BY

ANUJ GOYAL
 Contents
Banking History

Functions of Banking

On Line Banking
 Phase – 1 ( 1786-1969 )
General Bank of India - 1786
Bank of Bengal – 1809
Bank of Bombay – 1840
Bank of Madras – 1843
Allahabad Bank – 1865
Punjab National Bank – 1894
Reserve Bank of India - 1935
 Phase 2
Reforms and development
1949 : Enactment of Banking Regulation Act.
1955 : Nationalization of State Bank of India.
1959 : Nationalization of SBI subsidiaries.
1961 : Insurance cover extended to deposits.
1969 : Nationalization of 14 major banks.
1971 : Creation of credit guarantee
corporation.
1975 : Creation of regional rural banks.
1980 : Nationalization of seven banks with
deposits over 200 crore.
 Phase – 3
products and facilities
Phone banking and net banking
foreign banks and their ATM stations
Credit cards
Loan
Finance
Insurance
 Contents
Banking History

Functions of Banking

On Line Banking
 Banks and their business
Deposit taking Lending
e.g. savings deposits e.g. mortgage loans

Informations, consultations

Services
e.g. money transfer
 Basic functions of banks
To make and receive payments for
customers
To accept deposits and to keep them
safe for customers
To lend money to customers

These functions are carried out through holding accounts for

customers.
 Accounts
Current account: used for transfer
functions
Deposit account and saving accounts
are used for deposits
When a loan is agreed a separate
loan account is created for the
customer
 Deposits and loans

Deposit

Deposit
Loan
Deposit Bank
Loan
Deposit
 Banks and their business
Banks try to find depositors
Banks transform funds
Banks try to find customers who are
in need of money
Banks take on the risks of default
Counselling and administration
 Banks transform funds
Transformation of size: banks
transform many small deposits into
big loans
Tranformation of term: a part of short
term deposits remains at the disposal
of the bank for a longer period of
time, e.g. savings deposits repayable
on demand remain at the banks
disposal for 3 years in average.
Banks take on risk and default
Banks use their know-how to check whether
the borrower is able to repay the loan and by
doing this, they minimise the risk of default. It
is easier for banks than for private individuals
to take on the risk of default. This is because
they grant:
A variety of loans (to different customers, e.g.
private individuals, business enterprises,
industries), thus they spread the risk.
Numerous loans of which only a few are not
repaid.
 Sight deposits

These are acconts with banks, from which all the money can be withdrawn
on demand, e.g. current accounts. These accounts are held by depositors
who need this liquidity for their payments transactions. Sight deposits
usually pay very little interest.
As not all the money must be held at the customers‘ disposal, banks can
use a certain part, the so-called „deposit base“, of the sight deposits for
loans.
 Contents

Banking History

Functions of Banking

On Line Banking
 Introduction to Online Banking

Access account information, review bills, pay

bills, transfer funds
 Apply for credit, mortgage or auto loans
 Find out if a check has cleared
 Compare rates and prices
 24 hour access to your bank accounts
 Benefits of Online Banking
For Banks: For Consumers:
 Cuts payroll costs  Saves time/Money
 Extends to new  Flexible
markets
 Can log on from
 Flexibility
almost anywhere
 Image of Company
 Convenient
 Transaction Speed
Disadvantages of Online Banking
Building trust with consumers to use online
banking
Laws and software issues to support online
banking to ensure accountability
Security
Learning Curve
Bank Mergers
Site Changes
 Security Tips for Consumers
DO:
 Make sure that you are on the correct website
 Make sure that you choose a password that will
not easily be decoded
 Check monthly checking and credit card
statements carefully each month
 Report errors or problems promptly
 Be sure to “Log Out” of website when finished
 Security Tips for Consumers
DO NOT
 Disclose personal information such as credit card
or social security numbers unless you are 100%
sure who you are dealing with
 Have other browsers open while you are banking
online
 Download or open files that were sent from
strangers because this could infect your computer
and capture sensitive information without you
even knowing.
 Privacy Policies

 Most financial institutions have policies

about what information they collect, how
they use this information, and whom they
will share it with..
 You do have the right to inform your
financial institution that you do not want
your information to be shared-OPT OUT