CHAPTER: 2

INDIAN BANKING SECTOR

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 CHAPTER 2

INDIAN BANKING SECTOR

2.1 Indian Banking Sector – An Overview

Figure 2.1 In India the financial sector works as the
Indian Financial Sector Overview nervous system for the economic

“ Despite
risks in
increasing
innovative
development. Indian banking sector are
yet in transformations phase. The report
of RBI on Trends and progress (2014)
banking operations both
in domestic & global stated that financial sector of India
banking conditions, the
contains various sub-systems as
financial system of India
remains robust. However, financial services, banks and financial
the concern over evolving
technological risks and institutions. The RBI report
domestic factors still
acknowledged that the services sector in
looms large. “
--- financial institution is closely linked to
------- RBI
the economic expansion in India which
Source: Trend and Progress is identified an “Engine of Growth‟ in
of Banking in India RBI
Report(2014) current scenario. The growth banking
industry is evolutionary in nature. The
origin of the word ‘bank’ can be traced back to the German word “banck” which means ‘heap’ or
‘joint Stock Fund’. The Italian word ‘Banco’ was derived from the ‘Heap of Money’.” Indian
Banking Industry has arrived at to its current structure since the British Raj time. The growth
story of banking during the last decade has been spectacular and beyond the consistent double
digit growth. The key trends were powerful regulatory framework, use of multiple technological
channels with efficient customer oriented banking services and growing economic conditions. F

Indian institute of Banking and Finance Report (2010) categorized pillars of a Indian financial
system which are as given

1. Laws 2. Technology 3. Creditors’ Rights 4. Corporate Governance

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 INDIAN BANKING SECTOR

2.2 Phases of Transformation of Indian Banking Sector

Figure 2.2 Phases of Transformation of Indian Banking Sector

Source :www.rbi.org.in

2.3 Global Trends in online Banking System

Online Banking has presented the path of regulators and controller to face various challenges in
wireless banking at global level. Trends of internet banking illustrated that IB adoption among
customers is becoming more trendy and adequate in various countries.

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 INDIAN BANKING SECTOR

Figure 2.3.1 Global Trends in online Banking System

Source : www.rbi.org.in

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 INDIAN BANKING SECTOR

Figure 2.3.2 Global Trends in online Banking System

Source: www.rbi.org.in

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 INDIAN BANKING SECTOR

2.4 Structure of Indian Banking Industry

Figure 2.4 Structure of Indian Banking Industry

Source: RBI Report on Trend and Progress of Banking in India 2013-14

Table 2.1 Financial Institution in India

Institutions regulates the Financial Sector in India

Ministry of Reserve Bank Securities and Insurance

Finance of India Exchange Board Regulatory and
(MoF) (RBI) of India Development
(SEBI) Authority (IRDA)
Every year the Advises the Protects the It works on the
finance minister central board on interest of investors in guidelines of the
announces the various matters Securities IRDA2
budget Act, 1999.

Also acts as a Also acts as an Also regulates Safeguards

policy maker and investment the development the interest of
regulates the banker to the of the securities the common
financial sector government market man

Source: www.rbi.org.in

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 INDIAN BANKING SECTOR

Figure 2.5 Role and Functions of RBI

2.5 Role and Functions of Reserve Bank of

India
RBI holds the extensive powers of supervision and
control over the entire banking industry through the
Reserve Bank of India Act, 1934 and the Banking
Regulation Act, 1949.

Source : RBI Annual Reports on Currency and Finance 2014

Figure 2.6 Functions of RBI

Source : RBI Annual Report (2014) on Currency and Finance

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 INDIAN BANKING SECTOR

Figure 2.7 Regulatory and Supervisory Functions of RBI

Source : RBI Annual Report (2014) on Currency and Finance

Figure 2.8 Promotional Functions of RBI

Source : RBI Annual Report(2014) on Currency and Finance

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 INDIAN BANKING SECTOR

2.6 Introduction of Public and Private Sector Banks in India

2.6.1 Profile of Axis Bank

Table 2.2 Badhti ka naam zindagi……(Fastest Growing

Banks in India)…
Sector 3rd largest private sector bank in India , Banking, Financial Services
Founded 1994 (as UTI Bank) now established as new private banks
Founder The first branch was inaugurated on 2 April 1994 in Ahmadabad by Dr.
Manmohan Singh, the Finance Minister of India.
Headquarters Axis Bank (earlier UTI Bank) registered office : At Ahmadabad ,India
Corporate office: opened in Maharashtra Mumbai in December 1993.
Key people Chairman – Shikha Sharma (MD & CEO)
Number of Total Employees : 42,420 Women Employees : 7,117 (19% of Total )
employees as on 31-
March-2014
International 7 international offices of axis bank have been established in Singapore,
Presence Hong Kong, Dubai (at the DIFC), Shanghai , Colombo with their
Representative offices : at Dubai and Abu Dhabi,UK
branches in India as Axis bank has also network of 2402 branches with their extension counters
on 31-March-2014
ATMs as on March Annual report(2014) depicts that axis banks has largest ATMs network
2014 among private banks in India of 12922 ATMs. However, axis bank also
operates an ATM at one of the world’s highest sites at Thegu, Sikkim at a
height of 4,023 meters .
Customers as on Axis bank consists of 13 Million customers in its customer base.
March 2014
Source : Axix bank Annual Report (2014) and http://www.axisbank.com

2.6.2 SWOT Analysis – Axis Bank

Table 2.3 SWOT Analysis

Strength 1. The bank has a good image among urban population

2. The bank is registering a good growth
3. A huge portfolio of product and services
4. Decent penetration in the rural areas
5. One of the largest private sector financer in India for Agriculture loans wiz Retail
Agri & Corporate Agri.

Weakness 1. less branches as compared to its competitors banks

2. Image of Axis bank yet under the shadow of the UTI banks

Opportunity 1. bank can continue its expansion in rural areas in India

2. Going to foreign markets and exploring the new economies

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 INDIAN BANKING SECTOR

Threats 1. updated guidelines with licenses have been issued by the Reserve Bank Of
India
2. Foreign banks 3. Competitors

Competition

Competitors banks 1. SBI 2. Punjab National Bank 3. ICICI bank

One of the largest private sector financer in Indian

USP agriculture
STP

People and Enterprises in need of banking and financial

Segment services
Target Group Higher income group NIs , Corporate, middle earnings group People

Positioning Bank that is with you when you are in need

Source: Annual Report ( march 2015) of Axis bank http://www.axisbank.com Dtd march 2015

2.6.3 Awards & Recognition of Axis Bank

Table 2.4 Awards & Recognition of Axis Bank

Award Won - Year Surveyed & Awarded Award Won - Year Surveyed & Awarded
2014 by 2013 by
Axis Bank voted for Most Trusted Brands Bank of the Year - Money Today
Most Trusted PSIBs survey 2014 by Brand 2012-2013 FPCIL Awards
Bank in India Equity 2012-13

Axis Bank ranked no. 1 The Asset Benchmark Best Bank –( 2012-2013) CNBC-TV18 India’s
bank in INDIA in both Research Best Bank and
Primary & Secondary Financial Institution
market of corporate bonds Awards 2013
Axis Bank ranked No 1 Business Today 2014 Best Bank - Runner Up Outlook Money
company to work for in Awards 2013
the BFSI sector - 'The
Best Companies to Work
for'

Consistent Performer - Business Today & Consistent Performer - Business Today

India’s Best Banks – KPMG Research India’s Best Banks – & KPMG
2014 2014 2013 Research 2013
Fastest Growing Large Business World – Fastest Growing Large Dun & Bradstreet -
Bank PWC Survey of Bank Polaris Financial
India’s best banks Technology Banking
2014 Awards 2013
Ranked No 1 in the IT Express IT Awards Fastest Growing Large Business world Best
Biz Award - large Bank Banks Survey 2013
enterprises category

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 INDIAN BANKING SECTOR

Second Runners Up for IBA Banking India Bond House of IFR ASIA -
Best Technology Bank Technology Awards the year -2013 Country Awards
of the Year amongst 2014 2013
Private Sector Banks
Second Runners Up for IBA Banking Gold Shield for ICAI (Institute of
Best Internet Bank Technology Awards Excellence in Financial Chartered
amongst Private Sector 2014 Reporting in the Private Accountants of
Banks Banks category - 2012-13 India)

Source: Annual Report of Axis bank March 2015

http://www.axisbank.com/media-center/Awards-Recognition.aspx Dtd march 2015

2.6.4 Profile of HDFC Bank

Table 2.5
Profile of HDFC Bank "We understand your world"
Sector Private Sector Bank
Founded August 1994
Founder HDFC bank had been promoted by the Housing Development Finance Corporation which is a premier
housing finance company was set up in 1977 in India.
Headquarters Mumbai, Maharashtra, India
of HDFC
bank
Key people Aditya Puri (MD)
of HDFC
Bank
Number of Total Employees : 69,065 Women Employees :12,295 (17.80% of Total ) till march 2015
employees
International HDFC bank have overseas branches in Bahrain and Hong Kong
Presence
Branches in 3659 branches in India as on march 2015
India
ATMs in HDFC bank has 11,633 ATMs, in 2,287 cities of India, branches are linked with an online real-time basis as on
India March 2015. Now, HDFC bank introduced Mobile Banking in Hindi also. On a day, HDFC bank launches 87
branches across Punjab and Haryana state.
Customers HDFC bank has around 28.7 million customers base till march 2015.
Base
Source :Annual Report HDFC Bank(March 2015) www.hdfcbank.com/aboutus/cg/annual_reports.htm Dtd March 2015

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 INDIAN BANKING SECTOR

2.6.5 SWOT Analysis of HDFC Bank

Table 2.6 SWOT Analysis HDFC

1. One of the leading new age private sector bank

2. In India HDFC Bank contain more than 1700 branches and more than 5000
Strength ATMs, in around 780 cities.
3. Existing CBS across its branches
4. Huge employee base i.e more than 51000 employees
5. Large collaborations with corporate for employee salary accounts

Weakness 1.Rural penetration is low

2.Lesser no. of branches when compared with its competitors

Opportunity 1.Mobile banking, Internet banking

2.Venturing into rural areas
3.Providing more complex products to the ever increasing demands of the industry

Threats 1.Competitors
2.New banking licenses
3.Foreign banks that offer complex products

Competition

1.SBI
2.ICICI
3.Bank of Baroda
Competitors 4.Punjab National bank

USP One of the Big four banks in India

STP

Segment For people who wish to invest their money in banks

Target Group Corporate, Middle income group

Positioning A bank that puts the customer first preference

Source: Annual Report of HDFC bank march 2015 www.hdfcbank.com/aboutus/cg/annual_reports.htm Dtd march
2015

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 INDIAN BANKING SECTOR

2.6.6 Awards & Recognition of HDFC Bank

Table 2.7 Awards & Recognition of HDFC Bank

Award Won - Year 2014 Surveyed & Award Won - Year Surveyed & Awarded
Awarded by 2013 by

HDFC Bank wins Best Private Euro Money Best Bank in Large By Outlook Money
Banking Services for Super affluent Banks Category Awards 2013
clients for 5 years in a row at Euro
money

Best Private Banking Services “Euro money “Most Innovative by IBA

award for Net worth-specific Private Banking use of Technology” Innovation
services category for Super and Wealth Awards
affluent clients (US$ 1 million to Management
US$ 5 million). Survey 2015”

Best Private Banking Services

award Asset Management

“Best Bank in the New Private FE Best Bank Best Private Sector Dun & Bradstreet
sector - Winner – Profitability Awards Bank Technology Polaris Financial
Winner – Efficiency.” Adoption Technology
Banking Award
Best Private Sector 2013
Bank Retail

Overall Best Private

Sector Bank

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 INDIAN BANKING SECTOR

Best Large Bank – Business Today Best Bank in Asia Institutional Investor
– -
Overall - Best
KPMG Study Mr. Aditya Puri -
Large Bank - Growth 2014 Best CEO
Institutional
Investor

Best Large Bank Business world- Best Private Sector Sunday Standard Best
PwC India Best Bank: Banker awards
Fastest Growing Large Bank Banks Survey - Safest Bank: Large
2014 - Mr. Aditya Puri:
Top Achiever
Best Domestic Provider of FX Asia money FX Best CNBC TV 18
options Poll 2014 Performing Financial
Bank – Private Advisory
Best Domestic Provider of FX UTI Mutual Awards 2012
products & Services Fund

Best Domestic Provider of FX

research & market coverage

Best Domestic provider for FX

Services

Strongest Bank in Balance Sheet Best Domestic Asia Money 2013

India in the Asian Ranking 2014 Bank in India -
Banker 500 (AB The Asian Mr. Aditya Puri:
500) Strongest Banker Best Executive in
Bank India

Best Bank - Managing IT Risk Dun & Best in Financial MACCIA Awards
(Large Banks) Bradstreet - Services: Bank 2013
Polaris Financial Category
Best Bank - Mobile Banking Technology
(Large Banks) Banking Awards
2014
Best Bank - Best IT Team
(Private Sector Banks)

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“Best Corporate in Banking Dun & Best IT Driven NASSCOM CNBC–

Sector” Bradstreet - Innovation in TV18 IT Innovation
Manappuram Banking Award
Finance Limited (COMMERCIAL)
Corporate
Award 2014
Best Customer The National Quality
Service Result Excellence Awards

Source : Annual Report of HDFC bank March 2015

http://www.hdfcbank.com/aboutus/awards/default.htm Dtd 2015

2.6.7 Profile of Public Sector Bank ( SBI Bank)

Table 2.8 Profile of SBI Bank

"The Banker to Every Indian”
Sector Public Sector Bank
SBI bank ranked as number 1 bank among 4 other public sector banks and “India’s
Best Marketed Bank
Founded 27 January 1921, As Imperial Bank of India , 2 June 1956 , Nationalization , 1 July
1955
Founder
Headquarters of Mumbai, Maharashtra ,India
SBI banks
Key people Arundhati Bhattacharya (Chairperson) is the first woman Chairperson of SBI bank
appointed on October 7, 2013.
Number of SBI bank is the largest employers in India.
employees Total Employees : 222,033 Women Employees: 45,132 (20% of Total ) as on march
2015
International SBI bank has 190 overseas offices spread over 36 countries. It has branches in
Presence Moscow, Colombo, Dhaka, Frankfurt, Hong Kong, Tehran, Johannesburg,
As on March London, Los Angeles,Maldives, Muscat, Dubai, New York, Osaka, Sydney, and
2015 Tokyo. Also it has offshore banking units in the Bahamas, Bahrain, and
Singapore, and representative offices in Bhutan and Cape Town.
Branches in SBI has 14 regional hubs and 57 Zonal Offices that are located in major cities of
India India. SBI has 20,193 branches, including 5,096 branches of its five associate banks.
14,816 branches in India, as on March 2015. SBI bank also has 9,851 (66%) branches
in Rural and Semi-urban areas.

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ATMs Network SBI become the first bank to install an ATM at Drass in the Jammu & Kashmir Kargil
region. This was the Bank's 27,032nd ATM on 27 July 2012. Now SBI has 43,515
ATMs and SBI group (including associate banks) has 51,491 ATMs till march 2015.

Customer Base SBI bank has 219.2 Million customers as on march 2015.
SBI now has five associate banks, down from the eight that it originally
SBI Associate
acquired in 1959. All use the State Bank of India logo alog with the
Banks
"State Bank of" name, followed by the regional headquarters' name:

• State Bank of Bikaner & Jaipur

• State Bank of Hyderabad
• State Bank of Mysore
• State Bank of Patiala
• State Bank of Travancore

Source: Annual Report SBI bank(March 2015) www.sbi.co.in Dtd March 2015

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2.6.8 SWOT Analysis SBI Bank

Table 2.9 SWOT Analysis State Bank of India (SBI)

1. The biggest bank in the country

2. Has a separate act for banking itself. Thus, a special advantage.
3. Biggest branch network in the country
Strength 4. First public sector to move to CBS

1. Huge amount of staff

2. Expected to experience high level of attrition due to retirement of its top management
Weakness 3. In public, still have the image of the old public sector bank

1. Pool in talent to replace the going top management to serve the next generation
2. Make better use of its CRM
Opportunity 3. Expansion into rural areas

1. Consolidation among private banks

2. New bank licenses by RBI
Threats 3. Foreign banks that have sophisticated products

Competition

1. ICICI
2. PNB
Competitors 3. Bank of Baroda

USP A bank which you can trust

STP

People who want to use their money for banking

Segment

Target Group People from all walks of life

Positioning A bank for every Indian

Source: Annual Report of SBI bank march 2015 www.sbi.co. Dtd March 2015

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2.6.9 Awards & Recognition of SBI Bank

Table 2.10 Awards & Recognition of SBI Bank

Award Won - Year 2014 Surveyed
&
Awarded
by

Best Use of Mobility Technology IBA Awards – 2014

Best Use of Technology In Financial Inclusion IBA Awards –

2014

Best Use of Technology For E -Learning And Training IBA Awards – 2014

Best Use of Technology In Financial Inclusion IBA Awards – 2014

IBA
Best Customer Management IBA Awards – 2014 Banking
Technology
Best Use of Technology In IB(Internet Banking) IBA Awards – 2014 Awards –
2014
Best Internet Bank IBA Awards – 2014

Best Use of Technology in Payment System IBA Awards – 2014

The Best Overall Performance as Domestic Provider of FX Services Over The Last 10 Years.
IBA Awards – 2014
Source :Annual Report of SBI bank March 2015 www.sbi.co.in Dtd march 2015

2.6.10 Profile of Public Sector Banks (/ Punjab National Bank)

Table 2.11 Profile of Punjab National Bank

The name you can BANK upon!
Sector Public Sector Bank
Founded 19 May 1894
Founder Lala Lajpat Rai
Headquarters of bank New Delhi, India

Key people Gauri Shankar (Executive Director with additional charge of

MD & CEO)
Number of employees Total Employees : 62,392 Women Employees : 11,594 (18% of total) till march
2015
International Presence PNB bank has Banking subsidiary in UK, Hong Kong, Dubai and Kabul. Whereas
PNB bank have Representative offices in various countries as Almaty
(Kazakhstan), Dubai, Shanghai (China), Oslo (Norway) and Sydney (Australia).
Branches in India PNB bank has 6,081 branches in India along with one joint venture in
Nepal – “Everest Bank Limited”, there are 48 branches in Nepal of PNB
joint venture as on march 2015
ATMs Network 7,900 ATMs across 764 cities in India as on march 2015
Customers Base PNB bank has over 80 million customers as on march 2015
Source : Annual Report PNB bank March 2015 http://www.pnbindia.in/en/ui/Awards.aspx Dtd March 2015

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2.6.11 SWOT Analysis Punjab National Bank

Table 2.12 SWOT Analysis Punjab National Bank

Strength 1. Diversified operations with 5100 branches

2. Strong I. T support with “best fit” approach
3. Schemes for small and medium scale businesses
4. It is the second largest state-owned commercial bank in India with about 5000 branches
across 764 cities
5. Its 56,000+ workforce serves over 37 million customers

Weakness 1. Less penetration in the urban areas

2. Inadequate advertising and branding as compared to other banks
3. Legal issues regarding employees caused a bad name of PNB

Opportunity 1. Small scale business banking across India

2. Expansion in other countries for international banking
3. Installation of more ATM’s and better customers services

Threats 1. Economic crisis and economic fluctuations

2. Highly competitive environment
3. Stringent Banking Norms by the RBI and the Govts

Competition

Competitors 1 Indian bank 2. Andhra Bank 3 Canara bank 4. ICICI Bank

5. HDFC Bank 6. SBI

USP Punjab National Bank is one of the Big Four banks of India

STP

Segment Urban and rural banking

Target International Banking

Group

Positioning Complete Banking solutions

Source : Annual Report of SBI bank march 2015 http://www.pnbindia.in/en/ui/Awards.aspx

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2.6.12 Awards & Recognition of Punjab National Bank

Table 2.13 Awards & Recognition of Punjab National Bank

Award Won - Year Surveyed & Award Won - Year Survey &
2014 Awarded by 2013 Award
organized
Banking, Financial Golden Peacock Institute of
Services & ABP News Business Excellence Directors
Insurance under Bank Awards
with leading
Financial Inclusion
Initiatives

IBA Banking Social and World CSR

Technology IBA (Indian Corporate Day and
Awards-Best Risk Banks' Governance Bombay Stock
Management and Association) Award- Best exchange
Security Initiatives Corporate Social
Responsibility
IBA Banking
Technology
Awards-Best
Customer
Management
Initiatives PSU (1st
Runner Up)

IBA Banking
Technology
Awards-Best Use
of Technology in
Training and E
Learning (2nd
Runner Up)
Best Bankers' Award The Sunday Best Public Sector
under the Category Standard’ Bank CNBC TV 18 CNBC TV 18
Agriculture Credit Best Bank and
and Inclusion Financial Institutions
Awards

‘3rd Asia's Best Organization with Asia Pacific

CSR Practices Innovative HR HRM Congress
Awards- Best CSR World CSR Day Practices
Practices Overall “

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 INDIAN BANKING SECTOR

Employer Best online Bank ( 1st

4th Asia's Best Branding Runner Up)
Employer Brand Awards Indian Banks'
Awards 2013- Bank with Best Use Association
Excellence in of Business
Training Intelligence (W inner)

Bank with Best Risk

Management and
Security
Initiatives(winner)

Bank with Best

Financial Inclusion
Initiatives (Second
Runner Up)

Banking Technology IDBRT, 3rd CMO Asia

Excellence Awards - Hyderabad Excellence for
Customer Branding & CMO Asia
Management and Marketing under
Business Excellence Banking, Financial
Initiatives Institutions and
Insurance
3rd Asia's Best Employer
Employer Brand Branding
Awards- Excellence Awards and
in Training World HRD
Congress

Source : Annual Report of PNB bank March 2015 Dtd 2015

http://www.pnbindia.in/en/ui/Awards.aspx

2.7 Product and ancillary Services offered in E-Banking in India

Figure 2.9 Product and ancillary Services offered in E-Banking

Loan Products Deposit Product Other Products/Services

• Auto Loan • Deposit • NRI Services

• Gold Loan • Saving Accounts • POS Terminals

• House Loan • Current • Private Banking

Accounts
• Education Loan • Demat Services
• Fixed /Recurring
Retail Banking • Retail Banking
Business

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 INDIAN BANKING SECTOR

Commercial Banking Transaction Banking Key Segment

Term Loan Clearing bank Services Large corporate

Bill Collection
Tax collection Emerging Corporate
Working Capital
Banker to Public Issue Govt. PSU
Whole-Sale Deposits
Wholesale Custodian Services
Banking
Product Segment Other Financing

Equities Cash Management

Capital Markets Financial Decisions

Debit Securities
Treasury
Banking Foreign Exchange

Source: www.rbi.org.in Dtd march 2015

2.8 Advent of information technology in Indian Banking Sector

2.8.1 PEST Analysis on the Banking
Industry Figure 2.10 PEST Analysis on the Banking Industry
Mckinsey research report (2013) described Factors affects the Banking Industry
that banking sector in India has been
constantly moving towards the
P Political Factor E Economic
development of emerging technological Factor
-Monetary Policy
changes in banking operations and
services. Banks plays a pivotal role -Regulatory Framework More Saving
through improved e banking technologies
to reduce cost, time and enhance the -Budget More Capital Formation
customer satisfaction as well as customer - Change interest rate Increase Production of
retention. Information technology provides Goods and Services
the flow of information for CBS bank
branches and online transactions.
Development in information technological
tools for banking provides faster data S Social Factor T Technological
leading with faster judgment and decision- Factor
making in customers and employees both. Population Increase
Internet Banking
Changes in Lifestyle
Source: Mckinsey Research Report (2013)
IT Banking Services
Easy Way of Lending
Money Mobile Banking

Increase banking Services Credit Cards

in Rural Areas
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2.8.2 Comparison of Technological Growth of Electronic Payment System in Public and

Private Sector Banks

• NATIONAL ELECTRONIC FUND TRANSFER (NEFT)

RBI report on Trend and Progress of Banking in India (2014) stated that the electronic
payment system (EPS) innovation provides one to one fund transfer services through “NEFT”.
Owing to improvement in EPS customers, various organizations and business are now able to
transfer their funds electronically from one NEFT enabled bank branch to another NEFT enabled
bank branch in India. RBI report on Trend and Progress of Banking in India (2014) also
illustrated that as per the funds transfer guidelines of RBI the NEFT-enabled branches also offer
fund transfer NEFT services for walk-in customers also.
Chart 2.1 NEFT Outward Transactions
Table 2.14.1 NATIONAL ELECTRONIC FUND
TRANSFER (NEFT) Outward Transactions

Year SBI PNB HDFC Axis

2010-
2011 3668093 426645 8557718 2,555,945.00
2011-
2012 26730762 3289788 28573954 15,881,061.00
2012-
2013 47102934 6300452 50774319 34,075,642.00
2013-
2014 58122850 7205231 62662212 44,016,252.00
2014-
2015 64102532 7512421 68453420 50,025,340
Source : www.rbi.org.in Source : www.rbi.org.in

Mobile Banking: RBI report on Trend and Progress of Banking in India (2014) affirmed that
Mobile banking is a system that allows various financial transactions through a mobile device
through mobiles, tablet to the customers. RBI
report on Trend and Progress of Banking in India (2014) also described that Mobile banking is

completely different from mobile payment e banking services. Mobile payment allows 24* 7
payment option of goods and services either at the point of sale or from anywhere through
mobile devices. Customers can also utilize the debit or credit card which is also another effective
mode on EFTPOS payment.

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Chart 2.2 Mobile Banking Transactions

TABLE 2.14 Mobile Banking Transactions in Volume
Year SBI PNB HDFC Axis
FY 18077044 2016 191612 333691
2011-
2012
FY 36695557 15104 841816 4410330
2012-
2013
FY 2013- 59007420 20812 317180 1636647
2014
FY 72534569 25689 589479 5987485
2014-
2015

Source :www.rbi.org.in Source :www.rbi.org.in

Expansion of ATMs
Automated Teller Machine (ATM) : RBI Annual Report on Currency and Finance(2014)” illustrated that
ATM is an electronic fund transfer workstation that allows customers to deposit their cash , inter
and intra fund transfer between accounts, balance enquiries, print of mini statement, cash
withdrawals and pay bills services. ATM can be operated through plastic card contains
significant information with secure codes. The plastic card is the replacement of cheque, physical
presence of customers in bank branch to paperless banking and 24*7 e- banking transactions
from anywhere. ATMs are debit cards which are used as spring board for electronic fund
transfer.

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 INDIAN BANKING SECTOR

Table 2.15 Expansion of ATMs Bank Wise & Year Wise Chart 2.3 Expansion of ATMs

Total Total Total

Total
Table ATMs ATMs ATMs
ATMs
2.15 FY FY FY
FY
BANK 2011- 2012- 2014-
2013-2014
2012 2013 2015
SBI 22,141 27,175 44,429.00 78,650
PNB 6,009 6,312 7,548.00 18,456
Axis 9,924 11,245 12,820.00 28,364

HDFC 8,913 10,743 11,381.00

26,565
Source :www.rbi.org.in Source :www.rbi.org.in

2.9 Electronic Payment System and Legal Issues in Wireless Banking

IBA COMMITTEE (2010) report on “BANKING INDUSTRY VISION 2010 “ stated that
Payment and Settlement system is the backbone of any financial market place. The present
Payment and Settlement systems such as Structured Financial Messaging System (SFMS),
Centralized Funds Management System (CFMS), Centralized Funds Transfer System
(CFTS) and Real Time Gross Settlement System (RTGS) will undergo further fine-tuning to
meet international standards. Needless to add, necessary security checks and controls will
have to be in place. In this regard, Institutions such as IDRBT will have a greater role to
play. One area where the banking system can reduce the investment costs in technology
applications is by sharing of facilities. We are already seeing banks coming together to share
ATM Networks. Similarly, in the coming years, we expect to see banks and FIs coming
together to share facilities in the area of payment and settlement, back office processing, data
warehousing, etc. While dealing with technology, banks will have to deal with operational
risks. This would be critical issues to deal in the banking business in future.

2.10 Evaluation of challenges in implementation of IT tools in Banking Sector

Bahram & Hussein (2013) in their study about “The Effect of Using Electronic Banking on
Profitability of Bank” identified that modern digital technology solutions would be able to

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provide fast, accurate flow of information and enable quick analysis of future banking business.
E banking provides faster and more efficient decision making process in the positive perspective
of growth in banking sector. Mohammad & Amin (2013) described in their research on
“Investigating the Effect of Electronic Banking Systems on Customer Satisfaction in Tehran”
that an outcome of improved e banking services are the reduction of transaction and operations
cost in long run, sharing of benefits between banks and customers . IT investment in banking
and financial services of Indian banking industry have been increasing enormously to provide
enhanced technology solutions and more satisfied e banking customers base.

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