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I. Introduction to central bank of India
II. Products of central bank of India
III. Database & methodology
IV. Innovations in banking by products
V. Innovations in banking by branches
VI. Conclusion, finding & suggestions

This chapter contains the information about Central Bank of India origin,

 Profile:
Established in 1911, Central Bank of India was the first Indian
commercial bank, which was wholly owned and managed by Indians. The
establishment of the Bank was the ultimate realisation of the dream of Sir
Sorabji Pochkhanawala, founder of the Bank. Sir Pherozesha Mehta was the
first Chairman of a truly 'Swadeshi Bank'. In fact, such was the extent of pride
felt by Sir Sorabji Pochkhanawala that he proclaimed Central Bank as the
'property of the nation and the country's asset'. He also added that 'Central Bank
lives on people's faith and regards itself as the people's own bank'.
During the past 95 years of history the Bank has weathered many
storms and faced many challenges. The Bank could successfully transform
every threat into business opportunity and excelled over its peers in the
Banking industry.
A number of innovative and unique banking activities have been
launched by Central Bank of India and a brief mention of some of its
pioneering services are as under:

1921 Introduction to the Home Savings Safe Deposit Scheme to
build saving/thrift habits in all sections of the society.
1924 An Exclusive Ladies Department to cater to the Bank's
women clientele.
1926 Safe Deposit Locker facility and Rupee Travelers' Cheque.
1929 Setting up of the Executor and Trustee Department.
1932 Deposit Insurance Benefit Scheme.
1962 Recurring Deposit Scheme.

Subsequently, even after the nationalization of the Bank in the year 1969,
Central Bank continued to introduce a number of innovative banking services
as under:
1976 The Merchant Banking Cell was established.
1980 Central card, the credit card of the Bank was introduced.
1986 'Platinum Jubilee Money Back Deposit Scheme' was
1989 The housing subsidiary Cent Bank Home Finance Ltd. was
started with its headquarters at Bhopal in Madhya Pradesh.
1994 Quick Cheque Collection Service (QCC) & Express Service
was set up to enable speedy collection of outstation cheque.

Further in line with the guidelines from Reserve Bank of India as also the
Government of India, Central Bank has been playing an increasingly active role
in promoting the key thrust areas of agriculture, small scale industries as also

medium and large industries. The Bank also introduced a number of Self
Employment Schemes to promote employment among the educated youth.
Among the Public Sector Banks, Central Bank of India can be truly
described as an All India Bank, due to distribution of its large network in 27
out of 28 States as also in 4 out of 7 Union Territories in India. Central Bank of
India holds a very prominent place among the Public Sector Banks on account
of its network of 3194 branches and 267 extension counters at various centers
throughout the length and breadth of the country
In view of its large network of branches as also number of savings
and other innovative services offered, the total customer base of the Bank at
over 25 million account holders is one of the largest in the banking industry.
Customers' confidence in Central Bank of India's wide ranging
services can very well be judged from the list of major corporate clients such as
ICICI, IDBI, UTI, LIC, HDFC as also almost all major corporate houses in the

 Vision:
Our vision is to emerge as a strong, vibrant and pro-active bank
and to positively contribute to emerging needs of the economy through
harmonization of human, financial and technological resources and effective
risk control system.

 Capital structure:
The authorized Capital of Central Bank of India is
15,000 million equity shares of Rs.10 each & 8,000 million are perpetual non-

cumulative preference shares. Out of which 324,141,460 equity shares of Rs.10
issued and 80,000,000 equity shares of Rs. 10 fully paid up.

General Managers

Name Designation Tel. No.

Priority Sector/ Rajbhasha/ Operation/
Shri G Gupta 022-22161091
Central Card/ Subsidiaries
Shri S Suresh Credit/ Credit Policy/ Loan 022-22022048
Shri K K
Credit Appraisal 022-22021553
Shri R P
Zonal Manager - New Delhi 011-23318964
Shri S G
Zonal Manager - Kolkata 033-22301270
New Initiative Dept/ Planning &
Shri A Ghosh 022-22024601
Development/ Profitability
Shri G P
HRD/ Dept of IT/ Risk Management 022-22022565
Shri N Audit & Inspection/ House Keeping &
Natrajan IBR/ General Administration Dept
Shri R N International Division/ Treasury/
Vadivelu MBD/ Dept of IT
Shri R Planning & Development/ Accounts/ 022-22026776
Natarajan Legal/ Recovery
Shri S M
Zonal Manager - Mumbai Metro 022-22043673
Audit/ Inspection/ Inter Branch
Shri V P Sathe 022-27580571
Reconciliation/ Housekeeping
Shri H K Accounts/ Recovery/ Legal & BIFR/ 022-22023326

Vesuna HRD
Shri K A
Zonal Manager - Chennai 044-28554792

Corporate Office
Central Bank of India
Chander Mukhi, Narman Point
Mumbai – 400 021
Tel: 022 – 6638 7777

Zonal Offices


Block No. 37/2/4, Sanjay Tel.: 0562 – 2850154/3424

Place Fax: 0562 – 2853698/1341
Agra – 282 002 Email: zmagrazo@centralbank.co.in


Central Bank Building Tel.: 079 – 25503586

P.O. No. 205, Lal Darwaja Fax: 079 – 25505995
Ahmedabad – 380 001 Email: zmahmezo@centralbank.co.in


9, Arera Hills, Jail Road Tel.: 0755 – 2674037/36/35/34/33

Bhopal – 462 011 Fax: 0755 – 2552019
Email: zmbhopzo@centralbank.co.in


P. B. No. 13, No. 58-59 Tel.: 0172 – 2702994/98

Bank Square, Sector – Fax: 0172 – 2704047
17B Email: zmchanzo@centralbank.co.in
Chandigarh – 160 017


48/49, Monteith Road Tel.: 044 – 28554792/4692/4620
Egmore, Fax: 044 – 28551260
Chennai – 600 008 Email: zmchenzo@centralbank.co.in


G. S. Road, Central Bank Tel.: 0361 – 22457651/52

Building Fax: 0361 – 22452154 Email:
Bhangagarh, zmguwazo@centralbank.co.in
Guwahati – 781 005


P. B. No. 522, 710-712 Tel.: 040 – 24740361/64, 24611402-05

Mahapathram Road, Bank Fax: 040 – 24742841 Email:
Street zmhydezo@centralbank.co.in
Hyderabad – 500 195


Central Bank Building Tel.: 033 – 22301270/1275/7007

33, Netaji Subhash Road Fax: 033 – 22309864
Kolkata – 700 001 Email: zmkolkzo@centralbank.co.in


P. B. No. 10, Akash Deep Tel.: 0522 – 2611301-4

23, Vidhan Sabha Road Fax: 0522 – 2621213
Lucknow – 226 001 Email: zmluckzo@centralbank.co.in


Standard Building, 1st Tel: 022 – 22047229/7301/7304

Floor Fax: 022 – 22044720
D. N. Road, Email: zmmmzo@centralbank.co.in
Mumbai – 400 023


Pawapuri Vihar Building, Tel: 0621 – 22251855

N. H. 28 Fax: 0621 – 2251784
Near Bhagwanpur Chowk Email: zmmuzazo@centralbank.co.in
Muzaffarpur – 842 001


Oriental Building, 2nd Tel.: 0712 – 2520361-63

Floor Fax: 0712 – 2520365
Kamptee Road, Email: zmnagpzo@centralbank.co.in
Nagpur – 440 001


P. B. No. 7007, Link Tel.: 011 – 23318964, 23319268/69

House Fax: 011 – 23311332/237
Press Area, 3 Email: zmdelhzo@centralbank.co.in
Bahadurshah Jafar Road,
New Delhi – 110 002


2nd Floor, Block B Tel.: 0612 – 2226607

Maurya Lok Complex Fax: 0612 – 2221898
Dak Banglow Road, Email: zmpatnzo@centralbank.co.in
Patna – 800 001


P. B. No. 98, 317 Tel.: 020 – 26131611-17

M. G. Road, Fax: 020 – 26131618
Pune – 411 001 Email: zmpunezo@centralbank.co.in


1st Floor, Block ‘C’ Tel.: 0771 – 2226756, 2225171

Bombay Market, G. E. Fax: 0771 – 2234895
Road, Email: zmraipzo@centralbank.co.in
Raipur – 492 001

Directors of Central Bank of India & their addresses:
1. Ms H. A. Daruwalla
Chairperson & Managing Director
Chander Mukhi
Nariman Point
Mumbai-400 021
Tel.: (O) 022 - 22024393 / 22023942
Fax: 22028122
2. Shri K. Subbaraman
Executive Director
Chander Mukhi
Nariman Point
Mumbai-400 021
Tel: (O) 022 - 22023661 / 66387799 / 66387826
Fax: 22856187
3. Shri Albert Tauro
Executive Director
Chander Mukhi
Nariman Point
Mumbai-400 021
Tel: 022 - 22874143
Fax: 022 – 22022617
4. Shri P. P. Mitra
Economic Advisor and Joint Secretary

Ministry of Finance
Banking Division
Jeevan Deep Building
New Delhi Tel: 011 – 23745128
5. Shri M.K. Bhattacharya
RBI Nominee Director
Evershine Millenium Park Apts.
37/601, Thakur Village, Kandivili (East)
Mumbai – 400101
6. Shri Kamal Faruqui
A-80, Nizamuddin East,
New Delhi -110013
Tel: 011 – 23269723
7. Major (Retd) Ved Prakash
204/1 Neb Valley,
Neb Sarainew
Tel: 011 - 23018891 / 23014325
Fax: 011 – 23017047
8. Smt. Satya Bahin
89, Sector-4, Vaishali
Ghaziabad (U.P)
Tel: 0120 – 2774995
9. Shri Harish Chandhok

20-21, Manishpuri,
Saket Ext.
Tel: 0731 - 2493152
0731 – 4064828
10. Shri Romesh Sabharwal
A2/3, M.S. Flats
Peshwa Road, Gole Market,
New Delhi - 110 001
11. Ms. Indu Singh Pawar
Central Bank of India
18A, Shashtri Nagar,
Jammu Tavi
Pin - 180 004
12. Shri C.M. Puri
Central Bank of India,
Janpath Branch,
P.B. 244, 70, 72 Janpath
New Delhi - 110 001
Tel: 011 – 23321343/23316708
Fax: 011 – 23357934
13. Shri N. K. Pareek
Central Bank of India,
P.B. No. 87, Mirza Ismail Road,
Jaipur - 302 001

Tel: 0141 - 2370333
Fax: 0141 – 2338900

History of Central Bank of India

Sir Sorabji Pochkhanawala established Central Bank of India in 1911. It

was the first Indian commercial bank, which was wholly owned and managed
by Indians. Sir Pherozeshah Mehta was the first Chairman of the Bank. In
1969, Central Bank of India was nationalized along with 13 other banks.
In its 95 years of history, Central Bank of India has launched a number of
innovative and unique banking activities. Major among them are:
1921: Introduction of the Home Savings Safe Deposit
Scheme to build saving/thrift habits in all sections
of the society.
1924: An Exclusive Ladies Department to cater to the
Bank's women clientele.
1926: Safe Deposit Locker facility and Rupee Travellers'
1929: Setting up of the Executor and Trustee department.
1932: Deposit Insurance Benefit Scheme.
1962: Recurring Deposit Scheme.
1976: The Merchant Banking Cell was established.
1980: Centralcard, the credit card of the Bank was
1986: 'Plantinum Jubilee Money Back Deposit Scheme'

Was launched.
1989: The housing subsidiary Cent Bank Home Finance
Ltd. was started with its headquarters at Bhopal in
Madhya Pradesh.
1994: Quick Cheque Collection Service (QCC) & Express
Service were set up to enable speedy collection of
Outstation cheques.

Central Bank of India has a large network of 3161 branches and 270
extension counters spread over 27 States and 4 Union Territories. The Bank has
a total customer base of over 25 million account holders, which is one of the
largest in the banking industry.

URL: http://www.centralbankofindia.co.in/

This chapter contains information about different products offered by the

central bank of India for the benefit of its customers.
CBI has offered a choice of various deposit schemes with unique features and
facilities. These schemes suit different kinds of banking needs you might have.

Money multiplier deposit certificate
The interest accrued gets added back to the principal giving you an
effective interest rate that is higher than the contracted interest rate.
Amount of deposit minimum amount of Rs. 100/- and multiplies of Rs.
Period of deposit minimum period of 6 months and upto a maximum
of 120 months.
Rate of interest The rate of interest shall be the appropriate rate
prevailing on the date of the deposit for the period
so selected.
Premature payment Payment before maturity is available as per
prevailing rules.
Loans/advance Loan/advance facility is available under the scheme
against deposit as per prevailing rules.

Khazaana deposit scheme

Khazaana deposit scheme offers you the double benefits of easy

liquidity and high returns. It is also a flexible scheme that allows you to
withdraw a part of the deposit amount as and when required.
Amount of deposit minimum amount of Rs. 5000/- and multiplies of
Rs. 1000/-.
Period of deposit minimum period of 30 days and upto a maximum
of 120 months.
Rate of interest The rate of interest shall be the appropriate rate
prevailing on the date of the deposit for the period
so selected.
Premature payment You will be permitted to withdraw upto a

maximum of 10 times during the entire period of
Loans/advance Loan/advance facility is available under the scheme
against deposit as per prevailing rules.

Monthly interest deposit receipt

The MIDR scheme provides you with monthly interest earnings, without
affecting the principal amount.
Amount of deposit minimum amount of Rs. 5000/- and multiplies of
Rs. 1000/-.
Period of deposit open an account for periods ranging from 12
months to 120 months.
Rate of interest The rate of interest shall be the appropriate rate
prevailing on the date of the deposit for the period
so selected.
Premature payment Payment before maturity is available as per
prevailing rules.
Loans/advance Loan/advance facility is available under the scheme
against deposit as per prevailing rules.

Quarterly interest deposit receipt

QIDR provides you quarterly interest without affecting the principal
Amount of deposit minimum amount of Rs. 5000/- and multiplies of
Rs. 1000/-.
Period of deposit open an account for periods ranging from 12
months to 120 months.
Rate of interest The rate of interest shall be the appropriate rate

prevailing on the date of the deposit for the period
so selected.
Premature payment Payment before maturity is available as per
prevailing rules.
Loans/advance Loan/advance facility is available under the scheme
against deposit as per prevailing rules.

Centrals flexi yield deposit scheme

Under this scheme depositors can avail floating rate of interest, which is
higher than the interest rate on normal term deposits.
Amount of deposit Single deposit of Rs. 1 lac and above.
Period of deposit One year and above and upto a maximum of 10
Rate of interest The rate of interest shall be the appropriate rate
prevailing on the date of the deposit for the period
so selected.
Premature payment In case the deposit will be treated as normal deposit
and interest will be paid as per our prevailing rates
applicable to normal deposits.
Loans/advance Loan/advance facility is available under the scheme
against deposit as per prevailing rules.


You can avail of easy and convenient loan offers for purposes ranging
from housing finance to higher education to purchase of computer. Our loans
enrich life and enhance lifestyles.
Cent buy
Facility & You can avail of the term loan facility at all branches
purpose for purchase of consumer durables, two wheelers and
four wheelers.
Eligibility 1) Permanently employed persons (govt./private
2) Others have regular and known sources of
3) For four wheelers, applicant should be income
tax assessee.
Quantum of loan 80% of the cost of four wheelers. Maximum Rs. 10
lacs. 85% of the cost of two wheelers and other
consumer durables. Maximum Rs.2 lacs.
Security Hypothecation of articles/vehicles purchased out of
loan. In case f salaried employees, when installments
are received from salary.
Rate of interest PLR + 2%

Processing 1% of the loan amount. Minimum Rs.100/-.

Repayment 36 to 84 equated monthly installments (EMIs).

Cent Vyapari
Objective To provide finance to small and medium traders.

Implemented by Semi-urban and & urban branches.
Nature of facility Cash credit.
Eligibility Small and medium traders including retailers and
Maximum limit Rs. 5 lacs per borrower.
Margin Minimum 25% on stocks.

Rate of interest Upto Rs. 2 lacs – PLR

Over Rs.2 lacs and upto Rs. 5 lacs –PLR + 4%
Security 1) Hypothecation of stocks.
2) E.M. of land and building.
Processing fees Upto Rs. 25000 Nil
Above Rs.25000 to Rs.1 lac - Rs.250/-
Above Rs 1 lac – Rs.2lacs - Rs. 500/-
Above Rs.2 lacs – Rs.5 lacs - Rs.2500/-

Personal Loan – To Employees Of Corporate Clients

Eligibility Permanent employees of large corporate clients.
Purpose To meet any personal/domestic expenses of the
Quantum of loan Ten times of gross salary subject to a maximum of Rs.
1 lac.
Rate of interest PLR + 4%
Mode of 36 months in equated monthly instalments
repayment commencing one month after the month of
Processing 1% of the loan amount.

Cent mortgage
Facility & Term loan facility to meet any sort of personal or
purpose business expenses.
Eligibility Loan against mortgage of property situated in
metro/urban/semi-urban areas.
Target group Individual singly or jointly, traders, businessmen,
professionals or self employed persons etc. having
known sources of net income of Rs. 10000/- per month
or more.
Quantum of loan 20 times net monthly income subject to minimum
amount of Rs.1.00 lac and maximum of Rs. 10 lacs.
Security Residential house/flat, commercial or industrial
property situated in metro/urban/semi-urban centers
only in the name and possession of the borrower. The
property value should be equal to 200% of the loan
Insurance The property will be insured against fire, riots and
wherever required against earthquake, flood, lightning
etc. by the borrower with usual bank clause for the full
value of the property.
Rate of interest PLR + 4%
Processing 1% of the loan amount.
Repayment Advance Cheque signed by the borrower for repaying
monthly instalments along with letter of deposit will be

Cent trade
Facility & purpose Overdraft limit for business requirements.
Eligibility/Target Traders/retailers/distributors/commission
group agents/arhatiyas.
Quantum of loan Equitable mortgage of property situated in
metro/urban/semi-urban with market value of
200% of overdraft limit and in the name and
possession of the borrower.
Insurance The property will be insured with the usual bank
clause for full value of the property.
Rate of interest Upto Rs. 2.00 lacs - PLR
Over Rs. 2.00 lacs - PLR + 2%

Processing charges Upto Rs. 25000 - Nil

Above Rs. 25000 upto Rs. 100000 - Rs.
Above Rs. 100000 upto Rs. 200000 - Rs.
Above Rs. 200000 upto Rs. 1000000 - Rs.
Above Rs.1000000 upto Rs.2000000 - Rs.
Required details Application form.
Financial statements.
Copy of sales tax registrations.
Copies of sales tax returns.

Credit report from previous bankers/market
Details of property offered as security with its
present valuations.

Central kisan credit card

Objectives Loan for farmers on the basis of their holdings for
purchasing agricultural inputs including cash
withdrawals for their production needs.
Eligibility • CKCC will be provided to any farmer to
cater to his short-term credit requirements.
• Farmers having good track record for past 2
years with our bank as a borrower or depositor and
not being defaulter to any credit institution would
be considered.
• CKCC will be issued to farmers in the form
of card-cum-passbook incorporating the name,
address, particulars of land holding, borrowing
limit, validity period which will serve both as an
identity card as well as facilitate recording of
transactions on an ongoing basis.
Security margin In conformity with the agriculture loan.
Rate of interest Same rate of interest as are applicable to crop loans
and activities allied to agriculture.


Central card
It is a unique credit card offering you innumerable facilities &
convenience. It offers you the freedom to spend at a large number of member
Facilities offered by central card:
• Our domestic card is accepted all over India and Nepal having more than
110000 merchant outlets.
• All retail outlets, petrol pumps, Indian railways, airlines, nursing homes,
hotels, restaurants, departmental stores and grocery stores etc. now accept
central card.
• Mail order/telephone order, Internet transactions can also be made through
central card with prior approval/authorization from our system.
• Group Accident Insurance Scheme coverage upto Rs. 1 lakh.

Central Card Electronic

Central card electronic is a new “entry level credit product” for the
emerging, untapped market segments that previously did not have access to
traditional bank card payment products.

• It is designed for use only at electronic terminals. Acceptance at non-
terminalised merchants is not allowed.

• Account information is printed and not embossed on the card.
• 24-hour customer call centers are available on India.
• There is zero lost card liability.
• Card will be replaced in seven days.
• You will get free accident insurance cover upto Rs. 100000/-
• You will get free lost card insurance cover to the extent of credit limit.
• You will be allowed cheque encashment facility, upto Rs. 2500/- at all the
branches of CBI.
• There is no fear spending over the limit, as only transactions within the
available limits would be authorized.
• Cash withdrawal limit:
- Domestic card -Rs. 5000/- p.m.
- Global card -Rs. 15000/- p.m.
Fees and charges:
• There is no joining fee.
• An annual fee of Rs. 400/- is charged every year in advance.
• The card is issued/renewed every two years.
• A nominal fee of Rs. 50/- is charged for a photo card.

Debit Card
• Direct online debit to your savings or current account.
• Completely safe and secure PIN based card.
• Globally accepted at merchant establishments displaying the maestro/cirrus

• 24-hour customer call centers available in India.
• Zero lost card liability.
• Replacement card.
• Itemized billing on your statement/passbook.
Fees & charges:
• There is no transaction charge at the ATMs of CBI.
• Transaction charges are levied only at non-central bank maestro.
* Rs. 30 for cash withdrawal
* Rs. 6 for balance enquiry

Cash Management Services

Who can avail cash management services?
• Corporate
• Public, private and joint sector Cos.
• Existing partnership firms
• Existing proprietorship firms
• Individuals & institutions
Benefits to customers:
• Better cash management
• Regular computerized MIS/reports
• Instant liquidity
• Faster and higher turnover
• Higher income and profitability

Travelers’ Cheques
• Central bank’s travelers’ cheque are available in denominations of Rs.
100/-, Rs. 500/-, Rs. 1000/-, Rs. 2500/- and Rs. 5000/-.
• Charges Rs. 1/- per Rs. 100/-.
• They are encashable at par at all the branches of central bank and other
leading nationalized banks.
• They are valid till encashed.

Gift Cheques
• Central bank gift cheques are ideal gifts for all occasions.
• They are available in denominations of Rs. 11/-, Rs.25/- Rs.51/- and Rs.
• Issued free of charge and payable at par, at all the branches of central bank.

This chapter contains the information about the objectives of the study and
the information upon which the study for the purpose of project is conducted
and the limitations faced therein.

The objectives of the study are based on the concept of Income &
Investment Sources. The researcher has tried to represents the concept of
different sources of Incomes & Investments analysis in this project. The
various objectives are discussed as under:

• To understand the issue of Income & Investment Sources as

practiced by the bank.
• To know about the different sources Incomes & Investment of the
• To discuss about the role of Central Bank of India in banking field.
• To know about the benefits of investments to the bank.


To collect the data for the purpose of the project, study the following sources
are used:

The primary data has been based on the response received
from bank manager, bank staff related to the Income & Investment Sources.
The secondary data has been collected from the various books, journals,
articles, papers and the annual report of the bank and through web sites.

In this project report the study revealed about Income & Investment Sources of
Central Bank of India consisting of income sources, investment sources.

CHAPTER 1 – Introduction Of Central Bank Of India
CHAPTER 2 – Products Of Central Bank Of India
CHAPTER 3 – Database & Methodology
CHAPTER 4 – Innovations In Banking Products
CHAPTER 5 – Innovations In Banking Branches
CHAPTER 6 – Summary, Findings & Suggestions

For the purpose of presentation of the study the following ways have been
adopted. The presentations are through:
 Bar graphs
 Tables
 Diagrams
During the study work a number of limitations have been arisen which
are acknowledged here under. The limitations are:
 First of all main problem is that no any bank was ready to give

 Due to shorter span of time and resources less information has been
considered to analysis the concept of Income & Investment
Sources. So the study cannot be generalized.
 The respondents whose opinions are analyzed are not willing to
disclose the quantum of information they have.
 The information that is collected in project report is not adequate.

This chapter contains the different innovations in banking products such as E-
Banking, Mobile Banking, Debit Cards, Credit Cards, ATM, Internet

With the trend of globalization all over the world, it
is difficult for any nation whether big or small, developed, to remain isolated
from what is happening around. The growth of e-commerce and Internet has
transformed the world into the GLOBAL VILLAGE. Fast development in
electronic technology has concerned the computers to take over the bank
counters and to convert brick banking into electronic banking.
Usage of technology by banks is due to challenge of competition,
rising consumer expectations and shrinking margins of banks, which lead to
reduction in cost, and enhancement of productivity, efficiency and customer

E-banking means, “application of electronic technology
towards transfer of funds through an electronic terminal, computer or
magnetic tape to conduct various transactions like cash receipts, payments,
transfer of funds etc.”

It is often known as banking on net. It does not involve any physical
exchange of money, but it’s all done electronically, from one account to
another, using the Internet. With the advent of e banking, customers are
benefited by unlimited accessibility through the network of Automated Teller
Machines, personal computers or even through mobile phones. Customer can
perform various banking transactions such as balance enquires, bill payments,
and transaction histories, transfer money between accounts, without having to
step to office of the branch.

Features of e banking:
 Anywhere any time banking: customers can avail banking
facility while sitting at their home/office.
 Globalization of service: E-Banking has a special feature of
globalising bank’s services all over.
 Intense competition: E-Commerce is a product of handling intense
competition among various banks.
 Cash less banking: E-Commerce also provides feature of cash less
banking as cash is not require in raw form but electronic
cash like debit or credit cards may serve the purpose.
 Promptness: Another feature of E-Commerce is provides
promptness in services.
Process of E-Banking/ procedure of E-Banking
E-Banking process can be explained with the help of following diagram and
explanation as under:

Log on to
website Of


Credit Processing
Card Of
request information

 To make the use of E-Banking user has to go to the World Wide Web
and log on to the website.
 Next step follows verification of user ID and password by the website
 As soon as password is approved on the server, then processing of
information will start on the web.
 In this step, credit card number will be demanded for online transaction.
 If all security measures are completed then the transaction is approved

Advantages of E-Banking:
Importance of E-Banking can be explained from four aspects:


To To merchant
To banks To
cust Govt. Trader
I. omer
Benefits to banks
 Reduction in cost: E-Banking is helpful to banks by reducing the
cost of various transactions as compared to traditional cost by way
of ATM’s Telephone banking.
 Global coverage: E-Banking provides global network coverage of
bank’s services i.e. through the concept of ‘Anywhere Anytime
 Good customer relationship: E-Banking helps in attracting and
retaining the customer by properly handling their grievances.
 Reduction in paper work: E-Banking helps in eliminating
endless paper based bank statements, spreadsheets, bulky books of
accounts, ledger including the use of calculator.
 Reduction in frauds and misappropriations: Through E-
Banking frauds and misappropriations can be reduced as inter
branch reconciliation is possible through internet.
II. Benefits to customers

 Anytime banking: E-banking provides 24 hours, 365 days
services to customers.
 Anywhere banking: customers can avail any sort of banking
services from anywhere around the globe from sitting at anyplace.
 Prompt services: Customer can avail the services of details
regarding their accounts and transactional details instantly.
 On line purchase: Customer can buy product of bank or invest in
any scheme without actually insisting the bank branch but only
through online.
 Saving in time: With the help of E-banking there is no need for
bank customers to stand in queue for hours to complete financial
III. Benefits to government
 Transparency in transactions: E-Banking provides transparency in
transactions i.e. access to information is possible easily.
 Global market: With the help of E-Banking products of our country will
get global market to be popularized properly.
 Risk of carrying cash: E-Banking provides the facility of cash less
banking which helps in growth of economy.
IV. Benefits to merchant traders
 Promotion of business: with the help of E-Banking business of
merchants traders will be promoted because of increased purchasing
power of credit holder.

 Immediate settlement: E-Banking helps settlement, and payment of
cash is possible by the customer.
 Avoids risks: it helps merchants bankers also as there is no risk of
handling cash.
Limitations of E Banking:
 Problems of security: Security and privacy aspects are major issue in
case of E-Banking transaction. Various sites are not properly locked at to
ensure weather customer’s money is safe in cyber world or not.
 High cost: The infrastructural cost of providing E-Banking facility is
very high. The banks not only have to automate front-end services but
also back office services, which involves high cost.
 Lack of awareness: Another great hindrance is lack of awareness
because effective and wide media efforts in publishing Internet banking
need to be emphasized.
 Lack of computerization: Lack of computerization and low density of
telephone lines is also a bottleneck for online banking. In India, out of
65000 bank branches, only 5000 branches are computerized.
 Wrong assumption by people: Many people are away from net banking
on the assumption that it is more expensive than the traditional method
of dealing with bank transactions. They still prefer going to bank to
perform transactions.

Types of E-Banking services


Card E-cheque Mobile Telephone EFT
Banking Banking

1.Automatic Teller Machine (ATM): ATM facility was started in early

1990’s by foreign banks like HSBC, City bank. ATM is made to work 24
Hrs a day. For the purpose of withdrawing cash from ATM machine, plastic
currency and debit cards are used.
2.Credit Cards: Credit card is another facility produced by E-Banking. Credit
card is a product with the help of which a customer can avail various facilities
or buy products/services without making immediate payment and that
payment could be made at later stage of time.
3. Mobile Banking: Mobile banking provides customer to access their
account on mobile phone screen. Routine banking transactions can be
performed by just punching a few buttons on the mobile.
4. Telephone Banking: Tele banking is another main service provide by e-
banking Tele banking is a service where banks get various phone calls during
their working hours. It helps the user to transact various transactions while
remaining at home.
5.Electronic Fund Transfer (EFT): E-Banking has given a system of
electronically transferring funds .i.e. EFT which involves transfer of funds
from bank account of one customer to bank account of another customer
electronically. This is done through electronic data interchange (EDI).
6. Electronic Cheques: E-cheque is a system, which provides more security
and reduction in overall cost. E-cheque facilitates on line payment. It needs no

clearance charges. Issue of E-cheque is more familiar in various advanced

There are rapid changes in the financial services environment, which
has led to increased competition by few players and product innovations.
Recent innovations in tele communications have opened up an additional
channel for electronic banking.
Banks have noticed and availed the opportunity that exists between
banking and mobile telephony. SMS (short messaging services)
and GSM(global system mobile)of mobile can be used for banking
transactions. The mobile banking enables the customers to bank anywhere and
at any time.

These wireless devices may give services as hand held PC’s. Mobile
devices are enabled now days to perform many activities which earlier have
been available only as internet services.

Issues relating to M-Banking

• Cost saving: SMS offers revenue opportunities for operators by
changing SMS into higher value added applications. The service
offerings in SMS banking are numerous and highly cost saving.
• Simple to operate: The success of M- Banking is due to its user-
friendly interface and range of services it offers.
• Market research: Proper understanding of specific market is key in
the success of mobile banking. Research on available payment
methods, user habits and key players is required to be done. Players
will have to be creative to make users perceive it as beneficial.
Global system mobile (GSM) is not just about voice communications but also
supports wireless personal digital assistant and other devices, just as it
supports telephony. SMS tariffs should be lowered in order to capture the
markets and to exploits the potential for commercial transactions over mobile
Many services and schemes are being piloted and some are already available.
Few are mentioned here under:
• Balance enquiry can be made.
• Requesting for providing bank statement.
• Requesting countermanding cheque payments (stop cheque)
• Chequebook request can be made.
• Cheque clearance alerts are given to customers.
• Sending account balances every time one makes a withdrawal, which
helps in finding out if some one else is using your ATM card.

Limitations /problems in M-Banking:
• Possibility of error is higher than in internet banking.
• The data transmission is very slow.
• M-banking services are risky and not secure trials and pilots are still on
World Wide Web to developed enhanced security.
• M-banking services are not enough versatile.
• The information knowledge available related to M-Banking is not
sufficient. Some non-users of mobile banking perceive it to be
complicated due to lack of guidance available.
M Banking is not just a service reserved for international banks but for any
financial institution wishing to take it. There is a great opportunity to exploit
the combination of fast growing consumer device the mobile phone with the
richness of internet protocols that will surpass a similar revolution imitated by
pc related banking M-Banking has a lot to offer banks and to its customers,
but its success depend upon of variety of services, security and user friendly
interface its make it easy, cheaper it simple to use.

ATM facility was started in early 1990’s by foreign banks like
HSBC, City bank. ATM is made to work 24 Hrs a day. For the purpose of
withdrawing cash from ATM machine, plastic currency and debit cards are
used. The account number and credit limit of customers are magnetically
embedded on a strip of the tape on the back of card.
ATM enables user to perform banking transactions by actually interacting
with the human teller. This is one of the unattended or unmanned devices
usually located on or off the bank’s premises. Its function is to receive and
dispense cash and to handle routine financial transactions.
The operation mechanism is that card is inserted into the ATM; the
terminal reads the tape data to processes, which activates the accounts.
According to the instructions, the details are displayed on the screen and by
checking a few keys of the keyboard the user can direct the computer to carry
out the financial transactions.

An automated teller machine (ATM) is a computerized telecommunications

device that provides the customers of a financial institution with access to
financial transactions in a public space without the need for a human clerk or
bank teller. On most modern ATMs, the customer is identified by inserting a
plastic ATM card with a magnetic stripe or a plastic smartcard with a chip, that
contains a unique card number and some security information, such as an

expiration date or CVC (CVV). Security is provided by the customer entering a
personal identification number (PIN).

Using an ATM, customers can access their bank accounts in order to make cash
withdrawals (or credit card cash advances) and check their account balances as
well as purchasing mobile cell phone prepaid credit. ATMs are known by
various other names including automated banking machine, money machine,
bank machine, cash machine, hole-in-the-wall, cashpoint, Bancomat (in
various countries in Europe and Russia), Multibanco (after a registered trade
mark, in Portugal), and Any Time Money (in India).

Working of ATM

Insertion of Transmission of Tape Activation

Card into ATM data to Processor of account

Actual Clicking of keys Display of details

Transaction of keyboard on screen
Operation by user

ATM will give various options on the screen like:

 Balance enquiry
 Mini statement
 Deposits
 Cash withdrawals etc.

Banks have launched the operation of accepting payments for utility
services like electricity and telephone bills etc. Banking on the net is only an
extension of the ATM and tele banking services.
Various facilities produced by ATMs:
 Cash withdrawals
 Personal identification number (PIN) change
 On line balance enquiry
 Transfer of funds between accounts linked to one’s card
 Request for cheque book
 Request for account statement

The first mechanical cash dispenser was developed and built by
Luther George Simjian and installed in 1939 in New York City by the City
Bank of New York, but removed after 6 months due to the lack of customer

Thereafter, the history of ATMs paused for over 25 years, until De La Rue
developed the first electronic ATM, which was installed first in Enfield Town
in North London, United Kingdom on 27 June 1967 by Barclays Bank. This
instance of the invention is credited to John Shepherd-Barron, although various
other engineers were awarded patents for related technologies at the time.
Shepherd-Barron was awarded an OBE in the 2005 New Year's Honours List.
The first person to use the machine was the British variety artist and actor Reg

Varney.The first ATMs accepted only a single-use token or voucher, which
was retained by the machine. These worked on various principles including
radiation and low-coercivity magnetism that was wiped by the card reader to
make fraud more difficult. The machine dispensed pre-packaged envelopes
containing ten pounds sterling. The idea of a PIN stored on the card was
developed by the British engineer James Goodfellow in 1965

In 1968 the networked ATM was pioneered in Dallas, Texas, by Donald

Wetzel who was a department head at an automated baggage-handling
company called Docutel. In 1995 the Smithsonian's National Museum of
American History recognised Docutel and Wetzel as the inventors of the
networked ATM.

ATMs first came into wide UK use in 1973; the IBM 2984 was designed at the
request of Lloyds Bank. The 2984 CIT (Cash Issuing Terminal) was the first
true Cashpoint, similar in function to today's machines; Cashpoint is still a
registered trademark of Lloyds TSB in the U.K. All were online and issued a
variable amount which was immediately deducted from the account. A small
number of 2984s were supplied to a USA bank. Notable historical models of
ATMs include the IBM 3624 and 473x series, Diebold 10xx and TABS 9000
series, and NCR 5xxx series.


Debit cards combine the functions of ATM cards and checks. When
you pay with a debit card, the money is automatically deducted from your
checking account. Many banks issue a combined ATM/debit card that looks
just like a credit card and can be used in places where credit cards are accepted.
But don't be mistaken -- they are not credit cards. The money you spend comes
out of your checking account immediately.

Debit and check cards, as they have become widespread, have

revealed numerous advantages and disadvantages to the consumer and retailer
alike. Advantages are as follows (most of them applying only to a some
countries, but the countries to which they apply are unspecified):

• A consumer who is not credit worthy and may find it difficult or

impossible to obtain a credit card can more easily obtain a debit card,
allowing him/her to make plastic transactions.
• Use of a debit card is limited to the existing funds in the account to
which it is linked, thereby preventing the consumer from racking up debt

as a result of its use, or being charged interest, late fees, or fees exclusive
to credit cards.
• For most transactions, a check card can be used to avoid check writing
altogether. Check cards debit funds from the user's account on the spot,
thereby finalizing the transaction at the time of purchase, and bypassing
the requirement to pay a credit card bill at a later date, or to write an
insecure check containing the account holder's personal information.
• Like credit cards, debit cards are accepted by merchants with less
identification and scrutiny than personal checks, thereby making
transactions quicker and less intrusive. Unlike personal checks,
merchants generally do not believe that a payment via a debit card may
be later dishonored.
• Unlike a credit card, which charges higher fees and interest rates when a
cash advance is obtained, a debit card may be used to obtain cash from
an ATM or a PIN-based transaction at no extra charge, other than a
foreign ATM fee.

The Debit card has many disadvantages as opposed to cash or credit:

• Some banks are now charging over-limit fees or non-sufficient funds

fees based upon pre-authorizations, and even attempted but refused
transactions by the merchant (some of which may not even be known by
the client).
• Many merchants mistakenly believe that amounts owed can be "taken"
from a customer's account after a debit card (or number) has been
presented, without agreement as to date, payee name, amount and

currency, thus causing penalty fees for overdrafts, over-the-limit,
amounts not available causing further rejections or overdrafts, and
rejected transactions by some banks.
• In some unspecified countries, debit cards offer lower levels of security
protection than credit cards. Theft of the users PIN using skimming
devices can be accomplished much easier with a PIN input than with a
signature-based credit transaction. However, theft of users' PIN codes
using skimming devices van be equally easily accomplished with a debit
transaction PIN input, as with a credit transation PIN input, and theft
using a signature-based credit transation is equally easy as theft using a
signature-based debit transaction.
• In many places, laws protect the consumer from fraud a lot less than with
a credit card. While the holder of a credit card is legally responsible for
only a minimal amount of a fraudulent transaction made with a credit
card, which is often waived by the bank, the consumer may be held liable
for hundreds of dollars in fraudulent debit transactions. The consumer
also has a much shorter time (usually just two days) to report such fraud
to the bank in order to be eligible for such a waiver with a debit card,
whereas with a credit card, this time may be up to 60 days. A thief who
obtains or clones a debit card along with its PIN may be able to clean out
the consumer's bank account, and the consumer will have no recourse.
• When a transaction is made using a credit card, the bank's money is
being spent, and therefore, the bank has a vested interest in claiming its
money where there is fraud or a dispute. The bank may fight to void the
charges of a consumer who is dissatisfied with a purchase, or who has

otherwise been treated unfairly by the merchant. But when a debit
purchase is made, the consumer has spent his/her own money, and the
bank has little if any motivation to collect the funds.
• In some unspecified coutriesand for certain types of purchases, such as
gasoline, lodging, or car rental, the bank may place a hold on funds much
greater than the actual purchase for a fixed period of time. However, this
isn't the case in other countries, such as Sweden. Until the hold is
released, any other transactions presented to the account, including
checks, may be dishonored, or may be paid at the expense of an overdraft
fee if the account lacks any additional funds to pay those items.
• While debit cards bearing the logo of a major credit card are accepted for
virtually all transactions where an equivalent credit card is taken, a major
exception (in some unspecified countries only, is at car rental facilities.
In some unspecified countries, car rental agencies require an actual credit
card to be used, or at the very least, will verify the creditworthiness of
the renter using a debit cardThere are currently two ways that debit card
transactions are processed: online debit (also known as PIN debit) and
offline debit (also known as signature debit). In some countries including
the United States and Australia, they are often referred to at point of sale
as "debit" and "credit" respectively, even though in either case the user's
bank account is debited and no credit is involved.

Some cards are blocked from making either online or offline transactions,
while other cards are enabled for both kinds of transactions.

Online debit ("PIN debit" or "debit")

Online debit cards require electronic authorization of every transaction and the
debits are reflected in the user’s account immediately. The transaction may be
additionally secured with the personal identification number (PIN)
authentication system and some online cards require such authentication for
every transaction, essentially becoming enhanced automatic teller machine
(ATM) cards. One difficulty in using online debit cards is the necessity of an
electronic authorization device at the point of sale (POS) and sometimes also a
separate PINpad to enter the PIN, although this is becoming commonplace for
all card transactions in many countries. Overall, the online debit card is
generally viewed as superior to the offline debit card because of its more secure
authentication system and live status, which alleviates problems with
processing lag on transactions that may have been forgotten or not authorized
by the owner of the card. Banks in some countries, such as Canada and Brazil,
only issue online debit cards.

A credit card is a system of payment named after the small plastic
card issued to users of the system. A credit card is different from a debit card
in that it does not remove money from the user's account after every
transaction. In the case of credit cards, the issuer lends money to the consumer
(or the user). It is also different from a charge card (though this name is
sometimes used by the public to describe credit cards), which requires the
balance to be paid in full each month. In contrast, a credit card allows the
consumer to 'revolve' their balance, at the cost of having interest charged.
Most credit cards are the same shape and size, as specified by the ISO 7810
The issuer of the card grants a line of credit to the consumer (or the user)
from which the user can borrow money for payment to a merchant or as a cash
advance to the user. A credit card is different from a charge card, where a
charge card requires the balance to be paid in full each month. In contrast,

credit cards allow the consumers to 'revolve' their balance, at the cost of having
interest charged. Most credit cards are issued by local banks or credit unions.

Credit cards are issued after an account has been approved by the credit
provider, after which cardholders can use it to make purchases at merchants
accepting that card.

When a purchase is made, the credit card user agrees to pay the card issuer. The
cardholder indicates his/her consent to pay, by signing a receipt with a record
of the card details and indicating the amount to be paid or by entering a
Personal identification number (PIN). Also, many merchants now accept verbal
authorizations via telephone and electronic authorization using the Internet,
known as a 'Card/Cardholder Not Present' (CNP) transaction.

Electronic verification systems allow merchants to verify that the card is
valid and the credit card customer has sufficient credit to cover the purchase in
a few seconds, allowing the verification to happen at time of purchase. The
verification is performed using a credit card payment terminal or Point of Sale
(POS) system with a communications link to the merchant's acquiring bank.
Data from the card is obtained from a magnetic stripe or chip on the card; the
latter system is in the United Kingdom and Ireland commonly known as Chip
and PIN, but is more technically an EMV card.

Other variations of verification systems are used by eCommerce merchants to
determine if the user's account is valid and able to accept the charge. These will
typically involve the cardholder providing additional information, such as the
security code printed on the back of the card, or the address of the cardholder.

Each month, the credit card user is sent a statement indicating the purchases
undertaken with the card, any outstanding fees, and the total amount owed.
After receiving the statement, the cardholder may dispute any charges that he
or she thinks are incorrect (see Fair Credit Billing Act for details of the US
regulations). Otherwise, the cardholder must pay a defined minimum
proportion of the bill by a due date, or may choose to pay a higher amount up
to the entire amount owed. The credit provider charges interest on the amount
owed if the balance is not paid in full (typically at a much higher rate than most
other forms of debt). Some financial institutions can arrange for automatic
payments to be deducted from the user's bank accounts, thus avoiding late
payment altogether as long as the cardholder has sufficient funds.

Interest charges

Credit card issuers usually waive interest charges if the balance is paid in full
each month, but typically will charge full interest on the entire outstanding
balance from the date of each purchase if the total balance is not paid.

For example, if a user had a $1,000 transaction and repaid it in full within this
grace period, there would be no interest charged. If, however, even $1.00 of the

total amount remained unpaid, interest would be charged on the $1,000 from
the date of purchase until the payment is received.

The credit card may simply serve as a form of revolving credit, or it may
become a complicated financial instrument with multiple balance segments
each at a different interest rate, possibly with a single umbrella credit limit, or
with separate credit limits applicable to the various balance segments. Usually
this compartmentalization is the result of special incentive offers from the
issuing bank, to encourage balance transfers from cards of other issuers. In the
event that several interest rates apply to various balance segments, payment
allocation is generally at the discretion of the issuing bank, and payments will
therefore usually be allocated towards the lowest rate balances until paid in full
before any money is paid towards higher rate balances. Interest rates can vary
considerably from card to card, and the interest rate on a particular card may
jump dramatically if the card user is late with a payment on that card or any
other credit instrument, or even if the issuing bank decides to raise its revenue.

Advantages: The main advantages are as follows:


To customers Grace period To merchants

Benefits to customers:

Because of intense competition in the credit card industry, credit card

providers often offer incentives such as frequent flyer points, gift certificates,
or cash back (typically up to 1 percent based on total purchases) to try to attract
customers to their programs.

Low interest credit cards or even 0% interest credit cards are available. The
only downside to consumers is that the period of low interest credit cards is
limited to a fixed term, usually between 6 and 12 months after which a higher
rate is charged. However, services are available which alert credit card holders
when their low interest period is due to expire. Most such services charge a
monthly or annual fee.

Grace period

A credit card's grace period is the time the customer has to pay the balance
before interest is charged to the balance. Grace periods vary, but usually range
from 20 to 40 days depending on the type of credit card and the issuing bank.
Some policies allow for reinstatement after certain conditions are met.

Usually, if a customer is late paying the balance, finance charges will be
calculated and the grace period does not apply. Finance charges incurred
depend on the grace period and balance; with most credit cards there is no
grace period if there is any outstanding balance from the previous billing cycle
or statement (i.e. interest is applied on both the previous balance and new
transactions). However, there are some credit cards that will only apply finance
charge on the previous or old balance, excluding new transactions.

Benefits to merchants

An example of street markets accepting credit cards

For merchants, a credit card transaction is often more secure than other forms
of payment, such as checks, because the issuing bank commits to pay the
merchant the moment the transaction is authorized, regardless of whether the
consumer defaults on the credit card payment (except for legitimate disputes,
which are discussed below, and can result in charges back to the merchant). In
most cases, cards are even more secure than cash, because they discourage theft
by the merchant's employees and reduce the amount of cash on the premises.
Prior to credit cards, each merchant had to evaluate each customer's credit
history before extending credit. That task is now performed by the banks which
assume the credit risk.

For each purchase, the bank charges the merchant a commission (discount fee)
for this service and there may be a certain delay before the agreed payment is
received by the merchant. The commission is often a percentage of the
transaction amount, plus a fixed fee.

Parties involved

• Cardholder: The holder of the card used to make a purchase; the

• Card-issuing bank: The financial institution or other organization that
issued the credit card to the cardholder. This bank bills the consumer for
repayment and bears the risk that the card is used fraudulently. American
Express and Discover were previously the only card-issuing banks for
their respective brands, but as of 2007, this is no longer the case.
• Merchant: The individual or business accepting credit card payments
for products or services sold to the cardholder
• Acquiring bank: The financial institution accepting payment for the
products or services on behalf of the merchant.
• Independent sales organization: Resellers (to merchants) of the
services of the acquiring bank.
• Merchant account: This could refer to the acquiring bank or the
independent sales organization, but in general is the organization that the
merchant deals with.
• Credit Card association: An association of card-issuing banks such as
Visa, MasterCard, Discover, American Express, etc. that set transaction
terms for merchants, card-issuing banks, and acquiring banks.

• Transaction network: The system that implements the mechanics of the
electronic transactions. May be operated by an independent company,
and one company may operate multiple networks. Transaction
processing networks include: Cardnet, Nabanco, Omaha, Paymentech,
NDC Atlanta, Nova, TSYS, Concord EFSnet, and VisaNet.
• Affinity partner: Some institutions lend their names to an issuer to
attract customers that have a strong relationship with that institution, and
get paid a fee or a percentage of the balance for each card issued using
their name. Examples of typical affinity partners are sports teams,
universities, charities, professional organizations, and major retailers.

The flow of information and money between these parties — always through
the card associations — is known as the interchange.

As well as convenient, accessible credit, credit cards offer consumers an
easy way to track expenses, which is necessary for both monitoring personal
expenditures and the tracking of work-related expenses for taxation and
reimbursement purposes. Credit cards are accepted worldwide, and are
available with a large variety of credit limits, repayment arrangement, and
other perks (such as rewards schemes in which points earned by purchasing
goods with the card can be redeemed for further goods and services or credit
card cashback).

Some countries, such as the United States, the United Kingdom, and France,
limit the amount for which a consumer can be held liable due to fraudulent
transactions as a result of a consumer's credit card being lost or stolen.

A smart card, combining credit card and debit card properties. The 3 by 5 mm
security chip embedded in the card is shown enlarged in the inset. The contact
pads on the card enable electronic access to the chip.

The low security of the credit card system presents countless opportunities for
fraud. This opportunity has created a huge black market in stolen credit card
numbers, which are generally used quickly before the cards are reported stolen.

The goal of the credit card companies is not to eliminate fraud, but to "reduce it
to manageable levels". This implies that high-cost low-return fraud prevention
measures will not be used if their cost exceeds the potential gains from fraud

Most internet fraud is done through the use of stolen credit card information
which is obtained in many ways, the simplest being copying information from
retailers, either online or offline. Despite efforts to improve security for remote
purchases using credit cards, systems with security holes are usually the result
of poor implementations of card acquisition by merchants.

For example, a website that uses SSL to encrypt card numbers

from a client may simply email the number from the webserver to someone
who manually processes the card details at a card terminal. Naturally, anywhere

card details become human-readable before being processed at the acquiring
bank, a security risk is created.


Online banking (or Internet banking) allows customers to conduct
financial transactions on a secure website operated by their retail or virtual
bank, credit union or building society.

Online banking solutions have many features and capabilities in common, but
traditionally also have some that are application specific.

The common features fall broadly into several categories

• Transactional (e.g., performing a financial transaction such as an account

to account transfer, paying a bill, wire transfer... and applications... apply
for a loan, new account, etc.)
o Electronic bill presentment and payment - EBPP
o Funds transfer between a customer's own checking and savings
accounts, or to another customer's account
o Investment purchase or sale
o Loan applications and transactions, such as repayments

• Non-transactional (e.g., online statements, check links, cobrowsing, chat)

o Bank statements
• Financial Institution Administration - features allowing the financial
institution to manage the online experience of their end users
• ASP/Hosting Administration - features allowing the hosting company to
administer the solution across financial institutions


Security token devices

Protection through single password authentication, as is the case in most secure

Internet shopping sites, is not considered secure enough for personal online
banking applications in some countries. Basically there exist two different
security methods for online banking.

• The PIN/TAN system where the PIN represents a password, used for the
login and TANs representing one-time passwords to authenticate
transactions. TANs can be distributed in different ways, the most popular
one is to send a list of TANs to the online banking user by postal letter.
The most secure way of using TANs is to generate them by need using a
security token. These token generated TANs depend on the time and a
unique secret, stored in the security token (this is called two-factor
authentication or 2FA). Usually online banking with PIN/TAN is done
via a web browser using SSL secured connections, so that there is no
additional encryption needed.
• Signature based online banking where all transactions are signed and
encrypted digitally. The Keys for the signature generation and encryption

can be stored on smartcards or any memory medium, depending on the
concrete implementation.


Most of the attacks on online banking used today are based on deceiving the
user to steal login data and valid TANs. Two well known examples for those
attacks are phishing and pharming. Cross-site scripting and keylogger/Trojan
horses can also be used to steal login information.

A recent FDIC Technology Incident Report, compiled from suspicious activity

reports banks file quarterly, lists 536 cases of computer intrusion, with an
average loss per incident of $30,000. That adds up to a nearly $16-million loss
in the second quarter of 2007. Computer intrusions increased by 150 percent
between the first quarter of 2007 and the second. In 80 percent of the cases, the
source of the intrusion is unknown but it occurred during online banking, the
report states.[4]


There exist several countermeasures which try to avoid attacks. Digital

certificates are used against phishing and pharming, the use of class-3 card
readers is a measure to avoid manipulation of transactions by the software in
signature based online banking variants. To protect their systems against Trojan
horses, users should use virus scanners and be careful with downloaded
software or e-mail attachments.

This chapter includes innovations in banking branches such as
Universal banking, offshore banking, retail banking, and wholesale

Introduction: Universal banking is bank engaged in diverse kind of

banking activities. Under the universal banking system the banks do broad
based and comprehensive activities. R.H.Khan committee had recommended
the concept of universal banking. As per universal banking financial
institutions and banks are allowed to undertake all kinds of activities of
banking, development financing and related activities subject to compliance
of statutory and other requirements prescribed by RBI, Govt. and related legal

Meaning: Universal banking is a multipurpose and multi functional

financial superstore providing both banking and financial services. A
universal bank may undertake multifarious services under one roof, which
a) Receiving money on current or deposit accounts and lending of money
for trade, industries, exports, agriculture etc.

b) Mortgage financing; project financing infrastructure lending, asset
securitisation, leasing, factory etc.
c) Remittance of funds, custodial services, credit/debit cards, collection of
cheque/bills etc.
d) Corporate advisory services, insurance depository service, merchant
banking (brokerage, underwriting new debt and equity shares) foreign
exchange operations.
Therefore in universal banking under one roof, corporate can get loans and
avail, other financial services, while individuals can bank and borrow.
The few objectives of universal banking are as follows:
 To help in bringing harmony in the role of financial institutions and
 To offer world-class financial services to the clients by using information
technology and cross selling.
 To reduce per customer cost.
 To increase per customer revenue.
 To take benefit of economies of scale.
 To compete with international banks by expanding business beyond the
national boundaries.

RBI Guidelines:

According to RBI guidelines of April 2001, financial institutions have an
option to convert into a bank provided they ensure compliance with following
Reserve provisions (CRR/SLR): A financial institution will have to comply
with CRR and SLR provisions after its conversion into a universal banking.
Permissible activities: In case an activity, which is not permissible for a bank
under section 6(1) of B.R.Act 1949, is presently undertaken by financial
institution, such activity will have to be stopped after its conversion into a
universal banking.
Composition of board: The section 10(A) of B.R. Act 1949 requires that at
least 51% of that total number of directors should have special knowledge and
experience. This provision has to be complied with constituting the board
after transformation from financial institution to a bank.
Benefits of universal banking
The benefits of universal banking are as follows:

To Customers
To Organization To Shareholders

1. To the organization: When a bank diversifies its activities as a

universal bank it can use its existing expertise in one type of financial
service in providing the other types. So, it entails less cost in performing
all the functions by one entity instead of separate specialized bodies. A
bank possesses information on the risk characteristics of its clients,
which it can use to pursue other activities with the same clients.

A bank has an existing network of branches, which can acts as shops for
selling products like insurance. This way a big bank can reach the remotest
client without having to recourse to an agent. Many financial services are
interlinked activities, e.g. insurance and lending. A bank can use its
instruments in one activity to exploit the other, e.g. in case of project lending
to the same firm which has purchased insurance from the bank.
2. To the customers: Universal banking being a one-stop shops for all
varied services, some a lot of transaction costs and increases the speed
of economic activity. The wide range of financial products and services
offered by universal banks are preferred by the customers than the
specialized banks due to comprehensive service provided by these
3. To the shareholders: One manifestation of universal banking is a bank
holding stakes in a firm. When a lender has a stake in the firm he is in a
better position to monitor the firm to safeguard his interest, which sends
a good signal about the financial health the firm to the investors. This
situation is beneficial from investor’s point of view.
All these benefits have to be weighed out against the problems. The main
drawbacks are that:
a. Universal banking leads to a loss in economies of specialization.
b. Problem of the bank indulging in too many risky activities. To
account for this, appropriate regulation can be devised, which will
ultimately benefit all the participants in the market, including the
banks themselves.

In spite of these problems, there is a lot of interest expressed by banks and
financial institutions in universal banking. In India, too a lot of opportunities
are there to be exploited. Banks mainly the financial institutions are aware of
it, and most of the groups have plans to diversify in big way. Even though
there might not be profits forthcoming in the short run due to the switching
costs incurred in moving to a new business.

Introduction: offshore banking refers to the banking business related to
borrowing and lending funds abroad and meeting the special needs of
international investors. An offshore bank is a bank located outside the resident
country of the depositor. These banks are not subject to domestic monetary and
fiscal regulations. Moreover offshore banks are also exempted from the
regulations, which govern the branches of foreign banks. Rather they are
situated in a low tax jurisdiction that provides, financial and legal advantages.
These advantages may include strong privacy, low or no taxation protection
against local political or financial instability.
The important functions or financial services, which offshore banking
units can provide, are:
• Deposit taking
• Project financing
• Syndication of loans
• Issuing short-term instruments like negotiable certificates to deposits.
• Carry merchant banking activities in foreign currency denominated bonds.
• Electronic funds transfer
• Foreign exchange

• Letter of credit and trade finance
• Investment management and investment custody
• Trustee services
• Corporate administration
Although every bank does not provide each service. Banks try to polarize
between retail services (which are low cost) and private banking (which tries to
bring personalized suite of services to the client).
The main advantages of offshore banking are:


And Tax
Political Benefits

Payment of
Special Development
Banking Of nation/
Services Remote areas

 Economic and political stability: Offshore banking provides economically
politically stable jurisdictions especially for those resident in areas where there
is a risk of political turmoil, and who fear their assets may be seized or
disappear. Although, developed economies with regulated banking system offer
same advantages in terms of stability.
 Payment of higher interest rates: Some of these banks which function at a
lower cost base provide higher interest rates than the legal rates prevailing in
their home countries due to lack of government intervention and lower
 Tax benefits: Generally the interest paid by offshore banks is without tax
deduction. This acts as a benefit for individuals who do not pay tax on
worldwide income, or who do not pay tax until the tax return is agreed.
 Special banking services: Certain offshore banks offer special banking
services not offered else where such as anonymous bank accounts, higher or
lower rate loans based on risk and investment opportunities.
 Development of remote areas/nation: offshore banking helps even
geographically remote nations to generate investment and create growth in their
There are some limitations of offshore banking are as follows:


Involved in Encourages Difficult Financial

 Crime Tax evasion Physical access Disturbance

 Involved in crime: Off shore banking has been found associated with the
underground economy and organized crime through money lending. After
September 11,2001 these banks have been accused of helping various organized
crime gangs, terrorist groups.
 Encourages tax evasion: Offshore banks encourages tax evasion by giving
people seeking tax evasion an attractive place to deposit their hidden income.
 Difficult physical access: As offshore banks are often remotely situated
therefore the physical access is difficult. Access to information can be difficult,
however in a global tele communication networks this does not seen to be a big
problem as information can be set up on line, by phone or by mail.
 Developing countries may face financial disturbance: sometimes
developing countries may face problem due to speed at which money can be
transferred in and out of their economy. This “hot money” coming from
offshore accounts can be definitely increase problems of financial and economic
disturbance in developing countries.

Introduction: The coming up of middle class with substantial purchasing
power in India during the last decade has given rise to its desire to spend
according to the changing life style. This has offered the Indian banking system,
a ready market, for mobilization and development of their funds. Given the
rising purchasing power of this class, there is huge untapped potential for
Meaning: Retail banking is activity devised in past few years and now used
extensively. It represents any banking, which is not wholesale based. It includes
any business that is conducted through branch network, which is mainly focused
towards personal sector. It encompasses all institutions that provide a related
range of banking services—money deposit, credit services and some form of
financial advice. Retail banking today is characterized by three areas:
 Multiple products (deposits, credit cards, insurance, investment)
 Multiple channels of distribution (call center, branch internet)
 Multiple customer groups (consumer, small business)

Need for retail banking

 Economic prosperity and the consequent increase in the purchasing power of

 Technological factors also added to the requirement convenience of using
credit cards, internet and phone banking anywhere and any time banking has
also flood customers into banking.
 Decline in interest rates have also contributed to increase retail banking.
 With the large corporate borrowers having diversified the sources to fund
their financial requirements, frequent reduction in cash reserve ratio resulting in
pumping in of liquidity, declining bank rate leading to decline in spreads un-
attractive yields on government securities etc. have all forced banks to be in
search of alternative opportunity to deploy their funds.
Segments in retail banking:
There are three segments in retail banking which included:
a. Deposit products (convenient deposit schemes such as flexi deposits)
b. Loan products (such as housing loans, education loans, conveyance loans,
personal loans for diverse purposes such as medical expenses, travel abroad)
c. Other products
Besides there are a number of value added services such as free collection of
outstation instrument, concession in service fee in case of remittances, issue of
free ATM cards, waiver of fee on credit cards and utility services such as
payment of water, electricity and phone bills.
Developments in retail banking in India:
Commercial banks in India are involving more and more in retail banking as it
is now an attractive market segment having lot of opportunities for growth and
profit. Retail banking refers to housing loans for purchasing durables, auto
loans, credit cards and educational loans.

The loan values can average between Rs.20000 to Rs.1 crore. These loans are
of period of 5 to 7 years, with an exception of housing loan being granted up to
15 years. The speed of growth of retail banking can be accelerated by growth in
banking technology and automation of banking processes.
Although the retail banking offers phenomenal opportunities for growth and
profits but how far it is able to lead to growth will depend on the capacity of
banks to meet these opportunities profitably. There is need for constant
innovation to revalidate and upgrade existing internal systems. Banks can now
use retail as growth trigger. This requires product differentiation, innovation,
product pricing technological up gradation, cost reduction and cross selling.

Wholesale banking is the provision of services by banks to the like of large
corporate clients, mid-sized companies, real estate developers and investors,
international trade finance businesses, institutional customers (such as pension
funds and government entities/agencies), and services offered to other banks or
other financial institutions. In essence, wholesale banking services usually
involve high value transactions.

Wholesale banking contrasts with retail banking, which is the provision of

banking services to individuals.

(Wholesale finance means financial services, which are conducted between

financial services companies and institutions such as banks, insurers, fund
managers, and stockbrokers.)

Modern wholesale banks are engaged in: finance wholesaling, underwriting,

market making, consultancy, mergers and acquisitions, fund management.

This chapter represents a conclusive review of the efforts made since up till
about the different innovations by Central Bank of India in banking sector.
Various innovations of the bank provide benefits to the various
business and Industries in many different ways. The innovations of bank are of
two types: innovations in products & innovations in branches
Innovations in products includes, E-banking, ATM, debit cards, credit
cards & mobile banking whereas innovations in branches includes, universal
banking, offshore banking, retail banking, wholesale banking.
The project report summarizes about the facilities of CBI
accounts and deposits and also provides the different products. This information
is based on the primary and secondary data available from different sources.

The Project work is done on basis of certain objectives, which are as
• To understand the various innovations in banking sector by the bank.
• To know about the different products of the bank.
• To discuss about the role of Central Bank of India in banking field.
• To know about the benefits of innovations of the bank.

In the light of these objectives the following are the findings that
represent the changing environment of Indian economy in global scenario in the
wake of liberalization and globalization.
 The study reveals about the different types of innovations of the
bank, which helps the people in many ways.
 The role of board of directors is properly described. Processes are
established in such a manner that allows the board of director to
compliance with the policies of companies.
 The study presents the different types of products available in the
bank for the help of its customers.
So, these are the findings, which the project reveals by making an analysis
of the topic. Moreover to making efficient central bank of India, certain
suggestions have to be followed by these banks. These are as follows:
 Central bank of India has to provide ATM facility to its customers so
that the people can get benefit of this facility and withdraw money at any
time at any place with this they would not have to face any problem
regarding to money.
 Central bank of India’s branch network should be wider as, we have
already discussed about ATM network in each branch.
 Central bank of India has to improve its disclosure policies so that
everyone can get easily all information regarding banking policies and
other information related to bank.
 Indian market will provide for high growth market so bank should make
strategies to grab such opportunities.
 Bank should open their branches in rural area.

www.central bank of india.com
Value notes.com
White papers.com
Finance biz.com
Gahoo yoogle.com
Banking Law and Practice by Sharma publications.
Banking theory and practices by kalyani publishers.
Principles of banking by AIBA (All India banking associations)