Management Thesis on

Services provided by the bank

through

E-BANKING IN INDIA
By Komal sahu PGDM(IB) ROLL NO 20

CONTENTS
S.No. PARTICULARS COVER PAGE TABLE OF CONTENT ACKNOWLEDGMENT CHAPTER 1 INTRODUCTION OF BANKING SYSTEM IN INDIA PAGE NO. 1 2 3 5-6

CHAPTER 2

INTRODUCTION: E-BANKING VARIOUS FORMS OF E-BANKING PLASTIC CARDS AS MEDIA FOR PAYMENT ROLE OF CUSTOMER WHEN USING E-BANKING

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SUGGESTIONS

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ACKNOWLEDGEMENT I take this as an opportunity to thank with bottom of my heart to all those without whom the journey of doing my project would not have been as pleasant as it has been to me. Working on my project was a constant learning experience with all sweat and tear which was its due but not without being richly stimulating experience of life time. Finally I would like to convey my heartiest thanks to all my well wishers for their blessing and co-operation throughout my study. They boosted me up every day to work with a new and high spirit.

KOMAL SAHU PGDM(IB) ROLL NO: 20

Chapter 1 Introduction of Banking system in INDIA

Banking system of a nation is the shadow of nations economy. A healthy and profitable banking system is just like the backbone of nations economy. It is necessary for a nation to achieve growth and remain stable in this global world and global economy. The Indian banking system, with one of the largest banking networks in the world, has witnessed a series of reforms over the past few years like use of E-Banking and the increased participation of private sector banks.

History of INDIAN BANKING SYSTEM

Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and the Bank of Hindustan, both of which are now defunct The oldest bank in existence in India is the State Bank of India, a government-owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India. Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India, relegating it to commercial banking functions. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers.

 In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors

Liberalization in INDIAN BANKING SYSTEM

In the early 1990s, the government embarked on a policy of liberalization, licensing a small number of private banks. Some of the private sector banks are ING VYSYA Bank, Axis Bank (earlier as UTI Bank), ICICI Bank and HDFC Bank. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions. Currently, banking in India is generally fairly mature in terms of supply, product range but reach in rural India still remains a challenge for the private sector and foreign banks.

Chapter 2

Introduction:
E-Banking
Electronic banking, also known as electronic funds transfer (EFT), is simply the use of electronic means to transfer funds directly from one account to another, rather than by cheque or cash. You can use electronic funds transfer to:

Withdraw money from your checking account from an ATM machine with a personal identification number (PIN), at your convenience, day or night. Instruct your bank or credit union to automatically pay cer tain monthly bills from your account, such as your auto loan or your mortgage payment. Have the bank or credit union transfer funds each month from your checking account to your mutual fund account. Buy groceries, gasoline and other purchases at the point-of-sale, using a check card rather than cash, credit or a personal check. Use a smart card with a prepaid amount of money embedded in it for use instead of cash at a pay phone, expressway road toll, or on college campuses at the library's photocopy machine or bookstores. Use your computer and personal finance software to coordinate your total personal financial management process, integrating data and activities related to your income, spending, saving, investing, recordkeeping, bill-paying and taxes, along with basic financial analysis and decision making.

VARIOUS FORMS OF E-BANKING:

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

B. AUTOMATED TELLER MACHINES (ATM): An automated teller machine or automatic teller machine (ATM) is an electronic computerized telecommunications device that allows a financial institution's customers to directly use a secure method of communication to access their bank accounts, order or make cash withdrawals and check their account balances
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without the need for a human bank teller. Many ATMs also allow people to deposit cash or cheques, transfer money between their bank accounts, top up their mobile phones' pre-paid accounts or even buy postage stamps. On most modern ATMs, the customer identifies him or herself by inserting a plastic card with a magnetic stripe or a plastic smartcard with a chip, which contains his or her account number. The customer then verifies their identity by entering a pass code, often referred to as a PIN (Personal Identification Number) of four or more digits. Upon successful entry of the PIN, the customer may perform a transaction. The Indian market today has approximately more than 17,000 ATMs.

C. CREDIT CARDS/ DEBIT CARDS: The Credit Card holder is empowered to spend wherever and whenever he wants with his Credit Card within the limits fixed by his bank. Credit Card is a post paid card. Debit Card, on the other hand, is a prepaid card with some stored value. Every time a person uses this card, the Internet Banking house gets money transferred to its account from the bank of the buyer. The buyers account is debited with the exact amount of purchases. An individual has to open an account with the issuing bank which gives debit card with a Personal Identification Number (PIN). When he makes a purchase, he enters his PIN on shops PIN pad. When the card is slurped through the electronic terminal, it dials the acquiring bank system - either Master Card or VISA that validates the PIN and finds out from the issuing bank whether to accept or decline the transactions. The customer can never overspend because the system rejects any transaction which exceeds the balance in his account.

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

E. SMART CARD: Banks are adding chips to their current magnetic stripe cards to enhance security and offer new service, called Smart Cards. Smart Cards allow thousands of times of information storable on magnetic stripe cards. In addition, these cards are highly secure, more reliable and perform multiple functions. They hold a large amount of personal information, from medical and health history to personal banking and personal preferences

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

G. MOBILE BANKING : Mobile banking is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile or Personal Digital Assistant . The earliest mobile banking services were offered over SMS. With the introduction of the first primitive smart phones with WAP support enabling the use of the mobile web in 1999, the first European banks started to offer mobile banking on this platform to their customers.

We can avail the following services through E-Banking:

Bill payment service

You can facilitate payment of electricity and telephone bills, mobile phone, credit card and insurance premium bills as each bank has tie-ups with various utility companies, service providers and insurance companies, across the country. To pay your bills, all you need to do is complete a simple one-time registration for each biller. You can also set up standing instructions online to pay your recurring bills, automatically. Generally, the bank does not charge customers for online bill payment.

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Fund transfer You can transfer any amount from one account to another of the same or any another bank. Customers can send money anywhere in India. Once you login to your account, you need to mention the payees's account number, his bank and the branch. The transfer will take place in a day or so, whereas in a traditional method, it takes about three working days

Credit card customers

With Internet banking, customers can not only pay their credit card bills online but also get a loan on their cards. If you lose your credit card, you can report lost card online.

Investing through Internet Banking

Now investors with interlinked demat account and bank account can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited in their demat account. Moreover, some banks even give you the facility to purchase mutual funds directly from the online banking system.

Recharging your prepaid phone Now just top-up your prepaid mobile cards by logging in to Internet banking. By just selecting your operator's name, entering your mobile number and the amount for recharge, your phone is again back in action within few minutes.

Shopping
With a range of all kind of products, you can shop online and the payment is also made conveniently through your account. You can also buy railway and air tickets through Internet banking.

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Advantage Of Internet Banking

As per the Internet and Mobile Association of India's report on online banking 2006, "There are many advantages of online banking. It is convenient, it isn't bound by operational timings, there are no geographical barriers and the services can be offered at a very low cost."

Through Internet banking, you can check your transactions at any time of the day, and as many times as you want to. Where in a traditional method, you get quarterly statements from the bank. If the fund transfer has to be made outstation, where the bank does not have a branch, the bank would demand outstation charges. Whereas with the help of online banking, it will be absolutely free for you.

E-BANKING SUPPORT SERVICES

WEBLINKING A large number of financial institutions maintains 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. WIRELESS E-BANKING Wireless banking is a delivery channel that can extend the reach and enhance the convenience of Internet banking products and services. Wireless banking occurs when customers access a financial institution's network(s) using cellular phones, pagers, and personal digital assistants (or similar devices) through telecommunication companies wireless networks. Wireless banking services in the United States typically supplement a financial institution's e-banking products and services. Person-to-Person Payments Electronic person-to-person payments, also known as e-mail money, permit
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consumers to send money to any person or business with an e-mail address. Under this scenario, a consumer electronically instructs the person-to-person payment service to transfer funds to another individual. The payment service then sends an e-mail notifying the individual that the funds are available and informs him or her of the methods available to access the funds including requesting a check, transferring the funds to an account at an insured financial institution, or retransmitting the funds to someone else. Person-to-person payments are typically funded by credit card charges transfer from the consumers account at a financial institution. Since neither the payee nor the payer in the transaction has to have an account with the payment service, such services may be offered by an insured financial institution, but are frequently offered by other businesses as well.

BANKING SERVICES THROUGH INTERNET: 1. The Basic Level Service is the banks web sites 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.

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

The third level of Internet banking service are offered by Fully Transactional Web sites 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 service the customer or by new banks, who deliver banking service primarily through Internet or other electronic delivery channels as the
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value added services. Some of these banks are known as Virtual banks or Internet only banks and may not have physical presence in a country despite offering different banking services. The Indian Scenario: Internet banking, both as a medium of delivery of banking services and as a strategic tool for business development. At present, the total internet users in the country are estimated at 9 lakh. However, this is expected to grow exponentially to 90 lakh by 2003. Only about 1 percent of Internet users did banking online in 1998. This is increased to 16.7 percent in March 2000. - (India Research, May 29, 2000, Kotak Securities) Cost of banking service through the Internet from a fraction of costs through conventional methods. Rough estimates assume teller cost at Re.1 per transaction, ATM transaction cost at 45 paise, phone banking at 35 paise, debit cards at 20 paise and Internet banking at 10 paise per transaction. 1.

Plastic Cards as Media for Payment:There are four types of plastic cards being used as media for making payments. These are:
1. Credit Card 2. Debit Card 3. Smart Card 4. ATM Card

1. Credit Cards: The Credit Card is a post paid card. The credit card enables the cardholders to: Purchase any item like clothes, jewellery, railway/air tickets, etc. Pay bills for dining in a restaurant or boarding and lodging in hotel etc. 2. Debit Cards: A Debit Card, on the other hand, is a prepaid card with some stored value.
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Every time a person uses this card, the Internet Banking house gets money transferred to its account from the bank of the buyer. The buyers account is debited with the exact amount of purchases. 3. Smart Cards: Smart Cards have a built-in microcomputer chip, which can be used for storing and processing information. For example, a person can have a smart card from a bank with the specified amount stored electronically on it. The specified amount is utilized by the customer, he can approach the bank to get his card validated for a further specified amount. Such cards are used for paying small amounts like telephone calls, petrol bills etc. 4. ATM Cards: The card contains a PIN (Personal Identification Number) which is selected by the customer or conveyed to the customer and enables him to withdraw cash up to the transaction limit for the day. He can also deposit cash or cheque.

Role of customer when using e-banking

You can access Internet Banking only by using your User ID and Password. During the first login attempt, it is mandatory to change both passwords login and transaction which would have been mailed to you by the bank.

If you forget your password, you will have written to us using the "Email Us" option. The Bank will then issue a new password and send it to your mailing address as per our records. Kindly check with your branch that this address is updated...

Make sure no one can see the account login name or password you are entering when you log on to INGVYSYABANK.COM
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Logout of INGVYSYABANK.COM before moving on to other Websites. Before leaving the PC please "close" the browser. Do not write your INGVYSYABANK.COM login name or password anywhere.

Do not leave your login name and password such that someone sitting at your computer could see them.

Never present your INGVYSYABANK.COM login name and password to anyone (no representative of ING VYSYA BANK will ever ask you for your INGVYSYABANK.COM password).

Notify ING VYSYA Bank immediately if you notice any unusual account activity.

Keep all documents that include your account information in a secure location.

When you login you can view the date and time of your last log in.

ICICI Bank
ICICI Bank Online Banking Services provide the largest private bank in India right here at your desktops. Banking becomes a pleasure as the transactions and services become instant with ICICI Bank online Internet banking. The services provided are totally secure and unique. These cover online account transactions and operations, credit card and account applications and payments, share trading and investments through mutual funds, bill payments, statement generation and a virtual demo of each service. See in brief in final report.

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Role of customer when using e-banking

You can access ICICIBank.com only by using your User ID and Password. During the first login attempt, it is mandatory to change both passwords login and transaction which would have been mailed to you by the bank.

If you forget your password, you will have written to us using the "Email Us" option. The Bank will then issue a new password and send it to your mailing address as per our records. Kindly check with your branch that this address is updated...

Make sure no one can see the account login name or password you are entering when you log on to ICICIBank.com.

Logout of ICICIBank.com before moving on to other Websites. Before leaving the PC please "close" the browser. Do not write your ICICIBank.com login name or password anywhere. Do not leave your login name and password such that someone sitting at your computer could see them.

Never reveal your ICICIBank.com login name and password to anyone (no representative of ICICI Bank will ever ask you for your ICICIBank.com password).

Notify ICICI Bank immediately if you notice any unusual account activity. Keep all documents that include your account information in a secure location.

When you login you can view the date and time of your last log in.

Features offered by ICICI bank for internet banking

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Balance enquiry and statement Transfer fund online Card to card fund transfer Use debit card online Prepaid mobile recharge Subscribe for mobile banking Link bank account to ATM Lock / activate debit cards /ATM Request a cheque book Stop payment

Chapter 3

Literature Review
Internet and the Banking System
The rapid growth of the Web creates a tremendous opportunity for new businesses, but also requires a new way of viewing the market place for the community banker. Experts estimates that consumer use of on -line banking services will increase over 20-fold by the end of the century. Geography and the number of branches become irrelevant and community banks are able to offer the same level
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of service and convenience to customers as the largest banks. In the past, over 60% of existing bank customers have cited their bank selection to be based on convenience of location. For the customers of today, convenience of location includes the availability of 24-hour access via the Internet. (Wilson, 1996)

Seitz and Stickel (1999) considered that financial service companies are using the Internet as a new distribution channel. The goals are: complex products may be offered in an equivalent quality with lower costs to more potential customers there may be contacts from each place of earth at any time of day and night Seybold (1998) identifies 8 critical success factors for electronic banking: Own the customers total experience Streamline business processes that impact the customer Provide a 360-degree view of customer relationship Let customers help themselves Help customers do their job Deliver personalized service

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Suggestions
1. Demonstration of E-Banking should be provided to the existing customers to promote E-Banking. 2. Encourage customers that E-banking is totally safe if you take necessary precautions like protect your password from others. 3. Provide discounts on shopping through E-Banking.

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Chapter 4

Conclusion

The basic objective of my research was to analyze the awareness among customers for internet banking in INDIA. It gives direction to research tools, research types and techniques. Although the findings reveal that people know about the services but still many people are unaware and many of them are non users so the bank should by promotion try to retain the customers. Banks should look forward to have some tie ups with other financial institutions to increase the service base.

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