PRESENTATION OF SEMINAR ON CONTEMPORARY

ISSUE IN MANAGEMENT

TOPIC: INNOVATION WITH RESPECT TO

BANKING IN INDIA.

PRESENTED BY:
Rajesh Kumar (B42)
INTRODUCTION: BANKING IN INDIA

 Banking in India originated in the last decades of the 18 th century.

 The first banks were The General Bank of India which started in 1786, and the
Bank of Hindustan.

 The oldest bank in existence in India is the State Bank of India.

 The three banks namely Bank of Bengal, the Bank of Bombay and the Bank of
Madras merged in 1921 to form the Imperial Bank of India, which, upon India's
independence, became the State Bank of India.
CURRENT SCENARIO OF BANKING IN
INDIA

Overall, banking in India is considered as fairly mature in terms of supply, product range and

reach-even though reach in rural India still remains a challenge for the private sector and foreign

banks.

In terms of quality of assets and capital adequacy, Indian banks are considered to have clean,

strong and transparent image.

The Reserve Bank of India is an autonomous body, with minimal pressure from the government.

In recent years, due to the growth of the Indian economy the demand for banking services
especially retail banking, mortgages and investment services are expected to be strong.
CONT…………

 Currently, India has 88 Scheduled Commercial Banks (SCBs), 28 public sector

banks (that is with the Government of India holding a stake), 29 private banks

(these do not have government stake; they may be publicly listed and traded on

stock exchanges) and 31 foreign banks.

 The public sector banks hold over 75 percent of total assets of the banking

industry, with the private and foreign banks holding 18.2% and 6.5%

respectively.
ROLE OF BANKS

 By pooling the savings together, banks can make available funds to specialized institutions
which finance different sectors of the economy, needing capital for various purposes, risks and
durations.

 Banks have been playing a catalytic role in area development, backward area development,
extended assistance to rural development all along helping agriculture, industry, international
trade in a significant manner.

 Commercial banks provide short-term and medium-term financial assistance. The short-term
credit facilities are granted for working capital requirements. The medium-term loans are for
the acquisition of land, construction of factory premises and purchase of machinery and
equipment.
INNOVATIONS IN BANKING

 CREDIT CARDS

 DEBIT CARDS

 AUTOMATIC TELLER MACHINE

 E-CHEQUES

 MOBILE BANKING

 TELE BANKING

 INTERNET BANKING

 DEMAT
CREDIT CARDS
 Credit Card is “post paid” or “pay later” card that draws from a credit line-money made
available by the card issuer (bank) and gives one a grace period to pay. If the amount is not
paid full by the end of the period, one is charged interest.
 A credit card is nothing but a very small card containing a means of identification, such as a
signature and a small photo. It authorizes the holder to change goods or services to his
account, on which he is billed. The bank receives the bills from the merchants and pays on
behalf of the card holder.
 The major players in the Credit Card market are the foreign banks and some big public sector
banks like SBI and Bank of Baroda.
 India at present has about 3 million credit cards in circulation.
DEBIT CARDS

 Debit Card is a “prepaid” or “pay now” card with some stored value. Debit Cards quickly
debit or subtract money from one’s savings account,
 When he makes a purchase, he enters this number on the shop’s PIN pad. When the card is
swiped through the electronic terminal, it dials the acquiring bank system that validates the
PIN and finds out from the issuing bank whether to accept or decline the
transaction.
 For the debit card to work, one must already have the money in the account to cover the
transaction. There is no grace period for a debit card purchase. Some debit cards have
monthly or per transaction fees.
 The major limitation of Debit Card is that currently only some 3000-4000 shops country wide
accepts it. Also, a person can’t operate it in case the telephone lines are down.
AUTOMATIC TELLER MACHINE

 ATM card is a device that allows customer who has an ATM card to perform

routine banking transaction at any time without interacting with human teller .
 This can be done by inserting the card in the ATM and entering the Personal

Identification Number and secret Password .

 This service helps the customer to withdraw money even when the banks are
closed.
 The ATM services provided first by the foreign banks like Citibank, Grind lays
bank and now by many private and public sector banks in India like ICICI Bank,
HDFC Bank, SBI, UTI Bank etc.
ADVANTAGES OF ATM

 ATM’s provide 24 hrs, 7 days and 365 days a year service

 Service is quick and efficient
 Privacy in transaction
 The transaction is completely secure you need to key in Personal Identification
Number (Unique number for every customer).
 Easy access to the customers, for obtaining cash.
E-CHEQUES

 The payer issues digital cheques to the payee and the entire transactions are done through
internet.
 A typical electronic cheque transaction takes place in the following manner:
 The customer accesses the merchant server and the merchant server presents its goods to the
customer.
 The consumer selects the goods and purchases them by sending an e-cheque to the merchant.
 The merchant validates the e-cheque with its bank for payment authorization.
 The merchant electronically forwards the e-cheque to its bank.
 The merchant’s bank forwards the e-cheque to the clearing house for cashing.
 The clearing house jointly works with the consumer’s bank clears the cheque and
transfers the money to the merchant’s banks.
 The merchant’s bank updates the merchant’s account.
 The consumer’s bank updates the consumer’s account with the withdrawal information
TELEBANKING

 Telebanking refers to banking on phone services.

 A customer can access information about his/her account through a telephone call.
 Information on the current interest rates.
 Information with regard to foreign exchange rates.
 Request for a DD or pay order.
 D-Mat Account related services.
MOBILE BANKING

 A new revolution in the realm of e-banking is the emergence of mobile banking.

 It provides a new way to pick up information and interact with the banks to carry
out the relevant banking business.
 According to this system, customer can access account details on mobile using the
Short Messaging System (SMS)
 Wireless application protocol (WAP) technology, which will allow user to surf the
net on their mobiles to access anything and everything.
 ICICI and HDFC banks have tied up cellular service provides such as Airtel,
Reliance, etc. in Delhi and Mumbai to offer these mobile banking services to their
customers.
INTERNET BANKING

 Internet banking involves use of internet for delivery of banking products and
services.
 In internet banking, any inquiry or transaction is processed online without
any reference to the branch (anywhere banking) at any time.
 ICICI bank was the first one to offer Internet Banking in India.
 Increase convenience for customers, since they can conduct many
banking transaction 24 hours a day.
 Increase customer loyalty.
 Improve customer access.
 Attract new customers.
DEMAT

 Demat is short for de-materialization of shares.

 Demat is a process where at the customer’s request the physical stock is converted
into electronic entries in the depository system.
 In January 1998 SEBI (Securities and Exchange Board of India) initiated DEMAT
ACCOUNTANCY System to regulate and to improve stock investing.
 As on date, to trade on shares it has become compulsory to have a share demat
account and all trades take place through demat.
CONCLUSION

 The banking scenario has changed drastically. The changes which have
taken place in the last ten years are more than the changes took place in last fifty
years because of liberalization, globalization and automation in the banking
industry. Indian banking system has several outstanding achievements to its
credit, the most striking of which is its reach. Indian banks are now spread out
into the remote corners of our country. In terms of the number of branches, India’s
banking system is one of the largest in the world. India has 20 banks within the
world’s top 1000 out of which only 6 are within the top 500 banks.