yes Yes
Credit card
11.Average 10 AM – 7 10 AM – 7 10 AM – 2 9 AM – 4 PM
banking hrs PM PM PM
12. Sunday
Banking
No Yes Yes No
13.Minimun 10,000 10,000 10,000 10,000
Balance
Saving
14. Charges Rs. 750 per Rs 200 to Rs Rs 250 per Rs 300 per
for non- quarter 1800 per month quarter
maintenance month
of min.

57
balance
15.Cash 25,000 25,000 – 50,000 25,000
Withdrawal 1,00,000
per day
16. Cash Yes Yes Yes Yes
transaction
from non-
branch
17.Statement Free Free Free Free
charges
18. 24 hours Yes No No No
branch
19. 365 days Yes Yes Yes No
branch
20.Automate Yes No No Yes
d cheque
reorder
21. Multicity Yes Yes Yes Yes
Branch
banking
22. National Yes Yes(3-5 Yes(7-15 Yes
clearing days) days)
23. Speed Yes Yes Yes Yes
Clearing
24. Net Yes Yes Yes Yes
Banking
25. Mobile Yes Yes Yes Yes
Banking
26.Phone Yes Yes Yes Yes

58
Banking
27. DMAT Yes Yes Yes Yes

28.Priority Yes Yes Yes Yes

Banking
29.Flexibility Yes No No Yes
of Interest
Rates
30.Door step Yes Yes Yes Yes
Banking
31. Cash Yes(charged Up to 1 lakh Yes(charged Yes(charged
Delivery ) free & above ) )
charged
32. Cash pick Yes(charged Yes(charged Yes(charged Yes(charged
up ) ) ) )
33. Cheque Yes Yes Yes Yes
pick up

Explanation :

59
1. Most of the branches of Multinational banks are concentrated in the metros. The branches
of Indusind bank are comparatively more than ABN Amro, Citi bank and HSBC bank. But
ATMs of Citi bank are higher.

2. Almost every bank provides ATM cards to their customers to make banking more easier.
Customers do not have to visit the banks for deposits and withdrawals. ATM service can
be accessed through other banks as well. Few banks provide this facility free of cost while
others have charges for it. All the banks mentioned above have their respective charges.

3. Locker facility is chargeable under Indusind Bank at Rs. 2000 p.a. but in other banks this
facility is offered free of cost.

4. The Average Quarterly Balance is Rs. 10,000 for all the four banks. If the customer is not
maintaining this minimum balance there are charges for non maintenance.

5. Bank statements are available free of cost.

6. Cash withdrawal per day for Indusind bank is the lowest at Rs.25,000 while for ABN Amro
it is the highest and ranges from Rs. 25,000 to Rs. 1,00,000.

7. Doorstep banking is a new facility which was first introduced by Indusind bank and is now
used by almost every bank. Banks have their respective pickup and drop charges.

8. Multibranch banking, phone banking, mobile banking, internet banking, national clearing
and speed clearing facilities are provided by all the four banks.

PRIMARY DATA ANALYSIS

60
DEMOGRAPHIC ATTRIBUTIONS

Age

Table

Age

Cumulative
Frequency Percent Valid Percent Percent
Valid Below 20 years 15 15.0 15.0 15.0
Between 20 and 40 years 26 26.0 26.0 41.0
Between 40 and 60 years 40 40.0 40.0 81.0
Above 60 years 19 19.0 19.0 100.0
Total 100 100.0 100.0

19% 15%
Below 20 years
Between 20 and 40 years
26% Between 40 and 60 years
40% Above 60 years

From the above analysis, I can analyze that normally people in the age group 20-60 maintain
their relations with multinational or private sector banks. While, people in the age group of below
20 years and above 60 years are somewhat indifferent.

61
Occupation

Table

Occupation

Cumulative
Frequency Percent Valid Percent Percent
Valid Student 13 13.0 13.0 13.0
Service 47 47.0 47.0 60.0
Business 36 36.0 36.0 96.0
Others 4 4.0 4.0 100.0
Total 100 100.0 100.0

Figure

4% 13% Student
36%
Service
Business
47%
Others

From the above figure, we can analyze that the major proportion of the customers of the
Multinational banks and the Private sector banks are from the service class and the business
class. So the potential market segment of the customers of the various banks comprises of the
service and the business class.

Annual Income
62
Table

Annual Income

Cumulative
Frequency Percent Valid Percent Percent
Valid Dependant 13 13.0 13.0 13.0
Below 2 Lakh 11 11.0 11.0 24.0
Between 2-5 Lakh 44 44.0 44.0 68.0
Above 5 Lakh 32 32.0 32.0 100.0
Total 100 100.0 100.0

32% 13%
11%
Dependent
Below 2 lakh
Between 2-5 lakh
44%
Above 5lakh

From the above results, it can be analyzed that people whose income is above two lakhs
normally go for relations with multinational banks or some private sector banks. While people
who are dependent prefer Public sector banks.

Conclusion

63
A new form of competition has emerged both from the existing players and new

players of the market . But there are many concerns over E-banking

The Regulatory and Supervisory concerns in E-banking arise mainly out of the
distinctive features outlined above. These concerns can be broadly addressed under
three broad categories, viz.

i. Legal and regulatory issue

ii. Security and technology issues and

iii. Supervisory and operational issues

Legal and regulatory issue

Legal issues cover those relating to the jurisdiction of law, validity of electronic contract
including the question of repudiation, gaps in the legal / regulatory environment for
electronic commerce. On the question of jurisdiction the issue is whether to apply the
law of the area where access to Internet has been made or where the transaction has
finally taken place. Allied to this is the question where the income has been generated
and who should tax such income. There are still no definite answers to these issues.

Security and technology issues

Security of E-banking transactions is one of the most important areas of concerns to the
regulators. Security issues include questions of adopting internationally accepted state-
of- the art minimum technology standards for access control, encryption / decryption (
minimum key length etc), firewalls, verification of digital signature, Public Key
Infrastructure (PKI) etc. The regulator is equally concerned about the security policy for
the banking industry, security awareness and education.

Supervisory and operational issues

The supervisory and operational issues include risk control measures, advance warning
system, Information technology audit and re-engineering of operational procedures. The
regulator would also be concerned with whether the nature of products and services
offered are within the regulatory framework and whether the transactions do not
camouflage money-laundering operations.

64
The world over, central bankers and regulators have been addressing themselves to
meet the new challenges thrown open by this form of banking. Several studies have
pointed to the fact that the cost of delivery of banking service through Internet is several
times less than the traditional delivery methods. This alone is enough reason for banks
to flock to Internet and to deliver more and more of their services through Internet and
as soon as possible. Not adopting this new technology in time has the risk of banks
getting edged out of competition. In such a scenario, the thrust of regulatory thinking
has been to ensure that while the banks remain efficient and cost effective, they must
be aware of the risks involved and have proper built-in safeguards, machinery and
systems to manage the emerging risks. It is not enough for banks to have systems in
place, but the systems must be constantly upgraded to changing and well-tested
technologies, which is a much bigger challenge. The other aspect is to provide
conductive regulatory environment for orderly growth of such form of banking. Central
Banks of many countries have put in place broad regulatory framework for E-banking.

IndusInd Bank has been making efforts to become more visible by gearing up its
marketing and advertising activities. There has been a strong concentration on outdoor
marketing, which has been successful in reaching out to a wider audience. The
campaign will start bearing fruit in the coming quarters.. The thrust for the future is on
the mobilisation of low-cost deposits, concentration on the SME sector, increased
attention to high net worth NRIs, and more focus on fee-based income through forex
transactions, cash management, remittance, sale of third-party products, etc.

'IndusInd Bank is in transition to an exciting phase of robust growth. Our sound financial
position will strengthen further with accretion to our Tier-I capital soon. We have a
unique retail franchise of high-yielding assets related to vehicle financing, which is set to
grow along with the growth of the economy. Temporary dip in yields notwithstanding, we
are confident that this segment will continue to generate a substantial chunk of our
business revenue going forward. Our distribution strength of an all-India branch
network, spreading to Tier-II and Tier-III locations, is a source of strength,' Indusind
bank MD Ramesh Sobati said in conclusion.

This is not possible without extensive use of E banking and Indusind bank is working on
this to improve their technology and educating their customers to use more of e banking
so that transaction cost can be reduced resulting in more operating profit. IndusInd

65
Bank is providing multi-channel facilities including ATMs, Net Banking, Mobile Banking,
Phone Banking, Multi-city Banking and International Debit Cards. It was one of the first
banks to become a part of RBI’s Real Time Gross Settlement (RTGS) system. It has
implemented an enterprise-wide risk management system encompassing global best
practices in the area of Risk Management, with help from KPMG. This has enabled the
Bank to remain in the forefront in complying with the requirements of Basel II. It is the
first bank in India to receive ISO 9001:2000 certification for its Corporate Office and its
entire network of branches.

With its roots in Indian tradition and emphasis on customer care, IndusInd Bank’s
service philosophy is well reflected in the communication tagline “We Care… Dil Se”.

Finding of the reports

During this project one customer survey was done findings of that survey and Report is
as follows:

Reputation of the Bank is reason of majority of customer.

Most of the customer comes to know about E-banking facilities from sales executive of
the Bank or from Banks operational Staff.

On an average most of the customers were satisfied with the performance of this bank
and they prefer the traditional way of banking.

Most of the customers use only RTGS instead of full E-banking products.

66
Regarding the E banking process the customer are uninterested because this is very
slow process because of slow internet speed and low tech savvy people in small city
like Jodhpur.

Banks like ICICI and HDFC is performing far better than Indusind Bank.

Customers are using Phone banking channel over any other e banking product.

Since penetration of internet is very low in India in comparison to other developed

nations and in case of small cities it is much lower than average so it will take some
time to E-banking to be popular.

Recommendations & suggestions

Steps should be taken to improve the percentage of satisfied customer through different
ways such as: E banking presentations, awareness campaigns etc.

There is huge market in institutions, corporate offices, & rural area, Bank should
concentrate on capturing this segment by good advertisement & promotional
programme.

The bank should be very prompt in coming up with new schemes.

The bank should spend more on promotions, as we can find that bank is having very
fewer advertisements.

Bank should make their website more user friendly.

The company should plan out the package for its loyal customer by giving them
presentations trained their employees to how to use various e banking products.

Company should expand its network in rural market & will also help to attract new
customer.

Though the E banking is an extremely important tool for reducing the operational cost
and improving financial and operational strength and efficiency, it must be remembered

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that the still average Indian people are not using computers so special care should be
taken considering this fact

E banking has its own limitations. Most of Indian business still takes place in cash and
they also deposit cash in to banks to route their business transactions which is not
possible through E banking. As the economic conditions and the operating environment
vary from period to period and from one geographical location to another, this cannot be
strictly compared in isolation.

Regarding to make customer happy, company should make its services to customers
very easy, connective & faster.

Company should also offer the attractive offers so that customer can be diversified
towards E banking

BIBLIOGRAPHY

Websites & Search Engines

www.google.com

www.induind.com

www.rbi.gov.in

www.businesstoday.com

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Customer survey on E-Banking

1. Are You aware of the E-banking Facility provided by IndusInd Bank Ltd
 Yes
 No

2. How do you come to know about E-banking facility of bank

 Through advertisements
 Through Bank staff
 Any other Medium (Please mention)….

3. What Kind of banking you prefer most

 Traditional Banking
 E-banking

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4. What facility you uses most on E-banking

5. Which form of E-banking you preferred to use most

 Phone Banking
 Internet Banking

6. Give ratings to E-banking services of these three banks

 IndusInd Bank
 Hdfc Bank
 Icici Bank

7. Any suggestion you want to give about E-banking services of the bank

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