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project on internet banking with refernce to State Bank of India

project on internet banking with refernce to State Bank of India

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Published by Raja Thevar

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Categories:Types, School Work
Published by: Raja Thevar on Sep 27, 2010
Copyright:Attribution Non-commercial


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1.Introduction to Internet BankingMeaningInternet Banking System is a system that has been developed in order to help clients with the daily day-to-day transactions. Internet banking systems means thatclients can now do banking at the leisure of their homes.Also known as online banking, the system allows both transactional and non-transactional features.Online banking or internet banking allows customers to conduct financial transactions on a secure website operated by the retail or virtual bank.Introduction: -There is a sea change in the media world. While most consumers see the newspapers, the same magazines and listen to the same radio programs, behind this bland public exterior there is a seething world of innovation, acquisition, global partnership and divorces, births and deaths… all of it most readily interpreted as theinevitable result of the technological revolution that is in the process of merging telephones, computers, televisions in to a single all singing, all dancingmagic kit that will, very possible, change all of our lives more than we can imagine some dayThere are 2 ways you can respond to this 1 is to panic, which may mean simply curling up in a corner and wishing that it would all go away. The other is to embrace the new religion with messianic fervor and go out to proclaim the millennium. I welcome you to the new emerging world of the Info-High-Way, destined to redefine the world of communications:Drivers of ChangeThe six primary drivers of Internet banking includes:
Improve customer access
Facilitate the offering of more services
Increase customer loyalty
Attract new customers
Provide services offered by competitors
Reduce customer attrition2.History of Internet Banking In the World
The term online banking was first started in 80’s. The term online became popularin the late
80s and referred to the use of a terminal, keyboard and TV (or monitor) to access the banking system using a phone line. ‘Home banking’ can also referto the use of a numeric keypad to send tones down a phone line with instructionsto the bank.
Online services started in New York in 1981 when four of the city’s major banks (Citibank, Chase Manhattan, Chemical and Manufacturers Hanover) offered home banking services using the videotext system. Because of the commercial failure of videotext these banking services never became popular except in France where the us
e of videotext (Minitel) was subsidized by the telecom provider and the UK, where the Prestel system was used.
The first home online banking services were set up by the Nottingham Building Society (NBS) located in UK in 1983.
The system used was based on the UK
s Prestel system and used a computer, such as the BBC Micro, or keyboard (Tan data Td1400) connected to the telephone systemand television set.
The system (known as
Home link
) allowed on-line viewing of statements, bank transfers and bill payments. In order to make bank transfers and bill payments, awritten instruction giving details of the intended recipient had to be sent to the NBS who set the details up on the Home link system.
Typical recipients were gas, electricity and telephone companies and accounts with other banks. Details of payments to be made were input into the NBS system bythe account holder via Prestel. A cheque was then sent by NBS to the payee andan advice giving details of the payment was sent to the account holder. BACS waslater used to transfer the payment directly.
Stanford Federal Credit Union was the first financial institution to offer online internet banking services to all of its members in Oct, 1994. Later on it wasadopted by worldwide banks.3.Internet baking in India
Internet banking, both as a medium of delivery of banking services and as a strategic tool for business development, has gained wide acceptance internationallyand is fast catching up in India with more and more banks entering this market.
ICICI was the first bank in India to launch internet banking facility in the year 1997.
A recent survey consisting of 46 banks, has revealed that at present, 11 banks in India are providing Internet banking services at different levels, 22 banks propose to offer Internet banking in near future while the remaining 13 banks haveno immediate plans to offer such facility.
At present, the total Internet users in the country are estimated at 2.5 Crores. 
About 60% of internet users use internet banking directly or indirectly.
Costs of banking service through the Internet form a fraction of costs through conventional methods. Rough estimates assume teller cost at Re.1 per transaction,
ATM transaction cost at 45 paise, phone banking at 35 paise, debit cards at 20 paise and Internet banking at 10 paise per transaction.
The cost-conscious banks in the country have therefore actively considered use o
f the Internet as a channel for providing services.Online Activities in India Transaction Cost per Distribution Channel for Banking in India 4.RBI GUIDELINES ON INTERNET BANKING1.In June 2001 banks were advised to seek prior approval of Reserve Bank of India before offering transactional services on the Internet. The position hassince been reviewed and RBI has advised on 20th July 2005 that while the offering of Internet Banking services will continue to be governed by the provisions of the above circular, no prior approval of the Reserve Bank of India will be required by banks for offering Internet Banking services.2.Banks should, however, ensure compliance with the following conditions:i.The Internet Banking policy has been approved by the Bank
s Board.ii.The policy fits into the banks overall Information Technology and Information Security policy and ensures confidentiality of records and security systems.iii.The policy takes into account operational risk.iv.The policy clearly lays down the procedure to be followed in respect of"Know Your Customer" requirements, andv.The policy broadly meets the parameters laid down in the earlier circular.5.Internet Banking RisksInternet banking creates new risk control challenges for national banks. From asupervisory perspective, risk is the potential that events, expected or unexpected, may have an adverse impact on the bank’s earnings or capital.There are generally nine categories of risks in internet banking, which are as follows:-
Credit Risk
Interest rate Risk
Liquidity Risk
Price Risk
Foreign exchange Risk
Transaction compliance Risk
Strategic Risk and
Reputation Risk.Credit Risk

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