ry 8, 1993 and June 3, 1992 respectively sien ssury bills commenced from April, 28, 1992 ang replat 182-day treasury bills. io Thus, with this above -mentioned banking and financial Secto, task of decontrol and introduction of competition initiated ears "oy e been taken during 1993.94 tg sage ™®5eon ee s in the banking s; gthened pc oMtoj” numb distortions in the ban! . : be led the gh = spirit among the banks. These include interest Tee sotm® Permission Pt form of private banks, relaxations in lending restrictions and credit Controy, "8 Modifiea Rangarajan Committee: itrecomment i i periods for ¢ The committee was set up in the backdrop of national Outra, i ge ©) 365 Planning Commission’s suggested poverty line of Rs. 22 a day for a Be 4 a te Objectives wid ‘ Ve + To review international poverty estimation methods ang a be whether a particular method for empirical poverty estimation = e3 developed in India. k = + Torecommend how these estimates of poverty can be linked to eligit, expendi and entitlements under the various schemes ofthe Goveramentcfig) dimes Recommendations eee Methodology Used: The Rangarajan committee estimation is baseq ond : independent large survey of households by Centre for Monitoring Ini, Economy (CMIE).It has also used a different methodology wherein ahousehgj is considered poor if it is unable to save. Normative and Behavioural level: Poverty line should be based on: 2 (@) Normative level of adequate nutrition: Ideal and desirable level t nutrition. (b) Behavioural determination of non-food expenses: What people use consume as per general behaviour. Nutritional Requirement: For normative levels of adequate nutrition- average requirements of calories, proteins and fats based on Indian Council Medical Research (ICMR) norms, differentiated b ivity it u . age, gender and activity fv all-India rural and urban Tegions is considered: - * Calories: 2090 kcal in urban areas and 2155 Kal in rural areas. Protein: For Tural Fat: For urban Poverty Threshold: : meld: Pesos spending below Re.47 a day in cities and Rs.32!rnese ves ~ pe veee wy une Bank’ become a challeng vs — ‘act 1949 and by the direetives of Reserve Bank of India (RBD) B Regu Abank is a financial ins atiod oe sends money, Accepts deposits period may be cheques, provide loans and ¢¢ rieaout as ial services forits cust Retr co Both quite sector banks or private sector banks need tobe managa™ money professional way. Bank Managem nt is not just for earning profits bury The othe : Oe a: ‘agement, asset management, liability manage May i. B an RBI, This calls for the theme of Bank Management. TOM, i, Mi ast, Management System br Objectives of Bank Manag: r ; B: e context here is robust as required. The users can ac¢¢, v Pie osten i ssword. Thus, the data i 5 thy date and other functions by using a password. Thus, the ata is secure. Thro ii al stomers can handle most of their transactions online, 7 th eo ie ae i branch of the bank. A customer can transfer money, ma, payments, check the account balance online itself. Likewise, the bank can accounts, manage transactions, sanction loans, maintain accounts and 9 «, through this Bank Management System. All types of accounts including Savin account, Current account, Fixed Deposit account, Recurring Deposit accoy, and Loan account are managed under this system. The Reserve Bank of India played a prominent role inthe implementation, information technology in the banking sector. This implementation was to brin, quick, efficient, secure, accurate, reliable and cheaper transactions at any ban, in our country. As a result, our banks would also become competitive at th, global level. The RBI was involved in setting up several committees to propos changes in the banking system and to focus on technological up gradation, Saraf Committee In 1994, the Governor of Reserve Bank of India appointed a committee a technology issues under the chairmanship of W. S. Saraf. The committee looks: into technological issues related to the payment system and mat: recommendations for widening the use of moder technology in the banki industry. The Saraf committee recommended setting up of institutions electronic funds transfer systems in India. The committee also reviewed tie telecommunication system like use of BANKNET and optimum utilisation” SWIFT by the banks. ob nite. eeu for Society for Worldwide Interbank Financlt via SWIFT ee a ‘T payments are a type of international transfer ay Moonee carats Deas network. The SWIFT international paymet! customer makes a ere i Se messaging systems in the world. Whet! Corresponding banks in en fer, the banker would charge a fee for it. Also, een may also deduct their handling fee. SwitDn of ring yank the ose on xed de ing for Bankin of Various Commi io ittee Recommendations_“13 payments usually take 2-5 working days to reach the period may be a little longer due to time differences beween he way receiving country, or multiple intermedi r ince sae iple intermediary banks involved in the tran fer of The other recommendations were: Enactment of suitable legislation on the lin ion on e lines of the El Transfer Act 1978, USA and Data Protection Act 1984, UK. ii. MICR clearing be introduced at all centres with more than 100 bank branches. Priority should be given to centres such as Ahmedabad, Bangalore, Hyderabad, Pune and Surat which have relatively large volumes. ‘A uniform size for MICR instruments. tronic Funds iit, iv, Switch over to online interbank clearing on a gross basis. Introduction of ‘Clearing Bank’ concept for decentralised cheque processing. vi, Truncation of cheques up to the value of Rs.5,000/- Introduction of a Delivery versus Payment (DvP) system for SGL (Subsidiary General Ledger) transactions, with settlement on gross basis both for securities transactions in PDO (Public Debt Office) and funds transactions in current accounts at DAD (Deposits Accounts Department). Introduction of Electronic Clearing Service Credit for low value repetitive vii. viii. transactions such as interest, dividend, salary, pension payments and an Electronic Debit Clearing for payments to utility companies. ix. Geographical expansion of the BANKNET network with nodes in all important branches of banks and modifications in COMET software to enable dial-up connectivity, file transfer facility, encryption ete. x. Large scale induction of computers and communication technology in service branches xi, NICNET (National Informatics Centre), to be used for the reporting of currency chest transactions by the chest branches to their Link Offices and Issue Departments of the RBI. xii. Promotion ofa card culture, as well as enhanced training facilities. Narasimham Committee: Considering the inefficiency and profitability of the banking sector, the government decided to restructure the banking sector to infuse greater competition and efficiency in their workings and to increase their profitability. ___ The Government of India appointed a nine-member committee headed by M. Narasimham, the former Governor of the RBI in August 1991 . The committee was appointed to review the working of the commercial banks and other financial =—___—__—_— __Technolo, Fihe couniry. The Government also wanted the te eeemodel these institutions for raising theis in Bang, suggest measur ~ ilk tee submitted its report in Ny i Banking System und = Narasimham Committee submitted its report in Novernber, 19 Eaiieg Som ae ed m Comin astiaindnt in DosernBek 1091s age, “Te allowing ard Terorimnam Committee has acknowledged the success of the puoi pete Nalin respect of branch expansion deposit mobilization in the how Pelion baton, priority séctor lending and removal of regional disparities in bt Sima an But during this post-nationalization period, the banking sector suffered," Sinai erosion in its productivity, efficiency and profitability. Two rfiost important 2" fo regions responsible for this situation, as-feported by the ‘commitice, include din...” financing rvPetment and directed credit programmes. The Comittee argued tha 2. The Gove abnormally high Statutory Liquidity Ratio (SLR-38.5 percent) and Cash the ah Ratio (CRR-15 per cent) enforced on the bankers kind of tax on the bank Tai system and diverted a good amount of banking funds for unproductive Purpont s e Similarly, the CRR, in the form of reserve requirement tax has reduced he ‘ = Sic potential income of the banks and thus reduced the profitability of the banker, aes Moreover, the Narasimham Committee report mentioned that the system of pa directed credit operation in the form of subsidised credit flow to under-banked and i and priority areas, IRDP (Integrated Rural Development Program) lending, loan ratio mela and so on disturbed sound banking practices. 5 Tee The Committee further mentioned that about 20 percent of agricultural ang hed small industrial credit is in the form of ‘infected’ and ‘contaminated’ portfolios. ‘The Committee also mentioned that the operational expenditure of these banks increased significantly due to phenomenal increase in branch banking, lack of e 7 proper supervision, rapid growth of staff and aceelerated promotion, improper ; role of trade unions and higher unit cost administering loan to the priority sectors. Recommendations of Narasimham Committee on the Banking System: ‘The Narasimham Committee’s recommendations for reforming the ‘banking . system are based on the sole rational criterion, i.e., the resources of the banks should be deployed in a more rational manner so that it can provide maximum benefit to its depositors. Thus, the holding of funds of the banks by the ‘ ee of interest for financing its consumption expenditure (paying salary of the employees) defrauded the depositors. rational flexibility of professionalism in ctiveness of the financial—_— Banl tem and Overview of Various Cox The following are the important recommend: 7 Committee for making necessary reforms in the banka the financial system; —_—— 1, Establishment of a four-tier hierarchy for the banking struct of three or four large banks including the SBI at the nn nationalised banks with a network of countrywide branches bee”, °° for regional operations and rural banks at the bottom mainly onan peat ” financing agriculture and related activities ae The Government should not give too much thought to nationalize any private commercial banks of the country in future and private banks should be treated at par with public sector banks. Lifting the bar on setting up new banks in the private sector and abolishing the licensing procedure for branch expansion. The Government should be more liberal in allowing the foreign bank to ‘open more branches keeping in mind the foreign investment policy. Joint ventures of foreign and Indian banks be permitted in respect of merchant and investment banking. Foreign operations of Indian banks should be rationalized. 5. The Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) should be progressively brought down from 1991-92. The SLR instrument should be deployed in conformity with original intention of regarding it as a prudential requirement and not be viewed as a major instrument for financing the public sector. 6. The directed credit programme should be re-examined at least in case of those who were able to stand on their own feet and those who have turned this into a source of economic rent. In this way, the priority lending. should be controlled. The priority sector should be redefined to comprise small and marginal farmers, the tiny industrial sector, small business operators and other weaker sections. 7. Interest rates will be further deregulated to reflect emerging market conditions and the present interest rates on bank deposits may continue to be regulated. 8 In respect of doubtful debts, provisions should be created to MA Seas of 100 percent of the security shortfall. Loss of assets shoul e oH written off. A Board for tackling the problem of bad debts is oo a Arrangements be worked out under which at least part of se e eae doubtful debts of the banks and financial institutions are f ee balance sheet so that banks could recycle the funds realis this process into more productive assets.stem for bank officers is q ‘Appointments to the eae aw: The committ Posts, ised systems. ruitment reforms. cal favour. f computer ne tt also felt the urge gent a ee sector bank should set up One or more sertcover all its rural Branches and these 2H ag, recommendations 0 | rural banks. al be (a) The tole of A lic sector banks sh M peeowen reentage of shares of te PUPLE ace ee Ls Ge ‘ho other PSUs (Public Sector Units). © disinvgy < sa. 1p, Government sidelines relating to matters of internal administra : and forei + retaken back to ensure the ‘independence and autonomy of tha (©) Reduetic ‘The quality of control over the banking system between the RBI. banks govern Te dng Division ofthe Ministry of Finance should end and RB, ea be the primary agency for regulation of the banking system, tou Sey ce . already reaches ‘The other financial reforms recommended by the Narasimham Comm, productive inv include: fe -—_recommendati eit assigning supervisory function over banks and other fin ames pete ee asia er Financia concessional oe to a separate quasi-autonomous body to be sponsored 5, of SLR, ete. 5 ae 4 Althou: 2. Infusing competition among the Development Financial Institut; of eee (Fis) to adopt a syndicating or participating approach rather ia angles, ther consortium approach. The DFls should adopt internationally accey r Working ut toms fo restore capital adequacy and extend loans for short pei mea destroy the g meet working capital requirements. aa viewed fro / 3, IDBIshould retain only its refinancin; Inthet ig role and delegate its di i to a separate corporate body. gate its direct lending by the Go 4, Prudential guidelin« : Banking pape Sor ae om en the fastenins of all financial Impleme foamulnielanseh ot : e capital market, the SBI shoulé A prudential guideli 3 In-sp investors which would replace pesuidclines to protect the interests o! some mi , of Capital Issues), ictive guidelines of CCI (Control: Narasin . Provision to make for pro ee: The fol ae also for ime pass tcation of assets and full disclosut ie stitutic 01 ‘i a tions, unts of banks and other financlt lation of the Narasimham: s The Narasimham Commi Committee Report: ‘arious nite - grounds, “eTeport has been critici ; E icised by various critics”eettag Sector will be minimised in this ne Tela as effective ie” Perform theirs n this new system where ively as they did earlier, 1m Prosty sector ) Be po about no more national and foreign banks to expand their business to rem PREG PSLR may ee business is iano Private government adversely. Y affect the borrowing capacity of th Bein of the But all these criticisms have no solid base of i clear is that playing politically with public money deposited in the beak ha already reached its saturation point. Bank a Rees Sroduetive investment where viability ertr Is should be strictly used for Fevommendatons ofthe Narasi pean should hold good. But the Se catect ing: eo oo ack adequate statistical support ae Sepa rree ian aan e recommendations like removal of ona mae a eee abe ion of priority sector lending, reducing ee directly affect the weaker sections of the society. thou jarasimham Committee report has been critici i of politi : Hy, officials, fae ; criticised by a section =e paste trade , bank employees from their own angles, pee 2 a eee in facing competition and other structural changes. ive system for a prolonged period would defini y ee te yeh ee fan be ren eal viewed from that angle also. In the meantime, some of these recommendations have e already been ac by the Government. : a Banking and Financial Sector Reforms: 1991-92 to 1993-94 Implementation of. ‘Narasimham | Committee Recommendations since 1991-92: In-spite of strong opposition from different comers, the government initiates some major financial reforms since 1991-92 on the basis of the report of the Narasimham Committee placed before the Parliament in December, 1991. The following are some of these reforms initiated in the country: 1. Reduction in SLR and CRR: Higher rate of SLR and CRR have pre empted a large part of bank resources into low income earning assets thus reducing the profitability of the bank and pressurizing banks to commercial sector charge high interest rates on its advances in the The government has, therefore, decided to reduce over a three-year period from 38.5 per cent to the CRR over a four-year period to @ evel below 10 Per eA eas a step, the SLR was reduced to 30 per cent and percent in April 1992 which released Rs. '3 a thin} - WAN across its branches too. As a result, LANs in diffe Bs . a... n ‘niche tt v nnected. Thus, customers could transact visiting any branch : ety sont somer would declare the branches in which he/she woujg business. The home branch bank of the customer would seng estoy Computerizat customer's signature and photograph and send them to the declan’? wy 3 eee aE casethentication during online transactions. The tellers of the ots Deng? dsl or gacess the server of the customer's home branch using Wan,” Pag = ssvies, This system did not Support many services ty o™e ee Sabot TI ike AT. prote aoe Pants to run ATMS under this system, all the branches must ye 5. Mac pathours forall 7 days in the week. This is practically not posse 4° _ due m i i i 1 © 9, manpower and electric power that is required to keep the ATMs open lg, °! ae 4. WAN-based System with centralised database " eg 3 i ba i are was installed at the data centre of the ban! Required softw: ie : " installed at all the branches of the bank and LANs were linked to the data” c through VSAT (Very Small Aperture Terminal), Radio Link, DDN ora coming ‘ of them. In the centralised core banking system, all the customers’ informa.” : and transactions are recorded at a storage system linked with @ groy." ; clustered servers at the Data Centre. In the centralised core banking sty, Centra alternate delivery channels like ATMs will be connected to the Central Seng Cet and not to the individual branches. The servers are capable of running 24: ft am a day for a major part of the year. Experts in Information Technology are mp; ad =e available at the Data Centre. ice Thus, slowly all banks in India have been computerised to provide quaiy oe service to its customers. ; ped retai ATMs are required to run 24 hours on all days. The success of ATM netwois as tl in both rural areas and urban areas in India depends on the reliability of da sme communication. This is where VSAT plays a prominent role. VSAT providesit: Bar same level of high reliability services in both rural areas and urban areas. VSI coe runs on satellite communication. Additionally, banks require a network solutie: : that helps in quick deployment and relocation of ATMs based on custome sae usage patterns. VSAT offers a much easier option for doing this from tk a Perspective of turnaround time as well as cost-effectiveness as compared tot terrestrial networks. A Challenges faced in Computerisation of banks Computerisation of banks was a herculean task. Banks too had to att! number of challenges on account of computerisation. Some of them are: iby Technological failures which gave rise to operational risks which inclut? inaccurate processing of transactions. 2. Security risks which include loss of integrity. data privacy of customers and daba ee eee ee Computerization of Banks a: pea risks due to Tess clarity on laws regarding consumer priv: = liselosure of information, validity of some agreements formedtirough electronic me and authentication of systems by digital Deckite.” 4, Cross border risks in e-banking. Laws and rules related to protection, record keeping, privacy rules vary across differen sede, 5. Macro-economic challenges in the form of ineffective monetary polic due to cheap cross border transactions. “iad t 6. Infrastructural challenges which include adopting global technology at best prices. Rural customers have many barriers which include language barriers, e-illiteracy and negative perception towards technology banking. D 7. Credit risks arise when a customer is not able to meet his financial commitments. Customers can pay money from anywhere in the world. It is difficult for the bank to verify the identification of the customer. Verifying guarantees and if the person is in another country then in case of conflict different dominion procedures may cause conflicts. Centralisation of banking operations Centralisation of banking operations represents a system where processing, ofall transactions is carried out froma central location. With the application of modern technology, centralisation is not a tough task. Banks can maintain their central operation at head office or some other location which is part of the head office. Several applications are developed to enable the bank to centralise their operations. Core Banking is the business conducted by a banking institution with its retail and small business customers. Most of the banks treat the retail customers as their core banking customers and haye a separate line of business to manage small business. Core banking is thus depositing and lending of money. Core Banking is the meeting point of the largest banking services namely retail and commercial banking, information technology and communication technology. Core Banking provides the bank customers with the right products at the right time through the right channels 24 hours a day, 7 days a week through a multi-location, multi branch network. It is the platform where communication technology and information technology are merged to suit core needs of banking. Advantages of Core Banking: - «Asset of robust software components, designed to meet challenges of the day. dual, typical requirements of abank, * Could be tailored to meet the indivi requi abi aligning the bank’s IT strategy to its business objectives, thus gaining a competitive edge. + Products are made funct architecture, scalability. ionally rich, technically robust, with appropriateae 5 Banking pods ea zastomers Visit the physical bran a transaction to be done. The bank nak oF thee working hours of the branch, Difference between Traditional B, Basis Traditional Banking Global Coverage] Traditional Practice Provides limited coverage. | inv. _wh SS Marketing Tool | Traditional Practice does _| ae E-Banking Practices ‘lve global coverage ile sitting at home/of fice. E-Banking provides the ni cae proper facility of marketing of ting tools. products/ schemes online Z easily. Prompt Services| Traditional Practices E-Banking saves a lot of time involves process which _ | _as there is no need to stand a complete check on banking transactions, requires more time. in long queues. Reduction of ‘Traditional banking With the system of errors/ Frauds practices do not provide | reconciliation of inter- branch transactions, frauds and errors could be reduced. Paperwork Bank executives have to Cost and time could be perform a lot of paperwork| reduced or everything is to which increases both time | be through some interval and cost. and no need for huge paperwork. Risk of carrying | In the case of traditional E-banking provides banking cash business, a person has without carrying cash as to carry cash at each plastic money point of time. (ATMs, Credit cards are . available) In traditional banking, custo when they visit the bank orming the banking transactions. The different traditional banking service: ‘Advancing of Loans and Acceptance E-Banking saves alot of time Services in Traditional Banking eee mers can build relationships sare: of Deposits with the bank branch. Asaresult, they become comfortableMAN covers a larger geograpnicatarea oy mnterconnecg to form a larger network. MAN has a higher range than ata, N es to for Rent agencies. In MAN, LANS are connected 19 cyan’: Banki ‘Cleplioe exchange line. MAN is used for conmntinication er eames it een He from a customer's aceg city. = 9g = : Nee —_ E « Gecount in any bank, a _— Syould Be sent to the Jparik account) by the: ee Pai, ‘ao one receives the the debit card is less “The customer \ PIN isa 4-digit na / ae oe & Different types of Cards issued by banks Banks offer a variety of cards to its customers based on their ati, ‘These are association Automated ‘Teller Machines (ATM): FE: India-born Scot John Shepherd-Barron who invented the ATM, a cards come with the concept ofa self-service cash dispenser in 1965, when he was "type of aces to reach his bank. The first ATM was installed at Barclays Enfi dB ‘p. Master € London on the 27th June 1967. He also introduced four-digit P Just lik Identification Number (PIN), as many, he found, could not recollect four digits of a number. In simplest terms an ATM is a banking termini accepts deposits and dispenses cash, on activation by inserting a Debit! Card and PIN. customer is offered typically the following services over an ATM: ‘ash withdrawals (within set limit) lance checking lini statement printout osit of cash/cheques for credit of the account insfer of funds between linked accounts ige of PIN of ATM/ Debit Card utility bills, donations ng Mobile Phone recharge/ Internet pack questing for a cheque bookergy camey Once | Bran Person, }ore the inal i U Cro _ of payment. RuPay was started t Card Banking De rd 33 sa payment ca from a customer's account when a pare ONE et de need to carry cash or cheque book to make purchase ea aecount in any bank, a request for a debit card has Pilg aad would be sent to the address mentioned in the apaliengen bank account) by the customer. The PIN is sent sepady is eos no one receives the debit card and the PIN together. Pee cca the debit card is less, A default PIN set by the banker i Bein bee aes The customer ee have to go to the bank’s ATM and Sait Sane it number. PIN should not aan should not be written behind the card. Caras eae beat asecure manner. When the card expires, a new debit card is sent by the banker to the registered address and the same process has to be done to get it activated The PIN can be set online too via online banking, The PIN should be set carefully, Itshould not be a continuous number like 1234 or the customer’s date ofbirh which can be guessed easily. There are 5 types of debit cards in India, They are: a. Visa debit cards : These are debit cards styled with VISA on them and are issued by banks in association with Visa Inc, which is an American multinational financial services company. This card is widely accepted for both online and offline payment. Visa cards come in Classic, Gold and Platinum which are customised based on the ducted directly ds eliminate the stomer opens an The debit card type of account customers hold. b. Master Card debit cards Just like Visa, MasterCard is a popular American payments company which is accepted even at some foreign online retailers that ship to India. The company is known for its fast and secure payment gateway. MasterCard debit cards also ‘come with benefits and reward programs. - ¢ RuPay debit cards ion of India (NPCI) started RuPay as amode The National Payments coer 0 he expensive. .d by most online merch: ‘Ip customers in terms of cost as the cost of internati RuPay debit cards are accepted at tional card schemes were ea ony ATMs, Point-of-Sale terminals an a it cards d. Contactless debit ca th a built-in radio frequency module. These are debit cards which COME Tye debit car. The customer needs to _ Payments can be made by simply ei merchant outlet. This system is like acer aici ID cards at office premises. This debit eee es not have to hand over the card employees getting access usi card Pecanvieed as safe as the Ben on jor banks ike S BI and HDFC ie ter _ a in India. to the cashier and need not ent ‘wbich are accepted at major outlets in Inc a Bank issue contactless debit= Te, Stuer DEB Ce et tar to Master cards and can be \ phese are si =, a whens cards are accepted for payments at domestic any \™My we me eS any shape and will outlets, ‘Smart Card fe A amart card isa card that stores information on a mie Card and its reader jagnetic stripe found on ATM and creditcane i cards we are jook like driver's licenses or credit cards. Smart cards have me . es cmreten: inbuilt in them in acontact pad. Once the contact. Pad is removed a Generation the card is no longer smart. The chip has substantial Private om eden Smart cards provide ways to securely identify and authentcgy nt third parties can gain access to the card. Smart cards are yay" piysical slots meant for reading chips or through short-range Wi,“ eld communication. Smart cards are used for settling bills, makin, and other financial transactions. The only disadvantage of a smart cay ica little expensive due to its complexity and is only compatible wig smart card readers. ‘There are different types of Smart cards. They are: chip rather than the ‘a. Contact Smart Cards This is the most common smart card in use. ATM cards, credit er this category. The cards are inserted into the card reader Branton ‘n ee pad to be read and perform wansttions b. Contactless Smart Cards ‘These cards do not require a reader. These cards are quite rare in use, ¢.Hybrid Smart Cards ‘These cards have dual capacity and are quite rare in use. These cari work both on contact and without contact. Successive Generations of Smart Cards: + First Generation: First Generation Smart Cards (some categorise as Third Generation cards) employ physical contacts that terminal. This type of Smart Cards shares the mechanical magnetic stripe cards in making contact with terminals. This gt of cards require the use of a terminal in order to access the carts and to employ its IC functions, Second Generation Smart Cards, or “proximity Tome act feature, Communication between card and takes the card fe very close distance radio transmission. The use OL need of hon Meld at an angle, to the terminal, The terms! the problems epee i slot on its face. This obviates dein enc coma anh a ” er, ICard Banking _ ——need for any shape and will work in nearly any position. Thus, both the Smart Card and its cards use infrared light transmis Third Gener Generation They may bi Credit Card Credit card usu‘ 35 mart Cards themselves can be of reader can be made of irregular and/or smaller sizes: Some ion instead of radio communication. ration. Third Generation Smart Cards, in addition to Second features have numeric keypads and read-out display panels. .e battery or solar powered. s a ally refers to a plastic card assigned to a cardholder, usually with a credit limit that can be used to purchase goods and services on credit ‘The credit history. Higher the limit is decided by the bank based on the customer’s credit score and credit score and better is the history, higher is the sanctioned tuedit limit. The customer gets a credit card statement each month giving the pelow details. * available credit limit + payment due and payment due date « interest to be paid + payment methods reward points earned/not redeemed Historical Perspective (Root) (as traced by some historians) 1914 First consumer bankcards issued by Wester Union and GPSC (Mobil Oil). 1950-Diner’s merchants. 1951-Franklin 1958-Issue of fi permitting payment in instalments with a finance 1959-By the end of the year two mill 1966-Four large banks in Illin “mutually honour the cards. Various “Interbankeard Association which turned MasterCard. Club organised acceptance of common Credit Cards by National Bank, Long Island issued “Universal I” Credit Card. irst bankcard by Amex. Bank of America issued Bank Americard, ¢ charge. lion cards were in circulation. ois formed a bankcard alliance to issue and. others joined the alliance. Thus, formed jnto Master Charge and later to 1967-Bank Americard started franchising. 100 banks signed on. 1967-Bank Americard spun off to National of America licensed banks in 15 foreign cow operations were transferred to IBANCO. Bank Americard Inc. (NBI). Bank ntries. Bank of America foreign © tumed VISA International. VISA 1977 NBI became VISA USA and IBANC! ‘and MasterCard serve as non-profit processing and utility systems for the card ‘issuing companie: s (mainly banks).Card Banking transfer cards as the interest rate willy ‘rans! i ae the Tatereat rate will ot be as Tow as Oc aad nerd andl the rates are not valid for a specified time as in the latter one + Balance Transfer Credit Cards: Though most eredit p facility to transfer balance, a balance transfer credit card eee low-interest rate for a specified period of time. If the custome nt cand has a high-interest rate, he/she may transfer the outstanding ace from the current card to a balance transfer card with a low tae aa cards offer an opening rate as low as 0%. ey Rewards Credit Cards: A rewards credit card is the one that offers some kind of rewards for every rupee customer spends with the card. Every bank defines the number of rewards points customers get for a specific type of transaction, such as grocery shopping and online bill payment. + Cashback Credit Cards: Cashback credit cards offer a certain percentage of the purchase amount as cash back whenever the customer makes a transaction with the card. Cashback may be applicable only for specific transactions as the bank specifies. FE + Travel Credit Cards: Frequent travellers benefit from a travel credit card as the card offers benefits such as travel insurance, global acceptance, favourable currency conversion rates, and so on. Shopping Credit Cards: Credit cards that come with deals and offers when the card is used to pay for shopping expenses. Online and offline shopping can get customers additional rewards for every purchase. Entertainment Credit Cards: Credit cards that provide discounts and offers on entertainment-related usages are known as entertainment credit cards. Such usages include purchasing tickets for films, concerts amusement parks etc. ‘Airmiles Credit Cards: Every rupee you spend with an air miles card will offer air mile points to the customer card account. Upon accumulating the air mile points, the customer can redeem them for free flight tickets or other goodies available on the redemption catalogue. Lifestyle Credit Cards: This type of credit card gives benefits card is swiped for lifestyle expenses such as premiere screenings, fashion shows, and so on. = Premium Credit Cards: Premium credit cards are dedicated for selected airport lounges, concierge customers. It provides free access to golf. clubs, t service, and insurance. It may also come with complimentary Pee hotel accommodation coupons. Some cards also ote a per: relationship manager to handle the assets of the cardholder. i i f cards are Student Credit Cards: The primary wee of this category 0! ae fact do ne college students. The card considers the fact na ood a credit history at most time. ‘The approval for a when the nightlife,Get information at the right time Wen < _ Promote Green Banking Pa w rips while using net banking: fay ‘The user should access the website of bank by typing i . ping in the browser's: bar only and not through search engines which can lead to A G fraudulent websites. Users should not respond to any links via e-mails _ Users should not be attracted if they get ‘email/SMS/phone call promising 1, reward for providing their personal information or for updating their -jnformation in the bank’s site. ‘ While downloading any applications, customers should be aware of cious software on the internet. Customers should remember that the bank’s agents would not make I calls asking for customers details. ‘The net banking security can be strengthened by updating different software tools. "Users should have the latest version of browsers and Operating Systems. s should ‘ensure that personal firewalls are installed. have installed latest anti-virus software. is the practice of ‘performing banking transactions from home offices. Home banking can be done with or without e g could be in the form of mobile banking, web ‘telephone banking and banking by email. Here, mobile ing do not require the internet. Web banking and internet connectivity. ¥ ome acommon technology device that is very helpful ng banking business. Mobile banking can offer anywhere ‘However, mobile banking has security challenges too. be done through Mobile Banking:Card Banking ‘Types of Computer Network (Local Area Network) ‘A local area network (LAN) is a group of computers and peri Nee: hers it share a common communication line or wireless link a ann ct geographic area. A local area network may serve as few as two or ices in ahome/office or thousands of users in a large office. Home WiFi networks mall business networks are common examples of LANs. (Personal Area Network) is a network arranged within an individual person typically in a 10 mi, ant @ by Wi-Fi, Bluetooth). institutions. Examples of WAN are M ypes of PAN. They are Wired PAN (connected by USB) and xtends over a large geographical area such as states idered to be wider than LAN. WAN js used by the 2 obile DS32 Technology ; & MAN (Metropolitan Area Network) Sey in Ban MAN covers a larger geographical area by interconnecting a diff to form a larger network. MAN has a higher range than LAN, ink Government agencies. In MAN, LANs are connected to each other Ee telephone exchange line. MAN is used for communication between (hs : ot = : & a = 2 & x & 7 = 4 | —_m_ —— eo as = & a & Different types of Cards issued by banks Banks offer a variety of cards to its customers based on their requirements Automated Teller Machines (ATM): India-born Scot John Shepherd-Barron who invented the ATM, came Up with the concept of a self-service cash dispenser in 1965, when he was once late to reach his bank. The first ATM was installed at Barclays Enfield London on the 27th June 1967. He also introduced four-digit P S Identification Number (PIN), as many, he found, could not recollect more four digits of a number. In simplest terms an ATM is a banking i accepts deposits and dispenses cash, on activation by inserting a Debit! Card and PIN.will be ual bi . The serv J of the year. pu t 2 Data Centre. er 8, Slowly all banks in India h: Service to its customers. e VSAT : ATMs are required to run 24 hours on all days. The success of ATM networks in both rural areas and urban areas in India depends on the reliability of data communication. This is where VSAT plays a prominent role. VSAT provides the same level of high reliability services in both rural areas and urban areas. VSAT runs on satellite communication. Additionally, banks require a network solution that helps in quick deployment and relocation of ATMs based on customer usage patterns. VSAT offers a much easier option for doing this from the perspective of turnaround time as well as cost-effectiveness as compared to the terrestrial networks. } Challenges faced in Computerisation of banks Computerisation of banks was a herculean task. Banks too had to facea | number of challenges on account of computerisation. Some of them are: 1. Technological failures which gave rise to operational risks which includes vers are capable of running 24 oes Experts in Information Technology are made been computerised to provide quality | }