1.

0 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. E-banking includes 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. Customers access e-banking services using an intelligent electronic device, such
as a personal computer (PC), personal digital assistant (PDA), automated teller machine
(ATM), kiosk, or Touch Tone telephone. While the risks and controls are similar for the
various e-banking access channels, this booklet focuses specifically on Internet-based
services due to the Internet’s widely accessible public network.

1.2 Origin of E-banking In India The Indian banking system has undergone significant
technological transformation since the 1980s.The Rangarajan Committee report in 1980s was
the first step towards computerization of banks. Banks started exploring the idea of 'Total
Bank Automation (TBA)'. Although titled 'Total Bank Automation,' TBA was in most cases
confined to branch automation. It was only in the early 1990s that banks started thinking
about tying-up disparate branches together to facilitate information sharing. At the same time,
private banks entered the banking arena with radically different strategies. The private banks
provided huge budgets to the adoption of technology to provide a whole new range of
financial products and services at minimal costs.

1.3 E-Banking in India Most of Indian commercial banks are providing non-conventional and
innovative banking services. Product innovation is tied to internet banking; increasing
competition amongst the leading banks also promotes product and service differentiation. For
example, despite the Internet Banking System developed in 1990 by the reserve bank of India
with the help of department of telecommunication of India. Moreover, Indian banks offer
innovative technology based banking products and service to their customers. Information
technology revolution affect on traditional banking practice in following manner in India.

1.3.01 Computerization of Banks in India Computerization is general trend in all sector,

banks also trying to Computerization, as per recommendation of Rangarajan Committee (II),
the progress in implementation of the directive of the Central Vigilance Commission (CVC)
on the need to computerize 70 per cent of the banking business by public sector banks before
January 1, 2006, 13 banks had achieved the desired level. Figures as at end of March 2008
indicated that 23 banks have achieved the target, while two banks have computerisations
levels ranging between 70 per cent and 79 per cent and two others were at a level below
65per cent and 29 percent banks having a core banking solution. At present there are 67.7%
of branches are under Core Banking Solutions, 94.6% are fully computerized and 6.4% are
partially computerized branches of public sector banks in India. Other than public sector
banks, all private and foreign banks are mostly computerized recently.

1.3.02 Wireless Banking, Online Banking or Internet Banking Wireless banking/ online
banking is a delivery channel that can extend the reach and enhance the convenience of
Internet banking products and services. Wireless banking occurs when customers access a
financial institution's network using cellular phones, pagers, and personal digital assistants
through telecommunication companies’ wireless networks. It uses the Internet as the delivery
channel by which to conduct banking activity, e.g. transferring funds, paying bills, viewing
checking and savings account balances, paying mortgages, and purchasing financial
instruments and certificates of deposit. Online banking usually offers such features as: •Bank
statements, with the possibility to import data in a personal finance program such as Quicken
or Microsoft Money •Electronic bill payment •Electronic funds transfer between a customer's
own checking and savings accounts, or to another customer's account •Electronically
investment purchase or sale of securities by D-Mat Account •Loan applications and
transactions, such as repayments account aggregation to allow the customers to monitor all of
their accounts in one place whether they are with their main bank or with other
institutions.etc.

1.3.03 Core Banking or Centralized Banking Core banking is a term used to describe a
service provided by a group of networked bank branches. Bank customers may access their
funds from any of the member branch offices. Core banking consists of a networking process
by which the servers of different branches of a bank are joined to a common server and
henceforth an account holder may access, deposit, and withdraw money from his/her account
from any of the branches of the bank. In 21st United States, core banking has become
common place. Today 67.7 % of public sector bank branches are all branches of private and
foreign banks are under core banking solution in India.