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INTRODUCTION

Electronic banking is an umbrella term for the process by which a customer may perform
banking transactions electronically without visiting any institution. The following terms all
refer to one form or another of electronic banking: personal computer (PC) banking, Internet
banking, virtual banking, online banking, home banking, remote electronic banking, and
Phone Banking.

E-banking nowadays is the one of the fastest developing trends in Indian banking and is
poised to take the banking sector a notch higher.. With the use of advertising, people are now
motivated to use E-banking because again, it eliminates the hassle encountered when using
the old process of banking. The advancement of electronic banking or commonly known as e-
banking, began with the use of automatic teller machines (ATMs) and has included telephone
banking, direct bill payment, electronic fund transfer, online banking and other electronic
transactions. For many people, they believe that the e-banking will go to the direction of
mobile banking. Also, some people believe that online banking will be the most popular
method in the future. In order for users/customers to use their banks online services, they
need to have a personal computer and an Internet connection. Also, their personal computers
will be their assistant who will assist them in their transactions and services. Examples of
those transactions are paying bills, attaining information about accounts and loans, and etc.

E-Banking (an abbreviation for electronic banking) is an umbrella term for the process by
which a customer may perform banking transactions electronically without visiting a brick-and-
mortar institution. In simple terms, it does not involve any physical exchange of money, but it’s
all done electronically, from one account to another, using the internet. From a personal
computer, one can access bank account information, and perform many banking functions,
like transferring money, making a loan payment. Electronic banking, also known as electronic
fund transfer (EFT), uses computer and electronic technology as a substitute for checks and
other paper transactions.

In simple words, the systems that enable financial institution customers, individuals or
businesses, to access accounts, transact business, or obtain information on financial products
and services through a public or private network, including the Internet i.e. PC, ATM, Online
banking, etc. It means any user with a personal computer and a browser can get connected to
his bank -s website to perform any of the virtual banking functions. In Internet banking system
the bank has a centralized database that is web-enabled. All the services that the bank has
permitted on the internet are displayed in menu. Any service can be selected and further
interaction is dictated by the nature of service.

and individuals and their banking institutions. personal digital assistant. organizations. such as a PC. Once the branch offices of bank are interconnected through terrestrial or satellite links. . to access accounts. ATM. transact business. It would a borderless entity permitting anytime. E-banking is the term that describes all transactions that take place among companies. there would be no physical identity for any branch. DEFINITION OF E-BANKING: E-banking is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic interactive communication channels. anywhere and anyhow banking. including the Internet. The traditional branch model of bank is now giving place to an alternative delivery channels with ATM network. It includes the systems that enable financial institution customers. or obtain information on financial products and services through a public or private network. individuals or businesses. Customers access e-banking services using an intelligent electronic device. Touch tone telephone.

Rangarajan which emphasized that settlement operation must be computerized in the clearing houses of RBI in Bhubaneshwar.R. internet and networking. Patna and Thiruvananthapuram. Reserve Bank of India. The use of the modern innovation and computerization of the banking sector of India has increased many fold after the economic liberalization of 1991 as the country's banking sector has been exposed to the world's market. Guwahati.MICR. The major recommendations of this committee were introducing MICR (Magnetic Ink Character Recognition) Technology in all the banks in the metropolis in India. Committee on Technology Issues relating to Payments System. Reserve Bank of India.The committee submitted its reports in 1989 and computerisation began form 1993 with the settlement between IBA and bank employees' association. The RBI in 1984 formed Committee on Mechanisation in the Banking Industry (1984) whose chairman was Dr C Rangarajan. Electronic banking refers to DOING BANKING by using technologies like computers. The use of computers had led to introduction of online banking in India.ADAPTATION OF E-BANKING IN INDIA: The IT revolution had a great impact in the Indian banking system. Executive Director. This provided use of standardized cheque forms and encoders.EFT so as to increase efficiency. with the BANKNET communications network as its carrier. Chennai and MICR should be made Operational. It emphasized on Electronic Funds Transfer (EFT) system.Delhi. . It also said that MICR clearing should be set up in all branches of all banks with more than 100 branches. The Indian banks were finding it difficult to compete with the international banks in terms of the customer service without the use of the information technology and computers. productivity and transparency in the transaction. It also suggested modalities for implementing on-line banking . Jaipur. C.It further stated that there should be National Clearing of inter-city cheques at Kolkata. In 1988. It also focused on computerisation of branches and increasing connectivity among branches through computers. Deputy Governor.Mumbai. In 1994. the RBI set up Committee on Computerisation in Banks (1988) headed by Dr. quick service. Cheque Clearing and Securities Settlement in the Banking Industry (1994 was set up with chairman Shri WS Saraf. Committee for proposing Legislation On Electronic Funds Transfer and other Electronic Payments (1995) emphasized on EFT system.

Easy Loans. Banking from anywhere: Don’t worry if you are sitting in Middle East country and want to check your account in New York. E-Banking certainly leaves no room for blaming the distances. just by filling a small form. anytime. You can access all the details about your account sitting at home or at any distant location. What makes it more interesting is its flexibility. E-Banking provides real time banking to the customers. which makes it smart and banking system of today and tomorrow. High Performance and flexibility: E-Banking is a high performance system satisfying its customers for their every banking related queries and desires. Password Based Encryption (PBE). Banking is using everyday advancements in technology. credit cards has eased you from hatred. debit cards. You get all the relevant information about your account instantly.E-banking has certain features which give it edge over traditional banking. 24/7 banking: E-banking has removed the time constraint from banking. Your banks provide you instant loans. a small chip card has replaced piles of cash. This makes E-Banking more reliable. Certain web sites provide facility of online loaning .You can get instant loan there. Any malfunctioning or any inconsistency in your account can be traced easily. Instant Loans: Use of smart cards. Smart banking is ready to serve you anywhere. Real time banking: Unlike traditional banking which suffers from time consuming procedures.banking is more immune to security and safety related problems. Now you can withdraw cash or get any banking facility anytime. SERVICES THROUGH E-BANKING: . No need to keep cash with you at all. Safe and secure Banking: Electronic. electronic signatures and electronic tokens gives a high level of security. Secure Socket Layer (SSL). time consuming loaning procedures.

The transfer will take place in a day or so. whereas in a traditional method. Nowadays. . most leading banks offer both online banking and demat account. Customers can send money anywhere in India. After login to the account. mobile phone. ICICI Bank says that online bill payment service and fund transfer facility have been their most popular online services. across the country. customers need to mention the payees’ account number. it takes about three working days. then you need to sign a special form. his bank and the branch. credit card and insurance premium bills as each bank has tie-ups with various utility companies. Recharging your prepaid phone: Now customers can just top-up the prepaid mobile cards by logging in to Internet banking. Fund transfer: Customers can transfer any amount from one account to another of the same or any another bank. automatically. Investing through Internet banking: You can now open an FD online through funds transfer. entering the mobile number and the amount for recharge. Shopping. By just selecting the operator's name. the phone is again back in action within few minutes. However if you have your demat account with independent share brokers. some banks even give you the facility to purchase mutual funds directly from the online banking system. service providers and insurance companies. the bank does not charge customers for online bill payment.Bill payment service: Customers can facilitate payment of electricity and telephone bills. all one need to do is complete a simple one-time registration for each biller. Generally. To pay the bills. Customers can also set up standing instructions online to pay their recurring bills. this will link your two accounts. Now investors with interlinked demat account and bank account can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited in their demat account. Moreover.

customer can shop online and the payment is also made conveniently through the account.With a range of all kind of products. But the facility is limited to Mumbai. Surat and Pune. If the customer lose credit card. Railway pass: This is something that would interest all the aam janta. Indian Railways has tied up with ICICI bank and they can now make railway passes for local trains online. Thane. Credit card customers: With Internet banking. Customer can also buy railway and air tickets through Internet banking. . Nashik. they can also report lost card online. The pass will be delivered to the customer’s doorstep. customers can not only pay their credit card bills online but also get a loan on their cards.

but operate like cash or a personal check. The chips in these cards are capable of many kinds of transactions. The microprocessor is under a contact pad on one side of the card. a person could make purchases from their credit account. With sufficient numbers of hunting lines made available. . customer call will hardly fail. Think of the microprocessor as replacing the usual magnetic stripe present on a credit card or debit card. debit account or from a stored account value that's reload able. For example. The enhanced memory and processing capacity of the smart card is many times that of traditional magnetic-stripe cards and can accommodate several different applications on a single card DEBIT CARD: Debit cards are also known as check cards. While a credit card is a way to "pay later.VARIOUS FORMS OF E-BANKING:  AUTOMATED TELLER MACHINES (ATM): An automated teller machine (ATM) is an electronic computerized telecommunications device that allows a financial institution's customers to directly use a secure method of communication to access their bank accounts. entire banking can be done through Interactive Voice Response (IVR) system." When you use a debit card. The host computer and card reader actually "talk" to the microprocessor. the customer can access his account and by following the user-friendly menu. TELE BANKING: By dialing the given Telebanking number through a landline or a mobile from anywhere. in order to make cash withdrawals (or cash advances using a credit card) and check their account balances without the need for a human bank teller ." a debit card is a way to "pay now. The microprocessor on the smart card is there for security. SMART CARD: A smart card usually contains an embedded 8-bit microprocessor (a kind of computer chip). The microprocessor enforces access to the data on the card. Debit cards look like credit cards or ATM (automated teller machine) cards. your money is quickly deducted from your checking or savings account. Debit cards are different from credit cards.

Mobile phones are playing great role in Indian banking. A versatile multifunctional. The issuing bank collects from the cardholder. The retailer hands over the credit card slips to its own bank for payment. The clearing system presents each slip for payment to the bank that issued the card on which it was written.  It can now be used in place of paper cheques to do any and all remote transactions.  Mobile Banking: Mobile banking comes in as a part of the banks initiative to offer multiple channels banking providing convenience for its customer. free service that is accessible and viewable on the monitor of mobile phone. They are being used both as banking and other channels. All of these exchanges are now done by wire. . less a discount. The retailer's bank then passes the slips on to a clearing system.  CREDIT CARDS: The credit card is usually a four-party card which involves two banks in each transaction.  E-CHEQUE: An E-Cheque is the electronic version or representation of paper cheque. The Information and Legal Framework on the E-Cheque is the same as that of the paper cheque. the cardholder's bank (the issuer of the card) and the retailer's bank.both directly and indirectly. typically about 2-3%.

In other words. EFT Electronic Fund Transfer is the new facility provided to the Exporters for submitting the license fee through the Internet without visiting the Bank for the payment. State Bank of India. The RTGS system is the fastest possible interbank money transfer facility available through secure banking channels in India. this is an electronic payment processing environment wherein transactions are settled as soon as they are processed. HDFC. Punjab National Bank. Bank of India. Funds are transferred to the credit account with the other participating Bank using RBI's NEFT service. The facility shall be available only for electronically filed applications. UTI. Currently Electronic payment can be made through following banks: ICICI.  Inter Bank Transfer: Inter Bank Transfer is a special service that allows you to transfer funds electronically to accounts in other banks in India through: NEFT The acronym “NEFT” stands for National Electronic Funds Transfer. RTGS The acronym “RTGS” stands for Real Time Gross Settlement. . IDBI. This procedure is being proposed to facilitate payments through electronic means. RBI acts as the service provider and transfers the credit to the other bank's account. The RTGS system facilitates transfer of funds from accounts in one bank to another on a “real time” and on “gross settlement” basis. and Union Bank of India.

and pay bills electronically. transmitting the banking requests to a host computer and receiving it. There are some firms such as Wingspan and USA BancShares. directing the request either for handling by a customer service representative or to a queue for processing by an automated system. The method of the intervention includes the steps of inputting a customer banking request from among a menu of banking requests at a remote personnel computer. Consumers can fill out and submit electronically all necessary information needed to open a checking.  INTERNET BANKING: It helps you handle many banking transactions via your personal computer. When the application is submitted.com that enable customers to digitally sign their applications. you may use your computer to view your account balance. For instance. No need to waste time driving to a local branch to begin a banking relationship. The system is integrated with the host computer system of the bank so that the remote banking customer can access other automated services of the bank. Facilities through Internet banking  Online applications Consumers can begin their banking relationship with an online application. request transfers between accounts. identifying the type of customer banking request received.  Account Access . automatic logging of the service request. Some firms like American Express enable customers applying for an account to fund their new account electronically via a credit card or cheque from another banking institution. comparing the received request to a stored table of request types. Internet banking system is a method in which a personal computer is connected by a network service provider directly to a host computer system of a bank such that customer service requests can be processed automatically without need for intervention by customer service representatives. The system is capable of distinguishing between those customer service requests which are capable of automated fulfilment and those requests which require handling by a customer service representative. the bank will mail a signature card for its records and request one to mail or wire your initial funds. savings account or even a fixed deposit. each of the request types having an attribute to indicate whether the request type is capable of being fulfilled by a customer service representative or by an automated system and depending upon the attribute.

deposits.  Export your banking data Most banks offering the management interface also allow easy downloading of financial information into files that can be imported into Microsoft Money and Intuit's Quicken. Some banks have chosen to show only 30-45 days. This can be especially true as customer’s transition to online banking and need help learning the features.  Loan status and credit card account information . choose a mortgage. Offering live chat assistance is the exceptional level. savings.  24/7 customer service Although it is easy to yield to the temptation of allowing the Internet to replace expensive branch personnel and overhead. including cleared checks. including checking.  Interactive guides & tools to help selection of proper product Although online. Customers no longer have to hold on to the cleared checks. ATM transactions and balances as of previous day’s activities. Account access enables customers to view most recent activity on accounts. many banks have found that an customer service staff ready at any hour is well worth the expense. adds complexity to the programming it also serves the bank by assisting potential customers in choosing new products or services. interactive guides through a bank's products. loans and credit cards. Interactive Tools to design a savings plan.Internet banking customers now have the ability to view their accounts online. since their bank will store them for them online.  Access to old transactions Choices made in designing the Internet interface may include how much history will be available online.  Categorize transactions and produce reports Functionality is king as online banking customers using these features enjoy a Web interface that delivers the utility of a money management software application. Offering telephone and email a contact is a basic level of service. while others offer a history of six months or a year. No need to wait for your monthly statements or wait in queue for the next available customer service representative. obtain online insurance quotes all tied to applications These tools help remove some of the mystery involved in so many account options and costs.

Now a customer can shop worldwide without any need of carrying paper money with him. Convenience is popular and if a customer visits his or her online account frequently it only makes sense to allow the ability to reorder checks or perform certain other commands through the same interface. Benefits to Banking Industry: Banking industry has also received numerous benefits due to growth of E-Banking infrastructure. ADVANTAGES OF E-BANKING: Benefits to Consumers: General consumers have been significantly affected in a positive manner by E-banking. • Customer’s account is extremely accesses able with an online account. stop payment. • Customer can withdraw can at any time through ATMs that are now widely available throughout the country.  Online forms for ordering checks. There are highlighted below: • The growth of E-banking has greatly helped the banks in controlling their overheads and .Bank customers are familiar with reviewing their checking account information. • The Growth of credit card usage also owes greatly to E-banking. is removing a down side to online banking. Access to as many accounts held at the bank seems to be the goal. etc. • All services that are usually available from the local bank can be found on a single website. Many of the ordinary tasks have now been fully automated resulting in greater ease and comfort. balance inquiry at these ATMs • Through Internet Banking customer can operate his account while sitting in his office or home. • Banks are available 24 hours a day. • Besides withdrawing cash customers can also have mini banks statements. again. but many banks are adding the ability to look at one's loan status and credit card information as well. seven days a week and they are only a mouse click away. Now there is no need to stand in long queues outside banks for his purpose.  View digital copies of checks This. There is no need to go to the bank in person for such matter. • E banking has also greatly helped in payment of utility bill. It makes images of checks available as replacement for sending out cancelled checks or sheets of printed check images.

thus helping them to move the paper less environment. It has also led to expansion of the banking industry. Further E-banking has helped banks in better monitoring of their customer base. reduced delivery time. Besides all this E-banking has also helped in documentation of the economic activity of the masses. As e banking provide opportunity to banking sector to enlarge their customer base. better time usage and enhanced control. Besides many tangible benefit in form of reduction if cost. e-banking electronically controlled and thoroughly monitored environment discourage many illegal and illegitimate practices associated with banking industry like money laundering. are far better than any branch network. • The rise of E-banking has made banks more competitive. such as the Internet. . productivity and prosperity. increased efficiency. reduced wastage. frauds and embezzlements. opening of new avenues for banking operations. • Electronic banking has also helped bank in proper documentation of their records and transactions. • The reach and delivery capabilities of computer networks.operating cost • Many repetitive and tedious tasks have now been fully automated resulting in greater efficiency. • Electronic banking has greatly helped the banking industry to reduce paper work. This it is a useful tool in the hand of the bank to device suitable commercial packages that are in conformity with customer needs. a consequence to increase the of volume of credit creation which results in better economic condition. Benefits to General Economy: Electronic Banking as already stated has greatly serviced both the general public and the banking industry. This has resulted in creation of a better enabling environment that supports growth.

While fraud prevention measures are taken very seriously at banking institutions. loans. Automatic Debits Automatic debits are offered as convenience to banking and loan customers. Electronic banking is a popular form of banking since the Internet became widespread. While this convenience does save a stamp and a hassle. . credit cards. These debits are automatically withdrawn from your bank and paid to the vendor or lender.DISADVANTAGES/ISSUES RELATED TO E-BANKING: Electronic banking is convenient and often quite safe. auto loans and investment products. The company then has 30 days to respond to your enquiry and another 60 days to resolve and correct the issue. but problems do exist. They do reserve the right to ask for supporting documentation to agree with the inaccuracy of the issue. not your bank. or credit card accounts. This can lead to unsolicited offers on mortgages. there are still some issues in electronic banking that cause unrest and frustration. These transaction problems can be caused by human error. In addition. but they're often as a result of technical glitches or lost information. savings. Consumers have 60 days to contact their financial institution and notify them of the error. it can make mistakes. Customers often need to request a halting of this process in writing at least seven days in advance. Privacy Concerns Sometimes electronic banking customers find themselves on marketing lists for other financial institutions. you must work out a refund with the service provider. Electronic banking occurs at the individual. Transaction Errors Transaction errors can occur in your checking. Most electronic banks now have privacy agreements that allow customers to opt in or out of unsolicited offers. if you use an automatic debit to pay for a recurring service and the service suddenly is unsatisfactory. commercial and investment levels.

The banks should also provide their latest published financial results over the net.  Banks should designate a network and database administrator with clearly defined roles as indicated in the Group’s report.  Banks must make mandatory disclosures of risks. The banks should review their security infrastructure and security policies regularly and optimize them in the light of their own experiences and changing technologies. etc. utilities. The backed- up data should be periodically tested.  Banks should acquire tools for monitoring systems and the networks against intrusions and attacks. libraries. These tools should be used regularly to avoid security breaches. responsibilities and liabilities of the customers in doing business through Internet through a disclosure template. telecommunication lines.  All applications of banks should have proper record keeping facilities for legal purposes.  All applications of banks should have proper record keeping facilities for legal purposes.  Banks should introduce logical access controls to data. Therefore.  Banks should have proper infrastructure and schedules for backing up data. systems. should obtain prior approval from RBI. passwords. application software. accounts should be opened only after proper introduction and physical verification of the identity of the customer. GUIDLINES BY RBI FOR BANKS REGARDING E-BANKING:  All banks. .  Banks should have a security policy duly approved by the Board of Directors.  Considering the legal position prevalent. there is an obligation on the part of banks not only to establish the identity but also to make enquiries about integrity and reputation of the prospective customer. Logical access control techniques may include user-ids. even though request for opening account can be accepted over Internet. who propose to offer transactional services on the Internet. and smart cards. system software.

Internet has created plenty of opportunities for players in the banking sector.CONCLUSTION: E-banking has become a necessary survival weapon and is fundamentally changing the banking industry worldwide. Banks need to have an effective disaster recovery plan along with comprehensive risk management tool is significant not only to the bank but also to the banking system as a whole. security risk. Banks have traditionally been in the forefront of harnessing technology to improve product and efficiency. it is associated with risks such as reputation risk. The rise of E-banking is redefining business relationships and the most successful banks will be those that can truly strengthen their relationship with their customers. technology has brought about superior products and channel management with a special focus on customer relationship. No country today has a choice whether to implement E-banking or not given the global and competitive nature of the economy. being made available to retail and wholesale customer through an electronic distribution channel. The major driving force behind the rapid spread of e-banking is its acceptance as an extremely cost effective delivery channel. The incremental costs incurred for expansion and diversification are also more beneficial. While the new entrants have the advantage of latest technology. By merely putting existing service online won’t help the banks in holding their customer close. Instead. the click of the mouse offers customers banking services at a much lower cost and also empowers them with unprecedented freedom in choosing vendors for their financial service needs. Technology is altering the relationships between banks and its internal and external customers. Banks have come to realize that survival in the new e-economy depends on delivering some or all of their banking services on the Internet while continuing to support their traditional infrastructure. Indian banks are now providing E- Banking services in greater amount but they are lacking because of modern technology up gradation which is adopted continually by overseas banks. Today. But on the flipside. Technology innovation and fierce competition among existing banks have enable a wide array of banking products and services. Technology has also eroded the entry barriers faced by many industries. collectively referred to as e-banking. which are unique to e- banking. cross-border risk and strategic risk. . the good-will of the established banks gives them a special opportunity to lead the online world. banks must learn to capitalize their customer’s different online financial-services relationships. With one time investment. E-banking in India is not fully transformed sector until now but due to increase in number of online users in India it will be one day a fully transformed. The invasion of banking by technology has created an information age and commoditization of banking services.

bankersonline.BIBLIOGRAPHY: WEBSITES:  www.rbidocs.banknetindia.acadjournal.com  www.worldjute.com  www.org.com  WWW. NEWSPAPERS ARTICLES: The Economics Times .rbi.com  www.