WHAT IS BANKING

The banking industry is a dynamic and significant component to individuals, corporates, small and medium businesses, national and global, economic, socio and financial well-being. This industry cultivates financial relationships with customers of all sizes to supply financial products and services that stimulate economic growth, and act as a catalyst to national and global economics. The industry players produce a variety of services from savings accounts to home and business loans and mortgages, and from fund mobilization to handling global mergers and acquisitions. This industry is sensitive to regulatory, technological, and economic factors and has its own share of challenges largely attributable to these factors. New developing economies are changing the global landscape of economic wealth and economic instruments and banking industry is adapting very fast to provide new generation of innovative banking products and services. Banking industry is adopting unique strategies to overcome these challenges and move forward to deliver financial objectives to people and organizations- Learn more at www.technofunc.com. Your online source for free professional tutorials.

INTRODUCTION OF RETAIL BANKING

Retail banking is when a bank executes transactions directly with consumers, rather than corporations or other banks. Services offered include savings and transactional accounts,mortgages, personal loans, debit cards, and credit cards. The term is generally used to distinguish these banking services from investment banking, commercial banking or wholesale banking. It may also be used to refer to a division of a bank dealing with retail customers and can also be termed as Personal Banking services. In the US the term Commercial bank is used for a normal bank to distinguish it from an investment bank. After the great depression, through the Glass–Steagall Act, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital markets activities. This separation was repealed in the 1990s. Commercial bank can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to individual members of the public (retail banking)

Definition of 'Retail Banking'

Typical mass-market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs).

HISTORY OF RETAIL BANKING

Basic banking services such as deposits for safe keeping, saving, or borrowing for personal or business use is as old as human civilisation. Organised banking services started in 15thand 16 century Europe, when banks began opening branches in commercial areas of large cities. By the last quarter of the 19th century, banks were consolidating their branch networks so that they could operate in a more integrated manner (Consoli, 2003). Mergers and acquisitions allowed banks to grow quickly but, in the absence initially of information and communication technologies, their services remained largely local. The policy of opening new branches continued throughout the twentieth century as a means of business expansion, but services were limited to the provision of routine operations such as deposits, withdrawals and basic loan services. To cope with the increasing volume of work, and to achieve consistency across branch networks, banks started to standardise their record keeping and accounting practices. This also helped them to effectively connect branches. Standard record keeping also resulted in the appearance of new professions such as bank clerks. The arrival of the typewriter in the late nineteenth century helped to standardise internal/external communications, and other tools such as the telegraph made communications between branches and headquarters a daily routine.

Retail Banking-indian Scenario

Retail banking is the innovation of the 21st Century. India has experienced a rapid growth in retail banking is a banking service that is geared primarily toward individual customer It focuses strictly on consumer markets. Retail banking is a mass-market banking where individual customers use local branches of larger commercial banks. The services offered by retail banking includes saving and checking accounts, mortgages, personal loans, debit cards, credit cards etc. It takes care of the diverse banking needs of an indi- vidual customer. It provides banking products and services to individuals. Retail banking contains feature like multiple products, channels and customer groups. Most of the I Indian banks have been retail banks in their business composition. Retail banking in India is growing and the same expected in the future. The various reasons for the growth of retail banking in India are: * Technology. * Introduction Private and foreign banks. * Increased competition. * Innovation in banking products and services. * Economic growth. * Deregulation of interest rates. * Consumerism. * Changes in life style of working/middle class. * Focus on productivity and profitability. * Drive towards low NPAs. * Changing consumer demographics. Retail banking segment in the banking industry is continuously undergoing innovations, product reengineering, adjustments and alignments. Indian retail banking segment includes: * Cards- credit, debit and ATM. * Housing loans. * Personal loans * Consumption loans * Education loans * Vehicle loans. * Insurance. * Demat services. * Online services. Retail lending is the buzzword in India. Most banks has retail as of around 20% of their total lending portfolio and these \ are growing at an unnatural rate of 30 to 35% per annum, Retail lending has been the key profit driver and spectacular innovation in the banking sector in recent times. Retail banking used to be synonymous with savings account and fixed deposits with cheque based/deposit slip based transactions. Retail loans were usually restricted to housing loans. This has changed considerably in the last decade, especially in India. The RBI's report on Trend and Progress of India (2003-04) has shown that the retail lending ranges between Rs.20000 to Rs. 100 Lakh, which are generally for the duration of 5-7 years with housing loans granted for H5 years. It reveals some new trends in growth of credit. There 'is upsurge in retail credit as against corporate advances, which may reveal itself in accumulating NPAs in * banking sector and may accentuate theindebtedness of households in

This is reflected ad. The promise of lower transaction costs increased sales productivity and more convenient service has lured banks into setting up new delivery channels.equately in a change in the urban household income pattern. which is cited as one of the important propellers of the growth of retail banking in India. Internal Promotions to Cross-Sell Services Retail banks utilize their internal and external space to promote and cross-sell services. with several counter-cyclical measures in place and a vigilant central bank. Teller cages are most often dedicated to walk-in consumer patrons.ever. The banking organizations are seeking ways to increased automated access to a wider range of prod. which will now be skewed towards retail prod.crease in off-site and on-site delivery channels. It is now undeniable that the face of the Indian consumer is changing.ucts. Inside of the bank. Retail bank tellers are trained to focus on consumer checking and savings needs. The technological advancement has led to in. . The direct fallout of such a change will be the consumption patterns -and hence the banking habits of Indians. Telephone banking \ and Internet banking. Both provide fuel to the engine of retail banking. as per Minna Kumar of Sify Finance in his study titled "retail lending takes the lead' in November 2004.ucts. Income can be mainly divided into consumption and savings. Desks that house deposit slips are typically topped with brochures about various checking and savings instruments. Branch managers are trained to offer customer-service issues in regards to those accounts.nomic growth. Eco.the medium term. How. Commercial account transactions are typically limited to on to two separate stations dedicated to merchant accounts. Features of retail banking Consumer Banking Focus Most retail banks focus on the needs of consumers versus commercial account holders. is reflected in the income of the households. customers will see standing floor signs to promote interest rates on mortgages and savings accounts. Tellers might even wear a badge or button that states "ask me about …" to promote new services. there is little need for alarm. which brings new product development speed of transaction processing and reduction in transaction cost like ATM.

Most understand that customer's hours may not match bank hours. Services. live and shop. Some retail banks will provide a cash reward up to several hundred dollars to open a new account. to transferring funds between checking and savings accounts.CRM Practices Customer Relationship Management (CRM) techniques are growing in application among most major retail banks. print and magazine advertising. The overall goal is to increase new accounts. Websites assist and guide current and prospective customers to branch locations. Extended Hours. Locations Retail banks are often governed by state banking regulations in terms of hours of operation. Retail banks use this information to track and monitor customer satisfaction. This often includes broadcast television and radio advertising. . among both prospective and existing customers. As a result. They utilize many advertising tactics and strategies to achieve their new customer goals. retail super stores. gauge the feasibility for new products and services. and to identify areas for improvement of the customer service experience inside of branches. and public relations efforts to sponsor national and local events. Banks are now also offering their services inside of major grocery stores. Banks deploy savvy strategies to make sure that no opportunity is missed to service customers. to make their services accessible on a 24-hour basis so customers have "touch point" access to retail banking services near where they work. gas stations and convenience stores. Site visitors are offered the opportunity to provide feedback about their online banking experiences as well as their on-site banking experiences. New Customer Incentives Retail banks have a major marketing mission to increase new customers. Banks capture information to rate and rank new customers via information furnished on credit applications to assess credit worthiness and approve new account applications. most retail banks have ATM machines that can accommodate every banking need from making a deposit and inquiring about account balances.

The retail banks have to market their products aggressively. retail banking scenario will see a huge proliferation of products. which was earlier ignored. The challenge is to design and innovate the financial products which cater to the target segment needs. PSBs need to figure out the means to generate profitable business from this segment. thereby improving-purchasing power and liberal attitude towards personal debt. The rise of the middle class is an important contributory factor in this regard. In fact. with the banks undercutting one another. According to a research by Reich held and Sasser in the Harvard Business Review. with the banks jumping over one another to give out retail loans. is now the the most important of the lot. the challenges are equally daunting. Thus. The entry of new generation private sector banks has changed the entire scenario.Challenges And Opportunities Retail banking in India has vast opportunities and challenges. The SEZs will also provide growth opportunity for retail banking. Another major challenge in retail banking is attraction as well as retention of customers. Customer retention favor.ability by 35% in banking business. This will in turn require devising product which is easy to understand and at the same time meet the financial goals of the customers. and 125% in the consumer credit card market. Increase in purchasing power of the younger population would give an immense opportunity. Improving con. With supply far exceeding demand it has been a race to the bottom. As retail banking offers phenomenal opportunities for growth. The retail segment.ment. In future. coupled with more liberal attitudes toward personal debt is contributing to India's retail banking segment. the retention is more difficult in this competitive environment. banks need to focus on customer .sumer purchasing power. and contributing to India's retail segment. 5% increase in customer retention can increase profit. which at present is in the nascent stage. The combination of these factors promises growth in the retail sector.ably affects the profitability. 50% in insurance and brokerage. It has been found that younger generation is more comfortable in acquiring debt than the previous generation. The nimble footed new generation private sector banks have been losing business to the private sector banks in this seg.

In a service industry the value can be deliv. The network challenges includes proper functioning of distributed networks in support of business objectives. due to excessive concentration on the top-line without regard to the quality of growth of the top-line. need to have requirements of the employees who are well informed about the prod. providing instant updates to checking accounts and rapid movement of money. which could affect the future growth of retail banking. Specific challenges include ensuring that account trans.retention. However.ucts as well as have the necessary soft skills to deal and satisfy the customers. This would call for seamless integration of all channels to ensure optimum customer satisfaction.sibilities and challenges in managing. It challenges for the bank to upgrade their existing manpower and retention or lock in the best talents for having competitive advantage in terms of human resources.ered at the moment of interaction with the customers. maintaining and optimizing the performance of retail banking networks. Banks. phasing and farming through which scamsters are creating havoc indulging in cyber crimes on a large scale. Sustainability is another issue. Technology has made it possible to deliver services throughout the branch bank network. . However this dependency on the network has brought IT departments additional respon. increasing market share by increasing risk appetite and entering the markets where a bank may not have a competitive advantage. A bank has to build its brand by clearly communicating what it stands for and ensure that the brand image is consistently conveyed to its customers. Another issue of concern is the rising indebtness. which is becoming increasingly vital with respect to the growth of retail banking in India. on the other hand there is increasing menace of hacking. in a drive to carry on with tremendous expansion in terms of customer base.action applications run efficiently between the branch offices and data centers. regardless of the channel being used. The banks will also have to shore up the image of their brand. Most of the retail banks are witnessing a tremendous expansion in their customer base.

DEMAT ACCOUNT : In India. Transfers or purchases of securitiescan then be initiated. A Dematerialized account is opened by the investor while registering with an investment broker (or sub-broker). Access to the Dematerialized account requires an internet password and a transaction password. Purchases and sales of securities on the Dematerialized account are automatically made once transactions are confirmed and completed . shares and securities are held electronically in a Dematerialized (or "Demat") (/dimæt/.) account. Every shareholder will have a Dematerialized account for the purpose of transacting shares. instead of the investor taking physical possession of certificates. The Dematerialized account number is quoted for all transactions to enable electronic settlements of trades to take place.SERVICES PROVIDED TO CUSTOMER 1.

thefts etc. Transmission of securities is done by DP. Automatic credit into demat account for shares arising out of bonus/split. delays. A single demat account can hold investments in both equity and debt instruments. even from home). It provides better facilities for communication and timely service to shareholders and investors. Traders can work from anywhere (e.g.BENEFITS OF DEMAT ACCOUNT The benefits of demat are enumerated[by whom?] as follows:             Easy and convenient way to hold securities Immediate transfer of securities No stamp duty on transfer of securities Safer than paper-shares (earlier risks associated with physical certificates such as bad delivery. fake securities. consolidation/merger. are mostly eliminated) Reduced paperwork for transfer of securities Reduced transaction cost No "odd lot" problem: even one share can be sold Change in address recorded with a DP gets registered with all companies in which investor holds securities eliminating the need to correspond with each of them separately. . etc. eliminating the need for notifying companies. It increases the efficiency of the registrars and transfer agents and the secretarial department of a company. Benefit to the company The depository system helps in reducing the cost of new issues due to lower printing and distribution costs.

It ensures transfer settlements and reduces delay in registration of shares.Benefit to the investor The depository system reduces risks involved in holding physical certificates. It ensures faster communication to investors. theft. It increases overall trading and profitability. Benefits to brokers It reduces risks of delayed settlement.g. It ensures greater profit due to increase in volume of trading. mutilation.. It ensures faster payment on sale of shares. No stamp duty is paid on transfer of shares. loss. It helps avoid bad delivery problems due to signature differences. etc. forgery. . e. It provides more acceptability and liquidity of securities. It eliminates chances of forgery or bad delivery. It increases confidence in their investors. etc.

the role of key market players such as stock-brokers needs to be supervised as they have the capability of manipulating the market. Most of the Indian investors are laymen and do not know the seriousness of not closing the dp account. after liquidating the holdings. including the Depositories Act. Regulations and the various Bye-Laws of various depositories. The investor cannot close the account and he and his successors have to go on paying the charges to the participant. like annual folio charges etc. These may cause worries to the investor desirous of simplicity.      . It is incumbent upon the capital market regulator to keep a close watch on the trading in dematerialized securities and see to it that trading does not act as a detriment to investors.DEMERITS OF DEMAT ACCOUNT   Trading in securities may become uncontrolled in case of dematerialized securities. Many DPs are going on charging dp charges to such dp accounts with nil holdings. Agreements are entered at various levels in the process of dematerialization. There is no provision to close a demat account. For dematerialized securities. Multiple regulatory frameworks have to be conformed to. which is having illiquid shares.

A credit card also differs from acash card.[2] In contrast. CREDIT CARD: A credit card is a payment card issued to users as a system of payment. Credit cards have an embossed bank card number complying with theISO/IEC 7812 numbering standard. which can be used like currency by the owner of the card. whereas a charge card simply defers payment by the buyer until a later date.[1] The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to amerchant or as a cash advance to the user. It allows the cardholder to pay for goods and services based on the holder's promise to pay for them. The size of most credit cards is 3 ⅜ × 2 ⅛ in (85. credit cards allow the consumers a continuing balance of debt.60 × [3] 53. . conforming to theISO/IEC 7810 ID-1 standard. subject to interest being charged.2.98 mm). A credit card differs from a charge card also in that a credit card typically involves a third-party entity that pays the seller and is reimbursed by the buyer. A credit card is different from a charge card: a charge card requires the balance to be paid in full each month.

the credit card user is sent a statement indicating the purchases undertaken with the card. after an account has been approved by the credit provider. as in "We take (brands X. ecommerce. For card not present transactions where the card is not shown (e. allowing the verification to happen at time of purchase. In the US. The cardholder indicates consent to pay by signing areceipt with a record of the card details and indicating the amount to be paid or by entering a personal identification number (PIN). any outstanding fees. date of expiry.PROCESS OF CREDIT CARD Credit cards are issued by a credit card issuer. after receiving the statement. When a purchase is made. such as a bank or credit union. Each month. and billing address. merchants additionally verify that the customer is in physical possession of the card and is the authorized user by asking for additional information such as the security code printed on the back of the card. the credit card user agrees to pay the card issuer. Merchants often advertise which cards they accept by displaying acceptance marks – generally derived from logos – or may communicate this orally. known as a card not present transaction (CNP).C.. many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet. Also. mail order. § 1643. The verification is performed using a credit card payment terminal or pointof-sale (POS) system with a communications link to the merchant's acquiring bank. The cardholder must pay a defined minimum portion of the .S. and Z)" or "We don't take credit cards". and is implemented as an EMV card. and telephone sales). the cardholder may dispute any charges that he or she thinks are incorrect (see 15 U. Data from the card is obtained from a magnetic stripe or chip on the card. Y. The Fair Credit Billing Act gives details of the US regulations. after which cardholders can use it to make purchases at merchants accepting that card. the latter system is called Chip and PIN in the United Kingdom and Ireland. Electronic verification systems allow merchants to verify in a few seconds that the card is valid and the credit card customer has sufficient credit to cover the purchase. which limits cardholder liability for unauthorized use of a credit card to $50).g. and the total amount owed.

if the credit card user fails to make at least the minimum payment by the due date. or may choose to pay a higher amount up to the entire amount owed which may be greater than the amount billed. which can be viewed at any time by the cardholder via the issuer's online banking website. possibly enabling him or her to utilize the credit limit on the card several times over. such as an electronic transfer of funds from a checking account. the cardholder may also be able to make multiple payments during a single statement period. either in lieu of or in addition to physical statements. . some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts. thus avoiding such penalties altogether as long as the cardholder has sufficient funds. If the card issuer has chosen to allow it. Many banks now also offer the option of electronic statements. the issuer may impose a "late fee" and/or other penalties on the user. The credit issuer charges interest on the unpaid balance if the billed amount is not paid in full (typically at a much higher rate than most other forms of debt). Depending on the issuer. To help mitigate this. In addition. the cardholder may have other options for payment besides a physical check. Notification of the availability of a new statement is generally sent to the cardholder's email address.amount owed by a due date.

Card-issuing bank: The financial institution or other organization that issued the credit card to the cardholder. Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder.PARTIES INVOLVED     Cardholder: The holder of the card used to make a purchase. American Express and Discover were previously the only card-issuing banks for their respective brands. but as of 2007. Cards issued by banks to cardholders in a different country are known as offshore credit cards. Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant. this is no longer the case. the consumer. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. .

Since the mid-2000s. the use of debit cards has become so widespread that their volume has overtaken or entirely replaced cheques and. charities. card-issuing banks. universities. cash transactions. but in general is the organization that the merchant deals with.[1][2] In many countries. In some cases. The card. May be operated by an independent company. professional organizations. 3. MasterCard. in some instances. Credit Card association: An association of card-issuing banks such as Discover. Transaction network: The system that implements the mechanics of the electronic transactions. Examples of typical affinity partners are sports teams. The development of debit cards. Visa. . where accepted. for example. DEBIT CARD: A debit card (also known as a bank card or check card) is a plastic payment card that provides the cardholder electronic access to his or her bank account(s) at a financial institution. Some cards have astored value with which a payment is made. Insurance providers: Insurers underwriting various insurance protections offered as credit card perks. the primary account number is assigned exclusively for use on the Internet and there is no physical card.      Independent sales organization: Resellers (to merchants) of the services of the acquiring bank. and major retailers. American Express. unlike credit cards and charge cards. Affinity partner: Some institutions lend their names to an issuer to attract customers that have a strong relationship with that institution. and one company may operate multiple networks. and acquiring banks. etc. a number of initiatives have allowed debit cards issued in one country to be used in other countries and allowed their use for internet and phone purchases. Car Rental Insurance. while most relay a message to the cardholder's bank to withdraw funds from a payee's designated bank account. that set transaction terms for merchants. can be used instead of cash when making purchases. has generally been country specific resulting in a number of different systems around the world. Merchant account: This could refer to the acquiring bank or the independent sales organization. which were often incompatible. and get paid a fee or a percentage of the balance for each card issued using their name.

payments using a debit card are immediately transferred from the cardholder's designated bank account. which is part of the MasterCard brand.[3] One physical card can include the functions of all three types. Debit cards usually also allow for instant withdrawal of cash. UnionPay in China. Some debit cards are dual branded with the logo of the (former) national card as well as Maestro (for example. each accepted only within a particular country or region.Laser in Ireland. Interac in Canada. Carte Bleue in France. EC electronic cash (formerly Eurocheque) in Germany. acting as the ATM card for withdrawing cash. instead of them paying the money back at a later date. Austria's "Bankomatkasse" and Switch in the United Kingdom) being rebranded with the internationally recognised Maestro logo. Merchants may also offer cashback facilities to customers. where a customer can withdraw cash along with their purchase. offline debit (also known as signature debit) and theElectronic Purse Card System.Unlike credit and charge cards. for example Switch(now: Maestro) and Solo in the United Kingdom. Although many debit cards are of the Visa or MasterCard brand. there are many other types of debit card. EC cards in .RuPay in India and EFTPOS cards in Australia and New Zealand. TYPES OF DEBIT CARD There are currently three ways that debit card transactions are processed: EFTPOS (also known as online debit or PIN debit). The need for cross-border compatibility and the advent of the euro recently led to many of these card networks (such as Switzerland's "EC direkt". so that it can be used in a number of different circumstances.

ATM: "Cash machine" redirects here. etc.). Pinpas cards in the Netherlands. .Germany. Laser cards in Ireland. Switch and Solo in the UK. 4. The use of a debit card system allows operators to package their product more effectively while monitoring customer spending. see Cash Machine. Bancontact cards in Belgium. For the Hard-Fi song.

multi-function ATM in the United States .An NCR Personas 75-Series interior.

the customer is identified by inserting a plastic ATM card with amagnetic stripe or a plastic smart card with a chip that contains a unique card number and some security information such as an expiration date or CVVC (CVV). cashline or hole in the wall (British and HibernoEnglish). On most modern ATMs. is a computerized telecommunications device that enables the clients of a financial institution to perform financial transactions without the need for a cashier. ATMs are known by various other names including ATM machine. such as this off-premise Wincor Nixdorf mono-function ATM in Sweden An automated or automatic teller machine (ATM) (American. customers can access their bank accounts in order to make cashwithdrawals. cash machine. debit card cash advances. and check their account balances as well as purchase pre-paid mobile phone credit. Authentication is provided by the customer entering a personal identification number (PIN). The newest ATM at Royal Bank of Scotland operates without a card to withdraw cash up to £100. Using an ATM. automated banking machine and various regional variants derived from trademarks on ATM systems held by particular banks. human clerk or bank teller.Smaller indoor ATMs dispense money inside convenience stores and other busy areas. also known as an automated banking machine (ABM) (Canadian English). If the currency . cashpoint. Australian and Indian English).

g. Thus.: Withdrawing Japanese Yen from a bank account containing US Dollars). and are also widely used for this purpose . ATMs often provide one of the best possible official exchange rates for foreign travellers. the money will be converted at an official wholesale exchange rate.being withdrawn from the ATM is different from that which the bank account is denominated in (e.

credit card and other accounts. which may be cheque. because a number of accounts can be linked to the one customer number. Some financial institutions have set up additional security steps for access.E-BANKING Online banking (or Internet banking or E-banking) allows customers of a financial institution to conduct financial transactions on a secure website operated by the institution. loan. which can be a retail or virtual bank. and set up some password (under various names) for customer verification. a customer having personal Internet access must register with the institution for the service. the customer would go to the financial institution's website. To access online banking. but there is no consistency to the approach adopted. Customer numbers are normally not the same as account numbers. credit union or building society. The password for online banking is normally not the same as for telephone banking. Financial institutions now routinely allocate customer numbers (also under various names). savings. and enter the online banking facility using the customer number and password. The customer will link to the customer number any of those accounts which the customer controls. whether or not customers intend to access their online banking facility. . To access a financial institution's online banking facility. Customer numbers will also not be the same as any debit or credit card issued by the financial institution to the customer.

you can also do transfers between accounts. Send and receive an INTERAC e-TransferTM2: This could be the end of the birthday cheque! You can receive transfers from other people's accounts. select Add payees. In the Pay Bills section. View CIBC VISA* accounts: Always a good place to monitor your spending. but if you still use cheques. right from your account. you can order them directly from the CIBC website.               .Advantages of e-banking  View balances: Checking your balance doesn't require much work. You can also sign up for the Ebills service that sends you a bill by e-mail instead of a printed one by regular mail. The recipient will get an e-mail notifying them of the transaction. and the amount. Transfer funds: When you select Transfer Funds. You simply select Account balances and take a look at your balance and past transactions. Order cheques: We don't need them much anymore due to online banking and debit purchases. you can keep an eye on those stocks or mutual funds here. when. you just need to add to your account the names of the companies you wish to pay bills to. You can make your credit card payments online. Pay bills: To pay your bills online. search for the name of the company and fill in the account number for each company. Monitor CIBC investments: If you have any CIBC investments. or set up transfers from your account to someone else's. it might be convenient to set up an automatic withdrawal from your account. If you have more than one account. Set up recurring bill payments or transfers: If you make a regular payment every month. you'll be asked where to transfer the money to and from.

The transactions are settled as soon as they are processed.Take control Online banking helps you become more of a banker. you'll be hooked. and loss of . money. Once you get started. An efficient national payment system reduces the cost of exchanging goods and services. running your accounts like a small business that you control every day. payments are final and irrevocable. inequitable risksharing among agents. its failures can result in inefficient use of financial resources. A weak payment system may severely drag on the stability and developmental capacity of a national economy. and capital markets. Soon enough you'll be checking your bank account as often as your e-mail SERVICES OF E-BANKING 1. and is indispensable to the functioning of the interbank. actual losses for participants. Once processed. "Gross settlement" means the transaction is settled on one to one basis without bunching or netting with any other transaction. Settlement in "real time" means payment transaction is not subjected to any waiting period. RTGS: Real time gross settlement systems (RTGS) are funds transfer systems where transfer of money or securities[1] takes place from onebank to another on a "real time" and on "gross" basis.

besides giving an accurate picture of an institution's account at any point of time.confidence in the financial system and in the very use of money[2] Technical effciency of the payment system is important for development of an economy. reducing the amount in Bank A's account by $100. Credit risks due to settlement lags are eliminated. the central bank makes adjustments in the electronic accounts of Bank A and Bank B.000 and increasing the amount of Bank B's account by the same. The RTGS system is suited for low-volume. . The best RTGS national payment system cover up to 95% of high-value transactions within the national monetary market. Such systems are an alternative to systems of settling transactions at the end of the day. the accounts of the institutions are adjusted. also known as the net settlement system such as BACS. The World Bank has been paying increasing attention to payment system development as a key component of the financial infrastructure of a country. At the end of the day. transactions are settled across accounts held at a central bank on a continuous gross basis. high-value transactions. It lowers settlement risk. In the net settlement system. and has provided various form of assistance to over 100 counrites. all the inter-institution transactions during the day are accumulated. final and irrevocable. In an RTGS system. The implementation of RTGS systems by central banks throughout the world is driven by the goal to minimize risk in high-value electronic payment settlement systems. CENTRAL BANKS AND RTGS This "electronic" payment system is normally maintained or controlled by the central bank of a country. There is no physical exchange of money. Settlement is immediate.

Second. it is more beneficial to adopt an RTGS system for central bank when this allows access to a broad system of other countries' RTGS systems. 2. firm or corporate having an account with any other bank branch in the country participating in the Scheme. The list of bank-wise branches which are participating in NEFT is provided in the website of Reserve Bank of India.[3] Several reasons exist for central banks for RTGS adoption decisions to include counterparts in the system. By 1985 only 3 central banks had implemented RTGS system. the use of RTGS systems had diffused to 90 central banks. Who can transfer funds using NEFT? . Are all bank branches in the country part of the NEFT funds transfer network? For being part of the NEFT funds transfer network. First. Under this Scheme.enabled. NEFT: National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. it is very likely that the knowledge acquired through experiences with RTGS systems spills over to other central banks and helps them make their adoption decision. individuals. At the end of 2005. a bank branch has to be NEFT. firms and corporates can electronically transfer funds from any bank branch to any individual. decision to adopt is influenced by competitive pressure from the global financial markets.Most of the RTGS systems in place are secure and have been designed around international standards and best practices. central banks do not necessarly have to install and develop RTGS themselves. Third. Fourth.

Further details on the Indo-Nepal Remittance Facility Scheme are available on the website of Reserve Bank of India.per transaction. Even such individuals who do not have a bank account (walk-in customers) can also deposit cash at the NEFTenabled branches with instructions to transfer funds using NEFT. telephone number. However. etc..NEFT. Who can receive funds through the NEFT system? Individuals. thus. The beneficiary would receive funds in Nepalese Rupees. firms or corporates maintaining accounts with a bank branch can receive funds through the NEFT system. The NEFT system also facilitates one-waycross-border transfer of funds from India to Nepal. This is known as the Indo-Nepal Remittance Facility Scheme. necessary for the beneficiary to have an account with the NEFT enabled destination bank branch in the country.50. firms or corporates maintaining accounts with a bank branch can transfer funds using NEFT. It is.000/. facilitates originators or remitters to initiate funds transfer transactions even without having a bank account. A remitter can transfer funds from any of the NEFT-enabled branches in to Nepal.Individuals. Is there any limit on the amount that could be transferred using NEFT? . Such customers have to furnish full details including complete address. such cash remittances will be restricted to a maximum of Rs. therefore. irrespective of whether the beneficiary in Nepal maintains an account with a bank branch in Nepal or not.

however.No. There is no limit – either minimum or maximum – on the amount of funds that could be transferred using NEFT. account type and account number) and the amount to be remitted. This will help the branch to refund the money to the customer in case credit could not be afforded to the beneficiary’s bank account or the transaction is rejected / returned for any reason.50. name of the bank branch where the beneficiary has an account. However. maximum amount per transaction is limited to Rs. Walk-in customers will. How does the NEFT system operate? Step-1 : An individual / firm / corporate intending to originate transfer of funds through NEFT has to fill an application form providing details of the beneficiary (like name of the beneficiary. etc.) to the branch. The application form will be available at the originating bank branch. The remitter authorizes his/her bank branch to debit his account and remit the specified amount to the beneficiary. . Step-2 : The originating bank branch prepares a message and sends the message to its pooling centre (also called the NEFT Service Centre). Some banks offer the NEFT facility even through the ATMs.for cash-based remittances and remittances to Nepal.000/. IFSC of the beneficiary bank branch. have to give their contact details (complete address and telephone number. Customers enjoying net banking facility offered by their bankers can also initiate the funds transfer request online.

The ECS is being offered in the Department of Posts in connection with payment of monthly interest under ―Monthly Income Scheme‖ (MIS). The transactions under this scheme move from a single User source (i. Under ECS. 21 centres where SBI is managing ECS on behalf of RBI and 29 other centres where PNB and other banks are managing ECS on behalf of RBI. This scheme obviates the need for issuing and handling paper instruments and thereby facilitates improved customer service by the Banks and Companies/Corporations/Government Departments effecting bulk payments.ECS: Electronic Clearance Service (ECS) The Electronic Clearance Service (ECS) scheme provides an alternative method of effecting bulk payment transactions like periodic (monthly/ quarterly/ half-yearly/ yearly) payments of interest/ salary/ pension/ commission/ dividend/ refund by Banks/Companies /Corporations /Government Departments. bank-wise remittance messages are forwarded to the destination banks through their pooling centre (NEFT Service Centre). Step-5 : The destination banks receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary customers’ accounts. the depositors have the facility of getting MIS interest automatically transferred and credited into their SB . 3. Step-4 : The Clearing Centre sorts the funds transfer transactions destination bank-wise and prepares accounting entries to receive funds from the originating banks (debit) and give the funds to the destination banks(credit).Step-3 : The pooling centre forwards the message to the NEFT Clearing Centre (operated by National Clearing Cell. Thereafter. Reserve Bank of India. The Department of Posts introduced ECS scheme on a pilot basis in Mumbai City on 9th August 2003. The Scheme is in operation at 15 centres where Reserve Bank of India manages Clearing Houses. Mumbai) to be included for the next available batch.e. Banks/Companies /Corporations /Government Departments) to a large number of Destination Account Holders (Customers/Investors).

Currently. ECS Credit enables payment of amounts towards distribution of dividend. etc. the service is available in the Department of Posts at 15 RBI locations and 21 SBI locations as given below. salary. interest. pension. TYPES OF ECS ECS (Credit) ECS Credit is used for affording credit to a large number of beneficiaries having accounts with bank branches at various locations within the jurisdiction of a ECS Centre by raising a single debit to an account of a bank (that maintains the account of the user institution).account on the due dates at the designated Bank of their choice.. of the user institution ECS (Debit) ECS Debit is used for raising debits to a large number of accounts maintained with bank branches at various locations within the jurisdiction of .

For example : If account number as appearing on the cheque book is 1234 0120 8989 9991 (16 digits) the account number for ECS purpose will be as under : .. that are periodic or repetitive in nature and payable to the user institution.a ECS Centre for single credit to an account of a bank (that maintains the account of the user institution). periodic investments in mutual funds. Precautions taken while fill up ECS mandate form Please fill up 15 digit account number excluding the fifth digit while submitting the ECS (debit) mandate form.. ECS Debit is useful for payment of telephone / electricity / water bills. in case of you are maintaining account with our CBS branch. loan instalment repayments. etc. cess / tax collections.

000 financial institutions in 209 countries and territories. Business Identifier Codes (BICs) are popularly known as "SWIFT codes".[1] The majority of international interbank messages use the SWIFT network. which must be settled by correspondent accounts that the institutions have with each other. The CEO is Gottfried Leibbrandt. Each financial institution. who were exchanging an average of over 15 million messages per day (compared to an average of 2. who is from Pakistan. must have a banking relationship by either being a bank or . As of September 2010. to exchange banking transactions. it sends payment orders. much of it for use on the SWIFTNet Network. SWIFT: SWIFT (Society for Worldwide Interbank Financial Telecommunication)provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure. Swift also sellssoftware and services to financial institutions. rather. The chairman of SWIFT is Yawar Shah. who is from the Netherlands.4 million daily messages in 1995). SWIFT does not facilitate funds transfer.[2] SWIFT transports financial messages in a highly secure way[how?] but does not hold accounts for its members and does not perform any form of clearing or settlement.3. SWIFT linked more than 9. standardized and reliable environment. and ISO 9362.

These . one in the United States and one in the Netherlands. SWIFT headquarters. It has offices around the world. SWIFT is a cooperative society under Belgian law and it is owned by its member financial institutions. History of swift SWIFT was founded in Brussels in 1973 under the leadership of its inaugural CEO Carl Reuterskiöld (1973–1983) and was supported by 239 banks in 15 countries. Dalton of Virginia in 1979. It started to establish common standards for financial transactions and a shared data processing system and worldwide communications network designed by Logica. near Brussels. etc. rules for liability. were established in 1975 and the first message was sent in 1977. Belgium.[3] Fundamental operating procedures. designed by Ricardo Bofill Taller de Arquitectura are in La Hulpe. SWIFT's first United States operating center was inaugurated by GovernorJohn N.affiliating itself with one (or more) so as to enjoy those particular business features. Operations centres The SWIFT secure messaging network is run from two redundant data centers.. SWIFT hosts an annual conference every year called SIBOS which is specifically aimed at the financial services industry.

which started operating in 2009. the other is able to handle the traffic of the complete network. In case of a failure in one of the data centers. data from European SWIFT members will no longer be mirrored to the U. Messages formatted to SWIFT standards can be read by. whether or not the message traveled over the SWIFT network. data center.[8] European zone messages are stored in the Netherlands and in a part of the Switzerland operating center. Countries outside of Europe were by default allocated to the Trans-Atlantic zone but could choose to have their messages stored in the European zone. The distributed architecture will partition messaging into two messaging zones: European and TransAtlantic. SWIFT is also registration authority (RA) for the [5] following ISO standards: ISO 9362: 1994 Banking—Banking telecommunication messages— Bank identifier codes  ISO 10383: 2003 Securities and related financial instruments—Codes for exchanges and market identification (MIC)  ISO 13616: 2003 IBAN Registry  ISO 15022: 1999 Securities—Scheme for messages (Data Field Dictionary) (replaces ISO 7775)  ISO 20022-1: 2004 and ISO 20022-2:2007 Financial services— UNIversal Financial Industry message scheme In RFC 3615 urn:swift: was defined as Uniform Resource Names (URNs) for SWIFT FIN.[6]  . SWIFT opened a third data center in Switzerland.S.centers share information in near real-time. SWIFT cooperates with international organizations for defining standards for message format and content. Trans-Atlantic zone messages are stored in the United States and in a part of the Switzerland operating center that is segregated from the European zone messages. many well-known financial processing systems.[7] Since then. and processed by. STANDARDS SWIFT has become the industry standard for syntax in financial messages.

become the point of sale and point of contact for the customer. The bank and the insurance company share the commission. an arrangement in which a bank and an insurance company form a partnership so that the insurance company can sell its products to the bank's client base. and Asia. Bank staff and tellers. Bank staff are advised and supported by the insurance company through product information. Banks can earn additional revenue by selling the insurance products. BIM allows the insurance company to maintain smaller direct sales teams as their products are sold through the bank to bank customers by bank staff and employees as well. the sale of insurance and pensions products through a bank. Latin America. MODELS IN BANCASSURANCE . This partnership arrangement can be profitable for both companies. is the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell insurance products. while insurance companies are able to expand their customer base without having to expand their sales forces or pay commissions to insurance agents or brokers.BANCASSURANCE Bancassurance. rather than an insurance salesperson. marketing campaigns and sales training. Bancassurance. Insurance policies are processed and administered by the insurance company. has proved to be an effective distribution channel in a number of countries in Europe.

In most cases. e. protection. Bank branches receive commissions for the sale of life insurance products. usually direct debit from customer's account held in that bank.g. Products are mainly medium. which is sometimes supported by specialised insurance advisers for more sophisticated products or for certain types of clients. health. New business data entry is done in the bank branches and workflows between the bank and the insurance companies are automated. Part of the commissions can be paid to branch staff as commissions or bonuses based on the achievement of sales targets. There is increasing focus on developing relationships with the large number of customers who rarely or never visit a bank branch. Banks have therefore set up networks of financial advisers authorised to sell regulated insurance products. Financial planners are typically employed by the bank or building society rather than the life company and usually receive a basic salary plus a bonus element based on a combination of factors including sales volumes. Premium is usually collected by the bank. Following the reform of the polarization regime. In particular. asset management is done by the bank’s asset manag ement subsidiary. ADVANTAGES OF BANCASSURANCE . persistency. They are designed specifically for bancassurance channels to meet the needs of branch advisers in terms of simplicity and similarity with banking products. these products often have a low-risk insurance component. including through mailings and telesales. or non-life products.. Insurance products are distributed by branch staff.'Integrated models' is insurance activity deeply integrated with bank's processes. banks will have the possibility to become multi-tied distributors offering a range of products from different providers.They usually operate as tied agents and sell exclusively the products manufactured by the bank’s in-house insurance company or its third-party provider(s). and product mix.and long-term tax-advantaged investment products. A proactive approach is used to generate leads for the financial advisers from the customer base. Life insurance products are fully integrated in the bank’s range of savings and investment products and the trend is for branch staff to sell a growing number of insurance products that are becoming farther removed from its core business. This has the potential to strengthen the position of banc assurers by allowing them to meet their customers’ needs . 'Non-integrated models' – The sale of life insurance products by branch staff has been limited by regulatory constraints since most investment-based products can only be sold by authorised financial advisers who have obtained a minimum qualification.

Mutualization within the customer base favors maximum access to protection (by mutualizing risks) and savings (by mutualizing costs). Advantages to customers Ease of access Customers have a natural and frequent level of contact with their bank. TO BANK. they enjoy the further benefit of being looked after as part of the wider customer care relationship. pensions. auto loans. asset building. etc. It is equally natural that when they visit their bank. Customers are therefore able to buy a range of financial products from a single point of contact capable of covering all their needs.TO CUSTOMERS. Simplicity The insurance products sold over-the-counter by banks have been specially developed to be simple to understand and simple to sell.) and personal protection products. AND TO INSURANCE COMPANY. . but also loan protection products (for home loans. mortgage protection and protection against unforeseen life events. including precautionary savings. Comprehensive advice Bancassurance dovetails perfectly with the range of retail banking services by offering bank customers not only savings products (like life insurance and pensions). they should find straightforward over-the-counter responses to all their financial needs. Their rate structures are also designed for maximum customer accessibility. In the event of claim.

because the insurer’s agency structure there is limited. sex. • Demographic: the bank’s clients may form a very different group (e.g. e. purchasing habits) to the one which the insurer has previously courted. .Attractive rates Selling insurance products via retail banking networks usually has the effect of reducing distribution costs. by age. For example.g. Possible reasons: • Geographic: the bank’s clients are in a territory where the insurer has only a limited presence (if any). Products can therefore be marketed at rates that are more attractive to consumers. an insurer who previously concentrated on high net worth individuals (“HNWIs”) can now gain access to a wider range of customers who will not all be HNWIs. because marketing expenses can be offset against more extensive ranges of banking products and greater volumes of customers. advantages to insurance companies Source of new business – previously unreached clients: the bank’s client base may well be “virgin territory” for the insurance company and so a new source of business. Security The solvency of the insurer selected by the bank and the legal guarantee of the institutional intermediary are both reassuring factors for end-user customers.

This in turn allows the insurer to improve profitability and to price future products with narrower margins. from both existing and new policyholders. i.e. sales costs incurred under existing channels may force premium rates for a product to be uncompetitive. The costs via the bancassurance channel may be low enough to make it feasible. For example. so the product is not sold. Combining the bancassurer’s business with the other business of the insurer can produce economies of scale in administration costs (including capital expenditure). because of the fact that it can offer a wider range of services than before. – Administration – economies of scale: the insurance company can offer to carry out the adminstration activities of the bancassurer’s business. it can give its customers access to banking as well as to insurance services. if for example the bancassurer is a separate company. – Source of new business – products not otherwise feasible: the economics of the bancassurance operation may allow the insurer to offer products which are not feasible through the insurer’s existing channels.– Source of new business – wider range of products (including banking products): the insurance company hopes to attract further business. . which helps to make the insurer’s products more competitive.

as briefly outlined below: • Increased income generated. for both bank and insurer there is a great opportunity to learn and to make improvements in their own operation. as they are now also spread .Finally. The benefit comes when either company can implement changes as a result of the learning process. Each gets exposure to the other’s distinctive management styles. against a background of shrinking interest margins. advantages to bank The main reasons why banks have decided to enter the insurance industry area are the following: – Intense competition between banks. Financial benefits to a bank’s performance can flow in a number of ways. has led to an increase in the administrative and marketing costs and limited the profit margins of the traditional banking products. its objectives and measures and the pressures which it can exert and which it feels. in the form of commissions and/or profits from the business (depending upon the relationship) • Reduction of the effect of the bank’s fixed costs. New products could substantially enhance the profitability and increase productivity.

• Opportunity to increase the productivity of staff. .over the life insurance relationship. as they now have the chance to offer a wider range of services to clients.

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