I. II. III. IV. V. VI.

CHAPTER NAME Introduction to central bank of India Products of central bank of India Database & methodology Innovations in banking by products Innovations in banking by branches Conclusion, finding & suggestions Bibliography


This chapter contains the information about Central Bank of India origin, vision,

Established in 1911, Central Bank of India was the first Indian

commercial bank, which was wholly owned and managed by Indians. The establishment of the Bank was the ultimate realisation of the dream of Sir Sorabji Pochkhanawala, founder of the Bank. Sir Pherozesha Mehta was the first Chairman of a truly 'Swadeshi Bank'. In fact, such was the extent of pride felt by Sir Sorabji Pochkhanawala that he proclaimed Central Bank as the 'property of the nation and the country's asset'. He also added that 'Central Bank lives on people's faith and regards itself as the people's own bank'. During the past 95 years of history the Bank has weathered many storms and faced many challenges. The Bank could successfully transform every threat into business opportunity and excelled over its peers in the Banking industry. A number of innovative and unique banking activities have been launched by Central Bank of India and a brief mention of some of its pioneering services are as under:


1921 1924 1926 1929 1932 1962

Introduction to the Home Savings Safe Deposit Scheme to build saving/thrift habits in all sections of the society. An Exclusive Ladies Department to cater to the Bank's women clientele. Safe Deposit Locker facility and Rupee Travelers' Cheque. Setting up of the Executor and Trustee Department. Deposit Insurance Benefit Scheme. Recurring Deposit Scheme.

Subsequently, even after the nationalization of the Bank in the year 1969, Central Bank continued to introduce a number of innovative banking services as under: 1976 1980 1986 1989 1994 The Merchant Banking Cell was established. Central card, the credit card of the Bank was introduced. 'Platinum Jubilee Money Back Deposit Scheme' was launched. The housing subsidiary Cent Bank Home Finance Ltd. was started with its headquarters at Bhopal in Madhya Pradesh. Quick Cheque Collection Service (QCC) & Express Service was set up to enable speedy collection of outstation cheque. Further in line with the guidelines from Reserve Bank of India as also the Government of India, Central Bank has been playing an increasingly active role in promoting the key thrust areas of agriculture, small scale industries as also


medium and large industries. The Bank also introduced a number of Self Employment Schemes to promote employment among the educated youth. Among the Public Sector Banks, Central Bank of India can be truly described as an All India Bank, due to distribution of its large network in 27 out of 28 States as also in 4 out of 7 Union Territories in India. Central Bank of India holds a very prominent place among the Public Sector Banks on account of its network of 3194 branches and 267 extension counters at various centers throughout the length and breadth of the country In view of its large network of branches as also number of savings and other innovative services offered, the total customer base of the Bank at over 25 million account holders is one of the largest in the banking industry. Customers' confidence in Central Bank of India's wide ranging services can very well be judged from the list of major corporate clients such as ICICI, IDBI, UTI, LIC, HDFC as also almost all major corporate houses in the country.

Our vision is to emerge as a strong, vibrant and pro-active bank

and to positively contribute to emerging needs of the economy through harmonization of human, financial and technological resources and effective risk control system.

Capital structure:
The authorized Capital of Central Bank of India is

15,000 million equity shares of Rs.10 each & 8,000 million are perpetual non-


Out of which 324.460 equity shares of Rs. 022-22161091 022-22022048 022-22021553 011-23318964 033-22301270 022-22024601 022-22022565 Audit & Inspection/ House Keeping & 022-66387777 IBR/ General Administration Dept International Division/ Treasury/ MBD/ Dept of IT Planning & Development/ Accounts/ Legal/ Recovery Zonal Manager .Kolkata New Initiative Dept/ Planning & Development/ Profitability HRD/ Dept of IT/ Risk Management Tel.141.New Delhi Zonal Manager . No.10 issued and 80. 10 fully paid up. General Managers Name Shri G Gupta Shri S Suresh Shri K K Gupta Shri R P Sharma Shri S G Nadgonde Shri A Ghosh Shri G P Chitnis Shri N Natrajan Shri R N Vadivelu Shri R Natarajan Shri S M Deshpande Shri V P Sathe Shri H K Designation Priority Sector/ Rajbhasha/ Operation/ Central Card/ Subsidiaries Credit/ Credit Policy/ Loan Credit Appraisal Zonal Manager .000 equity shares of Rs.Mumbai Metro Audit/ Inspection/ Inter Branch Reconciliation/ Housekeeping Accounts/ Recovery/ Legal & BIFR/ 022-22831592 022-22026776 022-22043673 022-27580571 022-22023326 5 .000.cumulative preference shares.

B. 58-59 Bank Square.in Tel. No.Vesuna Shri K A Somayajulu HRD Zonal Manager . Arera Hills.: 0172 – 2702994/98 Fax: 0172 – 2704047 Email: zmchanzo@centralbank.: 0755 – 2674037/36/35/34/33 Fax: 0755 – 2552019 Email: zmbhopzo@centralbank.co. 13. No.in BHOPAL 9.O.: 0562 – 2850154/3424 Fax: 0562 – 2853698/1341 Email: zmagrazo@centralbank. No.co.co. 205. Lal Darwaja Fax: 079 – 25505995 Ahmedabad – 380 001 Email: zmahmezo@centralbank. Sanjay Place Agra – 282 002 AHMEDABAD Central Bank Building Tel.in 6 . 37/2/4.in Tel. Narman Point Mumbai – 400 021 Tel: 022 – 6638 7777 Zonal Offices 044-28554792 AGRA Block No.co. Sector – 17B Chandigarh – 160 017 CHENNAI Tel. Jail Road Bhopal – 462 011 CHANDIGARH P.Chennai Corporate Office Central Bank of India Chander Mukhi.: 079 – 25503586 P.

Bank Street Hyderabad – 500 195 KOLKATA Central Bank Building 33. No.: 044 – 28554792/4692/4620 Fax: 044 – 28551260 Email: zmchenzo@centralbank. Road. 10.: 033 – 22301270/1275/7007 Fax: 033 – 22309864 Email: zmkolkzo@centralbank.co. Netaji Subhash Road Kolkata – 700 001 LUCKNOW P. B. Central Bank Building Bhangagarh.in MUMBAI METRO ZONAL OFFICE Standard Building. 24611402-05 Fax: 040 – 24742841 Email: zmhydezo@centralbank.co. Vidhan Sabha Road Lucknow – 226 001 Tel. 1st Floor D. 710-712 Mahapathram Road. Road.in 7 .co. Mumbai – 400 023 MUZAFFARPUR Pawapuri Vihar Building. Guwahati – 781 005 HYDERABAD P.in Tel. S.: 040 – 24740361/64.: 0361 – 22457651/52 Fax: 0361 – 22452154 Email: zmguwazo@centralbank. Monteith Road Egmore. N. Tel: 0621 – 22251855 Tel: 022 – 22047229/7301/7304 Fax: 022 – 22044720 Email: zmmmzo@centralbank.in Tel. Akash Deep 23. 522. Chennai – 600 008 GUWAHATI G.in Tel. No.in Tel. B.48/49.: 0522 – 2611301-4 Fax: 0522 – 2621213 Email: zmluckzo@centralbank.co.co.co.

co. E.in Tel.: 020 – 26131611-17 Fax: 020 – 26131618 Email: zmpunezo@centralbank.co. New Delhi – 110 002 PATNA 2nd Floor.: 011 – 23318964.in Tel. Road.in 8 .N. No. 7007. Pune – 411 001 RAIPUR 1st Floor.: 0771 – 2226756. Nagpur – 440 001 NEW DELHI P. G. Block ‘C’ Bombay Market. Block B Maurya Lok Complex Dak Banglow Road.: 0712 – 2520361-63 Fax: 0712 – 2520365 Email: zmnagpzo@centralbank. No. 28 Near Bhagwanpur Chowk Muzaffarpur – 842 001 NAGPUR Oriental Building. 98. Raipur – 492 001 Fax: 0621 – 2251784 Email: zmmuzazo@centralbank. G. B. 317 M. Link House Press Area. 3 Bahadurshah Jafar Road. 2nd Floor Kamptee Road.in Tel.co. H.: 0612 – 2226607 Fax: 0612 – 2221898 Email: zmpatnzo@centralbank.in Tel.co.co.co. Patna – 800 001 PUNE P. B. 2225171 Fax: 0771 – 2234895 Email: zmraipzo@centralbank. Road. 23319268/69 Fax: 011 – 23311332/237 Email: zmdelhzo@centralbank.in Tel.

22874143 Fax: 022 – 22022617 4.: (O) 022 . Shri P. Shri K.22023661 / 66387799 / 66387826 Fax: 22856187 3. Ms H. Shri Albert Tauro Executive Director Chander Mukhi Nariman Point Mumbai-400 021 Tel: 022 . P. Mitra Economic Advisor and Joint Secretary 9 .Directors Directors of Central Bank of India & their addresses: 1. Subbaraman Executive Director Chander Mukhi Nariman Point Mumbai-400 021 Tel: (O) 022 . Daruwalla Chairperson & Managing Director Chander Mukhi Nariman Point Mumbai-400 021 Tel. A.22024393 / 22023942 Fax: 22028122 2.

Thakur Village. Major (Retd) Ved Prakash 204/1 Neb Valley. Nizamuddin East. Satya Bahin 89. Shri Harish Chandhok 10 .K. Kandivili (East) Mumbai – 400101 6. Vaishali Ghaziabad (U. 37/601. Neb Sarainew Delhi Tel: 011 . New Delhi -110013 Tel: 011 – 23269723 7. Smt.Ministry of Finance Banking Division Jeevan Deep Building New Delhi Tel: 011 – 23745128 5. Shri M.P) Tel: 0120 – 2774995 9. Shri Kamal Faruqui A-80. Bhattacharya RBI Nominee Director Evershine Millenium Park Apts. Sector-4.23018891 / 23014325 Fax: 011 – 23017047 8.

72 Janpath New Delhi . Puri Central Bank of India.M. Pareek Central Bank of India. Ms. Indore. Tel: 0731 . No.180 004 12.20-21. Indu Singh Pawar Central Bank of India 18A. Mirza Ismail Road. Saket Ext. P. Gole Market.2493152 0731 – 4064828 10. 70. 244. Jammu Tavi Pin . Jaipur .110 001 Tel: 011 – 23321343/23316708 Fax: 011 – 23357934 13.S.B. Flats Peshwa Road. New Delhi . K. Shri N. Shri Romesh Sabharwal A2/3. Manishpuri. P. Shri C. Shashtri Nagar. Janpath Branch.B.110 001 11. 87. M.302 001 11 .

Central Bank of India was nationalized along with 13 other banks. 1986: 'Plantinum Jubilee Money Back Deposit Scheme' 12 . 1976: The Merchant Banking Cell was established. 1980: Centralcard. Central Bank of India has launched a number of innovative and unique banking activities.Tel: 0141 . 1962: Recurring Deposit Scheme. In 1969. 1924: An Exclusive Ladies Department to cater to the Bank's women clientele. Sir Pherozeshah Mehta was the first Chairman of the Bank. 1926: Safe Deposit Locker facility and Rupee Travellers' Cheques. which was wholly owned and managed by Indians. 1932: Deposit Insurance Benefit Scheme. the credit card of the Bank was Introduced.2370333 Fax: 0141 – 2338900 History of Central Bank of India Sir Sorabji Pochkhanawala established Central Bank of India in 1911. It was the first Indian commercial bank. 1929: Setting up of the Executor and Trustee department. In its 95 years of history. Major among them are: 1921: Introduction of the Home Savings Safe Deposit Scheme to build saving/thrift habits in all sections of the society.

CBI has offered a choice of various deposit schemes with unique features and facilities. which is one of the largest in the banking industry. The Bank has a total customer base of over 25 million account holders.centralbankofindia. was started with its headquarters at Bhopal in Madhya Pradesh. URL: http://www. Central Bank of India has a large network of 3161 branches and 270 extension counters spread over 27 States and 4 Union Territories.in/ This chapter contains information about different products offered by the central bank of India for the benefit of its customers. 13 . These schemes suit different kinds of banking needs you might have.Was launched.co. 1989: The housing subsidiary Cent Bank Home Finance Ltd. 1994: Quick Cheque Collection Service (QCC) & Express Service were set up to enable speedy collection of Outstation cheques.

Money multiplier deposit certificate The interest accrued gets added back to the principal giving you an effective interest rate that is higher than the contracted interest rate.and multiplies of Rs. Amount of deposit Period of deposit Rate of interest minimum amount of Rs. The rate of interest shall be the appropriate rate prevailing on the date of the deposit for the period Premature payment Loans/advance against deposit so selected.and multiplies of Rs. Payment before maturity is available as per prevailing rules. Khazaana deposit scheme Khazaana deposit scheme offers you the double benefits of easy liquidity and high returns. It is also a flexible scheme that allows you to withdraw a part of the deposit amount as and when required. 5000/. You will be permitted to withdraw upto a 14 . minimum period of 6 months and upto a maximum of 120 months. 100/-. 100/. Amount of deposit Period of deposit Rate of interest minimum amount of Rs. minimum period of 30 days and upto a maximum of 120 months. The rate of interest shall be the appropriate rate prevailing on the date of the deposit for the period Premature payment so selected. Loan/advance facility is available under the scheme as per prevailing rules. 1000/-.

Loan/advance facility is available under the scheme as per prevailing rules. Amount of deposit Period of deposit Rate of interest minimum amount of Rs. 5000/. without affecting the principal amount. The rate of interest shall be the appropriate rate 15 . Payment before maturity is available as per prevailing rules.and multiplies of Rs. 5000/. 1000/-.maximum of 10 times during the entire period of Loans/advance against deposit deposit. The rate of interest shall be the appropriate rate prevailing on the date of the deposit for the period Premature payment Loans/advance against deposit so selected. 1000/-. open an account for periods ranging from 12 months to 120 months. Amount of deposit Period of deposit Rate of interest minimum amount of Rs.and multiplies of Rs. open an account for periods ranging from 12 months to 120 months. Quarterly interest deposit receipt QIDR provides you quarterly interest without affecting the principal amount. Loan/advance facility is available under the scheme as per prevailing rules. Monthly interest deposit receipt The MIDR scheme provides you with monthly interest earnings.

One year and above and upto a maximum of 10 years. LOANS 16 . which is higher than the interest rate on normal term deposits. Loan/advance facility is available under the scheme as per prevailing rules. Payment before maturity is available as per prevailing rules. 1 lac and above. In case the deposit will be treated as normal deposit and interest will be paid as per our prevailing rates Loans/advance against deposit applicable to normal deposits. The rate of interest shall be the appropriate rate prevailing on the date of the deposit for the period Premature payment so selected. Centrals flexi yield deposit scheme Under this scheme depositors can avail floating rate of interest. Loan/advance facility is available under the scheme as per prevailing rules. Amount of deposit Period of deposit Rate of interest Single deposit of Rs.prevailing on the date of the deposit for the period Premature payment Loans/advance against deposit so selected.

applicant should be income Quantum of loan tax assessee. 80% of the cost of four wheelers. 85% of the cost of two wheelers and other Security consumer durables. Hypothecation of articles/vehicles purchased out of loan./private sector) 2) Others have regular and known sources of income.2 lacs. two wheelers and four wheelers.You can avail of easy and convenient loan offers for purposes ranging from housing finance to higher education to purchase of computer. PLR + 2% 1% of the loan amount. Maximum Rs. Cent buy Facility & purpose Eligibility You can avail of the term loan facility at all branches for purchase of consumer durables. when installments Rate of interest Processing charges Repayment are received from salary.100/-. 3) For four wheelers. 1) Permanently employed persons (govt. Cent Vyapari Objective To provide finance to small and medium traders. 17 . Our loans enrich life and enhance lifestyles. 36 to 84 equated monthly installments (EMIs). 10 lacs. Minimum Rs. Maximum Rs. In case f salaried employees.

250/Above Rs 1 lac – Rs. PLR + 4% 36 months commencing in one equated month monthly after the instalments month of disbursement. 18 . 2) E. Upto Rs.1 lac .2500/- Personal Loan – To Employees Of Corporate Clients Eligibility Purpose Quantum of loan Rate of interest Mode of repayment Processing charges Permanent employees of large corporate clients.2lacs .5 lacs .25000 to Rs. of land and building. 1% of the loan amount. Upto Rs. 500/Above Rs. Rs. Cash credit.Rs. Minimum 25% on stocks.2 lacs and upto Rs. Small and medium traders including retailers and distributors. 5 lacs –PLR + 4% 1) Hypothecation of stocks. Ten times of gross salary subject to a maximum of Rs. 5 lacs per borrower.Rs. 2 lacs – PLR Over Rs. To meet any personal/domestic expenses of the borrower.Rs. 1 lac. 25000 Nil Above Rs.Implemented by Nature of facility Eligibility Maximum limit Margin Rate of interest Security Processing fees Semi-urban and & urban branches.M.2 lacs – Rs.

Individual singly or jointly. riots and wherever required against earthquake. having known sources of net income of Rs. The property will be insured against fire. Advance Cheque signed by the borrower for repaying monthly instalments along with letter of deposit will be obtained. 10 lacs. 10000/.per month Quantum of loan Security or more. 20 times net monthly income subject to minimum amount of Rs. professionals or self employed persons etc. The property value should be equal to 200% of the loan Insurance amount. PLR + 4% 1% of the loan amount. lightning etc. flood. by the borrower with usual bank clause for the full Rate of interest Processing charges Repayment value of the property. Loan against mortgage of property situated in metro/urban/semi-urban areas. 19 . commercial or industrial property situated in metro/urban/semi-urban centers only in the name and possession of the borrower. businessmen. traders.Cent mortgage Facility & purpose Eligibility Target group Term loan facility to meet any sort of personal or business expenses.00 lac and maximum of Rs.1. Residential house/flat.

25000 upto Rs.Rs. 1000000 2500/Above Rs. 200000 upto Rs. 100000 20 . 2.1000000 upto Rs. . . 100000 upto Rs. Financial statements. Above Rs. Copies of sales tax returns.2000000 Required details 5000/Application form.Rs. Equitable mortgage of property situated in metro/urban/semi-urban with market value of 200% of overdraft limit and in the name and Insurance Rate of interest possession of the borrower.Nil . Upto Rs. . The property will be insured with the usual bank clause for full value of the property. Copy of sales tax registrations. 2. Traders/retailers/distributors/commission agents/arhatiyas.Rs. .PLR + 2% Processing charges Upto Rs.Cent trade Facility & purpose Eligibility/Target group Quantum of loan Overdraft limit for business requirements.PLR Over Rs. 25000 250/Above Rs.00 lacs .Rs. 200000 500/Above Rs.00 lacs .

borrowing limit. Central kisan credit card Objectives Loan for farmers on the basis of their holdings for purchasing agricultural inputs including cash Eligibility withdrawals for their production needs. • Farmers having good track record for past 2 years with our bank as a borrower or depositor and not being defaulter to any credit institution would be considered. address. Details of property offered as security with its present valuations. Same rate of interest as are applicable to crop loans and activities allied to agriculture. • CKCC will be issued to farmers in the form of card-cum-passbook incorporating the name.Credit report from previous bankers/market report. validity period which will serve both as an identity card as well as facilitate recording of Security margin Rate of interest transactions on an ongoing basis. • CKCC will be provided to any farmer to cater to his short-term credit requirements. SERVICES 21 . particulars of land holding. In conformity with the agriculture loan.

1 lakh. nursing homes. It offers you the freedom to spend at a large number of member establishments. • Mail order/telephone order. airlines. untapped market segments that previously did not have access to traditional bank card payment products. petrol pumps. Facilities offered by central card: • Our domestic card is accepted all over India and Nepal having more than All retail outlets. Acceptance at non- terminalised merchants is not allowed. 110000 merchant outlets. Features: • It is designed for use only at electronic terminals. Internet transactions can also be made through Group Accident Insurance Scheme coverage upto Rs. 22 .Central card It is a unique credit card offering you innumerable facilities & convenience. restaurants. now accept central card. • Central Card Electronic Central card electronic is a new “entry level credit product” for the emerging. Indian railways. central card with prior approval/authorization from our system. • hotels. departmental stores and grocery stores etc.

You will get free accident insurance cover upto Rs.is charged every year in advance. Globally accepted at merchant establishments displaying the maestro/cirrus logos.• • • • • • • Account information is printed and not embossed on the card. upto Rs. The card is issued/renewed every two years.at all the There is no fear spending over the limit.p. • available limits would be authorized. 2500/.is charged for a photo card. There is zero lost card liability. • . 50/. as only transactions within the Cash withdrawal limit: -Rs.m. A nominal fee of Rs. 100000/You will get free lost card insurance cover to the extent of credit limit. 24-hour customer call centers are available on India. You will be allowed cheque encashment facility. Debit Card Features: • • • Direct online debit to your savings or current account. 23 . branches of CBI. Completely safe and secure PIN based card.p.Global card • • • • Fees and charges: There is no joining fee.m. 400/. 5000/.Domestic card . An annual fee of Rs. -Rs. Card will be replaced in seven days. 15000/.

6 for balance enquiry Fees & charges: • • Cash Management Services Who can avail cash management services? • • • • • Corporate Public. Existing partnership firms Existing proprietorship firms Individuals & institutions Better cash management Regular computerized MIS/reports Instant liquidity Faster and higher turnover Higher income and profitability Benefits to customers: • • • • • 24 . * Rs. private and joint sector Cos.• • • • 24-hour customer call centers available in India. Itemized billing on your statement/passbook. Zero lost card liability. Transaction charges are levied only at non-central bank maestro. Replacement card. 30 for cash withdrawal * Rs. There is no transaction charge at the ATMs of CBI.

2500/.Travelers’ Cheques • Central bank’s travelers’ cheque are available in denominations of Rs. 1/. 11/-.51/. Issued free of charge and payable at par. 500/-. They are encashable at par at all the branches of central bank and other They are valid till encashed. 1000/-. Rs. 100/-. They are available in denominations of Rs. Rs.Rs. • This chapter contains the information about the objectives of the study and the information upon which the study for the purpose of project is conducted and the limitations faced therein. Charges Rs.25/. 25 .and Rs. at all the branches of central bank. Rs.per Rs. 5000/-. • • leading nationalized banks. 101/-. • Gift Cheques • • Central bank gift cheques are ideal gifts for all occasions.and Rs. 100/-. Rs.

articles. SECONDARY DATA: The secondary data has been collected from the various books. • • • SOURCES OF DATA COLLECTION To collect the data for the purpose of the project.OBJECTIVES OF THE STUDY The objectives of the study are based on the concept of Income & Investment Sources. To discuss about the role of Central Bank of India in banking field. The various objectives are discussed as under: • To understand the issue of Income & Investment Sources as practiced by the bank. study the following sources are used: PRIMARY SOURCE: The primary data has been based on the response received from bank manager. papers and the annual report of the bank and through web sites. To know about the different sources Incomes & Investment of the bank. journals. To know about the benefits of investments to the bank. 26 . The researcher has tried to represents the concept of different sources of Incomes & Investments analysis in this project. bank staff related to the Income & Investment Sources.

Findings & Suggestions PRESENTATION OF PROJECT For the purpose of presentation of the study the following ways have been adopted. The limitations are:  First of all main problem is that no any bank was ready to give training.MAIN EMPHASIS OF STUDY: In this project report the study revealed about Income & Investment Sources of Central Bank of India consisting of income sources. investment sources. CHAPTER SCHEME CHAPTER 1 – Introduction Of Central Bank Of India CHAPTER 2 – Products Of Central Bank Of India CHAPTER 3 – Database & Methodology CHAPTER 4 – Innovations In Banking Products CHAPTER 5 – Innovations In Banking Branches CHAPTER 6 – Summary. The presentations are through:  Bar graphs  Tables  Diagrams LIMITATIONS OF THE STUDY During the study work a number of limitations have been arisen which are acknowledged here under. 27 .

 The respondents whose opinions are analyzed are not willing to disclose the quantum of information they have. 28 .  The information that is collected in project report is not adequate. So the study cannot be generalized. Due to shorter span of time and resources less information has been considered to analysis the concept of Income & Investment Sources.

Usage of technology by banks is due to challenge of competition. Introduction: With the trend of globalization all over the world. “application of electronic technology towards transfer of funds through an electronic terminal.” 29 . rising consumer expectations and shrinking margins of banks. transfer of funds etc. payments. ATM. Mobile Banking. developed.This chapter contains the different innovations in banking products such as EBanking. Meaning: E-banking means. Debit Cards. computer or magnetic tape to conduct various transactions like cash receipts. The growth of e-commerce and Internet has transformed the world into the GLOBAL VILLAGE. it is difficult for any nation whether big or small. Internet Banking. Credit Cards. Fast development in electronic technology has concerned the computers to take over the bank counters and to convert brick banking into electronic banking. and enhancement of productivity. which lead to reduction in cost. efficiency and customer convenience. to remain isolated from what is happening around.

and transaction histories. Customer can perform various banking transactions such as balance enquires. bill payments. It does not involve any physical exchange of money.It is often known as banking on net. Features of e banking:  Anywhere any time banking: customers can avail banking facility while sitting at their home/office.  Promptness: Another feature of E-Commerce is provides promptness in services.  Cash less banking: E-Commerce also provides feature of cash less banking as cash is not require in raw form but electronic cash like debit or credit cards may serve the purpose. personal computers or even through mobile phones. With the advent of e banking.  Intense competition: E-Commerce is a product of handling intense competition among various banks. using the Internet. customers are benefited by unlimited accessibility through the network of Automated Teller Machines. transfer money between accounts. but it’s all done electronically. without having to step to office of the branch. Process of E-Banking/ procedure of E-Banking E-Banking process can be explained with the help of following diagram and explanation as under: 30 .  Globalization of service: E-Banking has a special feature of globalising bank’s services all over. from one account to another.

then processing of information will start on the web.  In this step. credit card number will be demanded for online transaction.  As soon as password is approved on the server.Log on to website Verification Of password Final Approval Credit Card request Processing Of information  To make the use of E-Banking user has to go to the World Wide Web and log on to the website.  If all security measures are completed then the transaction is approved accordingly. 31 .  Next step follows verification of user ID and password by the website server.

Benefits to customers 32 . bulky books of accounts. To merchant Trader  Reduction in cost: E-Banking is helpful to banks by reducing the cost of various transactions as compared to traditional cost by way of ATM’s Telephone banking.e.  Good customer relationship: E-Banking helps in attracting and retaining the customer by properly handling their grievances.  Reduction in frauds and misappropriations: Through EBanking frauds and misappropriations can be reduced as inter branch reconciliation is possible through internet. II.  Reduction in paper work: E-Banking helps in eliminating endless paper based bank statements. To cust omer Benefits to banks To Govt.  Global coverage: E-Banking provides global network coverage of bank’s services i. spreadsheets. ledger including the use of calculator.Advantages of E-Banking: Importance of E-Banking can be explained from four aspects: Advantages To banks I. through the concept of ‘Anywhere Anytime Banking’.

e. Benefits to government  Transparency in transactions: E-Banking provides transparency in transactions i. access to information is possible easily.  On line purchase: Customer can buy product of bank or invest in any scheme without actually insisting the bank branch but only through online. 365 days services to customers. IV. Anytime banking: E-banking provides 24 hours.  Global market: With the help of E-Banking products of our country will get global market to be popularized properly. Benefits to merchant traders  Promotion of business: with the help of E-Banking business of merchants traders will be promoted because of increased purchasing power of credit holder. 33 .  Saving in time: With the help of E-banking there is no need for bank customers to stand in queue for hours to complete financial transactions. III.  Prompt services: Customer can avail the services of details regarding their accounts and transactional details instantly.  Anywhere banking: customers can avail any sort of banking services from anywhere around the globe from sitting at anyplace.  Risk of carrying cash: E-Banking provides the facility of cash less banking which helps in growth of economy.

They still prefer going to bank to perform transactions. Types of E-Banking services E-banking Services 34 .  Avoids risks: it helps merchants bankers also as there is no risk of handling cash.  Wrong assumption by people: Many people are away from net banking on the assumption that it is more expensive than the traditional method of dealing with bank transactions. Limitations of E Banking:  Problems of security: Security and privacy aspects are major issue in case of E-Banking transaction. and payment of cash is possible by the customer. In India. The banks not only have to automate front-end services but also back office services. Immediate settlement: E-Banking helps settlement. Various sites are not properly locked at to ensure weather customer’s money is safe in cyber world or not. out of 65000 bank branches.  Lack of computerization: Lack of computerization and low density of telephone lines is also a bottleneck for online banking. only 5000 branches are computerized.  Lack of awareness: Another great hindrance is lack of awareness because effective and wide media efforts in publishing Internet banking need to be emphasized.  High cost: The infrastructural cost of providing E-Banking facility is very high. which involves high cost.

which provides more security and reduction in overall cost. 5. City bank. ATM is made to work 24 Hrs a day. For the purpose of withdrawing cash from ATM machine.e. Routine banking transactions can be performed by just punching a few buttons on the mobile. Telephone Banking: Tele banking is another main service provide by ebanking Tele banking is a service where banks get various phone calls during their working hours. 6.i. EFT which involves transfer of funds from bank account of one customer to bank account of another customer electronically. 2. plastic currency and debit cards are used. 4. E-cheque facilitates on line payment.ATM Card E-cheque Mobile Banking Telephone Banking EFT 1. Mobile Banking: Mobile banking provides customer to access their account on mobile phone screen. Credit card is a product with the help of which a customer can avail various facilities or buy products/services without making immediate payment and that payment could be made at later stage of time.Electronic Fund Transfer (EFT): E-Banking has given a system of electronically transferring funds . 3. This is done through electronic data interchange (EDI).Automatic Teller Machine (ATM): ATM facility was started in early 1990’s by foreign banks like HSBC. It helps the user to transact various transactions while remaining at home.Credit Cards: Credit card is another facility produced by E-Banking. It needs no 35 . Electronic Cheques: E-cheque is a system.

Issue of E-cheque is more familiar in various advanced countries.clearance charges. 36 .

which has led to increased competition by few players and product innovations. The mobile banking enables the customers to bank anywhere and at any time. Meaning: Banks have noticed and availed the opportunity that exists between banking and mobile telephony. Mobile devices are enabled now days to perform many activities which earlier have been available only as internet services. SMS (short messaging services) and GSM(global system mobile)of mobile can be used for banking transactions.Introduction: There are rapid changes in the financial services environment. Recent innovations in tele communications have opened up an additional channel for electronic banking. These wireless devices may give services as hand held PC’s. Issues relating to M-Banking 37 .

The service offerings in SMS banking are numerous and highly cost saving.• Cost saving: SMS offers revenue opportunities for operators by changing SMS into higher value added applications. • Requesting countermanding cheque payments (stop cheque) • Chequebook request can be made.Banking is due to its userfriendly interface and range of services it offers. • Market research: Proper understanding of specific market is key in the success of mobile banking. 38 . Research on available payment methods. • Simple to operate: The success of M. Services: Global system mobile (GSM) is not just about voice communications but also supports wireless personal digital assistant and other devices. Players will have to be creative to make users perceive it as beneficial. • Cheque clearance alerts are given to customers. which helps in finding out if some one else is using your ATM card. SMS tariffs should be lowered in order to capture the markets and to exploits the potential for commercial transactions over mobile device. Few are mentioned here under: • Balance enquiry can be made. • Requesting for providing bank statement. Many services and schemes are being piloted and some are already available. • Sending account balances every time one makes a withdrawal. just as it supports telephony. user habits and key players is required to be done.

• M-banking services are risky and not secure trials and pilots are still on World Wide Web to developed enhanced security. • M-banking services are not enough versatile. M Banking is not just a service reserved for international banks but for any financial institution wishing to take it. • The data transmission is very slow. Some non-users of mobile banking perceive it to be complicated due to lack of guidance available. • The information knowledge available related to M-Banking is not sufficient. but its success depend upon of variety of services. cheaper it simple to use. There is a great opportunity to exploit the combination of fast growing consumer device the mobile phone with the richness of internet protocols that will surpass a similar revolution imitated by pc related banking M-Banking has a lot to offer banks and to its customers. security and user friendly interface its make it easy. 39 .Limitations /problems in M-Banking: • Possibility of error is higher than in internet banking.

which activates the accounts. ATM is made to work 24 Hrs a day.Introduction: ATM facility was started in early 1990’s by foreign banks like HSBC. such as an 40 . This is one of the unattended or unmanned devices usually located on or off the bank’s premises. plastic currency and debit cards are used. For the purpose of withdrawing cash from ATM machine. the terminal reads the tape data to processes. According to the instructions. An automated teller machine (ATM) is a computerized telecommunications device that provides the customers of a financial institution with access to financial transactions in a public space without the need for a human clerk or bank teller. City bank. that contains a unique card number and some security information. On most modern ATMs. the details are displayed on the screen and by checking a few keys of the keyboard the user can direct the computer to carry out the financial transactions. Its function is to receive and dispense cash and to handle routine financial transactions. the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smartcard with a chip. The operation mechanism is that card is inserted into the ATM. ATM enables user to perform banking transactions by actually interacting with the human teller. The account number and credit limit of customers are magnetically embedded on a strip of the tape on the back of card.

41 .expiration date or CVC (CVV). Security is provided by the customer entering a personal identification number (PIN).

ATMs are known by various other names including automated banking machine. cashpoint. and Any Time Money (in India). Working of ATM Insertion of Card into ATM Transmission of Tape data to Processor Activation of account Actual Transaction Operation by user Clicking of keys of keyboard Display of details on screen ATM will give various options on the screen like:  Balance enquiry  Mini statement  Deposits  Cash withdrawals etc. cash machine. Multibanco (after a registered trade mark. bank machine. 42 . hole-in-the-wall. customers can access their bank accounts in order to make cash withdrawals (or credit card cash advances) and check their account balances as well as purchasing mobile cell phone prepaid credit. money machine. in Portugal). Bancomat (in various countries in Europe and Russia).Using an ATM.

Banks have launched the operation of accepting payments for utility services like electricity and telephone bills etc. Banking on the net is only an extension of the ATM and tele banking services. but removed after 6 months due to the lack of customer acceptance. The first person to use the machine was the British variety artist and actor Reg 43 . Shepherd-Barron was awarded an OBE in the 2005 New Year's Honours List. until De La Rue developed the first electronic ATM. This instance of the invention is credited to John Shepherd-Barron. Thereafter. Various facilities produced by ATMs:  Cash withdrawals  Personal identification number (PIN) change  On line balance enquiry  Transfer of funds between accounts linked to one’s card  Request for cheque book  Request for account statement HISTORY: The first mechanical cash dispenser was developed and built by Luther George Simjian and installed in 1939 in New York City by the City Bank of New York. which was installed first in Enfield Town in North London. although various other engineers were awarded patents for related technologies at the time. the history of ATMs paused for over 25 years. United Kingdom on 27 June 1967 by Barclays Bank.

The 2984 CIT (Cash Issuing Terminal) was the first true Cashpoint. Cashpoint is still a registered trademark of Lloyds TSB in the U. the IBM 2984 was designed at the request of Lloyds Bank. which was retained by the machine. Texas. and NCR 5xxx series. These worked on various principles including radiation and low-coercivity magnetism that was wiped by the card reader to make fraud more difficult. ATMs first came into wide UK use in 1973.The first ATMs accepted only a single-use token or voucher.K. All were online and issued a variable amount which was immediately deducted from the account. The idea of a PIN stored on the card was developed by the British engineer James Goodfellow in 1965 In 1968 the networked ATM was pioneered in Dallas. Notable historical models of ATMs include the IBM 3624 and 473x series. In 1995 the Smithsonian's National Museum of American History recognised Docutel and Wetzel as the inventors of the networked ATM. by Donald Wetzel who was a department head at an automated baggage-handling company called Docutel. A small number of 2984s were supplied to a USA bank. The machine dispensed pre-packaged envelopes containing ten pounds sterling. Diebold 10xx and TABS 9000 series. 44 .Varney. similar in function to today's machines.

as they have become widespread. Many banks issue a combined ATM/debit card that looks just like a credit card and can be used in places where credit cards are accepted.they are not credit cards. the money is automatically deducted from your checking account.Introduction: Debit cards combine the functions of ATM cards and checks. but the countries to which they apply are unspecified): • A consumer who is not credit worthy and may find it difficult or impossible to obtain a credit card can more easily obtain a debit card. When you pay with a debit card. The money you spend comes out of your checking account immediately. have revealed numerous advantages and disadvantages to the consumer and retailer alike. Debit and check cards. Use of a debit card is limited to the existing funds in the account to which it is linked. thereby preventing the consumer from racking up debt • 45 . But don't be mistaken -. Advantages are as follows (most of them applying only to a some countries. allowing him/her to make plastic transactions.

or to write an insecure check containing the account holder's personal information. debit cards are accepted by merchants with less identification and scrutiny than personal checks. without agreement as to date. or being charged interest. Unlike a credit card. • For most transactions.as a result of its use. amount and • 46 . Many merchants mistakenly believe that amounts owed can be "taken" from a customer's account after a debit card (or number) has been presented. and even attempted but refused transactions by the merchant (some of which may not even be known by the client). Like credit cards. and bypassing the requirement to pay a credit card bill at a later date. which charges higher fees and interest rates when a cash advance is obtained. merchants generally do not believe that a payment via a debit card may be later dishonored. a check card can be used to avoid check writing altogether. payee name. thereby finalizing the transaction at the time of purchase. late fees. or fees exclusive to credit cards. Check cards debit funds from the user's account on the spot. Unlike personal checks. other than a foreign ATM fee. • • The Debit card has many disadvantages as opposed to cash or credit: • Some banks are now charging over-limit fees or non-sufficient funds fees based upon pre-authorizations. thereby making transactions quicker and less intrusive. a debit card may be used to obtain cash from an ATM or a PIN-based transaction at no extra charge.

the consumer may be held liable for hundreds of dollars in fraudulent debit transactions. this time may be up to 60 days.currency. In many places. • In some unspecified countries. theft of users' PIN codes using skimming devices van be equally easily accomplished with a debit transaction PIN input. Theft of the users PIN using skimming devices can be accomplished much easier with a PIN input than with a signature-based credit transaction. thus causing penalty fees for overdrafts. debit cards offer lower levels of security protection than credit cards. and theft using a signature-based credit transation is equally easy as theft using a signature-based debit transaction. whereas with a credit card. the bank's money is being spent. The consumer also has a much shorter time (usually just two days) to report such fraud to the bank in order to be eligible for such a waiver with a debit card. and the consumer will have no recourse. and rejected transactions by some banks. over-the-limit. When a transaction is made using a credit card. The bank may fight to void the charges of a consumer who is dissatisfied with a purchase. which is often waived by the bank. and therefore. or who has • • 47 . the bank has a vested interest in claiming its money where there is fraud or a dispute. as with a credit transation PIN input. However. While the holder of a credit card is legally responsible for only a minimal amount of a fraudulent transaction made with a credit card. A thief who obtains or clones a debit card along with its PIN may be able to clean out the consumer's bank account. amounts not available causing further rejections or overdrafts. laws protect the consumer from fraud a lot less than with a credit card.

Until the hold is released. car rental agencies require an actual credit card to be used. In some countries including the United States and Australia. even though in either case the user's bank account is debited and no credit is involved. while other cards are enabled for both kinds of transactions. or at the very least. • In some unspecified coutriesand for certain types of purchases. the bank may place a hold on funds much greater than the actual purchase for a fixed period of time. they are often referred to at point of sale as "debit" and "credit" respectively. However. a major exception (in some unspecified countries only. or may be paid at the expense of an overdraft fee if the account lacks any additional funds to pay those items. including checks. While debit cards bearing the logo of a major credit card are accepted for virtually all transactions where an equivalent credit card is taken. In some unspecified countries. any other transactions presented to the account. will verify the creditworthiness of the renter using a debit cardThere are currently two ways that debit card transactions are processed: online debit (also known as PIN debit) and offline debit (also known as signature debit). lodging. the consumer has spent his/her own money. 48 . or car rental. • Some cards are blocked from making either online or offline transactions. But when a debit purchase is made. is at car rental facilities. such as Sweden.otherwise been treated unfairly by the merchant. such as gasoline. this isn't the case in other countries. may be dishonored. and the bank has little if any motivation to collect the funds.

essentially becoming enhanced automatic teller machine (ATM) cards. The transaction may be additionally secured with the personal identification number (PIN) authentication system and some online cards require such authentication for every transaction. which alleviates problems with processing lag on transactions that may have been forgotten or not authorized by the owner of the card. only issue online debit cards. the online debit card is generally viewed as superior to the offline debit card because of its more secure authentication system and live status. One difficulty in using online debit cards is the necessity of an electronic authorization device at the point of sale (POS) and sometimes also a separate PINpad to enter the PIN. Banks in some countries. 49 .Online debit ("PIN debit" or "debit") Online debit cards require electronic authorization of every transaction and the debits are reflected in the user’s account immediately. Overall. although this is becoming commonplace for all card transactions in many countries. such as Canada and Brazil.

The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. at the cost of having interest charged. which requires the balance to be paid in full each month. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction. It is also different from a charge card (though this name is sometimes used by the public to describe credit cards). the issuer lends money to the consumer (or the user). A credit card is different from a charge card.Introduction: A credit card is a system of payment named after the small plastic card issued to users of the system. 50 . as specified by the ISO 7810 standard. In the case of credit cards. Most credit cards are the same shape and size. a credit card allows the consumer to 'revolve' their balance. In contrast. In contrast. where a charge card requires the balance to be paid in full each month.

at the cost of having interest charged. Credit cards are issued after an account has been approved by the credit provider. The cardholder indicates his/her consent to pay. known as a 'Card/Cardholder Not Present' (CNP) transaction. after which cardholders can use it to make purchases at merchants accepting that card. by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a Personal identification number (PIN). When a purchase is made. Also. the credit card user agrees to pay the card issuer.credit cards allow the consumers to 'revolve' their balance. many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet. 51 . Most credit cards are issued by local banks or credit unions.

Electronic verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is in the United Kingdom and Ireland commonly known as Chip and PIN, but is more technically an EMV card.


Other variations of verification systems are used by eCommerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder providing additional information, such as the security code printed on the back of the card, or the address of the cardholder. Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect (see Fair Credit Billing Act for details of the US regulations). Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit provider charges interest on the amount owed if the balance is not paid in full (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts, thus avoiding late payment altogether as long as the cardholder has sufficient funds.

Interest charges Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid. For example, if a user had a $1,000 transaction and repaid it in full within this grace period, there would be no interest charged. If, however, even $1.00 of the


total amount remained unpaid, interest would be charged on the $1,000 from the date of purchase until the payment is received. The credit card may simply serve as a form of revolving credit, or it may become a complicated financial instrument with multiple balance segments each at a different interest rate, possibly with a single umbrella credit limit, or with separate credit limits applicable to the various balance segments. Usually this compartmentalization is the result of special incentive offers from the issuing bank, to encourage balance transfers from cards of other issuers. In the event that several interest rates apply to various balance segments, payment allocation is generally at the discretion of the issuing bank, and payments will therefore usually be allocated towards the lowest rate balances until paid in full before any money is paid towards higher rate balances. Interest rates can vary considerably from card to card, and the interest rate on a particular card may jump dramatically if the card user is late with a payment on that card or any other credit instrument, or even if the issuing bank decides to raise its revenue.

Advantages: The main advantages are as follows:



To customers

Grace period

To merchants

Benefits to customers:
Because of intense competition in the credit card industry, credit card providers often offer incentives such as frequent flyer points, gift certificates, or cash back (typically up to 1 percent based on total purchases) to try to attract customers to their programs. Low interest credit cards or even 0% interest credit cards are available. The only downside to consumers is that the period of low interest credit cards is limited to a fixed term, usually between 6 and 12 months after which a higher rate is charged. However, services are available which alert credit card holders when their low interest period is due to expire. Most such services charge a monthly or annual fee.

Grace period
A credit card's grace period is the time the customer has to pay the balance before interest is charged to the balance. Grace periods vary, but usually range from 20 to 40 days depending on the type of credit card and the issuing bank. Some policies allow for reinstatement after certain conditions are met.


cards are even more secure than cash. each merchant had to evaluate each customer's credit history before extending credit.e. That task is now performed by the banks which assume the credit risk. finance charges will be calculated and the grace period does not apply. regardless of whether the consumer defaults on the credit card payment (except for legitimate disputes.Usually. excluding new transactions. Finance charges incurred depend on the grace period and balance. which are discussed below. with most credit cards there is no grace period if there is any outstanding balance from the previous billing cycle or statement (i. because they discourage theft by the merchant's employees and reduce the amount of cash on the premises. if a customer is late paying the balance. Benefits to merchants An example of street markets accepting credit cards For merchants. a credit card transaction is often more secure than other forms of payment. and can result in charges back to the merchant). there are some credit cards that will only apply finance charge on the previous or old balance. However. such as checks. because the issuing bank commits to pay the merchant the moment the transaction is authorized. Prior to credit cards. interest is applied on both the previous balance and new transactions). 56 . In most cases.

but in general is the organization that the merchant deals with. Discover. and acquiring banks. Credit Card association: An association of card-issuing banks such as Visa. this is no longer the case. The commission is often a percentage of the transaction amount. the consumer. but as of 2007. MasterCard. the bank charges the merchant a commission (discount fee) for this service and there may be a certain delay before the agreed payment is received by the merchant. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. that set transaction terms for merchants. Merchant account: This could refer to the acquiring bank or the independent sales organization. plus a fixed fee. Card-issuing bank: The financial institution or other organization that issued the credit card to the cardholder. Parties involved • Cardholder: The holder of the card used to make a purchase. card-issuing banks. • • • • • • 57 . American Express. Independent sales organization: Resellers (to merchants) of the services of the acquiring bank. etc.For each purchase. Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant. American Express and Discover were previously the only card-issuing banks for their respective brands.

Nova. Concord EFSnet. universities. repayment arrangement. charities. and are available with a large variety of credit limits. and get paid a fee or a percentage of the balance for each card issued using their name. • The flow of information and money between these parties — always through the card associations — is known as the interchange. NDC Atlanta. Transaction processing networks include: Cardnet. and major retailers. professional organizations. Nabanco. and VisaNet. Features: As well as convenient. which is necessary for both monitoring personal expenditures and the tracking of work-related expenses for taxation and reimbursement purposes. May be operated by an independent company. Examples of typical affinity partners are sports teams. and one company may operate multiple networks. credit cards offer consumers an easy way to track expenses. Paymentech. Omaha. Credit cards are accepted worldwide. 58 .• Transaction network: The system that implements the mechanics of the electronic transactions. accessible credit. Affinity partner: Some institutions lend their names to an issuer to attract customers that have a strong relationship with that institution. and other perks (such as rewards schemes in which points earned by purchasing goods with the card can be redeemed for further goods and services or credit card cashback). TSYS.

This opportunity has created a huge black market in stolen credit card numbers. the simplest being copying information from retailers. combining credit card and debit card properties. limit the amount for which a consumer can be held liable due to fraudulent transactions as a result of a consumer's credit card being lost or stolen. systems with security holes are usually the result of poor implementations of card acquisition by merchants. anywhere 59 . either online or offline. a website that uses SSL to encrypt card numbers from a client may simply email the number from the webserver to someone who manually processes the card details at a card terminal. This implies that high-cost low-return fraud prevention measures will not be used if their cost exceeds the potential gains from fraud reduction. the United Kingdom. Problems A smart card. The goal of the credit card companies is not to eliminate fraud.Some countries. which are generally used quickly before the cards are reported stolen. The low security of the credit card system presents countless opportunities for fraud. Naturally. such as the United States. The 3 by 5 mm security chip embedded in the card is shown enlarged in the inset. but to "reduce it to manageable levels". Despite efforts to improve security for remote purchases using credit cards. and France. Most internet fraud is done through the use of stolen credit card information which is obtained in many ways. The contact pads on the card enable electronic access to the chip. For example.

Introduction: 60 .card details become human-readable before being processed at the acquiring bank. a security risk is created.

) o o Electronic bill presentment and payment . cobrowsing. apply for a loan. but traditionally also have some that are application specific. chat) o Bank statements • Financial Institution Administration . wire transfer.g. The common features fall broadly into several categories • Transactional (e. credit union or building society.features allowing the hosting company to administer the solution across financial institutions • Security 61 . and applications. online statements. performing a financial transaction such as an account to account transfer..features allowing the financial institution to manage the online experience of their end users ASP/Hosting Administration .g.. check links..Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank. new account. such as repayments o o • Non-transactional (e. Features: Online banking solutions have many features and capabilities in common. or to another customer's account Investment purchase or sale Loan applications and transactions.. paying a bill..EBPP Funds transfer between a customer's own checking and savings accounts.. etc.

Security token devices Protection through single password authentication. Signature based online banking where all transactions are signed and encrypted digitally. The Keys for the signature generation and encryption • 62 . These token generated TANs depend on the time and a unique secret. is not considered secure enough for personal online banking applications in some countries. as is the case in most secure Internet shopping sites. The most secure way of using TANs is to generate them by need using a security token. Usually online banking with PIN/TAN is done via a web browser using SSL secured connections. • The PIN/TAN system where the PIN represents a password. TANs can be distributed in different ways. Basically there exist two different security methods for online banking. used for the login and TANs representing one-time passwords to authenticate transactions. the most popular one is to send a list of TANs to the online banking user by postal letter. so that there is no additional encryption needed. stored in the security token (this is called two-factor authentication or 2FA).

Computer intrusions increased by 150 percent between the first quarter of 2007 and the second. In 80 percent of the cases. depending on the concrete implementation. the report states. compiled from suspicious activity reports banks file quarterly. Two well known examples for those attacks are phishing and pharming. A recent FDIC Technology Incident Report. users should use virus scanners and be careful with downloaded software or e-mail attachments. lists 536 cases of computer intrusion. the source of the intrusion is unknown but it occurred during online banking. 63 . the use of class-3 card readers is a measure to avoid manipulation of transactions by the software in signature based online banking variants.can be stored on smartcards or any memory medium. To protect their systems against Trojan horses.000.[4] Countermeasures There exist several countermeasures which try to avoid attacks. with an average loss per incident of $30. Attacks Most of the attacks on online banking used today are based on deceiving the user to steal login data and valid TANs. Cross-site scripting and keylogger/Trojan horses can also be used to steal login information. That adds up to a nearly $16-million loss in the second quarter of 2007. Digital certificates are used against phishing and pharming.

64 .

Khan committee had recommended the concept of universal banking. industries. Under the universal banking system the banks do broad based and comprehensive activities.This chapter includes innovations in banking branches such as Universal banking. development financing and related activities subject to compliance of statutory and other requirements prescribed by RBI. which includes: a) Receiving money on current or deposit accounts and lending of money for trade. A universal bank may undertake multifarious services under one roof. Introduction: Universal banking is bank engaged in diverse kind of banking activities. and related legal acts. offshore banking. R.H. Govt. As per universal banking financial institutions and banks are allowed to undertake all kinds of activities of banking. and wholesale banking. agriculture etc. exports. retail banking. Meaning: Universal banking is a multipurpose and multi functional financial superstore providing both banking and financial services. 65 .

 To increase per customer revenue. c) Remittance of funds. project financing infrastructure lending. d) Corporate advisory services.  To take benefit of economies of scale. RBI Guidelines: 66 . corporate can get loans and avail. merchant banking (brokerage. other financial services. asset securitisation.  To reduce per customer cost. leasing. collection of cheque/bills etc. Therefore in universal banking under one roof.  To offer world-class financial services to the clients by using information technology and cross selling. factory etc.b) Mortgage financing. credit/debit cards. insurance depository service. while individuals can bank and borrow. The few objectives of universal banking are as follows:  To help in bringing harmony in the role of financial institutions and banks. custodial services.  To compete with international banks by expanding business beyond the national boundaries. underwriting new debt and equity shares) foreign exchange operations.

Act 1949 requires that at least 51% of that total number of directors should have special knowledge and experience. Reserve provisions (CRR/SLR): A financial institution will have to comply with CRR and SLR provisions after its conversion into a universal banking. which it can use to pursue other activities with the same clients. This provision has to be complied with constituting the board after transformation from financial institution to a bank. is presently undertaken by financial institution.R.R. financial institutions have an option to convert into a bank provided they ensure compliance with following provisions. 67 .Act 1949. To the organization: When a bank diversifies its activities as a universal bank it can use its existing expertise in one type of financial service in providing the other types. Benefits of universal banking The benefits of universal banking are as follows: Benefits To Organization To Customers To Shareholders 1. Permissible activities: In case an activity. A bank possesses information on the risk characteristics of its clients. it entails less cost in performing all the functions by one entity instead of separate specialized bodies.According to RBI guidelines of April 2001. which is not permissible for a bank under section 6(1) of B. such activity will have to be stopped after its conversion into a universal banking. So. Composition of board: The section 10(A) of B.

appropriate regulation can be devised.g. which will ultimately benefit all the participants in the market. To the customers: Universal banking being a one-stop shops for all varied services. Problem of the bank indulging in too many risky activities. 68 . in case of project lending to the same firm which has purchased insurance from the bank. 3. This situation is beneficial from investor’s point of view. A bank can use its instruments in one activity to exploit the other. insurance and lending. To the shareholders: One manifestation of universal banking is a bank holding stakes in a firm. which sends a good signal about the financial health the firm to the investors.A bank has an existing network of branches. When a lender has a stake in the firm he is in a better position to monitor the firm to safeguard his interest. 2.g. Many financial services are interlinked activities. This way a big bank can reach the remotest client without having to recourse to an agent. some a lot of transaction costs and increases the speed of economic activity. e. e. To account for this. b. The wide range of financial products and services offered by universal banks are preferred by the customers than the specialized banks due to comprehensive service provided by these banks. All these benefits have to be weighed out against the problems. which can acts as shops for selling products like insurance. Universal banking leads to a loss in economies of specialization. The main drawbacks are that: a. including the banks themselves.

there is a lot of interest expressed by banks and financial institutions in universal banking. and most of the groups have plans to diversify in big way. 69 . too a lot of opportunities are there to be exploited. Even though there might not be profits forthcoming in the short run due to the switching costs incurred in moving to a new business.In spite of these problems. Banks mainly the financial institutions are aware of it. In India.

Services/functions The important functions or financial services. These advantages may include strong privacy. low or no taxation protection against local political or financial instability. • Electronic funds transfer • Foreign exchange 70 .Introduction: offshore banking refers to the banking business related to borrowing and lending funds abroad and meeting the special needs of international investors. are: • Deposit taking • Project financing • Syndication of loans • Issuing short-term instruments like negotiable certificates to deposits. which govern the branches of foreign banks. which offshore banking units can provide. Moreover offshore banks are also exempted from the regulations. financial and legal advantages. These banks are not subject to domestic monetary and fiscal regulations. An offshore bank is a bank located outside the resident country of the depositor. Rather they are situated in a low tax jurisdiction that provides. • Carry merchant banking activities in foreign currency denominated bonds.

• Letter of credit and trade finance • Investment management and investment custody • Trustee services • Corporate administration Although every bank does not provide each service. Banks try to polarize between retail services (which are low cost) and private banking (which tries to bring personalized suite of services to the client). Benefits/advantages The main advantages of offshore banking are: Advantages Economic And Political Stability Tax Benefits Payment of Higher Interest Rates Special Banking Services Development Of nation/ Remote areas 71 .

or who do not pay tax until the tax return is agreed. Disadvantages There are some limitations of offshore banking are as follows: 72 . higher or lower rate loans based on risk and investment opportunities. and who fear their assets may be seized or disappear. developed economies with regulated banking system offer same advantages in terms of stability.  Payment of higher interest rates: Some of these banks which function at a lower cost base provide higher interest rates than the legal rates prevailing in their home countries due to lack of government intervention and lower overheads.  Tax benefits: Generally the interest paid by offshore banks is without tax deduction. Although. Economic and political stability: Offshore banking provides economically politically stable jurisdictions especially for those resident in areas where there is a risk of political turmoil. This acts as a benefit for individuals who do not pay tax on worldwide income.  Special banking services: Certain offshore banks offer special banking services not offered else where such as anonymous bank accounts.  Development of remote areas/nation: offshore banking helps even geographically remote nations to generate investment and create growth in their economies.

After September 11. Access to information can be difficult. This “hot money” coming from offshore accounts can be definitely increase problems of financial and economic disturbance in developing countries. terrorist groups.  Encourages tax evasion: Offshore banks encourages tax evasion by giving Difficult physical access: As offshore banks are often remotely situated people seeking tax evasion an attractive place to deposit their hidden income.Disadvantages Involved in  Crime Encourages Tax evasion Difficult Physical access Financial Disturbance  Involved in crime: Off shore banking has been found associated with the underground economy and organized crime through money lending. however in a global tele communication networks this does not seen to be a big problem as information can be set up on line. 73 .  therefore the physical access is difficult.2001 these banks have been accused of helping various organized crime gangs. by phone or by mail.  Developing countries may face financial disturbance: sometimes developing countries may face problem due to speed at which money can be transferred in and out of their economy.

investment)  Multiple channels of distribution (call center. which is not wholesale based. 74 . there is huge untapped potential for business. for mobilization and development of their funds. branch internet)  Multiple customer groups (consumer. small business) Need for retail banking  Economic prosperity and the consequent increase in the purchasing power of consumer. credit services and some form of financial advice. Given the rising purchasing power of this class.Introduction: The coming up of middle class with substantial purchasing power in India during the last decade has given rise to its desire to spend according to the changing life style. It encompasses all institutions that provide a related range of banking services—money deposit. which is mainly focused towards personal sector. It represents any banking. It includes any business that is conducted through branch network. Retail banking today is characterized by three areas:  Multiple products (deposits. a ready market. credit cards. This has offered the Indian banking system. insurance. Meaning: Retail banking is activity devised in past few years and now used extensively.

declining bank rate leading to decline in spreads unattractive yields on government securities etc. credit cards and educational loans. frequent reduction in cash reserve ratio resulting in pumping in of liquidity. Technological factors also added to the requirement convenience of using credit cards. internet and phone banking anywhere and any time banking has also flood customers into banking. Segments in retail banking: There are three segments in retail banking which included: a. Other products Besides there are a number of value added services such as free collection of outstation instrument. education loans. conveyance loans. travel abroad) c. issue of free ATM cards. concession in service fee in case of remittances.  Decline in interest rates have also contributed to increase retail banking. personal loans for diverse purposes such as medical expenses. 75 . auto loans. Developments in retail banking in India: Commercial banks in India are involving more and more in retail banking as it is now an attractive market segment having lot of opportunities for growth and profit. Retail banking refers to housing loans for purchasing durables. waiver of fee on credit cards and utility services such as payment of water.  With the large corporate borrowers having diversified the sources to fund their financial requirements. electricity and phone bills. Deposit products (convenient deposit schemes such as flexi deposits) b. have all forced banks to be in search of alternative opportunity to deploy their funds. Loan products (such as housing loans.

1 crore. Although the retail banking offers phenomenal opportunities for growth and profits but how far it is able to lead to growth will depend on the capacity of banks to meet these opportunities profitably. 76 .The loan values can average between Rs.20000 to Rs. product pricing technological up gradation. The speed of growth of retail banking can be accelerated by growth in banking technology and automation of banking processes. This requires product differentiation. with an exception of housing loan being granted up to 15 years. cost reduction and cross selling. Banks can now use retail as growth trigger. There is need for constant innovation to revalidate and upgrade existing internal systems. These loans are of period of 5 to 7 years. innovation.

(Wholesale finance means financial services. institutional customers (such as pension funds and government entities/agencies). In essence.) Modern wholesale banks are engaged in: finance wholesaling.Wholesale banking is the provision of services by banks to the like of large corporate clients. wholesale banking services usually involve high value transactions. underwriting. insurers. international trade finance businesses. and services offered to other banks or other financial institutions. which is the provision of banking services to individuals. which are conducted between financial services companies and institutions such as banks. fund management. and stockbrokers. fund managers. mergers and acquisitions. 77 . real estate developers and investors. market making. Wholesale banking contrasts with retail banking. mid-sized companies. consultancy.

To know about the benefits of innovations of the bank.This chapter represents a conclusive review of the efforts made since up till about the different innovations by Central Bank of India in banking sector. This information is based on the primary and secondary data available from different sources. FINDINGS The Project work is done on basis of certain objectives. debit cards. universal banking. 78 . To know about the different products of the bank. retail banking. which are as follows: • • • • To understand the various innovations in banking sector by the bank. ATM. credit cards & mobile banking whereas innovations in branches includes. offshore banking. To discuss about the role of Central Bank of India in banking field. The project report summarizes about the facilities of CBI accounts and deposits and also provides the different products. wholesale banking. The innovations of bank are of two types: innovations in products & innovations in branches Innovations in products includes. Various innovations of the bank provide benefits to the various business and Industries in many different ways. E-banking.

which the project reveals by making an analysis of the topic.  The study reveals about the different types of innovations of the bank. 79 .  The study presents the different types of products available in the bank for the help of its customers. we have already discussed about ATM network in each branch.  Bank should open their branches in rural area. Processes are established in such a manner that allows the board of director to compliance with the policies of companies. So.  Central bank of India’s branch network should be wider as.  Central bank of India has to improve its disclosure policies so that everyone can get easily all information regarding banking policies and other information related to bank. these are the findings.In the light of these objectives the following are the findings that represent the changing environment of Indian economy in global scenario in the wake of liberalization and globalization. certain suggestions have to be followed by these banks. which helps the people in many ways. These are as follows:  Central bank of India has to provide ATM facility to its customers so that the people can get benefit of this facility and withdraw money at any time at any place with this they would not have to face any problem regarding to money. Moreover to making efficient central bank of India.  The role of board of directors is properly described.  Indian market will provide for high growth market so bank should make strategies to grab such opportunities.

com www. Principles of banking by AIBA (All India banking associations) 80 .com Gahoo yoogle.google.com www. Banking theory and practices by kalyani publishers.com Value notes.com White papers.com Banking Law and Practice by Sharma publications.com Banknetindia.lycos.central bank of india.www.com Finance biz.wikepeadia.com www.

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