Banking in India From Wikipedia, the free encyclopedia

Structure of the organised banking sector in India. Number of banks are in brackets. Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790; both are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. Contents

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1 History 2 PostIndependence 3 Nationalisation 4 Liberalisation 5 Further reading 6 References 7 External links

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[edit]History Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. TheAllahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that issues stock and requires shareholders to be held liable for the company's debt) It was not the first though. That honor belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Simla. When the American Civil War stopped the supply of cotton to Lancashire from the Confederate States, promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century. Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madrasand Puducherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active

concentrated on financing foreign trade. Indian Bank. divided by solid wooden bulkheads into separate and cumbersome compartments. Canara Bank and Central Bank of India. most of which served particular ethnic and religious communities. Bank of Baroda. Around the turn of the 20th Century. Corporation Bank. saw the establishment of banks inspired by the Swadeshi movement. The first entirely Indian joint stock bank was the Oudh Commercial Bank. The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara ( South Kanara ) district. mainly due to the trade of the British Empire. Around five decades had elapsed since the Indian Mutiny. We are like some old fashioned sailing ship. the Indian economy was passing through a relative period of stability. Indians had established small banks." The period between 1906 and 1911. which has survived to the present and is now one of the largest banks in India. and the social. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. It failed in port in India. mostly owned by Europeans. The exchange banks. . established in Lahore in 1895. and so became a banking center. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency and exchange banks. "In respect of banking it seems we are behind the times. The next was the Punjab National Bank. established in 1881 in Faizabad. A number of banks established then have survived to the present such as Bank of India. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking". Four nationalised banks started in this district and also a leading private sector bank. All these banks operated in different segments of the economy. This segmentation let Lord Curzon to observe. industrial and other infrastructure had improved. The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks.

Lakhs) Years 1913 12 1914 42 1915 11 1916 13 1917 9 1918 7 [edit]Post-Independence The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal. The Government of India initiated measures to play an active role in the economic life of the nation. The major steps to regulate banking included: . paralyzing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking.During the First World War (1914-1918) through the end of the Second World War (1939-1945). At least 94 banks in India failed between 1913 and 1918 as indicated in the following table: Number of banks Authorised capital Paid-up Capital that failed 274 710 56 231 76 209 (Rs. and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. and two years thereafter until the independence of India were challenging for Indian banking. The years of the First World War were turbulent. Lakhs) 35 109 5 4 25 1 (Rs. This resulted into greater involvement of the state in different segments of the economy including banking and finance. and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related economic activities.

" The meeting received the paper with enthusiasm. continued to be owned and operated by private persons. and a debate had ensued about the nationalization of the banking industry."  existing bank could be opened without a license from the RBI.[Reference the Banking Regulation Act was enacted which empowered the Reserve The Banking Regulation Act also provided that no new bank or branch of an Bank of India (RBI) "to regulate. described the step as a "masterstroke of political sagacity. 1969 Despite the provisions. expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation. and inspect the banks in India. Times of India. Indira Gandhi. 20. The Government of India issued an ordinance and nationalised the 14 largest commercial banks with effect from the midnight of July 19. control. The Reserve Bank of India. [edit]Nationalisation Banks Nationalisation in India: Newspaper Clipping. 1948 (RBI. a national leader of India. then Prime Minister of India." Within two weeks of the issue of the . At the same]  In 1949. July. control and regulations of Reserve Bank of India. 1969. and no two banks could have common directors. Jayaprakash Narayan. 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act. banks in India except the State Bank of India or SBI. Thereafter. By the 1960s.rbi. the Indian banking industry had become an important tool to facilitate the development of the Indian economy. India's central banking authority. 2005b). it had emerged as a large employer. her move was swift and sudden. was nationalized on January 1.

which later amalgamated with Oriental Bank of Commerce. the government merged New Bank of India with Punjab National Bank. Later on. in the year 1993. along with the rapid growth in the economy of India. the then Narasimha Rao government embarked on a policy of liberalization. People not just demanded more from their banks but also received more. namely. were used to the 4-6-4 method (Borrow at 4%. closer to the average growth rate of the Indian economy. government banks. and included Global Trust Bank (the first of such new generation banks to be set up). and it received the presidential approval on 9 August present it has gone up to 74% with some restrictions. After this. the Government of India controlled around 91% of the banking business of India. the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. [edit]Liberalisation In the early 1990s. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalised banks from 20 to 19. . which has seen rapid growth with strong contribution from all the three sectors of banks. licensing a small number of private banks. This move. The next stage for the Indian banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment.Lend at 6%. private banks and foreign banks. With the second dose of nationalization. These came to be known as New Generation tech-savvy banks. A second dose of nationalization of 6 more commercial banks followed in 1980. The new policy shook the Banking sector in India completely. ICICI Bankand HDFC Bank.All this led to the retail boom in India. where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%. the nationalised banks grew at a pace of around 4%. Bankers. The stated reason for the nationalization was to give the government more control of credit delivery. till this time. revitalized the banking sector in India.ordinance.Go home at 4) of functioning. Axis Bank(earlier as UTI Bank). until the 1990s.

takeovers. mortgages and investment services are expected to be strong. with minimal pressure from the government. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide. vehicle and personal loans. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. especially retail banking. product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%.[1][2][3] [edit]Further reading  The Evolution of the State Bank of India (The Era of the Imperial Bank of India.Currently (2007). With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector-the demand for banking services. In terms of quality of assets and capital adequacy. One may also expect M&As. and asset sales. published by Mumbai based Glocal 1921-1955) (Volume III)  Infomart. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. Banking Frontiers .a monthly magazine. Indian banks are considered to have clean. Editor [edit]References . In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connection with housing. The Reserve Bank of India is an autonomous body. banking in India is generally fairly mature in terms of supply. strong and transparent balance sheets relative to other banks in comparable economies in its region. In March 2006.

Indiatime. During Fourth phase. Chennai. banking in India has evolved through four distinct phases. growing expectations led to increased awareness amongst banks on the role and . ^ "ICICI personal loan customer commits suicide after alleged harassment ^ "Karnataka / Mysore News : ICICI Bank returns tractor to farmer’s ^ "ICICI’s third eye : It’s Indiatime". deregulation of interest rates & easing of norms for entry in the field of banking. Recommendations of the Narasimham Committee (1991) paved the way for the reform phase in the banking. Retrieved 2010-07-28. 2. 2008-06-30. provisioning and capital adequacy. mother".com. India: The Hindu. also called as Reform Phase. The growing competition. Retrieved 2010-07-28. by recovery agents". Entry of new banks resulted in a paradigm shift in the ways of banking in India. Important among these have been introduction of new accounting and prudential norms relating to income recognition.1. [dead link] [edit] IT in Banking 2003 (Special) An Overview of: IT in Banking In the five decades since independence. Important initiatives with regard to the reform of the banking system were taken in this phase. Parinda. Retrieved 2010-07-28.

MILESTONES . Information technology and the communication networking systems have a crucial bearing on the efficiency of money. mobile / cell phones etc. deregulation. capital and foreign exchange markets. today is in the midst of an IT revolution.e. implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographically distant and diversified markets. The early 90s saw the plummeting hardware prices and advent of cheap and inexpensive but high-powered PCs and servers and banks went in for what was called Total Branch Automation (TBA) Packages. like Internet. Information Technology has basically been used under two different avenues in Banking.. Information technology enables sophisticated product development. transformation of assets and monitoring of risks. better market infrastructure.importance of technology in banking. The middle and late 90s witnessed the tornado of financial reforms. globalisation etc coupled with rapid revolution in communication technologies and evolution of novel concept of 'convergence' of computer and communication technologies. Indian banking industry. The Software Packages for Banking Applications in India had their beginnings in the middle of 80s. One is Communication and Connectivity and other is Business Process Reengineering. when the Banks started computerising the branches in a limited manner. access to liquidity. A combination of regulatory and competitive reasons have led to increasing importance of total banking automation in the Indian Banking Industry. Further. i. technology has changed the contours of three major functions performed by banks. In view of this. The arrival of foreign and private banks with their superior state-of-the-art technology-based services pushed Indian Banks also to follow suit by going in for the latest technologies so as to meet the threat of competition and retain their customer base.

a wide area satellite based network (WAN) using VSAT (Very Small Aperture Terminals) technology. The Information Technology Act. This would result in funds transfers and funds-related message transfer to be routed electronically across banks using the medium of the INFINET. Detailed guidelines of RBI for Internet Banking has prepared the necessary ground for growth of Internet Banking in India. As stated in RBI's Annual Monetary and Credit Policy 2002-2003: "To reap the full benefits of such electronic message transfers. was jointly set up by the Reserve Bank and Institute for Development and Research in Banking Technology (IDRBT) in June 1999. 2000 has given legal recognition to creation. trans-mission and retention of an electronic (or magnetic) data to be treated as valid proof in a court of law. Internet has emerged as an important medium for delivery of banking products & services. INFINET. which has become operational since February 2002 and RTGS (Real Time Gross Settlement system) scheduled towards the end of 2003 are other major developments in the area. except in those areas. CFMS (Centralised Funds Management System) for better funds management by banks and SFMS (Structured Financial Messaging Solution) for secure message transfer. The process of reforms in payment and settlement systems has gained momentum with the implementation of projects such as NDS ((Negotiated Dealing System). Negotiated dealing system (NDS). Internet has significantly influenced delivery channels of the banks. The Indian Financial Network (INFINET) which initially comprised only the public sector banks was opened up for participation by other categories of members. 1881. it is necessary that banks bestow sufficient attention on the . banks as well as other financial entities entered the world of information technology and with Indian Financial Net (INFINET). The first set of applications that could benefit greatly from the use of technological advances in the computer and communications area relate to the Payment systems which form the lifeline of any banking activity. which continue to be governed by the provisions of the Negotiable Instruments Act.In India.

Intra-city and intra-bank networking would facilitate in addressing the "last mile" problem which would in turn result in quick and efficient funds transfers across the country". IT in Banking 2003 (Special) Initiatives of: Reserve Bank of India .computerisation and networking of the branches situated at commercially important centres on a time-bound basis.

Consequently. The Committee.Implementation of Centralised Funds Management System The centralised funds management system (CFMS) provides for a centralised viewing of balance positions of the account holders across different accounts maintained at various locations of RBI.H. Patil) was set up in 2002. inter alia. Government of India. the process of setting up of registration authorities (RA) under the CA has commenced at various banks. a legal basis for netting. the electronic clearing service (ECS) and electronic funds transfer (EFT) are also being enhanced in terms of security by means of implementation of PKI and digital signatures using the facilities offered by the CA. the second phase comprising the centralised funds transfer system (CFTS) would be made available by the middle of 2003. The draft Bill provides. 54 banks have implemented the system at their treasuries/funds management branches. Committee on Payment Systems In order to examine the entire gamut of the process of reforms in payment and settlement systems which would be culminating with the real time gross settlement (RTGS) system. submitted its report in September 2002 along with a draft Payment Systems Bill. The Controller of Certifying Authorities. R. Certification and Digital Signatures The mid-term Review of October 2002 indicated the need for information security on the network and the use of public key infrastructure (PKI) by banks. a Committee on Payment Systems (Chairman: Dr. apart from empowering RBI to have regulatory and oversight . have approved the Institute for Development and Research in Banking Technology (IDRBT) as a Certification Authority (CA) for digital signatures. after examining the various aspects relating to payment and settlement systems. So far. While the first phase of the system covering the centralised funds enquiry system (CFES) has been made available to the users. In addition to the negotiated dealing system (NDS).

a pilot project for multi-application smart cards in conjunction with a few banks and vendors.powers over payment and settlement systems of the country. national EFT (NEFT) is being introduced using the backbone of the structured financial messaging system (SFMS) of the IDRBT. Multi-application Smart Cards Recognising the need for technology based payment products and the growing importance of smart card based payment flows. In order to facilitate banks to have better control over their funds. Government of India. This has facilitated same day transfer of funds across accounts of constituents at all these branches. The project is aimed at the formulation of standards for multi-application smart cards on the basis of inter-operable systems and technological components of the entire system. has been initiated. with the inter-bank settlement being effected in the books of account of banks maintained at RBI. The report of the Committee was put on the RBI website for wider dissemination. Special Electronic Funds Transfer As indicated in the mid-term Review of October 2002. it is proposed to introduce national . National Settlement System (NSS) The clearing and settlement activities are dispersed through 1. the State Bank of India and its associates.047 clearing houses managed by RBI. under the aegis of the Ministry of Communications and Information Technology. NEFT would provide for movement of electronic transfer of funds in a safe. public sector banks and other institutions. secure and quick manner across branches of any bank to any other bank through a central gateway of each bank. a special EFT (SEFT) was introduced in April 2003 covering about 3000 branches in 500 cities. The draft Bill has been forwarded to the Government. Since this scheme requires connectivity across a large number of branches at many cities.

all deals in government securities. if done outside NDS. CDs and CP executed among NDS members have to be reported automatically through NDS. With a view to improving transparency and strengthening efficiency in the market. At present. Deals done outside NDS should be reported within 15 minutes on NDS. which has become operational since February 2002. insurance companies. In case there is repeated non-reporting of deals by an NDS member. call/notice/term money. Reporting of Call/Notice Money Market Transactions on NDS Platform Negotiated dealing system (NDS). primary dealers (PDs). The live run of RTGS is scheduled towards the end of 2003. From the fortnight beginning May 3. development of the various software modules for the RTGS system is in progress. it has been observed that a very sizeable proportion of daily call/notice money market deals is not reported by members on NDS as stipulated. Full compliance with the reporting requirement to NDS will be reviewed in September 2003. 2. it is proposed that: 1. enables on-line dealing and dissemination of trade information relating to instruments in money. government securities and foreign exchange markets. it will be considered whether . it would be mandatory for all NDS members to report all their call/notice money market deals on NDS. Real Time Gross Settlement System (RTGS) As indicated in the mid-term Review of October 2002. mutual funds and any other institution as admitted by RBI. These include banks. if the deal is done on NDS and within 15 minutes of concluding the deal. Membership in NDS is open to all institutions which are members of INFINET and are maintaining subsidiary general ledger (SGL) Account with RBI. irrespective of the size of the deal or whether the counterparty is a member of the NDS or not. financial institutions (FIs). The initial set of modules is expected to be delivered by June 2003 for members to conduct tests and familiarisation exercises. However. 2003.settlement system (NSS) in a phased manner.

Ravikiran Mankikar. UTI Bank. Chief of Information Technology. Bank of Maharastra. Also Prof. Ram. with special reference to the Reserve Bank of India’s intitiatives in promoting computerisation in the Financial Sector.. Mrs S A Panse. General Manager & Chief Technology Officer. V. C. The participants include: V Chandrasekhar. Deputy General Manager (Information Technology).non-reported deals by that member should be treated as invalid with effect from a future date Perspectives of: CTOs of Banks in India Banknet India invited CTO's (Chief Technology Officers) of various Major Indian Banks to share their perceptions on IT in Banking.. Bank of Baroda. Shamrao Vithal Co-Operative Bank. Bank of Maharastra is of . Mrs S A Panse.K. S. Chief Technology Officer. Pravir Vohra. which will get the emphasis in IT plans/Strategy of banks. IDBI Bank. Deputy General Manager (Information Technology). IT in Banking 2003 (Special) Perspectives of: CTOs of Banks in India Areas. HDFC Bank. Chief Technology Officer. Neeraj B Bhai. ICICI Bank. Tata Institute of Fundamental Research was invited to provide with the 'Other Perspective'. Sanyal.N. Chief Technology Officer. President (Information Technology). Ramani.

for electronic settlements. SMFS and RTGS. connectivity intrabank as well as interbank is also the basic necessity for every bank. UTI Bank is confident that the Policy announcements on the payment systems will pave the way for the establishment of the legal framework. ALM & Risk management are going to be areas of top priority in IT plans/Strategy of banks. HDFC Bank feels that Connectivity of banks. Establishing a WAN for connecting all the branches and moving towards Core Banking Solution is the prime business need. While Multi-application smart card pilot has been indicated in the policy. The technology initiative taken by the RBI for setting up RTGS will have far reaching impact As follow up to the electronic clearing ECS.According to Mr Pravir Vohra. Ramani. Risk Management. IDBI Bank.K.NDS-PDO. all banks will have to gear up for it. Inter-bank payment systems are poised to move to a much higher degree of advancement during the year. According to Mr Neeraj B Bhai. CFMS. With RTGS being implemented by Jan.2004. its active usage is still quite some time away. WIth impending arrival of RTGS.view that as Asset-Liability management and Risk management have gained importance after liberalization and globalization. Chief Technology Officer. . In order to achieve this. the move for an RTGS is logical extension. Mr V. The earlier Smart Card project of RBI had met with a limited success. Mr C. Chief Technology Officer. This has gained more importance after the establishment of the CCIL. getting the data updated on real time basis for the organization is of prime importance. National Settlement System will enhance the efficiency of funds management. IT would be playing a major role. Asset Liability Management systems and core banking will rank high in plans of Banks. President (Information Technology). Networking of branches. Ram. Further. in view of RBI's initiative for implementing various payment and settlement systems such as. in view of RBI's policy this year. Chief Technology Officer. ICICI Bank. every bank would have to not only computerize the entire functioning of the Treasury department but also would have to consolidate the treasury function and move towards integrated treasury for better funds management. which can now be centralised in a much better way.N.

General Manager & Chief Technology Officer. The technology for integrated applications is available but unless the volume of transactions is large. Core Banking Solution implementation IT in Banking 2003 (Special) Perspectives of: CTOs of Banks in India Approach of RBI towards IT in Banking. Networking of branches b. Chief Technology Officer. Currently smart cards are used for select applications. IDBI Bank feels that as such there is no major shift on IT front in this year's RBI policy.. These were in the areas of moving towards . What we see today is the culmination of the initiatives that were started a few years back. the standards for inter operability of smart cards will enable multiple applications on a single chip. Mr Neeraj B Bhai. it is not an attractive proposition. Secure Messaging for launching funds transfer products c.According to Mr Ramani. Implementation of the Core Banking solutions are to be planned by Banks as part of their strategy to align with the RBI initiative. which will get the emphasis in IT plans/Strategy of banksa. Chief of Information Technology. Mr Ravikiran Mankikar. Banks that are not geared up for the networking should fear to be left behind. Focus on technology based initiatives for Intra-day liquidity Management e. Mr V Chandrasekhar. Bank of Baroda summarises the key areas. Shamrao Vithal Co-Operative Bank feels that RBI's initiatives and encouragement to the Banks to implement payment and settlement systems in a secured environment is surely the first logical steps towards the introduction of the electronic funds transfer mechanism in a big way. Integrated Treasury Management System d..

General Manager & Chief Technology Officer.automating interbank payment and settlement systems. Roll out of RTGS is expected before the year-end. Mr C. HDFC Bank. He points out that Bank of Baroda was the first bank to put in place a world class an Integrated State of the Art Treasury System covering front. According to Mr V Chandrasekhar. Initiative taken by the RBI for setting up RTGS will have far reaching impact. Bank of Baroda. IT in Banking 2003 (Special) Perspectives of: CTOs of Banks in India How RBI's initiatives for Payment and Settlement system will impact customer service & efficiency of Banks? According to Mr V Chandrasekhar. Chief Technology Officer. The chain of incidents indicates that the technology focus of RBI is to bring in technology to minimize systemic risk. Shamrao Vithal Co-Operative Bank. according to Mr Ravikiran Mankikar. Bank of Baroda. Technology initiatives started of with introduction of PDO-NDS during early 2002. agrees that RBI is continuing with the policy initiatives in a systematic manner. middle and back office environment. integrated payment and settlement system for the banking sector. The real time payment across Banks & regions would revolutionise the payment mechanism in India. General Manager & Chief Technology Officer. The Real Time Gross Settlement (RTGS) project would create a major upheaval in the banking sector. . ICICI Bank is also of view that RBI has continued it's efforts for developing a modern and efficient. Chief of Information Technology. Mr Pravir Vohra.N. Chief Technology Officer. Ram. This was followed by introduction of CFMS Phase I. RTGS / SEFT will addresses the requirement of the customers for moving funds across bank branches at almost the same cost they pay for the normal remittance facility.

K. Mr Neeraj B Bhai. is of view that the Special electronic funds transfer (SEFT) opens up a significant business opportunity Large trading and . With connectivity established across the banking industry. is also of view that for customers it will mean availability of faster and cheaper instruments of movement of funds across the country as well as quicker realisation of cheques (once truncation comes in .Mr C. Cash Management Services). ICICI Bank feels that though in future the customers will have faster and cheaper instruments of movement of funds across the country as well as quicker realisation of cheques. President (Information Technology). Now banks will have to put proper Information Technology systems in place to participate in RTGS and provide the benefits of improved payment systems to their customers. will lead to technological upgradation in banks. Deputy General Manager (Information Technology). Mr Neeraj Bhai. For the Banks the increased efficiency of funds movement and settlement will mean shrinking of available floats and partial/ significant cannibalization of some of the existing products (e. Mrs S A Panse. IDBI Bank. but banks will be left with lower levels of float funds. UTI Bank.but that is some time away). If they lag in this area they will loose their customer to other banks. which have been introduced in a systematic manner.N. Chief Technology Officer. Ram. Mr Pravir Vohra. Bank of Maharastra also feels that NSS. Thus it would be imperative on each bank's part to establish a fullfledged Costing department (If not done already). however feels Banks will be able to ride the available infrastructure to introduce their own funds transfer products. would have an impact on the FLOAT funds. coupled with connecting the service branches of the banks and Treasury with RTGS for settlement of all the transactions on real time basis. and rework the service charges structure. Chief Technology Officer.g. Ramani. is of view that Reserve Bank of India initiatives on RTGS. In due course one will see this pricing also getting subjected to competitive pressures. Mr V. there would not be much availability of floats and this would have a major impact on the costing of various services being offered by the banks. HDFC Bank. Chief Technology Officer. They will have to price these products appropriately.

According to Mrs S A Panse.. Roadmap of banks to strengthen the existing financial infrastructure.procurement systems with settlement of transactions across the banking system taking place under the SEFT. Introduce all the delivery channels in addition to the branch network. it is necessary that each public sector bank take following stepsEstablish a WAN connecting all the major branches.. Development of an interface with the RBI applications and the Core banking systems to enable STP. Large public sector Banks and the new generation private sector banks who have made substantial investments in the IT infrastructure have an opportunity to offer a wider range of services through multichannel delivery systems backed by the RTGS and SEFT for funds settlement. networking of branches in the identified commercially important centres immediately and start funds transfer products. Bank of Baroda should comprise ofa. c. Roadmap of banks according to Mr V Chandrasekhar. Immediate Establishment of RA office for issue of Digital certificates for use in these funds transfer products. Introduction of Core Banking system within the next 12 to 24 months. e. General Manager & Chief Technology Officer. Establishment of an Integrated Treasury branch or in the interim proper reporting arrangements from major centres for effective management and maintenance of intra-day liquidity. Deputy General Manager (Information Technology). d. Bank of Maharastra. As an interim solution. .distribution firms can effectively implement e. b.

IDBI Bank. Take up restructuring/ reorganization for the entire bank. Mr Ravikiran Mankikar. According to Mr Neeraj B Bhai. What is needed is its efficient execution. Shamrao Vithal CoOperative Bank feels that the Banks are today aware for the need to be part of a networked system. Introduce Customer relationship Management. S. To be able to launch one's own products. Introduce data warehousing and data mining. Move towards Integrated treasury management. The emerging role of technological employment by the Private Sector Banks and the leading Public Sector Banks is also motivating the Banks in the Co-Operative Sector to put their act together.Move towards Core Banking Solution. TIFR . Go in for Business Process Re-engineering. the Banks will have to enhance this roadmap to include integration with their existing applications so that end-to-end straight-through-processing becomes possible. Chief Technology Officer. Sanyal. Chief of Information Technology. mobiles and ATMs. School of Technology & Computer Science. Roadmap has already been defined by RBI in great detail. Here the fully computerised banks will have the edge. Prof. The implementation of ATMs on a massive scale by some of the Banks is also spurring the other Banks to have an ATM installed base of their own. Have an aggressive HRD policy for retraining in IT skills. There is no reason why such products can not be made available on self-service channels like Internet.

elec clearing service (ECS) and electronic funds transfer (EFT). Sometimes. new century without any major problem. People simply cannot k . Regular statistics were being published in the media. recently announced by RBI will have severe implications in the world of technology a nothing could be better. And.. what could the consumer ask for? But looking at it from the banker's point of view.. a Another important but less thought-of area is that of upgrading the knowledge level of the Senior and M level staff of various banks. any solution provided should be scala In the new policy. is Electronics and Computerised staff is to older lot. banks will have to make special provision for educating their staff and also to be progress human beings (Bankers and Bank Users both). Banks might need to invest additional amounts in employing ethical hacke cover large areas so as to reach all corners of India. it worked. in the haste of total computerisation. This would mean enhancing banking netwo terms of security by means of use of Public Key Infrastructure (PKI) and Digital Signatures. The banks should gear up in the manner they did before the Y2K crisis. including top officials were after various financial institutions in the country to make their systems Y2K Government had been promoting the usage of technology in our day-to-day lives for a long time. From the consumer's perspective. Young bankers will learn. which is emerging. Instant clearing of checks. it might mean burning midnight oil and implementation way banks look at it. More importantly. With the new paradigm shift towards electronic age banking. Though the taking a concrete shape finally. one feels that if everything works out as planne of art encryption techniques. formation of a separate IT mi all are forward moving steps in this regard. the RBI has also proposed implementation of negotiated dealing system (NDS). And one more point. Then only we can succeed in implementing the latest policy. We could move over to approach needs to be adopted. one lo the focus that Banks should have possibly more human interaction than earlier. Everyone in the Government. The network has to be extremely secure to be able to handle what the RB proposes in its credit policy. as they are growing with the changes. The identification of certifying authorities. digital certificates . not so for pragmatic manner. electronic funds transfer. things compliant. So.The credit policy. find loopholes in the network and correct them.

I applaud the right directional movement by RBI but would like to stres other field. or . be it in Banking.talking to machines or keep punching numbers to get a solution. where they could have achieved the s a shorter time with human help. Then only we will achieve a total solution. human element should not be abolished.

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