banking

1. • Introduction
• The banking sector in India is on a growing
trend. It has vastly benefitted from the surge
in disposable income of individuals in the
country.
• There has also been a noticeable upsurge in
transactions through ATMs, and also internet
and mobile banking.
• Consequently, the different banks, viz public,
private and foreign banks have invested
considerably to increase their banking
network and thus, their customer reach.

2. The banking industry in India has the
potential to become the fifth largest banking
industry in the world by 2020 and third largest
by 2025 according to a KPMG-CII report.
Over the next decade, the banking sector is
projected to create up to two million new
jobs, driven by the efforts of the RBI and the
Government of India to integrate financial
services into rural areas. Also, the traditional
way of operations will slowly give way to
modern technology.

3. • Market Size
• The Indian banking sector is fragmented, with
46 commercial banks jostling for business with
dozens of foreign banks as well as rural and
co-operative lenders. State banks control 80
percent of the market, leaving relatively small
shares for private rivals.
• Banks have opened 7.73 crore accounts under
the Pradhan Mantri Jan Dhan Yojana (PMJDY)
till November 19

4. Bharatiya Mahila Bank Ltd (BMB) has launched
its internet banking facility by the name
BMBSmartBanking, along with its newly
designed website. Currently, this women
focused bank has branch network of 33
branches and all of them on core banking
solutions with onsite ATMs.

5. Banks get serious on social. Gartner says that nearly
one in three customers would have purchased
social integrated products or services by the end
of 2016. Most progressive banks realize the
opportunity, and are continuously expanding
their offerings on social channels - such as
Personal Financial Management (PFM) tools and
spend comparisons, P2P payments and
innovative savings products.
Here's some good news for such banks - research
by Gallup shows that those who explore
information about banking products in social
media make the best prospects.

6. The forecast says cloud. At least six out of 10
banks globally will process most of their
transactions on the cloud in another three
years. Having built their private clouds, banks
will increase their presence in the public one
next year, largely owing to improvement in
public cloud security and reliability. The
expectation is that that half of all enterprises
will operate in a hybrid cloud environment by
2017.

7. Banking through app stores. API platforms will
usher in an era of the custom-built apps.
Credit Agricole has created such a platform for
third party developers to create specific apps
requested by the bank's customers through
the CA App Store. Examples include an app to
analyze expenses and another that
incorporates gamification. Expect more and
more banks and solution vendors to join the
party.

9. • Setting up of X.25 based packet switching network called
'BANKNET' to be jointly
• owned by the Reserve Bank and the public sector banks.
• Inter-bank fund transfers on banks' own account and on
customers' account;
• Inter-branch funds transfers on banks' own account and on
customers' account;
• Currency chest transactions;
• Government transactions;
• Improvements in payment systems by facilitating
automated clearing services
• India should join the SWIFT (Society for Worldwide
Interbank Financial Telecommunication) Network for the
transmission and reception of international financial
messages.

10. • Establishment of an Electronic Funds Transfer
(EFT) system, with the BANKNET
communications network as its carrier.
Enactment of suitable legislation on the lines
of the Electronic Funds Transfer Act 1978, USA
and Data Protection Act 1984, UK

11. • Plastic Money
• a ) Credit Card
• b ) Debit Card
• c) Smart Card
• Debit card
• A debit card (also known as a bank card or check
card) is a plastic card that provides an alternative
payment method to cash when making
purchases. Functionally, it can be called an
electronic check, as the funds are withdrawn
directly from either the bank account, or from
the remaining balance on the card. In some
cases, the cards are designed exclusively for use
on the Internet, and so there is no physical card.

12. • the debit card deducts the balance from a deposit account, like a
checking account, whereas the credit card allows the consumer to
spend money on credit to the issuing bank. In other words, a debit
card uses the money you have and a credit card uses the money
you don't have. "Debit cards" which are linked directly to a checking
account are sometimes dual-purpose, so that they can be used as a
credit card, and can be charged by merchants using the traditional
credit networks.
• A merchant will ask for "credit or debit?" if the card is a combined
credit+debit card. If the payee chooses "credit", the credit balance
will be debited the amount of the purchase; if the payee chooses
"debit", the bank account balance will be debited the amount of
the purchase. The "debit" networks usually require that a personal
identification number be supplied. The "credit" networks typically
require that purchases be made in person and often allow cards to
be charged with only a signature, and/or picture ID. However, most
merchant agreements in the United States forbid picture ID as a
requirement to use a Credit Card. T he "debit" networks usually
require that a personal

13. • A typical debit card contains Issuing bank logo
,EMV chip ,Hologram ,Card number, Card
brand logo ,Expiration date, Cardholder's
name .The reverse side of a typical debit card
contains Magnetic stripe ,Signature strip, Card
Security Code .
• There are currently three ways that debit card
transactions are processed:
• online debit (also known as PIN debit), offline
debit (also known as signature debit) and
Electronic Purse Card.

14. Electronic Banking
Electronic banking includes ATM, Internet banking, Phone
banking, SMS ,banking, EFT, and IVRS
SMS banking is a technology enabled service offering from banks to its customers, permitting
them to operate selected banking services over their mobile phones using SMS messaging.
SMS banking services are operated using both push and pull messages. Depending on the
selected extent of SMS banking transactions offered by the bank, a customer can be
authorized to carry out either non-financial transactions, or both and financial and non-
financial transactions. SMS banking solutions offer customers a range of functionality,
classified by push and pull services as outlined below.
• Typical push services would include:
• • Periodic account balance reporting (say at the end of month);
• • Reporting of salary and other credits to the bank account;
• • Successful or un-successful execution of a standing order;
• • Successful payment of a cheque issued on the account;
• • Insufficient funds;
• • Large value withdrawals on an account;
• • Large value withdrawals on the ATM or EFTPOS on a debit card;
• • Large value payment on a credit card or out of country activity on a
• credit card.
• • One-time password and authentication

15. • Typical pull services would include:
• • Account balance enquiry;
• • Mini statement request;
• • Electronic bill payment;
• • Transfers between customer's own accounts, like moving money
• from a savings account to a current account to fund a cheque;
• • Stop payment instruction on a cheque;
• • Requesting for an ATM card or credit card to be suspended;
• • De-activating a credit or debit card when it is lost or the PIN is
• known to be compromised;
• • Foreign currency exchange rates enquiry;
• • Fixed deposit interest rates enquiry.

16. • Mobile banking
• Mobile banking (also known as M-Banking,
SMS Banking etc.)
• is a term used for performing balance checks,
account transactions, payments etc.
• via a mobile device such as a mobile phone.
Mobile banking today (2007) is most
• often performed via SMS or the Mobile
Internet but can also use special programs
• called clients downloaded to the mobile
devices

17. • Mobile banking can offer services such as the
following:
• Account Information
• • Mini-statements and checking of account history
• • Alerts on account activity or passing of set thresholds
• • Monitoring of term deposits
• • Access to loan statements
• • Access to card statements
• • Mutual funds / equity statements
• • Insurance policy management
• • Pension plan management
• • Status on cheque, stop payment on cheque

18. • Ordering check books
• • Balance checking in the account
• • Recent transactions
• • Due date of payment (functionality for stop, change and deleting of
• payments)
• • PIN provision, Change of PIN and reminder over the Internet
• • Blocking of (lost, stolen) cards
• Payments, Deposits, Withdrawals, and Transfers
• • Domestic and international fund transfers
• • Micro-payment handling
• • Mobile recharging
• • Commercial payment processing
• • Bill payment processing
• • Peer to Peer payments
• • Withdrawal at banking agent
• • Deposit at banking agent

19. • Telephone banking and /or IVRS
• Telephone banking is a service provided by a financial institution which allows its
customers to perform transactions over the telephone.
• Most telephone banking use an automated phone answering system with phone
keypad response or voice recognition capability. To guarantee security, the
customer must first authenticate through a numeric or verbal password or through
security questions asked by a live representative With the obvious exception of
cash withdrawals and deposits, it offers virtually all the features of an automated
teller machine: account balance information and list of latest transactions,
• electronic bill payments, funds transfers between a customer's accounts, etc.
• Usually, customers can also speak to a live representative located in a call centre or
• a branch, although this feature is not guaranteed to be offered 24/7. In addition to
• the self-service transactions listed earlier, telephone banking representatives are
• usually trained to do what was traditionally available only at the branch: loan
• applications, investment purchases and redemptions, chequebook orders, debit
card
• replacements, change of address, etc. Banks which operate mostly or exclusively
• by telephone are known as phone banks

20. • Electronic funds transfer (EFT)
• Electronic funds transfer or EFT refers to the computer-based systems used to perform
financial transactions electronically. The term is used for a number of different concepts:
• • Cardholder-initiated transactions, where a cardholder makes use of a payment card • Direct
deposit payroll payments for a business to its employees, possibly via a payroll services
company
• • Direct debit payments from customer to business, where the transaction is initiated by the
business with customer permission • Electronic bill payment in online banking, which may be
delivered by EFT or paper check • Transactions involving stored value of electronic money,
possibly in a private currency
• • Wire transfer via an international banking network (generally carries a higher fee) •
Electronic Benefit Transfer
• Electronic Payment Services – E Cheques
• Now-a-days we are hearing about e-governance, e-mail, e-commerce, e-tail etc. In the
same manner, a new technology is being developed in US for introduction of e-cheque, which
will eventually replace the conventional paper cheque. India, as harbinger to the introduction
of e-cheque, the Negotiable Instruments Act has already been amended to include;
Truncated cheque and E-cheque instruments.
• Electronic Funds Transfer at Point of Sale (EFTPOS)
• EFTPOS (short for Electronic Funds Transfer at Point of Sale) is an Australian and New Zealand
electronic processing system for credit cards, debit cards and charge cards. European banks
and card companies also sometimes reference "EFTPOS" as the system used for processing
card transactions through terminals on points of sale, though the system is not the
trademarked

21. Real Time Gross Settlement (RTGS)
Real Time Gross Settlement system, introduced in India
since March 2004, is a system through which
electronics instructions can be given by banks to
transfer funds from their account to the account of
another bank. The RTGS system is maintained and
operated by the RBI and provides a means of efficient
and faster funds transfer among banks facilitating their
financial operations. As the name suggests, funds
transfer between banks takes place on a ‘Real Time'
basis. Therefore, money can reach the beneficiary
instantaneously and the beneficiary's bank has the
responsibility to credit the beneficiary's account within
two hours.

22. • Electronic Funds Transfer (EFT)
• Electronic Funds Transfer (EFT) is a system
whereby anyone who wants to make payment to
another person/company etc. can approach his
bank and make cash payment or give
instructions/authorization to transfer funds
directly from his own account to the bank
account of the receiver/beneficiary. Complete
details such as the receiver's name, bank account
number, account type (savings or current
account), bank name, city, branch name etc.
should be furnished to the bank at the time of
requesting for such transfers so that the amount
reaches the beneficiaries' account correctly and
faster. RBI is the service provider of EFT.

23. Electronic Clearing Service (ECS)
Electronic Clearing Service is a retail payment
system that can be used to make bulk
payments/receipts of a similar nature
especially where each individual payment is of
a repetitive nature and of relatively smaller
amount. This facility is meant for companies
and government departments to
make/receive large volumes of payments
rather than for funds transfers by individuals.

24. • Automatic Teller Machine (ATM)
• Automatic Teller Machine is the most popular
devise in India, which enables the customers
to withdraw their money 24 hours a day 7
days a week. It is a devise that allows
customer who has an ATM card to perform
routine banking transactions without
interacting with a human teller. In addition to
cash withdrawal, ATMs can be used for
payment of utility bills, funds transfer
between accounts, deposit of cheques and
cash into accounts, balance enquiry etc.

25. Point of Sale Terminal
• Point of Sale Terminal is a computer terminal
that is linked online to the computerized
customer information files in a bank and
magnetically encoded plastic transaction card
that identifies the customer to the computer.
During a transaction, the customer's account
is debited and the retailer's account is
credited by the computer for the amount of
purchase.

26. Tele Banking
• Tele Banking facilitates the customer to do entire
non-cash related banking on telephone. Under
this devise Automatic Voice Recorder is used for
simpler queries and transactions. For complicated
queries and transactions, manned phone
terminals are used
• Electronic Data Interchange (EDI)
Electronic Data Interchange is the electronic
exchange of business documents like purchase
order, invoices, shipping notices, receiving
advices etc. in a standard, computer processed,
universally accepted format between trading
partners. EDI can also be used to transmit
financial information and payments in electronic
form.

27. • Electronic Data Interchange (EDI)
• Electronic Data Interchange is the electronic
exchange of business documents like purchase
order, invoices, shipping notices, receiving
advices etc. in a standard, computer
processed, universally accepted format
between trading partners. EDI can also be
used to transmit financial information and
payments in electronic form.