UNIT – 5 (E-BANKING)

Meaning and Definition of E-Banking – Traditional Vs. E-banking – Electronic

Delivery Channels – E-Cheque – Mobile banking – Wallet – IMPS – RTGS – Virtual
Currency – Advantages and Disadvantages of E-banking – Security measures of
E-banking.
What is meant by E-banking?
Electronic banking has many names like web-based banking, e-banking, virtual banking or
web banking and online banking. It is an electronic payment system that enables customers of a
bank or other financial institution to conduct a range of financial transactions through the financial
institution's website.
E-banking is also helpful for non-financial transactions such as changing your ATM PIN,
getting a mini statement, updating your personal details, balance inquiry or printing an account
statement.
E-banking is a safe, fast, easy and efficient electronic service that enables you access to
bank account and to carry out online banking services, 24 hours a day, and 7 days a week.
Define E-Banking.
“E-banking involves delivery of banking products and services to customers via digital
channels. Customers do not have to physically visit banks since services are delivered through
computer controlled systems” – (Arnaboldi & Claeys 2008)
State the Merits and Demerits of E-banking.
Advantages of E-banking:
The followings are the various advantages of e-banking as given below. They are:
a) Faster Service.
b) Higher Interest Rate.
c) Service Quality.
d) 24/7 Facility.
e) Discounts.
f) Transfer Assistance.
g) Surveillance service.
h) Paying bills online and Liquidity.

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(a) Faster Service:
People don't have to wait in line to pay their bills or transfer money thanks to this system,
which offers quick service. Instant money transfers between accounts are possible with internet
payment options.
(b) Higher Interest Rate:
Online banking services offer their users higher interest rates. It has decreased the
operational costs of banks, enabling them to provide better interest rates on consumer deposits.
(c) Service Quality:
Internet banking has raised the level of client service. Using online banking to make
payments is quick, secure, and effortless. Using e-banking apps, customers may keep track of all
account-related transactions.
(d) 24/7 Facility:
Customers have access to e-banking services around-the-clock, seven days a week, 24 hours
a day. Customers can access banking services and products at any time, from any location.
(e) Discounts:
The ability to take advantage of numerous discounts is another significant benefit of using
online banking services. People benefit from several discount programs in stores that accept credit
or debit cards.
(f) Transfer Assistance:
The virtual banking system makes it simple to transfer money 365 days a year. You don't
have to limit yourself to carrying out transactions during business hours; you have 24 hours to do
as you choose.
(g) Surveillance service:
Customers have access to an updated passbook at any time to manage their financial plans
and keep track of their transactions.
(h) Paying Bills Online:
Because it offers a feature to pay any sort of bill, including energy, water supply, telephone,
and other services, you don't need to stand in line to pay your bills.

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(i) Liquidity:
It gives customers access to more readily available finances. They can conveniently
withdraw cash from ATMs at any time and from any location.
Disadvantages of E-banking:
E-banking has various advantages which improves the banking system but there are
disadvantages of using internet banking. These are as follows:
a) Security Problems.
b) High Start-up Cost.
c) Transaction Issues.
d) Training and Development.
e) Challenging for beginners.
f) No Cash Deposit Platform.
(a) Security Problems:
Online hackers' hacking of e-banking systems has led to several security problems.
Customers could suffer significant financial loss if they lose their login information when making
payments.
(b) High Start-up Cost:
It costs a lot to set up different computers, software, hardware, a modem, and an internet
network. Banking businesses must make significant investments to launch online banking services.
(c) Transaction Issues:
Banking servers frequently go down, which causes transactions to fail. Online payment
issues that customers encounter are inconvenient.
(d) Training and Development:
Banks must teach their employees so that they can better serve clients online. For keeping
skilled and trained workers, significant investment is needed.
(e) Challenging for Beginners:
It will be difficult for novices to understand e-banking; they may find it difficult. Because
they are worried about losing money, customers are typically reluctant to explore all of the features
and alternatives offered on the website or app.

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(f) No Cash Deposit Problem:
There is no platform for cash deposits in e-banking services. This suggests that e-banking
customers must visit their local bank branches or automated teller machine locations to deposit
cash instead of using the platform.
State the difference between Traditional vs. E-banking.
Traditional Banking:
Traditional banking refers to banks offering conventional financial services, such as savings
accounts, checking accounts, loans, and more. These banks have physical branches, a network of
ATMs, and a rich history that spans decades or even centuries.
E-Banking:
Electronic Banking is more commonly referred to as internet banking or simply net
banking. It is an electronic payment system supported by a website that offers an array of products
and services of any bank that is possible to work electronically, like payments, transfers, deposits
and more.
Traditional Banking E-Banking
1) You need to go to a physical branch for some You can do everything online from anywhere.
tasks.
2) Typically only available during business Typically offers 24/7 customer service via phone, e-
hours. mail or live chat.

3) Employ various security measures such as Implement advanced security measures such as
physical security, document verification and in- encryption, multi-factor authentication, fraud

person verification. monitoring and secure account management to

protect customer’s money.
4) Offers a wider array of specialized financial Offers convenience and streamlined digital services.
products and services.
5) May not offer bill pay services. Offers bill pay services that allow you to set up
automatic payments for your bills.
6) May not offer mobile banking. Offers mobile banking apps that allow you to
manage your account from your Smartphone or
tablet.
7) May have limited customer service hours or Limited face-to-face interaction.
only offer phone customer service.

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What are the security measures/issues in e-banking?
The security features available to customers include the following:
a) Change your password regularly.
b) Do not share your details with anyone.
c) Keep checking your savings account regularly.
d) Always use licensed anti-virus software.
e) Type your internet banking URL.
f) Logout.
g) Two-Factor authorization.
h) Virtual Keyboard.
(a) Change your password regularly:
For the first time you login to your internet banking account, you will need to use the
password provided by the bank. However, you need to change this password in order to keep your
account safe. In addition, keep changing your password at regular intervals.
(b) Do not share your details with anyone:
Your bank will never ask for your confidential information via phone or email. So whether
you get an apparent phone call from the bank or an email requesting your details, do not give out
your login information. Use your login ID and password only on the official login page of the
bank, which should be a secure website. Look for 'https://' in the URL when logging in; it means
that the website is secure.
(c) Keep checking your savings account regularly:
Check your account after making any transaction online. Verify whether the right amount
has been deducted from your account. If you see any discrepancies in the amount, inform the bank
immediately.
(d) Always use licensed anti-virus software:
To protect your computer from new viruses, ensure that you always use licenced anti-virus
software. Pirated versions of anti-virus software’s may be available for free, but they may fail to
protect your computer from new viruses prevalent in the online world. In addition, you will get
notifications for updates in the software periodically.

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(e) Type your internet banking URL:
It is a safer to type your bank URL in the address bar of the browser than clicking on links
given in an email. There are instances of fraudsters sending emails with fraudulent websites links
that are designed exactly like the bank’s original website. While logging on, check for 'https://' in
the URL and ensure that it is your bank’s authentic website.
(f) Logout:
You can log in to your bank from only one device at a time. When you log out the window
or app, it is closed instantly. The browser’s or app’s back button won’t work. And every time you
want to return to your Digital Banking page, you will have to log in again.
(g) Two-Factor authorization:
2FA helps identify genuine account holders. It needs your password or PIN and a card
reader or mobile phone that generates a single-use pass code.
(h) Virtual Keyboard:
Using a virtual keyboard to enter your password will protect your credentials from being
compromised by any key logger software installed on shared computers.
What are the popular services under e-banking in India?
The following various services under e-banking in India. They are:
1) ATM (Automated Teller Machines)
2) Telephone Banking.
3) Mobile Banking.
4) Internet Banking.
5) Tele Banking.
6) Door-step Banking.
7) Smart Cards.
8) Electronic Clearing Cards (ECC)
9) Electronic Clearing Services (ECS)
10) Electronic Fund Transfer (EFT)

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What is the meaning of Electronic Delivery Channels?
Electronic Channel means any telecommunication or electronic transmission method which
may be used in connection with the Service, including computer, Internet, telephone, e-mail or
facsimile.
State the various E-Delivery Channels.
There are five E-Delivery Channels are E-banking in India. They are:
 ATM
 Internet Banking.
 Phone Banking.
 Mobile Banking.
 SMS Alerts.
(a) ATM:
Generally known as “Automated Teller Machine” an electronic device
which is used to withdraw money from current and savings account. Moreover,
some advanced machines are used to deposit money, cheque even SBI Yono
enabled machines can be accessed without ATM to withdraw money.
(b) Internet Banking:
Internet banking, also known as online banking, e-banking or virtual banking, is an
electronic payment system that enables customers of a bank or other financial institution to
conduct a range of financial transactions through the financial institution's website.
(c) Phone Banking:
Telephone banking is a service provided by a bank or other financial institution that enables
customers to perform over the telephone a range of financial transactions that do not involve cash
or financial instruments (such as checks) without the need to visit a bank branch or ATM.
(d) Mobile Banking:
Mobile banking refers to the use of a mobile device, such as a smart phone or tablet, to
access and manage one's banking accounts and conduct various financial transactions. Mobile
banking apps offer a convenient and secure way to manage one's finances on the go, without the
need to visit a bank branch or ATM.

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(e) SMS Alerts:
It is a facility used by some banks or other financial institutions to send messages (also
called notifications or alerts) to customers' mobile phones using SMS messaging, or a service
provided by them which enables customers to perform some financial transactions using SMS.
What is meant by E-Cheque?
E-cheques are cheques that are written and processed electronically. This means that the
funds are transferred from the payer’s account to the payee’s account through an electronic
network instead of a physical cheque. These cheques are also known as “digital cheques” or
“electronic cheques”. The components of e-cheques are the account number, the bank code, the
cheque number and the amount.
Define E-Cheque.
The electronic cheque is defined under the New Section 6 (a) of the NI Act as, “A cheque is
the electronic form means a cheque which contains the exact mirror image of a paper cheque, and
is generated, written and signed in a signature (with or without Biometrics signature) and a
symmetric crypto system”
State the features of E-Cheque.
Nowadays many people are using these cheques because they provide a number of benefits
over traditional paper cheques. For example, e-cheques are faster and more secure than paper
cheques.
(a) Faster - E-cheques are processed faster than traditional paper cheques. This is because there is
no need to wait for the cheque to be physically delivered to the payee.
(b) More Secure - E-cheques are more secure than traditional paper cheques because they are
processed through an electronic network. This means that there is less chance for them to be lost or
stolen.
(c) Easier to Track - E-cheques can be easily tracked through online banking systems. This makes it
easy to see where the funds are going and who they are being transferred to.
(d) Reduces Paper Waste - E-cheques reduce paper waste because they do not require the use of
physical cheque stock. This means that fewer trees need to be chopped down in order to produce
paper cheques.

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(e) Saves Time and Money - E-cheques save time and money because they eliminate the need for
manual processing. This means that there is less chance for human error and that the funds will be
transferred more quickly.
What is meant by Mobile Banking?
Mobile banking (m-banking) refers to the use of a mobile device to access banking and
financial services offered by banks. It enables customers to check their bank account balance,
conduct online transactions, transfer funds, pay bills, etc., without visiting banks.

Customers use m-banking through SMS, Unstructured Supplementary Service Data

(USSD), or an application (app) provided by the bank installed on their mobile device. On the one
hand, it offers the customers the convenience of using banking services anytime, anywhere.
Explain the different types of mobile banking services.
M-banking allows banks to offer a range of financial services to customers. M-banking has
assumed all roles traditionally requiring the help of a bank representative.
 Account Information.
 Transaction.
 Investments.
 Loans.
 Customer Support.
 Customer Complaints.

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(a) Account Information:
The account holders can:
 Extract the details related to accounts like bank statements.
 Enable or disable SMS alerts of transactions.
 Manage the fixed deposits and recurring deposits.
 Know the loan details and statements.
 Get debit card details.
 Obtain credit card statements.
 Understand and invest in insurance details.
 Perform investment in securities
(b) Transaction:
Customers can transfer funds between self-operated accounts, make payments to third-party
bank account holders, and undertake utility bill payments, premium payments, and loan
repayment using the mobile-based application. Moreover, many banking apps also integrate online
shopping for the ease of customers laced with offers, cash backs, and rewards upon using these
services.
(c) Investments:
Many banks offer the facility of managing the investments like deposits, insurance, and
equities from their m-banking interface embedded in the app.
(d) Loans:
Banks provide the window of loans management to their customers. Customers can check
the status of their loans, pay their EMIs, and even avail small digital loans using the app-based
mobile utility.
(e) Customer Support:
All banks provide a dedicated menu in their m-banking app to submit requests for services
like cheque book, debit & credit card, and loan applications. The account holders can also check
their ATM card and credit card reward points from the banking app.
(f) Customer Complaints:
Customers can lodge complaints about any forgery or invalid transaction from their
accounts using the app.

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What are the advantages and disadvantages of m-banking?
Advantages of M-Banking:
1) Offers 24-hour accessibility to banking.
2) Saves time.
3) Provides a convenient way of making fund transfers and payments.
4) Enables easy tracking and monitoring of bank accounts.
5) Facilitates quick reporting of any illegal transaction or fraudulent activity.
6) Allows swift redressal of consumer complaints.
7) Increase request processing speed.
8) Makes online shopping possible.
9) Allows trouble-free management of investments.
10) Sends notification of bill or loan payments.
11) Encourages customers to stay indoors during a pandemic.
12) Eliminates the need to carry cash all the time.
13) Reduces chances of theft.
Disadvantages of M-Banking:
1) Causes inconvenience for less tech-savvy account holders.
2) Removes human touch from banking.
3) Raises security concerns and online fraud.
4) Results in delays or losses in transactions due to mistakes.
5) Gives rise to comprehension issues due to the complex app interface.
6) Makes follow up on fraud reports difficult.
7) Delays service requests in case of internet issues.
What is the meaning of Wallet and Digital Wallet?
A wallet is a flat case or pouch, often used to carry small personal items such as physical
currency, debit cards, and credit cards; identification documents such as driving
licence, identification card, club card; photographs, transit pass, business cards and
other paper or laminated cards. Wallets are generally made of fabric or leather, and they are
usually pocket-sized and foldable.

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 A digital wallet is a software-based system that allows individuals to make electronic
transactions, such as bill payments, mobile recharges, and travel/movie bookings. Digital wallets
can also be used to transfer money from one bank account to another, providing a convenient and
secure alternative to physical wallets. By using a digital wallet, individuals can access their
financial information and make transactions without the need for cash or credit cards. Top 10
digital wallets in India.
1) Paytm
2) Google Pay.
3) Amazon Pay.
4) Phonepe
5) Freecharge.
6) BHIM
7) ICICI Pockets.
8) Jio Money.
9) HDFC PayZapp.
10) MobiKwik.
What are the benefits of digital wallets?
Digital wallets have gained enough popularity owing to the multiple benefits that they
offer.
1) Security.
2) No minimum balance requirement.
3) Quick transactions.
4) No additional charges.
5) Ease of use.
6) Multiple transactions.
(a) Security:
 Digital wallets are password-protected, providing an added layer of security.
 Biometric authentication is often used to further secure digital wallets.

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(b) No minimum balance requirement:
 There is no requirement to maintain a minimum balance in a digital wallet.
 Users can add as much or as little money as they need to their digital wallet.
(c) Quick Transactions:
 Digital wallets enable quick and easy transactions.
 Digital wallet apps are simple and user-friendly, making it easy to complete transactions.
(d) No additional charges:
 There are no fees or additional charges associated with using a digital wallet.
 Digital wallets are available for use at no cost.
(e) Ease of use:
 Digital wallets can be accessed from anywhere and at any time, providing convenience
for users.
 Digital wallets require only a smart phone, an internet connection, and a linked bank
account.
(f) Multiple Transactions:
 Digital wallets can be used for a wide range of transactions, such as paying bills and
completing online purchases.
 Digital wallets can be used at the point of sale by scanning a QR code or by adding a
mobile number.
What is IMPS?
Immediate Payment Service (IMPS) is an instant interbank electronic fund transfer service
through mobile phones. It is also being extended through other channels such as ATM, Internet
Banking, etc.
IMPS, or Immediate Payment Service, are an electronic money transfer system where you
can send money instantly from your bank account to another. To use this, you and the receiver
should have a bank account and register yourself for IMPS services with your respective bank.
Banks facilitate their customers to use this facility from branches, net banking, and mobile banking
channels.

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IMPS Eligibility:
According to NPCI (National Payments Corporation of India), both the sender and the
receiver must have a bank account with a registered mobile number and MMID (Mobile Money
Identifier) to send and receive funds through IMPS (Immediate Payment Service). Additionally,
you need to enter the IFSC (Indian Financial System Code) code, bank account number and
transaction amount to make a transaction.
IMPS Maximum Limit Per Day:
The Reserve Bank of India (RBI) previously set the IMPS limit to Rs. 2 lakh per day.
However, seeing the increasing demand for this payment system, they have increased the IMPS
daily limit to Rs. 5 lakh per day.
IMPS Charges:
IMPS allow you to make instant transfers of funds from sender to receiver. Banks tend to
charge additional for this service. The additional charge depends on the transaction amount. The
below table provides the charges of IMPS transactions:
Transfer Amount Charges
Up to Rs.10,000 Rs.2.50 plus GST
From Rs.10,001 to Rs.1 lakh Rs.5 plus GST
From Rs.1 lakh to Rs.2 lakh Rs.15 plus GST
Rs.2 lakh and above Rs.20 plus GST.
The exact amount can vary between different banks. The table contains approximate IMPS
charges.
IMPS Transfer Time:
IMPS transfer facility is available 24/7 for every account holder of any bank. The funds
reach the beneficiary instantly after the sender's bank approves the transaction. However, in rare
cases, it can take up to 5 working days when your transaction becomes void, fails, or is timed out
during the process.

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State the features of IMPS.

What is RTGS System?

RTGS stands for Real-Time Gross Settlement. It is a payment system that enables
instantaneous and secure fund transfers between your bank account to the beneficiary account. It is
widely used for high-value transactions due to its real-time processing and the system of
processing transactions individually and not in batches.
RTGS mode of payment can also be used for making your debit and credit card payments.
One can either use the online mode or visit the bank branch to make RTGS transactions. This post
discusses in detail about RTGS process, charges and benefits.

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State the features and benefits of RTGS.
The followings are the features and benefits of RTGS as given below. They are:
(a) Real-Time Settlement - One of the key advantages of RTGS is that funds are transferred
instantly, providing immediate availability of the funds to the recipient.
(b) High Security - RTGS transactions are highly secure as they are settled individually and in real-
time, reducing the risk of fraud or interception.
(c) - No Intermediaries - RTGS eliminates the need for intermediaries, ensuring direct and seamless
transfers between banks and reducing delays and costs associated with intermediary banks.
(d) High Transaction Limits - RTGS is particularly suitable for high-value transactions as there is
usually no upper limit on the amount that can be transferred. The minimum transaction in this
mode is Rs. 2 lakhs.
(e) Improved Cash Flow - Businesses can benefit from RTGS by having better control over their
cash flow, as payments are settled immediately.
What is NEFT System?
The acronym “NEFT” stands for National Electronic Funds Transfer. Funds are transferred
to the credit account with the other participating Bank using RBI's NEFT service. RBI acts as the
service provider and transfers the credit to the other bank's account.
What is the minimum/maximum amount for RTGS/NEFT transactions?
Type Minimum Amount Maximum Amount
RTGS Rs.2 Lakhs No Limit
NEFT No Limit No Limit
Till what time RTGS service window is available?
For Customer Transaction:
Day Start Time End Time
Weekday and Saturdays (Except 2nd and 4th Saturday) 9.00 hrs 16.00 hrs

For Interbank Transaction:

Day Start Time End Time
Weekday and Saturdays (Except 2nd and 4th Saturday) 9.00 hrs 18.00 hrs
** 2nd and 4th Saturday will be holiday for RTGS.

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What are the service charges applicable for RTGS/NEFT transactions?
Charges for RTGS/NEFT are as listed in the following table:
RTGS Outward Transaction Amount 09.00 to 12.00 12.01 to 15.30 15.31 onwards
hours hours
Rs.2 Lakh to Rs.5 Lakh Rs.25 Rs.26 Rs.30
Above Rs.5 Lakhs Rs.50 Rs.51 Rs.55
What is Virtual Currency?
Virtual currency is a type of unregulated digital currency. It is not issued or controlled by a
central bank. Examples of virtual currencies include Bitcoin, Litecoin, and XRP. Digital currencies
are stored in and transacted through designated software, applications, and networks in digital
form.

Virtual currencies are typically issued by private issuers and used among specific virtual
communities. The security of the software and networks that virtual currencies stand on is a critical
concern.
What are the different types of virtual currency?
In terms of legal status, there are two major types of virtual currencies
namely, centralized and decentralized.
(a) Centralized:
A centralized virtual currency has a central administrator or repository. The central
administrator of a virtual currency is typically the issuer of that currency. The role is similar to a
central bank in a regulated currency system. XRP is an example of centralized virtual currency.

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(b) Decentralized:
Conversely, a decentralized currency does not have a third-party central administrator or
repository. Instead, a distributed system will authenticate the transactions of a decentralized virtual
currency.
Many decentralized currencies are based on blockchain networks such as Bitcoin, Litecoin,
and Ethereum.
What are the advantages and disadvantages of virtual currency?
Advantages of Virtual Currencies:
The advantages of virtual currencies are as follows:
1) The technology rails of virtual currencies can eliminate geographical boundaries.
2) Decentralized virtual currencies can eliminate intermediaries during monetary
transactions and establish a direct connection between two transacting parties.
3) Virtual currencies can be programmed to complete automated transactions. For
example, smart contracts on Ethereum's blockchain can hold and release money in
escrow accounts without human intervention.
4) Virtual currencies are digital repositories of value and can assign value to disparate sets
of objects, from gaming tokens to artwork.
Disadvantages of Virtual Currencies:
The disadvantages of virtual currencies are as follows:
1) Virtual currencies are attractive targets for hackers. There have been several cases of
cryptocurrency theft by hackers.
2) Virtual currencies can be subject to scams. Several initial coin offerings (ICOs), which
became popular after a run-up in crypto currency prices, were scams in which private
developers sold worthless tokens for hypothetical networks. The tokens could not be
converted into other currencies.
3) Unregulated virtual currencies do not offer legal recourses to investors because they are
issued by private entities and, for the most part, are not regulated by financial authorities.
4) Virtual currencies can be subject to highly volatile price swings.

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