Technological Developments in Banking
Information technology and the communication networking systems have a crucial bearing onthe efficiency of money, capital and foreign exchange markets and have manifold implications for the conduct of monetary policy. In India, banks as well as other financial entities have entered theworld of information technology and computer networking with INFINET.The Indian Financial Network (INFINET), a wide area satellite based network using VSATtechnology, was jointly set up by the Reserve Bank and Institute for Development and Research inBanking Technology (IDRBT) at Hyderabad to facilitate connectivity within the financial sector.The network was inaugurated in June 1999.It was established to serve as the communication backbone of the proposed IntegratedPayment and Settlement System (IPSS). The Reserve Bank constituted National PaymentsCouncil in 1999-2000 to focus on the policy parameters for developing an IPSS with a real timegross settlement (RTGS) system as the core. INFINET initially comprised only the public sector banks was opened up for participation by other categories of members. 26 public sector banksachieved the level of 70 per cent of business captured through computerisation by June 2001.The Information Technology Act, 2000 has given legal recognition to creation,trans-missionand retention of an electronic (or magnetic) data to be treated as valid proof in a court of law,except in those areas, which continue to be governed by the provisions of the NegotiableInstruments Act, 1881.
Present level of Computerisation:
Based on the norms worked out by Rangarajan Committee (II), 7827 branches of the PublicSector banks were identified for full branch computerisation up to March 2000. It was found withimmense need of existing ± computerized branches to be inter ± connected in order to provide better services to customers. Some of the Banks have started inter-connecting their computerized branches using leased telephone lines or Very Small Aperture Terminals (VSATS), creating better±centralised control and more comprehensive service to customers. As of now, New PrivateSector and Foreign Banks have an edge over Public Sector Banks as far as implementation of technological solutions is concerned. However, the latter are in the process of making hugeinvestments in technology.Services and products like "Anywhere Banking" "Tele-Banking" "Internet banking" "WebBanking´, e-banking, e-commerce, e-business etc. have become the buzzwords of the day and theBanks are trying to cope with the competition by offering innovative and attractively packagedtechnology-based services to their customers.