S.NO.
CHAPTER NAME
I.
Introduction to central central bank of India
II.
Products of central central bank of India
III.
Database & et!odolo"# et!odolo"#
I$. I$.
Inno%ations in bankin" bankin" b# roducts
$.
Inno%ations in bankin" b# branc!es
$I.
Conclusion' findin" & su""estions (iblio"ra!#
1
This This chapte chapterr contai contains ns the inform informati ation on about about Centra Centrall Bank Bank of India India origin origin,, vision,
Profile: Established in 1911, 1911, Central Bank of India was the first Indian
commercial bank, which was wholly owned and managed by Indians The establishment of the Bank was the ultimate realisation of the dream of !ir !orab"i #ochkhanawala, founder of the Bank !ir #hero$esha %ehta was the first Chairman of a truly &!wadeshi Bank& In fact, such was the e'tent of pride felt by !ir !orab"i #ochkhanawala that he proclaimed Central Bank as the &property of the nation and the country&s asset& (e also added that &Central Bank lives on people&s faith and regards itself as the people&s own bank& )uring the past 9* years of history the Bank has weathered many storms and faced many challenges The Bank could successfully transform ever every y thre threat at into into bu busi sine ness ss op oppo port rtun unit ity y and and e'ce e'cell lled ed ov over er its its peer peerss in the the Banking industry
+
number of innovative and uni-ue banking activities have been laun launch ched ed by Cent Centra rall Bank Bank of Indi Indiaa and and a brie brieff menti ention on of som some of its its pioneering services services are as under. 19+1 19 +1
Intr Introd oduc ucti tion on to to the the (om (ome !avi !aving ngss !afe !afe )ep )epos osit it !ch !chem emee to build saving/thrift saving/thrift habits in all sections sections of the society society
19+0 19+ 0
n E'clus E'clusive ive adies adies )epart )epartme ment nt to cater cater to the Bank&s Bank&s women clientele
19+2 19 +2
!afe !afe )epo )eposi sitt oc ocke kerr fac facil ilit ity y and and 3upe 3upeee Travel aveler ers& s& CheChe-ue ue
19+9 19 +9
!ett !ettin ing g up up of of the the E' E'ec ecut utor or and and Tr Truste usteee )epa )epart rtm ment ent
194 94+ +
)epo )epossit Insu nsuranc rancee Bene enefit !che !chem me
192+
3ecurring )e )eposit !c !cheme
!ubse-uently, even after the nationali$ation of the Bank in the year 1929, Central Bank continued to introduce a number of innovative banking services as under. 1952
The %erchant Banking Cell was established
1967
Central card, the credit card of the Bank was introduced
1962 19 62
&#la &#lati tinu num m 8ubi 8ubile leee %o %one ney y Bac Back k )ep )epos osit it !che !cheme me&& was was launched
1969
The housing housing subs subsidiar idiary y Cent Bank (ome inance inance td was started with its head-uarters at Bhopal in %adhya #radesh
1990
:uick Che-ue Collection !ervice ;:CC< = E'press !ervice was set up to enable speedy collection of outstation che-ue
4
urther in line with the guidelines from 3eserve Bank of India as also the >overnment 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 !elf Employment !chemes to promote employment among the educated youth mong the #ublic !ector Banks, Central Bank of India can be truly described as an ll India Bank, due to distribution of its large network in +5 out of +6 !tates as also in 0 out of 5 ?nion Territories in India Central Bank of India holds a very prominent place among the #ublic !ector Banks on account of its network of 4190 branches and +25 e'tension 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 +* 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 "udged from the list of ma"or corporate clients such as ICICI, I)BI, ?TI, IC, ()C as also almost all ma"or corporate houses in the country
Vision: @ur vision is to emerge as a strong, vibrant and proAactive bank
and to positively contribute to emerging needs of the economy through harmoni$ation of human, financial and technological resources and effective risk control system
0
Capital structure: The authori$ed Capital of Central Bank of India is
1*,777 million e-uity shares of 3s17 each = 6,777 million are perpetual nonA cumulative preference shares @ut of which 4+0,101,027 e-uity shares of 3s17 issued and 67,777,777 e-uity shares of 3s 17 fully paid up General Managers
ame
)esignation
Tel o
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#riority !ector/ 3a"bhasha/ @peration/ Central Card/ !ubsidiaries
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!hri ! !uresh
Credit/ Credit #olicy/ oan
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!hri >upta
Credit ppraisal
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!hri 3 # !harma
Donal %anager A ew )elhi
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!hri atra"an
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!hri 3 adivelu
International )ivision/ Treasury/ %B)/ 7++A++641*9+ )ept of IT
!hri 3 atara"an
#lanning = )evelopment/ ccounts/ egal/ 3ecovery
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!hri ! %
Donal %anager A %umbai %etro
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)eshpande !hri # !athe
udit/ Inspection/ Inter Branch 3econciliation/ (ousekeeping
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ccounts/ 3ecovery/ egal = BI3/ (3)
7++A++7+44+2
!hri !omaya"ulu
Donal %anager A Chennai
700A+6**059+
Corporate Office Central Bank of India Chander Mukhi, Narman Point Mumbai !"" "#$ %el: "## &&'( )))) *onal Offices +G+
Block o 45/+/0, !an"ay #lace gra F +6+ 77+
Tel. 7*2+ F +6*71*0/40+0 a'. 7*2+ F +6*4296/1401 Email. $magra$oGcentralbankcoin
+-M./+B+/
Central Bank Building #@ o +7*, al )arwa"a hmedabad F 467 771
Tel. 759 F +**74*62 a'. 759 F +**7*99* Email. $mahme$oGcentralbankcoin
B-OP+0
9, rera (ills, 8ail 3oad Bhopal F 02+ 711
Tel. 75** F +250745/42/4*/40/44 a'. 75** F +**+719 Email. $mbhop$oGcentralbankcoin
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# B o 14, o *6A*9
Tel. 715+ F +57+990/96
2
Bank !-uare, !ector F 15B Chandigarh F 127 715
a'. 715+ F +570705 Email. $mchan$oGcentralbankcoin
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06/09, %onteith 3oad Egmore, Chennai F 277 776
Tel. 700 F +6**059+/029+/02+7 a'. 700 F +6**1+27 Email. $mchen$oGcentralbankcoin
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> ! 3oad, Central Bank Building Bhangagarh, >uwahati F 561 77*
Tel. 7421 F ++0*52*1/*+ a'. 7421 F ++0*+1*0 Email. $mguwa$oGcentralbankcoin
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# B o *++, 517A51+ Tel. 707 F +0507421/20, +021107+A7* %ahapathram 3oad, Bank a'. 707 F +050+601 Email. !treet $mhyde$oGcentralbankcoin (yderabad F *77 19* 4O04+%+
Central Bank Building 44, eta"i !ubhash 3oad olkata F 577 771
Tel. 744 F ++471+57/1+5*/5775 a'. 744 F ++479620 Email. $mkolk$oGcentralbankcoin
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# B o 17, kash )eep +4, idhan !abha 3oad ucknow F ++2 771
Tel. 7*++ F +211471A0 a'. 7*++ F +2+1+14 Email. $mluck$oGcentralbankcoin
M1MB+I M.%O *ON+0 O55IC.
!tandard Building, 1st loor
Tel. 7++ F ++705++9/5471/5470 a'. 7++ F ++7005+7
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) 3oad, %umbai F 077 7+4
Email. $mmm$oGcentralbankcoin
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#awapuri ihar Building, Tel. 72+1 F +++*16** ( +6 a'. 72+1 F ++*1560 ear Bhagwanpur Chowk Email. $mmu$a$oGcentralbankcoin %u$affarpur F 60+ 771 N+GP1
@riental Building, +nd loor amptee 3oad, agpur F 007 771
Tel. 751+ F +*+7421A24 a'. 751+ F +*+742* Email. $mnagp$oGcentralbankcoin
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# B o 5775, ink Tel. 711 F +4416920, +4419+26/29 (ouse a'. 711 F +441144+/+45 #ress rea, 4 Bahadurshah Email. $mdelh$oGcentralbankcoin 8afar 3oad, ew )elhi F 117 77+ P+%N+
+nd loor, Block B %aurya ok Comple' )ak Banglow 3oad, #atna F 677 771
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# B o 96, 415 % > 3oad, #une F 011 771
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6
1st loor, Block HC Bombay %arket, > E 3oad, 3aipur F 09+ 771
Tel. 7551 F +++25*2, +++*151 a'. 7551 F ++4069* Email. $mraip$oGcentralbankcoin
/irectors
/irectors of Central Bank of India 6 their addresses: $7 Ms -7 +7 /aru8alla
Chairperson = %anaging )irector Chander %ukhi ariman #oint %umbaiA077 7+1 Tel. ;@< 7++ A ++7+0494 / ++7+490+ a'. ++7+61++ #7 9hri 47 9ubbaraman
E'ecutive )irector Chander %ukhi ariman #oint %umbaiA077 7+1 Tel. ;@< 7++ A ++7+4221 / 22465599 / 224656+2 a'. ++6*2165 '7 9hri +lbert %auro
E'ecutive )irector Chander %ukhi ariman #oint %umbaiA077 7+1
9
Tel. 7++ A ++650104 a'. 7++ F ++7++215 !7 9hri P7 P7 Mitra
Economic dvisor and 8oint !ecretary %inistry of inance Banking )ivision 8eevan )eep Building ew )elhi Tel. 711 F +450*1+6 7 9hri M747 Bhattachar;a
3BI ominee )irector Evershine %illenium #ark pts 45/271, Thakur illage, andivili ;East< %umbai F 077171 &7 9hri 4amal 5aru
A67, i$amuddin East, ew )elhi A117714 Tel. 711 F +4+295+4 )7 Ma=or >etd? Ved Prakash
+70/1 eb alley, eb !arainew
)elhi Tel. 711 A +4716691 / +47104+* a'. 711 F +4715705
(7 9mt7 9at;a Bahin
17
69, !ectorA0, aishali >ha$iabad ;?#< Tel. 71+7 F +55099* @7 9hri -arish Chandhok
+7A+1, %anishpuri, !aket E't
Indore Tel. 7541 A +0941*+ 7541 F 07206+6
$"7 9hri omesh 9abhar8al
+/4, %! lats #eshwa 3oad, >ole %arket, ew )elhi A 117 771 $$7 Ms7 Indu 9ingh Pa8ar
Central Bank of India 16, !hashtri agar, 8ammu Tavi #in A 167 770 $#7 9hri C7M7 Puri
Central Bank of India, 8anpath Branch, #B +00, 57, 5+ 8anpath ew )elhi A 117 771 Tel. 711 F +44+1404/+4412576 a'. 711 F +44*5940
11
$'7 9hri N7 47 Pareek
Central Bank of India, #B o 65, %ir$a Ismail 3oad, 8aipur A 47+ 771 Tel. 7101 A +457444 a'. 7101 F +446977
-istor; of Central Bank of India !ir !orab"i #ochkhanawala established Central Bank of India in 1911 It was the first Indian commercial bank, which was wholly owned and managed by Indians !ir #hero$eshah %ehta was the first Chairman of the Bank In 1929, Central Bank of India was nationali$ed along with 14 other banks In its 9* years of history, Central Bank of India has launched a number of innovative and uni-ue banking activities %a"or among them are. 19+1. Introduction of the (ome !avings !afe )eposit !cheme to build saving/thrift habits in all sections of the society 19+0. n E'clusive adies )epartment to cater to the Bank&s women clientele 19+2. !afe )eposit ocker facility and 3upee Travellers&
Che-ues
19+9. !etting up of the E'ecutor and Trustee department 194+. )eposit Insurance Benefit !cheme 192+. 3ecurring )eposit !cheme
1+
1952. The %erchant Banking Cell was established 1967. Centralcard, the credit card of the Bank was
Introduced
1962. &#lantinum 8ubilee %oney Back )eposit !cheme& Jas launched 1969. The housing subsidiary Cent Bank (ome inance td was started with its head-uarters at Bhopal in %adhya #radesh 1990. :uick Che-ue Collection !ervice ;:CC< = E'press !ervice were set up to enable speedy collection of @utstation che-ues
Central Bank of India has a large network of 4121 branches and +57 e'tension counters spread over +5 !tates and 0 ?nion Territories The Bank has a total customer base of over +* million account holders, which is one of the largest in the banking industry
?3. http.//wwwcentralbankofindiacoin/
14
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 uni-ue features and facilities These schemes suit different kinds of banking needs you might have
Mone; 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 mount of deposit
minimum amount of 3s 177/A and multiplies of 3s
#eriod of deposit
177/A minimum period of 2 months and upto a ma'imum
3ate of interest
of 1+7 months The rate of interest shall be the appropriate rate prevailing on the date of the deposit for the period
#remature payment
so selected #ayment before maturity is available as per
oans/advance
prevailing rules oan/advance facility is available under the scheme
against deposit
as per prevailing rules
4haAaana deposit scheme ha$aana deposit scheme offers you the double benefits of easy li-uidity and high returns It is also a fle'ible scheme that allows you to withdraw a part of the deposit amount as and when re-uired mount of deposit
minimum amount of 3s *777/A and multiplies of 3s 1777/A
10
#eriod of deposit
minimum period of 47 days and upto a ma'imum
3ate of interest
of 1+7 months The rate of interest shall be the appropriate rate prevailing on the date of the deposit for the period
#remature payment
so selected Kou will be permitted to withdraw upto a ma'imum
oans/advance
of 17 times during the entire period of deposit oan/advance facility is available under the scheme
against deposit
as per prevailing rules
Monthl; interest deposit receipt The %I)3 scheme provides you with monthly interest earnings, without affecting the principal amount mount of deposit
minimum amount of 3s *777/A and multiplies of
#eriod of deposit
3s 1777/A open an account for periods ranging from 1+
3ate of interest
months to 1+7 months The rate of interest shall be the appropriate rate prevailing on the date of the deposit for the period
#remature payment
so selected #ayment before maturity is available as per
oans/advance
prevailing rules oan/advance facility is available under the scheme
against deposit
as per prevailing rules
uarterl; interest deposit receipt :I)3 provides you -uarterly interest without affecting the principal amount
1*
mount of deposit
minimum amount of 3s *777/A and multiplies of
#eriod of deposit
3s 1777/A open an account for periods ranging from 1+
3ate of interest
months to 1+7 months The rate of interest shall be the appropriate rate prevailing on the date of the deposit for the period
#remature payment
so selected #ayment before maturity is available as per
oans/advance
prevailing rules oan/advance facility is available under the scheme
against deposit
as per prevailing rules
Centrals flei ;ield deposit scheme ?nder this scheme depositors can avail floating rate of interest, which is higher than the interest rate on normal term deposits mount of deposit #eriod of deposit
!ingle deposit of 3s 1 lac and above @ne year and above and upto a ma'imum of 17
3ate of interest
years The rate of interest shall be the appropriate rate prevailing on the date of the deposit for the period
#remature payment
so selected In case the deposit will be treated as normal deposit and interest will be paid as per our prevailing rates
oans/advance
applicable to normal deposits oan/advance facility is available under the scheme
12
against deposit
as per prevailing rules
0O+N9 Kou can avail of easy and convenient loan offers for purposes ranging
from housing finance to higher education to purchase of computer @ur loans enrich life and enhance lifestyles
Cent bu; acility =
Kou can avail of the term loan facility at all branches
purpose
for purchase of consumer durables, two wheelers and
Eligibility
four wheelers 1< #ermanently employed persons ;govt/private sector< +<
@thers have regular and known sources of
income 4< :uantum of loan
or four wheelers, applicant should be income
ta' assessee 67L of the cost of four wheelers %a'imum 3s 17 lacs 6*L of the cost of two wheelers and other
!ecurity
consumer durables %a'imum 3s+ lacs (ypothecation of articles/vehicles purchased out of loan In case f salaried employees, when installments
3ate of interest
are received from salary #3 M +L
#rocessing
1L of the loan amount %inimum 3s177/A
charges 3epayment
42 to 60 e-uated monthly installments ;E%Is<
15
Cent V;apari @b"ective Implemented by ature of facility Eligibility
To provide finance to small and medium traders !emiAurban and = urban branches Cash credit !mall and medium traders including retailers and
%a'imum limit %argin
distributors 3s * lacs per borrower %inimum +*L on stocks
3ate of interest
?pto 3s + lacs F #3
!ecurity
@ver 3s+ lacs and upto 3s * lacs F#3 M 0L 1< (ypothecation of stocks
#rocessing fees
+< E% of land and building ?pto 3s +*777 il bove 3s+*777 to 3s1 lac A 3s+*7/A bove 3s 1 lac F 3s+lacs
A 3s *77/A
bove 3s+ lacs F 3s* lacs A 3s+*77/A
Personal 0oan %o .mplo;ees Of Corporate Clients Eligibility #urpose
#ermanent employees of large corporate clients To meet any personal/domestic e'penses of the
:uantum of loan
borrower Ten times of gross salary sub"ect to a ma'imum of 3s
3ate of interest %ode of
1 lac #3 M 0L 42 months
in
e-uated
repayment
commencing
one
month
16
monthly after
the
instalments month
of
#rocessing
disbursement 1L of the loan amount
charges
Cent mortgage acility =
Term loan facility to meet any sort of personal or
purpose Eligibility
business e'penses oan against mortgage of property situated in
Target group
metro/urban/semiAurban areas Individual singly or "ointly, traders, businessmen, professionals or self employed persons etc having known sources of net income of 3s 17777/A per month
:uantum of loan
or more +7 times net monthly income sub"ect to minimum
!ecurity
amount of 3s177 lac and ma'imum of 3s 17 lacs 3esidential house/flat, commercial or industrial property situated in metro/urban/semiAurban centers only in the name and possession of the borrower The property value should be e-ual to +77L of the loan
Insurance
amount The property will be insured against fire, riots and wherever re-uired against earth-uake, flood, lightning etc by the borrower with usual bank clause for the full
3ate of interest #rocessing
value of the property #3 M 0L 1L of the loan amount
charges 3epayment
dvance Che-ue signed by the borrower for repaying
19
monthly instalments along with letter of deposit will be obtained
Cent trade acility = purpose Eligibility/Target
@verdraft limit for business re-uirements Traders/retailers/distributors/commission
group :uantum of loan
agents/arhatiyas E-uitable mortgage of property situated in metro/urban/semiAurban with market value of +77L of overdraft limit and in the name and
Insurance
possession of the borrower The property will be insured with the usual bank
3ate of interest
clause for full value of the property ?pto 3s +77 lacs A #3 @ver 3s +77 lacs A #3 M +L
#rocessing charges
?pto 3s +*777
A il
bove 3s +*777 upto 3s 177777
A 3s
+*7/A bove 3s 177777 upto 3s +77777
A 3s
*77/A bove 3s +77777 upto 3s 1777777
A 3s
+*77/A bove 3s1777777 upto 3s+777777 3e-uired details
*777/A pplication form
+7
A 3s
inancial statements Copy of sales ta' registrations Copies of sales ta' returns Credit report from previous bankers/market report )etails of property offered as security with its present valuations
Central kisan credit card @b"ectives
oan for farmers on the basis of their holdings for purchasing agricultural inputs including cash
Eligibility
withdrawals for their production needs CCC will be provided to any farmer to cater to his shortAterm credit re-uirements armers having good track record for past + years with our bank as a borrower or depositor and not being defaulter to any credit institution would be considered CCC will be issued to farmers in the form of cardAcumApassbook 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
!ecurity margin 3ate of interest
transactions on an ongoing basis In conformity with the agriculture loan !ame rate of interest as are applicable to crop loans
+1
and activities allied to agriculture
9.VIC.9
Central card It is a uni-ue credit card offering you innumerable facilities = convenience It offers you the freedom to spend at a large number of member establishments 5acilities offered b; central card:
@ur domestic card is accepted all over India and epal having more than 117777 merchant outlets ll retail outlets, petrol pumps, Indian railways, airlines, nursing homes, hotels, restaurants, departmental stores and grocery stores etc now accept central card %ail order/telephone order, Internet transactions can also be made through central card with prior approval/authori$ation from our system >roup ccident Insurance !cheme coverage upto 3s 1 lakh
Central Card .lectronic Central card electronic is a new Nentry level credit productO for the emerging, untapped market segments that previously did not have access to traditional bank card payment products
++
5eatures:
It is designed for use only at electronic terminals cceptance at nonA terminalised merchants is not allowed ccount information is printed and not embossed on the card +0Ahour customer call centers are available on India There is $ero lost card liability Card will be replaced in seven days Kou will get free accident insurance cover upto 3s 177777/A Kou will get free lost card insurance cover to the e'tent of credit limit Kou will be allowed che-ue encashment facility, upto 3s +*77/A at all the branches of CBI There is no fear spending over the limit, as only transactions within the available limits would be authori$ed Cash withdrawal limit. A )omestic card
A3s *777/A pm
A >lobal card
A3s 1*777/A pm
5ees and charges:
There is no "oining fee n annual fee of 3s 077/A is charged every year in advance The card is issued/renewed every two years nominal fee of 3s *7/A is charged for a photo card
/ebit Card 5eatures:
)irect online debit to your savings or current account
+4
Completely safe and secure #I based card >lobally accepted at merchant establishments displaying the maestro/cirrus logos +0Ahour customer call centers available in India Dero lost card liability 3eplacement card Itemi$ed billing on your statement/passbook 5ees 6 charges:
There is no transaction charge at the T%s of CBI Transaction charges are levied only at nonAcentral bank maestro P 3s 47 for cash withdrawal P 3s 2 for balance en-uiry
Cash Management 9erDices 2ho can aDail cash management serDicesE
Corporate #ublic, private and "oint sector Cos E'isting partnership firms E'isting proprietorship firms Individuals = institutions Benefits to customers:
Better cash management 3egular computeri$ed %I!/reports Instant li-uidity aster and higher turnover
+0
(igher income and profitability
%raDelersF Che
Gift Che
+*
This chapter contains the information about the ob"ectives of the study and the information upon which the study for the purpose of pro"ect is conducted and the limitations faced therein
OB.C%IV.9 O5 %-. 9%1/3 The ob"ectives of the study are based on the concept of Income = Investment !ources The researcher has tried to represents the concept of different sources of Incomes = Investments analysis in this pro"ect The various ob"ectives are discussed as under. To understand the issue of Income = Investment !ources as practiced by the bank To know about the different sources Incomes = Investment of the bank To discuss about the role of Central Bank of India in banking field To know about the benefits of investments to the bank
9O1C.9 O5 /+%+ CO00.C%ION
To collect the data for the purpose of the pro"ect, study the following sources are used.
PIM+3 9O1C.:
The primary data has been based on the response received from bank manager, bank staff related to the Income = Investment !ources 9.CON/+3 /+%+:
+2
The secondary data has been collected from the various books, "ournals, articles, papers and the annual report of the bank and through web sites
M+IN .MP-+9I9 O5 9%1/3: In this pro"ect report the study revealed about Income = Investment !ources of Central Bank of India consisting of income sources, investment sources
C-+P%. 9C-.M. C(#TE3 1 F Introduction @f Central Bank @f India C(#TE3 + F #roducts @f Central Bank @f India C(#TE3 4 F )atabase = %ethodology C(#TE3 0 F Innovations In Banking #roducts C(#TE3 * F Innovations In Banking Branches C(#TE3 2 F !ummary, indings = !uggestions
P.9.N%+%ION O5 PO.C% or the purpose of presentation of the study the following ways have been adopted The presentations are through.
Bar graphs
Tables
)iagrams
0IMI%+%ION9 O5 %-. 9%1/3 )uring the study work a number of limitations have been arisen which are acknowledged here under The limitations are.
+5
irst of all main problem is that no any bank was ready to give training
)ue to shorter span of time and resources less information has been
considered to analysis the concept of Income = Investment !ources !o the study cannot be generali$ed
The respondents whose opinions are analy$ed are not willing to disclose the
-uantum of information they have
The information that is collected in pro"ect report is not ade-uate
+6
This chapter contains the different innovations in banking products such as .H Banking, Mobile Banking, /ebit Cards, Credit Cards, +%M, Internet Banking7
Introduction: Jith the trend of globali$ation 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 eAcommerce and Internet has transformed the world into the >@B I>E ast development in electronic technology has concerned the computers to take over the bank counters and to convert brick banking into electronic banking ?sage of technology by banks is due to challenge of competition, rising consumer e'pectations and shrinking margins of banks, which lead to reduction in cost, and enhancement of productivity, efficiency and customer convenience
Meaning: EAbanking means, )alication of electronic tec!nolo"# to*ards transfer of funds t!rou"! an electronic terinal' couter or
+9
a"netic tae to conduct %arious transactions like cas! receits' a#ents' transfer of funds etc.+
It is often known as banking on net7 It does not involve any physical e'change of money, but its all done electronically, from one account to another, using the Internet Jith the advent of e banking, customers are benefited by unlimited accessibility through the network of utomated Teller %achines, personal computers or even through mobile phones Customer can perform various banking transactions such as balance en-uires, bill payments, and transaction histories, transfer money between accounts, without having to step to office of the branch
5eatures of e banking:
+n;8here an; time banking: customers can avail banking
facility while sitting at their home/office
GlobaliAation of serDice: EABanking has a special feature of
globalising banks services all over
Intense competition: EACommerce is a product of handling intense
competition among various banks
Cash less banking: EACommerce also provides feature of cash less
banking as cash is not re-uire in raw form but electronic cash like debit or credit cards may serve the purpose
Promptness:
nother feature of
EACommerce is provides
promptness in services
Process of .HBanking procedure of .HBanking
47
EABanking process can be e'plained with the help of following diagram and e'planation as under. og on to website
inal pproval
Credit Card re-uest
erification @f password
#rocessing @f information
To make the use of EABanking user has to go to the Jorld Jide Jeb and log on to the website
e't step follows verification of user I) and password by the website server
s 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
41
If all security measures are completed then the transaction is approved accordingly
+dDantages of .HBanking: Importance of EABanking can be e'plained from four aspects.
To banks
dvantages
To cust
To >ovt
To merchant Trader
I. Benefits to banks
eduction in cost: EABanking is helpful to banks by reducing the cost of
various transactions as compared to traditional cost by way of T%s Telephone banking
Global coDerage: EABanking provides global network coverage of banks
services i.e. through the concept of Hnywhere nytime Banking
Good customer relationship: EABanking helps in attracting and retaining
the customer by properly handling their grievances
eduction in paper 8ork: EABanking helps in eliminating endless paper
based bank statements, spreadsheets, bulky books of accounts, ledger including the use of calculator
eduction in frauds and misappropriations: Through EABanking frauds
and misappropriations can be reduced as inter branch reconciliation is possible through internet
II7Benefits to customers
4+
+n;time banking: EAbanking provides +0 hours, 42* days services to
customers
+n;8here banking: customers can avail any sort of banking services
from anywhere around the globe from sitting at anyplace
Prompt serDices: 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
9aDing in time: Jith the help of EAbanking there is no need for bank
customers to stand in -ueue for hours to complete financial transactions
III7 Benefits to goDernment
%ransparenc; in transactions: EABanking provides transparency in
transactions i.e. access to information is possible easily
Global market: Jith the help of EABanking products of our country will
get global market to be populari$ed properly
isk of carr;ing cash: EABanking provides the facility of cash less
banking which helps in growth of economy
IV7 Benefits to merchant traders
Promotion of business: with the help of EABanking business of merchants
traders will be promoted because of increased purchasing power of credit holder
Immediate settlement: EABanking helps settlement, and payment of
cash is possible by the customer
44
+Doids risks: it helps merchants bankers also as there is no risk of
handling cash
0imitations of . Banking:
Problems of securit;: !ecurity and privacy aspects are ma"or issue in
case of EABanking transaction arious sites are not properly locked at to ensure weather customers money is safe in cyber world or not
-igh cost: The infrastructural cost of providing EABanking facility is very
high The banks not only have to automate frontAend services but also back office services, which involves high cost
0ack of a8areness: nother great hindrance is lack of awareness because
effective and wide media efforts in publishing Internet banking need to be emphasi$ed
0ack of computeriAation: ack of computeri$ation and low density of
telephone lines is also a bottleneck for online banking In India, out of 2*777 bank branches, only *777 branches are computeri$ed
2rong assumption b; people: %any people are away from net banking
on the assumption that it is more e'pensive than the traditional method of dealing with bank transactions They still prefer going to bank to perform transactions
%;pes of .HBanking serDices E-banking Services T%
Card
EAche-ue
%obile Banking 40
Telephone Banking
ET
$7+utomatic %eller Machine >+%M?: T% facility was started in early
1997s by foreign banks like (!BC, City bank T% is made to work +0 (rs a day or the purpose of withdrawing cash from T% machine, plastic currency and debit cards are used #7Credit Cards. Credit card is another facility produced by EABanking
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 '7 Mobile Banking: %obile banking provides customer to access their
account on mobile phone screen 3outine banking transactions can be performed by "ust punching a few buttons on the mobile !7 %elephone Banking: Tele banking is another main service provide by eA
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 7.lectronic 5und %ransfer >.5%?: EABanking has given a system of
electronically transferring funds i.e. ET 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 ;E)I< &7 .lectronic Che
and reduction in overall cost EAche-ue facilitates on line payment It needs no clearance charges Issue of EAche-ue is more familiar in various advanced countries
4*
Introduction:
42
There are rapid changes in the financial services environment, which has led to increased competition by few players and product innovations 3ecent innovations in tele communications have opened up an additional channel for electronic banking
Meaning: Banks have noticed and availed the opportunity that e'ists between banking and mobile telephony !%! ;short messaging services< and >!%;global system mobile
These wireless devices may give services as hand held #Cs %obile devices are enabled now days to perform many activities which earlier have been available only as internet services
Issues relating to MHBanking •
Cost saDing: !%! offers revenue opportunities for operators by changing
!%! into higher value added applications The service offerings in !%! banking are numerous and highly cost saving
45
•
9imple to operate: The success of %A Banking is due to its userAfriendly
interface and range of services it offers •
Market research: #roper understanding of specific market is key in the
success of mobile banking 3esearch on available payment methods, user habits and key players is re-uired to be done #layers will have to be creative to make users perceive it as beneficial
9erDices: >lobal system mobile ;>!%< is not "ust about voice communications but also supports wireless personal digital assistant and other devices, "ust as it supports telephony !%! tariffs should be lowered in order to capture the markets and to e'ploits the potential for commercial transactions over mobile device %any services and schemes are being piloted and some are already available ew are mentioned here under. •
Balance en-uiry can be made
•
3e-uesting for providing bank statement
•
3e-uesting countermanding che-ue payments ;stop che-ue<
•
Che-uebook re-uest can be made
•
Che-ue clearance alerts are given to customers
•
!ending account balances every time one makes a withdrawal, which helps
in finding out if some one else is using your T% card
0imitations problems in MHBanking: •
#ossibility of error is higher than in internet banking
•
The data transmission is very slow
46
•
%Abanking services are risky and not secure trials and pilots are still on
Jorld Jide Jeb to developed enhanced security •
%Abanking services are not enough versatile
•
The information knowledge available related to %ABanking is not
sufficient !ome nonAusers of mobile banking perceive it to be complicated due to lack of guidance available % Banking is not "ust a service reserved for international banks but for any financial institution wishing to take it There is a great opportunity to e'ploit 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 %ABanking 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
49
Introduction: T% facility was started in early 1997s by foreign banks like (!BC, City bank T% is made to work +0 (rs a day or the purpose of withdrawing cash from T% 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 T% 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 banks 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 T%Q the terminal reads the tape data to processes, which activates the accounts ccording 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 n automated teller machine ;+%M< is a computeri$ed telecommunications device that provides the customers o f a financial institution with access to financial transactions in a public space without the need for a human clerk or bank teller @n most modern T%s, the customer is identified by inserting a plastic T% card with a magnetic stripe or a plastic smartcard with a chip, that contains a uni-ue card number and some security information, such as an e'piration date or CC ;C< !ecurity is provided by the customer entering a personal identification number ;#I<
07
?sing an T%, customers can access their bank accounts in order to make cash withdrawals ;or credit card cash advances< and check their account balances as
01
well as purchasing mobile cell phone prepaid credit T%s 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 3ussia<, Multibanco ;after a registered trade mark, in #ortugal<, and Any Time Money ;in India<
2orking of +%M Insertion of Card into T%
ctual Transaction @peration by user
Transmission of Tape data to #rocessor
Clicking of keys of keyboard
ctivation of account
)isplay of details on screen
T% will give various options on the screen like.
Balance en-uiry
%ini statement
)eposits
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 e'tension of the T% and tele banking services
0+
Various facilities produced b; +%Ms:
Cash withdrawals
#ersonal identification number ;#I< change
@n line balance en-uiry
Transfer of funds between accounts linked to ones card
3e-uest for che-ue book
3e-uest for account statement
-I9%O3: The first mechanical cash dispenser was developed and built by uther >eorge !im"ian and installed in 1949 in ew Kork City by the City Bank of ew Kork , but removed after 2 months due to the lack of customer acceptance Thereafter, the history of T%s paused for over +* years, until )e a 3ue developed the first electronic T%, which was installed first in Enfield Town in orth ondon, ?nited ingdom on +5 8une 1925 by Barclays Bank This instance of the invention is credited to 8ohn !hepherdABarron, although various other engineers were awarded patents for related technologies at the time !hepherdABarron was awarded an @BE in the +77* ew Kear&s (onours ist The first person to use the machine was the British variety artist and actor 3eg arneyThe first T%s accepted only a singleAuse token or voucher, which was retained by the machine These worked on various principles including radiation and lowAcoercivity magnetism that was wiped by the card reader to
04
make fraud more difficult The machine dispensed preApackaged envelopes containing ten pounds sterling The idea of a #I stored on the card was developed by the British engineer 8ames >oodfellow in 192* In 1926 the networked T% was pioneered in )allas, Te'as, by )onald Jet$el who was a department head at an automated baggageAhandling company called )ocutel In 199* the !mithsonian&s ational %useum of merican (istory recognised )ocutel and Jet$el as the inventors of the networked T% T%s first came into wide ? use in 1954Q the IB% +960 was designed at the re-uest of loyds Bank The +960 CIT ;Cash Issuing Terminal< was the first true Cashpoint, similar in function to today&s machinesQ Cashpoint is still a registered trademark of loyds T!B in the ? ll were online and issued a variable amount which was immediately deducted from the account small number of +960s were supplied to a ?! bank otable historical models of T%s include the IB% 42+0 and 054' series, )iebold 17'' and TB! 9777 series, and C3 *''' series
00
Introduction: /ebit cards combine the functions of T% cards and checks Jhen
you pay with a debit card, the money is automatically deducted from your checking account %any banks issue a combined T%/debit card that looks "ust like a credit card and can be used in places where credit cards are accepted But don&t be mistaken AA they are not credit cards The money you spend comes out of your checking account immediately )ebit and check cards, as they have become widespread, have revealed numerous advantages and disadvantages to the consumer and retailer alike +dDantages are as follows ;most of them applying only to a some countries, but the countries to which they apply are unspecified<. •
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 •
?se of a debit card is limited to the e'isting 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 e'clusive to credit cards •
or 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 finali$ing the transaction at the time of purchase, and bypassing the
0*
re-uirement to pay a credit card bill at a later date, or to write an insecure check containing the account holder&s personal information •
ike credit cards, debit cards are accepted by merchants with less
identification and scrutiny than personal checks, thereby making transactions -uicker and less intrusive ?nlike personal checks, merchants generally do not believe that a payment via a debit card may be later dishonored •
?nlike a credit card, which charges higher fees and interest rates when a
cash advance is obtained, a debit card may be used to obtain cash from an T% or a #IAbased transaction at no e'tra charge, other than a foreign T% fee The )ebit card has many disadDantages as opposed to cash or credit. •
!ome banks are now charging overAlimit fees or nonAsufficient funds fees
based upon preAauthori$ations, and even attempted but refused transactions by the merchant ;some of which may not even be known by the client< •
%any merchants mistakenly believe that amounts owed can be RtakenR 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, overAtheAlimit, amounts not available causing further re"ections or overdrafts, and re"ected transactions by some banks •
In some unspecified countries, debit cards offer lower levels of security
protection than credit cards Theft of the users #I using skimming devices can be accomplished much easier with a #I input than with a signatureAbased credit transaction (owever, theft of users& #I codes using skimming devices van be e-ually easily accomplished with a debit transaction #I input, as with
02
a credit transation #I input, and theft using a signatureAbased credit transation is e-ually easy as theft using a signatureAbased debit transaction •
In many places, laws protect the consumer from fraud a lot less than with a
credit card Jhile 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 "ust 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 27 days thief who obtains or clones a debit card along with its #I may be able to clean out the consumer&s bank account, and the consumer will have no recourse •
Jhen 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 fi'ed period of time (owever, this isn&t the case in other countries, such as !weden ?ntil the hold is released, any other transactions presented to the account, including checks, may be
05
dishonored, or may be paid at the e'pense of an overdraft fee if the account lacks any additional funds to pay those items •
Jhile debit cards bearing the logo of a ma"or credit card are accepted for
virtually all transactions where an e-uivalent credit card is taken, a ma"or e'ception ;in some unspecified countries only, is at car rental facilities In some unspecified countries, car rental agencies re-uire 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 #I debit< and offline debit ;also known as signature debit< In some countries including the ?nited !tates and ustralia, they are often referred to at point of sale as RdebitR and RcreditR respectively, even though in either case the user&s bank account is debited and no credit is involved !ome cards are blocked from making either online or offline transactions, while other cards are enabled for both kinds of transactions Online debit >JPIN debitJ or JdebitJ?
@nline debit cards re-uire electronic authori$ation of every transaction and the debits are reflected in the users account immediately The transaction may be additionally
secured
with
the personal
identification
number ;#I<
authentication system and some online cards re-uire such authentication for every transaction, essentially becoming enhanced automatic teller machine ;T%< cards @ne difficulty in using online debit cards is the necessity of an electronic authori$ation device at the point of sale ;#@!< and sometimes also a
06
separate #Ipad to enter the #I, although this is becoming commonplace for all card transactions in many countries @verall, 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 authori$ed by the owner of the card Banks in some countries, such as Canada and Bra$il, only issue online debit cards
09
Introduction: credit card is a system of payment named after the small plastic card issued to users of the system 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 re-uires 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 %ost credit cards are the same shape and si$e, as specified by the I!@ 5617 standard The issuer of the card grants a line of credit to the consumer ;or the user< from which the user can borrow money for payment to a merchant or as a cash advance to the user credit card is different from a charge card, where a charge card re-uires the balance to be paid in full each month In contrast, credit cards allow the consumers to &revolve& their balance, at the cost of having interest charged %ost credit cards are issued by local banks or credit unions Credit cards are issued after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card Jhen a purchase is made, the credit card user agrees to pay the card issuer The cardholder indicates his/her consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a
*7
#ersonal identification number ;#I< lso, many merchants now accept verbal authori$ations via telephone and electronic authori$ation using the Internet, known as a &Card/Cardholder ot #resent& ;C#< 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 #oint of !ale ;#@!< system with a communications link to the merchant&s ac-uiring bank )ata from the card is obtained from a magnetic stripe or chip on the cardQ the
*1
latter system is in the ?nited ingdom and Ireland commonly known as Chip and #I, but is more technically an E% card @ther 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 fter receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect ;see air Credit Billing ct for details of the ?! regulations< @therwise, 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< !ome 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
*+
or e'ample, if a user had a S1,777 transaction and repaid it in full within this grace period, there would be no interest charged If, however, even S177 of the total amount remained unpaid, interest would be charged on the S1,777 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 ?sually this compartmentali$ation 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 "ump 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
+dDantages: %he main advantages are as follows.
dvantages
*4
To customers
>race period
To merchants
Benefits to customers: Because of intense competition in the credit card industry, credit card providers often offer incentives such as fre-uent flyer points, gift certificates, or cash back ;typically up to 1 percent based on total purchases< to try to attract customers to their programs ow interest credit cards or even 7L interest credit cards are available The only downside to consumers is that the period of low interest credit cards is limited to a fi'ed term, usually between 2 and 1+ months after which a higher rate is charged (owever, services are available which alert credit card holders when their low interest period is due to e'pire %ost such services charge a monthly or annual fee
Grace period credit card&s grace period is the time the customer has to pay the balance before interest is charged to the balance >race periods vary, but usually range from +7 to 07 days depending on the type of credit card and the issuing bank !ome policies allow for reinstatement after certain conditions are met
*0
?sually, if a customer is late paying the balance, finance charges will be calculated and the grace period does not apply inance charges incurred depend on the grace period and balanceQ with most credit cards there is no grace period if there is any outstanding balance from the previous billing cycle or statement ;ie interest is applied on both the previous balance and new transactions< (owever, there are some credit cards that will only apply finance charge on the previous or old balance, e'cluding new transactions
Benefits to merchants
n e'ample of street markets accepting credit cards or 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 authori$ed, regardless of whether the consumer defaults on the credit card payment ;e'cept for legitimate disputes, which are discussed below, and can result in charges back to the merchant< In most cases, cards are even more secure than cash, because they discourage theft by the merchant&s employees and reduce the amount of cash on the premises #rior to credit cards, each merchant had to evaluate each customer&s credit history before e'tending credit That task is now performed by the banks which assume the credit risk
**
or each purchase, the bank charges the merchant a commission ;discount fee< for this service and there may be a certain delay before the agreed payment is received by the merchant The commission is often a percentage of the transaction amount, plus a fi'ed fee
Parties inDolDed •
Cardholder: The holder of the card used to make a purchaseQ the
consumer •
CardHissuing bank: The financial institution or other organi$ation 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 merican E'press and )iscover were previously the only cardAissuing banks for their respective brands, but as of +775, this is no longer the case •
Merchant: The individual or business accepting credit card payments for
products or services sold to the cardholder •
+c
products or services on behalf of the merchant •
Independent sales organiAation: 3esellers ;to merchants< of the services
of the ac-uiring bank •
Merchant account: This could refer to the ac-uiring bank or the
independent sales organi$ation, but in general is the organi$ation that the merchant deals with •
Credit Card association: n association of cardAissuing banks such as
isa, %asterCard, )iscover , merican E'press, etc that set transaction terms for merchants, cardAissuing banks, and ac-uiring banks
*2
•
%ransaction net8ork: The system that implements the mechanics of the
electronic transactions %ay be operated by an independent company, and one company may operate multiple networks Transaction processing networks include. Cardnet, abanco, @maha, #aymentech, )C tlanta, ova, T!K!, Concord E!net, and isaet •
+ffinit; partner: !ome 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 E'amples of typical affinity partners are sports teams, universities, charities, professional organi$ations, and ma"or retailers The flow of information and money between these parties always through the card associations is known as the interchange
5eatures:
s well as convenient, accessible credit, credit cards offer consumers an easy way to track e'penses, which is necessary for both monitoring personal e'penditures and the tracking of workArelated e'penses for ta'ation 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 <
*5
!ome countries, such as the ?nited !tates, the ?nited ingdom, and rance, 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
Problems smart card, combining credit card and debit card properties The 4 by * 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 -uickly before the cards are reported stolen The goal of the credit card companies is not to eliminate fraud, but to Rreduce it to manageable levelsR This implies that highAcost lowAreturn fraud prevention measures will not be used if their cost e'ceeds the potential gains from fraud reduction %ost 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 )espite efforts to improve security for remote purchases using credit cards, systems with security holes are usually the result of poor implementations of card ac-uisition by merchants or e'ample, a website that uses !! 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 aturally,
*6
anywhere card details become humanAreadable before being processed at the ac-uiring bank, a security risk is created
Introduction:
*9
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
,eatures@nline 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 ;eg, 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 A EB##
o
unds transfer between a customer&s own checking and savings accounts, or
to another customer&s account o
Investment purchase or sale
o
oan applications and transactions, such as repayments
•
onAtransactional ;eg, online statements, check links, cobrowsing, chat<
o
Bank statements
•
inancial Institution dministration A features allowing the financial
institution to manage the online e'perience of their end users •
!#/(osting dministration A features allowing the hosting company to
administer the solution across financial institutions
9ecurit;
27
9ecurit; token deDices #rotection 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 e'ist two different securit; methods for online banking •
The #I/T system where the #I represents a password, used for the
login and Ts representing oneAtime passwords to authenticate transactions Ts can be distributed in different ways, the most popular one is to send a list of Ts to the online banking user by postal letter The most secure way of using Ts is to generate them by need using a security token These token generated Ts depend on the time and a uni-ue secret, stored in the security token ;this is called twoAfactor authentication or +< ?sually online banking with #I/T is done via a web browser using !! secured connections, so that there is no additional encryption needed •
!ignature based online banking where all transactions are signed and
encrypted digitally The eys for the signature generation and encryption can
21
be stored on smartcards or any memory medium, depending on the concrete implementation
+ttacks %ost of the attacks on online banking used today are based on deceiving the user to steal login data and valid Ts Two well known e'amples for those attacks are phishing and pharming CrossAsite scripting and keylogger /Tro"an horses can also be used to steal login information recent )IC Technology Incident 3eport, compiled from suspicious activity reports banks file -uarterly, lists *42 cases of computer intrusion, with an average loss per incident of S47,777 That adds up to a nearly S12Amillion loss in the second -uarter of +775 Computer intrusions increased by 1*7 percent between the first -uarter of +775 and the second In 67 percent of the cases, the source of the intrusion is unknown but it occurred during online banking, the report statesU0V
Countermeasures There e'ist several countermeasures which try to avoid attacks )igital certificates are used against phishing and pharming, the use of classA4 card readers is a measure to avoid manipulation of transactions by the software in signature based online banking variants To protect their systems against Tro"an horses, users should use virus scanners and be careful with downloaded software or eAmail attachments
2+
24
This
chapter
includes
innovations
in
banking
branches
such
as
1niDersal banking, offshore banking, retail banking, and 8holesale banking7
Introduction: ?niversal banking is bank engaged in diverse kind of banking activities ?nder the universal banking system the banks do broad based and comprehensive activities 3(han committee had recommended the concept of universal banking s per universal banking financial institutions and banks are allowed to undertake all kinds of activities of banking, development financing and related activities sub"ect to compliance of statutory and other re-uirements prescribed by 3BI, >ovt and related legal acts
Meaning: ?niversal banking is a multipurpose and multi functional financial superstore providing both banking and financial services universal bank may undertake multifarious services under one roof, which includes. a<
3eceiving money on current or deposit accounts and lending of money
for trade, industries, e'ports, agriculture etc
20
b<
%ortgage financingQ financingQ pro"ect financing financing infrastructure infrastructure lending, asset
securitisation, leasing, factory etc c<
3emitt 3emittanc ancee of of fund funds, s, custod custodial ial servic services, es, credit credit/de /debit bit cards, cards, collec collectio tion n of of
che-ue/bills etc d<
Corp Corpor orat atee advis advisor ory y servi service ces, s, insu insura ranc ncee depos deposit itor ory y servi service ce,, merc mercha hant nt
banking ;brokerage, ;brokerage, underwriting underwriting new debt and e-uity shares< foreign foreign e'change 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 ob=ectiDes of universal banking are as follows.
To help in bringing harmony in the role of financial institutions and banks
To offer worldAclass 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 compete with international banks by e'panding business beyond the
national boundaries
BI Guidelines:
2*
ccording to 3BI guidelines of pril +771, financial institutions have an option to convert into a bank provided they ensure compliance with following provisions eserDe proDisions >C90?: financial institution will have to comply
with C33 and !3 provisions after its conversion into a universal banking Permissible actiDities: In case an activity, which is not permissible for a bank
under section 2;1< of B3ct 1909, is presently undertaken by financial institution, such activity will have to be stopped after its conversion into a universal banking Composition of board: % he section 17;< of B3 ct 1909 re-uires that at
least *1L of that total number of directors should have special knowledge and e'perience This provision has to be complied with constituting the board after transformation from financial financial institution to a bank
Benefits of uniDersal banking The benefits of universal banking are as follows. Benefits To @rgani$ation
To Customers
To !hareholders
1 %o the organiAation: Jhen a bank diversifies its activities as a universal bank it can use its e'isting e'pertise in one type of financial service in providing the other types !o, it entails less cost in performing performing all the func functi tion onss by on onee enti entity ty inst instea ead d of sepa separa rate te spec specia iali li$e $ed d bo bodi dies es bank bank possesses information information on the risk characteristics characteristics of its clients, clients, which it can use to pursue other activities with the same clients
22
bank has an e'isting network of branches, which can acts as shops for selling products like insurance This way a big bank can reach the remotest client without having to recourse to an agent %any financial services are inte interl rlin inke ked d acti activi viti ties es,, eg eg insu insura ranc ncee and and lend lendin ing g bank bank can can use use its its instruments in one activity to e'ploit the other, eg in case of pro"ect lending to the same firm which has purchased insurance from the bank + %o the customers: ?niversal banking being a oneAstop shops for all varied services, some a lot of transaction costs and increases the speed of economic activity activity The wide range of financial products and services offered by universal banks are preferred by the customers than the speciali$ed banks due to comprehensive service provided by these banks 4 %o the shareholders: @ne manifestation of universal banking is a bank holding stakes in a firm Jhen a lender has a stake in the firm he is in a better position to monitor monitor the firm to to safeguard his interest, interest, which sends a good good signal about the financial health the firm to the investors This situation is beneficial from investors point of view view ll these these benefits have have to be weighed weighed out against against the problems problems The The main
dra8backs are that. a ?niversal ?niversal bankin banking g leads to to a loss in economi economies es of speciali$a speciali$ation tion b #roblem of the the bank indulging indulging in too many risky risky activities To To account 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, problems, there is a lot of interest interest e'pressed by banks and financial institutions in universal banking In India, too a lot of opportunities are there to be e'ploited Banks mainly the financial institutions are aware of
25
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
26
Introduction: offshore banking refers to the banking business related to borrowing and lending funds abroad and meeting the special needs of international investors n offshore bank is a bank located outside the resident country of the depositor These banks are not sub"ect to domestic monetary and fiscal regulations %oreover offshore banks are also e'empted from the regulations, which govern the branches of foreign banks 3ather they are situated in a low ta' "urisdiction that provides, financial and legal advantages These advantages may include strong privacy, low or no ta'ation protection against local political or financial instability !ervices/functions The important functions or financial serDices, which offshore banking units can provide, are. •
)eposit taking
•
#ro"ect financing
•
!yndication of loans
•
Issuing shortAterm instruments like negotiable certificates to deposits
•
Carry merchant banking activities in foreign currency denominated bonds
•
Electronic funds transfer
•
oreign e'change
•
etter of credit and trade finance
•
Investment management and investment custody
29
•
Trustee services
•
Corporate administration lthough every bank does not provide each service Banks try to polari$e
between retail services ;which are low cost< and private banking ;which tries to bring personali$ed suite of services to the client<
BenefitsadDantages The main advantages of offshore banking are.
dvantages
Ta' Benefits
Economic nd #olitical !tability
#ayment of (igher Interest 3ates
!pecial Banking !ervices
)evelopment @f nation/ 3emote areas
.conomic and political stabilit;: @ffshore banking provides economically
politically stable "urisdictions especially for those resident in areas where there
57
is a risk of political turmoil, and who fear their assets may be sei$ed or disappear lthough, developed economies with regulated banking system offer same advantages in terms of stability
Pa;ment of higher interest rates: !ome of these banks which function at a
lower cost base provide higher interest rates than the legal rates prevailing in their home countries due to lack of government intervention and lower overheads
%a benefits: >enerally the interest paid by offshore banks is without ta'
deduction This acts as a benefit for individuals who do not pay ta' on worldwide income, or who do not pay ta' until the ta' return is agreed
9pecial banking serDices: Certain offshore banks offer special banking
services not offered else where such as anonymous bank accounts, higher or lower rate loans based on risk and investment opportunities
/eDelopment of remote areasnation: offshore banking helps even
geographically remote nations to generate investment and create growth in their economies /isadDantages
There are some limitations of offshore banking are as follows.
)isadvantages
51
Involved in Crime
Encourages Ta' evasion
)ifficult #hysical access
inancial )isturbance
InDolDed in crime: @ff shore banking has been found associated with the
underground economy and organi$ed crime through money lending fter !eptember 11,+771 these banks have been accused of helping various organi$ed crime gangs, terrorist groups
.ncourages ta eDasion: @ffshore banks encourages ta' evasion by giving
people seeking ta' evasion an attractive place to deposit their hidden income
/ifficult ph;sical access: s offshore banks are often remotely situated
therefore the physical access is difficult ccess to information can be difficult, however in a global tele communication networks this does not seen to be a big problem as information can be set up on line, by phone or by mail
/eDeloping countries ma; face financial disturbance: sometimes
developing countries may face problem due to speed at which money can be transferred in and out of their economy This Nhot moneyO coming from offshore accounts can be definitely increase problems of financial and economic disturbance in developing countries
5+
Introduction: The coming up of middle class with substantial purchasing
power in India during the last decade has given rise to its desire to spend according to the changing life style This has offered the Indian banking system, a ready market, for mobili$ation and development of their funds >iven the rising purchasing power of this class, there is huge untapped potential for business %eaning. 3etail banking is activity devised in past few years and now used e'tensively 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 servicesmoney deposit, credit services and some form of financial advice etail banking toda; is characteriAed b; three areas:
%ultiple products ;deposits, credit cards, insurance, investment<
%ultiple channels of distribution ;call center, branch internet<
%ultiple customer groups ;consumer, small business<
Need for retail banking
Economic prosperity and the conse-uent increase in the purchasing power of
consumer
Technological factors also added to the re-uirement convenience of using
credit cards, internet and phone banking anywhere and any time banking has also flood customers into banking
54
)ecline in interest rates have also contributed to increase retail banking
Jith the large corporate borrowers having diversified the sources to fund
their financial re-uirements, fre-uent reduction in cash reserve ratio resulting in pumping in of li-uidity, declining bank rate leading to decline in spreads unA attractive yields on government securities etc have all forced banks to be in search of alternative opportunity to deploy their funds
9egments in retail banking: There are three segments in retail banking which included. a )eposit products ;convenient deposit schemes such as fle'i deposits< b oan products ;such as housing loans, education loans, conveyance loans, personal loans for diverse purposes such as medical e'penses, travel abroad< c @ther 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 T% cards, waiver of fee on credit cards and utility services such as payment of water, electricity and phone bills )evelopments 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 3etail banking refers to housing loans for purchasing durables, auto loans, credit cards and educational loans The loan values can average between 3s+7777 to 3s1 crore These loans are of period of * to 5 years, with an e'ception of housing loan being granted up to 1* years The speed of growth of retail banking can be accelerated by growth in banking technology and automation of banking processes
50
lthough 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 e'isting internal systems Banks can now use retail as growth trigger This re-uires product differentiation, innovation, product pricing technological up gradation, cost reduction and cross selling
5*
2holesale banking is the provision of services by banks to the like of large
corporate clients, midAsi$ed companies, real estate developers and investors, international trade finance businesses, institutional customers ;such as pension funds and government entities/agencies<, and services offered to other banks or other financial institutions In essence, wholesale banking services usually involve high value transactions Jholesale banking contrasts with retail banking, which is the provision of banking services to individuals ;Jholesale finance means financial services, which are conducted between financial services companies and institutions such as banks, insurers, fund managers, and stockbrokers< %odern wholesale banks are engaged in. finance wholesaling, underwriting, market making, consultancy, mergers and ac-uisitions, fund management
52
This chapter represents a conclusive review of the efforts made since up till about the different innovations by Central Bank of India in banking sector arious innovations of the bank provide benefits to the various business and Industries in many different ways The innovations of bank are of two types. innovations in products = innovations in branches Innovations in products includes, EAbanking, T%, debit cards, credit cards = mobile banking whereas innovations in branches includes, universal banking, offshore banking, retail banking, wholesale banking The pro"ect report summari$es 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
5IN/ING9
The #ro"ect work is done on basis of certain ob=ectiDes, which are as follows. 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 ob"ectives the following are the findings that represent the changing environment of Indian economy in global scenario in the wake of liberali$ation and globali$ation
The study reveals about the different types of innovations of the bank,
which helps the people in many ways
55
The role of board of directors is properly described #rocesses 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 !o, these are the findings, which the pro"ect reveals by making an analysis of the topic %oreover 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 T% 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 Indias branch network should be wider as, we have
already discussed about T% 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
wwwwikepeadiacom
56
