09/17/2016

CONTENTS
1. Introduction
1.1 The state bank of India.
1.2 Internet banking.
1.3 RBI Guidelines On Internet Banking.
1.4 Objective Of Study.
1.5 Scope Of Study.
1.6 Limitations Of The Study.
1.7 Findings.
2 Literature Review
2.1 Background Of Internet Banking.
2.2 Advantages Of Internet Banking
2.3 Internet Banking Risks.
2.4 Risk Management Techniques Undertaken By Banks
2.5 Problems & Solution In Internet Banking.
2.6 Introduction Of State Bank Of India (SBI).
2.6.1 History Of State Bank Of India.
2.6.2 Internet Banking In SBI
2.7 Services Provided By Sbi Internet Banking.
3. Research Methodology And Research Process.
3.1 Research Methodology.
3.2 Research Process.
3.3 Philosophical Approach To Research.
3.4 Methods.
3.4.1 Qualitative Or Quantitative Approach .
3.5 Primary Data.
3.5.1 Questionaire.
Customer Preference Towards Internet Banking In SBI .

4. Findings And Discussion

4.1 Questions And Answers Bank Manager.
4.2 Questionnaire.
5. Secondary Data.
5.1 Swoc Analysis.
6. Recommendation And Suggestions.
7. Conclusion.
8. Bibliography.

1.1 INTRODUCTION

In the recent times, the use of internet for business purpose has grown
tremendously.It has shown direct effect on many industries around the globe. The advances in
information and communication technologies have had an insightful effect on the banking
industry across borders. The new technology of internet was introduced through the
US Defence Academys ARPANET project. These technological break throughs has radically
changed the way world interacts and conducts. Such a phenomenon has created a truly global
market place. But the penetration of internet banking is more prominent in the well developed
western countries,while it still has to be embraced by many other small public sector banks
serving in smallcities and town across the globe. A growing phenomenon in financial services
is the use of the internet as a channel for financial services. The internet bank usage might
however not be easy for the consumers. Consumers' use of internet banking requires
acceptance of the technology, which can be complicated because it involves the changing of
behavioural patterns(Meuteret al., 2000) .
The financial institutions are using the internet for information presentation, two-way
communication and interaction with users, in addition to traditional transaction
banking
(Dial, 1995). The slow adoption of technology is mainly due to poor infrastructure,
education and economies, also cultural factors play a very important role for the same. The
Asian continent consists of many developing countries where culture and religion strongly
influence the business and social behaviour in which they operate. This thesis reports the
conduct andthe findings into the adoption of internet banking in Indian Public Banks. Thus
studying the factors it proposes a frame work composed of a variety of factors that are likely
to be involved. Meticulously it investigates customer perceptions of the usefulness and the
ease of use of current Internet based information technology, as adopted by the Indian Banks.
However, according to the World Bank it is globalization that is expected to
most,
reflect the progressive interaction of the World Economics (World Bank, 2000).
Thus it is
necessary to understand the competitive and rapidly changing environment of
InternetBanking.
There is a sea change in the media world. While most consumers see the newspapers,
the same magazines and listen to the same radio programs, behind this bland public exterior
there is a seething world of innovation, acquisition, global partnership and divorces, births
and deaths all of it most readily interpreted as theinevitable result of the technological
revolution that is in the process of merging telephones, computers, televisions in to a single
all singing, all dancingmagic kit that will, very possible, change all of our lives more than we
can imagine some dayThere are 2 ways you can respond to this 1 is to panic, which may
mean simply curling up in a corner and wishing that it would all go away. The other is to
embrace the new religion with messianic fervor and go out to proclaim the millennium. I
welcome you to the new emerging world of the Info-High-Way, destined to redefine the
world of communications:
Drivers of Change
The six primary drivers of Internet banking includes:

Improve customer access

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

Reduce customer attrition

1.1 THE STATE BANK OF INDIA

Public company

Type
Traded
as

NSE: SBIN
BSE: 500112
LSE: SBID
BSE SENSEX Constituent
CNX Nifty Constituent
Banking, financial services

Indust
ry
Found

2 June 1806, Bank of Calcutta

27 January 1921, Imperial Bank of India
1 July 1955, State Bank of India
2 June 1956,[1] nationalization

Headq

Mumbai, Maharashtra, India

Area

Worldwide

ed

uarters
served
Key

Arundhati Bhattacharya
(Chairperson)

Produ

Consumer banking, corporate

banking, finance and insurance, investment
banking, mortgage loans,private
banking, private equity,
savings, securities,asset management, wealth
management, credit cards,

people
cts

Reven
ue

2.7287103 trillion(US$41 billion)

(2016)[2][3]

Profit

127 billion (US$1.9 billion)

(2016)

Owner
Numb
er of
employees

Government of India
293,459 (2016)

Sloga

The Banker to Every Indian

Websit

sbi.co.in

n
e

State Bank of India (SBI) is an Indian multinational, public sector banking

and financial services company. It is a government-owned corporation with its headquarters
in Mumbai, Maharashtra. As of 2014-15, it had assets of 20.480 trillion (US$300 billion)
and more than 14,000 branches, including 191 foreign offices spread across 36 countries,
making it the largest banking and financial services company in India by assets. The company
is ranked 232nd on the Fortune Global 500 list of the world's biggest corporations as of 2016.
The bank traces its ancestry to British India, through the Imperial Bank of India, to
the founding, in 1806, of the Bank of Calcutta, making it the oldest commercial bank in
the Indian Subcontinent. Bank of Madras merged into the other two "presidency banks" in
British India, Bank of Calcutta and Bank of Bombay, to form the Imperial Bank of India,
which in turn became the State Bank of India in 1955. Government of India owned the
Imperial Bank of India in 1955, with Reserve Bank of India (India's Central Bank) taking a
60% stake, and renamed it the State Bank of India. In 2008, the government took over the
stake held by the Reserve Bank of India. State Bank of India is a banking behemoth and has
20% market share in deposits and loans among Indian commercial banks

1.2 INTERNET BANKING

Internet banking (or E-banking) means any user with a personal computer and a
browser can get connected to his bank -s 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. Any
service can be selected and further interaction is dictated by the nature of service. The
traditional branch model of bank is now giving place to an alternative delivery channels with
ATM network. Once the branch offices of bank are interconnected through terrestrial or
satellite links, there would be no physical identity for any branch. It would a borderless entity
permitting anytime, anywhere and anyhow banking.
The network which connects the various locations and gives connectivity to the central
office within the organization is called intranet. These networks are limited to organizations
for which they are set up. SWIFT is a live example of intranet application.

1.3 RBI GUIDELINES ON INTERNET BANKING

1. In June 2001 banks were advised to seek prior approval of Reserve Bank of India
before offering transactional services on the Internet. The position hassince been reviewed
and RBI has advised on 20th July 2005 that while the offering of Internet Banking services
will continue to be governed by the provisions of the above circular, no prior approval of the
Reserve Bank of India will be required by banks for offering Internet Banking services.
2.Banks should, however, ensure compliance with the following conditions:

i.The Internet Banking policy has been approved by the Banks Board.
ii.The policy fits into the banks overall Information Technology and Information
Security policy and ensures confidentiality of records and security systems.
iii.The policy takes into account operational risk.i
v.The policy clearly lays down the procedure to be followed in respect of"Know Your
Customer" requirements.
v.The policy broadly meets the parameters laid down in the earlier circular.

1.4 OBJECTIVE OF STUDY

The main objectives of the study are:
To understand the concept of Internet banking and importance, to bank as well as
customers.
To get aware of various aspects of net banking
To build up SWOC analysis of Internet banking of SBI
To build up various solutions for drawbacks in net banking
Perceptual mapping of internet banking users.
To know the cause why customers are not using internet banking
To know which age group of customers is using different e-banking facilities

1.5 SCOPE OF STUDY

The study is made taking consideration of whole State Bank of India. It investigates
about all applications of online banking in SBI. It would help society to understand the
usefulness of on- line banking. The study will also help to get the knowledge about process of
internet banking and usefulness to banking industry. As the study contains the 360 degree
information regarding SBI and its internet banking, Hence the study will lead to new ways to
tackle the problems and the SWOC of SBI in respect of internet banking.

1.6 LIMITATIONS OF THE STUDY

The primary limitation of this study is based on quality and originality of secondary
data taken via the official website of State Bank Of India and Reserve Bank of India.

1.7 FINDINGS
This study states that internet banking provides greater reach to customers.
Feedback can be obtained easily as internet is virtual in nature. Customer loyalty can
begain. Personal attention can be given by bank to customer also quality service can be
served. After studying the SWOC analysis, we came to know various strengths of SBI
such as quality customer service, greater reach, customer loyalty, easy access to information,
24hours access, easy online applications etc. SBI should put efforts to multiply the number of
strengths. In terms of weakness I come to know some of the major weaknesses they are lack
of awareness of internet banking among the customers, obsolesce of technology related to
security, complicated procedures of availing internet banking facilities, lack of knowledge
among the employees of SBI. SBI should concentrate on the weaknesses and reduce them to
zero.

2 LITERATURE REVIEW
To-day, we cannot think about the success of a banking system without

information technology and communication. It has enlarged the role of banking sector
in
the economy. The financial transactions and payment can now be processed quickly
and
easily. The banks with the latest technology and techniques are more successful in the
competitive financial market. They have been able to generate more and more
business
resulting in their greater profitability.
Various empirical and theoretical studies have been undertaken at the national
and international level to analyze the impact of e-banking and information and
communication technology (ICT) on banking sector, customers, service quality and
payment system. The studies mainly focus upon e-banking impact on productivity and
profitability primarily due to core banking system, electronic fund transfer, real time
gross settlement system and electronic clearing services. From the customer angle the
studies primarily focus upon; why customers choose e-banking products and increase
in
their level of satisfaction due to phone banking, mobile banking, internet banking,
website services, ATMs, etc. These services have not only improved the satisfaction
level of customers, but also helped in reduction of processing time and transaction
time.
The productivity of banks in terms of time saving and attending the customers at the
branches has also improved. The review of following studies throws light upon
different
aspects of e-banking. To know the impact of e-banking on various aspects, the
research
studies undertaken for the review have been classified into four categories, i.e.,
studies
related to banks, studies related to customers, studies related to service quality and
studies related to technology.

2.1 BACKGROUND OF INTERNET BANKING

The term online banking was first started in 80s. The term online became popular in
the late '80s 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 videotext
system. Because of the commercial failure of videotext these banking services never became
popular except in France where the use of videotext was subsidized by the telecom provider
and the UK, where the Prestel system was used. The UKs first home online banking
services was set up by the Nottingham Building Society (NBS) in 1983 .The system used was
based on the UK's Prestel system and used a computer, such as the BBC Micro, or keyboard
(Tandata Td1400) connected to the telephone system and television set. The system (known
as 'Home link') allowed on-line viewing of statements, bank transfers and bill payments. In
order to make bank transfers and bill payments, a written instruction giving details of the
intended recipient had to be sent to the NBS who set the details up on the Home link system.
Typical recipients were gas, electricity and telephone companies and accounts with other
banks. Details of payments to be made were input into the NBS system by the account holder
via Prestel. A cheque was then sent by NBS to the payee and an advice giving details of the
payment was sent to the account holder. BACS was later used to transfer the payment
directly. Stanford Federal Credit Union was the first financial institution to offer online
internet banking services to all of its members in Oct, 1994. Later on it was adopted by
worldwide banks

2.2 ADVANTAGES 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 miniscule
cost."
Through Internet banking, you can 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. Internet Banking has several advantages over traditional one
which makes operating an account simple and convenient. It allows you to conduct various
transactions using the bank's website and offers several advantages. Some of the advantages
of internet banking are:
Online account is simple to open and easy to operate.
It is quite convenient as you can easily pay your bills, can transfer funds between
accounts, etc. Now you do not have to stand in a queue to pay off your bills; also you do not
have to keep receipts of all the bills as you can now easily view your transactions.
It is available all the time, i.e. 24x7. You can perform your tasks from anywhere and
at any time; even in night when the bank is closed or on holidays. The only thing you need to
have is an active internet connection.
It is fast and efficient. Funds get transferred from one account to the other very fast.
You can also manage several accounts easily through internet banking.
Through Internet banking, you can keep an eye on your transactions and account
balance all the time. This facility also keeps your account safe. This means that by the ease of
monitoring your account at anytime, you can get to know about any fraudulent activity or
threat to your account before it can pose your account to severe damage.
It also acts as a great medium for the banks to endorse their products and services.
The services include loans, investment options, and many others.

2.3 INTERNET BANKING RISKS

Internet Banking RisksInternet banking creates new risk control challenges for
national banks. From asupervisory perspective, risk is the potential that events, expected or
unexpected, may have an adverse impact on the banks earnings or capital.There are
generally nine categories of risks in internet banking, which are as follows: Credit Risk
Interest rate Risk
Liquidity Risk
Price Risk
Foreign exchange Risk
Transaction compliance Risk
Strategic Risk and
Reputation Risk.
Credit Risk:Credit risk is the risk to earnings or capital arising from an obligors failure to meet the terms
of any contract with the bank or otherwise to perform as agreed. Credit risk is found in all
activities where success depends on counterparty,issuer, or borrower performance. It arises
any time bank funds are extended, committed, invested, or otherwise exposed through actual
or implied contractual agreements, whether on or off the banks balance sheet. Internet
banking provides theopportunity for banks to expand their geographic range. Customers can
reach a given institution from literally anywhere in the world. In dealing with customersover
the Internet, absent any personal contact, it is challenging for institutions to verify the
bonafides of their customers, which is an important element inmaking sound credit decisions.
Interest Rate Risk:Interest rate risk is the risk to earnings or capital arising from movements ininterest
rates.The following are the types of interest rate risk.
1.Re-Pricing Risk: Interest rate risk arises from differences between thetiming of rate
changes and the timing of cash flows.
2.Basis Risk: Interest rate risk arises from changing rate relationships among different
yield curves affecting bank activities.
3.Yield Curve Risk: Interest rate risk arises from changing rate relationships across
the spectrum of maturities
4.Options Risk: Interest rate risk arises from interest-related options embedded in
bank products.

Liquidity Risk:Liquidity risk is the risk to earnings or capital arising from a banks inabilityto meet
its obligations when they come due, without incurring unacceptable losses. Liquidity risk
includes the inability to manage unplanned changes in fundingsources. Liquidity risk also
arises from the failure to recognize or address changes in market conditions affecting the
ability of the bank to liquidate assetsquickly and with minimal loss in value. Internet banking
can increase deposit volatility from customers who maintain accounts solely on the basis of
rate or terms.

Price Risk:Price risk is the risk to earnings or capital arising from changes in the valueof traded
portfolios of financial instruments. This risk arises from market making, dealing, and position
taking in interest rate, foreign exchange, equity, andcommodities markets. Banks may be
exposed to price risk if they create or expand deposit brokering, loan sales, or securitization
programs as a result of Internet banking activities. Appropriate management systems should
be maintained to monitor, measure, and manage price risk if assets are actively traded.
Foreign Exchange Risk:Foreign exchange risk is present when a loan or portfolio of loans is denominated in a
foreign currency or is funded by borrowings in another currency. In somecases, banks will
enter into multi-currency credit commitments that permit borrowers to select the currency
they prefer to use in each rollover period. Foreignexchange risk can be intensified by
political, social, or economic developments.The consequences can be unfavorable if one of
the currencies involved becomes subject to stringent exchange controls or is subject to wide
exchange-rate fluctuations.

Transaction Risk:-

Transaction risk is the current and prospective risk to earnings and capital arising
from fraud, error, and the inability to deliver products or services, maintain a competitive
position, and manage information. Transaction risk is evidentin each product and service
offered and encompasses product Internet Banking development and delivery, transaction
processing, systems development, computing systems, complexity of products and services,
and the internal control environment. A high level of transaction risk may exist with Internet
banking products, particularly if those lines of business are not adequately planned,
implemented, and monitored. Banks that offer financial products and services through the
Internet must be able to meet their customers expectations. Customers who do business over
the Internet are likely to have little tolerance for errors or omissions from financial
institutions that do not have sophisticated internal controls to manage their Internet banking
business.
Compliance Risk:Compliance risk is the risk to earnings or capital arising from violations of, or
nonconformance with, laws, rules, regulations, prescribed practices, or ethical standards.
Compliance risk also arises in situations where the laws or rules governing certain bank
products or activities of the banks clients may be ambiguous or untested. Compliance risk
exposes the institution to fines, civil money penalties, payment of damages, and the voiding
of contracts. Compliance risk can lead to a diminished reputation, reduced franchise value,
limited business opportunities, reduced expansion potential, and lack of contract
enforceability.Most Internet banking customers will continue to use other bank delivery
channels.
Strategic Risk:Strategic risk is the current and prospective impact on earnings or capital arising from
adverse business decisions, improper implementation of decisions, or lack of responsiveness
to industry changes. This risk is a function of the compatibility of an organizations strategic
goals, the business strategies developed toachieve those goals, the resources deployed against
these goals, and the qualityof implementation. Management must understand the risks
associated with Internet banking before they make a decision to develop a particular class of
business.In some cases, banks may offer new products and services via the Internet. It is
important that management understand the risks involved in the decisions. Before introducing
the Internet banking product, management should consider whetherthe product and
technology are consistent with tangible business objectives in the banks strategic plan. The
bank also should consider whether adequate expertiseand resources are available to identify,
monitor, and control risk in the Internet banking business.

Reputation Risk:-

Reputation risk is the current and prospective impact on earnings and capital arising
from negative public opinion. This affects the institutions ability to establish new
relationships or services or continue servicing existing relationships. This risk may expose
the institution to litigation, financial loss, or a decline in its customer base. Reputation risk
exposure is present throughout the organization and includes the responsibility to exercise an
abundance of caution indealing with customers and the community. A banks reputation can
be damaged by Internet banking services that are poorly executed or otherwise alienate
customersand the public. Well-designed marketing, including disclosures, is one way to
educate potential customers and help limit reputation risk. A national bank should not market
the banks Internet banking system based on features or attributes the system does not have.
National banks should carefully consider how connectionsto third parties are presented on
their Web sites. Hypertext links are often used to enable a customer to link to a third party.
Such links may reflect an endorsement of the third partys products or services in the eyes of
the customer. It should be clear to the customer when they have left the banks Web site so
that there is no confusion about the provider of the specific products and services offered or
the security and privacy standards that apply. National banks need to besure that their
business continuity plans include the Internet banking business.

2.4
RISK MANAGEMENT TECHNIQUES UNDERTAKEN BY BANKS

Financial institutions should have a technology risk management process to enable them
to identify, measure, monitor, and control their technology risk exposure.Risk
management of new technologies has three essential elements:
The planning process for the use of the technology.
Implementation of the technology.
The means to measure and monitor risk.
The risk planning process:- The risk planning process is the responsibility of the board
and senior management. They need to possess the knowledge and skills to manage the
banks use of Internet banking technology and technology-related risks. The board should
review, approve, and monitor Internet banking technology-related projects that may have
asignificant impact on the banks risk profile. They should determine whether
thetechnology and products are in line with the banks strategic goals and meet a need in
their market. Senior management should have the skills to evaluate the technology
employed and risks assumed. Periodic independent evaluations of the Internet banking
technology and products by auditors or consultants can help the board and senior
management fulfill their responsibilities.

Implementing the technology:- Implementing the technology is the responsibility of

management. Management should have the skills to effectively evaluate Internet banking
technologies and products, select the right mix for the bank, and see that they are installed
appropriately. If the bank does not have the expertise to fulfill this
responsibilityinternally, it should consider contracting with a vendor who specializes in
thistype of business or engaging in an alliance with another provider with complementary
technologies or expertise.

Measuring and monitoring risk :-Measuring and monitoring risk is the responsibility of
management. Management should have the skills to effectively identify, measure,
monitor, and control risks associated with Internet banking. The board should receive
regular reports onthe technologies employed, the risks assumed, and how those risks are
managed. Monitoring system performance is a key success factor. As part of the design
process, a national bank should include effective quality assurance and audit processes in
its Internet banking system. The bank should periodically review the systems to
determine whether they are meeting the performance standards.

2.5 PROBLEMS & SOLUTION IN INTERNET BANKING

Financial institutions, their card associations, and vendors are working to develop an
Internet payment infrastructure to help make electronic commerce secure.Many in the
banking industry expect significant growth in the use of the Internet for the purchase of goods
and services and electronic data interchange. The banking industry also recognizes that the
Internet must be secure to achieve a high level of confidence with both consumers and
businesses.Sound management of banking products and services, especially those provided
over the Internet, is fundamental to maintaining a high level of public confidencenot only in
the individual bank and its brand name but also in the banking system as a whole.Key
components that will help maintain a high level of public confidence in anopen network
environment include:
Security
Authentication
Privacy
Availability
SecurityThreat:
Security is an issue in Internet banking systems. Some national banks allow fordirect
dial-in access to their systems over a private network while others provide network access
through the Internet. Although the publicly accessible Internet generally may be less secure,
both types of connections are vulnerable to interception and alteration. For example,
hardware or software sniffers can obtain passwords, account numbers, credit card numbers,
etc. without regard to the means of access.
Solution:
National banks therefore must have a sound system of internal controls to protect against
security breaches for all forms of electronic access.

Firewalls are frequently used on Internet banking systems as a security measureto protect
internal systems and should be considered for any system connected toan outside
network. Firewalls are a combination of hardware and software placedbetween two
networks through which all traffic must pass, regardless of the direction of flow. They
provide a gateway to guard against unauthorized individualsgaining access to the banks
network.

Authentication Threat:
Authentication is another issue in Internet banking system. Transactions on
theInternet or any other telecommunication network must be secure to achieve a highlevel of
public confidence. In cyberspace, as in the physical world, customers,banks, and merchants
need assurances that they will receive the service as ordered or the merchandise as requested,
and that they know the identity of the person they are dealing with.
Solution:
Banks typically use symmetric (private key) encryption technology to secure messages and
asymmetric (public/private key) cryptography to authenticate parties. Asymmetric
cryptography employs two keys a public key and a private key. These two keys are
mathematically tied but one key cannot be deduced from the other. Forexample, to
authenticate that a message coming from the sender, the sender encrypts the message using
their private key. Only the sender knows the private key.But, once sent, the message can be
read only using the senders public key. Sincethe message can only be read using the senders
public key, the receiver knows the message came from the expected sender.
Privacy:-

Privacy is a consumer issue of increasing importance. National banks that recognize

and respond to privacy issues in a proactive way make this a positive attribute for the bank
and a benefit for its customers. Public concerns over the proper versus improper
accumulation and use of personal information are likely to increase with the continued
growth of electronic commerce and the Internet. Providers who are sensitive to these
concerns have an advantage over those who do not.
Availability
Availability is another component in maintaining a high level of public confidence in
a network environment. All of the previous components are of little valueif the network is not
available and convenient to customers. Users of a networkexpect access to systems 24 hours
per day, seven days a week. Among the considerations associated with system availability are
capacity, performance monitoring,redundancy, and business resumption. National banks and
their vendors who provide Internet banking products and services need to make certain that
they have the capacity in terms of hardware and software to consistently deliver a high level
of service.

2.6 INTRODUCTION OF STATE BANK OF INDIA (SBI)

Company profile State bank of India is the nations largest and oldest bank. Tracing
its roots back some 200 years to the British East India Company (and initially established
asthe Bank of Calcutta in 1806), the bank operates more than 15,000 branches within India,
where it also owns majority stakes in six associate banks. State Bankof India (SBI) has more
than 80 offices in nearly 35 other countries, includingmultiple locations in the US, Canada,
and Nigeria. The bank has other units devoted to capital markets, fund management, factoring
and commercial services, credit cards, and brokerage services. The Reserve Bank of India
owns about 60% of State bank of India.

2.6.1 HISTORY OF STATE BANK OF INDIA

State Bank of India (SBI) is that countrys largest commercial bank. The governmentcontrolled bank--the Indian government maintains a stake of nearly 60 percent in SBI through
the central Reserve Bank of India--also operates the worlds largest branch network, with
more than 13,500 branch offices throughout India, staffed by nearly 220,000 employees. SBI
is also present worldwide, with seven international subsidiaries in the United States, Canada,
Nepal, Bhutan, Nigeria, Mauritius, and the United Kingdom, and more than 50 branch offices
in 30 countries.Long an arm of the Indian governments infrastructure, agricultural, and
industrial development policies, SBI has been forced to revamp its operations since
competition was introduced into the countrys commercial banking system. As part of that
effort, SBI has been rolling out its own network of automated teller machines, as well as
developing anytime-anywhere banking services through Internet and other technologies. SBI
also has taken advantage of the deregulation of the Indian banking sector to enter the, assets
management, and securities brokering sectors. In addition, SBI has been working on reigning
in its branch network, reducing its payroll, and strengthening its loan portfolio. In 2003, SBI
reported revenue of $10.36 billion and total assets of $104.81 billion.The establishment of the
British colonial government in India brought with it calls for the formation of a Western-style
banking system, if only to serve the needs and interests of the British imperial government
and of the European tradinghouses doing business there. The creation of a national banking
system began atthe beginning of the 19th century.The first component of what was later to
become the State Bank of India was created in 1806, in Calcutta. Called the Bank of Calcutta,
it was also the countrys first joint stock company. Originally established to serve the citys
interests, the bank was granted a charter to serve all of Bengal in 1809, becoming the Bank of
Bengal. The introduction of Western-style banking instituted deposit savings accounts and
investment services. The Bank of Bengal also received the rightto issue its own notes, which
became legal currency within the Bengali region. This right enabled the bank to establish a
solid financial foundation, building an interest-free capital base.The spread of colonial
influence also extended the scope of government and commercial financial influence. Toward
the middle of the century, the imperial government created two more regional banks. The
Bank of Bombay was created in 1840, and was soon joined by the Bank of Madras in 1843.
Together with the Bank of Bengal, they became known as the "presidency" banks.All three
banks were operated as joint stock companies, with the imperial government holding a onefifth share of each bank. The remaining shares were sold to private subscribers and, typically,
were claimed by the Western European tradingfirms. These firms were represented on each
bankboard of directors, which waspresided over by a nominee from the government. While
the banks performed typical banking functions, for the Western firms and population and
members of Indiansociety, their main role was to act as a lever for raising loan capital, as well
as help stabilize government securities.The charters backing the establishment of the
presidency banks granted them theright to establish branch offices. Into the second half of the
century, however,the banks remained single-office concerns. It was only after the passage of
thePaper Currency Act in 1861 that the banks began their first expansion effort. That
legislation had taken away the presidency banks authority to issue currency, instead placing
the issuing of paper currency under direct control of the British government in India, starting
in 1862.Yet that same legislation included two key features that stimulated the growth of a
national banking network. On the one hand, the presidency banks were given the
responsibility for the new currencys management and circulation. On the other, the
government agreed to transfer treasury capital backing the currency to the banks--and
especially to their branch offices. This latter feature encouragedthe three banks to begin
building the countrys first banking network. The threebanks then launched an expansion
effort, establishing a system of branch offices, agencies, and sub-agencies throughout the
most populated regions of the Indian coast, and into the inland areas as well. By the end of

the 1870s, the three presidency banks operated nearly 50 branches among them.The rapid
growth of the presidency banks came to an abrupt halt in 1876, when anew piece of
legislation, the Presidency Banks Act, placed all three banks undera common charter--and a
common set of restrictions. As part of the legislation,the British imperial government gave up
its ownership stakes in the banks, although they continued to provide a number of services to
the government, and retained some of the governments treasury capital. The majority of that,
however, was transferred to the three newly created Reserve Treasuries, located in Calcutta,
Bombay, and Madras. The Reserve Treasuries continued to lend capital to the presidency
banks, but on a more restrictive basis. The minimum balance now guaranteed under the
Presidency Banks Act was applicable only to the bankscentral offices. With branch offices no
longer guaranteed a minimum balance backed by government funds, the banks ended
development of their networks. Only the Bank of Madras continued to grow for some time,
supplied as it was by the influx of capitalfrom development of trade among the regions port
cities.The loss of the government-backed balances was soon compensated by Indias
rapideconomic development at the end of the 19th century. The building of a nationalrailroad
network launched the country into a new era, seeing the rise of cash-crop farming, a mining
industry, and widespread industrial development. The threepresidency banks took active roles
in financing this development. The banks also extended their range of services and
operations, although for the time being was excluded from the foreign exchange market.By
the beginning of the 20th century, Indias banking industry boasted a host ofnew arrivals, and
particularly foreign banks authorized to exchange currency. The growth of the banking sector,
and the development of indigenous banks, in turn created a need for a larger "bankers

bank." At the same time, the Indian government had outgrown its colonial background
and now required a more centralizedbanking institution. These factors led to the decision to
merge the three presidency banks into a new, single and centralized banking institution, the
ImperialBank of India.Created in 1921, the Imperial Bank of India appeared to inaugurate a
new era in Indias history--culminating in its declaration of independence from the
BritishEmpire. The Imperial Bank took on the role of central bank for the Indian government,
while acting as a bankers bank for the growing Indian banking sector. Atthe same time, the
Imperial Bank, which, despite its role in the government financial structure remained
independent of the government, carried on its own commercial banking operations.In 1926, a
government commission recommended the creation of a true central bank. While some
proposed converting the Imperial Bank into a central banking organization for the country,
the commission rejected this idea and instead recommended that the Imperial Bank be
transformed into a purely commercial banking institution. The government took up the
commissions recommendations, drafting a new bill in 1927. Passage of the new legislation
did not occur until 1935, however, with the creation of the Reserve Bank of India. That bank
took over all central banking functions.The Imperial Bank then converted to full commercial
status, which accordingly allowed it to enter a number of banking areas, such as currency
exchange and trustee and estate management, from which it had previously been restricted.
Despitethe loss of its role as a government banking office, the Imperial Bank continuedto
provide banking services to the Reserve Bank, particularly in areas where the Reserve Bank
had not yet established offices. At the same time, the Imperial Bank retained its position as a
bankers bank.By then, India had achieved its independence from Britain. In 1951, the new
government launched its first Five Year Plan, targeting in particular the development of the
countrys rural areas. The lack of a banking infrastructure in these regions led the government
to develop a state-owned banking entity to fill the gap. As part of that process, the Imperial
Bank was nationalized and then integrated with other existing government-owned banking
components. The result was the creation of the State Bank of India, or SBI, in 1955.The new
state-owned bank now controlled more than one-fourth of Indias total banking industry. That
position was expanded at the end of the decade, when new legislation was passed providing
for the takeover by the State Bank of eight regionally based, government-controlled banks.
As such the Banks of Bikaner, Jaipur,Indore, Mysore, Patiala, Hyderabad, Saurashtra, and
Travancore became subsidiaries of the State Bank. Following the 1963 merger of the Bikaner
and Jaipur banks,their seven remaining subsidiaries were converted into associate banks.In
the early 1960s, the State Banks network already contained nearly 500 branches and suboffices, as well as the three original head offices inherited from the presidency bank era. Yet
the State Bank now began an era of expansion, actingas a motor for Indias industrial and
agricultural development that was to transform it into one of the world

s largest financial networks. Indeed, by the early1990s, the State Bank counted nearly
15,000 branches and offices throughout India, giving it the worlds single largest branch
network.SBI played an extremely important role in developing Indias rural regions,
providing the financing needed to modernize the countrys agricultural industry
anddevelop new irrigation methods and cattle breeding techniques, and backing the creation
of dairy farming, as well as pork and poultry industries. The bank alsoprovided backing for
the development of the countrys infrastructure, particularly on a local level, where it
provided credit coverage and development assistance to villages. The nationalization of the
banking sector itself, an event that occurred in 1969 under the government led by Indira
Gandhi, gave SBI new prominence as the countrys leading bank.Even as it played a primary
role in the Indian governments industrial and agricultural development policies, SBI
continued to develop its commercial banking operations. In 1972, for example, the bank
began offering merchant banking services. By the mid-1980s, the banks merchant banking
operations had grown sufficient

ly to support the creation of a dedicated subsidiary, SBI Capital Markets, in 1986. The
following year, the company launched another subsidiary, SBI Home Finance, in
collaboration with the Housing Development Finance Corporation. Then in the early 1990s,
SBI added subsidiaries SBI Factors and Commercial Services, and then launched institutional
investor services.SBI was allowed to dominate the Indian banking sector for more than two
decades.In the early 1990s, the Indian government kicked off a series of reforms aimedat
deregulating the banking and financial industries. SBI was now forced to brace itself for the
arrival of a new wave of competitors eager to enter the fast-growing Indian economys
commercial banking sector. Yet years as a government-run institution had left SBI bloated-the civil-servant status of its employees hadencouraged its payroll to swell to more than
230,000. The bureaucratic nature ofthe banks management left little room for personal
initiative, nor incentive for controlling costs.In 1994, the bank hired consulting group
McKinsey & Co. to help it restructure its operations. McKinsey then led SBI through a
massive restructuring effort thatlasted through much of the decade and into the beginning of
the next, an effortthat helped SBI develop a new corporate culture focused more on
profitability than on social and political policy. SBI also stepped up its international
tradeoperations, such as foreign exchange trading, as well as corporate finance, export credit,
and international banking.SBI had long been present overseas, operating some 50 offices in
34 countries, including full-fledged subsidiaries in the United Kingdom, the United States,
andelsewhere. In 1995 the bank set up a new subsidiary, SBI Commercial and International
Bank Ltd., to back its corporate and international banking services. Thebank also extended its
international network into new markets such as Russia, China, and South Africa.Back home,
in the meantime, SBI began addressing the technology gap that existedbetween it and its
foreign-backed competitors. Into the 1990s, SBI had yet to establish an automated teller
network; indeed, it had not even automated its information systems. SBI responded by
launching an ambitious technology drive, rolling out its own ATM network, then teaming up
with GE Capital to issue its own credit card. In the early 2000s, the bank began cross-linking
its banking network with its ATM network and Internet and telephone access, rolling out
"anytime, anywhere" banking access. By 2002, the bank had succeeded in networking its
3,000 most profitable branches.The implementation of new technology helped the bank
achieve strong profit gainsinto the early years of the new century. SBI also adopted new
human resources and retirement policies, helping trim its payroll by some 20,000, almost
entirelythrough voluntary retirement in a country where joblessness remained a
decidedproblem.By the beginning of 2004, SBI appeared to be well on its way to meeting the
challenges offered by the deregulated Indian banking sector. In a twist, the bank had become
an aggressor into new territories, launching its own line of banc assurance products, and also
initiating securities brokering services. In the meantime, SBI continued its technology rollout,
boosting the number of networked branches to more than 4,000 at the end of 2003. SBI
promised to remain a central figure in the Indian banking sector as it entered its third century.

2.6.2 INTERNET BANKING IN SBI

How SBI was in 90s

In early 1990s more than 7000 branches were using traditional manual procedures.
These manual procedures were inherited from the Imperial Bank.
Traditional procedures were evolved over decades
Very few changes were brought in those procedures as per the need of time.
In that time, mainframe or mini computers were used for MIS, Reconciliation & Fund
Settlement Process, or we can say that for backhand operations purpose.Changes brought by
Information Technology in SBI:In the next decade internet facility was provided for individuals.
All SBI branches were connected and ATMS were launch.
2001 - KMPG appointed consultant for preparing IT Plan for the Bank.
Later on Core banking proposed by the IT consultancy company.
2002 All branches computerized but on decentralized systems, there the initiative of
core banking took place.
2008- more than 6500 branches (95% of business) on Core Banking Solution (CBS).
Internet Banking facility for Corporate customers was also launched in early 2008.
More Interfaces developed with e-Commerce & other sites through alternate channels
like ATM & Online Banking.
All Foreign Offices were brought on Centralized Solution.
Large network is playing the role of backbone for connectivity across the country.
Multiple Service Providers are providing the links BSNL, MTNL, Reliance, Tata
&reliance which are making the system errorless and provide high speed.
Multiple Technologies to support the networking infrastructure Leased lines, Dialup, CDMA & VSAT

2.7 SERVICES PROVIDED BY SBI INTERNET BANKING

ONLINE SBI (WWW.ONLINESBI.COM): State Bank of India is Indias largest
bank with a branch network of over 11000 branches and 6 associate banks located
even in the remotest parts of India. State Bank of India (SBI) offers a wide range of
banking products and services to corporate and retail customers. Online SBI is the
Internet banking portal for State Bank of India. The portal provides anywhere,
anytime, online access to accounts for State Banks Retail and Corporate customers.
The application is developed using the latest cutting edge technology and tools. The
infrastructure supports unified, secure access to banking services for accounts in
over 11,000 branches across India.
RETAIL BANKING:
The Retail banking application is an integration of severalfunctional areas, and
enables customers to:
Issue Demand Drafts online
Transfer funds to own and third party accounts
Credit beneficiary accounts using the VISA Money Transfer, RTGS/NEFT feature
Generate account statements
Setup Standing Instructions
Configure profile settings
Use e-Tax for online tax payment
Use e-Pay for automatic bill payments
Interface with merchants for railway and airline reservations
Avail DEMAT and IPO services
CORPORATE BANKING:
The Online SBI corporate banking application provides
features to administer and manage corporate accounts online. The corporate
module provides roles such as Regulator, Admin, Up loader, Transaction Maker,
Authorizer, and Auditor. These roles have access to the following functions:
Manage users, define rights and transaction rules on corporate accounts

Access accounts in several branches with a single sign-on mechanism

Upload files to make bulk transactions to third parties, supplier, vendor and tax
collection authorities.
Use online transactional features such as fund transfer to own accounts, third party
payments, and draft issues
Make bill payments over the Internet.
Authorize, modify, reschedule and cancel transactions, based on rights assigned to the
user
Generate account statement
Enquire on transaction details or current balance
VALUE ADDED SERVICES
Tax payments to central and state governments through site to site integration.
Supply Chain Finance( e-VFS- Electronic Vendor Finance Scheme)
DirectDebitFacility
ECollectionFacilitiesfor
CoreBankingTransactions
InternetBanktransactionsforincomingRTGS/NEFTTransactions
InternetbankingtransactionsforSBIandassociatebanksDebitfacilitywhere
supplierscandirectlydebittheircustomersaccountthroughinternetbanking
PRODUCTS & SERVICES
E-Ticketing
SBI E-Tax
Bill Payment
RTGS/NEFT -Payment
Fund Transfer
Third Party Transfer
Demand Draft
Cheque Book Request
Account Opening Request
Account Statement
Transaction Enquiry
Demat Account Statement
Donation

E-TICKETING:

You can book your railway, air and bus tickets online through OnlineSBI. To book
your train ticket, just log on to irctc.co.in and create an ID there at if you do nothave one.
Submit your travel plan and book the ticket(s)-either i-ticket (where the delivery of tickets
will be made at your address) or E-tickets (wherein after successful payment transactions, an
e-ticket is generated which can be printed any time. For an e-ticket, the details of photo
identity card will required to be filled in) and select State Bank of India in the payment
options. You will be redirected to Internet Banking site of SBI (www.onlinesbi.com). After
submitting the respective ID and password, you can select your account. After a successful
debit, Railways will generate the ticket. E-ticket can be printed by you whereas the i-ticket
will be dispatched by IRCTC at the given address. Service charges @ Rs.10/- per transaction
shall be levied in addition to the cost of the ticket. Cancellation of E-ticket can be done by
logging on to IRCTC's site; refund amount will be credited to your account directly within 23 days. For cancellation of i-ticket, you shall be required to submit your ticket at a
computerized counter of Railways and on cancellation; the amount shall be credited back to
your account. You can also book your Air ticket through the e-ticketing feature. Logon to
Indian Airlines website to make a payment for an e-ticket through State Bank of India, you
need to select SBI as the payment option. The payment request will be redirected to Internet
Banking site. The request may be processed based on values sent from the airlines website.
Once a transaction is processed, an appropriate response will be sent to airlines site to update
the status of the transaction. You can print the E-ticket immediately. To book bus tickets to
destinations in Karnataka, log on to the KSRTC website. Provide details about the start and
end points of your journey, date of journey and number of tickets. Verify availability of seats
on the selected date and confirm the transaction. Select Online SBI to make the payment.
Provide your credentials and select the SBI account that will be debited for the payment. You
are provided a KSRTC reference number for your e-Ticket.
SBI E-TAX
You can pay your taxes online through SBI E-Tax. This facility enables you to pay
TDS, Income tax, Indirect tax, Corporation tax, Wealth tax, Estate Duty and Fringe Benefits
tax. Click the e-Tax link in the home page. You are displayed a page with two links Direct
Tax and Indirect Tax. Click the Direct Tax link. You will be redirected to the NSDL site
where you can select an online challan based on the tax you wish to pay. Provide the PAN,
name and address, assessment year, nature of payment and bank name. On selecting the bank
name as SBI and submitting the form, you will be redirected to the Internet Banking site.
After submitting the respective ID and password, you can select your account for making
payment of taxes. After payment is successful you can print the E-Receipt for the payment.
The E-receipt can be printed at a later date also and the same can be retrieved from: Enquiries
> Find Transactions > Status Enquiries > Click on the respective transaction to print the tax
receipt.

The Indirect Tax link is used to make Central Excise and Service Tax payments to
Central Board of Excise and Customs. The online payment feature facilitates anytime,
anywhere payment and an instant E-Receipt is generated once the transaction is complete.
The Indirect Tax payment facility is available to Registered Central Excise/Service Tax
Assesses who possesses the 15 digit PAN based Assesses Code. You can make CBEC
payments using the Indirect Taxes link available in the Payments/Transfers tab. You need to
provide your assesses code as registered with CBEC and select the minor heads towards
which you intend to pay tax. Select the appropriate tax type and enter the tax amount. Select
an account for debiting the total tax amount. You can use any of your transaction accounts to
make the payment. If a payment is successful, CBEC provides a link to generate an E-Receipt
for the payment. Internet banking customers can pay tax through site to site integration. For
government agencies, which are not Internet-enabled, Online SBI offers the Government
Tax Payment facility. This facility is available as a post login feature in the retail and
corporate banking sites of the Online SBI portal.
BILL PAYMENT
A simple and convenient service for viewing and paying your bills online. No more
late payments No more queues No more hassles of depositing cheques Using the bill payment
you can view and pay various bills online, directly from your SBI account. You can pay
telephone, electricity, insurance, credit cards and other bills from the comfort of your house
or office, 24 hours a day, 365 days a year. Simply logon to http://www.onlinesbi.com/ with
your credentials and register the biller to which you want to pay, with all the bill details. Once
the bill is uploaded by the biller, you can make payment online. You can see 'how do i' to
learn the steps for using the facility. You can also set up Auto Pay instructions with an upper
limit to ensure that your bills are paid automatically whenever they are due. The upper limit
ensures that only bills within the specified limit are paid automatically, thereby providing you
complete control over these payments. The e-PAY service is available in various cities across
the country and you can now make payments to several billers in your region.
RTGS/NEFT
You can transfer money from your State Bank account to accounts in other banks
using the RTGS/NEFT service. The RTGS system facilitates transfer of funds from accounts
in one bank to another on a "real time" and on "gross settlement" basis. This system is the
fastest possible interbank money transfer facility available through secure banking
channels in India. RTGS transaction requests will be sent to RBI immediately during
working hours post working hours requests are registered and sent to RBI on next working
day. You can also schedule a transaction for a future date. You can transfer an amount of Rs.1
lac and above using RTGS system. National Electronic Funds Transfer (NEFT) facilitates
transfer of funds to the credit account with the other participating bank. RBI acts as the
service provider and transfers the credit to the other bank's account. NEFT transactions are
settled in batches based on the following timings 1.6 settlements on weekdays - at 09:00,
11:00, 12:00, 13:00, 15:00 and 17:00 hrs. 2.3 settlements on Saturdays - at 09:00, 11:00 and
12:00 hrs. Please note that all the above timings are based on Indian Standard Time (IST)
only. In order to transfer the funds to an account with other bank, kindly ensure that the bank
branch of the beneficiary is covered under the RGTS/NEFT payment system. It is
recommended that you choose the Bank/ Branch from the drop down option provided under
the link "Add Interbank beneficiary" and exercise care to provide the correct account number
and name of the beneficiary.

E-PAYMENT
You can pay your insurance premium, mobile phone bills and also you can purchase
mutual fund units by coming from the billers website and selecting state bank of
India in
the payment option.
LIC PREMIUM:
For paying premium of LIC policy logon to www.licindia.com and register your
policy details. When the premium is due select State Bank of India in the make payment
option.
SBI Mutual FUND:
You can invest in the SBI Mutual Fund schemes online. Logon to www.sbimf.com
and select the scheme in which you want to make investment in the payment option select
State Bank of India.
CC Avenue:
Enjoy shopping at the CC Avenue Shopping Mall and purchase from a wide variety of
products and services through CC Avenue Certified Vendors. Make payments for your
purchases using your Internet enabled SBI accounts.

FUND TRANSFER
The Funds Transfer facility enables you to transfer funds within your accounts in the
same
branch or other branches. You can transfer aggregating Rs.1 lakh per day to own
accounts
in the same branch and other branches. To make a funds transfer, you should be an
active
Internet Banking user with transaction rights. Funds transfer to PPF account is
restricted
to the same branch. JustlogontoretailsectionoftheInternetBankingsitewithyour
credentialsandselecttheFundsTransferlinkunderPayments/Transferstab.Youcanseeall
youronlinedebitandcreditaccounts.Selectthedebitaccountfromwhichyouwishto
transferfundsandthecreditaccountintowhichtheamountistobecredited.Enterthe
amountandremarks.Theremarkswillbedisplayedinyouraccountsstatementforthis
transaction.Youwillbedisplayedthelastfivefundstransferoperationsonyouraccounts.On
confirmingthetransaction,youwillbedisplayedaconfirmationpagewiththedetailsofthe
transactionandtheoptiontosubmitorcancelthefundstransferrequest.Areferencenumber
willbegeneratedforyourrecord.

THIRD PARTY TRANSFER :-The user can transfer funds to his trusted third
parties by adding them as thirdparty accounts. The beneficiary account should be any branch
SBI. Transfer is instant. The user can do any number of Transactions in a day for amount
aggregating Rs.1lakh.To transfer funds to third party having account in SBI, the user need to
add andapprove a third party, the user need to register his mobile number in personaldetails
link under profile section. The user will receive a One Time SMS password on his mobile
phone to approve a third party. If the user do not have a mobilenumber, third party approval
will be handled by his branch. Only after approvalof third party, the user will be able to
transfer funds to the third party. Theuser can set limits for third party transactions made from
his accounts or evenset limits for individual third parties.
DEMAND DRAFT :The Internet Banking application enables the user to register demand drafts requests
online. The user can get a demand draft from any of his Accounts (Savings Bank, Current
Account, Cash Credit or Overdraft). The user can set limits for demand drafts issued from his
accounts or use the bank specified limit for demand drafts.The user can opt to collect the
draft in person at his branch, quoting a reference to the transaction. A printed advice can also
be obtained from the site for his record.

CHEQUE BOOK REQUEST :The user can request for a cheque book online. Cheque book can be requested forany
of his Savings, Current, Cash Credit, and Over Draft accounts. The user canopt for cheque
books with 25, 50 or 100 cheque leaves. The user can either collect it from branch or request
his branch to send it by post or courier. The usercan opt to get the cheque book delivered at
his registered address or the user can provide an alternate address. Cheque books will be
dispatched within 3 working days from the date of request to the requested destination by the
user.The user can just log on to retail section of the Internet Banking site with hiscredentials
and select the Cheque Book link under Requests tab. The user can view all his transaction
accounts. Select the account for which the user require acheque book; enter the number of
cheque leaves required and the mode of delivery. Then, submit the same.
ACCOUNT OPENING REQUEST:OnlineSBI enables the user to open a new account online. The user can apply fora
new account only in branches where he already has an account. He should have an INBenabled account with transaction right in the branch. Funds in an existingaccount are used to
open the new account. He can open Savings, Current, Term Deposit and Recurring Deposit
accounts of Residents, NRO and NRE types.He has to enter retail section of the Internet
Banking site with his using his ID and select the New Account link under Requests tab. He
can see all types of accounts. Select the account and account type he wishes to open and
submit the same. Then, he needs to select the branch and enter the initial amount to open
theaccount. He can select any of his accounts for debiting the initial amount. Then, submit the
transaction. His new account opening request will be processed by the branch.
DEMAT ACCOUNT STATEMENT:-

Online SBI enables the user to view Demat account statement and maintain such
accounts. The bank acts as your depository participant. In the third party site, you can mark a
lien on your Demat accounts and use the funds to trade on stock using funds in your SBI
savings account.The user can view Demat account details, and generate the following
statements:statement of holding, statement of transactions, statement of billing.

DONATION:The user can make donation to religious and charitable institution by using Internet
Banking of SBI. He has to just log on to http://www.onlinesbi.com/ with hiscredentials and
go to Payment and transfer and click on make donation link. After selecting the debit account,
the user has to select the religious/charitableinstitution to which he wants to offer donation.
After successful payment he canprint an E-receipt for the donation made.
CUSTOMERS PERSPECTIVE
From the customers perspective, it was also decided to collect at least 100
questionnaires from the different branches of SBI in approx equal representation therefore, a
total of 120 questionnaires were floated in these branches using on convenience basis.
Selfadministered approach was applied for data collection and surveys were completed
anonymously and returned to the researchers. At the end total 108 responses were received
and finally 100 questionnaires were selected randomly and analyzed through cross tabulation
techniques.

2.8 ECOMMERCE AND INTERNET BANKING IN INDIA

Internet banking, both as a medium of delivery of banking services and as
a strategic tool for business development, has gained wide acceptance
internationallyand is fast catching up in India with more and more banks
entering this market.
ICICI was the first bank in India to launch internet banking facility in the
year 1997.
A recent survey consisting of 46 banks, has revealed that at present, 11
banks in India are providing Internet banking services at different levels, 22
banks propose to offer Internet banking in near future while the remaining 13
banks haveno immediate plans to offer such facility.
At present, the total Internet users in the country are estimated at 2.5
Crores.

About 60% of internet users use internet banking directly or indirectly.

Costs of banking service through the Internet form 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.
The cost-conscious banks in the country have therefore actively
considered use of the Internet as a channel for providing services.Online
Activities in India Transaction Cost per Distribution Channel for Banking in
India

3. RESEARCH METHODOLOGY AND RESEARCH PROCESS

3.1 RESEARCH METHODOLOGY

The study employs primary data as well as secondary data. Secondary data was
collected from different published sources. Primary data was collected by structured
survey.
The survey was created online and link sent to the respondents from India using
convenience
sampling. The respondents, who were approached through email, were 80. Of these,
61
responses were received, giving a response rate of 76.0 percent.
In the questionnaire, various internet banking applications were included from
previous research. Later, structured questionnaire containing 32 items was developed
(18 for
general perception and 15 for internet banking features) for the purpose of data
collection.

All items were measured by responses on a five-point Likert scale in agreement/

relevance
with statements, ranging from 1= Strongly Disagree/ Completely Irrelevant to 5=
Strongly
Agree/ Completely Relevant. The analysis of primary data was carried out using
Statistical
Package for the Social Sciences (SPSS) 16.0 for windows.

3.2 RESEARCH PROCESS

Definitions
1.David J. Luck and Ronald S. Rubin:It is the determination and statement of general research approach or strategy
adopted for the particular project. It is the heart of planning.If the design adheres to the
research objective, it will ensure that the clients need will be served.
2. Kerlinger Fred N: Research design in the plan, structure and strategy to investigation conceived so as
to obtain answer to research question and to control variance.
3. Green and Tull: It is the specification of methods and procedures for acquiring the information
needed. It is the over-all operation pattern or framework of the project that stipulates whar
information is to be collected from which sources by what procedure.
Research process consists of series of actions orsteps necessary to eectively carry
out researchand the desired sequencing of these steps.
The chart shown in the following fgure well illustrates a research process.

Steps/stages in the process of research

1.To select the research topic
2.To define research problem
3.To decide research objective4
.To review useful literature
5.To develop hypothesis
6.To decide research design
7. To decide sample design
8. Data collection
9. To execute research project
10.To analyse data
11.To test hypotheses
12.To generali&e and interpret
13.To prepare research report

Features of Good Research:1. Systematic

2. Logical

3. Empiricable/related/valid
4. Replicable/ Subject to verification
5. Free from personal bias
6. Objective oriented
7.Based on modern tecnology

3.3 PHILOSOPHICAL APPROACH TO RESEARCH

All research is based on ideas about how the world is perceived and how we may best
come
to an understanding of it. Throughout the ages philosophers have debated these issues.
In this
part of the course we will alert you to how contemporary social scientists approach
these
questions and trace some of their roots. In many texts you will see that these
approaches are
often labelled quantitative versus qualitative. These distinctions are made largely
because
the nature of data. In the quantitative approach this is numerical whereas in qualitative
studies
the data consists of words in a variety of forms.We would suggest that the labels quantitative
versus qualitative should be restricted to describe the nature of the data products from
research. Crotty (1998) uses the distinction objectivism versus subjectivism to describe
different epistemological perspectives in social science research. He argued (Crotty 1998:15)
that every beginning researcher learns at once that all research is divided into two parts
and these are qualitative and quantitative respectively. He suggests that this divide the
objectivist research associated with quantitative methods over against constructionist or
subjectivist research associated with qualitative methods is far from justified. Most
methodologies known today as forms of qualitative research have in the past been carried out
in an utterly empiricist, positivist manneron the other hand quantification is by no means
ruled out within non-positivist research. We may consider ourselves utterly devoted to
qualitative research methods. Yet, when we think about investigations carried out in the
normal course of our daily lives, how often measuring and counting turn out to be essential to
our purposes. The ability to measure and count is a precious human achievement and it
behoves us not to be dismissive of it. We should accept that, whatever research we engage in,
it is possible for either qualitative methods or quantitative methods or both to serve our
purposes. In addition to Crottys use of terms such as objectivist versus subjectivist you will
also find a range of other labels used to differentiate research. These labels are given to
describe what has become known as the paradigm war. The other labels include traditional,
nontraditional, scientific versus artistic, experimental versus naturalistic, reductionist versus
holistic and prescriptive versus descriptive. In this unit we will use a range of labels reflecting
differing philosophies and approaches to research. The major areas we will cover are
positivist, critical realist, constructivist, interpretativist, post-modernism and feminist
critique. We would suggest that, rather than think in dichotomous terms, it is possible to see
the development of philosophical thought in relation to social sciences as one of a continuum.
Over time the various perspectives that have emerged have done so through a series of
arguments and counter arguments amongst philosophers. However, there is no doubt that

what we refer to as the positivist persuasion has held sway over the years despite shifts
towards a more interpretative approach to social science research.

3.4 METHODS
3.4.1 QUALITATIVE OR QUANTITATIVE APPROACH
Qualitative Approach :Qualitative research presents non-quantitative type of analysis. Qualitative research is
collecting, analyzing and interpreting data by observing what people do and say. Qualitative
research refers to the meanings, definitions, characteristics, symbols, metaphors, and
description of things. Qualitative research is much more subjective and uses very different
methods of collecting information,mainly individual, in-depth interviews and focus groups.
The nature of this type of research is exploratory and open ended. Small number of people
are interviewed in depth and or a relatively small number of focus groups are conducted.
Qualitative research can be further classified in the following type.
I. Phenomenology:-a form of research in which the researcher attempts to understand how
one or more individuals experience a phenomenon. Eg:-we might interview 20 victims of
bhopal tragedy.
II. Ethnography:- this type of research focuses on describing the culture of a group of people.
A culture is the shared attributes, values, norms, practices, language, and material things of a
group of people. Eg:-the researcher might decide to go and live with the tribal in Andaman
island and study the culture and the educational practices.
III. Case study:-is a form of qualitative research that is focused on providing a detailed
account of one or more cases. Eg:-we may study a classroom that was given a new
curriculum for technology use.
IV. Grounded theory:- it is an inductive type of research,based or grounded in the
observations of data from which it was developed; it uses a variety of data sources, including
quantitative data, review of records, interviews, observation and surveys
V. Historical research:-it allows one to discuss past and present events in the context of the
present condition, and allows one to reflect and provide possible answers to current issues
and problems. Eg:-the lending pattern of business in the 19th century.
In addition to the above, we also have the descriptive research. Fundamental research, of
which this is based on establishing various theories
Also the research is classified in to 1. Descriptive research 2. Analytical research 3.
Fundamental research 4. Conceptual research 5. Empirical research 6. One time research or
longitudinal research 7. Field-setting research or laboratory research or simulation research 8.
Clinical or diagnostic research 9. Exploratory research 10.Historical research 11.conclusion
oriented research 12.case study research 13.short term research

Quantitative Approach :-

This research is based on numeric figures or numbers. Quantitative research aim to measure
the quantity or amount and compares it with past records and tries to project for future period.
In social sciences, quantitative research refers to the systematic empirical investigation of
quantitative properties and phenomena and their relationships. The objective of quantitative
research is to develop and employ mathematical models, theories or hypothesis pertaining to
phenomena.
The process of measurement is central to quantitative research because it provides
fundamental connection between empirical observation and mathematical expression of
quantitative relationships. Statistics is the most widely used branch of mathematics in
quantitative research. Statistical methods are used extensively with in fields such as
economics and commerce.
Quantitative research involving the use of structured questions, where the response options
have been Pre-determined and large number of respondents is involved. eg:-total sales of
soap industry in terms of rupees cores and or quantity in terms of lakhs tones for particular
year, say 2008,could be researched, compared with past 5 years and then projection for 2009
could be made.

3.5 PRIMARY DATA

Primary data is information that you collect specifically for the purpose of your research
project. An advantage of primary data is that it is specifically tailored to your research
needs. A disadvantage is that it is expensive to obtain.
Some Advantages of using Primary data:
1. The investigator collects data specific to the problem under study.
2. There is no doubt about the quality of the data collected (for the investigator).
3. If required, it may be possible to obtain additional data during the study period.

3.5.1 QUESTIONAIRE
CUSTOMER PREFERENCE TOWARDS INTERNET BANKING IN SBI
1. Name ______________________
2. Gender

Male
Female

3. Age

Less than 25
25-35
35-45
45-55
55-above

4. Occupation

Service
Business
Professional
Student
Homemaker

5. Income

Nil
Less than 50,000
50,000-1,50,000
1,50,000-3,00,000
3,00,000-5,00,000
5,00,000 and above

6. What was the single most important reason that you choose this particular Bank ?

I have a traditional Bank account with the same bank

The brand name of the bank
The excellent service offered by this bank
ATM Service
Net Banking facility
Location advantage

7. What were your reasons for choosing our online banking service? Please select all that
apply.

Convenience
To save time
24 hour access to accounts
Other

8. How often do you use our services ?

Daily
Weekly
Monthly
Never

9. Which online features do you use regularly? Please select all that apply.

Pay bills
Make an account inquiry
Transfer funds between accounts
Wire transfers
Process payroll
Order check books

10. Please rate the following online features

Excellent

Good

Neutral

Poor

N/A

Bill payment
E-alerts
Wire
Transfer
Balance
Inquiry
Check Image
retrieval
Ordering
Cash
Retrieving
Bank
Statement
11. Would you use your mobile phone to do your banking ?

Yes
No

12. Which of the following mobile banking features would you use? Please select all that
apply.

Balance inquiry
Utility bill payment
Email and text alerts
Order check books
Internal account transfer

13. Which account facility you are availing in the Bank ?

Saving Account
Current Account
Fixed Account
NRI Account

14. Since how many year are you dealing with this bank ?
Less than 1 year
1 to 2 years
3 to 5 years
More than 5 years
15. What is the main reason that you typically visit your bank branch ?
(Please choose the single most important reason)

To make a deposit
To get advice for investment options
To inquire about a balance
To withdraw cash

16. How would you rate the following banking service quality on scale of 1-5 provided by
bank Where 1-Excellent,2-Good,3-Above average,4-Average,-5-Below average

Access
Communication
Confidentiality
Security
Responsiveness
Waiting time

17. If you are provided with better services by optional bank.Would you like to move to the
bank ?

Yes
No

18. How would you rank the overall service ?

Excellent
Good
Satisfactory
Average
Below Average
Signature

Thank you for your cooperation and patience.

2. Gender

Male
Female

3. Age

30%
25%
20%
15%
10%
5%
0%
Less than 25

4. Occupation

25-35

35-45

45-55

55-above

35%
30%
25%
20%
15%
10%
5%
0%
Service

Business

Professional

Student

Homemaker

5. Income

30%
25%
20%
15%
10%
5%
0%

6. What was the single most important reason that you choose this particular Bank ?

35%
30%
25%
20%
15%
10%
5%
0%

7. What were your reasons for choosing our online banking service? Please select all
that apply

Convenience
To save time
24hour access to
accounts
other

8. How often do you use our services ?

60%
50%
40%
30%
20%
10%
0%
Daily

Weekly

Monthly

Never

9. Which online features do you use regularly? Please select all that apply.

Pay bills
Make an account inquiry
Transfer funds between
accounts
Wire payroll
Process payroll
Order check books

10. Please rate the following online features

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

Excellent
Good
Neutral
Poor
N/A

11. Would you use your mobile phone to do your banking ?

Yes
No

12. Which of the following mobile banking features would you use? Please select all that
apply.

40%
35%
30%
25%
20%
15%
10%
5%
0%

13. Which account facility you are availing in the Bank ?

Saving Account
Current Account
Fixed Account
NRI Account

14. Since how many year are you dealing with this bank ?

Less than 1 year

1 to 2 years
3 to 5 years
More than 5 years

15. What is the main reason that you typically visit your bank branch ?

40%
35%
30%
25%
20%
15%
10%
5%
0%

16. How would you rate the following banking service quality on scale of 1-5 provided
by bank Where 1-Excellent,2-Good,3-Above average,4-Average,-5-Below average

5
4.5
4
3.5
3
2.5

Excellent
Good

Above Average

1.5

Average

Below Average

0.5
0

17. If you are provided with better services by optional bank.Would you like to move to
the bank ?

Sales

Yes
No

18. How would you rank the overall service ?

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Excellent

Good

Satisfactory

Average

Below Average

4. FINDINGS AND DISCUSSION

4.1 Questions and Answers Bank Manager
1. How can I reduce my monthly charges?
They should tell you to automate payments wherever possible, as charges are generally lower.
Also, recycle cash where you can, so you dont pay in and then withdraw shortly after.
2. Do you offer a payroll service?

Automated payroll services free up time. All you do is set up an authority with your bank,
send the details for each recipient, and let the bank do the rest.
3. What are the current lending criteria?
Find out if they offer a variety of borrowing options fixed term business loans, business
overdrafts, cashflow finance, credit cards and borrowing against assets, all offer a good
choice for business owners.
4. Is your online banking facility secure?
Most of the big banks offer their own downloadable security software for internet customers.
Ask them what theirs is called, how effective it is, and whether theyve had any security
breaches.
5. Do you provide general business advice when needed?
This is an important question, particularly for start-up businesses. Youll need access to
advice at some point during your journey, and this is one way they can make a big difference.

4.2 QUESTIONNAIRE
1.In which year your bank started online services?
__________________
2 Does Your Competitiors also provides similar services with respect to you?
Yes
No
3 Does your bank sell a product or service that is time-constrained? Forexample, do you work
for a financial firm offering online trading orpayment services, or a travel or entertainment
business offering onlinebooking?
Yes
No
4 Does your bank aim to serve customers via all available sales channels?
Yes
No
5 Have your competitors already built m-commerce sites?
Yes
No
6 Are your customers prone to using the latest gadgets, such as PDAs,two-way pagers and
mobile phones?
Yes
No
7 .Does online banking provide more revenue than traditional banking
Yes
No
8 What percentage of your customers using online banking servicesprovided by you?
0-20%____ 21-40%________ 41-60%_____ 61-80%______ 81-100%_________
9 Does online banking provides more reach and frequency thantraditional banking?
Yes
No
10 Your Service Provider ____________________________
11 Does online banking helps you to retain your customer and helps in to discover new
customer? ___________________________________________________
12 Does the revenue coming from the online banking crosses the expenses made on online
banking? ___________________________

13 Do you provide and kind of training programme to your employees sothey promote more
online banking? ______________________________
14 What kind of services are you providing in online banking?
Online bill payment
Online fund/money transfer
Online Bookings
Online payroll direct deposit
Mobile Recharge
International Payments
Online Purchase
15 .Do you advertise you bank on other websites
No
if yes which_______________________
16 Who is responsible for maintaining the banks website? ________________
17 How does your bank connected to internet?
DSL
Dial-up
BroadBand
Cable.
18 Is the security always updated to protect any theft or fraudulent?
Yes
No
19 Is firewalls and other securities hardware and software in place?
Yes
No
20 Is bank hardware is well-proctected from power failures or some kindof internal failures?
Yes
No
21 Is online banking well fitted in your long term strategy?
Yes
No
22 Did online banking done well according to you expectations?
Yes
No

5. SECONDARY DATA
Secondary data refers to data that was collected by someone other than the user. Common
sources of secondary data for social science include censuses, information collected by
government departments, organisational records and datathat was originally collected for
other research purposes.
Some Advantages of using Secondary data:
1. The datas already there- no hassles of data collection
2. It is less expensive
3. The investigator is not personally responsible for the quality of data (I didnt do it)

5. ANALYSIS
5.1 SWOC ANALYSIS
Strenghts :

Greater reach to customers.

Quicker time to market.
Ability to introduce new products and services quickly and sucessfully.
Ability to understand its customers needs.
Customers are given access to information easily across any location.
Greater customer loyalty.
Easy online application for all accounts, including personal loans and mortage.
24 hours account access.
Quality customer service with personal attention.

Weaknesses: Lack of awareness amng the exixting customers regarding internet banking.
Obsolesce of technology take place very soon specially in terms of security on

internet.
Procedure for applying for id and password for using services related to internet
banking takes time.
Lack of knowlwdge is found regarding internet banking in employees of SBI
Implementation of newer technologyg is little bit complicated.
Employees needs training to obtain knowledge regarding internet banking.

Opportunities:

Approximately 95% of customer are not using internet banking.

Core competency can be achieved in terms of banking if focus is made on awareness
of internet banking.
Can become 1st virtual bank of india.
Concentration of various servies should be made using internet banking.

Challenges:

Maintaining Business Edge over competitors in the context of sameness in IT

infrastucture.
Multiple vendor support is necessary fpr working of highly complex technology.
Maintaining secured IT infrastructure for business operations.
Alternative must be there in case of failure of system.

6. RECOMMENDATION AND SUGGESTIONS

Training and awareness among employees:-It is recommended that State Bank of India
should conduct various training programmes for the employees, so that they will get
aware with the terms of internetbanking. After such programmes they can create
awareness amongst the consumers.

Exchange of information on threats and vulnerabilities at appropriate forums:-There

should be an open end discussion on the threats and vulnerabilities comingacross the
functioning of internet banking work by the employees in the variousofficial forums and
meets.

Build an optimal operating model by understanding which activities to retain collaborate

and outsource:-There should be clear sight of operations which needs to outsource to
other companies, this will lead to ease in work for employees.

Bank should Create and sustain customer, investor and regulator confidence by adpting
international accounting standards :-Adopting international standards adds some more
star to the glory of any company, SBI should impose such standards when it comes to
internet banking or virtualbanking, this will enhance the goodwill of SBI among
regulator, customers and invertors.

Bank should anticipate and get prepared for regulatory changes:-Laws regarding IT or
cyber laws get change as per the need. SBI should anticipate such kind of changes and get
loaded with various plans and actions.

Focus on identifying core competence:-SBI possess some unique characteristics or

positive points in it and with the help of them it can become a leader in market. Bank
should identify such points and concentrate to flourish them more. This can be done with
the help of internetbanking, as internet banking of SBI is getting largely accepted by
customers.

Increasing usage of mobile phones is going to revolutionize the banking culturein near
future:-Mobile banking is also getting popular in the segment of internet banking thus this
can add some more steps to progress for SBI. Bank is into the mobile bankingbut it is
providing limited features.

More stress should be given on security concern on internet:-There are some people who
are into unethical practices of hacking of accounts ofcustomers. This is nothing but the
breach in the security of the SBI on internet. There should be some measures in order to
prevent such practices. IT structure should be unbreakable.

7. CONCLUSION
Studying the project I came to know that Internet banking is clearly the way forward
for the State Bank of India. It provides comfort to customers at the same time it provides cost
cutting to SBI by eliminating physical documentation. Internet banking saves time of bank as
well as those of customers.Study states that internet banking provides greater reach to
customers. Feedback can be obtained easily as internet is virtual in nature. Customer loyalty
can be gain. Personal attention can be given by bank to customer also qualityservice can be
served.Bank should know that No system is perfect, however a system of such a type
willneed to be very secure. This is a system which holds account details and customers
wealth. If such a system was not trusted and not reliable, then SBI would face serious laws
and would lose business.After studying the SWOC analysis, I came to know various strengths
of SBI such as quality customer service, greater reach, customer loyalty, easy access to
information, 24 hours access, easy online applications etc. SBI should put efforts to multiply
the number of strengths. In terms of weakness I come to know some ofthe major weaknesses
they are lack of awareness of internet banking among the customers, obsolesce of technology
related to security, complicated procedures ofavailing internet banking facilities, lack of
knowledge among the employees of SBI. SBI should concentrate on the weaknesses and
reduce them to zero.In the third segment of SWOC analysis of internet banking I dealt with
opportunities like 95 % market of internet market is untapped, SBIs path to become first
virtual bank. By encasing such opportunities bank can become the leader in banking sector of
India. In the last segment I come to know about various challenges which are in front of SBI,
like sameness in IT infrastructure within various banks, need of various vendor supports for
complex technology, maintaining secured IT infrastructure, alternative mechanism in case of
failure of present security system.The company can take the advantage of the reputation it has
created in the market for itself and become more competitiveThe recommendations and
suggestions given, if adopted will improve the positionof the company substantially and
optimal profitability coupled with better service and satisfactions for investors may be
achieved.

8. BIBLIOGRAPHY
Books:SBI training guide for internet banking.
Websities:www.statebankofindia.com
www.onlinesbi.com
www.wikipedia.com
www.google.com