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Private-sector banks in India

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The private-sector banks in India represent part of the indian banking
sector that is made up of both private and public sector banks. The
"private-sector banks" are banks where greater parts of stake or equity
are held by the private shareholders and not by government.
Banking in India has been dominated by public sector banks since the
1969 when all major banks were nationalised by the Indian government.
However since liberalisation in government banking policy in the 1990s,
old and new private sector banks have re-emerged. They have grown
faster & bigger over the two decades since liberalisation using the latest
technology, providing contemporary innovations and monetary tools and
techniques.[1]
The private sector banks are split into two groups by financial regulators
in India, old and new. The old private sector banks existed prior to the
nationalisation in 1969 and kept their independence because they were
either too small or specialist to be included in nationalisation. The new
private sector banks are those that have gained their banking license
since the liberalisation in the 1990s.
Contents
[hide]
1 Old private-sector banks
o 1.1 List of the old private-sector banks in India
2 New private-sector banks
o 2.1 List of the new private-sector banks in India

3 References
Old private-sector banks[edit]
The banks, which were not nationalized at the time of bank
nationalization that took place during 1969 and 1980 are known to be
the old private-sector banks. These were not nationalized, because of
their small size and regional focus.[2] Most of the old private-sector
banks are closely held by certain communities their operations are
mostly restricted to the areas in and around their place of origin. Their
Board of directors mainly consist of locally prominent personalities from
trade and business circles. One of the positive points of these banks is
that, they lean heavily on service and technology and as such, they are
likely to attract more business in days to come with the restructuring of
the industry round the corner.
List of the old private-sector banks in India[edit]
Name
1. Bank of punjab merged with Centurion Bank to form
Centurion Bank of Punjab in June 2005
2. City Union Bank
3. Dhanlaxmi Bank
4. Federal Bank
5. ING Vysya Bank
6. Jammu and Kashmir Bank
7. Karnataka Bank
8. Karur Vysya Bank
9. Lakshmi Vilas Bank
10. Nainital Bank
11. Bipasa Bank
12. SBI Commercial and international Bank
13. South Indian Bank

Year
established
1943
1904
1927
1931
1930
1938
1924
1916
1926
1922
1943
1955
1929

14. Tamilnad Mercantile Bank Limited


15. Ratnakar Bank Ltd.
16. IDB Bank Ltd (reverse merged with parent IDBI in
2004 to become IDBI Bank. Making this public sector
bank private)
17. CATHOLIC SYRIAN BANK

1921
1943
1964
1920

New private-sector banks[edit]


The banks, which came in operation after 1991, with the introduction of
economic reforms and financial sector reforms are called "new privatesector banks". Banking regulation act was then amended in 1993, which
permitted the entry of new private-sector banks in the Indian banking s
sector. However, there were certain criteria set for the establishment of
the new private-sector banks, some of those criteria being:#The bank
should have a minimum net worth of Rs. 200 crores.
1. The promoters holding should be a minimum of 25% of the paidup capital.
2. Within 3 years of the starting of the operations, the bank should
offer shares to public and their net worth must increased to 300
crores.[3]
List of the new private-sector banks in India[edit]
Name
1. Axis Bank (earlier UTI Bank)
2. Bank of Punjab (actually an old generation private bank
since it was not founded under post-1993 new bank licensing
regime)
3. Centurion Bank Ltd. (Merged Bank of Punjab in late 2005
to become Centurion Bank of Punjab, acquired by HDFC
Bank Ltd. in 2008)
4. Development Credit Bank (Converted from Co-operative

Year
1994
1989
1994
1995

Bank, now DCB Bank Ltd.)


6. ICICI Bank (previously ICICI and then both merged;total
merger SCICI+ICICI+ICICI Bank Ltd)
7. IndusInd Bank
8. Kotak Mahindra Bank
9. Yes Bank
10. Times Bank (Merged with HDFC Bank Ltd.)
11. Global Trust Bank (India) (Merged with Oriental Bank of
Commerce)
12. Balaji Corporation Bank Limited
13. HDFC bank

1996
1994
2003
2005
Unknown
Unknown
2010
1994

References[edit]
1.

Jump up ^ "Introduction to private sector banks". Retrieved


10-09-2011. Check date values in: |accessdate= (help)

2.

Jump up ^ "Nationalization of Banks".

3.

Jump up ^ "Criteria set for the new private sector banks".


[hide]
v
t
e
Banking in India

Reserve bank

Reserve Bank of India

Public sector banks

Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Bharatiya Mahila Bank
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
IDBI Bank
Indian Bank
Indian Overseas Bank
Oriental Bank of Commerce
Post Bank of India
Punjab & Sind Bank
Punjab National Bank

State Bank of Bikaner & Jaipur


State Bank of Hyderabad
State Bank of India
State Bank of Mysore
State Bank of Patiala
State Bank of Travancore
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank

Private sector banks

Axis Bank
Catholic Syrian Bank
City Union Bank
Development Credit Bank
Dhanlaxmi Bank

Federal Bank
HDFC Bank
ICICI Bank
IndusInd Bank
ING Vysya Bank
Jammu & Kashmir Bank
Karnataka Bank
Karur Vysya Bank
Kotak Mahindra Bank
Lakshmi Vilas Bank
Nainital Bank
RBL Bank (Ratnakar Bank)
South Indian Bank
Tamilnad Mercantile Bank Limited
Yes Bank

Cooperative banks

Buldhana Urban

Cosmos Bank
Repco Bank
Saraswat Bank
Shamrao Vithal Co-op. Bank

Foreign banks

ABN AMRO
Abu Dhabi Commercial Bank
Antwerp Diamond Bank
Australia and New Zealand Banking
Group
Bank Internasional Indonesia
Bank of America
Bank of Bahrain and Kuwait
Bank of Ceylon
The Bank of Tokyo-Mitsubishi UFJ
Barclays
Citibank India
Credit Suisse

Deutsche Bank
HSBC
The Royal Bank of Scotland
Scotiabank
Standard Chartered

Regional Rural Banks

Andhra Pragathi Grameena Bank


Kerala Gramin Bank
Bangiya Gramin Vikash Bank
Gramin Bank of Aryavart
North Malabar Gramin Bank
Pallavan Grama Bank
Pandyan Grama Bank
Paschim Banga Gramin Bank
Sarva UP Gramin Bank
South Malabar Gramin Bank
Uttar Bihar Gramin Bank

Vananchal Gramin Bank


List of regional rural banks in Uttar
Pradesh

BANCS
Cashnet
CashTree
Cirrus
Interbank networks

IMPS
MITR
NFS
PLUS
RuPay

Defunct banks

Alliance Bank of Simla


Arbuthnot & Co
Bank of Bombay
Bank of Calcutta

Bank of Chettinad
Bank of Madras
Bank of Madura
Bank of Rajasthan
Bengal Central Bank
Bharat Overseas Bank
Centurion Bank of Punjab
Chartered Bank of India, Australia and
China
Commercial Bank of India
Dass Bank
Exchange Bank of India & Africa
Global Trust Bank
Grindlays Bank
Imperial Bank of India
Lord Krishna Bank
Madhavpura Mercantile Cooperative
Bank
Mercantile Bank of India, London and

China
Nath Bank
Nedungadi Bank
New Bank of India
Oriental Bank Corporation
Oudh Commercial Bank
Palai Central Bank
Pandyan Bank
State Bank of Indore
State Bank of Saurashtra
United Industrial Bank

Related topics

Banking Codes and Standards Board


of India
ATM usage fees in India
De-Materialisation (DEMAT)
Foreign Exchange (FOREX)
Indian Financial System Code (IFSC)

List of banks in India


National Electronic Fund Transfer
(NEFT)
National Payments Corporation of
India
Real Time Gross Settlement (RTGS)
Structured Financial Messaging
System (SFMS)
Prepaid Payment Instruments in India
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What is E-Banking ? Online Banking

E-banking refers to electronic banking. It is like e-business in


banking industry. E-banking is also called as "Virtual Banking" or
"Online Banking".
E-banking is a result of the growing expectations of bank's
customers.

Image Credits Jochem Koole.

E-banking involves information technology based banking. Under


this I.T system, the banking services are delivered by way of a
Computer-Controlled System. This system does involve direct

interface with the customers. The customers do not have to visit


the bank's premises.

Popular services covered under E-Banking

The popular services covered under E-banking include :1.

Automated Teller Machines,

2.

Credit Cards,

3.

Debit Cards,

4.

Smart Cards,

5.

Electronic Funds Transfer (EFT) System,

6.

Cheques Truncation Payment System,

7.

Mobile Banking,

8.

Internet Banking,

9.

Telephone Banking, etc.

Advantages of E-Banking

The main advantages of E-banking are :1.

The operating cost per unit services is lower for the banks.

2.

It offers convenience to customers as they are not required


to go to the bank's premises.

3.

There is very low incidence of errors.

4.

The customer can obtain funds at any time from ATM


machines.

5.

The credit cards and debit cards enables the Customers to


obtain discounts from retail outlets.

6.

The customer can easily transfer the funds from one place to
another place electronically.

banking issues.
E-banking, which includes any transaction you perform using the
Internet or a mobile device, is becoming more common. Making
electronic payments, paying bills and transferring money between
accounts are all elements of e-banking, which can be done from
your cell phone or computer. Despite potential risks of identity
theft and account hacking and less personal contact with the
bank, e-banking presents a number of advantages to customers.
Convenience
The ability to do banking from home at any hour is one of the
most common benefits of online, or e-banking. You can move
money from checking to savings or make electronic payments
24/7, even when the bank is closed. Some customers also
appreciate the real-time banking information to check balances in
checking and savings accounts.
Portability
Electronic banking also creates a more mobile bank for
customers. Mobile apps allow customers to check balances and
perform routine bank transactions from anywhere they can get
phone reception. Alerts to low balances are offered by some bank
apps.
Cost Savings
E-banking offers some cost-savings opportunities for customers.
By paying bills online, you reduce the number of checks you have
to write. This saves you on buying new check pads and paying for
stamps and envelopes. Also, with broader access to banks
operating online, you can price shop and find lower fees and more
favorable interest rates.

Track Spending
Some bank customers who previously did little to no budgeting
now monitor basic spending habits using spending trackers
provided by online banks. When you make purchases with a debit
card or pay bills online, programs update your spending chart by
cataloging the expense as utility, car payment or another type of
bill. These trackers are somewhat limited because they can't
directly monitor cash spending. However, some bank apps allow
you to manually record grocery expenses or other cash outflows
to fill those gaps.
Industry Benefits
Banks can minimize labor and supply costs by allowing customers
to self-service certain types of transactions, and save money on
paper and postage by sending statements over the Internet. While
some people believe ATMs and e-banking go against traditional,
personalized banking, others point to the increased efficiency and
flexibility.
References
KeyBank: Advantages of Online Banking
DepositAccounts.com: Benefits of Online Banking
Bankrate.com: The Benefits of Online Banking
About the Author
Neil Kokemuller has been an active business, finance and
education writer and content media website developer since
2007. He has been a college marketing professor since 2004.
Kokemuller has additional professional experience in marketing,
retail and small business. He holds a Master of Business
Administration from Iowa State University.

Photo Credits
Comstock/Comstock/Getty Images
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Advantages and Disadvantages of Online Banking


by Shakti Singh Dulawat on June 22, 2010

Online banking can simply be defined as


the process of entering into transactions by a particular client and the
bank using modern technology. With the various capabilities of the
computer and other technological developments, online banking is one
of the many businesses that benefited from it. Since banking plays a
very important role in the economy of a nation, then there is truly a need
to maximize and improve its features to be client friendly and easy to
access. There are of course the advantages and disadvantages of online
banking.
Among the advantages of online banking include the following: Very convenient. Online banking is a totally easy thing to do. In
the comfort of your home or offices, you can do whatever
monetary transactions you wish to do with your bank.
Unlimited service day and night.The services and various
features of your bank are always available seven days a week and

24 hours daily.The most interesting thing here is that, everything


can happen at just one click of your mouse.
No time constraint. Online banking is also stress free because it
never closes unlike the traditional banking that has cut-off time.
Easy to access via PC. Using your personal computer, you can
easily do various transactions with your bank in view of your
business or any other personal or financial matters.
Easy way of payment. Bill payments can also be handled properly
and smartly. Instead of waiting for certain due dates, you can
easily pay all your transactions using your computer and in
coordination with your bank.
Smart. Online banking is also ubiquitous or simply put smart.
This enables you to do troubleshooting regarding any problem that
may arise from your business.
Higher interest rate. Another great advantage of online banking is
the interest rates which basically range between 5% to 3.40%
annually. Unlike the traditional banking, online banking can earn
you a better interest or return of investment both in your savings
and checking account.
Easy transaction.Another advantage is the speed of every
transaction. Online transactions, compared to ATM or traditional
banking, works faster. Thus business matters could benefit so
much from this speed feature.
Banking online is both efficient and effective. With just one
secure site, all your financial transactions can be managed orderly.
On the other hand, the following are the disadvantages of online
banking:-

First is the slow processing from the moment you entered a


financial transaction with your bank via the computer. Usually the
bank will require you to submit certain documents like an
identification card, signature and the like. Not only will the bank
online require you to submit documents but also to provide special
power of attorney in cases where you want to do transactions
together with your spouse. A concrete example is when you want
to manage all your wealth and resources together as a couple and
you wish to view it online. Certain technical procedures regarding
online banking may be taxing too and complicated.
Another disadvantage is the so-called learning curve. This
means, banking online especially in locating the sites may be
complicated and hard to find.
Another disadvantage is bank site changes. If this occurs, the
bank will require you to re-enter all your information again and
other related data.
Finally is the trust aspect. Online banking should be entered very
carefully if you wish to enjoy your financial life.
Best Readings:
Why Save for Rainy Days
Get Approved For Credit Card
Getting Familiar With Credit Card Terms
Why you must save money
As a conclusion, banking online has its benefits and discomforts and it
will be up to the client to choose which for him or her is more
convenient, hassle-free and efficient.

Advantages and Disadvantages of Internet Banking


Posted by admin on April 25, 2013

Internet banking is a term


used to describe the process whereby a client executes
banking transactions via electronic means. This kind of
banking eradicates the necessity of physical movement
to financial positions. This type of banking uses the
internet as the chief medium of delivery by which
banking activities are executed. The activities clients are
able to carry out are can be classified to as transactional
and non transactional.
Non transactional activities

Account balance viewing

Viewing of previous bank transactions

Bank statement downloading

Check book ordering

Viewing of images of paid cheques

M banking and E banking applications


downloading

Provision of account/ bank statements

Transactional activities

Electronic funds transfer

Bill payments and wire transfers

Loan application and repayments

Buying investment products

Internet banking has its advantages and disadvantages.


Advantages of Internet banking

Convenience Banks that offer internet banking


are open for business transactions anywhere a
client might be as long as there is internet
connection. Apart from periods of website
maintenance, services are available 24 hours a day
and 365 days round the year. In a scenario where
internet connection is unavailable, customer
services are provided round the clock via telephone.

At the touch of a button, actual time account


balances and information are availed. This hastens
the banking processes hence increasing their
efficiency and effectiveness.

Online banking allows for easier updating and


maintaining of direct accounts. The time for
changing mailing address is greatly reduced,
ordering of additional checks is availed and
provision of actual time interest rates.

Friendlier rates Lack of substantial support and


overhead costs results to direct banks offering
higher interest rates on savings and charge lower
rates on mortgages and loans.

Some banks offer high yield certificate of deposits


and dont penalize withdrawals on certificate of
deposits, opening of accounts without minimum
deposits and no minimum balance.

Transfer services Online banking allows


automatic funding of accounts from long
established bank accounts via electronic funds
transfers.

Ease of monitoring A client can monitor his/her


spending via a virtual wallet through certain banks
and applications and enable payments.

Ease of transaction the speed of transaction is


faster relative to use of ATMs or customary
banking.

Disadvantages of Internet banking

Banking relationship Customary banking allows


creation of a personal touch between a bank and its
clients. A personal touch with a bank manager for
example can enable the manager to change terms
in your account since he/she has some discretion in
case of any personal circumstantial change. It can
include reversal of an undeserved service charge.

Security matters Direct banks are governed by


laws and regulations similar to those of customary

banks. Accounts are protected by Federal Deposit


Insurance Corporation (FDIC).

Complex encryption software is used to protect


account information. However, there are no perfect
systems. Accounts are prone to hacking attacks,
phishing, malware and illegal activities.

Learning Banks with complicated sites can be


cumbersome to navigate and may require one to
read through tutorials to navigate them.

Transaction problems face to face meeting is


better in handling complex transactions and
problems. Customary banks may call for meetings
and seek expert advice to solve issues.

The Importance of E-banking in Business


by Laura Acevedo, Demand Media
Businesses rely on efficient and rapid access to banking
information for cash flow reviews, auditing and daily
financial transaction processing. E-banking offers ease of
access, secure transactions and 24-hour banking options.
From small start-up companies to more established
entities, small businesses rely on e-banking to eliminate
runs to the bank and to make financial decisions with
updated information. In an information-driven business
climate, companies who do not use e-banking are at a
competitive disadvantage.
Activity Review
Business owners, accounting staff and other approved
employees can access routine banking activity such as
deposits, cleared checks and wired funds quickly through
an online banking interface. This ease of review helps
ensure the smooth processing of all banking transactions
on a daily basis, rather than waiting for monthly
statements. Errors or delays can be noted and resolved
quicker, potentially before any business impact is felt.
Productivity
E-banking leads to productivity gains. Automating routine
bill payments, minimizing the need to physically visit the
bank and the ability to work as needed rather than on
banking hours may decrease the time involved in
performing routine banking activities. Additionally, online

search tools, banking actions and other programs can


allow staff members to research transactions and resolve
banking problems on their own, without interacting with
bank employees. In some cases, month-end
reconciliations for credit card transactions and bank
accounts can be automated by using e-banking files.
Related Reading: How to Open Business Bank Accounts
Lower Banking Costs
Banking relationships and costs are often based on
resource requirements. Businesses that place more
demands on banking employees and need more physical
assistance with wire transfers, deposits, research
requests and other banking activities often incur higher
banking fees. Opting for e-banking minimizes business
overhead and banking expenses.
Reduced Errors
Utilizing e-banking reduces banking errors. Automation of
payments, wires or other consistent financial activities
ensures payments are made on time and may prevent
errors caused by keyboard slips or user error. Additionally,
opting for electronic banking eliminates errors due to
poor handwriting or mistaken information. In many cases,
electronic files and daily reviews of banking data can be
used to double or triple check vital accounting data,
which increases the accuracy of financial statements.
Reduced Fraud

Increased scrutiny of corporate finances through audits


and anti-fraud measures requires a high level of visibility
for all financial transactions. Relying on e-banking
provides an electronic footprint for all accounting
personnel, managers and business owners who modify
banking activities. E-banking offers visibility into banking
activities, which makes it harder for under-the-table or
fraudulent activities to occur.
References (3)
About the Author
Laura Acevedo has been a professional writer for more
than 15 years. With a background in business,
international relations, psychology and technology,
Acevedo writes from both experience and an educational
foundation. She holds a Master of Business Administration
from the University of North Florida and undergraduate
degrees in business and psychology.
Suggest an Article Correction
E-BANKING SYSTEM IN THE BANKING SECTOR
Dhawesh Pahuja July 24, 2011 Banking & Insurance Law, Legal
Articles No Comments

1. Introduction: The process of globalization


and liberalization has virtually transformed the way of business across
the globe. The technological innovation of improvements in the
communication networking helped the banking sector activities through
re-engineer its works. E-Banking is considered as an important input for
rapid growth of economic development by providing mechanism of
electronic inputs to the banking sector. E-banking is the banking of new
era. The term Internet Banking or E-Banking Internet both are used as
supplement. E-Banking system makes the banking transactions easy for
the bankers as well as customers in the modern world where all persons
are busy with their hectic schedule. In fact, banks have been using
electronic and telecommunication networks for delivering a wide range
of value added products and services. The devices have been telephone,
personal computers including Automated Teller Machines (ATM).
2. Development of E-Banking System: The wind of globalization has
affected each and every sector of its economy and entered into all the
activities of the banking sector. Though the E-Banking system developed
in the late 1980s and referred to the use of a terminal, keyboard and TV
(or monitor) to access the banking system using a phone line. Home
banking can also refer to the use of a numeric keypad to send tones
down a phone line with instructions to the bank. Online services started
in New York in 1981 when four of the citys major banks (Citibank,
Chase Manhattan, Chemical and Manufacturers Hanover) offered home
banking services using the videotex system, television system and
telephonic system. The UKs first home online banking services were set
up by the Bank of Scotland in year 1983. The system (known as
Homelink) allowed on-line viewing of statements, bank transfers and

bill payments. In order to make bank transfers and bill payments.


Though E-Banking system was more popularized amidst of the foreign
countries later on in the early 1990s E-Banking system developed in
India too and development was not possible without creating sufficient
infrastructure or presence of sufficient number of users. The experience
of ICICI Bank Ltd. and HDFC Bank Ltd. shows that the number of
transactions carried out on the internet is very limited in India.
3. Meaning of E-Banking: E-Banking refers to electronic banking and
it is an automated delivery of new and traditional banking services
which provides electronic facility for business and commercial
transactions to its customers. E-banking is the easiest way to carry out
banking transactions in todays hectic schedule. E-Banking is also called
as i.e. Internet Banaking, Net Banking, Virtual Banking or Online
Banking. E-Banking (or I-banking) means any user with a personal
computer and a browser can get connected to his banks website to
perform any of the virtual banking functions. In internet banking system
the bank has a centralized database that is web-enabled. All the services
that the bank has permitted on the internet are displayed in menu. The
fact is that many services that are now being offered with online banking
are almost impossible to avail of in regular banking.
4. Services covered under E-Banking: E-Banking has numerous
benefits to offer. Nowadays, all banks provide online banking facility to
their customers as an additional advantage. Gone are the days, when one
has to transact with a bank which was only in his local limits. Online
banking has opened the doors for all customers, to operate beyond
boundaries. The popular services covered under E-banking include :

Automated Teller Machines(ATM)

Credit Cards

Debit Cards

Smart Cards

Electronic Funds Transfer (EFT) System

Cheques Truncation Payment System

Mobile Banking

Internet Banking

Telephone Banking

5. Problems While Using E-Banking Facilities: E-Banking system


removes the traditionally geographical basis as it could reach out to all
the customers of different countries and regions. The popularity of
internet banking is growing rapidly as the transactions are becoming
faster and more convenient. Internet banking is the latest development
that has added a new dimension to banking transactions by making it
more convenient, which has eliminated the long wearisome queues. But,
there are some serious problems that a customer may encounter while
banking through the internet, due to which many still prefer to go
directly to the banks instead of availing this facility. There are certain
problems of E-Banking system which are as follows:

Computer and Internet knowledge is very much required for


using the facility of E-Banking by the customer because of which
limits number of persons willing to avail this facility. Therefore it is
the major problem in the country like India where literacy ratio is
low.

While banking through the internet, you have to be careful about


the security of your internet bank account. The security of your
internet bank account depends to a great extent on the security of
your computer, password and pin number. Any leakage of
information regarding your password or pin number and banking
transactions can allow computer hackers to gain access to your bank
account, which is the most common internet banking problem. This

can even lead to unauthorized and criminal transactions being


conducted without your knowledge. By the time you get your bank
statement and detect such transactions, it may be too late.

Some proxy websites can easily access customers bank account,


if they can crack ones user name, password or pin number. Due to
such security problems, many people are apprehensive about internet
banking.

Though E-Banking system saves the time of customers but it is


very difficult to use this facility by customers who do Lack of trust
on d machines provided by the banks may be another problem as
there is no safety of money through online banking.

Technical problems with respect to the computers and internet


facilities may be one of the problems which must be taken into
consideration.

Customer is always in problem with respect to the security of its


password, pin number and bank related information.

Customer care service also does not provide accurate information


always as numbers of transactions are increasing along with
customers.

6. Advantages of E-Banking System: E-banking system has gained


wide acceptance internationally and it can be considered as a remarkable
development in the banking sector. In India also the things are changing
fast and most of the banks are providing E-Banking services to their
customers and there are many advantages of using E-Banking service to
the customers which are as follows:

Paying Bills Online is the major advantage to the customers who


can pay bills i.e. telephone, electricity, shopping, loans amount
(EMI) and payment of tickets booking online.

Time saving and easy to get information of bank account.

Customers are no longer required to wait in those long and


crowded queues of the banks to request a financial transaction or
statement.

E-Banking offers convenience to the customers as they are not


required to go to the banks premises.

E-Banking provides monthly e-statement facilities to the


customers which saves the time of bankers as well as customers.

Low incidence of errors increases the number of users/customers


of E-Banking which results in the great advantage.

The customers can obtain funds at any time from ATM machines.

The credit cards and debit cards enables the Customers to obtain
discounts from retail outlets.

Reduction in the administrative costs and paperwork related to the


transactions. Besides, banks can also cater to the needs of thousands
of customers at the same time. All these factors have significantly
increased the profit margins of commercial banks by lowering their
operating costs.

Transactions of transferring of funds from one person


account to another persons account became much more
faster
and convenient both national and international level.

Accessing bank account information at any day or any time


irrespective of banks off working hours.

Quickest way to check and see if a transaction has cleared


your account. This can help you to find out the amount of a
transaction after you have lost your receipt.

E-Banking also allows customers to find out about


unauthorized transactions of their accounts more quickly and to
resolve the issues more quickly.

7. Disadvantages of E-Banking System: In todays cyber world where


when people do not have much time even for their personal work, EBanking appears as a boon. Internet banking has become very popular in
the recent years, as it is quick and easy. Though E-Banking provides
more advantages than traditional banking however, it has some
disadvantages too which are as listed:

Setting up an account in the bank may take time though the


E-Banking facility is provided by the banks.

Internet account of customer with an Internet Service


Provider (ISP) which may be another hectic experience.

Banking sites can be difficult to navigate at first by the


customers who do not have knowledge of computer and internet
so getting acquitted with the banking sites software may require
some time to read the tutorials in order to become comfortable in
persons virtual lobby. There may be some difficulties to the
customer for learning these activities of E-Banking.

Some alterations or changes made in the banks sites due to


technological advancement may lead to a problem to customers
who have to provide all the personal information once again
through online transaction.

E-Banking is time consuming for the customers, though


there is option of online transactions, in the end customers have
to run to the ATM for withdrawing the cash.

No personal contact with any of the bank staff, and if talk to


any bank staff through the telephone, there is no guarantee to the
customers that they had talked with a right person or not.

Hackers who may access customers bank account is the


main disadvantage to the customers who takes E-Banking facility
very casually.

Security concern is the important issue as cybercrimes


activities are clutching up which decreases the number of
customers to avail the benefit of E-Banking.

Technical breakdowns where online banking websites


sometimes go down. If this happens then, if customer wishes to
close his bank account then he will definitely go penniless.

Switching banks due to technical faults can be a major


disadvantage of using E-Banking system to the customer.

Increasing online frauds and attacks i.e. Trojan horse


(Remote Attacker) are a major disadvantage of using E-Banking.

However, in the case of Internet banking, one will find


oneself making endless calls to the customer service department.
There have been cases, where the person is put on hold or has
been passed around from one person to another.

Hackers and crackers attack on the bank account of customer


by stealing passwords or using fake credit cards to cheat a person
which will cause loss to the customers wealth.

8. Guidelines By Reserve Bank of India: Reserve Bank of India being


the highest authoritative bank and main head of all the nationalized
banks in India, had set up a Working Group on Internet Banking to
examine different aspects of Electronic Banking (E-banking). The Group
had focused on three major areas of E-banking, i.e. (i) technology and

security issues, (ii) legal issues and (iii) regulatory and supervisory
issues. Accordingly, the following guidelines are issued for
implementation by banks. Banks are also advised that they may be
guided by the original report, for a detailed guidance on different issues.
These issues can be defined as:
A.

Technology and Security Issues: Banks should designate a


network and database administrator with clearly defined roles as
indicated in the Groups report. Banks should have a security
policy duly approved by the Board of Directors. There should be
a segregation of duty of Security Officer exclusively with
information systems security and Information Technology
Division which actually implements the computer systems.
Further, Banks should also adopt and implement some new
policies relating to security check ups and should inform
customers about new technologies concerning E-Banking. Banks
should also take steps to

B.

Legal Issues: There is always an obligation on the parts of


banks to keep the proper records of its customers manually as
well as electronic. While opening an account of customer by
internet a complete identification documents must be collected by
the customer and a physical verification need to be done so that it
will assist bank to avoid any legal risk. From a legal prospective,
security procedure adopted by banks for authenticating users
needs to be recognized by law as a substitute for signature. There
must be strict rules regarding instructions by the customers for
stop-payment and banks should clearly state the consequences in
which stop-payment instruction could be accepted by the bank.

C.

Regulatory and Supervisory Issues: Only such banks


which are licensed and supervised in India and have a physical
presence in India will be permitted to offer Internet banking
products to residents of India. The products and schemes of the
bank should be limited to the account holders only but not to the

extra territorial jurisdictional account holders. Indian overseas


banks must be permitted to offer internet services. A supervisory
authority need to be appointed so that it will assist in avoiding
any illegal transactions.
9. Risk Involved In Using E-Banking: E-Banking poses some different
risks as compared to the traditional banking. These risks are more
pronounced in the case of Internet banking. Firstly, the risk of
technological changes has to be carefully watched. This is essential to
update technologies and remain cost effective and customer friendly.
The banks have to be careful about risks involved in agreements with
third parties. The security is an important area of risk. In fact it will be
very crucial for the expansion of Net Banking. Another important area
will emerge out of cross-border implications as E- Banking breaks the
geographical boundaries. Imposing regularity conditions on such
transactions will be a difficult task.
10. E-Banking Frauds: Fraudsters are continuing their switch from
traditional card fraud to raiding online bank accounts. According to the
new research Fraud losses on UK credit and debit cards totalled 440m
in 2009 a drop of 28% compared with the previous year the UK
Cards Association said. But the number of phishing attacks rose by
16% in the same period. This is when fraudsters trick people into
entering their personal details on a website or in e-mails. As there is
expansion in the illegal activities of the hackers, crackers and Trojan
horse there must be a strict law to punish such criminals. Online frauds
are very common nowadays because it is easy to access or to obtain
password, pin code and account number of customers by hackers.
Recently there is a case which is known as ICICI Bank Fraud Case
where Rs/- 150000 was stolen by the persons bank account and it was a
heavy loss of money to the account holder though the complaint was
filed by the account holder but banks are still silent on that issue as
banks too have no idea how these activities are taking place.

11. Preventive Measures: As E-Banking is an important aspect for the


bankers and customers as well, there must be some measures and
policies which should be adopted by the banks before providing EBanking facilities to the customers which can be taken as precautionary
measure. A best preventive measure is that the account holder of the
bank must be aware of increasing bank frauds and cybercrimes, and he
should not give his password, pin number and credit cards number to
anyone by using E-Banking facility. As it is recognise that cards will
always be targeted by criminals, so we are determined not only to
continue to prevent, detect and deter those who are behind this type of
crime, but also to make sure that innocent victims do not lose out,.
There is always necessity that Customers need to protect themselves on
their computer, remaining vigilant and using good security software.
A better-educated consumer is less likely to fall foul of phishing
attacks this saying has its own importance because consumer is the king
with respect to the Indian trade and market but here while using EBanking facilities a consumer need to be more careful of online frauds,
so a consumer must take some necessary precautions while opting out
for E-Banking facilities.
12. Conclusion: E-banking offers a higher level of convenience for
managing ones finances even from ones bedroom. However, it
continues to present challenges to the financial security and personal
privacy. Many people have had their account details compromised, as a
result of online banking. Thus, if one is going to use it for financial
transactions, he should be aware of the risks involved. Awareness of the
risks and problems enables him to take precautions for a more secured
online banking experience. E-Banking system is not only popular
nationally but also internationally where a person can transfer money
through any part of the world. E-banking system is useful for the
bankers as well as customers of banks.

Dhawesh Pahuja
Advocate in Banglore

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Process
Online banking (or Internet banking) allows customers to conduct
financial transactions on a secure website operated by their retail
or virtual bank, credit union or building society.
Features
Transactional (e.g., performing a financial transaction such as an
account to account transfer, paying a bill, wire transfer... and

applications... apply for a loan, new account, etc.)


Electronic bill presentment and payment - EBPP
Funds transfer between a customer's own checking and savings
accounts, or to another customer's account
Investment purchase or sale
Loan applications and transactions, such as repayments
Non-transactional (e.g., online statements, check links,
cobrowsing, chat)
Bank statements
Financial Institution Administration Support of multiple users having varying levels of authority
Transaction approval process
Wire transfer
Source:

http://knowingbank.blogspot.com/

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