FINAL PROJECT REPORT

"Technology in Banking Seclorfl

THE PROJECT SUBMITTED TO THE UNIVERSITY OF

t\fID1BAI

IN PARTIAL FULFILLl\iENT OF THE REQULR£l\t£NTFO R

THE AWARD OF DEGREE OF
t\1AST£R OF l\L\NAGD1ENT STUDIES (l\fl\1S)

BY

PARLE TILAK VIDYALAYA ASSOClATION' I NSTITITTE OF

l\1ANAGDt£NT
VILE PARLE (E),l\1m1BAl -400 057.
2013-2014

1
 CERTIFICATE

I Or.Rup<Ull Tow:>ri hottby cenify that 1t Arjun Govando.MMS S1uden1of Parle

Ttlak Vodyalaya Asso<oauon's lnslinne of Management. has compleicd a pn>JCC1
udcd 'Ttchnol ot:Y In BankingStctor 'in lhe academic year 2014. Tho """' of
the studcnl as original and the information iocluded in the project as 1ruc to 1he best
of my knowledge.

Signatureof Gui<le with Date Signature 01'1hc Menll>er

Guide:Or. Rup:un Tiw:tri Boord PTVA

2
DECl.A RATION:

I, Arjun J111yvun1Qo\'andc •of Parle·rLlak:V1dyallrya Assoc&at1on's ln5t1tUlc of lan:tpmt,

punuina MtS (Scn1 IV) hcrrby declare that I ha1ie complc1cd a project on TechnolOJY in
B:wkina Sector for the academic ) ar 2013-14.

The report work '" oripul and tbe infonnatioofd.ua iadwkd m the rqiotl 1!1 U\IC 10 tht brsl o(
my mct-kd&c.Out: CRdil: is altl!ldtdoo the •--art « liltrawW ' by ttldorslcg
11&a lbe 81bbopllpby as prt pttscribed funna

3
 ACKNOWLEDGEl\fENT

AcknoWlcd,;:i11; th«! wide p.tnorama of people who helped und 1n01iv1ucd 1ne 10 oon1p1ctc
this prujcc•.I am 1r1ucful in pre.'iCllting to you the rare shades o( n111rkc11n1tand 1cdtnolocy by
documc m.1.n1the project ·rECll()L()(;\' IN 8."-i KIX(;SECTOK '

I am utrc:mc.ly dunkful to my oollqc guide. Dr.Rupam Tiwatl.Senior Catt fxoalry.

(PTVA "S
lnslolUI< of Vol< l'Wlc). "ila!c adl•'C co-opcni""' It p..i-. during lb<
COUOC" of c:omplcbon ol pn>jcc1 .-ut bdped mt fomw.Lllt:.mld"uae llld impkmaa m pnaiell
_ _,, ""' fw<b lh< pRljoa ........tully.

Lau.I)'. 1fed oblip!d llOUpttSS my gr:atduJ Chants IO my col)(- profc-.uon and

••ho
Famaly. me all the possibk help in the completion ot thl' PIOJCCC.

4
 TA BLE OF CONTENTS

PAOE
SR. NO TOPIC
NUMBE R

I INTRODUCTION

2 EXECUTIVE SUMMARY

s LITERATURE REV1£W

6 OBJ ECTIVES & NEED FOR THE STUDY

7 RESEARCH METHOOOLOOY

ANALYSIS OF DATA. FINDINGS ANO

8
INTERPRETATIONS

9 RECOMMENDATIONS & SUGGESTIONS

10 Ll11TATIONS OFTHE PROJECTS

II CONC1USJON

12 BIBLIOG RAPHY,REFERENCES & WEBSITES

s
 INTRODUCTION

Ad\1cn1 of i.nronn:idon 1cchnology nnd cybcr devices heralded ia new wcwld ond hough!
lrcmcndou:!l ch:anc' In nll jCCtors or1hc economy. Banking sector alway11 11tand 111lhe rorcrron1 of
lhc economy and tnnov111ion has p:ulUUOUIW concern 10 the applk-<111on or the modem 1eclln cal
devices. l1ectron1e dch\•cry e:h3nnds., ATM's. \•ar11ety o( cards, Vl'Cb ba.'M:d bankln;and mobtlc:
b.;mkiQ& 11te few o( 1bc outcomes or the- pooess of autom:lbon and compu1cn111kin 1n bGnt:ing
sector. Tcctl'ucal .,novinsons., INlom3lJOn and LP bacd nrM-vrk ha,c ompl1fiied hlnk's
productivity MCI d'fidmt m:m Jold. This bas funbl!r 'cd to the D>O"\C from bnck baating to
oonccpC ol "Cid bcar*1'. The ptt:Sdll p.3pCI' ancmpcs &o anai)W the i!pplaclltlOM ol ff i.a
8aabnJ Sector.'fhe S-ptt drscnC.lcs tbl!' C-."Oforice of £T ID ba±lll lit'CIOI'. 11lc' p.lPCf" aho
- IO -JK d>e ol>oa<ks ...S risbC>p»<d W. oo d>e oppi- ol lbo• booa
IO lbc sector.

IDfonnlDOO •echllok>s.Y n; onr of the mos1 importaal r.o.ht1kln (cs lhe tr'Mfi:fon'Mlion of tht-
lndl.an banb:IJ i.ndu!iiUY in tmnS of ils tnUlS3Ctioos p-occssan& u •'C-1 u for 11tioui otbt:r
LDtcmal t.)'MenU and ptottssa lbt,·arious tttbnoJog.cal pllllform11 u by bonl:s for the
conduct Of tbCJf di)' 10 day optrarioru.. thcit maontt O( rq>Orting and the ·ay in which inLCtb:ant
lransaction!I and clclll'ins; is affcacd tuts "Ol\'Cd sub.-.tantiaJly O\-O-1hc )'CaN..

11lC tcchnOl01lcal evolution of the lndi.an banking industry tui.11 been lnriCI)' dirtt1cd by lhe
\1arious cc>n1nu11ces K-1 up by the RBI and lhe government o( India to rc\1icw the ln1plemcnt:11ion
of' tcchnoloaJc11I chanac. No mnjor brenkthmug.h io technology in1pk1ncn1nlioi1 wns achie'o'td by
the i.nd lry till the car1y 80s. though some working groups wKI commincc• made gray
rcfcrcoccll 10 the need for mech:tniu1ion of some banking proce!isCll. Th"' wu la11cly due 10 the
sti r RSc by the 'tt'/ wong bank mtplo)'ttS unions. The c;wly 198<¥ were iMUUmenuJ in
lhc lDtrodl.ICl.aon or mcctunisatioo and compurttisatioo in lndum ball. nu, .--u 1hc period
•rbto bouUJ u well as thr RBI ..-till 'ttY slow oo mcc cattfully avoid1ns the use of
•compulCIS' IO avoid f'CSl5Unt'C from cmplO)u uruoos. HoYt'C'\-cr, du "•lb: cn11C!l pmod

.......
8dla& the KCbratcr •ilicb lird '° the slow aod suady IDO'"C o- brJc: tC2lc ttthnology

•
 EXECUTIVE SUMMARY

Indian bllnlcini 11Cctor opened its door for computcri npplic11Lions ond dc\'clopmcn1 of
con1n1wdc11tion network basically due to the sheer compulsion and ncccs!iity 10 cope up dt!nund
from il$ c:uuomcn rmm different countries. Increasing number or bank bninchel.. ;rowing
volun'IC of bomkln; opcnuiom;.problems inherent in munua.I sysacm ud 1ncl'('a<ilni inctdcnce of
fnMKb m;,adc iiimpcniti\'C for banks to signal:ise favourublc response for c:hc need or hour.During:
lhc rin;t pblde or lntroduietion or compultt applic«ioos in bakina. :.rouod 4776 Adnncrd Ln·el
Po5&Jn& t\1d1ncs (AU) .'Id 233 m..imcom.pottB ba\T bttD amtalkd. 111 1993.rmpio)ttS of
banb .Jl.pcd "' wim imm:emc:at rq;anliDg Cl0Cllp1kru:IUCl8 or bulbfta •odustry u.
lada.a. c bndrd by c. R:mg3njm b:a\ ll''"CD tw•-.t rrparts IU'Oftgly
ttCOPMDC"OChftl 1bc- rr mppliorions illh:mting bnsjorss la 199-1 RCfa'Vt" 8alllt ol lftdii (RB[)
comtlMcd •('OmnUntc b"tttlwtic:sl up ptcion ol the baaks... The COlnftlllltt worbd with the
ol dsfTcrmt membtts fn:m b:mb.. tedulical &aSUhlDOM wl pctnnlml.. Based «i
the RCOmllkftdatiQDs oi thr oommintt the lnsbtu1t for Or\ dopmcnt and in Baokirt;
Tcchno10£y (IDR.BT)•";U cst.abtishtd in 1996.The c:orc rcscllda •inJ of 1he 1niititutc indu&
finmc1al ncswort. application ardlitttrurc. "''Cb based tochnology.paymcm i")'tilCm. multimedia..
data minu1a. da •·11CChousins and risk lll3llagcme:ot. In 1999thecolWborM1vc efforts of tDRBT
and RBI developed a ,;mcllitc bs...00 wide :ll"Ca nt1"'ork known all Indian Fln!Lncial Nerwork
(lNFlNET). The nct.....ork is rcsLric( \'C to be used by the bWlk.11; and financbl lrwilu1ioos only.
Prc.-;ently. the nc1wort coosisis of ovc::r 950 Very Snutll Aperture Tcnni1uil (VSAT•) located in
127 cities of the country and wiliscs one ruu tmnspondcr on lNSAT 311. RcaJisins the
lniportance of payn1cn1 sys1em RBI coostituttd nn opcralion:al group and pcan1 system
advill<Jcy commiucc in 2000. The prime task assigoed 10 the comnuncc wiu 10 develop n.n
effic1en1 sand wt:ll-intca:mtod system ••bich could sen·c the purpose o( 1ime: Gross
Sdtlc:tnC'n&.

7
 LITERATURE REVIE\V

1llC followina Mudicii on lnrcwnl:1tion cechnology in banking sectcw. rela1cd d1rtell)' or indirttdy
h:a\'C been revlcwcd in ibis chapter. Dr. Satish 1·anaji llbo:"11lt. Dr. B.S S.awant,
..rtc•11olu1,lt•I l)t\'f ll)pmrnts in Indian Banking Stf tor" : Thi!I paper 1alk iabou11 role or
bwik:ina: !IC.'Ctor ln 1hc: dc\·cloplucn1 of lnd:ia.n Economy. So tKmb need 10 opci01U1Jly lcVtta
t«hoc*>&)' 10 1ncrn pcncuution. impl'O\·c lheir productivity und c01ck':ncy. dcli\•er COSI ·
cffccti,c prodl.tcU and rvitts., JWoridc faster. Eff1Cicnt and con,crucn1 ca\l.omcr SirtVi« and
thereby. coouibucc 10 ovtt211 J,TW"tb and dt-\lopmt:n& m the QOUM:ty. It hiihlip tbs
)' allow'\ tnM.aaioM to uU pl3a' rasaer and offer uap;nlk:ICClft\'dkl':tt lhrou:gb
,....,.,., dcli\'Cf)' cNnat:hi. This piptr" also Wies lhout .....,. .I btc lllClt. Cbrqut
tt-.cbOe t:ml. RTGS. "EFT ftC. Dr.V.S .}laopak, ls.J,\' ll.r.A.D lt.andiT
• E-CJL\I 111 tDdiaa Banonc s..u.r.GotMa Ranrdl Thoup. :n.,_..,..,_.,..,..-
kdmoq.)'. people and cusaomtt wt the tbrtt c-lnnmcs m •iudl b1Q,n the ol tmiking
10 thefut cblnpls economic' imnmem lbt' utimllr performance o( a bant depeock tJpoD
the sx111fattt0ft of 1u CWitOtlletS.IA me emerging compctib\-c .and tical drivn era. b:mts
ha''C 10 JUi,·c hard for tttainin;, and enlarging their customtt base:.E-C'IU1 i.11he I tiuu..'OC'd
in the wrponite or and is pertti\T:d as one of tht efft'Cb\'C lool an this dit«tinn by bctnts.
This papa- i&n11.lyic11 the concept of e R.\1in Indian banks from ib various dimensions '·ering
spec:ilically 1111 need. pU.. pttnl scalus and future prospccb.l(PIG. •TtC'hnolOjt)' t'nabltd
cnnsrornutli on In llaakinl"• "l'ht Et.onomic "l'imts U1nkin2 Te(.'.hHolo1ey. Coneht\•e 201l:
11lC artick: hall concludrd 1tua1Jnrormation technology in b:utking is fa._,t C\10lvina,. Fromenabling
banking rvkcll 10 dri,•in transfomwion in tbc indumy. lnfonn.111100 1cch1t0IOJ,)' holds a
PfOOUJIC to chan'c 1hc fuce of b.mking in the next few )'CMS. New cn1nants att looking to
k\·cruac their eJ1.ilidn1litnJLbs in the Indian banking arena. Tbe opponun11y ovwl11bJe 10 the
cntr.anu throu&f' tcvcraain' tbtir unde:tsW'.lding of ttthoologio and martcu they optr:atr in.
proma!IC!I UU10Vll1\""C business modt:h with a fOCWI on dc:b\-c:nna cu51omcr luc.Thr p:itt of
ch:aaJC uJcd b)' rtpl:.caty dinc'lioos .-ill posh banks 10 d&:rm tlw:U' f.lnCq,ICS IO II CllSIOftlll't
ccmnc focw. o>ou lk nru four )-CWS.

CcimeutMatlnn
Tbc computenution marltN lhe begiM1ng G all la:hoolopca! 1n.1U:ali\'CS ift lhe
o(
hank.ins 1ndu!i'.U')'. Computeris;ation of bank: braoches bad stutN "'1th 1m;1alblion m silie
compulcn 10 lWIQn\31e the funaioning of branchc5. especially •I h1Sh 1ndfic bntnchts.
Thcrc Lcr. Tocal Branch Automatton was in u.<>e.•1hich did nol ln\"Ol\"e bMk lc,el br:mch
octwort::in1.11nd did oot: mr3n much lO the customer.

8
Nct---ortc:lna or btanchci !ft now undertaken to ensure bcltl:Y ouJtomcr 5ef\'ice. COft; Banking
Soluuons (CBS) i'the nct.,."tlftjng or tht: branches of a bank. so as IO cnahk the nstomcrs 10
opcnilc their IK\COUnl'li fmm n.ny bank branch.. regard.Jc"or which branch he opened 1heaccount
wilh, 11lc nctwOfkinc or bmnchc:=s under CBS enables cenlraliz.cd ©111 m11n11 cmcn1 and aids in
lhc in1plc1ncnuulon of internet and mobile banking. Besides. CBS hclpit In brin.;,1.na tht:! oon1plete
opcmlions ortxanks uAdcr a single technologica.I platronn.

CBS 1mpkn-.:nct11ion in the lndi..an lxlnking industry is sun underway. The \Ut aq:mphical
!!prc;id or the bnnchcs in the country is the prinwy rc:i.wn ror the i.noab.lity of banks IO attain
complde CBS implcmrnt:uion.

9
 on.ECTIVEAND NEED FOR THE STUDY

•To find out the: prosrcu or computeriz::uion in all dlt publac 5Cdor boinb or India

• T o ldicrwJfy chalkrl;cl m the o(l.T.solwans the publ.c ICCIDI' bmts of

.......
111

10
 RESEARCH METHODOLOGY

1Dc proent 1uudy I ba.!Ord on lhe secondary data coUcctcd £ruin d1frcrcn1 joum:slj, m:igv:ioes.
!lites ;and publ1.dlicd d:d11 £mn1 various issue.c.; or RBI and ditlcrcnt P\lbltt J«tor bclnb.Vttriou:s
s1ud1cs on 1h1.1 JUhjcc1 h3\ c also been referred io this scudy. The hcoad and orhcr runc1ion:irics
ba\'C Wso been conl!M:Ud pttson.illy tocollect W required cbta fix lhlJ scudy.

Cm«>mcn ha\'C srown 10apect comprthmsi '" fm:mcial scrTiccs from a sinaJc: point or lXl.

"""""' -· ·---y
lbc-y we llllltrK«d by m:1ny nrw prodticts and servitts th:M. DOD-tlllnbna 1Mt1t1111Clft1h;J.yto bttn
Offcrut&. Tbe cballa:IJ.r ror tmtts 'is°
>' llCft»S linrs•idtll bo:amdb
p.1Cbgc mesc pnxlutb aad wrv.ca end dcliva- thrm
s. Only
be ablt
by . .. . . ,... .. . ,..., .. . m d
to rcqc • portfol11> unWbGritiftg
wn'JCIC'l bMtdon 1hr pmdi'ihcs <:A specific cosaomcr tmrld. sq:inm0.

CODSUIDC'I' bchli\'tOr 11an imporun1. facuir lbal •illchange the and huncu pbM of
banb 10 lbc next decade. banking soaor vi.JJ iocrcasmgly IOO'\ C •owvd• CRi banki:ns
lodcl •1hr:tt the ))o.nt1> will h1nce 10 dc\•clop aod scn"ia: produeb a;ulle<L' required %11 differmt
of'• con.sumer'$ life. Banks ha\'e alrt:ady SW1Cd mo\11ng Lo•'iud' caldun; 1be asslOmttS
)'OUnl by pro,1id1ng I and ooUcgt< going srudmLS v;•ilh bank tce0un1t.. As the yciungs;cer
groWJ b:anlut will ti;ivc 10 1rnck and predict I.be financial needs u!>i.na M>phliillcarod aMl)1ical
n1odel.s tand dcli\-cr focused products and sctvi«!i. ll has ;il'l&)'ll been difficull fot l:itge
institutiUli!l 10C01npile infor1nation Oil a single CUSlOOlCf rrom LnultiJ>lic poillUI O( COOlllC'I.

CuJIOJtll"fJ who choo!IC jervs Md products from muhipic businc» W'"Clil 1ypically ore lated
as .separate rclt11Mll'l\"h1J)§ within e3Ch an.-a Because a customer· cc:ntric infntsUUC1urc docs not
exist al n b:anb,cuuomcr suvicr represeotlti'-cs do DOI. h:.1·, e the 1nfrutruc1u .;:upport or the
incentive to pull the information together. \\'.itbout clearly undcrslwxhAJ the scratt'ic !advantages
ol mana a (UW>mCr daa v·.:irdlou:st.OOnk c:usaomtt scrv1tt rt:prcscnt::lll'-"CJ will no1 CJ't their
bc:hol\'lCJI', Md U)' COOlpCl:ili\°C adnnuge V.'itl be sbon b\'l!'d. lbc baftt ..lJJ plD mioil'Mf nJut
from the .1o1pur.cw in,-uanrnt 10 de\-dop the ttqW.Slte t«Moloc1Ct.

·kd:F lft3lS lht beba. ior ol peopk: as •equal wl es.t.CDldl aimponem ol

dkctJ,-c talonmbOD- Kno•r mo from .limibr
Pf:''IOUS s11111t10m to tnform C'llnUlt dttisians.8olb 9lld kt'\K'.'C: IPlm: mma play a
roe 1a bu•kbna a ·kd:t rulru:re. t:magccs amt cochfy -- expa'ICDC'CS. packaging
them to m&Urul.C their rdto. sad ttuSi:ng them in oc••.sllUJicim 1hll ante,...rue. Ol'lcc the
knowlt'dce hn bcel'I oodificd. it aeu1s to be sb:artd•ith .appopna&e 1nd1vtdu.a.I AD i
approach 10 tno-·kd,c enabLes lhe bank 10 group JU pmdua110 liel'\ i;prciK i'
martcc gn ent1. auch alii lav·.yen. )'CMmg profmooals. rrtirtt1.1lic: produc.i poupinp v'.Otlld
be based on cuuomcr fe!edhack as 10 u·.bicb products art' 111 demand und on the l»nk' $ au . essmmt
of each prochx1'1 proftuahili1y. Once the bank. idcnti6e..;: the product 1roupin11. it nn provide

ll
 h1gh-qw.1.11ty setVtcc.. -·ilh hiMuaJity suppon rrom frml anct bad.: orru... crtK!l*funieriarW dua
b:ascs.and CU!>tQmer Kt\ pcr!iOnnt:I.

For bw1k8. infonnation tcdtnology play,; ::m important role in in (onncd dC("islon-.making by
C'ft'_aling u mcan.'4 10 collect and codify cxperienccs and solutions fro1n n1ilar decisions in such
WT:a:s us r.nwh1I n1anamc:n1.customtt service.or relationship dC\'Cklpmcnt. cruabling
tcchoolo&ies ii.elude clicnt/Stt\"cr 1ccbnology. distributed con1putin,.nctworlclna.and cbla
wurchou.oUna. Knowlcd,;e of wh3t russ need most and are wi.ll111110 pay a pn:mium to g:tt.
should be: fmiuently updaird and shsred :KTOSS tht book.. T OI)' :iJlow• the b:lnk 10
accompluh this CftClnl'IOllll)' complie:c last.. Know11!dg\" miea.ns more lbunJu_q havi'IJ informaliotl:;
it -bc:n i.nfomurion is pm in p"Clptt coaltXl and IJb;amd. For cw; ola:lblie
bowkd&c nup be rc:Rttto! in tk pnf0f'Dl3ll0! of lhor rm;mcaal portfobo or 1n thr e:tSC" and
suct'C» ol makaas &nManiom. The d:u. · and gnipbKal lMCff' a dut tupport the
cus&omcr's portfolio pnMdiC rnkime acass. to all C1tS1oma w1fftKM them ille
-.-.tamlcu 1a1..U...Few ob< bank. l<Chaology =-a IOOI fo< ..........
-""""""".f.....cd lxho........ pum..s;ng....,........ ponlolM> pcrfomunoc. and """""
9Dd compdll.l\'C ahcrmll\U. Prorubifuy aml)'S!S IS crucuil to dJc ·s CUROmCf" rdmonshJps.
and tt hrtP'o tdcac1f)'altetn311iVCS for deli\"triog \ alUC to cu:stomcn.

u
 ANALYSIS OF DATA, FINDINGS AND INTERPR ETATIONS

Jodi.WI bllnkinalndU".\"11)', today is i.n the m

idst of an rr l"t'volution. A con,bination of rcpb1ory
and con1pctili\·c reasons has Jed to increasing impon:ancc: o( total inc auron1ation in !he
lnd1W1 Bw*1n1lrdastry. The b:ank which used lhr: rigbl t«bnok>a.Y to •upply 1imcly informa'lion
wi.ll K"C produc11vlcy r't.ie and thttd>y gain a competiuw td.To compccc in Ml economy
.-bkb 1J opmua up. it ii im:perari ·c for dlt: lodi.an Banks to omuvc the,_.. 1echnolor;y and
modafy d &o suit dlcit ntriroomr:l'IL lnfonmtioo l«hoology offcn a dlMcc (ot b:lftb 10 build
11CW J) tbM dh:u a • idt nft!'t of CUSfOIDl"J' llttdJ !Df'Ndl91-) l DIX bt

'"'"l'mhk eoiby.

Banb have ch:ans«' in their openllions and mm·cd ·ards uru\"CIUI bantin,s •Lon; with tht
ioorcJMCI uc of leClhno and technolog)'-ba...00. .!iCl'Viccs offcrin& 11.llcmaic channcl!li sudl as
smar1 cld'd An1-. m:nge of tht: iotemct. mobile and social bank:ana. 8ant1h:l\"C sr.ancd
deploying core biulkini. humnn fl.'SOUttt m:mag_cmeol (H1) and cntcrpriioc risk (ERP)
n1anagcn'IC1ll and proccios rc-en!Pnecring etc to impro\'C on their pcrfornuance nnd pmWctivity.
1ajorl1y o( bant.c arc Insisting on cashlcs<.> n.nd paperless payment 11!0lk:J.
Accord1na 10 a KP 10 s1udy. a researeh anaJyst SJiys.. as o( FY2012.non-c.11.. payments
conWtutcd 91 per ccn1 in value tttms :as comp:wcd to 88 per cent in FY in 20 I0 and 48 pct ttnt
in lcmw o( vit.li..c from 35 per ccn1in FY 2010.A bank anaJyst s;i.ys lhe poymrnu nude through
cbcqUCJ an iotlll QOO-Cash 1111Mxtioo too b3:s come: do9rn to S2 per cat Crom &3 per ctt11 in
volume tcnm.. And IO n.inr pct Cctll from 85 per ccnc in\--alUt: t.cnm ckw'aAa bdwtta FY 1006and
FY 2012.

ladaaa t..t. Ft kip billns Jlobally:-Tbis bas ttSUktd m p.1U1DC %0 lDda.:an b:lnts m lhrir"
shml•• a,..._Dy.IA 2010. lhc UK -based Brand FI"DW'Cs' . nint., pm thcie tmik.s intbt
1op SOO bdoby ....,,.bnnd nluc. la"1DJI1. OD!y six loWm .bod die lop DJ Jlo!Wly.
To further sro-1h 1n1hr b:mlcing SieCta' ttgUla11en and policy md:cnba\'CI been emphasising
on financLll 1nch1t:ion 10 00\tt all scctials of cht sociicty. Half of India's popu1111iot'I cb-s NII
bant.. Tbe l'CJU l:uon policy makers ba\•e SUll1.Cd t&ing a scnous \'IC'll of th.Ai a 1ttiul1.the

top rcsula.or the Rcscn·e Bank of India (RBI) is oow encouraging varHN.s cn11dcs lnelud ns non-
bank:ing fin.uncc 001np.:an ics (NBFC11).co-opcrn.ti\'c banks. regional runil b:lnb (RRBs). Md self-

u
help C'OC11 .busillC$1l cortt!ipOlldt:ntS in rural areas and microfi companies \\'hteh ha\--e
now gi"cn CJ'lp<KUtt 10 oon-bankC'd rura1 arC'as. This shoW!I that at Mnnt poin1 or 1imc banking
scrvicic1.1 woukt rc11eh rural n.rcn.s as much us they do in urban and M.".nu-urtmn 11n::a1.

The govcmn1cn1 nnd 1hc rrsuiuor ha\'c. 1.!lkcn SC\'eral measures incluiJing n"1and.u1cwy opening of
al kasl 2S per ccn1of new bank branches in unba.nkcd rural atta\. 1Jvini; ln1pct u110 opcnin; of
new brulM:bcs In 1kr lll VI cities. The m:mdatory and simplifictl Know Your Cus1onw!r (KYQ
dctaiJin& foropen in a tm:lll i.ccounts ha\'c made things easier ror banb to CAtend their n:i.ch.
Banb b:l\'C ul'W> bccomt ftn.1t1CC' providers for community xrvica dcvclopmC'nt. P051·
bbcr2i1sat.M>Cl llldlll bal u.Jso beC'n attraeting OOnks from various f«eap lands.Thc1iC' now number
40 • fromi 28 •FY 14 ?008 und ha -e a 7 pttttnt s1:13tt of lhr IOI.al MJeU 20 °'-u
1ndaaa tJeab hive: DOW oprnrd °'"tt2AO offices O\'U'M'aS.

FUllUl'e ou&Joot:Tbt bcantin& sysarm tm to; Bast:l 111gwckluan •per lhr diruti"--t or
tbr RBI IO mate .. llJUIStt .seaor. Some of lbC' t.ey of l8CfudC' aelliftl rum
IO rml;e 11 fuoiproof of sysumic risb.. SUlDgnl lmldmn.. °"CO'"I uqW'O\'Cftllttll or
qi.W;1ty ud qv.an1l1y of capiW. liquidity rist manag_C'mcnL ,-aJUIO"bad pnaitts. solid
mcchMm;m. d1.1tloiura for toW mms:part:OC)'and redlllCUOO or •) lnntC rlU': "' dcriva1iw and
Olhtt moncy-rcllllod markt'ls.

The RBI has 1ipul:a1od 11 1ime fmme of five years to implement BILM:I Ill norms. Bue 1hctt arc
economy rcl:itod hwdlcs u1 govcmmcru "'hidlholds majority stake in the public sC!dtt banks
(PSBll) c'.Upc!i wilh llMI hi;Jl fii;cal dcftej1.Once the go\'Cmme:nt decides 10 dilute lt!l s;hall!s in lht
PSBs und brinp ii down 10 around 51 per cent. the Indian bw1kin1s«lor woold see. a Sl"3
chWlgc. Also. 111 l:ar;c number of foreign players and big lndiWl corpora1c am awaiting
go\l!mmcnl ck:ltanc:C't for uing up new g.c:nerntion banks. Once i.1 clari1y on this issue:
thin.p Y.'OUld ch:lnae dras1ically.

Adnpt inn nt Rankin; Ttthnology

nr rr rt....-C.M>Cl has lud :a. gtt::11 i:mpoct oa t1r lodi:an b:ao"ns J)'Mc:CL The u.sc of compu1ttS
ms led .., the of oalinr b:Jnking in lndi:a. Tht ot t'OlllflUlm in lht bvt1ciftJ SttU'
18('

m LDdui bn 1ncrt.ued m:my folds :lfttt the C'«IDOll.._.. I ol 1991 •thC' ('()UftQ')"'s
bank••MCW has been a:poscd fO the world's martd.. Jm• bmb•"Cft r..:tana 11 chfficutt JO
compete •"'Ith the lnll"l'ft#iomil bUtks in terms of C'USIOIDCI' )Cf\"ICC'. - lhoal lhl" of
tnfQl"lnlb(la ttchcdoc,y.

The RBI .ce up a number or commituoes '° dt:fint and co-ordau&c bak.in.s t«hnolo;;)'. These
ha\'C included:

In 19&4 "'•!I
(ol'1Jl«l thc Commiuee on tcchanisation in the Ban.kin& Industry ( 1984)( 11Iwhosc
chaim1an W.115 Dr. c RallJatnjnn. Deputy GO\'ttnar. ReM.'.l"\C Bank or India. 1bc major

14
rccomR1C"ndalion 1of thls oommi11iee '\\'en- introducing l\iJCR tcchnolo&)' in •II 11\c: h:tnb in lht
n1etropol1 in lndia.Thi5 providt:d for the use of scandardi:zcd cheque fonniand encoders.

Jn 1988..the RIJI Jlet up the Conlmiucc on Computcrisatloo in Banb (1988)( 131headed by Dr. C
Rw1g11rujw1. II c1nphalir.OO !hat M:U)emcnt opcnlliou must be con1pu1crl/.cd in the clcarini houses
o( RBI in BhubanCJlv.•ar,C."uwaluiti.Jaipur.P:unu and Thiruvanwithapunan 1.h fu11her stated Iha!
there should be National Chrins, of intcr<ity cheques at Kolkata. 1un1 i. Delhi. Chcnnai and
l\11CR lhouJd be m:atk optnu:jon:tl. It also focused on oomputcriJatk>n of hnmchcs and
incrc'"ina COMtCt1vlty AmOl'IS bnnchcs through compu1C'rs. It al'° sugcMcd mod:.tlilics for
implcmcntina on.-linc bantiftS.The committee submitted its reports an 1989 and compu1eris:uion
bc:pn &om 1993 .r11b thr liemmt bec: "'ttn IBA and bank cmf*J>'tt'-' 1®0M..

la 199'.the Commi11te: aa T«baology Issues relating 10Pa)mmt •) Sm&. CbcqlX Cbrift& and
S«unba Sctlkmcnr I.II thr 8.)nting IDdusuy (199')•<tt 5t!t llp -*" Ouman W S S:nf. It
rmp». .mS Ekcltcmtt Fur.& Trad'tt (EFT) S)"Sltm. .,--11b the BA".i'K. ET CCM1a1uniii":rioos
Dd•'Olt a 1U mncr.hallO said Iha fJCR desing should be 5d up D all blancki oL all lhost
bmb..lh more: "'- 100tnnchts.

In J99S. lhc Committcc for proposing Legislation on Ekdroruc Funck TransJcr and ocher
Ekdronte Paymcotto (1995) apin emphasiu:d EfT S)ston.

TOOll nunibc:-ri or ATh1i instalkd in lndis by various banks allon t'nd June 2012
i99,21&. The
NC'\\' Private Sec1or 8ank5 in lndia :ttt: having lhc largcsc numbcfll o( ATil. whleh is folki'\\t'd
by olY .i.ilc ATh111 hclcmgin.; 10 SBJ :ind it" subsidiurin and lhcn by Nndonuli d banks and
(orcign blanks.While on Sile is highest for the Natiorutliscd banb of lndla,,

15
Bnmchc!I und An.111 of Sedukd Commercial Banks as on end ?i.1an:h 2005

Bw1k l)'pc Nun1bcr of On-site ATl" Orr site ATh1 Total AT1s
briulehes
Nalion.uJiscd 33627 3.205 1.567 4,772
b!r.nb
SOiie &nt or 1),661 1.548 3.671 s 220

-
lndLlli
Oldpriw11e 4,,5 11 800 441 .2-11
1

Ncw pnvatc 1,685 1.883 3.729 S.612

Forui:•bub 2A2 218 Sil 800

T<JrAL S3
.i26 1
.65' 9.409 17,64.S

16
 Intorm.tion tedmolog_v in the banking sector:- op1>ortu11itles,
threats and strategies

lbc 2111 «atlll')' will brins an all-mllncing coo"agcaa ot compu11na,.communic:•ions.

in:fionmbOO Md bowbll'".This ..llradic3lly C'hmgt the ...,,y •-c: law.wort. llDd thiftt. The

""""' ol lull> --coapl<d wilh lht falbag - °' "'...........

moldng
powtilc: mppilCa&IODI undr<.io'!Wd of in the plSl. Voitt. da.. lmil,0.. ud video 1n2y DOW ht
tramfcmd the wortd in miao-stcoods.. This cxplouoa of k'CbaolosY tbt"
._..,..llldilU')' from and branch b3nb 10 digibzcd and nce-uted bent•ftJ Knicu. h
has Mady ch.aAaed mt intenul accouoring and management J)'),.lnftl of banb. II is row
fwxlamcnl&ll)' chu\a&nJ, the dcli\'tt)' S}'Sll.':JllS banb USC 10 inknet vnth t.hclf CUstomrB.All O\'tt
lhc .,ukl. banb lll"C Mill IiDltSsJing to find a trobnologica.1 Mllution to mcc1 the ch!llllengcs of a
rapdJ)'-<lhan&ini cnvironmcnL It is cksr that this new technology i11 ctL:ln ms the b(ll'l):: og
industry rOl'C"\"Cf, 8wlk!ii wilb tht: ability lO in\'CSI and inl<'gnl1C infcwma1ion lcdtnology \\ill
bcoon1c do1niruuc in 1hc hi;.hly competitivc global markC'. Bantcr11 11rc COflYi.llCCd lhat investing
in rr iit crilical. 1111 paccn1inl and consequences on lhe b:lnking indu!>ll')' fu1ure 111 cnotnlOUS.

"l'uh nobwx agd llagks In gst'ormatjgg

Compu cB i«icctan1 men sophistiattd. Tbt:y ba\-c: &JVH bl.ob• potcmut.I they could onJy
dn'llm about tt.nd ha\c ii\·en blnk cusmmttS i.gb a 1bc chansn tb:M. l'lleW
l«hDolosics b>YC broupt liO banking are ttamoos in tbc:S- unpKt OD offtCCR. anplo)ttS. and
oaskJmc'n ot bub. Ad\-wt"S illttdmology :ft alla-iDg r«ck:lr•"CI')" ol '-'l:laJ prodDcts wl
SCR'ICCS men- COll\'Cftlrfttl)' md dfecri\'dy lhaa "tt bdCft • bd CRallftl DrW b:asirs al
compdJbOL Rlpd 9ICt'rU IO crilicaJ infonmcion aod tk libdll)' to 8CI qwckJ)' Md df«'li\'d)'
..JI daYIQpl the A: b.vlks of tbl!' filrure. Tbt b-* p&aS • \"Ital compcc•1\'l' mid\
by havina • d.1ut martctin1and 8CCOLlllblbk aas1omcr !iCl'\'1CC cnvlrmamimt and new.
scrt:amlmcd buQncu protttiief..

17
l\t?,ior 11p1tU911lon'l:The iMi\•llntages accruing from compulC'ri7.alH>a tre thn:e-direaional • co
lhc cu onlC'r.10 the !:lank and 10 the C'mployce.

t)1r lht• C'y1191ner: Btank!ii arc aware. orcustomer"s need ra new l'Cl'Yi.cell and plan 10 n1ake them
avu.ihablc. IT h lncrc:r.sed tht: level or oompc:cition and roo:cd Lhcm t o ln1e511u e the new
tcchnolo&ie:t 1n order 10 Jnli)' their customers.They ha\'C nJrcady dc' lopcd Md ln1plemen1ed a
ccrt:11nnun1bcr or M'.llution!ii among tbt:m:
1r-tnq11i1'1' (:trilitv:f;acility ror logging into spccifit:d sc:lf-mqu1ry terminal'.i Ill lhr bnanch to
inquire and "ICW the mut_ in 1ht account.

Rnnnc: hank!nc:RC'mOlr' tt:nnimls :IC th! o:as&omcr Slit coancctcd to lhr m;pectl't br.tnch
dlrou&b • modtm.. embfitts 1ht C'.'a:Slomtt to mah iDqumo Rprdlml bai accaunu. OD-liec.
wwtboul. .._,.&al co from his offitt.

Annims h•nkl"I: An)'"'betr Minting: •nsc••brioo of AThb •-tudl offer w-saop cash
withdrs•aJ. nem11lWCS and inquity bcilicics. Nctwortiog of compu1mnd tnnc:hrs imrr<i1y
and LDU.-oty • 'di penni1rustomers d these branches.•Wn imcmonncctcd. to tf11MACl rrom any
o( ....lnnchcL

Tt:Jrhagklpp:A 24-Mur Krvice through••hich ioquiries Rgard1ng bal.llncc!ii and tfllnmions in

lhc accounl Clln be n111dc O\•er the phone.

Eln·tg11tJ!' li9nklnp :This enables the OOnk. co provide corporate or hijth \•1aluc CUi.ton:ien with
Graphical UJ1Cr hucrracc (GUI) software on a PC. 10 inquire about lhcir fintuKinl tr:tnstiCtions
and 111tcountJ. Cl"l\h 1mn fer!ii, cheque book issue and inquiry on r".11.C':S WtlhOUt vb11ini 1hc bank.
tr. LC 1cx1 und details on bills c:m be sent by the customer. and lhc bnnk: cnn download
the smic.The tcchno'°l;y used to pro\'idt: this service is called ckccrocuc <but 1ntcrth:an,;c (EDI).
It 1s med IO tnmmilbusiniess 1 incomputcr- adablc (onn bcc•'ttft or;:ini.u1iclns nnd
indlvidul, u1 • JUNbrd forrtt:U as i:nfonnatioo is ccmralazcd * upd»ci: a't-" :ribbk
)' • all plXd... singlt-•indow scnitt bcmmc:J po:!..\•blc. ro cffttti'tT
ttduct1om &a •-amtaQJ time.

18
Fnr ttM: fl;in li:j Durini lhc bsl decode. bsnks applied IT lo a wide nangeo(back and front offioe
las.l:.. Ul tiddilion 10 11 ;.tt.t11 number of new products. The mujor itdvant.11,g f(llr 1he bnnk to
in1plcnicnt IT llR!:

• Avudability of a wide range of inquiry focilitks. 11Ss<

l 1tina the bn.nk in business
dc,cJopmcn1 !llld follow-up.
• lmmrdi:11c rcpJics io c:us-tomer queries without reference to kdaer tccpc:r u 1amin:ds l1n':
provided to 1:1r\2 crs 2tld Chief 'lam.gen.
• AutoaWc and prompt c:aaying out of sanding instruct:tons ondue «blc :ind ;encrsiori.of
..poru.
• Gcoenllioa of nrioa:s "-115rqxwts .uld ptticdcal n:wm:s cm due dMa.
Fn; wt 1n!omur:ion rnimftt cmhting spttdltt clccu.ICIM. by m1ir:mnnnrning
compoOa\>cd ..."""'"'8il>g affi=
Fo< Ibo .......)..,IThH ma-caS<d tbcir producti ity duvugh Ibo follo-a"'P:

• Accurate compurin,: ol cumbersome and timc<00swntns jobli AtOh u h:LIMieing and

inI cakul:st101u1; on dut: daltt
• Au1on1a1ic: printins of cm-Mng schedules.dcposi1 reccipL1i:.pa!IJ boot I Pll"" llihM. frtting
the i.U&.IT rron1 rfonning the. time-consuming job!. and CNlblina thcn1 10 &:i\'C more
uuc.ntion 10 the 9'Cftii orthe ell.Slomer.
• Signa1urc rcuicval (3Cili1y. a-;sisring in verificalion ol' tnaruattHm.t, i;:i11i11g at their own
tcrnunal,
• Avok:loince of duplication of cnrrics due tocxistcnct" ot single-point daiua C'fltry.

19
A 5C.':111'Ch or lhc b:ankin; li1cmrure l'C\'Ca1S that banks arc mD\'lng rapedly 10 lake !ldvaruasc of
recent ood new custonlcr i;rn•itt :ind cost rcduc1ion opponunilics Lhat new 1cchnoloirs offer. A
san1pling ill in 1hc 1cihlc below:

--
Ttchnol"'""' Current Use UK i.nNolJ \'tan
PC Ncc"'Olb Tclkts
.....
481' lMlli
Saks Tnack:in&
Sofiwim: ,.,.

-
""'
R.dxiooal D:nB:lit
"'
AUIOrmllt Cttdit
Sc:uin ,,,.
E-aWl
""' 95,.

.
eq.•.,.,...
Softw2tt
1
a
ln;,Chds /
Swcmm<>
ln1•u•1n1: Documcms
,,. 12"

<S•
ZS•
Internet B:inking
Home Page '"
ln1cmcr Elcamnic
Oflitt ,".',. IS"

Tdebank in1.1 88•

Sm.1111 C11nls Ocbir
Coonb "" """
Elect:ronlc Bantin.. 12.. 76"

lntsmst; INctaet: is npidly b«omitlg tbt infonoa.boD. supcrb.p•--.y ol a slobcal c:kcuonic

Tht nMns iwttsG inrbr lalcratt: WC" apccaail) C"< dtlll in -Cromertd"'
JUCh n t: caWop.. )'dlow pages. sodltlllb. IUlb. Md em1amrr support
CC'8llft.. AU thc:it: 11pphc:aiou arr bast:d oo tbt v.•odd Wide \\'d> (WWW) - 1ht: fnana CfO"'i.Dg
sqmcnt of the: IMcmcL Although "bad: arplicllions suc:h m. ckctron.lc dala imeidunge
(EDI) arc equally amponant. their adoption b3s not bom u f1IP'd.. One R'l.IJOI' C(lftCCm is tittvriry:
the lntcmct ' ecncnJI)' pt:rtth,.cd as OOf .so.:ure enough for tnmmatt1n1KOS:1livc d::tfa such as
paylll('nl5.. Upon a ci.o..ct look, hm\'C'\'cr. this 'in.1 is noc W111TaRecd. sancc 1echnolopes web ss
pubhc tey e:neryp1lon and firewalls address cs5C.'ntial security conccrm. 1oroo\'tt, such
tcchnoqJc11 11.f'e already available. The only remaining barrkl- is Lbc IKk or re:al wotld uscn of
Lhosc tcchnol@a1cL

20
The p lot projccl ber"ccen Bank of America (BofA) and one of 11.- laripe <'OtpOl'llle aasLomers
invol\'O Lnansponins flft!Lncial EDI transactions O\'er lhc lnk'mcl. IJ t-uet'CiS(ul. BofA expttts
lhal 1hi new EDI option will lead 10 a reduction in 1ekclomn1unicaLions COSIJ. an itnpro\<t:d
position w11h rc1 10 iui value-added network (VAN). and \'aluablc lcamini; experience wi1h
lhc Internet envlron1ncn1.which is btcoming increasingly in1port11nt 10 the bank. TI1c pmj«l is
also signifte:int beyond BofA: because it ic.; one of the t1nt lqc Kl!Jc. f'C":ll·wor1d 1ri:i ls. its
outcome wi.11 help dll many uncenaintics surrouoding ln1cmd·b:i$cd EDI , 11nd encoumge
ruOR conlpwlic:' 10 n10\'C in this di:rec1ion.

Igxntjgr Ip ttthgglgry; Attoning 10 a SW'\'t')' conducted by tht Anxriclll!I lbtitcn:

A»oc:mtlic-. US bllW upcndi1utt on infonnalioo ltt.bnology pew ff'OCD S16.l bill.Jon in 1994
10 $18.7 bl.Loa in 199S-m incre3sl! of 14 .7". and SI blUKlll mott daa lht umt b:ictfts
f tbey •'OUld tpead in bsl )"'CIWS' sun-ey.By 199&. lbr c.i:pcct '° spend S212
btlboa (•IKfQJC ol 7.I ).

Hnw tn !'Hni\'f'j 1be key 10 swviYal is cusaomcr Stt\"i('C.. CuSiomn" 10)11..h)' will be dattmined
by COR\'CnK'DI And inn<Wllli\"C deH\-cry or producu and pcnonahzcd 8Cf'\'aca. ln the iO's and
'Ills.banb \lo'tre m u'l:e1in; 10 a generation raised oo old style banbn& :pcniONll incCl'&C'lton at a
bank:ing omce.That ntra1ion Vi'as discbinful of "impersonal" !lt'l'Vkc tind afraid of oompuicrs:.
Convcnic1KC was ha\•ini a "branch" in ones ncigh.bourhood. Tod.II)'. pcrM>nal service and
con venience nre 1uill the criticnJ factors in the banking rch111on!>hip. but they arc defined
difl'crcntly. Con.'iunlCfll still w:an1 tobank with a financial i.nst111.1tion they "know," n.nd one Vi'ho
" 'S" them. but they do not necessarily w:m1 10 go to the blank. lbey Ole 001 afraid of
comJMcr ud 1cchno'°S.)':1hcy embrace them. Convmieocc 1s do1n1their Nnlc:lnc.."'hen die)'
"<' ml. WK! where 1bcy wanL They 3tt oow oomfon:able wilh penoul compuicn and odlicr

BcctroU: dc-<Ka. 'They upect f:ast. cfllcimL and accurate Xl'V'll>'C And the only Yf°";IY IO cost
cfkcb -cly pt'O'idc tbt lMUt'll, qmlity that CUSUMDCn demllld. llACI that the: rompcririoa
prO'"ldo. IJ t acnsive ust oC lilt lll05l a:l\JlllC'<ld inf'onmll09 k'Cbaoklptl mrd dwoag:h
good people U'1MaCd I.ft the: USC of lbest ltt For all thoe ttd>Ol., the: bcmts deli\"'tt)'
.,.....................y.-Pi.

1lM! Ns•· P£1J,m Sn-1nm : Tht i:ocreasing rost of bwkbns bnck·aftd..rnonar tnnches..
n& COM or compulttl. high deli\'tt)' costs and slow rc\"C'nuc grow.1h force •rek:d: a1 !ht
conV<!ntJOOlll dchvct')' syuems. 1oroovcr. i.og romfon ol tcchnok>cy u by 1be asstorncr
is n.pidly fo!>tcrina mn,;e of non-brnnch ch:mncls for routine tr.anJX"Lk>rut.

21
The new 5tndCJ)' dwJ;:cs the focus of tbt bnmcb from bdng a high C08C tranu.eclon ltt lO a.
prol•idcr or • \\ide n.nie of .!iCf'Viccs llkc tt:.kbanking. cuslon1cr Sien>1oe tdoiik$. ATh s. and
rcmole clcclroilk bankina,.

Ny w i> tad!;rslnu (bipgrtnpiljes: As 1hc new technology is i;o c.xpcn:uve b«nks neut 10 UiiC the
new S)'M.COU 10 do mott than dcli •cr information and basic scrvicct1. Banb need 1he llhilily 10
:Wo sen im:unanc:c and lnsamcnt producu to gee a bcttcr tttwn on thi!i in\'C!iilrtlC1\I.Tclepbont
blankin& can brins fUlllncial scnicts 10 I.be home or office.cspcclit.Uy 1( they Gte onhble
SCrtt.111 phooc::I. 8y nolft.J bow l'fUC'b intcn'Sl tbl! CUSCOIDl."r Upc6f6. the b:.lnk am tn3t'tet smelt
quo&cs and uniacc quoca lft1msicti"--c- ""ideos :n DtW &cchoo6ou 1h:al bcmts on m:ake
avaabbk: IO die euil«fttt ro mainoin penoo;al COCllX'l •iule Sbll 1hr u ol
ddl'"CI) .t.cnlCC. \\'lth •llucncti-'-c- idto an apen cmploycc: n llOI llftdcd •C1eb br.mdL
Complo bfe prodoal.. opm alXOWllS. C'U'10'D'7t"d pmdoc.1 dlnsnlions ca
be Wldc:ly 8\'aibblc: J!ltt!lkd. Tbe imttacri\"'l" \;dcG 11i1.ll be «Ill dlea1ft u:pcnisc. ihe
mkmd is •mednam 10 allow banks 10 offer products 10 euslomcn outudt the wmal maornt'f"
base or • tnneb. Banks a-....-c of me cusaomtt's occc1 ror lbcJe and pUn. 10 mm
.,._table before ochttsourccs do.
them

CurrTnt Trtnd1c Aoothtr oonccpl. \'i.nwil banking or dinx:1 tran!lae1ionll and da1n., banks cnn
in1prove is gainina ooncl This model producti\1i1y. optimize co,.lli, JX'OYide qu teker and offer
pcoduclll. CC1> nnd bcucr quality customer scrvkc. Thco . ;e 1rwls111Cli01l!i only throuJ,h c.lccua1lc
help wilh the envlron 1ncnu1J ans.le dcli\1cry cha.noel.;.gencrJ.lly without an y ph ysical branch.has
al.ready been C!iled out in advancN couotrics such as the Unilcd Statc:!I and Europe. Owins to
m-.er brWM:h m:aintcn und m:tnpM\rcr cosu.. such banks arc able to oOc'r compc1i1i...e pricing
their prodUcl'l und 11Crviccs vis-vis traditiooal banb. ion: and mon:: CU!.iiU>mc att already
(or
moYin& to noo-tnnch lwOOn_;:.llftd. the dirttt boolciog tmxl wall JUl"dy calCb up in India as
lechnolosVYY biaftb: mdopl this modd. Though it may - to N\'C the bank • loc m
111 rnl11y. lhc nKljl)l'l'M'r Dn'tt occdiog so visll a bilm: brw:b.. C'llhtt fewcomplttin& the
llCCOUlll . ..proccu cw lht substqattll 6mocial a:ta\'1bCS actui ) up ...dullttap.
The po-aw of 11eem:at.cs it b3ppen w:wNtsdy wi Tirtmlly. but ca. is
lOOIC"thl.. •hJcb calls for bamm m:h. for all tbClr ICChaolopcal liOpbull('MOI, \inua)
hlnb•..ttoutd be baii.dc Crtt nd a plie2su.Dbk ttpniieoc.'c> for the 1.UC'I'.1bc: \ lttml banks nttd
lO be av..-e o( thaJ fact in lmer :md spirit and aJ"-a)'S msa.n lhal the qual11y of wet upcricncc is
p.-.mount and lc, ins 1«hnolog)1is only an aid 10 enriching w.cr upcriencc.

As Banb adopc mott tochoolns,y.1v.-o thiogi;; stand ouc - us1nglcs11 p.11ptr Md doinJ tmns:icrions
wirclc!lly. ln lhc lll<\"t few ye3B. numy baoks in India have implcmcnlcd ron1en1 m:annn1
solution!I and 'uccccdcd in conducting paperless 1ransac1ions using the ilnln; 11nd workflow

22
cap;tblhlacJ d MJCh $0ft:V.att. Also. 8UlOtnalCd handling o( ICC ttquc:ili v.i1b proper
documcnl•llon tmd tractina; flK"iUties bas significanlly rcdl»CCd turnaround tinlC.

Prooc.<i:dn& online :ipplicntions for accoun1 opening aod olhcr snvic. 11ansfcr of funds wiLhOUI
chl"quc1.1. wdine nccount ilutcn:ients n.re :ill bccoo1iog pm1 of lhc rcgull1r brulldna, process. Wilh
digitization of 1111 cus1 lNr l WICtions aod data. bank.i.; can in1pro\1e bcucr 'lunlhy cusaomcr
service pmduc1ivity. optimize cost11,. Md provide quicker and bcun- qu;ality llCf"Vlce.

Wilb c1.is1omcr1 dcnlandin.; anytime and an)'\llilcrt: acccss to their money And fift:ll'ICW
infomi;i.bon.tMank:J ha\e no option but to impkmcnt wirclCS!I IOlutiOM 1ndevice independent And
nctworl a.ac Q)"J- On the user side. rapid progn.-ss1on ol moblk: tc.cbno'°CICft n c"lideattd
by the•-ell "'Q LTE (1...on& Tmn E." .'Olutic:e) means banks mw;I 1ncrtaJ1naf y ld:lp. lhrir own
10tbc client side- Dttds.

0.die Rap i.idr.milk PCs. mobilt pbmes an- small ud are cauly kl8t or JilOlca.. m:abDJ them
lllltft '\llar:rablc: to frmduJttll nrtsaCtiom.. This calls few grcma xcunry mcwns cuubU.cd

11t'llh fJO'ltou1'UI rqubnoa. lbt:tt att also scme pi-.-xy Woes R'bkd to •vdicu. banbrtg d'3l

oted to be mol\'Cd. ()\.-cnlt. is oo dea)iog tba tbt"rc u challotntt ud opponuniry for

banb 1n C"anchins cm1omcr cxperieatt arising from lbc nlUlllrlOlil uJe cai;e fittlUrios ol
pooA'trlul i.;nwt phoocs opcntting v•itt:tisly. By ensuring the C'a!IO. comfon. uJct)'. and
se.nlcssncs.J of iuch oprriuions.banks can nssuredly remain in busancu..

PnKlud lnn11\'lll"•n 11nd t tthnologv

Tiit b:u1kin1lndusuy it;nins 1hrougb a period or rapid chaogc 10 n.i:cl co1npc1blon. chnUcni;es
of tcchooloay. 11.nd 1hc dcnunds or 1hc end users.Clearly tcchooloay 11a key d1ffcrco1iatioa I.be
pcrr or bank-. Studies m'C'al tb3t approximately 20% or non·intC'l'C1it c•pendituit of
large 1n che Un11cd S1;,,tcs is on infocrmtioo technology. The need.. of the rurul m:vk-itt att
qwtc chffcrC'OI Md banb ha\ 10 iMO\o':Ut" :icconlingly. Aho. aJoaa •·1th QA' product offttiftgs.
by n«d to wort '°"' n:isiifts prodtlc.t opc:imiarion. \\'ltb licrao·ea&.t tcdudoSY 1he erublcn..
"""°"k'd by WIOnl!W" prodDets l2ilon:d few dJr runl pnpu•arc. blfttJ CM offtt s«uR"
Ill\ •ttb p>OC1 murm wl ia. :!lddirioa. act as c.aul)'Jb IO allcr ranl &0\'CSltnrm pme1as
aioD& DIOR pi1odbcl1ft lioeL Jndi:m hints Dttd 10 focus OD $1"J't wS co.tlllUBi tnfmic:n ol
tcdmolos->' •ililc CllPll"iftJ its 9PP1opi•nwss :md uriliry re.- tioch the: rural udurbM nmta.

Dunn& lhc b\C civil \\'llr (1975-1990). cigbty paccnt of the infl"lls1rueru.R' was
dci.;lm)'CCI. The rcmainini twenty pcrocnl :ire now outdated. l11c Lcbiane bantin or was
hcnvily ulle'c1cd by 1he \\'n.r.They lucked the infomw1ion lcchnology rc\IOlution in 1tw'.! baoking

2l
 OI". I.I bccomc:1 • liitl'Btepc necessicy for lbc Lebanese OOnkf to 1mpkment the new
Lechnolos-ie5 at all lc\<ds, trnnsactionaJ lc\'t:I. mao.as.c:rial IC\'CI and occullvc lc\•cl ln the 1990's
Lhcy .started in1plcn1cndni rr capabilities to change: the: wort ors:anization. Naiiic 1hcprodUci i\'il')'.
cut co:M!Ji $Ind deliver 1he sc services 10 their customers and incre<isc IJM:it pmfi1.1: in th.! same
Lin1c. 10!il of the Ltbilncse bankers belie\'e dull IT will crwblc dM:nl 10 race the foreign
con1pcdtion and the l>f>'Siblr eonsequences of the eon1ing peace.

TcchnolOi)' Adopcion the viw m3-jority of the Lebanese banks h:&\'C 5d very h 1Jl s1and.mds of
CllCCllenc:c for lhc:m!iCh'C5 in terms or technology. Slafl'-lhe-Qrt (acil1l1CI. ('U'i;t(lmtt service and
CU!ilomcr orkntlMion with an fXttS of operatioos Klt.lllly computcrucd. The banks Also matt:
uk'D.Sl''C u o( ('(llllmunnion llCCboology to olf' sa&e banUns (ac1luin i:actuding
ATM>.

1bcvamblboll iito positiaft tht:msdYt:S as ttt.boology-dn\-ca m.ts otrcriaa qpenor senitts oo

bodl lhcv dcalt:k d.aurs • !ht: corpcx11t: COSIOmCf" wl dw: nnal aa_uc.ncr.n.: 001pol•
t:U:Momcr 1ypcalt)' rcw;piirt:S cisp>Sal of lo:la apphc#1CJ1Ds wt muimwn mmm from lht:
cash t.lwc. Tbc Dee!CIS of tht: COlpolW! CDSlomtl' art" f:unruoaJ o/ the of
Tcdmolosacally the llftliiWtt 10 this is a rcliabk- oct\l'Ort COllDtCl.LnS bnncha that nm on-line.

The firsl •k'pj·At the catty mgc..l.t:banest: banks stancd IO build thc1r databafa IUld mnom3:t.e
lhci.r YfOlt pmccdUrt$, 10Sil banks ba\'C adopted rcadymadc rQr thrir intetn:l(
opcr.111ons. CurreMly, thc-.sc banks arc rq>Laang thc1r old 1nrormaoon syStems. 11le tnnl::'s
hr1111Chcll W'C pl;innin;. 10 pm"idt: sllllef lhe-an service,.. 10 their eu1onlCfll ennhling a rapid
gmW1h o( the bwlk's pcrfonnn.nct: in a very competiti\'C mnrkciplace.

Oil'tcrenc 11pproochcc are follod in lhe Ld>ancsc banks 10 :acquire l.mplen1cn1 1hc new
technoloaies.. Banque du Lib.:ln ET d'ouue-mer (BL0 1).for c.uimpk. Ms dc·elopcd i1s own
complete Nntins informt11ion syst.t:m. \Vhile Ban k Audi (oilo-·cd QllOlhct" MTGICJ)' and
a-.
pun..illHCd an m-hnc infonn:uion S)'Stem providing a n::aJ. tune on lane brulch tlCt'l-luk \\'itb an
udti.atOCSS amlyw.. Boch infonn3licm S)'SkmS. in BW t in

tC'brdu.J«I IO nm
up-t<Mtde boiatans a:nd c:u. omer i:ftform:irioo 10 senior managcrDC'nl. maddlc manaicn.. end ustrS
dunna ru )UI.Tht "'*" rnsons AUlb
bdiod U.,..il1g cw dto.'dopua& aew iafonnllliOll syurms an:
Rapd _..,...... <><Po•Uoo b3S forttd banks ro ..pi... lh<u off •..,. .,....,,, by ......-
S)'$km lmbq lht brwtw;s IO lht:beadoflitt through thf' tt:kc'on-JwtlC'*JOM --

bank\ pmorsvs il'I order 10 rtdDtt sWT cxpcmn •"'hdli COM11t• •tarsc pan of
the opcl'l{lltil COSll and a hert')" burden 00 its opcrMing pvfilablllty.

lncomp;at1hll11y of the old systems v•ith the stndegk ncttSSllf or1nkjrat1n.a new le!Chnologies
like AT1'1j, tclcbo.nk1ns. c. in cw-dcr to pro\'idc the high quahty )Cf\ficci 10 the CU!iilortlt':t'S and
con1pc11n1on :in equal r(l()t "'itb lhe foreign banks.

24
ThC' <.'OnnX1illon

1nc Lcb.anciic brulkll !Lfc also planning to offer the entire ran'C or ser\•ke!i like 1clcbanking.
ATh1s. etc.The)' al!OO rnpond \'Cl)' uc1ivcly in lbc nlarkctpl.acc i.n introducina new producu: and
scrvicc4 . '. Anab B:ink \\'M Lhc pioneer in introducing AThis i.n Lebanon, Arab bant s1aned to
i.nstall ATh1machines in 1993.Other banks roUoy,ed. by cstabli.sh1n,a: in 1994 • N!l\\'ork called
Lank l"ctwork. usins Link cards.About 25 banks ha\·c joi.ncd thi.s nccv.1>l't •nd we 11h:sring now
11'salmost 60 mactuncs locllled 1n the major cities of l..d>;;mon. The cC'nlnl bank 1,e•pecting tb3it
about 700 ATht rnacbi will be insuJJN in Lebanon by the -2(0).

l..cblncH blab lft Aho inaoducing moot<" Mnkjng scrvic'cs. Anb t..k WU Aila the fusl b:Wt
iD UbaDcl9 eo offer llus Rnit'r. E..ty in 1994.Anh hmt: ms&alkd •18kn1C11vc voitt ,.........
S)"*'8. called Pbone B:aotifts.. Al th! same timit. it dlUOductd the WMfiUltt tma:1. rttnW"
beok••sc:n<llCC •1udl as catkd a.por:att banking Four othC'r hMlJ.. AJ11Cd 8US1nas Rm..
BLOt.UDl\'enal BMLk. and lhc Brilisb Bank of 1bt liddlc EaM. fono."'ed .cllllU'Oduttd their
tdC'phoac btitd mncu twlting. Hcw. u these scnicc:s arc JX'O' tdlnc oftly •nqult')' fs:ilitits
bcnwc they fR ofl'.J1ne i;:yuems.

1llC diffu!lioo wKI 11ucccssful in1plcmcntation or IT in Lebanese bwtkll iM noc a" ca11)' process.
Lebanese b:lnb o.rt: r in;enormous ctuillcngcs in UU1S-lcring the new tool• providC'd hy IT. An
i.n1portan1conqmin1 10 the' diffusion and success or IT implcn1cn1ation Ill lhe 1clccon1municn1ions
infrastructure. •nothcr obstadc is riaJ prnctkcs and organiu1toMJ W"Cakncs<.>e!ii. In I.be
follo\\·lng lll:CUOO. I wdl an:dysc tmd dJSCus.s these obstx.lcs. In C\'lluaun; bunts ·use of
tcchncqy.W"C toot 11 bocb t tcchnorogy in plxe to scn·e tod.;i.)"s. CU!ilomtt and lhe plans for
scrvlDI tocnon'O'lt'J .ibe fin1objccti\o--c is tonaminc the bank's dcplo)'ID(OI of 1«bnoilosY

uammc -benk"s prqwxioe for lbt funn. \\c ......to -·w

ro1w.-., qnnriooc lk
rdab\-C 10 •bat •'S\ bhk. tcSttd. and p'O\"C'O lO blDt pcrfonuatt.The: S«'Ol'td is II>
tbc
lllO!o1 HDflGUDI IUUC'fi to be .uJ)'St'd SC:

I) To •im '-' lhe b:mk DSing ptO\ tn ttthoologics to cnhaooc pcrlomwa1

2) Arc lhl:rc any 1cctino1o::irs no1 dt:plo)Ul dw .,.,"OUld ha\·c • .i;;1gn1fican1. uvc dTCCl on
pcrf'onnance?
3) Whal Jc,1cl of 11pcclnli7.td Ir.lining h:tli been received b)' the omccrs and en1plc>)'«Sa!iiSipled 10
sclccling.dcpf0)1n;.and m1 . 1U1ging cccbnology?
25
5) How cf!COi\-e arc 1he S)'!iiLcms thru o.re bcing used'?

6) l'i ManugcnKiU 1ooni1orins the C\'Olution of banking tcchnologic.'i wKI plannin,; ror the fu1utt'?

·relt".t:ntnnn1nlc:11kin lnrm tru cture

The grc"llik'JC obsti.clc to «al time clitetronic banking in Lt:bilnon lJ the tclccommunic:dion:s
infnutruccurc.Tc.l«ommunicatioos in the banking S«1a" U a rNijor (111Ct0f IO 1.be SUOCl"SS or
f.Swe ol uy applieMion or Tbt: tclccOlllDIWUCllllMJM uirmsuuietutt W3S
de' by lbc avil ww.The proass of td'3biliulioo and modmuz-.m ol tht.1 iafmuucrutt
sQr1Cd ID 199J.AccontiDJ IO the rttO\ICIY pba dn't:iopnl by CDR tk tirl«ommmiarioes
rd:tiabWtlDoD pba1 •il be compkud by the yes 1998.Tl:u.s mam dlal t.d:.I W'ID D(ll be IO
rdy Olli &be publlC nctwoR uftlil 1998. 1bt result of such Nl\UDoD lj. • delay iD .mpkmt:ming
ocw SiCn· and products lite ttmOU" hanking, clcaromc fundt: uw:fcr. rut time b:mt
mforma&aon i)"MCmL This has 3Jso a clTect OG cbr rdtahhl)' of lhc ,;ct\.cn. l'l!rndy
unplemcakd htc An.ts.. 14 order 10 Catt this cbalkngc. banb began'1uctyan1Lhc fe:ts:ibiliry of
mSlalhna • pnvate 1ck!communications oef\l•oct. Four banks.Bank Audi. A.nib B11:nt.. Byblos
Bank. and BL.01. it.ancd in the C3f'ly 1996cons.idc:riog lhe install<JilHXI of • pnW11c nct'Ol't to
conned their bnanchcl and lhus conduct n.":al time banking O(>t'Wion1.Thiti nct'A'Ork will also be
u!IC'd 10 coruM:Ct 1he ATh1j tn3chincs which will thus func:1ion on-line. 1'10\\'C\'cr 1htte problems
arc dch1ying 1hci1nplcmen1n1ion or such nct\JIOd::

1> otitumas •l.ccmc from the tiaisrry oCPOSI and tt:

2) lbo ...,. - ol d>< 0 .... xt: ol ............ .......... ol lht

Uhllloe AU(ll(UtlOD.

26
Human R'°"'"'"'"Prnhlemi

8w1k1ng industry t10 hc:lvil y depending upon informalion tcdl.nology 1h:i1needs professHlrutls fot
dC\'eloprncnl. lmplen'ICnltition and suppon... lkspilt: the prov.uni; pcrforn1od by nuny b3nt'.i 10
dC\'elop their loc.nl expertise in IT. there is still a real shonagc o( qualified pct'Ji()nncl. According
toa recent 11wvcy ( T.;\bdul Rcdn and 1.Dayya. Banking IT:u k>O&: u.I Lebanon. AUB, 1996)
lhc ro11ow1na problems \\'CfC identified:

AIJDO!ll h;1l(of 1hc Lcb.:le banks do not hav..- one engineer :unona tbc1r m.ff.
i..a'k o( prokinal lnininJ programs:- FiQ3Qcial instiW1JOO!I IA Lcbwlon offer a wide l'llngl" of
UUUAJ propatm 10 their empk>)ttS.. Howc-\ou. ..,,tb
rcspttl to tbc:1t tedwclll ff SUff the
pcrttD&• of lnltuft.1 pn>SJ3ftlS is much less.btt.aast IT staff SC com;lckml 10 be trained.
tqbfy qU;1(1Cd wl hrntt: do not attd cnmdtd trainmg WWON- De comequrntt ol sach
pobcy IS a ttdaaot of the cap:Dlity of ITmff to be: up IDdale la the moM rcatll am-wcs.

u..p TUIDO""Cf Ra ot Terhrtical swr:• The twDO\-u nu ot the tccbn.cal iUff ••same "°"'
pcm:nl the Ltbanac: b:lftb is 2rOaftd - ihe low sai.v:s and bdatt opponwUtirs in Olber
i:odwtnC$ •the m:un rosons for this high nde.

Rciii£incc 10 ehanic and 1ht! absorpcion capacity is often neglected once 1hc 11u1orn:uion sys1em
i'.i udopled, 140\\'CVCt, lh is humDn factor is a criliClll (nctor in the !IUCCCJll or tlR)' banking
application bf lnfonnnrion 1cchnology. The only way to soivc 1hi.s probk1n I'll 10 de\:IJ:n lldcqua1e
training prolf1llUI' and iocre:i'.ie 1be awareness of the employco. l\tt Lebanese b:tnb ba\C
rtali.zcd th11(1et Md .ome or
them ha,c esmblishcd a u:tining centre.

Thoe •the major obii1:aclrs for impiementing ITin I...cbannc banb.Another point dUI should
be mtaoncd d the llCCl'SSiay ol pl3nning "UY cattfully the dc,c.klplacnt or tllll)' lllfW m:ppliClltiolL
A compukNMIOD pl.la is 1ht basis for impiL"mtobog succna.Nl mfonn:ahOl'l ttdn>logy
solUbons. To be tir. dlrst plms b:I\ to be: battd closely to orpoaullOIUI
obj«b\ priontia and prottssts.

s1n1m fm- tht- tti1u ....

Banb r.cc a ICriou"' cti:a!Len.i;c. 1be bWc Sll"OCtUr'e of the bank LJ incru nitr ln conflict: with
the cb»ng101prodUcc. dr.Jivuy, and service needs of I.be CUSIOOlC':l'.5 hc(t11urc bc.iof'IJS 10 financiaJ
scrvioc providcn nor tnditlotutl banks. Uk' \1a..;;1 majority o( large Ilks "'ill create ,•aJuc
networb. Doi.n; JO prc11ents iremendoos challenges. Banks will ti.;ive 10 fino1 de\'elop 11
con1prchc11 i\1C disuiht.nion s1cm that will enable customers lo Kl\l(h 1hcm a.I n1ultiple points..

27
Bania mu alJO Ct'Cldc performance mtaswcmcnt sysacms to re the mix produces and
scrvlocs lhcy offer nm bcncficiaJ 10 boch the customer and the bank.ibcy mu dt:tcnnine
whcthcr to deploy new tttbnolo;ies thcmsclvcs or with other scni1cc pro\•idcN;. Nc\•c11htless.
lcchnoktfiy ulOI will not M>l\'C issues or cretite advanlu.gcs. Thi.s tcxhnolo;y needs to be
integratedin unorpniziu on, ·ilh the change managc.mc-nt i.ssucs linked IO people resisting new
concepl'I und idca1'. II aliO nttds 10 support a clearly de.lined wKI well con1n1unicu1cd business
strategy.

Satdlit fl•lt nt

S*1.ll&c: ti.bna I al• ma 'lttbtdogical iooo''ation .. the IDdun b:iftkins indbsuy.

•illdl is upcckd IO brlp in soh-ing 1ht probltm cl•-nl commurucaion. ittb ia
IDMIY f*U of the COWIU')" 1lr mt of saadlites fc.- C'Olllk'CtJ\ lt'f bclW'ttft twlltlCbt:s
•-.II bdp blab co radl rural md billy areas in a bcua ....,,• -.! ofTer bcncr fxi itits..
p11'11CV1atty &II rt"bltami ID cWuoaic funds mmsfcrs. 'l'\U.Um Ul\"Ol\U \'a)' luJh CUlS CO tbt
bmb. HaM:c- WMkr lhe proposal m3de by RBL it•"'Ol.tkl be bclnns a Pl"' or
me knod muJs
(or satr:lh&c: COMCC!IA'U)', if the banks USC ifoeCOWlll!'OiftJ the nortb C'Mk'm -Cfi and lbr Uftder
bantcd da1Uricti.

lltvch1rn1('11!of l>l trlh11tion Channels

11lc niajor wMJ upcom ini ch:innels of distribution in the lxutkin.g indu try, bci;:ldc branches are
AT t.s.intc:mc:t banlcinJ:.mobile and tclepb()CI(' banking and card billed ckhvcry i;:y,;;1ems.

AThb •·CR tWOduorid 10 the 1ndi3n Noting indmlJ'y ID the c.f y 199()$ 11111aatcd by foreign
bub. l\loe1 forcap tmlb 2l'ld. some pri\'allL" sector pb.)'l.."'n 51.lffcmd from • iCl"M)Ul. lwkticap •
that limo- I.Kt of a lill"OtlS branch nct"-"Oft.. AThi tccboo1ogy -u IHCd u a mcaM 10 p:anisll}'
ovc:'roomc tb11tut.ndkap by reaching out to lhe cuslOmC'rS at a kJ-uaruoal and 1nanion cosas
and oO"crlna hn.'.-!i'.k frtt icu. Since then. innovations m ATt tcchnoloay ha -c romc a Jong
. ;;cd manifold. P\lblk: sec:1or blLllkli ha\-c also now
way and cu1>1mncr l'ClCepc i 'd)CSS bas tllso incn.":a<
('Otcrcd the f'8CC for cXpan!iikln of AThi necv'.Of'ks.. Oc\'t:lopmmt of ATh1 nctworl:s is nor only
Le\"t'fUgcd for lowerin5 1hc 1rnnsactioo costs.but also as an c:ffcc11·c muttcdnich:anntl rtsource.

Banks ..-ross the cowury ha,·e staned the process or setting up ATI.1.1!1 m11blcd with biometric
tee)' 10 cap 1hc poec:n1ial of nu:al m:ukc:ts.A Large proporbOA of the population in such
ccnon dotJ noc fld(ipt iel'bnology as filsl as tbc wb.ln centres due 10 che liqc 5alle iUilrrac:y.
Oc'\"Clopmcnt o( biomroic:' technology made lhr use ol xlf JIC""tte ch:.lnncb likr AThts
viable w1ch ra;pcct 10 thr illiectDtt popubtion. 1bouP U:pcll!ll" C IO in._qafl. 1hr scopr ol
blomdra ,,cxpcand.a.nJ Dpidly. h provides for brtttt SllX\Ulty S)'1-llem. by llnt1ns tftdrmWs
""CnflCIDOD co R!COpllice of lbe fa«. liogerprillts. t)""C:S or'OICC·Some brJ!C b:ll'lts ol tht
COU11try have uhn lhr'!t fim la-°3tds large: sc:ak ol blolnrcric AThls..
)' for nnl b.mbnJ.. Al thr indusu)1 k\-d.00.-n-u.dm keblioloC)' ti )'Ct .,hr adopted:
lhr hip ••'Ol"'o:i larp'ly a'C.'OUmiog for me deb.y in ldopt.,.

J\tultilinE'••I AT!\.t 111

lnstallalioa of muhilin ual ATh1s tuis also cnltttd pil<M implc:n1c:nLacion Ma;,c for many large
banks in Lhc coontry. This 1tthnok>gicaJ inno\1atioa is also ain1cd ILi Lhc rurul bmlkin;btt'iiness
bclie,·cd io ha\'C llLIJC unu1ppcd potential The Jaogu.n oe di,'Cl'Jity of h\d i:a hall proved 10 be a
n1ajor in"11>cdin1cn110 1hc octi\•c odopiion of nc\\' technology.rcstr11incJ by the lllC'k of knowledge
of Enahllh.

1\l111Jif11octh>gal &Dis

tu.l.ttfUll((JOa( Ant.s yn IO hr introduttd by moM. badts lll Inch&. bul have l1Jn3dy bttft
Dtt
ttCOpUZCd at a very c-ff«."rivc mr:ms lO XttSS otbcr tw.ki•g hd11ftuictiOl'tial AThis !ft'
cqwppcd IC> perform oda" fiw.tiom.. besides dispmsdg cam wl provlda...llCClOlm infonn:wricwt
t.toblle 1c:c:t.ia- tlC.UttftJ. bill ps)'lDttll. :md aih"'Utamg wr rc::bb""CI)' acw wen dm ttt being
up1omt,.,. muh1functlOllW AThlt.. •11icb b:n"C" the potmt&al W> h«oaac m'COUC' for
lhr bMkJ by ctTeou:is utn.. besides acting as ddi""'ft'Y chanDt:b. ltbl al tbt additiuls .,
1bc An.1rou11t rt<fU• 1"pC'Cific :.ppro\'al from the regublor.

29
TJ\ t N<1-.-·tu•k SwltchH

ATht s·ilchn; arc used 10 connect tht ATMs to the accounhng pl1'tfonn11 ()( the rci,•e
banks. In Ofdc:r to connrc1 the ATh1nt'l·orts of difFcrent banks.. u.pc:Jt level fiWilChc!I n.rc rcquittd
that connec:I lhc viui(lU!> fiWitches: of indiviclwtJ banks. Through thi5 lhnoloa,y. ATr..1C'tlnls of
ooo bw1k can be used at the ATtl.1s or ocher b:tnk.'i. racili.t::tdng bcucr custoo"IC'r convt'.!nicnce.
Under the c:um:n1 mcch:sniun, l:nnks O'\\'ning the ATh1chargt" a rec for allowlns 1hecus1omen; of
Somt' other bmk 10O!CCCU. iu AThi.

Amon.a the vllliou1 An1 network switc.bcs art: Ca.dl Trtt. BANCS. Caih net trrRE :and
N.:aboGal Fiuncilll Swiu:b. l\tost Ant switches att also hntcdto V1.uor u_ tcreud JJ1tmys.

la order to the of opcr.uim for banb. IDRBT.•i'ucb ad.m1niucn !ht S:n:iorl:al

ttlM
F...aaiS•·.u:h. bu _...,u !hr n.ildling ftt•ilhdfttt &om Dccc:mbcr 3.100'1.

lnlttnet baftk1n110 lndiJt hep util'lg toOtS ooly from the early ?(XX)j.lcdcmcc bantans seniots
•c offemi an three lcls. The first Jd rs of a bank's 1nJC.xmat10llllll \\'cl>s1tc.\\'herein only
queries urc h 1nd lcd: 1hc K'IOOnd le\"cl includes: Siq>k Tranl'lllCbonlLI Yt tb.1;;ilei. which mabk's
cuslORl('tJ 10;i,c instruetions_ oolinc applications and balance cnquiriC§. Under Simple
Trunsac:liona l \Vcbsile11. no fund based transactions arc alloM!d 10 be conduc1cd. Internet
banking in Ind in has tt"nchcd le\1el thrtt. offering Fully Trans:actiorual \Vcbshcti, which allow for
fund lnan. rcn tuld \•arlouli vllluc nddcd ser\'tccs.

Internet biankins J>Clli« hip opcraaioo.iJ. security and kg_al rii1b. Thill hllC rcs1raintd the
dc,•eklpmcnt of 1nlcmct banking in India. The guidelines govcm•ni u.cc:rnct bunkins; opcrnrioas
in loWa cO\ m ll number of ttthnological. S«Urit)• rclalcd and lepl lJt.'SUCJ to be in
rc.blloa to 1Al.Cmef bonkins.According to tbl! earlier gwdc:bncs. .II.II inland bankln.s KtYices h3d
to be *9olrun.11ed an lac:lJ airm'IC'y. but oow. n·co forrign och:an&c set\'iCU. ror che prnnincd
uadcrlYUll b'WlWCIOm. C1l1'I btofftttdtbroagb. ialcract tJmkiag

........-....cu ..off<t<d ooly by l>ri:s fic<m<d ...i.......,,..s .....,,.."'""'.ph)'>icol

pR'SC'llCC U1 IDdtL. O\"'UW.31 oi lndi:Jn banks ll'C .UO..'Cd to 1lllllircn* dlltt'llU bmliftg
oaly afia' SM.9".f)"'l.QJ the suprnisor inaMirioo 10the borne 5Upft'\ u;or,

Phone and mobile b:ankins nrc a fllidy ttttn1phcnomcnoo ror lhc lnda111 bin.kins lnduslf)'.lkn-
ui.st opcna11vc: guideline• 1tnd restrictions on tht type and quanlum of lran. 1iom th:i1cnn be
u ndertaken'i4 1hh: route. Phont: banking channels runcrion lhmugh fl.I\ h11emc1iW! Voice
30
 (lVRS) ot tdeblntjng exeaxti\'CS al the banb.. Tbc 1ranae1lon< att limited 10
Rcspoll!iC Sya;:acm
balunce "nqu1ries, tnuu;aeiim enquiries. s'op pa)mcnt 1nstr\Klll(KUI on chcqueli\ and funds
tnmsfen of nnll amounts (per 1ransaction limit of Rs 2500. OVt'rall Cl&p Of Rs S(m per d:t)' per
custonier).Accocdi11110 the draf1 guidelines on nlobilc bnnking. only banb: "'h 1eh nrc littnscd
:uKt SUJ)Cf'Vised I n India and ha\•e a physical presence in IJKtia llTC allowed 10 orrcr mobile
bank:ina scrvic. Bc11idc-.on1y rupee b3SCd services can be of li:rcd. 1obile bank ln; llCf'Vices ore
to be rc'.ilrictcd to bWllr: mccount and credit card account hokk.-rl "'hich iw K YC and M1C
con1pli=rin1.

With Uw: raptdly JJOWlft.J mobilr penetration in w oounuy.mobile bid.ins hltl the pcuntbl to
become • mau bonkin;. eh:lntld with'"1Y minim11m in.-.-c5tmnl rc:qwrcd by thr b.1nks..
Hov."'C'\-cr.more 8Ct'W\ty ililxs nttd 10 be a:idrt'SSCd bt:fcn banba& can be mon
frttlr v1a 1tuJ chamcl.

Card Razd Pdirrcr SnJrpp

Amons the card ba ddivuy mtthsnisms for ..-anous banking JCl"o iccs. IR" cndlt earck.. debit
cardJ. Nnarl card!' etc. These M\•e bttn im.mcnscly successful an lnd1.1 iUK'e 1.bcir bunch.
Pmctnlilion of' l.hcllc card h:lsod sysiems Juye ioc.rcas4.'d manifold O\"ft' the p.a!iil decade Aided by
upwiding An1nct\\'Ol'kll and Poin1 of Sale (POS) tcnniuls.banb h:ive been abtc to incrcast"
thetran!>1L on of cu-Qon1et'i tO\\•ards these ch:mncls.thereby reducinglhc.lr cos111 100.

h)'mf'n 1111id fif'lll'1nrnl Sv lem'.1'

The inno\•iat.ion Sn 1cchnolo y Md communiet11tion infrasb'UC'ture 1n rtecnr )'CW'1 hll\·c imp.1Cted

blilnb lD 1t 1M1e way 1hmup the OO·etopmc:m or payment and SC'ltlcmcnt i)'l'tcmll. which att
ttntr.al to the ponioo ol tht l:usiRtS.K'S of banks.

la onkr 10 iithe instiwtioo.31 fr.m:rtt.'Olt ror tht paymml ..... Sdlkmrnl')""UCmS i:o the
couatry.1be RBI cc-;riwltd. il'l 2005.a Board ror Rqubboa aad .oa of hymml md
Scttk:n:at S)'*lm (BPSS) ss a Commitle<- oL ils Cmual e.o.d. Tbe BPSS llOli' b)°' 00.'l!t
pobau Rbliq, ID dlic ttpbtioe and supenisa ol all l)"'JN!S al p1)'1Dctll Md X'ltlcmml .l)'Wmf..
scB .QDdan.k for odlinJ and futwto S)"'SU10S.. #lflPO\--CS cnir:na b .-hon,,..,.of pz)'mttll md
sdlklDC'Clll ')'ACmi. atld delt:rmines criteria. for mon to chtK J;)'SIOM. iadadittg
conhnuataon. 1t:nn1nauot1 and ttjttUoo of mcmbcrslup.Thcruflcr.the a:ovcm.mcnt and 1he RBI
r('lt the need rot a lcpl fnme91o'C'JI'\: dedicattd to the effldcN fWICbOl\lnS OC the p:t)'lnel.'ll iand
seltl('RIC'nl 1ys:tc.m1. 11'IC Pn)menr and Settlement Systenu Act "n p!lSM.'d in Occcmher 2CMl7.
which en11)(1'\\'Cfod the RBI IO rtgulate and supcivi.S4." the payment wwj !ICtllcmcnt S)'Stems :ind
pnl"idcd • lcpl basis Far mu1tila1cral netting nnd .settlement

31
Among 1hcnlOlil impona.nt impm\'Cment in paper based clearing syi11enu1 wa._ dM:i in1mducLion or
11CR 1cchnoloay in tht! mid 1980s. Tilough impro\'cn1cnto; continued to be made in 1JCR
cnabk:d in51IUJJICDI. 1he n1ajor tnms:ition is expected now. wlth the hnplcn1cnuu ion of lhe
Cheque Truncation Sy1cn1for IM processing or chcque:s.

TnlllilalllOD lS lhc proccg: of stopping lht t'llO"' cmtOl of &hr ph) cibcquc: which is IO
uwaicd .. some po.a ro-rowr to tbr drntt bnodl --rkceroNc unaee ti thr chrqae-
- be foCll '° mt chwtt bnrtcb aloog with the rt:k\"Ull mfonnmoe lite lhr flCR ftdds..
dllc ol ...pttsmaiftl b.mb t"IC. Tbus. d:lc CT'S mllK'e the pcobabebty oL fumds..
problom<. JosU1ics problems and lbr COSl d--.

The cheque U\lftcaltOn J)""trm -.<as J31UK'bed oo a pilol 1n the Na1JOnl.I c.,.w Rrpon of
New Delhi on Fctn:iry I. 2008.v•ilh the participation of 10 banb. The main adnt11a;.c of the
cheque truncMiOn J)'SICm is: th31 ii obvistCS the ph)'SIC'aJ prt'st':DlallOCI Of !he chrque llO the
clearing hou-'C.lnstclld, tht rJcclmnic im3gc of lhc: cheque v·.ould be: required II) be s:cnr 10 the
clearing hot.I. 'This woold pmviclt: a more cost fTccti\-c mode or8CtllcnlCflt 1h1Ln manual and
11CR ckarina.rn.:ibling rcalizaLion of cheques on the same day. AnM:"1Klmcn1s have alre3dy
been 1nadc in dM:i Nl AC1 10 gi\'e legal recognition to lhc clcctronklnuiac of the rruncak'd
cheque.providina for llM)Ulld legal frn.mcv·.od;: for lhc introducdon or
CTS.

Currently the cf(oni' on incrt:3Sing du! p-occssing efficiency w11h rc'ipcct 110 pnpcr bas<'d
tnlnlLllClioaJ., ud a'fll a'possible. to rNuct: w burden on p;apcr clc;irins.Through W
in&roductJOQ of ldvanccd t:karonic funds transfer mtebaniws. tbc RBI bttn u.cccssful in
··· a1a. pon.an or pmpet" 1xrstd trnns3<1)ons kt tbt: t:kc:bOOK roult:.
dJ\ut1

The Ek<:1m111c Catina Strvitt (ECS) introduced by the RBI in 1995. akin 10 1Au1omn:ctd
Ckarina l"lousc li:)'liltm 1tui1 is: Qf)(:rational in ccttain other counlric11 llkC 1hc US. ECS has: l'\\'O

32
'arianlJ.. ECS dcb11clc:uins and ECS crcdi1 clearing .service.EC'Scrtelit ckarln;. optt:l!Cfi an the
pr1DC1plc Of '11nglc debit muh1plc Credits' and IS used (er tr.msaelK'JnS l1l>C p;l)'mC'fll Of SftlSf)'.
d1v1dcnd, pcnsM'ln, 1ntJt c1c. ECS debit clearing servtec cs on the pnnc1ple of single
crcd1l multiple debris' and 1s used by utihl)' setV1ce prov1dc:r-s for collection Qf cleetnc1l)' hills,
lclcpbonc bilh1 nnd 01hcr ch11rgc. s n.nd also by baob for collect ion!! ot principal nnd in1cres1
rcpaymcncs. Sc11kmcn1 unr ECS i. undcnakco on T+I basis. Any ECS U "C':r can undc11ake 1lr
trun.<U1CtionJ by rcab-tcrin; 1b:m lves with an approved clearing house.

Opcr..i.tnl from 74 diffcttn1 loc:1tions.. ECS bandlcs an 111\'eragc or 20 nuUKin 1nnsactions per
month. lt coabla c:t)' paiymcnu and colltttions for rcpctiti,·c: and bulk cnan._qnion.t,. ECS lakts
o(( • ICJl ol bw*a of paiprr work from the: OOnks. cnablul& smooth now o/ ll'UlYietions. The
vofl.UDC ot c:kc:uoa.etnnsxtiom: h:a:s inctt3sed •aa :anoml a" ra&C s.ro-·th rw of 32.l" durinJ
FY(lS..FY09.Tbc me of ECS (cm:ld) 3Dd ECS (dcbi1). in partaaabr. hM -.:11 mbsotw.W
gt'O'A1b ..tbc la.u "'

The RBIha< ...,.....,, .....ix.Ilb< N......EkanJaic Cbno& Sen,..(1"'ECSi in Sqxmibtt

2008. ,.,iucb '' ui""'°''Cll'llCfll O\tt lhe EC:S cumul)' opcnUOUI. Under 1''-ECS. sll
tr.msaaJOnl Wll be 111 •CCOlraJiud tocatioo called the NlfJOMI Clcan.l'IJCdl. localtd
lD twnbal. as •pin thr ECS, ••here processing is currently done .II 74 d1ffcmu locationi. ECS
sys&em ha!!; a dcccntr.al1 funaloning.and requires uscn IO prc:p;arc: e j('f rL ECS d:m.
ccntrc--v;i.i.;e. u31C requiml 10 1ic up v·.ith 1ocB.1 spoosor baob for prcJ.Cnt 1n; ECS file 10 each
ECS Ceoln:. All on Scpicmhcr 2008. 25000 branches of 50 bomb pardctpa.tc in the NEC:S.
l.c''emgins on the core b:inkins, system. N'ECS is cx:pccicd to bring n'l()(c crneicncyin10 che
S)'li(COl,

lbt l;:ai.mch or thr clcetmnic funds transfer mech:lni$0l!I bcpn with the Ekc:1mnic Funds
Tra<Jfcr (EFT) S)"'\Ccm. Thr EFf Systt:m wu opmiriooali:ttd 1n 199SCO\'Ml'.l!C IS ttnc 11-1 ttde
""' ....... -_...... dcariagbooscs.
SpccW EFT ($EFT) tchrmr.a '\"'Xi:ml ol the EFr sys&cm. ..._ W'llh cffcra fiom Api1
I. 2003. D order ., macuc the CXJ'taagc ol ibc scbcmc -9 IO JlrO' tdc for qnldtt funds
trwfcn. SEF'T WM made 2\'2ibbk across bf whts ol banks thal•'Cft compattiW and
\'Ll a _..ut: Cft3bli:ng mm:fcr of dcatooic' mes Wt the f'CUl'\ IDC bt"8Ch ia a
stnugbl t:hrou#t manner (STP processing). In tht case ol EFT• .u branchci or banb ia the 15
locations •'tft p.aii of 1hc scheme. •hethcr the)• an- nct•"'Olkcd or not.
A new vari ILnll of the EFf called the National EFT (NE.Fl) wu decided to 1mpk:nv:ntcd
(NCM.'mbcf 1()()$) JiO till 10 bro:id base the facilities of EFT. Thi.ti •'Id a n!L1lon•·ide retail
clcctronk fund'1nansfcr mcchanimt bc1cen 1hc nt1workcd br.anchCll of bank N'EFT provided

33
ror amqiOll with lhe Suuctuttd Financial 1essaging Soluuon (SA.tS) or the lndutn Fin:tnciaJ
Netv.'Ofl: (lNflNE'T). The NEPT ust:s SR.1S for EFT mes.l. \lgc crc111:1cwa •nd 1n.nmiuion from
the branch IO the · - 611'-CV.11)' and to the NEl--r Cenlrc, thcfeby consiWubl)' enhancing the
sccurily in lhc uuiH;Jer or funds. \\'bile RTGS is a real time 11r11 11c1tk 1ncn1 funds 1rn.nsfer
producl. Nl!Ff I a c1cremc1 net settlement funds U'ansfer produel. All the NEFI' l)'Slem
stabilized O\'Cf 1in1c.the number of scuJement-; in NEFr v.•as incrc.alled fro1n the ini1it1J two to
six. NEFT now providrs six scttlemcn1 cycles a day and c:na funck 1r1i.MJer LO
bc:ncfieiiari sicrount on T+O basis.bringing it closer to real tin)C scttk-mcnl.

lbr commcncemcn• of NEFr kd eo discontinlUlion. or SEFT.and EFT lJ ..,.... 1W11.113bae only for
'°' mmenl peymenu. With the SR.ts fxility. braocbes can puticapa&e 10 both thr RTGS and
the N'EFT S It is avis:icntd th:lt all tbc RTGScnlbkd t.nt bn8chc5 v;cuki bt 'EFT-
embkd IOO. s;o that thr ('tKIC)fl'M'f •"Oldd a cboia" bcn"tta R.TGS or N'EFI'. on timt
urgracy.nloe the trmtmioft and difftttm dmgcs appl......oa die 1-.-v li) IC'lm. UsiDJ tblC'
:\EFT lal a GnC-tf3'Y remimntt bcility fn. ladali 10 Nepal hH abo btta
unpi<mcokd bythe RBI ,;,.,., ISch tsy 2008.

In onkr to the cmuage of NEFT to a widtt S«OOn o( bank cu.Momcn 1n scm -urb:m.
LACf'CllliC

and nnl arcu.. an cnh:tneunent ol the l\".EFT caUed the 'EFT-X (NatKlll.81EFT (Extc:Ddcd)) is
al pl"ClpO!!\Cd ror phai;c wi!OC iliemmtation. This v.•ould faal1tat.e non-«e"A'Qft:ed bmnches of
banb to inn:d'cr rundi elC!Ctf'OflicaUy by accessing; NEfT-cnablcd brllnC'ho for 1rantt of funds.
NEPT (Eitcndcd) v.-ould 'A'Of'k on a T+ I basis and "'ould cnsurc \\•Kie Nt'll CO\•entge or lht
clcclronic fumk u·u.ni;;rcr stem.

The other p!lymcnt and K.Ulemcn1systmts deployed v·.erc mostly aimed •t 11mall wtue repetiti,·c
tranuctlOM. br1cly for the nu.ii mms.actions.. The introduchon or RTGS in 2<XM '4'"3.S
imtnamcl'llal lft I.be cte.". ClopneDI of infrasauctutt fut Systemically lmpottm:U Pnymrnl Systems:
(SIPS

Country \'tar System Network Sh•JM of

r11lor l\t· now
Structure
 Bcllllun> 1996 EWPS S\\'11'-T y
TBF y
"''"""'
Gcmian\I
llalv
1997
1988
1997
EIL-ZV
Bl-REL
SWll-'T
CB
SA
y
v
la I 1988 BOJ-NET CB v
NcthcrlwKlll 1997 TOP CHIACH v
S\lo"-c!dcn 1986 RIX CB v
SWllttrlwK) 1987 SIC Tekkurs AG v
UK 1984 CHAPS CHAPS L
llSA 1918 Fed wire CB v

The papncot •)'*m m lndi2 l.:argrly folJoil-ed :a dt:fmcd on K'ttkmcot rq.i.mc:.•1Ucb mr3fll dw
die llCI .....WM wttlrd brf."tttlbas OQ :a ddcmd basis. lbu. pcMd. QptflCaftl kmcm;
rub. RTGS WM bondtird by RBL wi. lich cmbkd. a ml Umr ldlkmnl 01111 a pau basis. To
cmun: thll RTGS s)"Sltm is med Oft)y fOr brXt ""3lut U'lmlC'boDs -.IttU&I 1*m
allC'mlle chMlotl ol doeuooic fmds mm.fer. a miammn thrDhold o( OOC btb tuprrs•"'3.S
pracnbcd for caqomcr tr.ll'tSX'lioM aader RTGS on Jmwry I. 2007.

RTGS muv.m1za'YJilcmic rists IOO. in addition to scttkmcnt rub. n p:ipcr funds

sct11cmc'm lhroueh 1he 1n1Cfb3nk clearing an- replaced by the electronic. credit tn1Mftt ba.vd
RTGS ):)')lt':m. I-lip systemioc risks art: posed by higb \-aluc 1n1crb11nk INltti>fcrs. 50., i1 is
coosidcrtd cbinahlc tha1 all major in1crbank uansfcrs among rommctCbl banb h:a\•ini :icoouttt<;
wilh RBI be muled only 1t.-oos,h the RTGS system. The RTGS S)'l'lcm h.i1d 11 OlCDlrdtip ol 107
pardcip;antll (96 hank.. 8 prim3ry dealers. lhe Reset\'C Bank and the Dcpollh ln_wl'tlncc, Credit
Ouarw>lcc Corpon1lon and Cl-et1ting Co..-poratioo of lodia Ltd.) as 111 e:nd·Au,tt1.>t 2009.The 3Ch
llDd ubli1111tion of1hc RTGS has witnessed a susttlincd incR.'a'.ic $Ince its introduction in 2004. 1k
bankltnnch ncrwork eovtta.;t of the RTGS system incn:ast'd to SS.720 bntnchc !l1 more than
10.000cC'nltCS fac1lita1:i.ns the incttas:ed usage orthis mode or funds tnanJcr.

bay lDc1a.a baalJ; h3ndled is.sues in home bll the blc 1990I.. Thcrnfttt.tbt"
oomplaoom o( the hH§"M'W'tj.C lilt NIPI' RM .. ol $pCCl&lu:cid '\(!ndoft .,h:mdk
oomplu JJU(f. Due IO tbc rompkxities ill'\"'Ol\-ed most banb DOW prd"cr fO CllpJt" rr \'t"fldcn
to UJtrodYCC sp«tab.:1.o:l ., "aR s to bdp m tbcu- nsk t:)-"w:mt.. mail .nd COipotSlt"

banki,.. eard rnent sysaems.. oompW back offl('C support 1ndud1n1dm gemem
systcm1.

35
()h..,l•dt"t snd RJ<k •Wldarfid •ith IT application

The uc o( IT In b:ankini srctor b.:ls bought le number o( bcncfils 10 banki: as Yr ll ai; its
cuslomcrs. llut at 1hc nip i;ide of changing fioaocial Jaodscapc fro1n brick 10 cl.ck bn.nkioa. tbt
aJ>plicncion or IT In h:Lnkins. cxBCCtb:ltcs 1rnditiooal banking ri.sb und rnisod nuany 1htt11ts 10
banking uuthorhic11. Thtsc nmplificd risk'.> pcrsisl C\'CO if lhcsystcn1U!iell c:IOM:d flC'l\\'otksios1cad
or open networks (M in c ol closed nct:\\'od:: progr.an1s also. the ibilty of iMCcurc
telephone conncc1lons.pass"'Ofd violations. :md system attlcl.J cxbt).. l.oc:kc11 and LinJcr (1997)
:Wo ickntifiod n•llt .,..:a vtty cruciaJ .upect or electronic booking. The rlJ.k in\'olvcd in usi.ns rr in
bankina opcri.1.om 1ncltldc s<CUrity risk. lcg:t.l. risks. stralcpc nJ.k. moocy laundcrin1risk..
rcput.:alJOll ftJk CCC.Some other obuxJies :associattd wilb ff apphcabOM U:•Ct t«jUi:mntnt of
heavy ln\'(jUIXDI 1•hllnhntt imd soli'A':ln"•i.tb compnb' loaa JdMJOO pcnod. h may lead
to problc coaccmu:as coa C'OtlO"OI. of uwfia)OIQI S)"3lcm to DCW i:yiacm and mw:n
ol UC'C'M capeaty.Ranhtt dlr IO tbt c•p•nriSJI 1h ia lhc llli1lnbcr of IC'Chftlcal lft""'ftlriom..
tbcR .......,... • fear ol piftJ lhe 11'1#mMlfcd tttbnicp..ourdSd.t.hordy.
 RECO fENDATIONS AND SUGGESTIONS

(a) Policy AcliOfll.l the Banking Soctor shoo.Id:

(i) EM11bh prosnan1mts and policies 10 coSUtt' that their human l'CjOUl'CCll nccd'li will me1.
These llhould mnl:c pnwision for tM recruitmco1 of slolls "·hich are WM:"i lltll)' ro their care
dlsciphncll.. u w-cll !t.' continuous training. both in-house and throu.ah p3nncrinS 12

(iJ) Be pro4C11vc whh dt'-eiopmeots in the sccwr.Tbe bankl do DOI ahrays ha IO

to
suggcsbOQS for the 1 cry.0-
•1Mt on l')\'Cl"IUftml' 10 K1the agmd:l ot m:aU Ir m this
.,the Idea ror a CAR.:Olt curmacy •·blcb - rant mooea:l by • bantas"
as.\OCUIDO&. A90lhcr uwe•1Uch woaJd butit:r• from. a JWDIM&Xt by me bents Ui lhr old
y COl\\"'eftbry miri.31iw-

(ill) Tale*P5 to 1mpG\-e its public im3ge. This am be xblc:\"Cd tbnJu,a. pubt
•iuch upbms •'ha banku'li is !lboul :md its benefits to the SOCIC't)'

The GQ\ crnmcnt.1ihould:

(i) Stgn lbc CARIC0!.1 Firuncial Senitts Agccmmt u soon a5 pm1blc .Th1• lhou ld qujckf:n
the pooc of fiwincial lntqpu1ion and the ablistuncn1of the regk>Nil c.11piu1I nuut:cr
(ii) Undtttllkc wine technical "'ork on a regional basis to better u tand 1hc relationship
between'iarioo.s level.Ii of 1axn1ion and the profi1abili1y of the bankJ, Thi' \\'Otlld help 10
dcU m1ine \lilheihcr IAJC polici(!S 31'C injurious 10 the growth or lhc bw\ll:il'IS U!CtOr 11nd ir any
i.nttnti\'CJ i.te wurun1cd. 11 would be usc:fuJ for this wort to be undcn11kcn u pan or tM
mo\·('nJCRI IOWan:l'lhc b3t'm0l'lis.arion or fiscal policy

(i.ii) Ea.u.bh:sh waiu:bdoJ a dw "-ould be cbargcd Wlth proc«e1n1the intttHU of

comumcn.. EA.ampk$ ol att am:i--OUSt bodies and dcpos.11 i.nsurwc corponlJOM
(1v) E.atiblub • body 10 bcilitab! ck dforb of ts.Ms IO tltc- ol
pnmdcd ill uD il S 13

(i) Conuoue '° u nm.I !iiDtiioo 10 W b:mks to alloca&c •rupcr proponjOCI of lhrir Cftdit 10
the foman-cxchanie camin.s SttlOfS. Ho<r".'e\-u. cht)• should cxunane the: fcuibili1y of tt-
1nlroduc1n1ettd11cciltns:"on Lending ror P3f"licubr .ctivines

(ii)Creme po11it1on11 or hanking ombudsman 10 look after complaints about bank fccti n.nd ch:irges

37
 (in) U...c publac odue••iol'I 10 make consumers more aware or rcgul•IOf)' procticet:; u 'ell M
chnn.gcs in moncuwy policy and in the financiaJ environment

(b) Oat4! Ga?' 1he Biu k lOhould:(i) endc3\'out 10 produce and publim 11wider mnsc of fiMnCial
in(or1nncion 11nd nn'.ll i

(ii) Seek to beconlC familiar wi1h all policies. programmes and rcenlCnlli which n1ay i:mJ>31.1
their cumnt und fu1urc operations

i lat1\'C Chan,ci The Go\em:mcnts should: (i) make \\' llC\'Cf" wncnd:mcnt1 are ncctsiM)'
(c) Lcss
to ensure thl&ll there tft no incoasisttnciies bct\\'ttn lhc pLCCO or lc11JJaikin under which chc
bukla& KCICJI' lt;rrplllltd
(•)...........pombk ............lh< l<gisbrioa 14

( •)Rqm.c me bmtlnJ IL'CKlr"asa disDnct poop

(i,) SlrC:ftSthce tbt lcpl pnwisiom: rebring-=> goveruocc rtqUll't:llXDU
 LIMITATIONS OF THE PRO.JECT

E.-ly expcricnc:c11 with eltt1ronic comn.le:ttt in the banking induJtry. which ha bcC'n 11 picr
i.n the me orelectronic 5)'5tcms, can be used to team or some.' potential da.n;c,.and i!ls to be
Utl:cn inlo QCCOUnl, The UK o( Auklm31ed Teller 1aclliDl'S and electronic home bClnldnC s:ysacms
b;as llKR'llSlAJIY lllio.""N cusaomers 10 bank outside or tradition.:LI bwlk (AC1ht1CS. for most or their
tnim.aa.om..T1W wu COBSis1eo1"ilh the cost sa.vmgs sttatqy ol mc»I bo.nb. whJch
lbat ck:clroaic •""M" abcu K\"CD tllDC'J lio5 CtMtly conipwcd ID the
IDMUI olthc:R by a bank tdltt.N "t:nhdol..lbe f1t1 tbal cuwimcn'only
COlltlt'l •-.lb tbc:ar buts•"n througfl (ramtt- ) clcctrumC' uurflCCI. and lhr lmjor"
dlffllCUltlc1. •lDIC'plllJ thr kpcy S)"'Slml.S ol a typical bent. JR' t.lt•ID mall)' Cl:!iiCS
from eddttl!Oml prodo."U 10 cusaocnecs (c::ros.s-sclhng).Ia some Ewopc:ao mad:tu. the
msunncc COCl'lplNCI loot opportunity of m.to grab bl.umcss from tMAks. wltms Avin;ss
prodDCU to aaomcn 1twoup their cxtensi\"t: distribution nec:•"'Od. Samat.iy.the dccrnse in
human inlCtaetk>ft Yfilh CUfitOfl'ICtS could also lead 10 a bS!i0ph1stacaicd undcntandir\J Of their
°'"
occdi.;• •,lhc)''rt: PQt a.lwa)1' able Kt express c1J1nnK'll1:S.critici!irm rcquc_i.c1for new products
whUcinlcl"IChna whh 1nachint:s.Th.is should lead 10 a design of ckdronic con1nlc:l'CC sysLCms:
whk:h incOfpcnlecapn.bili1i.cs for customer understanding and for pro;acti\'CI !lttlln;of new
productll. Elcaronlc busil)CU 1rnnsac1ions can only be successful 1f flnlUK"lnt e.xchllnj;Cibclwcu
bu)l:l'!I wtd scllen can occw in a 11imple. univcr.snJly aettptccl s.alC and chCILJ) way. Varioui
systcn1J ha\'C been proposed. some or them based on traditional n1cchw1i1n,s (e.a.crcdi1CMdll
accoonl'4) wh1)e ochers rely on new designs.such as clcctrook money.The key here will be to
ftnd a few wtdcly acceptftl mcch::mis:ms.••bicb can be used by mo&t actoB.The recent
agrcc:mcnt between tasterCard and Visa on OOI! urity stancbrd for cred.11cud 1n1:ns-1:ions
0\- U lk lntcmct:.and ils baclci:og by mos1 major sott.-att \'cndcn ls one *'P 10 the ri;:h1

cbrttboD. 11nJ donal diminub tht Ottd re. man" spttialu:C'd S)"Jkrm.tror WiUll« liO 4.l1ow
IDlm> .tht udutl:r:of \'U')' small amo-ws of wy (•fe-· ttnti) &a eutunir for
mfonmb09 or ICR'itti. Tht-St ...,p:l)-mtm o::it'('haniSolS •illm 1_.cubic' new bminrss
modrb MICb Mpi)'1>Umrrick- --

39
 CONCLUSION

lnfor-nU1lioi1l«:hlwloey t>frrs enotmotl$ pocentW 3tld llatldp0i1td Y.'Wloti,ti. OJll>fAluJuliei 16 the brull:ing
Jie'l.-..or. 11 pro,idt" COiit ff«:li\'e, rapid :.ad sysit:al30t pr0Yiuo111 ol )lltf'\lil.'h to 1he cuslOmen..
Applialaoo o( rr 1111 hW\b erl3bleil produc1 dt\<t:klplltlll.rclwbtt 1«tlrtiqllH for rislc:
l'llaiftaftmttli.br1n ll'Uin.i(IQtt"")' 10 die S)Slttl!I *"1bdps bcltiti:a& fi«tor rath )' du.un.t 3ad
di\"l't.Slflird lllMUU.rr udromtiU'liarioa 61!'(11toctiag S)'Slt:dl ha\'f: CNaJI ims-t Oft motle')', apul aad
fiott&p odaM!•marlet. tm wr. ot rr .......... anay '-the ooeW'ftbOIUI
,....,t.arse teW aimpulo!'n.Wioo also t\"qli« ....118'111tjl-- •llilrd• 1111111 sam.
wl ....... r·11 wcr.1k k2 ol t-e1-d dtlt 10 1lllt apd ICdalClll "llbe'.* flll'dlft
ladf. ao JOW cb.lxk .. ·8**5 mould edlalit 1U cwacmcn rtprdula p«:MlbOW>
.... u .rrw iUlbhlt l"'..WIM'S f«safny ll'littiUrtl. .... . ••dear ""'*I) &-ivn
from dw.mid ahouMpr.:lpft o( tlSbtJl\'Oh't'd ....,._ ...... I
dfttti\-. procedllr'H. ..:t ,...,, ..a.m. Mid M!ptt'iUGn mDst
romill&tOlbly the artataa; f ud.shouW ia:rodlw ,..,al mcw.hflCllbOll ..ll. In on1a to
!Mb hti.I pot. utot ol domtstie «'qlilttmtf'IU. n abo Mibjec:I '°
aaal)vd by
the tt&Mi1»on. To a'otd the piubibi.bry ot fsilwt: n>gulatty IDOft.llOf"IC or "'ru10n• rq.ulat stc.'Utiry
1tlab are Jil.Mt reqw.1ed. Brl.flli mui.I miiurt proper b3Ck aod l'tOO\ay plM!i llO ai k> C'lliutt full f:utb ill
ltt'hnolc>a)'

40
 BIBILIOGRAPHY

• B:tl:sha. S•• 'Corporme (iovemancc in1·ransformatK>n rimes .I BA Dullc11n. 200J

• Ound Jal:an., ""Strcn;tbcn1ng lnd1an Banlong and F1nancc-Progrcst and ProspcclS' '.1·tic
&nit Ecooomi!it Conf.India.. 2002

41