Types of Electronic Banking

fliina Outcomes ~ - - - - - - - - - - - - - - - - -
After studying this chapter, you should be able to understand:
► Understanding the Concept of ECS ► Working of ECS
► Home Banking ► Mobile Banking
► Security Standards on Mobile Banking ► Virtual Banking
► Electronic Fund Transfer: NEFT, RTGS, IMPS
► E-Money and PPI ► E-Purse and Digital Cash
► Need and Importance of Security Standards in Banking
► Types of International Security Standards
► International Security Standards Organisations
► Security Standards on Internet Banking in India

13.1 IN110Dumotl
We have am416~YIID tures of e-banking over the traditional baokJng bl tbe ~
cbap.r«.
e-
ban
to e-commerce and
er banb draw
e----
t,,Aelmnierce is a wider concept including e- • ~ ad
r tut •
 1ss II Euentiab of&nkint""" 1mur1111a --
Tn,a ofJ!/earonk &#ddtw ft ~
phyJfa1 wpr of lhe cheque. 11nu, If i.t • B2B technology, Slmiwly, onllne i,,nklns, internet bankJn1
,,f
etc. areieweumplaofB2Ct«hnalo,r, In lhe pramt chapet:r, we w/JJ ,tudy v,rfOIU typa e-banklng 13.2.2 ECS c,..
techoolt>gia 1
f,CS credit • U~d by an ln.tlfutlcm fur affording atdlt to ii larp number ofbenefidarles (for imCanu.
4
tmpl,,yu '.1nvator4 etc.) havingacc.c,unu with bank brancheuc varloat locadonnridun the jurisdiction
13.2 8KTIOIIK ClIAOIIIG SmfM tECSJ of a J;C,,S <-entre by raltlng a •Ingle debit ti> !he bank~ of t h e _ , ~ ECS Credit enable
J-.,CS ii, an dearonJ4: mode o((UTJM tranm:r frQtD one bank a«ount to am,r her, Under ECS, a cuttc,me payment c,f arm,unt tc,wardt dittributlon of dividend, interat, ..Jary, pemioa. ac..oldie wr DlldtudolL
can nuu pqmem! reaipt fr>, tramaaiom that are r~ltlve and perfodic In nature, ECS i, Utcd br
HCS Cr~_it J>"d}'rnentt can be in~ by any intfflutJon (called ECS Cttdit lJMr) which needs to make
~ fr>, nwclng bulk paymml o( ,mounu towards dbtribution of dividend, interett, •ala y !,ulk or repetitive payment. to a nurnber ofbeneficiaria, 1he in,titutional ._,._ tofinc ...... wtdl m ECS
peminrJ, etc... or fhr bulJc Cl"Aleakm of amounu towards telcphone/tlectriclty/water dues, ~U/ ~y. Centre, 'Jhe UK'T h3$alft, tc, <Jbtain theCt,mem ofbendiciaria (Le~ the ruipiauof.Jary. pmllon.divfdmd.
v.,TJeaJotu, fo:tn Imulments ,qnymenu. periodic lnva1menl6 in mutual fundt, iMurance premiu r. jnterest etc.) and get their bank aw,unt particulan prior to participation in die ECS Cfflllt tchane.
e t c . ~ ECS facIJiutff buUc transfer of moni~ from one bank a"lJunt to many bank a«:<iu :
ECS Credit pay~enu can be put tbmugh by the ECS uaer only through hWha bank <k- ill
,,f
or nu vcru. EC5 ii vtry hdp(uJ in avoiding lot of hu,lff like Jou/fraudulent interception rece;~ the Sponwr bank), ECS Creditt are afforded to the bendiciary account holden~ a,. cfntinatioo
piyment IJf money durinJ potU1 tramit. lhlt abo npeditet payment through credit to cm e's on, acc-ount holders) through the beneficiary account holddt bank (known u dw- cladnatioo bank), 1he
. . . . -~m
compartd to r«.dvfng payment in um. cheque or other phy'1cal form'> like dividend warrant$ 'lh beneficiary account holders are required to glve mandatet to the uaer inA:itutions to enable them to
ire two~arunu of U.-S, one is E.cS credit and ..u<md ECS debit Dhcus~i<,n of u :;s credit a~d
ddJithafb«nmadtlater.
/J,5
e afford credit to their bank accounts thrc,ugh the ECS Credit mechanmn.
J3.2.3 Working of ECS Credit
13.2J Geor,aphic.al <.overage through ECS The working of ECS credit has been presented through figure 13.l given below.
8at,t4 oo ,be gp-,g,aprual lt,cation ofbracti.e. covered, there are three broad categories of ECS Schemes
thatue (J) weal f..CS, (2) ~ EC.S, and (3) NatfonaJ I:,CS, 'Ihese Scheme are either operated by RBI
orbylbednignau4 commercW banb, Naoonal Automated Clearing Hc,u5e (NACH) i5 al~o one of the
1.
User (Who Intends to
make payment)

,4,
Taklng mandate from
beneflcianes, like, name.
bank name and branch
H a....._a. (To whom
~ . . ID be made
f«m off.CS ,y.um operated by NPCI, account number, MICR
J, Local £.CS: Thu is operating at 81 untersl locations across the country, At each of these ECS
c.entra, the branch roverage ii reffrkted to the geographical coverage of the clearing house,
gtnetaDy "1'ttring ~ city and/or satellite towns and suburbs adjoining the city. ..
"i I.
RecDd Cllllecllanl
2, JlegloaaJ f.CS: Thu if operating at 9 centers/ locatiom at various parts c,f the country. RECS gg andllAlmllalon
~ the wverag.e aJJ «ire-banking-enabled branches in a .s tate or group of States and can u
;~ 6. 8,
bt wtd by illltitutions desirous of reaching beneliciarie, within the State/ group of States. The Directions to sponsor bank
f}'stffll tuts advantage of the core banking sy,tem in banks. Accordingly, even though the lw to credit the amount In the
account of beneficiaries

Information service ol
successful and declined
transactions
fntcr-bank ~ taktl place c:.entral1y at one location in the State, the actual customers
under the Scheme may have their accounts at various bank branches across the length and
breadth of the State! group ofStat.es,
2.
.3, Nat1onal .ECS: This .is the centraliud version of ECS Credit which was launched in October
2008- The Scheme i$ operated at Mumbai and facilitates the coverage ofafl core-banking enabled
Sponsor Bank
(Bank of User) or
7.
Credit of payment
•-
Destination Banks
called as drawer bank as per directions (Bank.sol beneficiary)
branches located anywhere in the country, 'Ihis system too take~ advantage of the core banking draMebaoks
'Ystffll In banh. Accordingly, even though the inter-bank settlement takes place centrally at
one location at Mumbai, the actual customers under the Scheme may have their accounts at
Y ~ bank branches across the length and breadth of the country. Ban~ are free to add any 11.
of their core-banking-enabled branches in NECS irrespective of their location. In caee of faHure to credit, I-------
P8)1menl eenl bank ECS
Centre
Figure 13.1: Working of ECS Credit
 J,O II S,,,,,HIU tflJMIJd• - """""" ~ ----.,
credit the uaer (who want• to make payment through P.Cs ha, 10 • b
1. 1b1vallbenefitto!:;:r1e1 like name, bank/branch/account number of the beneficiary, ~ ~1t
ben••, ... -k .___~.. date on which credll la to be afforded to the benef'aC •rl1-~
dellJI, oftht
f th deetlnauon UIIII vnm,u,
code o ~11..1 formal (c:alltd the Input file) throush Its sponsor bank to onti of the
1
t•:
fte,, In • .,,.....J..,•. ....i.~-~ u a Uaer. 1he aponaor bank Is a bank In whkh IINl'r hns Ile. 11' -~
Ctntera where t,. •...-- cou,11
_ ......in• the BCS Centre then dehl.ta the •c.count of the s.ponsor
a 1ht banJc ,._,....,. - hunk <> t ,,·
lor
' eduJed Httlement day and credits thuccounts of the Jesth111tlon h11nk.,, onwurd nc11II 1
teaccountaoftheuJtlmatebenefidules with thedesthu1tlo11 hnnk hn1ndw., . MICH (Mnn,:K:,:0
Ink Character Recosnitlon) Code Is a numeric codl' th111 11nlc111l'ly ltlmtllrt•s II honk hrund~
putldpatlnsln the BCSCredlt scheme. '!his Is a 9 digit rndt• to ltlmtily tht• lot at Ion of tht• hunk
branch· the lint 3 characters rcprcsent the dty, the• next .l the bunk nnd the• Inst .l tlw hrn,
The MiCR Code allotted to a bank br111Kh ls prlntt•d on llw MICR h,rnd of dit•ques Issue<;~~ 1 (Ill) Advantages of the ECS Credit Scheme to
bank branchrs.
3. BCS credJt user hu to take consent from b,•ndidarit•s to whom us,·r lntt'1Hls to mnke pnymc
called mandate form. The benefidar_y h~s to fornish a mandall' to .'he user Institution glv1::~1
consent to avail the F.CS Crcdit foc:ihty. lht· 1111111datl• rnn1a111s detnrls of hls/lwr bank brunch
account putlcularund authorizes the user lnstitulion lo afford c.:rt•dil lo his/hn a<.:rnun1 with th~
destination bank branch. In case the Information/ nn:ount pull kulai ,ontahwd In lhl' rnnndntc
undergo any changt, the beneficiary hns lo notify lht• chunges lo the Usl'r lnslitutions so lhnt
the coriut Information can be Incorporated in its rt·rnrds. 'Ihis will t•nsun• that lransnctlons
do not get rejected at the bcncficlury'., hank hrnnch dut• lo inrnnsisll'n,·ks/ mlsmnkh In the
data sent by the user Institution. ECS cnn ,,lso bt• USl'd to trnnsfi.'r funds to NRE and NRO
account& In the country, subject to th,• fulfilnll'nt of the Forl'ign Exd1,u1gt• Managt•mcnt Acl,
2000 (PBMA).
4. lf1 Destination Bank Is not in u position lo nedit till' benefich1ry arrnunl due· lo any m,son, the
same would be returned lo the ECS Cent rt• lo enablt· tht• ECS Ct·ntn· 10 pass on tht• unm•tlilcd
Items to the User lnstllutlon through the Sponsor Bank. 'lhe Ust•r Institution ran lht•n lnillnlc
ptyment through alternate modes to the belll•liciMy.
13.2.4 Advantages of the CS Credtt Scheme
(I) AclYantagea to the Beneficiary
BCS Credit offers many advantages to till' hcnl'fidory:
I. The beneficiary need not to vlslt hls/lwr bunk for deposlllng tlw p111wr lnstrumrnls.
2
, The beneficiary need not to be npprt•hensivc of loss/ tlwfl of physirnl ins1ruml nls or tht•
0 the rnstonwr hlls II h11nk lln:ount.
likelihood of fraudulent encashnwnt till'm1L
3. Cost effective.
4. The beneficiary receives the funds right 011 lht• dm· d,,tl'.
(II) MYanta,ea of ECS Credit Scheme to User lnNlltutlons
1
· Savings on administrative machinery and rnsts of prlnling, dispaldt ,ind n·londli,ilion °1
paper Instruments are the primary hendits of ES<:.
2· AV014 C--.otlc,wlhlftoflftltnlWIDlllllll"',ffl 11,;;odof,,.,rlte
II Ct•
?
of PIPtr lnetrurnent,, etc. and ........... corrap
3. Rfflclent payment mode maurlfll that
•••cillllll
the......,_ tit
4. Co,t effective.
5. 'Jhere 11 no value llmlt cm the amount of bNll,tduaf tnrnr:lloar
'!here 11 lcHt co1t per lran11etlon. >.. par RBI pl:Wllw, lfllll I
originating hanb are required to pay a nominal CM19'of25 ,_..,..... Ill
houHe and destination bank reapecttvety. Dadnatlon bank lnDChll
u••• fl 1W
HCS Credit free of charge to the beneficiary ICCOUDt holdln.
die......_.,.._
I. Preedom from paper handling and the raallant .......... fl--..
nnd monitoring paper lnstrumenta praented In darlns, !ale o f ~ '
for the destination bank branches.
2. Smooth process of reconciliation for the lpOIIIOI' banb.
.l. Cost effective,
13.3 ECS DEBIT
ECS dt-hlt is used an institution for raising debits toa large numberoCICCOIIDll(far
of utillly services, borrowers, Investors in mutual funds etc.) IJWDblloed wlda . . . . .
locutions within the Jurisdiction of an ECS Centre for single credit to the 1111k
Institution. ECS Debit Is useful for payment oftclephonc/electrlclty/waterbllla.caw
lnst,,lment repayments, periodic investments in mutual funds, lnsuranc... pc~-.. ••penollk
or rcpclilive in m11urc and payable to the user Institution by luge nwnberofc111111m1n-.
ECS Debit Irnnsaclion cun bt' Initiated by any Institution (called ECS Debit U..,) wldcb • •
rt•n•lvc/colkct amounts towards periodic receipts. It ls a scheme under which•..,.. hoWlr
ii bank brnnch rnn ,1uthorlsc an ECS Users to recover an amount at a prescribed fnqueDcy br nllml
dcbil to his/lll'r h,1nk ,1Ccount.
'Iht• Ust•r lnstilulion hus lo first register with an ECS Centre. The Uler lnltltlatklll baa to alaooblala
the nuthorizalion (m11ndl1te) from its customers for debiting their account lon, wlda their buklCCOUllt
pnrtlcuh1rs prior to particip,1tion in tht• ECS Debit scheme. The mandate has to be clwy'VtriAed bf tbl'
ht•ncfid11ry's h,1nk. A copy of the 111.111da1c shoulll be 11vullable on record with thedectlnltloblilnlt1fhele
13.3.1 Working of ECS Debit Scheme
'I ht• F.CS Ikhil Ust•r inlt•rullng to collect rcceivables through ECS Debit has to submit detalla of the
n&shum•rs (lik1• miml', h,mk/hrnnch/account number of the customer, MICR code of tht deatlnltioft
hllnk hn1111h, l'lr,), dntl' on which the customer's account Is to be debited, etc., In a spedfitd format
k1tlll·d 1lw lupul tili·) lhrough It, sponsor bank to the ECS Centtt.
 192 11 Essentials of&mking and 1nsurona
. th ECS Centre then passes on the debits to the destination banks for onw
The bank managtnB e . ch . ard 5· lbtre le no limit on amount L.- ollected from customer(s).
. th , account with the destination bank bran and credits the sponsor bank's acco to ""' c
deb1tto e customer 5 . . bank b ch will h . . Unt
--''t t the User institution. Destination ran es treat t e e1ectromc mstrucu 6· Cost effective.
foronward
received ~ o
from . aJ ~heques and accord ingIy d eb'1t the custoni.e
. the p hys1c ons (JI) Advantage, to the Banking Sy9 tem
the ECS Centre at par with .
. tained with them. All the unsuccessful debits are returned to the sponsor bank thr0 r
accounts main I. Preedom from paper handling and the r~ultant ~ ofhanclling. recdvingaad
the ECS Centre (for onward return to the User Institution
. . ) 'th' th
WI m
'fi d .
e spec1 e time .
frame. ugh
monitoring paper instruments presented m clearing.
In case ofany need to withdraw or stop a mandate the customer can do so . by approaching theuser 2. Hase of processing and return for the destination bank branches. Datinadon baalk
institution to withdraw the mandate. The account hid/ o er customer can also withdraw the mandate/ d b. branches can debit the customers acco~ts ~ matching the ICCOllnt mmia,., ol the
instruction directly from his/her banker without involvement of the User institution. The withd e It customer in their database and due venficat1on of existence of valid IIWl6ia'.ancl its
instructions of a customer in such cases would be treated equivalent to a 'stop payment' inst ra:'al particulars. With core banking systems in place and straigbt-througb-procaajg. tbit
. ruction
in cheque clearing system. However, as a matter of best practice, the customer may also provide . process can be completed with minimal manual intervention. ·
notice or intimation of mandate withdrawal to the ECS user institution well in time, so as to ensu pr~or 3. Smooth process of reconciliation for the sponsor banb.
the input files submitted by the user institution does not include the ECS Debit details in respectre/ at 4. Cost effective.
0
withdrawn/stopped mandates, leading to avoidable returns/ rejections etc. the
The sponsor banks are required to disclose the charges in a transparent manner. With effect fr 13.4 HOME BANKING
July 2011, originating banks are required to pay a nominal charge of25 paise and 50 paise pert 1st
om_
to the clearing house and destination bank respectively. Bank branches do not generally levy ransac~on 'Ibe basic objective of e-banking is to allow customers to avail the benefits of banking laYices ~
sernce. ch arges ' d b' . th
1or ts f . . d
e 11ing e accoun o customers mamtame with them The working fECS processing/ point of time and at any place. Home banking adheres this objective of e-banking. 'Ibis II die pm.nary
· · . . . o Debit
may be understood with the help of figure given above by replacmg credit inflow with the d b' technology by using which customer(s) can avail banking facilities without visiting to bank bnncfi and
e 1t outflow.
filling physical forms to transfer money to any third party or other operatiom. Home Bankiag a,stem
13.3.2 Advantages of ECS Debit Scheme allows to manage their accounts and to make use of a full range of the Bank's services from their office
by using a personal computer. Different charinels of transmission of information using modem plO\lide
1-
(i) Advantages to the Customers cooperation between the Bank and the customer.
I. ECS Debit mandates will take care of automatic debit to customer accounts on the due Home banking generally refers to either banking over telephone or on internet. 1he t i n t ~
dates without customers having to visit bank branches/ collection centres of utility service with internet banking started in early 1980s, but it did not become popular until the mid of In
providers etc. India, almost all banks provide facility of home banking along with branch banking. Home banking mast
2. Customers need not keep track of due date for payments. not be confused with personal banking, rather personal banking is a sub-category of home banking. At
3. The debits to customer accounts would be monitored by the ECS Users, and the customers a broader classification, home banking has to variant that are personal banking and corporate banking.
alerted accordingly
[ Home Bankfn9 ~
4. While submitting mandate, customer may fix limit of amount to the debited from his
account on regular intervals. I
5. Cost effective.
(ii) Advantages for User Institutions Personal Home Banking
l
Corporate Home Banking I
l. Savings on administrative machinery and costs of collecting the cheques from customers, Figure 13.2: Variants of Home Banking
presenting in clearing, monitoring their realization and reconciliation.
2
· Better cash management because of realization/ recovery of dues on due dates promptly 13.4.1 Personal Home Banking
and efficiently.
3. Avoids chances ofloss/ theft of instruments in transit, likelihood of fraudulent access to Personal banking refers to service of a bank provided to special customers at their door steps either
lhe paper instruments and encashment thereof. during banking hours or whenever they in need. A customer can avail banking facilities by using
4 tele-banking facility. The tele-banking facility connects customers call to automated computer services,
' Realization of payments on a uniform date instead of fragmented receipts spread over like IVRS. JVRS means interactive voice response system. It is a technology that allows a computer to
many days.
~
 194 11 R.<.•rnt1o1s ,if&nki_~ """ 1ns11rwn«
intern.I with hum11ns through the us<- ofvokr tont's input via keypad or ,llaling p11d. On connccthil! -----
IVRS computer, ,ustomcr tt«'iY\"S dilttrtnt S<'t of inlormallon with ,fclint'll numeric (llkl• 1,2,3 cic"'h~ 13.4.2 Corporate Homa 8ank"mg
Types of Electronic Banking II 195
sp«ial chnn1der (11kt', I,• t'h:) numllt'r and askt'd to st'lc.:t/prtss rtquil't'<I nu111brr kry In order to , .) llr c;orporntc home hanktn
,t.-sirc.'<I scrvkrs. A m0<ld IVRS for 1"'rs<111al blinking hns bc.-rn shown In thr following figure l J.tccfve 1vcs the power to ,ust g refers to business banking ,iervices provided to privilegt'd business entities. It
11locntlons with no lime i°mers 10 execute critical bank transactions instantly from the customer's office
•)Ids type of scrvkc Is auli~ 811d hence Is Indispensable tool in today's 24 x 7 high spet'd business world.
icrmlnals right In the ·custso called
, as· remote 1,anklng. More and more banks are providing customer
hyslcnlly coming lo thc<>bmcrks office which will facilities the customers to operate the account without
an l'or gctrmg t h Is type of services, the customer rt"qulres a computer,
I
P
Internet connection and mode~
features of Corporate Home Banking
SmartPhOne I Iw U)
\ I
V BANK
The salient facilities of corporate home bank·mg are as ,o
, 11ows:
-
WiFI MENUE WITH
R DIFFERENT J. Single window view of all ace
. . oun ts , mapped to a •
single User ID •
m a ·
respecttvt' bank across •its
0
~ \ Menu
OPETIONS
ANO
branches. This mcludes loans deposits and I' k d
dealer accounts. '
l'lte h
m e accounts I c anne .
I partnt'I', d d
I~ ~
vt'n or an
ASSIGNED
a:: SUPPORT
In digital forms
w
I-
Wire
(2/4)- SYSTEM Announcements
s NUMBERING 2. Intra and Inter Bank fund transfer using NEIT and RTGS.
3. Bulk Payments.
z y
/ In voice forms
s 4. Online Tax Payment.
5. Utility Bill Payments.
~
Over
6. Trade Services.
rlP
~~
7. Cash Management Services which includes Cheque/DD printing, collrctions MIS, intt'met-
based cheque writing, etc.
In Caso of 8. Requests for Fixed Deposit {FD) opening, cheque book and cheque stop payment.
I ~AIIA ~ I I No Option
Available of
Otherwise Key Benefits of Corporate Home Banking
The main benefits of corporate home banking are given below:
I. 24 x 7 Banking Hours.
Figure 13.3: Model of Personal Banking with IVRS Technology 2. Real-lime access to all your account information.
3. <;:ustomisation and security customer can preset the information access, multi-level approval
1he personal banking is safe, as the software has four levels of protection, including the system of
process and transaction authority for various employees, for complete security.
passwords (like PIN number of cards, expiry date of cards etc), automatic encryption of information
4. MIS Integration -customer can download your account statement in six different formats,
(like,date of birth/incorporation etc.), and an electronic personal signature of the customer (like digit~I
including M S Excel or Text file.
signature, if any). 1he system Home Banking allows perfor m ing import of fi les from the customers
5. Audit Trails-custom er can track all logins and transactions by date/ User JD to monitor any
accounting system (for example, prepared payment doc uments) lo the Home Banking system. The
system Home Banking might export documents to the c ustome r's accounting system. It may also m isuse of access.
provides personalized services like receiving information o n c urrent currency exchange rates, account
balance etc. l 3.5 MOBILE BANKING
Mobile banking refers to
telecommunicatio n <lcvic • . ..
provision of banking and financial services with the help of mobile
ave enabled the launch ofcs such as a mo b'I le Ph one or tablet. Recent .mnovations
. .m telecommumcatlons
. .
h new ace css
•. met 11ods for banking services through various e-channels, mobile
~
 196 fl Essentials ofBanldng and Jnsurrmtt .--
( bil hone has been increased
---...
banking is one of them. In the last two dead~ thr usagrSMoS mo r iservfce, wherein cust~me lllany
folds. The mobile banking has evolved from bemg ?1e~ suppor
updates about their transactions to full-tied~ banking services. . ,
Mobile phones as a delivery channel for extending banking scrvic~s have off-late been attainin
._,i:cance The rapid growth in users and wider coverage of mobile phone networks have"' dg
~aler s11Y~• • · W"th ti
!/us channel an important platform for extending banking service_s to customers. 1 1c rapid growth
. th umber of mobile phone subscribes in India (about 261 milhon as at the end of March 200S
m en
wing at about 8 million a month), banks have been expIoring the ",eas1·b·J·
11ty of usmg
. mobile ph and
gro . . . ones
as an alternative channel of delivery of banking services.
Some banks have started offering information based services like balance enquiry, stop pa
instruction of cheques, transactions enquiry, location of the nearest ATM/Branch etc. Accept;:ent
transfer offunds instruction for credit to beneficiaries of same/or another bank in favour of pre-registee of
beneficiaries have also commenced in a few banks. Mobile banking differs from mobile payments, wh~ed
involve the use of a mobile device to pay for goods and services either at the point of sale (POS)ich
analogously to the use of a debit or credit card to effect an EFTPOS (electronic fund transfer po· or
mt of
sale) payment.
Internet banking an~ mobil~ banking are two sides of a co~. The later is a new innovation over the
former technology. Mobile banking allows customer to do banking on their mobile phone easy to ca
and handy at every point of time. Moreover, there are banking apps provided by respective banks fre:~f
charge which m~ possible to operate b_anking transaction on a just click after successful login in the
app. Both are the different steps of evolution of technology and banking related thereto.
13.5.1 Characteristics of Mobile Banking
Following salient features of mobile banking are essentials for an effective mobile banking system.
(a) Simplicity and Usability: The m-payment application must be user friendly with little or no
learning curve to the customer. The customer must also be able to personalize the application
to suit his or her convenience.
(b) Universality: M-payments service must provide for transactions between one customer to
another customer (C2C), or from a business to a customer (B2C) or between businesses (B2B).
The coverage should include domestic, regional and global environments. Payments must be
possible in terms of both low value micro-payments and high value macro-payments.
(c) Interoperability: Development should be based on standards and open technologies that allow
one implemented system to interact with other systems.
(d) Security, Privacy and Trust: A customer must be able to trust a mobile payment application
provider that his or her credit or debit card information may not be misused. Secondly, when
these transactions become recorded customer privacy should not be lost in the sense that t~e
. . and spending patterns of the customer should
eredit histones r
not be openly available 1or pubhc
scrutiny. Mobile payments have to be as anonymous as cash transactions. Third, the system
should be foolproof, resistant to attacks from hackers and terrorists. This may be provided
-----~-----~1ypu~· _;_of~•_;_;_tron1c
__ Bonkin6_...:;.,....H_1'1_
.
using pubitc key lnfraatructurc security, biometric. and puaworda integrated Jnto the mobile
ts 8et payment aoiutlon archltecturca,
(e) Coat: 'lhe m-paymcnts should not be coltlicr than ailtlng payment mec;haoiNN to the atcat
possible. Mobile-payment solution should compete with other moda of payment in terms of
cost and convenience.
•uQ e
(f) Speed: 1he speed at which m•payments are eucuted IIIUlt be acceptable to CUltomerl UMl
merchants
(g) Cross Border Payments: To become widely accq,ted the m-payment applladion lllDlt be
available globally, word-wide.
13.5.2 Advantages of Mobile Banking
Mobile banking has following advantages:
(a) Time saving: Instead of allocating time to wal1c into a bank. you can check account baJaoca,
schedule and receive payments, transfer money and organise your accounts when yoare on the
go.
(b) Convenient: The ability to access bank accounts, make payments, and even track investments
regardless of where you are can be a big advantage. Do your banking at a time and place that
suits you, instead of waiting in queues.
(c) Secure: Generally, god mobile banking apps have a security guarantee or scod you a SMS
verification code you need to input to authorise a payment for added security. Mobile baoldog
is said to be even more secure than online/intemet banking.
(d) Easy access to your finances: With the introduction of mobile banking, you are able to access
your financial information event beyond the working hours. h helps t avail banking senices
even by making a call to the bank.
(e) Increased efficiency: Mobile banking functions are functional, efficient and competitive. It also
helps in decongesting the banking halls and reduces the amount of papa work for both the
banker and the customer.
(f) Fraud reduction: One very real advantage to implementing mobile banking. "Customers are
being deputized in real time to watch their accounts.
(g) No separate internet required: It utilizes the mobile connectivity of telecom operators and
therefore does not require an internet connection.
(h) Availability: Mobile banking is available round the clock 24/7/365, it is easy and _convenient
and an ideal choice for accessing financial services for most mobile phone owners m the rural
areas.
l3.S.3 Disadvantages of Mobile Banking
Besides above said advantages, there are few disadvantages of mobile banking stated below:
(a) Risk of Fake Messages: Mobile banking users are at risk of receiving fake SMS messagrs and
scams.
 198 II Essentials ofBanking and Insurance
(b) P~yst t your mobile banking PIN and other sensitive information.
gain access o
ost: Regular users of mobile banking over time can accumulate significant h
----
.cal Loss of Mobile: The Joss of a person's mobile device often means that crintitiaJ8
can
~ Hidden C c~
from their banks, es
(d) No Prudent System against Hacking: There are 1.5 billion computers on the Inter
.5 billion people using mobile phones, but there is currently no significant operatins°etstillld
4 PP cation level encryption over network and transport layer encryption
supporting the mobile space. Hacking of electronic devices are common and causing slyOsst e111
customers. o
(e) Internet Connection: Most mobile banking apps need an internet connection.to be b
operate it, so if you live in a rural area or experience problems with your internet conn:,I~ to
then you won't be able to access your account. The same applies if your mobile phone r\lJl tion,
s out
of battery.
(0
virus software. Most cell phone don't come standard with anti-virus protection evenif;
Lack of Standard Configuration of Anti-virus: Many phones aren't yet compatible 'th .
anti.
the capacity to browse the internet Some phones aren't even compatible with the e_y ~ave
software available and there are various cases in which people were unable to put :~-~us
software registered to them on corporate cell phones. ti-virus
13.5.4 RBI Guidelines on Technical and Security Standards on Mobile Banking
Mobile banking users are specially concern with security issues like financial frauds, account misuse and
user friendliness issue- difliculty in remembering the different codes for different types of transaction,
application software installation & updating due to lack of standardization. RBI has issued guidelines
on mobile banking with objective of providing safe and secure mobile banking to customers in order
to boost up the confidence of customers towards electronic banking, reducing burden on branches of
banks, cost management, and prompt services. These guidelines have been reiterated below:
(i) Security Standards: Banks are required to follow the Security Standards appropriate to the
complexity ofservices offered, subject to following the minimum standards set out by RBI from
time to time. The guidelines should be applied in a way that is appropriate to the risk associated
with services provided by the bank and the system which supports these services.
(ii) Risk Mitigation Measures: Banks are required to put in place appropriate risk mitigation
measures like transaction limit (per transaction, daily, weekly, monthly), transaction velocity
limit, fraud checks, AML checks etc. Depending on the bank's own risk perception, unless
otherwise mandated by the Reserve Bank.
(iii) Authentication: Banks providing mobile banking services shall comply with the following
security principles and practices for the authentication of mobile banking transactions:
(a) All mobile banking shall be permitted only by validation through a two factor authentication.
(b) One of the factors of authentication shall be 'Mpin' or any higher standard.
(c) Where Mpin is used, end to end encryption of the mPin shall be ensured, i.e mpin shall
not be in clear text anywhere in the network.
(d) The mpin shall be stored in a secure environment.
e . . . . .__~
I ~
.--
(iv) Encryption: Pr
transact·10
.
Types ofElectronic Banldng
.
II 199
opcr level of encryption and security shall be implemented at all stages of then
n proces · The endeavour shall be to ensure end-to-end encryption
. transact' · sing. · of the mobile
ban k1ng
10
~s. Adequate safe guards would also be put in place to guard against the use
1 b
0 f mob')
tw k e danking in money laundering, frauds etc. The following guidelines with respect to
ne or an system .
security shall be adhered to:
(a) Implement a 1·1 . .
wh erever possible.
(b) E~ta:h proper firewalls, intruder detection systems (IDS), data file and system integrity
c ec g, surveillance and incident response procedures and containment procedures.
(c) Con~uc~ periodic risk management analysis, security vulnerability assessment of the
app_lication and network etc at least once in a year.
(d) Mamtam proper and full documentation of security practices, guidelines, methods and
procedure~ us_ed ~ mobile banking and payment systems and keep them up to date based
on the penodic nsk management, analysis and vulnerability assessment carried out.
(e) Implement appropriate physical security measures to protect the system gateways,
network equipments, servers, host computers, and other hardware/software used from
unauthorized access and tampering. The Data Centre of the Bank and Service Providers
should have proper wired and wireless data network protection mechanisms.
(v) Certification and Accredited from External Agency: Banks may depend upon other agencies
involve in providing mobile banking services. The customer data is important, financial as well
as non-financial being held by these agencies. It is therefore imperative that sensitive customer
data, and security and integrity of transactions are protected. It is necessary that the mobile
banking servers at tlie bank's end or at the mobile banking service provider's end, if any, should
be certified by an, accredited external agency. In addition, banks should conduct regular
information security audits on the mobile banking systems to ensure complete security.
(vi) Alternative ID or Authentication: For channels which do not contain which do not contain
the phone number as identity, a separate login ID and password shall be provided to ensure
proper authentication. Internet banking login IDs and Passwords shall not be allowed to be
used for mobile banking.
13.6 VIRTUAL BANKING
Internet based financial institution that offers deposit and withdrawal facilities, and other banking
services, through automated teller machines or other devices, without having a physical (brick and
mortar) walk-in premise called virtual banking. This is the latest and foremost form of present day
banking where most of the services are delivered 'virtually'. Means the services are delivered through
we~d there is least (fraction to 1%2 customers those requires physical_£rese_~.e at their bank branch.
The Vlrtual banking is based on the integration of such technologies as the internet, mobile_pho~e, and
other which allow the client identification, and recording transactions cair1ed out by customers but
electronically. It is a comprehensive solution for banks to manage the full-fledged branches without
physical presence but through internet, mobile or call-centre. Since virtual bank is based on digital
technology therefore it is also called as digibank.
 200 II Bss111tiills of_lklnlcbtg • '""""""·
In the 1nttn1atlonal blnldnl sector, the number of digital banks is increasing. Some countries
'!'!JIii of r -• ,.
UK has more than ten dlsltal blnb, but In India there is only one virtual bank. DBS B11nk hns 1Ii~ E•paymenta made e-cash or account directly cleclud the IIDOUDI from lllak ICCOallt llllllllce
Jevrrased Jn launch of lndlai first mobilt-only bank In Aprll, 2016. It breaks down all conve~; ried maintained by user. The payment may be made by e-cuh. ATM/Debk card, pn-plld,or.._ ,.,.....
banklnB norms with their onerous forms-filling and cumbersome processes. Virtual bankJ 1011a1 In case of non-account payments, the cuatomer get add money ftlue In tbelr canll ca tbe Cllllllllln of
completely paperless. signature-less and branchless bank. All banking operations, including ng Is a the bank or service provider. The enmple of non-account lined paymeatuieamatc:anl•decbUllk
opening. customer authentication, E-KYC. and daily banking transactions are persuaded pu ~cco~llt wallet like, metro card is a smart card, and paytm, Google e-wallet, itzCMb. ..... e-Wlllet etc aR
the A,dhaar card. The fact is known well that Aadhaar card is a biometrics-enabled ID whichr; Y using e-wallet.
issued to over one billion Indians in the world's largest biometric identification program. las been Credit card is the system of e-payment which allows customer to buy~ ad_,_ ca aecllt
Besides other benefits of e-banking. virtual banking has exclusive advantages of high
as it is based on biometric system, and least cost tedmology
basis and grant a defined period to pay the money back to the accounc ofaecllt card
interest. But on late payments, interest is also charged.
wllhoat..,..
IIIJ'
as least number of custo eSl security
other I•nfrastru~ _are requrn:u.··'--' Th . al
. e virtu banks also collaborate with other existingmer cent
banks ers or E-cash is electronically stored in software on the user's local .:ampae, la ..... format,
the benelits of their infrastructure like, ATM, Cheque Collection Centre etc. In order tO . to take cryptographically signed by a bank. They could spend the digital cub money at IIIJ' abop .. ..1 =
services to their customer at least cost. It is also beneficial to banks as well. Because th give ~dequate e-cash. The security of e- cash is ensured through digital signature.
L..... el . .,_.: and
1J11XU on ectromc uc:v,ces. no paper work is involved which may cause of h eIsystem is totalJy Credit card, smart card, ATM, and debit card are the examples ofplastic~ Plaltic mGDq ja a
customer in case of technical crisis or hacking of data. uge oss to bank and term that is used predominantly in reference to the hard plastic cards ft uae evuy day Jn place ofICblll
currency notes.
13.7 £-PAYMENTS
E-payments_system is an ~c:ctronic medium of making transactions or payments for goods and services 13.7. l Electronic Fund Transfer (EFT)
without ~ ~ e~or 9@.lt is also called an electronic payment system or online payment system. Electronic fund transfer is a transaction that takes place over a computeriad DCtwort. either amcmg
~yments are made on the basis of electronic data intect;icillDI) technologies by using which the accounts at the same bank or to different accounts at separate banks. EFT invohaclircctdebittransacllom;
balance ofone's account is credited to account ofvendor or service provider. Similar to other e-commerce direct deposits, ATM withdrawals, and online bill pay services. The transactions aR procem ii duougb
technologies. e-payments are also paperless monetary transactions. A few examples of e-payments are the automated clearing house (ACH) network. Electronic funds transfer is a much mon: pu6:ued
online reservation of tickets (rail, air or movie), online bill payment (water, electricity, phone), payment of money transfer options it allows customers to make money transfers at the c:mnfort d. their bcmaa
instalments (insurance premium, loan repayment), online payment for goods (pizza, grocery, t-shirt etc). using integrated bartking tools such as internet and mobile banking. Besides being comaieDt. electnmic
£-payments may be classified into two types, (1) cash payment or account linked payments, and transfer modes are considered to be safe, secure and make transferring money much simper. Eleclroaic
(2) credit payment system, shown in figure 13.4. transfers are processed immediately with the transferred amount being deducted f'nlm one KCOUDt and
credited to the other in real time, thus saving time and effort involved in ph}'Sically transferring a sum
E.Payments of money.
Opting for electronic transferring system also reduces the possibilities ofanymistabsasa transaction
Cash Payment/Account is only authorized with complete details which include the correct account number of the beneficiary
l...ilked Payments Credit Payments/Non-
Account linked Payments
and the target bank's specific IFSC code. Transferring funds via electronic gateway is much simpler than
the conventional methods. Transfer of funds through EFf can be done in any of the way listed below:
■ Transfer funds into your own linked accounts of the same bank network.
E-Cash
Credit Card • Transfer funds into different account of the same bank.
■ Transfer funds into different bank's accounts using NEFf.
ATM/DebitCa,d
Plastic Cards Smart Card ■ Transfer funds into other bank accounts using RTGS
■ Transfer funds into various accounts using IMPS.
OnlinePa,ment
Electronic Wallet EFT are of following types:
■ NEFT or National Electronics Funds Transfer.
• RTGS or Real Time Gross Settlement.
• IMPS or Immediate Payment Service.
Figw. 13.4: Mode of E-Payments
 202 11 Essentials ofBankillj and !11s11m11rc
Electronic Fund Tran■fer
National Electronic Real nme Gross Immediate Payment
Fund Transfer Settlement service
Figure 13.5: Types of Electronic Fund Transfer
13.7.2 National Electronic Fund Transfer
National Electronic Funds Transfer (NEFT) is a nation-wide money transfer system which allows
customers with the facility to electronically transfer funds from their respective bank accounts to any
other account of the same bank or of any other bank network. Not just individuals but also firms and
corporate organizations may use of NEFT system to transfer funds to and fro. Funds transfer through
NEFT requires a transferring bank and a destination bank. With the RBI organizing the records of all
the bank branches at a centralized database, almost all the banks are enabled to carry out an NEFT
transaction. Before transferring funds via NEFT account holder has to register the beneficiary, receiving
funds. For this customer must possess information such as name of the recipient, recipient's bank name,
a valid account number belonging to the recipient and his respective bank's IFSC code. These fields are
mandatory for a funds transfer to be authorized and processed.
Any sum of money can be transferred using the NEFT system with a maximum of Rs 1000000/-
NEFT transactions can be ordered anytime customer wants, even on holidays except for Sundays which
are designated bank holidays. However, the~cj:ions are settled in b~s d_tlined by the Reserve
Bank oflnclia dg?ending upon seecifi~ tirn~ There are 12 settlement batches operating at present
between t h e ~ of.8~ to 7 pm on weekdays and from 8 am to 1!:,IT! on Saturdays with 6 settlement
bate~.
NEFT was introduced in November 2005 now covers 77,821 branches and offers eleven hourly near
real-time settlements on week days and five settlements on Saturdays. One of the unique features of
the system is a mandatory' !>~ltiYiConftrmation' to the originator confirming successful credit to the
]>eneficiary's account. Since its inception, the syste~has witnessed ;i° surge in the volume and value of
transactions with l.4 million transactions settling on a single day which is the highest volume processed
till date.
I3.7.3 Real Time GrossSettlement
Real Time Gross Settlement (RTGS) as the name suggests is a real time funds transfer system which
facilitates customer to transfer funds from one bank to another in real time or on a gross basis. 1he
transaction isn't put on a waiting list and cleared out instantly. RTGS payment gateway, maintained ~y
the Reserve Bank of India makes transactions between banks electronically. 1he transferred amount is
La\
Types of Electronic Ba!'_king II 203
Jnstuntly deducted from lhc account of one bank and credit~d to the other bank's account. Users such
os incllvicluals, companies or firms can transfer large sums usmg the RTGS system. The minimum value
thul can be transferred usingRTQSJ.s t2 Lakhs anciabove.Jiowever there is no upper cap on the amount
that can be transacted. 1 he remitting customer needs to add the beneficiary and his bank account details
prior to transacting funds via RTGS.
A beneficiary can b e registered through customer's internet banking account portal. The details
required while transferring funds would be the beneficiary's name; his/her account number, receiver's
bank address and the lFSC code of the respective bank. On successful transfer the Reserve Bank of India
acknowledges the receiver bank and based on this the both the remitting bank as well as the receiving
bank may/may not notify the customers.
The RTGS system was introduced in March 2004 and now extends to 77,093 branches as at the
end ofJune 2011. RTGS settles gross inter-bank and customer (?2 lakh and above) transactions. On an
average RTGS settles 1.8 lakh transactions with a value of Rs 4 trillion on a daily basis. Considering the
Importance of RTGS for settling large value payment systems, action has been initiated for putting in
place a Next-Gen RTGS.
13.7.4 Immediate Payment Service
Majority of the funds transferred using electronic channels are processed via NEFT or RTGS. But as the
funds could only be cleared in batches using these transfer gateways, the National Payments Corporation
of India introduced a pilot mobile payment project also known as the Immediate Payment Service
(IMPS). Available to Indian public, IMPS offers instant electronic transfer service using mobile phones.
IMPS interbank transfer service is available 24x7 and allows customers to use their mobile phones to
access their account and to authorize transfer of funds between accounts and banks. Toe IMPS service
also featured a secure transfer gateway and an immediate confirmation on fulfilled orders. IMPS are
offered on all the cellular devices via Mobile Banking or through SMS facility.
To be able to transfer money via IMPS route customer must first register for the immediate payment
services with respective bank. On obtaining the Mobile Money Identifier (MMID) and MPIN from
the bank, customer can login or make a request via SMS to transfer a certain amount to a beneficiary.
Meanwhile the beneficiary must link his/her mobile number with his/her respective account and obtain
the MMID from the bank to be able to receive money. To initiate a transfer customer must enter the
beneficiary's mobile number, beneficiary MMID, the transfer amount and your MPIN while requesting
the fund transfer. As soon as the transaction is cleared, customer receives a confirmation SMS on
deduction from his account and the money credited into the beneficiary's account. The transaction
reference number can be noted for future reference. Thus, IMPS enables customers to use mobile
instrun1ents as an instant money transfer gateway, facilitating user convenience and saving time and
effort involved in other modes of transfer.
 204 II Essentials ofJkm/ci,rg rmd /IISlll'IIIKt
13.7.5 Difference between NEFT, RTGS and IMPS
NEFT has settlement cycles
Operations
running through the day,
Once you opt for this
transfer, the amount is not
immediately transferred, but
is done in the next settlement
cyde. These cycles generally
run at 60 minute intervals.
The beneficiary and the
sender both need to be a part
of the NEFT network.
T!Olings Settlement cycles take place
every 60 minutes, but the
timings are mostly for 11
hours on weekdays. 5 hours
on a Saturday, and no NEFT
on Saturdays. For example, if
your bank's weekday NEFT
timings are from 8 am to
7 pm, and you conduct a
transaction at 7.10 pm, the
NEFT will take place on the
next working day.
Requirements I Sender and beneficiary
should be a part of the
respective network Amount
to be transferred. Account
number of the sender.
Account number of the
beneficiary. Beneficiary's
IFSCcode
Transfer Limit I There is no minimum
or maximum limit for
NEFT transfers, unless
you personally apply one.
However, the maximum per
transaction is tlO lakh.
(l,;"""·°\ ~ \;,..,._y
The funds are credited to
the beneficiary in real time.
This type of transfer is
accounted in the RBl's books
and is irrevocable and final.
RTGS is mostly used by big
corporations used by big
corporations for real time
transactions.
RTGS timings work pretty I IMPS is a 24-hour service
much in the same way as and can be used at an
NEFT timings, except for time.
the fact that it is practically
instant and real time, so
till the last working hour,
you can avail an RTGS
transaction, but mostly not
after working hours, half
days on Saturdays, and on
Sundays.
Sender the beneficiary
should be a part of the
respective network. Amount
to be transferred. Account
number of the beneficiary.
Beneficiary's IFSC code.
While some banks set a
maximum limit to RTGS
transactions, on individual
accounts, the minimum limit
for an RTGS transaction is n
lakh. This is done to limit the
number of transactions.
·:l ') 6:115®)
This is a more consulller
centric service that can be
done using mobile Phone
services.
y Pre-paid payment instruments (PPI) are payment instruments that facilitate transactions like purchase
Sender and beneficiary
must be registered for
IMPS. The MMID or the
bank IFSC and account
number of the beneficiary.
Aadhar numbers can
also be used for transfer.
Sender's MPIN
There is mostly no
mm1mum or maximum
limit on IMPS transactions,
but this may vary from
bank to bank.
( 1, ,fJ:' ') · • · , io)
1ypes<1/Elmronic &iniini II as
13.8 E-MONEY
E-Money ls electronic money which is exchanged electronically~ a ~device such as acomputer
or mobile phone. E-money in circulation oper~ as a pre-paid bearer IDstruments (currency notes or
coins). It remains credited/available in ~lectromc account of t h e ~ ~ on a computer Jinktd
with bank or any other approved finan<:1al agency. E-mone_r has properties similar to physical currencies,
d allows for instantaneous transaction. In real terms it the only store value of the cumncy on an
:fectronic device. All the features of physical currency that are measure, medium, standard, store, and
transferability adheres by electronic money as well.
In India, the field of electronic money is regulated by the RBI mainly under Payment and Settlement
S stem Act (PPS Act) 2007. The Act gives details about the issue of electronic money under the name
p~epaid Payment Instruments. Separate Prepaid Payments Instruments guidelines are aJso issued by
the RBI on this behalf. As per the PPS Act, banks and non-bank entities can issue pre-paid payment
instruments in the country after obtaining necessary approval/ authorisation from RBL
13.8.1 Pre-paid Payment Instruments
of goods and services, including funds transfer, against the value stored on such instruments. The value
stored on PPls represents the value paid by the holders by cash through a bank account etc. There are
large variety of PPis including smart cards, magnetic stripe cards, internet accounts, internet wallets or
digital wallets, mobile accounts, mobile wallets, paper vouchers and any such instrument which can be
used to access the pre-paid amount As per the RBI regulations, there are three types of PPls:
1. Closed system payment instruments,
2. Semi-closed system payment instruments, and
3. Open system payment instruments (multipurpose cards).
1. Closed System Payment Instruments: These are payment instruments issued by a person/
entity for facilitating the purchase of goods and services from him/it These instruments do
not permit cash withdrawal or redemption. Being very simple type, these instruments cannot
be used for payments and settlement for third party services and hence these PPI are not
classified as payment systems. The implication is that RBI approval is not required for. issuing
the closed system payment instruments. In the real world, closed system payment instruments.
include bonus point like wallets issued by web portals for online purchases/shopping for their
customers. Mobile prepaid cards also come under this category.
2. Semi-Closed System Payment Instruments: These are payment instruments can be used for
purchase of goods and services, including financial services at a group of clearly identified
merchant locations/establishments. These PPis can be used for third party purchase settlements
and the specific contract between the issuer and the merchant is needed for the use of these
PPis. Still, the semi-closed system payment instruments cannot be used for cash withdrawal
or redemption by the holder. For higher payments, KYC norms are required. Example of semi
closed system payments is Paytm wallets.
 Types of Electronic Banking II 207
206 II Essentials ofBanking and /1is11ra11cc
_ fla)•111cnt lns1rumc,,t Un der moblle or electron Ic wa)let' the Individual ·pre-loads
h
cash in thee-wallet and use it to make
1 tr · all
cards)· 1l1csc "" ·
3 Open System Paym
ent lllstruments (Multipurpose . · . s"rvkcs like funds trnns'"s cnts or trans' I ding of money Is done e1t er e ec oruc y usmg a computer/mobile by
.
• . · J ding hnancrn1·'
b ed for purchase of goods and scn~ccs, me u I '11ols) ,111d also permit cash
,,r PayJl) ,crs. ,oa h . U b h dlin h
debiting from a credit card or bani< account or p ~s1ca Y. y . an . g over cas at a local merchant
can e us · . ( ,oint of s,1 c lcrnu · d
at any card accepting merchant 1oa,.!Jo;s ~re of these PPls that the)' C,lll be use for limited (point of salc[POS]) or at the ATM counters. What ,s requ1Ted IS an mternet connection and a mobile/
withdrawal at ATM<! B~- An imalporlDant. Cd the lime of den~onctization, the RBI raised cash cornputer.
, d a,.sh w,thdra,, s. unng
R. lOOOO Thc ·e PPls can be issue on IYb>· banks· E.xumples
cash trans,er an d
_, 1· - fthese PPJs to s · s ·
withdraw·.u ama1 o t instrument is Vodafone mPesa. Only banks can iss_
u e open. Systcn1 l3.8.3 Benefits of e-wallets
for open system payrnen th h d Cl ·ed and Semi Closed System Instruments ca11 b
a ent instruments. On the o er an • os e l. Use of debit cards requires access to designated point of sales and ATM counters. However, in
P ym FC d ther entities that a,·ails a license from the RBI.
issued by NB an ° case of e-wallets, money moves along with the holder and he can access it from an instrument
held in his hand- his mobile or computer, giving a lot of flexibility for the account holder.
13.8.2 Electronic Purse and Digital Cash 2. Further e-wallets avoid the dangers associated with card thefts.
. f art card which with an embedded microchip, provides multiple operations
Electronic purseis a type o sm ' , 3. For those who stay far away from the brick and mortar ATM/ bank branches, as in the case of
. d __..,,t d type payments. "Wallet" in the conventional senses re,ers to a purse or•
such as debit car 'or u= car . . 'd . d D' . al rural areas, money is still accessible to them at the click of a button. ln case of any requirement
, __ ,_, h !ding
folding case ,or sa.it:1)' 0
mone)' or personal mformation such as I entity car • 1g1t or El ectronic for physical cash, they just need to go to the nearby banking correspondent or a local merchant
electronic, internet based payment system which stores fi nanc1al ·
·
Wallet (e-wallet) refiers to an value as
. b who can make payment like an ATM machine by receiving money in electronic form from the
well as personal 1.denti'ty related information.
· Such electronic payment systems ena le a customer to
. . . needy customer.
. , th goods and services including transfemng funds to others, by usmg an integrated
pay onlme ,or e • . . 4. e-wallets are handy for those who do not have a bmk account, net banking or credit card,
hardware and software system. Hardware can be a mobile or computer. ~ommumcatton between the
buyer and the seUer may happen over the internet or blue tooth or on mobile network. especially those who may otherwise be in-eligible for receiving them. At present, services are
not generally designed to handle big payments.
Thus, e-wallet is nothing but an online money account which does not require the use of a physical
card for undertaking transactions/remittances. Unlike savings bmk accounts, they, at present, do not 5. The use of e-wallets substantially reduces the cost of doing banking transactions. Almost all
offer any interest for keeping money in it, but rewards the holders through cash-backs for making e-wallets are free of cost or charging very minimal amount of fee from customer. It is also
purchases through it. Unlike credit cards, e-wallets are pre-loaded money. Hence, 1t resembles more to cost effective for bank as well. Effecting such transactions through the normal/traditional route
would be burdensome for the bmks, requiring more people to be employed at their counters.
a debit card
6. The use of e-wallet has been very successful in foreign countries, where millions of people
On the other hand, digital cash refers to system which enable a buyer to pay electronically by
are estimated to be using this service to transfer small amounts of money to other people and
transmitting a unique number (called digital certificate) similar to a banknote number. Unlike credit
card payments where the identity of the buyer can be established, digital cash (just like real cash) is merchants via their mobiles.
anonymous. It is also called electronic cash or electronic money. In India no much difference is made 7. Use of e-wallets particularly facilitates e-commerce as customers are not required to fill out
between different sets of e-money. RBI in its report on electronic money (11 July, 2002) mentioned order forms at each site when they purchase an item as the information has already been stored
that thee-money products could be classified into two broad categories viz., (a) pre-paid stored value and is automatically updated and entered in the order fields across merchant sites.
card (sometimes called "electronic purse") and (b) pre-paid software based product that uses computer 8. Use of e-wallets helps in moving away from cash based economy. 1n the process, all the
networks such as internet (sometimes referred to as "digital cash" or "network money"). The stored transactions get accounted in the economy, which has the effect of reducing the size of the
value card scheme typically uses a microprocessor chip embedded in a plastic card while software based parallel economy.
scheme typically uses specialized software installed in a personal computer.
E-wallet is a component of the payment system. As discussed above e-payment systems, however, 13.9 OTHER PRODUCTS TO MAKE E-PAYMENTS
in India, comes under the legally recognized term-"Pre-paid payment Instruments". The pre-paid 1. Unique Identification Authority of India-Aadhaar Project: The unique identity number
instruments can be issued as smart cards, magnetic stripe cards, internet accounts, internet wallets, (Aadhaar) is poised to be an important driver of financial inclusion initiatives. Aadhaar which
mobile accounts, mobile wallets, paper vouchers and any such instrument which can be used to access will provide a unique identification valid through the country when integrated with payment
the.pre-paid amount. Unlike other
pre-paid payment instruments, e-wallet is only an internet based system application has the potential to shape the payment system future in the country. NPCI
onlme account, sans the existence of a physical card. Mobile wallet is an e-wallet where the mobile phone and UIDAI in partnership are ushering in the Aadhaar enabled payment system (AEPS). AEPS
gets doubled up as an electronic wallet. is a bank led model which allows online financial inclusion transaction at PoS (Micro ATM
4iv.

208 II BS#1ditlb af""'1dtrt-' ,,.,,,,._.
throu&h the buslne11 correspondent of a bank using the Aadhaar ----
Uling handheld deYlce) AEPS aervke can be availed by customen at their respective bank
authendcldOn- At pment
wi 1eip00Clent outlets.
bUJinat lour of banking services viz. Balance enquiry withdrawal, cash deposit
.Aadhur~ transfers. UIDAI along with NPCI has piloted Aadhaar enabled
A.EPS will ,upport
and Aadhaar to In J}wtchand. Basic transactions permissible over these accouni_s Include cash
Payment~thdrawal, balance enquiry, and inter-bank money transfer. 1h1s system also
deposit, the creation of an Aadhaar Enabled Payment Bridge which would facilitate direct
~ t of government benefits to the beneficiary by credit to their bank accounts using
Aadhaar.
2. Rapid Luptotemmts in the Payment Infrastructu.re: Last few years have seen expansion in
the yment system infrastructure as a whole. There has been entry of n~w payment systern
~ growing acceptance of new delivery chann~ls, new pro~ucts, increase in number
of ATMs (80000+), PoS terminals (610156), augmentatio~ and sc~mg of payment processing
infrastructure etc. We have also witnessed the used of serVIces proVJded by payment facilitators
such as intermediaries, technology solution providers and merchant acquirers gaining ground
in the industry.
3. Setting up of National Payment Corporation of India Ltd: NPCI has been set up as an
umbrella organisation for retail payments with an objective of integrating and consolidating
various clearing houses in the country for cheques and electronic payments and introduce new
payment applications with focus on electronic payments. NPCI has already introduced RuPay,
an indigenous domestic card scheme. It has also started operating Interbank Mobile Payment
System (lMPS) which offers an instant 24 x 7, interbank electronic fund transfer service through
mobile phones.
4. Domestic Card Scheme - Ru.Pay: The need for a domestic payment card the "RuPay" card
is on account of two factors: (a) the high cost borne by the Indian banks for affiliation with
international card associations in the absence of a domestic price setter and (b) the connection
with international card associations resulting in the need for routing even domestic transactions,
which account for more than 90% of the total, through a switch located outside the country.
NPCI has since been ranted approval to launch the "RuPay" affiliated cards for use at ATMs and
Micro ATMs. NPCI has been advised to ensure that the use of these cards under the Aadhaar
Enabled Payment System (AEPS) is in strict compliance with the DBOD guidelines on Business
Correspondents (BCs). 4 banks have started using the RuPay card. These include: Kashi Gomati
Gramin Bank; Bank ofIndia Dhan Aadhar Card; The Gopinath Patil Parsik Janata Sahkari Bank
Ltd; NKGSB Urban Co Op Bank Ltd.
5.. RRBs in the Payment System Fold: The Report of the Working Group on technology up
gradation of Regional Rural Banks, set up by RBI in 2008, recommended that as a matter of
policy, all RRBs should begin moving towards CBS and achieve 100% coverage by September
2011. Currently, 45 out of82 RRBs have achieved 100% CBS status, and the remaining are in
various stages of implementation. You would agree that a CBS enabled RRB opens up immense
possibilitjes in terms of products and services. As a first step, the sponsor banks would need
to integrate the CBS of RRBs with their own Core Banking. This would enable the customers
'l)paof.,.,,,,,...,,.•
- of RRBa to enjoy the aamc l,enefitl of anywhere UMl anytime baaking llld
payment delivery channclt 1uch II RTGS, NEPT, ECS, ATM,, Internet. tel, heelhw
and SMS banking etc:
13.10. INTERNATIONAL SECURnY STANDARDS IN WIING
W have studied the evolution of banking industry in preceding chaptm. Starting fnim Shah or Napr
Se~h or a desk to exchange currency it has passed t h ~ various staps viz - . •· •· .
h"fts
1 economic reforms, Infrastructural up gradation etc. Thae changa ICtllllly OODb..,._.
lo the
~ el~pment of banking industry. A major contribution in development lsol
~nology has changed its internal operations, like data base mana,ement.
1
higher authorities, etc., as well external operations, like customer
to d interbank transactions. One of the advantages of technology Is that tt made a pladorm a
Indian
:anks in international market. Besides numerous advantages of lnfoi
threats. Data hacking is one of biggest challenge to banking industry using lnbrliiiltluu leCIIDololtY
which necessitates security issues.
Another challenge is that whether each individual bank should have its own security cbecb or there
should be common standards across the banking industry. Toe key problem with amer Is that it may
leads to increase complexity for end users as there may be different set of guidcliacs or iDltnlctions.
Secondly, it might not be helpful in communicating similar information as desired by other persons due
to lack of harmony among standards. Therefore, there is requirement of security standards those are, in
principle, similar.
13.10.1 International Security Standards
In evaluating the many options for network security solutions, it is essential to understand and coalliller
the role of security standards. The growth in distributed computing and increasing computa ..rime has
led to legislations to establish legal requirements for data security. Use of security staDclards provides
the best assurance of high quality and safety. At international level, there is various network security
standards available in financial market e.g., ANSI, FIPS and ISO widely used in c:ommercial transac:tiom.
Commercially reasonable security standards have been defined by the international banking
community through adoption of ANSI and ISO standards. These standards provide methods of data
encryption, message authentication, and user identification to protect against the risks encountered
during electronic funds transfers. In the banking sector, a bank and its customers are under 6duciary
relationship. Thus, bank has fiduciary responsibility to protect customer's assets, including information
assets. Again, the use of standards-based securi~ provides excellent evidence that due ~ has been
exercised by employing methods endorsed by national government and international standards bodies
in a same fashion.
13.10.2 Security Standards Organization
The following organizations set security standards for national and international network applications.
(i) ANSI: American National Standards Institute sets standards for the banking industry.
 •
210 II Bl•lll•Hf...,.,_,,,,.,_.
(IJ) J11PSi JWenl ......,_ l'lucllllnl Sllndarda. '11111 orpnlsatiOII eetl atandards for lJ 9
GcMnunlntua ,S. ANSI X ,l?/ISO DIS 8732/PIPS 171 ha belll for.n, ,..._.. - ~ ilir-bam data 1 •
(HO ISOIUIO fn(lfflldonll Standards Orpnlutlon and the International Electro-tc.-chnl.
org1nl1.atlon~~nd the llla)or Ulle1'1 of commerdll encryplloll t,cbaDluf,,·- W.aid .ilwlld
1n1t1tutlona, SI X9, I? Is In use for ■ppllcatiofll IIUCh 11:
CommJalon 1et 1ntematlonal standards. (al ■ Electronic Punds •rran1,en,
L
(lv) O!TFi Internet ~ 1 1 8 lisk Fon:e. This organlatlon Is ttsponslble for setting stnnd
for lntemet usen. nr<1, ■ Payment Authorb.atlon,
• Automated Clearinghouse Tranuctiofll
13.10.3 s-t, Servbs • Secure remote access for users auch as :udltor1, Law L ~ ~ - - ~
groups, CBI etc.,), and Diplomata,
s«wity services are used to achieve a desired business outcome. Business goals for network applic I' ■Securities Trading.
10
and the correspondill8 s«Urlty services are givtn below Table 13.1. a ns
On intern_et banking in India, RBI has issued Rq,ort, and guidelmes oa cyt,er MC'ar1ty trameworlt
1abk 13.l Aim to Select Security Services (vide notification: ~1/2015-16/418 DBS.CO/CSITFJBC.t l/33.01.001/lOlS-16) folowlagdle pllllftl•
===~ 4~~~-.fltJ, international security standards. It is not easy to comprehend all imamllomhecadty . . . . .Jdll!'ecl
Security Service
with banking applicable across the globe. Moreover, it is out of scope of ddl book. Howner,,a llmillr
• Data Encryption attern and requirement of these security standards are given under abcJ¥e 111d RBI ..,....,.... •
• lnfurmltion that is received is exactly what was sent • Authentication ~iscussed in the following part of the chapter.
• You art who claim to be/ selecting right user • User Authentication
binding electronic transaction I • Digital Signatures 13.11 INTERNATIONAL SECURITY STANDARD ORGANISATIONS
The issue is how to select or recognise what type of security services are provided by different 13.l l .l The American National Standards Institute lANSI)
standards. Table given below identifies the various areas of security standardisation. It also explains the
standards that are in common across the different standards bodies at international level. ANSI is a private sector voluntary standardization system of the United Slates for llllllR the 90,-n.:
Founded in 1918 by five engineering societies and three government asencies. the blllilla remaia&
Table 13.2: Identification of Area of Security Standardization private, non-profit membership organization supported by a diverse comtitueacy of pmare and pub1k
sector organizations. The Institute represents the interests of its nearly 1,000 aimpuia, ~
. ' Security Standards
.. ,;. government agency, institutional and international members through its office in New York City.and ils
,1•....:.-.... ANSI FIPS I ISO/IEC IETF headquarters in Washington, D.C.
INCITS92, FIPS 197,
Data Enayption Standard 18033-1, 10116 RFC2411 ANSI facilitates the development ofAmericanNationalStandards(ANS)byacaeditingthe~
XJ.106 CBC SP 800-67 of standards developing organizations (SDOs). These groups work cooperatively to develop VGlunW'y
User Authentication ASC/X9-X9.26 FIPS 140-3 9798, 11131 national consensus standards. Accreditation by ANSI signifies that the procedures used by the ltliDdan1s
RFC2222
JTC 1/SC 35 body in connection with the development of American National Standards meet the Institutis esaentil1
X9.9, FIPS PUB requirements for openness, balance, consensus and due process. As of January 2018, some 13? standiml
Message Authentication 9797 (MAC) RFC2104
X9. 19 198-1 developers were accredited by ANSI; there were more than 11,500 American National Stlndards. A
X9.17, FIPS PUB separate process, based on the same principles, determines whether standards meet the necessaryaiterlll
Key Managmtent- Secrets 38500:2015
X9.24 140-2 RFC4107, 2408 to be approved as American National Standards. The Institute is the sole U.S. representative and dues-
paying member of the two major non-treaty international standards organiutions, the International
Key Management-Public X9.42(draft) SP 800-32 9594-8:2017, Oakley+ Organization for Standardization (ISO), and, the International Electrotechnical Commission (IEC).
11770-3 ISAKMP
Digital Signature FIPS 186-4 9796-2, 14888
Solft:e: 8Ulhor owned. 13.l l .2 Federal Information Processing Standards lFIPS)
The standard for automated key management, accepted worldwide, is ANSI X9 .17/ISO DIS 87321 The National Institute of Standards and Technology (NIST) develops FIPS publications when required
FIPS 171. This standard provides for secure automatic, periodic, electronic changes of encryption and by statute or there are compelling federal government (U.S.) requirements for cyber security. FlPS
authentication keys. standards may be used by non-federal (U.S.) organizations and even by private sector organization. NISI'
 212] s,,,,,d lllltt/~ -,,.,.,, ...
mmework c:onallll al _
...,.. pldellnee. and belt pncticel to manlp cyber-ee curlty related rl
the ..--rinf t and ...Ulence of critical lnfrutructure of the econ •k.
1he aim al the lnldtUle 11 ..,---·- I'""'___. 0
----
t3.12 $AU£NT fEAlURES Of SECUlffl SlANOAIDS MID ll5lllBKI
111) INDIAN EXPERllNG
atleatel'COII.
worb c:k,eely with ,tabholden In government, Industry, academla and other organl1.1t
NIST revtewed by NIST at leut every 5 years In order to determin e whether
1o11 pollowlng key points mu•t be kept In mind to achieve buellne cyber-eecurllyor......,_.._......,
PIPS ~ - . , - 1 or withdrawn. The
remain UIIQ-..
art1fic111 1nteruaen.-ce,-cyber-sec
priority 1tt1 of NIST Is to publish
- urlly, Internet of things, and rellable computing. security
they sh •
stnndardOUld
~ on
!ler olnt• are extracted from the guideline• of RBI on cyber aecurtty 1ft benb . .
(RHl/2015-16/41 R DHS.CO/CSl'fP./BC. l l/33.0l.001/2015-16, dated Janel.·
. . .\.
2016). IMIOlllllhllllll~••
I. Inventor y Manage ment of Bualnae IT ANeb: Bulb are reqa1n4 to lllllillllD •
13.11.3 1n1wna11oiial Orgaiisalion for Stondontisation and International Electotechnicol Commissk)
date Inventory of business data Including cuatomer data/lnfonmtlaa, ballia
. ~
USO/IEO
supporting IT Infrastructure facllltlea. Appropriate protection, wltbtn
should be provided depending on the sensitivity of the data / lnformalloa.
a4Clllalcle:'...=
n I
a joint technical committee of ISO and IEC purposef ully constitut
z. Preventing Unautho rised Uaage of Software : Bank mlllt haw mec:ben llmtoCGI IIINI dwlre/
1S0/IEC is ed to develop • m aintai
. applications on end-users personal computers, 1aptopa, worbtationt, eerwn.
and promote standards in the field of information technology. ISO/IEC was formed in 1987 as a m n malille devlca
t,etween JSOfl'C 97 and IECfl'C 83, with IEC/SC etc.
478 joining later. ISO is an independ ent erger
-ment al international organization with a 3. Environmental Control: Bank should put in place appropriate emlromn
a-·---- - members hip of 161 national standard s bodies Th' non. ental controla for
its memben. it brings together experts to share knowledge and develop · s-brough securing location of critical assets providing protection &om natural 111d man-lllld
voluntary, consensu e thrall.
marftd relevant international standards . Internatio Environmental control devices are relating to temperature, water, unoke, aca.
nal Organiza tion for Standard ization have diftased, 11arm1, power
acronym ISO instead oflOS. ISO is derived from the Greek word 'isos', meaning equal. supply etc.
erent
4. Network Management and Security: Bank should maintain an
IEC is a not-for-profit, quasi-governmental organization, founded in 1906 is the world's
up-to date networlt archttectme
. . D for the preparati.on and publi . 1 . diagram at the organiza tional level including wired/
organizatiO cation of. ·mternatt · al d eadmg wireless network. It mmt pat 1pp1oprlate
• , on stan ards for all electrical• e1ectronic . control to secure wireless local area networks, wireless access polnta. Mobile or
and related technologies. These are known co11ectively as electotec hnology. !EC is Switzerla
laptop connected
nd b through wireless must be pre-ensured before connecting them to bank
organization having centnl office in Geneva. IEC is one of three global sister organiza
. ti·ons VIZ.,
. !EC
netwolk.
ased s. Standard Operating Procedures (SOP): All major IT activities
ISO. and rru. IEC promotes . world trade and .economic growth and encourages the deve1opment of• Including connecti Dg dakcs
products. system and sernces that are safe, efficient and environmentally friendly. to the network must be processed through SOP. Security operation centre to
monitor the lop
of various network activities should be checked and controlled.
6. Secure Configuration: a periodical evaluation of critical devices such
13.11.4 Internet Engineering Tusk Force (IETF) switches, security devices, must be done.
IS fuewal1. network.
IETF is a large open international community, located in California, of network 7. Application Security Life Cycle (ASLC): Banks
designer s, operators, are required to incorpo nte lDfonnat ioD
vendors, and researche rs concerne d with the evolution of the internet architec security across all stages of applicatio n life cycle. In respect
ture and smooth operation of aitical businas applic;atioDa,
of the internet The technical work of the IETF is done in working groups, which banks may consider conductin g source code audits by professio nally
are organize d by topic compete nt penonael/
into several areas. The mission of the IETF is to make the internet work service providers to assure that the application is free from embedded maliciou
better by producin g high quality, s/fraudulent
relevant technical documents that influence the way people design, use, and code.
manage the internet. The
major areas ofconcern ofIETF are applications and real-time area (art), general, Besides business functionalities, security requirements relating
internet, operation and to system
authentication, transaction authorisation, data integrity, system activity logging,
access control..
management, routing. security and transpor t area.
audit trail,
The security area is the home for working session management, security event tracking etc. are required to be clearly specified
groups focused on security protocol s. They .
provide one 8. User Access Control/Management: Banks
or more of the security services like, integrity, authentication, must provide secure access to the bank's services. A
non-rep udiation , confiden tiality, and careful protection to customer credentials should be given, such
access control Since many of the security mechanisms needed to provide as login, userid, authenti cation,
these security services employ information and tokens. access profiles etc. Two factor or multi factor authentic
cryptography, key management is also vital. The security area intersects with all other ations may be
IETF area. applied dependin g on risk assessment.
9. Secure Mail and Messaging System: Banks must impleme nt secure mail and messagi ng
systems, including meas~res to prevent email spoofing, identical mail domains
, protection of
attachments. malicious !mks etc.
 214 II Essentials ofBanking and /nSUri1IICe -
IO. Vendor Risk Manageinenr: B~ shall be accountable for ensuring appropriate manage,lleni
---- <Po One has to mak
"
e login on the respective website of the bank m

Types of Electronic Banking

. which h ount.

II 215
and assurance on security ns~ in o~tsourced and partner arrangements. Banks shall careful( Generally •tI customer as ace .
evaluate the need for outsourcing cntical processes and selection of vendor on comprehen . Y b ki requires login password transaction password, and OTP/PIN while perfonmng
an ng transa t" ' •-• h · pedal
risk assessment. It is also mandato_ry to assure that other business party, to whom outsour:i~e ch aracter key's cin•on. Most of the banks• ask for a password consisting ...p a+ numenc+ 5
order to generate password with great strength.
is made, are fulfilling all Jegal reqwrements. g 'Po Whenever e-banki .
15 . nrnc th ·
1. Removable Media: Banks must define and implement policy for restriction and secu termed as persona] ng b k.idone . with telephone communications like messagmg or • y _ , en 15
1 of removable media. Timely scanning of removable media for maJware/anti-virus ~e Use
Prior t an ng Instead of internet banking.
b
'9" Internet anki· ng and b"lI b . • ovan· the
providing read/write access must be done. o former teeh nology Mmo e anking are two sides of a coin. The later JS a new mn
th • obil hon over t
1 b kin
0 b"J
12. Anti-Phishing: Banks must subscribe to anti-phishing/anti-rouge app services from dh · e an g allows customer to do banking on e1r m e p one easy o
carry, an andy at every point of time.
service providers for identifying and taking down phishing websites/applications. externa]
13. forensics: Banks must have support system for network forensic investigation. f{}o Mobile banking is more handy but risky as smart phone, most of time. Remember passwords and
ID of customer~. One has not to save his PIN and password in mobile phone. OTP must be deleted
14. Employee/ Management Awareness: ' Banks must
. define
. security policy to employees coveri on the complet10n/decline of transaction.
secure and acceptable use of b ank s network mcludmg customer information, educaf th ng
about cyber security risks and protection at their level. Encourage them to report mg_ em <{}o NEFT and RTGS are internet based electronic fund transfer services, IMPS is a mobile based
services.
behaviour incidents to the immediate management team. Banks must condu suspicious
awareness/training for key personnel on security related administration/operation
ct _targeted f{}o One may visit website of 'National Payments Corporation of India 'to read various types of
electronic payment technologies including BRIM, VPA, •99#, RuPay, Aadhaar Enabled Payment
management. and System (AEPS) in detail.
15. Customer Education and Awareness: Bank must encourage customers to re . .
mails or sites on which remedial action could be taken. Bank must educate ~ort phishing f{}o In India, e-payments are known as pre-paid payment instruments includes all types of card based
on the downside risk of sharing their login credentials/passwords etc. to an
consequences thereof y
thir:
t
CUS omers
f{}o

and software based services.

All pre-paid payment instruments have different features on the basis of transfer and credit of
Party and
money to some other customer, redemption or withdrawal of money etc. These are categorized as
closed, semi-closed, and open system instruments.
KEY POINTS TO REMEMBER
'§>o E-money products could be classified into two broad categories viz., (a) pre-paid stored value card
-,. ECS is an electronic mode of funds transfer from one bank account to another. Under ECS, a (sometimes called "electronic purse") and (b) pre-paid software based product that uses computer
customer can make payment/receipt for transactions that are repetitive and periodic in nature. networks such as internet (sometimes referred to as "digital cash" or "network money"). The stored
Customer does not execute ECS himself, rather give directions to bank to debit or credit the amount value card scheme typically uses a microprocessor chip embedded in a plastic card while software
by submitting required data of the parties. based scheme typically uses specialized software installed in a personal computer.
.,_ ECS is different from Electronic Fund Transfer (EFT), the later is performed by customer himself,
but former is by bank on customer's request. ECS cannot be done without bank intranet. EFT is REVIEW QUESTIONS '.'~~f(~\: · -~, ~.~~~·~:, - ' -
carried out on internet, ATM machines, credit or debit card etc. ECS is a mechanism ensuring
1. What do you understand from the term ECS? What are the variant of it on geographical coverage
regular payment and receipts, whereas EFT is an e-payment system.
and receipt/payment basis?
.,_ Of course, ECS and EFT both avoid brick and mortar banking and based on electronic banking
2. Explain ECS Credit and Debit. How does ECS Credit work"?
concept. Conceptually, EFT is a variant of internet banking, but ECS is a mere e-banking.
3. What are the various benefits of ECS to customers, bank, and banking system?
.,_ Local, regional and national are three types of automated clearing house. A designated bank is
4. Write short note on the followings:
assigned to look after the ECS functioning for a defined geographical area.
(a) Corporate home banking
"" H_ome banking is nothing but an internet banking allowing customers to manage their accounts
(b) Mobile banking
witb full range of banking activities. Still, all banking facilities are not available on home banking,
(c) Virtual banking
for example, you cannot renew fixed deposits online, for that purpose one has to visit branch.
(d) NEFT, RTGS
.,.. Personal home banking and corporate banking have similar features but meant for different set of (e) IMPS
persons. The later is for fir •
ms, comparues etc, and former for individuals. (f) Pre-paid payment instrument
~
216 II Bslentials ofBanking and Insurance

5. Mm distinction between NEFT, RTGS, and IMPS.

6. Elucidate the model of personal home banking with IVRS technology.
7. •Mobile banking is an advancement of internet banking': Do you agree with statement? G
features, advantages, and disadvantages of mobile banking. Ive
8. What are different standard measures issued by RBI in order to secure e-banking?
9. Explain the concept of e-commerce, e-banking, internet banking, and mobile banking. Try to~
at least five differences among them.
10. Diagrammatically presents the various modes of c-payment. Also give features thereof.
11. "E-money is one the electronic mechanism of c-banking': what are the diverse channels of e-money
through which a financial transaction can be executed?
12. What are the types of pre-paid payment instruments, in India?
13. Explicate benefits of electronic purse and digital cash.
14. E-banking is being updated with various latest innovations day by day, what are the latest innovations
in the field of e-payments?
15. Explore five mobile app based one-money/digital cash technology. List out their features also.
16. What do you understand by International Security Standards? What are the functions of a bank
require international security standards?
17. Critically analyse the cyber-security standards issued by RBI.
18. What are the leading organizations providing international security standards?

□□□