1.5. banking grouping in indiashodhganga.inflibnet.ac.in/bitstream/10603/79291/7/07_chapter...
TRANSCRIPT
10
1.5. Banking grouping in India
The banks in India’s are in many shapes and forms that can be categorized on the
basis of ownership, functions and operations. The Indian banking system is
regulated by the Reserve Bank of India (RBI) that comprises of scheduled and non-
scheduled banks and these are classified in various sub-categories as follows:-
1.5.1 Scheduled Banks:
“Scheduled Banks in India are those banks which have been included in the Second
Schedule of Reserve Bank of India (RBI) Act, 1934.” [28]
As on 30th June, 1999, there were 300 scheduled banks in India having a total
network of 64,918 branches and till March 31, 2002, this figure is increased 418
banks in India with its wide network of all over India.
Figure – 1 (Scheduled Banking Structure in Indian, (As on March 31, 2002) ) (Source: INDIAN BANKING by S. Natarajan, R. Parameshwaran)
“Scheduled banks in India, means the State Banks of India constituted under the
State bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the
State bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding
new bank constituted under section 3 of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking
Scheduled Banks in India
Scheduled Commercial Banks Scheduled Co-operative Banks
Public Sector Banks (27)
Private Sector Banks (30)
Foreign Banks in India (40)
Regional Rural Banks (196)
Scheduled State Co-operative
Banks (16)
State Bank of India & Its
Associates (8)
Old Private Banks (22) New Private Banks (8)
Scheduled Urban Co-operative Banks (52)
Nationalized Banks (19)
11
Companies (Acquisition and Transfer of Undertakings) Act, 1980 ( 40 of 1980), or
any other bank being a bank included in the Second Scheduled to the Reserve Bank
of India Act, 1934 ( 2 of 1934), but does not include a co-operative bank.”[29]
The following are the Scheduled Banks in India:
Public Sector Private Sector Foreign Banks in India State Bank of India Vysya Bank Ltd. American Express Bank Ltd. State Bank of Bikaner and Jaipure
ICICI Bank ANZ Gridlays Bank Plc.
State Bank of Hyderabad Axis Bank Ltd. Bank of America NT & SA State Bank of Indore Indusind Bank Ltd. Bank of Tokyo Ltd. State Bank of Maysore Global Trust Bank Ltd. Banquc National de Paris State Bank of Patiala HDFC Bank Ltd. Barclays Bank Plc State Bank of Saurashtra Centurion bank Ltd. City Bank N.C. State Bank of Travancore Bank of Punjab Ltd. Deutsche Bank A.G. Andhra Bank IDBI Bank Ltd. Hong Kong and Shanghai
Banking Corporation Allahabad Bank Yes Bank Standard Chartered Bank. Bank of Baroda The Chase Manhattan Bank Bank of India Dresdner Bank AG Bank of Maharashtra ABN AMRO Bank Canara Bank Abu Dhabi Commercial
Bank Central Bank of India Corporation bank Dena Bank Indian Overseas Bank Indian Bank Oriented Bank of Commerce Punjab National Bank Punjab and Sind Bank Syndicate Bank Union Bank of India United Bank of India UCO Bank Vijaya Bank
Jammu & Kashmir Bank Ltd. (Table-2: Scheduled banks in India)
(Source: http//www.answer.com/topic/scheduled-banks)
The network of the banks in India is very wide and scattered all over the country.
“Amongst the public sector banks the State Bank of India and Associates had
13,684 branches as on June 30, 2005. The nineteen nationalized banks had 33,865
offices all over the country. In recent years in order to meet the credit requirements
of the weaker sections, small and marginal farmers, landless labourers, artisans and
12
small entrepreneurs, the regional rural banks have been set up in different parts of
the country. On June 30, 2005 their branches numbered 14,496. The foreign
scheduled banks operate mostly in big cities and their number of branches in the
whole country is just 251. Other scheduled commercial banks are private sector
banks and their branches numbered 6,181 as on June 30, 2005.”[30]
1) Public sector banks in India:
In India Public Sector was considered as the major vehicle for development of the
country. Similarly Public Sector Banks are carried as important established
working for the sound banking and financial system of the country. The growth and
development of these banks are presented below:
i) The State Bank of India: The State Bank of India is a statutory institution like
the RBI and it is governed by the SBI Act 1955. The history of the State Bank of
India is divided into four phases:
(Figure-2: phases State Bank of India)
(Source: INDIAN BANKING by S. Natarajan, R. Parameshwaran)
There were three Presidency Banks of Bombay, Calcutta and Madras before 1921.
In 1921, by the amalgamation of these three banks the Imperial Bank was
established. It was governed by the Imperial Bank of India Act of 1920. The
Imperial Bank was mainly a commercial bank owned by private shareholders. But
it was simultaneously performing some of the functions of Central Bank such as the
1 Before 1921
2 From 1921
to 1934
3 From 1934
to 1955
4 After 1955
13
banker to the government, bankers’ bank and national clearing house. But it was
not given the powers to issue notes or to engage in foreign business. The Imperial
Bank was functioning on this line till 1934 when a separate central bank i.e. RBI
was established. Then the Imperial Bank of India Act was amended by the Imperial
Bank (Amendment) Act of 1934. In addition to its regular functions, the Imperial
Bank acted as the agent of the Reserve Bank of India in all places where the later
had no branches of its own. On the recommendation of the Rural Credit Survey
Committee the Imperial Bank of India was converted into the State Bank of India
on July 1, 1955. Its 92 % shares were acquired by the RBI, and thus it had the
distinction of becoming the first State owned commercial bank in the country.
In 1956 the State Bank of India (Associate Banks) Act, was passed and this paved
the way for creating the State Bank Group. They are State Bank of Bikaner, State
Bank of Jaipur, State Bank of Indore, State Bank of Mysore, State Bank of Patiala,
State Bank of Hyderabad, State Bank of Saurashtr, State Bank of Travancore. Over
the years, the State Bank of India and seven associate banks have expanded their
business in a big way. On June 30, 2005 the State Bank of India and its Associate
Banks together accounted for around 20 % of the total branches of all commercial
banks in the country. The share of the banking business with them was roughly
30%. In 1993, the State Bank of India Act was amended to enable it to have access
to the capital market. The State Bank of India raised over Rs. 2,400 crore through
public issue. The RBI shareholding is now 59.7% as against 99 percent earlier. The
Management of the SBI is very wide. The head offices of the SBI is located in
Mumbai and the bank has local offices at Calcutta, Mumbai, Chennai, New Delhi,
Lucknow, Ahmedabad, Hyderabad, Patna, Bhopal, Bhubaneswar, Chandigarh,
Guwahati and Bangalore. “The bank is administered by a central board of director
consisting of:
14
Members Number
(a) Chairman (appointed by the Central Government in consultation with RBI)
1
(b) Vice-Chairman (appointed by the Central Government in consultation with RBI)
1
( c) Managing Directors (appointed by the central board with the approval of the central government)
2
(d) Directors (Elected), (elected by the shareholders other than RBI)
6
( e) Director (Nominated) (nominated by the central government in consultation with RBI to represent territorial and economic interest having commerce, industry, banking of finance)
8
(f) Director (Nominated) (nominated by the central government)
1
(g) Director (Nominated) nominated by RBI
1
Total Members 20
(Table-3: Members of S.B.I) (Source: INDIAN BANKING by S. Natarajan, R. Parameshwaran)
Functions of State Bank of India:
The functions of SBI can be grouped under two categories:
A) Central Banking Functions and B) General Banking Functions.
A. Central Banking Functions:
The SBI acts as agent of the RBI and renders the following function:
(i) Banker to the government
(ii) Banker to banks in a limited way
(iii) Maintenance of currency chest
(iv) Acts as clearing house
(v) Renders promotional functions
(i) Banker to the Government: The SBI functions as the banker to the central and
state governments. It receives and pays money on behalf of the governments.
Especially it renders the following functions as directed by the RBI in this regard.
(a) Collection of charges on behalf of the government e.g. collection of tax and
other payments
(b) Grants loans and advances to the governments
15
(c) provides advises to the government regarding economic conditions, etc.,
(ii) Banker’s Bank: Commercial Banks have accounts with SBI. When the banks
face financial shortage, the SBI provides assistance to them as it is considered a big
brother in the banking industry. It discounts the bills of the other commercial
banks. Due to the functions on this line the SBI is considered in a limited sense as
the banker’s bank.
(iii) Currency Chest: The RBI maintains currency chests at its own offices. But
RBI Offices are situated only in big cities. SBI, buy its wide network of branches
operate in urban as well as rural areas. RBI therefore, in such places keeps money
at currency chests with SBI. Whenever needs arise, the currency is withdrawn from
these chests under proper accounting and reporting to RBI. Presently RBI entrust
currency chest to other Public Sector Banks and a few Private Sector Banks also.
(iv) Acts as Clearing House: In all the places, where RBI has no branch, the SBI
renders the functions of clearing house. Thus, it facilitates the inter bank
settlements. Since, all the banks in such places have accounts with SBI; it is easy
for the SBI, to act as clearing house.
(v) Renders Promotional Functions: State Bank of India also renders various
promotional functions. It provides facilities to the following priority sectors:
(1) Agriculture
(2) Small-Scale Industries
(3) Weaker sections of the society
(4) Co-operative sectors
(5) Small-traders
(6) Unemployed Youth
(7) Others.
In this respect SBI is like any other commercial bank of the country.
B) General Banking Functions:
SBI perform the ordinary banking functions under the section 33 of the Act.
1. Accepting deposits from the public under current, savings, fixed and recurring
deposit accounts.
16
2. Advancing and lending money and opening cash credits upon the security of
stocks, securities, etc.
3. Drawing, accepting, discounting, buying and selling of bills of exchange and
other negotiable instruments.
4. Investing funds, in specified kinds of securities.
5. Advancing and lending money to court of wards with the previous approval of
State Government, etc.
(ii) Nationalised Banks in India: The second category of public sector banks in
India is of nineteen commercial banks, of which fourteen were nationalized on July
19, 1969. Each one of these fourteen banks had deposits of Rs.50 crore or more.
This step had changed the very complexion of the banking structure in the country.
The nationalization was justified by the government on the ground that, the major
banks could not be any more allowed to remain captive organization of the big
business. Their policies should be inspired by the larger social purpose and be in
accordance with the national priorities and objectives. Hence, a fundamental shift
in their approach was witnessed in the post-nationalization phase. The banking
system in this period became an instrument of development. The Lead Bank
Scheme formulated in December 1969 played a significant role in transforming
these profit maximizing institutions of yester years into catalysts of local
development, serving all segments of the society.
After nationalization of 14 banks, there was rapid expansion of branch net-work.
On April 15, 1980 six more private owned commercial banks were nationalized.
The purpose was ‘to control the heights of the economy, to meet progressively and
serve better the needs of the development of the economy and to promote welfare
of the people, in conformity with the policy of the state’. With the nationalization
of six more banks, the share of private sector in the entire banking declined to just 9
per cent. In 1993, New Bank of India merged with Punjab National Bank. As a
result the number of public sector banks other than the State Bank of India and its
associates declined to nineteen. The total number of branches of the nineteen
nationalized banks was 33,865 as on June 30, 2005.
17
2) Private sector commercial banks in India:
There are ten newly established private banks with a network of 6,181 branches are
operating in the private sector. Private Scheduled Banks is functioning on par with
the other public sector banks in various respects. Since, they have been included in
the second schedule of Reserve Bank of India Act; they are enjoying the privileges
as that of any other scheduled banks. These privileges, importantly, include
refinance facility from RBI and participation in money market activities. “The joint
stock banks in the private sector in India numbered 35 at present out of which 34
are scheduled banks and one non-scheduled bank. Of the 34 private sector banks, 9
are newly set up under liberalized policy. These banks together accounted for 10.3
per cent of total assets of all commercial banks in India as on 31st March 1998.
They have made net profit of Rs.841.88 crore during 1997-98 as compared to
Rs.685.77 crore in 1996-97”[31]. In 2004-05 new private sector banks accounted for
12.9 per cent of total banking assets.
3) Foreign Banks:
The foreign banks in private sector are the branches of banks where as incorporated
in foreign countries. There are 42 such foreign banks in India. Their branches are
mainly located in the big cities. The foreign banks perform mostly the same range
of services as being performed by local banks. However, they are more active
players in export/import trade and transactions relating to foreign exchange
operations. The role of foreign banks is also important for the development of the
economy of the country, particularly for the development of foreign trade. On June
30, 2004 the country had foreign banks with 218 branches located mainly in big
cities.
4) Regional Rural Banks:
The Regional Rural Banks are established for promoting regional development in
general and rural development in particular. “The Regional Rural Banks were set-
up by the Government by promulgating an ordinance in September, 1975. The
Ordinance was replaced by the Regional Rural bank Act, 1976. The Ordinance was
replaced by the Regional Rural bank Act, 1976. The Regional Rural Banks were
set-up on the recommendations of a working group headed by Mr.Narasimhan. To
18
start with, there were only 5 Regional Rural Banks on October, 2, 1975, with an
authorized capital of Rs.1 crore each. Every rural bank is expected to cover a
population of one crore through about 100 branches.”[32] The Regional Rural Banks
raise their resources through:
(a) Owned capital;
(b) Deposits from the public;
(c) Borrowings from sponsor banks; and
(d) Refinance from NABARD.
The objective of establishing the Regional Rural Banks was to develop the rural
economy by developing agriculture, trade, commerce and industry and other
productive activities in the rural areas. As on June 30, 2005, there were 196
regional rural banks with a network of 14,496 branches in the country.
1.5.2. Non Scheduled banks:
Non-Scheduled banks are those not included in the 2nd schedule of the Reserve
Bank of India Act. Their number has progressively declined over the years. These
are also known as non-banking financial companies. “The non-bank financial
companies (NBFCs) are financial institutions that provide banking services with
out meeting the legal definition of a bank, i.e. one that does not hold banking
licenses. Operations are, regardless of this, still exercised under bank regulation.”[33]
The activities of non-bank institution are suppliers of loans and credit facilities,
supporting investments in property, trading money market instruments, funding
private education, wealth management such as Managing portfolios of stocks and
shares and, underwrite stock and shares, retirement planning, advise companies in
merger and acquisition, prepare feasibility, market of industry studies for
companies, discounting services e.g., discounting of instruments.
As per the nature of the activities performed by the non-banking financial
companies can be classified into the various groups like development finance
institutions, leasing companies, investment companies, modaraba companies, house
finance companies , venture capital companies, discount & guarantee houses etc.
19
1.6. Functions of Modern Banks:
Modern banks not only deal in money and credit but they also perform various
functions, namely, agency functions, management of foreign trade, finance, etc.
The meaning of modern banks is used in narrow sense of the term as commercial
banks. The various functions of commercial banks can be seen from the following
chart:
(Figure: 3 functions of commercial bank )
(Source: Banking and Finance by C.M Chaudhary)
1.6.1. Primary or Traditional Functions:
These functions are performed by banks from their very inception.
They are classified into two categories, namely:
(1) Accepting Deposits
(2) Advancing of Loans.
Functions of Commercial Banks
Primary Function
Agency Function
General Utility function
Foreign Trade
Management
1. Accepting Deposits 2. Loans and Advances
1. Collection of Payment of Cheques, Bills Of Exchange 2. Payments of Cheques, bills Of Exchange etc. 3. Receiving Payment of Customers 4. Making Payments 5. Transfer of Money 6. Purchase and Sale of shares And securities 7. Manager, Trustee & executor 8. Underwriting Function 9. Other Agency Function
Credit Creation
1. Security Of Wealth and Assets 2. Traveler’s Cheques & Letter of Credit 3. Information Relating to Economic Position 4. Financial Adviser 5. Publication 6. Acceptance Of bill of Exchange 7. Personal Credit 8. Management Of public Debt 9. Function of Share Market
Documentary credit
20
(1) Accepting Deposits: The primary function of bank is accepting deposits and
advancing of loans. Banks require money to make loans and advances. Their share
capital does not create adequate funds for advancing loans. Hence they accept
deposits from individuals and institutions and make payment for deposits as
interest. For the safety point people and institutions deposit their money with the
banks and they get interest. For this purpose banks operate various types of
accounts in which the deposits are attracted. Commercial banks operate various
types of accounts as given under:
(i) Fixed Deposits Accounts: It is also called time deposit account. In such accounts
money is deposited for a fixed period. After the maturity of the account the bank
repays the principal plus interest for that given period.
(ii) Current Account: This account is generally opened by traders, businessmen and
industrialists. Customers have facility to deposit and withdraw from such account
as many times as they wish.
(iii) Saving Account: Such accounts are opened for the convenience of middle and
lower salaried or income groups. Small savings are collected and deposited in such
accounts which are used for capital formation in the country. Such account can be
opened by any individual by depositing Rs.100 to Rs.300 in any bank. Such facility
is available in nationalized private commercial banks.
(iv) Home Safe Account: This account is useful for those who save fewer amounts
out of their income. Under this facility bank provides a safe to the customer.
Customer takes away the safe. Customer collects money in the safe and when the
safe is full, it is deposited in the bank. It leads to accumulation of individual
savings. The very low rate of interest is payable on such accounts.
(v) Indefinite Period Deposit Account: Deposits are accepted in such accounts for
indefinite period. Money is withdrawn from such accounts in special cases. Bank
makes interest payment to its customers. The deposits in such accounts can be
invested by the banks and for that reason high rate of interest is paid. Such accounts
are not operating in India.
(vi) Other Deposit Accounts: Banks also accepts deposits for the accounts other
than the above mentioned.
21
(i) Recurring Deposit Account: Account holder deposits a given amount every
month and it is deposited for a given period. At the time of maturity the principal
and interest earned is paid to the account holder. A large amount is obtained by the
holder. The rate of interest is higher than the saving bank account and lower than
the fixed deposit account.
(ii) Daily Saving Deposit Scheme: Under this scheme bank employee goes to the
residence of account holders and daily savings is collected by him. It is useful to
daily wage earners and small shopkeepers.
(iii) Retirement Scheme: Under this scheme saver saves a given amount for a given
period. After a given period the amount is repaid in installments with interest. It
assists the pensioners in their old age.
Besides these schemes, there are some schemes namely, monthly interest deposit
scheme, minor’s saving scheme, home deposit scheme, insurance benefit saving
account, etc. The objective of such schemes is to attract and collect savings and
help persons.
(ii) Advancing of Loans: Another important primary function of commercial
banks is advancing of loans. It is performed because banks have to pay interest on
various deposits. Thus banks charge high rate of interest on advancing of loans and
earn profit. Banks collect small savings and are used for advancing of loans for
production purposes. Banks makes advancing of loans to industrialists, traders,
farmers, self-employed persons. Generally, commercial banks advance loans for the
following purpose:
(i) Cash Credit: Under this scheme bank advances loans for a given period on the
security of shares, debentures and movable and immovable properties. The loaner
withdraws money from the bank as per his requirements from time to time.
Generally, bank charges interest on the amount which has been withdrawn by the
account holder. Sometimes traders borrow from banks on the security of goods.
Borrower has the right to get the dividend and interest on the securities pledged for
loan.
(ii) Loans and Advances: Banks provide loans and advances to its customers on
adequate security. Such amount of loans and advances are deposited in the account
22
of the borrower and the borrower can withdraw the amount as and when he
requires. Such facility is given for a given period. After the given period the loans
and advances are repaid to the bank. If the borrower does not repay the amount, the
bank is empowered to sell the security and recover the amount advanced by the
bank.
(iii) Overdraft: When a bank allows its customers having current account to
withdraw the amount more than the deposits in the account it is called overdraft.
The overdraft depends on the credit of the customers. Such facility is given for
short term and emergency purposes. Banks require security from the customer for
such facility. In some cases banks give relaxations to their customers. Such facility
is given on current account only.
(iv) Discounting of Bills of Exchange: It is also a method for borrowing from the
bank. Under this method bank provides credit against the dated bill of exchange
before its maturity. Seller writes such bill and buyer accepts it. The buyer promises
to pay given amount for given period. Such bills are discounted by banks and
payment is made to the customers. If the buyer does not make the payment of the
bill then the bank gets the payment from the seller of the bill.
1.6.2. Agency Functions
Commercial banks play the role of agent of their customers and providing the
multiple services. Some charges are levied by the banks on such services. Some
services are rendered free of charges. The following are the agency functions of
commercial banks provided to their customers.
(i) Collection of Payments of Cheques, Bills of Exchange and other Letters of
Credit: Banks collect payment of cheques, bills of exchange, hundis and other
letters of credit deposited by the customers in the bank. Banks act as an agent on
behalf of the customers and collect and deposit. The local collection is free of
charge while outstation collection of these instruments attracts charges.
(ii) Payment of Cheques, Bills of Exchange and other Letters of Credit: Banks
make payment on the basis of various instruments written by the customer and the
amount is debited. Many a times, bank accepts the bill of exchange on behalf of
customer and makes payment in time.
23
(iii) Receiving Payment for Customers: Banks also receive rent, interest,
installment of loan, pension, dividend, etc. on behalf of their customers and the
amount is deposited in their accounts.
(iv) Payment on behalf of Customers: Banks not only receive payments on behalf
of their customers but also make payment on behalf of customers in the form of
rent, interest, dividend, installment of loan, insurance premium, commission, etc.
Such amount is written in customer’s account and banks charge commission for
conducting these functions.
(v) Transfer of Money: Banks transfer money from one place to another as directed
by their customers. Bank draft, postal and telegraphic transfers are the methods
through which such transfers take place. Bank charges some commission for
conducting these functions.
(vi) Purchase and Sale of Shares and Securities: Banks purchase and sale shares
and securities on behalf of their customers. Generally, banks have more knowledge
regarding such activities. Banks purchase and sale shares and securities in their
customer’s interest. Banks charges commission for this purpose.
(vii) Functions of Manager, Trustee and Executor: On the direction of customer’s
banks perform the functions of manager, trustee and executor whenever such work
is assigned. Court orders or government orders are implemented by the banks on
behalf of their customers.
(viii) Underwriting Function: Large industrial and business units raise capital from
the market. Debentures are underwritten by the banks. It helps the companies to
collect the minimum capital on their guarantee. If the shares and debentures are not
purchased in adequate quantum, the bank itself purchases all these shares and
debentures. It increases the trust of the public in the company concerned. Bank
charges commission for underwriting function.
(ix) Other functions: Banks also do correspondence on behalf of customers relating
to passport and foreign exchange.
1.6.3. General Utility Functions
Banks also carry on some utility functions which are useful to their customers.
These functions are as under:
24
(i) Security of Wealth and Assets: Lockers are provided by bank to their customers.
Their valuables, namely, important documents, ornaments, gold, shares,
debentures, deposit receipts, etc. are kept in these lockers. Some annual charges are
charged by the banks for the purpose.
(ii) Arrangement of Traveler’s Cheques and Letters of Credit: Banks issue
traveler’s cheques and letters of credit for their customers. Customers need not to
carry cash while they are on tour. The risk involved in carrying cash is done away
with.
(iii) Information relating to Economic position: Banks provide information to their
customers relating to economic position of inland and foreign businessmen.
Customers conduct transactions on such information. It reduces the risks of
customers.
(iv) Financial Adviser: Banks advise their customers on economic and financial
matters. It helps customers to take correct decision.
(v) Publication of information: Large commercial banks collect information
relating to economic and business activities and after analyzing these facts, they are
published in the form of annual reports, etc. Economic and business decisions are
easily taken on the basis of such publications.
(vi) Accepting Bills of Exchange: The bills of exchange written by customers are
accepted by banks and they take the liability for making payment at the time of
maturity.
(vii) Security of Loans: Large banks guarantee on the loans taken by industrial and
business units from national and international sources. It helps industrial and
business units in getting loans from these sources.
(viii) Personal Credit: Banks provide consumer loans to their customers on the
basis of personal credit. These loans are provided to purchase consumer goods like
car, scooter, refrigerator, washing machine, air conditioner, etc. Such loans are
repaid in installments.
(ix) Management of Public Debt: Commercial banks manage public debts on behalf
of central bank when central and state governments raise loans through debentures
or bonds.
25
(x) Share Market function: Banks also settle the accounts on behalf of their
customers when they are purchasing and selling shares debentures in the share
market.
(xi) Management of Foreign exchange: Commercial banks are authorized dealers in
foreign exchange. Customers who get foreign exchange or who are in need of such
currencies are given the facility by banks to them.
1.6.4. Foreign Trading
Commercial banks have played a dominant role in the expansion of foreign trade.
Short term credit is provided for foreign trade by banks. These banks accept and
discount the commercial bills, hundies, and letters of credit. It facilitates in the
international transactions. Banks contact the importers and exporters and finalize
the transactions between two parties. It facilitates the international payments and
increases the foreign trade.
1.6.5. Credit Creation
Banks attract deposits from the public and on the basis of these deposits; they make
loans and advances to the public. Such amount of loan is deposited in the account
of loan holders. Thus loans create deposits. On the basis of these deposits loans are
further granted. Thus loans from deposits and deposits from loans are encouraged.
This process is called credit creation. The supply of money increases indirectly.
1.7. Banking Regulation Act 1949:
The banking system in India is regulated by the RBI, the central banking authority
in the country in keeping with the Reserve Bank of India Act, 1934 and Banking
Regulation Act, 1949. The Reserve Bank of India (RBI) was constituted under the
Reserve Bank of India Act, 1934 and began functioning w.e.f. 1st of April, 1935.
Although it is the oldest amongst the central banks operating in developing
countries. RBI is a state-owned institution under the Reserve Bank (Transfer of
Public Ownership) of India Act, 1948. This Act empowers the Union Government,
in consultation with the Governor of RBI, to issue such directions, necessary in
public interest, to the RBI. The Governor and the four Deputy Governors of the
RBI are appointed by the Union Government. The RBI is controlled by the Central
Board of Directors, comprising of the Governor, the four Deputy Governors and
26
fifteen directors nominated by the Union Government. The RBI’s internal
management is based on functional specialization and coordination amongst
various departments, with the headquarters located at Mumbai, the financial capital
of the country.
1.7.1. Main Provisions of the Act
“Some of the important sections of the Banking Regulation Act of 1949 are
discussed below:
Section 5(i) (b)
The section defines banking as “accepting for the purpose of lending or investment,
deposits of money from the public, repayable on demand or otherwise and
withdraw able by cheque, draft and order or otherwise”.
Section 5(i) (c)
Banking company has been defined as any company which transacts the business
of banking in India.
Section 6
Business of a banking company may consist of the following:
(1) Carrying on and transacting every kind of guarantee and indemnity business;
(2) Acting as an agent for any government or local authority or any other person or
persons, the carrying on of agency, business of any description;
(3) Contracting for public and private loans and negotiating and issuing the same;
(4) The borrowing, revising or taking up of money, lending or advancing of money
either upon or without security, drawing, marking, accepting, discounting, buying,
selling, collecting and dealing in the bills of exchange, hundies, promissory notes,
coupons, drafts, scripts and other investments and securities;
(5) Undertaking and executing trusts;
(6) Managing, selling and realizing any property which may come into the
possession of the company in satisfaction;
(7) Undertaking the administration of estates as executor, trustee, or otherwise
doing all such other things as are incidental or conductive to the promotion or
advancement of business of the company;
27
(8) Any form of business notified by the central government as lawful for a bank to
engage in, etc; and
(9) The effecting, insuring, guaranteeing, underwriting, participating in
management and carrying out of any issue public of private, of state, municipal or
other loans or shares, stocks, debentures, stock of any company, corporation or
association and lending of money for the purpose of any such issues.
Section 8: Prohibition of Business
A banking company under section 8 of the Act cannot directly or indirectly deal in
the buying or selling or borrowing of goods except in connection with the
realization of security given to or held by it or engage in any trade or buy, sell or
barter goods for others or otherwise than in connection with the bills of exchange.
Section 9: Prohibition of Non-Banking Assets
Under the section banking company is prohibited from holding any immovable
property, howsoever, acquired except for its own use for the period exceeding
seven years from its acquisition.
Section 10: Prohibition of Employment and Restriction on Certain
Employment
A banking company cannot have any managing agents and it cannot be managed by
any person:
(1) Who is, or at any time, has been adjudicated an insolvent, or has suspended
payment to or compounded with his creditors or who is, or has been convicted by a
criminal court of an offence involving moral turpitude;
(2) Whose remuneration of part there of takes the form of commission or of a share
in the profits of the company other than legitimate bonus;
(3) Whose remuneration is, in the opinion of RBI, excessive.
(4) Who is a director of any other company, not being a subsidiary company of the
banking company registered under section 25 of the Companies Act of 1956?
(5) Who is engaged in any other business or vocation; and
(6) Whose term of office as a person managing the company is for a period
exceeding five years at any time.
28
Section 12: Regulation of Capital and Voting Rights
Under this section authorized, subscribed and paid-up capital of banking companies
incorporated on or after 15th January 1973 has been regulated as given under:
(1) Subscribed capital must at least be one-half of the authorized capital and the
paid-up capital at least one-half of the subscribed capital.
(2) The capital shall consist of ordinary shares only or of ordinary shares and such
preference shares as may have been issued before July 1, 1944.
Section 13: Commission and Sale of Shares
No banking company can pay directly or indirectly by way of commission,
brokerage, discount or remuneration in any form in respect of any share issued by it
of any amount exceeding in the aggregate 2.5 per cent of the paid-up value of the
said shares.
Section 14: Prohibition of Charge on Paid-up Capital
A banking company has been prohibited under the section from charging upon
unpaid capital. No banking company can create a floating charge on the
undertaking or any property of the company or any part there of without a
certificate in writing from RBI that such floating charge is not detrimental to the
interests of the depositors.
Section 15(2): Dividends of its Shares
The Amendment Act of 1959 permits a banking company to pay dividends on its
shares without writing off:
(1) The depreciation in the value of its investments in approved securities where
such depreciation has not actually been capitalized or otherwise accounted for a
loss;
(2) Depreciation in the value of its investments in shares, debentures or bonds
where adequate provision for such depreciation has been made to the satisfaction of
the auditor of the banking company; and
(3) bad-debts, if any, where adequate provision for such bad-debts has been made
to the satisfaction of its auditors.
29
Section 16: Prohibition of Common Director
Under the section a banking company has been prohibited to appoint a director who
is a director of:
(1) Any other banking company; or
(2) Of companies which among themselves are entitled to exercise voting rights in
excess of 20 per cent of the total voting rights of all the shareholders of the banking
company.
Section 17: Reserve Fund
Under this section every Indian banking company must maintain a reserve fund and
transfer at least 20 per cent of its net profits each year. Central government can
exempt the company on the recommendation of RBI provided at the time of
relaxing, the amount in the share premium together with the amount in the share
premium account is not less than the paid-up capital of the banking company.
Section 18: Cash Reserve
Every banking company other than a scheduled bank is required to maintain in
India a cash reserve either with itself or in a current account with RBI or State Bank
of India (SBI) or any other bank notified by the central government in this behalf
partly in cash or partly in such accounts a sum equivalent to at least 3 pre cent of
the total of its time and demand liabilities in India.
Section 20: Restrictions on Loans and Advances
Under the section a banking company is prevented to:
(1) Advance any loan or advance on the security of its own shares; or
(2) Enter into any commitment for granting any loan or advance to or on behalf; of
(i) Any of its directors,
(ii) Any firm, partner, manager, employee or guarantor, or
(iii) Any company of which any of this directors of the banking company is a
director, manager, employee or guarantor or in which he holds substantial interest,
or
(iv) Individual.
30
Section 21: Power of RBI to Control Advances by Banking Companies
RBI is empowered to control the advances by banking companies in the public
interest or in the interest of depositors or if necessitated by the banking policy. RBI
may direct regarding the purposes, margins, maximum amount and rates of interest
for such advances.
Section 22: Licensing of Banking Companies
Every banking company is required to obtain a license from RBI. Before granting
the license the following conditions should be fulfilled by the bank:
(1) The company is or will be in a position to pay its present or future depositors in
full as their claims accrue;
(2) The affairs of the company are not detrimental to the interests of its present or
future depositors; and
(3) In case of foreign companies, they should work in the public interest and they
should not discriminate, in any way, against banking companies and they comply
with the provision of the Act.
RBI is also empowered to cancel such license in case:
(1) Where the company does not carry out banking business; or
(2) At any time fails to comply with or fulfill the conditions mentioned above.
Section 24: Statutory Liquidity Ratio
Under this section every banking company is required to maintain in cash, gold or
unencumbered approved securities, valued at price not exceeding current market
price, an amount equal to at least 25 percent of its total time and demand liabilities.
It ensures the liquidity of assets of the banks.
Section 25:
It is required that every banking company should have at least 75 percent of its
demand and time liabilities as assets in India.
Section 26: Return of Unclaimed Deposits
Every banking company is required to submit within 30 days after the close of each
calendar year, a return in the prescribed form and manner to RBI of all accounts
which have not been operated upon for ten years.
31
Section 27: Return of Assets and Liabilities
Every banking company is required to submit to RBI a return in the prescribed
form and manner showing its assets and liabilities in India at the close of business
on last Friday of every month.
Section 28: Power to Publish Information
RBI is empowered to publish any information obtain by it under the Act in the
interest of the public.
Section 29 to 34: Accounts and Balance Sheet
Under these sections every banking company is required to prepare accounts,
balance sheet, profit and loss accounts and they should be audited by a competent
and qualified auditor.
Section 35: Inspection of banking companies
RBI is empowered to inspect the books and accounts of a banking company at any
time. But such powers should be exercised when asked for by the central
government.
Section 36: AE and AF: Acquisition of the Banking companies
The central government is empowered under sections 36 AE and 36 AF to take
over the business of any banking company where:
(1) a particular bank has failed to comply with the directions of RBI as the
directions relate to banking policy, or
(2) Where the bank is being managed in a manner detrimental to the interests of its
depositors; or
(3) Where it is necessary to acquire the undertaking in the interest of depositors or
banking policy.
Section 37: Suspension of Business
If RBI is satisfied that the affairs of the banking company are being conducted in a
manner detrimental to the interests of the depositors, it may apply to the High Court
for the winding-up of the company.
Section 38: Winding-up by High Court
RBI is empowered to apply for winding-up if the banking company:
32
(1) Fails to comply with the requirements of section
11 (minimum paid-up capital and reserves); or
(2) Has become disentitled by reason of section 22 to carry on banking business in
India; or
(3) Has been prohibited from receiving fresh deposits by an order either under
section 35(4)(a) or section 42(3A)(b) of the RBI Act of 1934; or
(4) Has failed to comply with any requirements of the Act.
Section 44A: Amalgamation of Banking Companies
No banking company can be amalgamated with any other banking company
without the prior written section of RBI under the Act.
Section 46: Penalties
RBI is empowered to impose penalties in the following cases:
(1) For submission of false or inaccurate return the penalty is imprisonment up to
three to five years;
(2) For failure to furnish documents, account or information during inspection,
penalty is a fine up to Rs. 2,000 and if default persists, Rs.100 per day during the
default period;
(3) For receiving deposits in contravention of an order by RBI, the penalty is twice
the amount of deposit so received, and
(4) For default in complying with the provisions of the Act, the penalty is a fine up
to Rs.2, 000 and if continued, a further fine up to Rs.100 per day.
Section 46A: Public Servant
Every chairman, director, auditor, liquidator, manager and other employee of a
banking company will be regarded as a public servant for the purpose of chapter IX
of the Indian Penal Code.
Section 47 and 48: Powers and Procedures Relating to Cognizance of Offences
and Fines
RBI has been empowered to take cognizance of offences and to impose fines under
the Act.
33
Section 56: Cooperative Banks
The cooperative banks have been brought under the Banking Regulation Act by
passing an Amending Act 23 of 1956 which is called Banking Laws (Application to
Cooperative Societies) Act of 1965.
Provisions not Applicable to Cooperative Banks
The following sections of the Banking Regulation Act of 1949 will not apply to
cooperative banks:
(1) Section 10: Employment of managing agents and certain forms of employment.
(2) Section 10A: Constitution of the Board of Directors.
(3) Section 10B: The whole time chairman.
(4) Section 10C: Chairman or Director appointed by RBI not to hold qualification
shares.
(5) Section 17: Reserve funds.
(6) Section 36 AA: Removal of managerial and other persons from office.
(7) Sections 37 and 38-45: Suspension of business and winding up of banking
companies.
(8) Sections 45 A to 45X in part III: Special provisions for speedy winding-up.”[34]
1.8. Banking Development in Modern Era:
The traditional function of banking is limited to accept deposits and to make loans
and advances. Today’s banking is known as Innovative banking. The coming
together of information technology, communication and entertainment (ICE) has
given rise to new innovations in the product design and their delivery in the
banking and finance industry. Driven by new technologies, changing customer
preferences, and increased competition, banks have taken to heavy investments in
new distribution channels such as: new branch formats and teams of sales agents,
remote and electronic channels like advance automated teller machines, telephone
systems, and on-line banking, one of the reasons for internet applications not to
have picked up as expected so far have been to concern about the security and lack
of the legal framework related to such transactions. This hurdle has been reduced to
34
a large extent in the recent past with framing of laws enabling financial transactions
through electronic media.
The electronic banking (e-banking) is an offshoot of such an innovative
development. The Indian banking industry has started making progress in e-
banking. The most of the private and nationalised banks have entered in the
technology age and providing various types of electronic products and services to
their customer. The research work is based on analysis of the “E-BANKING
IMPLEMENTATION IN INDIAN BANKS, A STUDY OF BANKS IN
MAHARASHTRA STATE”.
1.9. Review of Literature: During the period of research various libraries/ institutions in India were visited
and surfing various sites like IEEE, OCC (office of the Comptroller of the
Currency) etc. The available related literature in these libraries/ institutions and
sites was studied which proved to be very useful in getting an insight into the main
objectives of the study & in finalizing the methodology. Therefore, in this part, an
attempt is made to review the available literature on the topic of E-banking.
Reports on Internet Banking, various sites of banks on Internet, research studies,
books and articles, research papers published in leading research journals are also
reviewed. Therefore, a brief review of the literature is presented below:
Andrea Schaechter [35] (2002), conducted the study that using electronic delivery
channels for banking services and products has become increasingly popular in
recent years. Electronic banking makes it possible to offer banking services around
the world 24 hours a day. The dependence on technology for providing the services
with the necessary security, and the cross-border nature of transactions, involve
additional risks for banks and new challenges for banking regulators and
supervisors. In this paper author provides an overview of some of the issues
resulting from the development of electronic banking and how they are currently
being addressed by regulatory and supervisory authorities.
Ankur Gupta, [36] analyzed that, Consumer Internet Banking, with its ability to
reach each and every nook and corner of the world holds great importance for a
nation like India, where conventional Banking services are out of reach for a large
35
proportion of the masses. But to make it a successful it requires more than just an
adequate internet enabling infrastructure. There is a dire need for an adequate legal
and regulatory frame work to be out into place. One of the crucial elements of such
a legal and regulatory framework will be Data Protection provisions. The emphasis
of this article is on the aspect of data protection in the electronic banking sector.
The article is an attempt to highlight the importance of data protection in internet
banking and well upon possible legal recourses which may adopt keeping in mind
the current legal frame work in India with regards regulation of Information
Technology.
C. M. Chaudhary [37] in his book, “BANKING AND FINANCE”, (2003), has
discussed about the banking with special reference to Indian Banking. He also
focused on Law and Practices of banking, public finance dealing with theory and
practices of public finance with special reference to India. He has covered the
innovative banking or e-banking and new products and services provided by banks.
Dr. S.P. Rajagopalan [38] in his article briefly highlighted the e-Banking in the
Indian Scenario and the evolution of e-banking as world wide. He has discussed
about electronic products and services provided by private banks in India like
ICICI and HDFC banks and about the e-banking products and services like
Electronic Fund Transfer (EFT), Automatic Teller Machines (ATM), Mobile
banking etc. The article has also covered the benefits of electronic product to banks
etc.
Dr. R.V.Kulkarni and B.L. Desai [39] in their book, “Knowledge-based Systems in
Banking Sector”, (2004)., explained the picture of Indian banking system before
1990, it is found that, banking industry in India was a near monopoly of the
Government and in January 1993, the Reserve banks issued guideline for licensing
of new banks in the private sector. Since then, competition in the banking sector
has increased with the entry of private banks, permission to foreign banks to open
new branches and relaxation of various restrictions on public sector banks which
are now allowed to access the capital market to raise funds. They have also focused
on the banking sector has already taken strides towards computerization and
automation of their operations; however, this alone will not solve their problems in
36
processing large amount of data and decision making in scrutinizing and vetting
proposals and projects for advances. It is difficult to handle loan proposals which
need to be appraised from legal, technical, and economical angle. They described
about the need for electronic processing of loan proposals with the help of an
expert system. Expert systems are a type of decision support systems and represent
an application from the field of artificial intelligence. The authors have also
explained recent developments in Indian banking. More specifically, it deals with
how the experts in the field should take decisions in the process of evaluating a
loan proposal, particularly small-scale industry term loans.
Dr. Nirmala Prasad & K. Chandradass J. [40] in their book, “BANKING AND
FINANCIAL SYSTEM” (2004), discussed about the changes of Indian financial
systems during the last few years. They also focused on modern banking and
financial system and also discussed the banking law and financial services etc.
Dr. Lisa Harris and Dr. Laura J. Spence [41] (2002), in their paper authors
explored the ethics of business-to-business electronic commerce, with a focus on
the banking sector. A case study of online foreign exchange developments at an
investment bank is used to help illustrate some key moral issues. Important areas
identified for further research include freedom of choice, trust and transparency of
business-to-business transactions and limits to responsibility. They concluded that
only with careful consideration of a broad range of management issues, the
traditional companies effectively address the challenges of electronic commerce.
The barriers to be dealt with are far from being just technical solutions to doing
business in cyberspace.
Dr. N. Sundaram [42] (2007) has conducted the study of e-banking and discussed
in the paper that, Invention of Computer and Internet elevated Internet banking or
E-banking which is a revolution in banking services. The banks provide the
services like on-line shopping and payment, on-line donations and subscriptions,
routine transactions like loan and investment etc., electronic bill payments, fund
transfer facilities, money transfer to India from NRIs. He also highlighted the
scope and benefits of Internet banking in India, disadvantage of Internet banking,
challenges & problems that are faced by Internet Banking.
37
D.Ramani [43] (2007), studied the Innovative Internet Banking – emerging issues
and challenges. He has started on the concept of Internet banking. Internet banking
enables a customer to perform banking transactions through the bank’s website. He
further discusses the Internet Banking services, features and Introduction &
adoption of Internet banking in India. The author also covered the drawbacks and
Emerging Issues and Challenges of Internet banking in his study.
Dr. Md. Abdul Hannan Mia, Mohammad Anisur Rahman, Md. Main Uddin [44] (2007), has analyzed that the beginning of the E-business age has been
shivering the business environment and breaking out innovative and un
conventional ways of doing business. One of the latest outcomes of this E-Business
is internet banking or E-banking. Banking sector is now reengineering itself to
adopt the change and to be in the race of globalization. Thus it has become
imperative for the banking industry to better gauge the E-Banking phenomenon.
This study painstakingly attempts to bestow the evolution, competitive forces,
strategy, present status, and prospect of E-Banking, so that the existing banks and
potential e-banks could better understand this opportunity and could reap the best
befits from it.
Dr. Mrs. Pratibha Rasal [45] (2001), conducted the study on cyber laws. She
discusses that, computer, Internet and cyberspace, together known as Information
Technology, presents challenges for the law. Challenges, which are not, confined to
any single traditional legal category but in almost all established categories of law
such as criminal law, contract, tort, as well as legal concepts of property,
expression, identity, movement etc. She has study in this paper the laws related to
cyber crimes that is computer laws, Information technology laws, or cyber laws.
She covered laws of e-commerce, Intellectual property; Issues related to morality,
Jurisdictional Issues, cyber crimes etc.
Dr. A. Nelson [46] (2007), has conducted the study on Internet and Hi-tech banking
technology. He highlighted on the use of most modern and advanced method and
equipments in banking industry like ATM, EFT, shared payment network system,
Electronic clearing services, Electronic Data Interchange, Tele banking, credit/
38
debit cards, smart card, digital signature, cheque traction and mobile wallet. He has
also discussed on core banking solution.
Francisco Javier Miranda, Rosa Cortes and Cristiana Barriuso [47] (2006),
conducted the study on quantitative Evaluation of E-Banking Web Sites. The study
is conducted on Spanish banks. The authors have discussed in their paper that,
Online banking research to data is to a large extent anecdotal. Only a very limited
number of studies have explored Electronic Banking in recent years. In this work
an objective investigation of the issue has been conducted by manually accessing
and evaluating the web sites of Spanish private and saving banks. Quality of web
home pages was determined using an original Web Assessment Index, which
focuses on four categories: accessibility, speed, navigability and content. A detail
report of the results arising from this investigation is presented and systematically
analyzed. These findings will be useful for both researchers and practitioners who
seek to understand the issues relevant to electronic banking.
Indian Institute of Banking and Finance [48] in the book “Information System for
Banks” (2005), conducted the study on five different modules consisting of a)
Technology in Banks, b) Technology- System, Development, Process,
Implementation, c) Security and Controls, Standards in Banking d) Continuity in
business e) Overview of legal frame works. The primary objective is to understand
the conceptual framework. There is a rigorous coverage of an analytical technique,
substantial information about the operational risks that the banks are facing, and
how those risks are managed by appropriate measures.
Indian Institute of Banking and Finance [49] in the book, “Know Your Banking-I,
Basics of Banking”, (2005), has provided a comprehensive coverage of the
principles of banking and other important aspects of banking in India. The
subject—matter is wide and covers the topics: Introduction of banking, Banking
regulation, Banks- customer relationships, types of customers and their accounts,
negotiable instruments, fee-based banking services, electronic banking, basics of
accounting and bank marketing etc. It has focused on the role of DSA (Direct
Selling Agents) and DMA (Direct Marketing Agents) in Marketing Bank Products.
39
Jason Dong and Michael Bliemel [50] (2008), have studied the rapid growth of
online banking over the last decade. This research examines the benefits of online
banking. How Canadian banks accommodate various financial activities through
different service channels, including online, telephone, ABM and in-branch. A
framework is introduced for categorizing the most common activities by their need
for physical interaction and assistance and to align activities with their ideal service
channel. The research concludes with the presentation of strategies for integrating
different customer channels.
Jia Hu and Ning Zhong [51] (2006), have analyzed that E-finance industry is
rapidly transforming and evolving towards more dynamic, flexible and intelligent
solutions. The paper describes a model with dynamic multi-level workflow
corresponding to a multi-layer Grid architecture, for multi-aspect analysis in
building e-finance portals on the Wisdom Web. The application and research
demonstrate that mining-grid centric three-layer Grid architecture of effective for
developing intelligent risk management and decision making financial systems. E-
finance is progressing, with the enhancements of e-paying, e-trading, e-banking, e-
commerce, and e-business. This model is particularly appropriate for existing
financial institutions with established resources and will help them transform
themselves to complete successfully in the new financial environment.
Kori L. Egland, Karen Furst, Daniel Nolle, and Douglas Robertson [52] (1998),
they discuss on Banking over the Internet is attracting a great deal of attention in
the banking and regulatory communities, and developments in this new delivery
channel are the subject of this articles. In this article the authors have discussed
about the key characteristics of banks offering transactional Internet banking, study
of banks provided the transactional Internet banking, privacy statements and
transactional Internet banking and growth of transactional Internet banking.
Leo Puri [53] (2007), “The CEO as CIO: An interview with K.V. Kamath of
ICICI”, in this article the author has discussed the interview of K.V. Kamath, CEO
of ICICI bank. The Industrial Credit and Investment Corporation of India (ICICI)
was a vulnerable institution whose primary purpose was to provide industrial loans
to support India’s economic development. Today, with assets around $56 billion,
40
ICICI Bank is the country’s largest private bank, with a vast consumer based
serving from more than 614 branches and 2,200 ATMs in 13 countries. The bank
provides many other electronic banking products and services to their customers. In
this article Kamath discussed the bank’s journey and technology’s role in it, with
McKinsey’s Leo Puri at ICICI’s modern campus in Mumbai.
Lj.Antovski, M. Gusev [54] (2001), has conducted the study on e-banking,
developing with advanced technologies. He has discussed that internet forces are
affecting the banking sector transition more than any other financial provider
group. E-Bank solution should deliver three key requirements: High Availability,
Scalability and Security. End-to-end security consideration includes network
security, data integrity and identity authentication security. Framework architecture
for multi channel B2C solution enforced by reliable Network and N-Tier
architecture is proposed. The architecture is designed to fulfill the key
requirements.
Mrs. Suma Devi [55], has conducted the study on Electronic Banking-Entry in the
Indian Banking Scenario and has discussed about the evolution of electronic
banking in India, the catalyst in Initiating Electronic Based Delivery System,
Implementation of e-banking in Indian private banks, e-banking in foreign banks
operating in India, e-banking in Indian public banks, Indian financial Institutions,
Retail clientele, corporate clients, Correspondent bank clientele, The new
distributed model. She has also focused on issues in electronic banking, legal
recognition of electronic contracts and future of electronic banking technology etc.
Mark J. Cotteleer, Christopher A. Cotteleer, and Andre Prochnow [56], (2007),
have discussed the challenges and choices in B2B, E-PAYMENTS. The objective
of this paper is to discuss about the open network payment systems which are the
future of corporate payments, assuming they address the challenges of integration,
security and remittance standards. The studies are based on business-to-business
(B2B) payments system of U.S Market. Changes in the marketplace for business-
to-business (B2B) payments increasingly demand executives’ attention. Growing
numbers of e-payments, decreasing paper check volumes and new legislation in the
U.S. are the main motivators. Businesses are beginning to realize they must add
41
new payment options to a process still dominated by paper checks, wire transfers,
and automated clearing house (ACH) transactions. The authors highlighted B2B
payment methods, projected growth in B2B e-payments, life cycle of a B2B
payment, e-payment technologies, associated product attributes and optimal e-
payment application.
Mohammed Sadique Khan and Siba Sankar Mahapatra [57] (2009), this study
aims at evaluating the service quality of internet banking (i-banking) services in
India from customer’s perspective. The authors begin the study with discussing the
development of i-banking in India, status of i-banking in India and Internet users in
India. The service quality in the context of i-banking can be viewed from two
perspectives i.e. a) customer perspective and b) bank perspective. The study was
based on a survey. A structured questionnaire containing 44 quality items was
administered to various target groups. Seven quality dimensions viz. reliability,
accessibility, user friendliness, privacy/security, efficiency, responsiveness and
fulfillment, are identified, based on principal component factor analysis.
Demographic analysis of data revealed that gender is hardly a bias for use and
evaluation of service quality of i-banking in most of the cases across various
categories of customers. A valid statistical model is proposed to access the overall
service quality using regression analysis. The results show that customers are
satisfied with quality of service on four dimensions such as reliability, accessibility,
privacy/security, responsiveness and fulfillment but least satisfied with the ‘user-
friendliness’ dimension. The empirical findings not only priorities different
parameters but also provide guidelines to bankers to focus on the parameters on
which they need to improve.
Marcin Dabrowski and Piotr Pacyna [58] (2008), have based their study on the
distributed identity discovery services for non-federated system. Today, multiple
digital identities of a person are managed by independent identity providers. These
identities are unlinked with each other; therefore existing identity discovery
mechanisms are restricted to discovery by way of a known identifier, within a
certain identifier domain or federation of identifier domains. In the future,
automatic service personalization will make extensive use of identity attributes.
42
Therefore, next generation Identity Management Systems will have to include a
discovery framework for automatic exchange of identity attributes not only within
federations, but also between the non-federated domains, such as the Internet,
healthcare, e-government, e-banking and entertainment. The future identity
discovery framework should allow to sufficient to bootstrap trust relation between
the attribute provider and the service provider. This paper proposes an interoperable
distributed identity discovery service which alleviates the above limitation and
allows for cross-domain discovery of identities in different and non-federated
identifier domains. To the best of our knowledge, it is the first proposition of a
cross-federation discovery service for unlinked identities of the person.
MU Yibin [59] (2003), conducted the study on Status and Impact of E-banking on
traditional banking. The author has discussed the major applications of e-banking
especially in SME- finance. In the next part of the study, he has analyzed the
challenges and policy implications. In which cross-border e-banking activities and
its policy implications, from the society perspective, from bank’s perspectives and
from the authorities perspective (banking supervisor, central bank, related
government depts.), are discussed.
Marc Pasquet, Vincent Alimi, Sylvain Vernois, Christophe Rosenberger [60]
(2008), conducted the study on an e-banking platform for collaborative work
between Education, industry and Research. They paper presents an e-banking
platform used as a collaboration tool between more than 15 industrial companies, a
school of engineering and different research laboratories. The main objective of this
collaboration is to prepare the new e-banking protocols that will take place into the
SEPA program (Single Euro Payments Area). This program has for objective to
harmonize bank payment systems in Europe. It began to take effect in January 2008
and will continue through 2010. Many engineers have to be trained, lots of tests
have to be realized from end to end in the e-banking chain with new protocols and
recent research developments have to be integrated. Some quantitative results show
the interest of this platform for all the partners.
M. Upendar [61] (2004), analyzed Internet Banking, Security Related Issues. He
discussed the various aspects like Internet based Financial Business Dynamics,
43
Effect of Internet on banks, Geographical expansion of Internet banking in world
wide, opportunities and threats, Some Impediments to Development of Internet
Banking, competition etc.. The author has further discussed on Future holds, Risks
and security Issues Related to Internet banking. He has highlighted the Internet
banking in Indian scenario, Recommendations of the RBI Group on Internet
Banking etc.
Madhu Vij [62], she has stated that, Technology innovation witnessed by the
corporate sector during the nineties have changed the way business needs to be
conducted. I.T. has introduced new business paradigms and is increasingly playing
a significant role in improving the services in the banking industries. E-banking is
becoming more and more popular today, as is banking via digital television.
Beyond doubt, a substantial part of the future of banking business lies in a banking
environment that is less and less branch-based and where customers are able to
access banking services remotely. In the context of the above perspective, the
author has discussed about the e-banking and the innovations, the regulatory and
taxation issues of e-banking. She concludes the paper by presenting a case study on
ICICI bank.
Prof. Sharad Padwal and Dr. Vasant Godse [63] in their book,
“TRANSFORMATION OF INDIAN BANKS WITH INFORMATION
TECHNOLOGY” (2004), had focused on the period of transformation of Indian
banks with information technology or computerization. The banking and financial
services industry was redefined as trading on information on related to customer,
money, market and risk. They have tried to understand integration of financial
sector’s i.e. banking, insurance and capital market in the context of globalization
mainly due to usage of Internet and related IT products and services and also
analysis that how emerging new products and services of IT such as Data
Warehousing, Business Intelligence, Customers Relationships Management aided
financial institutions to innovate new products and services in financial sector with
in-built risk analysis capabilities. It also helps understanding of usage of IT for
benefit of portfolio management and operations of credit, investment, treasury,
assets/liabilities, and foreign exchange. It elaborates on how availability of multi-
44
channels capabilities enabled by IT such as core banking solution integrating
branches, ATM network, EFT-POSs , Internet banking ,Telephone banking, Mobile
banking, e-commerce made financial sector more competitive. The electronic
payment system has provided the opportunities for foreign direct investment and
made the movement of finances from one country to another possible within
minutes. They also had given the brief review of technology adoption processes in
Indian financial sector and identified the contemporary and emerging issues and
tried to provide points to the answers for such issues.
Prof. N.P.Agarwal & Prof. Sugan C. Jain. [64], in their book “Information
Technology and E-Business” (2002), has presented the use of electronics in
information technology and commerce. It has brought revolutionary changes in the
management styles of conducting business. The authors have discussed the area of
E-business and its benefits. They also focused on impact of electronic commerce on
accounting, impact of e-commerce on personnel, e-commerce and banking, Internet
banking,
Prof. T. Uma Mahesware Rao and Ch. L. Hymavathi [65], (2005), have
conducted a study on Internet Banking in Indian Scenario. They have discussed the
Banking through Internet. Internet banking is a web-based service that allows the
banks authorized customer to access their account information. In this system,
customers are allowed to log on to the bank’s website with the help of
identification issued by the bank and a Personal Identification Number (PIN).
Banks replies the user and enables him to access the desired services. Internet
bank’s products or services are divided into three types: a) Information Kiosks,
b)Basic Internet banking c) E-commerce Banking. The authors had further
discussed the Net banking as global experience, and also highlighted the e-banking
services of Indian banks like ICICI, HDFC, Foreign banks operating in India etc.
Rajiv Dewan and Abraham Seidmann, [66] (2001), have carried out a study on
the current issues in e-banking. The main objectives of this article was to study that
being at the forefront of technology adoption for many years, the financial services
industry faces cutting-edge technological and strategic issues before other
45
industries encounter similar issues. The article presented to inspire and inform our
financial considerations at present and into the future.
R.K. Uppal [67] in his book “INDIAN BANKING INDUSTRY and Information
Technology” (2006), the author considered and discussed that the process of
economic liberalization in India, initiated in 1991, had a deep impact on the
banking industry of the country significantly. Economic reforms over the last one
and a half decades have radically transformed the operational environment of the
banking sector. Introduction of Information Technology played an important role in
financial sector especially in banks. He further explained that, the Information
Technology (IT) revolution has not only changed the way banking business was
carried out but also widened the range of products offered by the banks. The
nationalized banks, with their social obligations, were having a large number of
branches operating manually and a huge customer base. However, with the coming
of new private and foreign banks with their attractive products and service
packages, the customers now have various options. The new products and service
offered by these banks are fast luring the customers away from the nationalized
banks which are slow to adjust to new environment. But the growing competition
among the banks forcing the nationalized banks to provide prompt and reliable
customer services and offer the variety of electronic banking products and services.
He also evaluates the impact of Information Technology on the growth and
performance of a cross-section of banks in India. It offers various guidelines for the
banking industry to improve its performance in the changed scenario characterized
by openness, competition and prudence.
Raghunath Desai [68] in his book “E-BANKING” (2007), has focused on the
various decent concept of electronic banking. He has discussed various modern
concepts of e-banking like the Evolution & Generation of cyber cash, Electronic
money, managing online money, delivery of financial services, impact of
technology on financial services, Institutional structure of banking in digital age,
deregulation of large and community banks, future of banking as per international
perspective etc. He has put forward clear and concise instructions for using the
electronic banking products and services.
46
Sanjiv Singhal [69] in his book “A BANKER’S GUIDE TO INTERNET
STRATEGY IN THE POST DOTCOM ERA – INTERNET BANKING THE
SECOND WAVE” (2003), has discussed about the Internet applications and
strategies in the banking sector. Its insightful analysis of the key concept from the
Internet euphoria in financial services should be very useful in devising strategies
for the future. The author has included, a)Reviews the initial hype and the events
that led to the eventual disenchantment with Internet banking and also discusses the
potential of the Internet, how it changes everything and what it specifically
promises to do for banking, b) Attempts to reconcile the dichotomy between the
theoretical promise of the Internet and the empirical evidence on the field and
faltering Internet banking ventures, c) Outline the new delivery structures for
existing banking products like credit cards, loans and corporate treasury. Examines
how the Internet allows cheaper and faster delivery as well as ease of transacting,
d) Presents a troika of Internet enabled products that have been introduced in the
past few years and which portend a paradigm shift in banking. These products are
electronic bill presentment and payments (EBPP), account aggregation and person-
to-person (P2P) payments, e) Case studies are presented which compare the
Internet strategies of three banks. f) Describes the trends in mobile telephony and
wireless access to the Internet that point to a speedy and pervasive dissemination of
the new technology and also provides an overview of the different mobile payment
systems being piloted. At end the author has discussed about the g) rounds up the
leanings from the experience of the plays seen in the Internet banking space thus far
and predicts that even though many ventures that pioneered the Internet enabled
innovations in banking have collapsed, the underlying business models will sustain.
S.S. Kaptan [70] in his book, “New Concepts in Banking” (2002), has discussed
about the changes in the economic and banking environment all over the world.
The changes take place because of technology and technology is facilitating the
creation of new approaches to banking and financial services. The new financial
products and services will be more customer friendly and easy to operate. The state
of art technology has changed the nature and system of banking operations. The
electronic age has brought several changes in banking sector. These changes
47
include the implementation of ATM, internet banking and high level automation.
He has also examined the likely implications of automation and technology on
customer services in banking sector and discussed the variety of issues related to
credit cards and other aspects concerned to convenience banking. The basic
concepts described by the author are, new concepts in banking, changing role of
bank, mechanization of banking, financial automation for better banking , credit
cards etc.
S.M. Padwal [71] in his book, “IT, MIS AND PRODUCTIVITY IN BANKS”,
(1997), has discussed the various aspects of information technology in financial
sector or especially in banks. He has described the banking and technology in India
from 2001, Impact of liberalization and Computerization in Indian financial
system, IT, computers and communication in banking etc. He also focused on
security, safety of Information technology in banks, productivity in
computerization environment, MIS in Indian banks, GIS for development banking
in India and risk management etc.
S. Natarajan and R. Parameswarn [72] in their book, “INDIAN BANKING”
(2006), have focused on how the world over, dramatic changes are taking place in
banks and banking operations. The global financial integration has brought about
bigger challenges to the Indian banking and also discussed that how the
complexities arise in the banking operations due to innovations in the banking
products and services. They start the discussion form the basics of banking,
evolutionary changes in the Indian banking system, its structure and purpose, the
ongoing developments etc. The traditional banking system helps us to understand
the primary concepts of banking. Numerous tables, figures and examples are used
to understand the operations of banking. The authors also focused on merchant
banking, mutual funds etc. They have also discussed the functioning of various
types of banks existing in India and especially discussed the electronic banking
concepts.
Stuart Mathison [73] (2007), conducted the study on MFI (microfinance
institutions i.e. specialist microfinance institutions, commercial banks and
generalist development organization etc.), who provide financial services to poor
48
households through e-banking. In this paper the author has discussed about how the
technology evolution took place in less developed economies and also highlighted
the two current imperatives within the microfinance sector i.e. ‘outreach’ and
‘sustainability’. The main objective of this study was to describe the application of
electronic banking in microfinance operations. He has discussed the microfinance
and ICT applications in back office management Information system (MIS),
Corresponding banking (equipped with technology such as an EFTPOS devices,
barcode readers and/or keypads, a personal computer), Card services, EFTPOS and
ATMs, Internet banking, Electronic community banking, Mobile phone banking
etc.
Sheebs Kapil [74] conducted the study on E-Banking: In Nascent Stage in India.
She stated that, to keep pace with the changing environment worldwide, Indian
banking industry is fast adopting technology. It has embraced many new features
like Internet banking, ATMs, Phone banking etc. With the help of new technology,
banks are now able to offer products and services which were difficult or
impossible with traditional banking. But the banks in India still to go a long way
before making themselves technology savvy. In this paper she has highlighted, E-
banking, banking and IT, ATM, Technology Solution for Indian Banks,
Precautions Taken by banks to sustain their Customers and Market Share, e-
banking in India and Cluster Banking Model for e-banking.
S.P. Dhandayuthapani [75] (2007), has discussed about the role of information
technology on banking. He highlighted on the concept of electronic banking, any
time and any where banking, tele-banking, online banking. He analyzed the
benefits of I.T. to the banks and benefits to customer etc.
T. R. Nagesh [76] (2007), has analyzed the Internet banking and a regulatory
challenge. He discussed that, advancement in technology has resulted in the rise
of multiple channels of banking. Internet banking evolved as an effective delivery
channel. The article throws light on the risks involved in banking on the net and the
issues of concerns for the regulators. The author has also discussed on the
development in Internet banking in major countries.
49
Vasu Deva [77], in his book, “E-Banking” (2005) have discussed that how,
liberalization and financial reforms era has totally changed the picture of banking
sector. Banks are actively looking at centralized core banking solution. Banks are
now looking at solutions that provide a unified view of the customer across all
service lines. Changes in the regulatory regime and the move to participate in the
Global banking system based to look at technology in a big way. The advent of
Internet has initiated an electronic revolution. The Internet is one of the major
distribution channel of banking products and services. Due to advances in Internet
security and the relevant protocol, banks play their role as financial intermediators
of commercial transaction. The E-banking strategies that banks implement are
aimed at deriving maximum value through the online channel. He has also
elaborated the E-banking transactions and how the Internet has transformed
banking transactions and use of Internet as an information delivery tool to improve
relationship with customers. The main topics that author has focused on, are
conceptual framework of e-banking and financial services, global perspectives,
strategies, internet and portals, mobile banking, risks, e-finance, e-money, e-
payment system, digital signature, banking services and information technology,
financial services and financial solution and integration etc.
Vasant Desai [78] in his book, “INDIAN BANKING NATURE & PROBLEMS”,
(1979), has analysed the nature and problems of Indian banking system. He also
studied in depth, the impact of banking on rural and backward areas and evaluates
the role of banks in the development of backward areas, and examines in detail the
administrative issues involved in taking banking to the countryside. But through
and beyond this, he discusses a fresh and critical appraisal in Indian banking as a
whole, its achievements and potentials.
Verena Veneeva [79] conducted the study on e-banking/online banking and its role
in today’s society. The world is changing at a staggering rate and technology is
considered to be the key driver for these changes around us. An analysis of
technology and its uses show that it was permeated in almost every aspect of our
life. Many activities are handled electronically due the acceptance of information
technology at home as well as at workplace. Internet can be seen as a truly global
50
phenomenon that has made time and distance irrelevant to many transactions. The
transformation from the traditional banking towards e-banking has been a ‘leap’
change. The evolution of electronic banking started from the use of automatic teller
machines (ATM) and has passed through telephone banking, direct bill payment,
electronic fund transfer and the revolutionary online banking. The author states
discus that, the fundamental shift towards the involvement of the customer in the
financial service provision with the help of technology, especially internet, has
helped in reduced costs of financial institutions as well as helped client to use the
service at anytime and from virtually anywhere with access to an internet
connection. Customer evaluation of the electronic services is influenced by
attributions of success and failure in inter-personal service situations. The use of
electronic banking has removed the banking personnel that facilitate the
transactions and has placed additional responsibilities on the customers to transact
with the service. Thus it can be concluded that a fit between task i.e. the banking;
technology i.e. the user interface and its reliability; and individual i.e. the
customers and their knowledge about using the service, is the key to successful E-
banking services.
William Hudson, [80] (2002), has studied about the e-banking websites. In this
article author focused on the problems faced by the user/ bank customers at the
time of surfing on internet e-banking sites. He has discussed that in many cases e-
banking websites are serving a captive audience and they faced the problems of
inconvenience with security, aggressive navigation and Precambrian design
philosophy.
Witold Chmielraz [81] (2002), discusses the Profitability aspects of electronic
banking applications for small companies. The main goal of the paper is the
presentation of the evaluation methodology of electronic-banking system from the
point of view of small companies. The study was based on e-banking services for
small companies offered by the selected banks operating in Poland, whose services
were used by small companies the most frequently in 2000.
Will Ferrell [82] ,This paper explores the common issue financial institutions face
with dated internet banking solutions, concerns these institutions have in converting
51
to a new solution, how to identify the ideal internet Banking solution and best
practices in a successful conversion. In addition, this paper will help financial
institutions gain a deeper insight into the capabilities today’s online bankers
demand. The basic points the author has covered that importance of internet
banking, meeting today’s customer needs in Internet banking, common challenges
with Internet Banking Providers, choosing the right Internet banking solutions etc.
Ziqi Liao and Michael Tow Chenug [83] (2003), had highlighted the challenges
faced by banks and customers while using the internet e-banking product and
services. The authors have studied that how commercial banks face significant
challenges on both the supply side and demand side, associated in particular with
competition, product-service quality and differentiation, transaction security, cost
efficiency & demographic change etc.
Ziqi Liao and Machael Tow Cheung [84] , (2008), conducted study on Measuring
Consumer Satisfaction in Internet Banking and also tried to find out what service-
quality attributes must Internet banks offer to induce consumers to switch to online
transactions and keep using them?. They have applied Herbert Simon’s seminal
idea of bounded rationality to construct a frame-work for measuring consumer
satisfaction with Internet banking in terms of a core subset of attributes. This
construction facilitates decision-cost-effective thinking and applications on the part
of the e-bank’s operations and IT mangers to enhance customer service quality and
boost market share in this expanding but increasingly competitive business area.
An increasing number of banks worldwide offer facilities that allow customers to
access accounts and execute transaction through Internet. Internet banking is the
requirement that mangers and strategists identify, measure, and compare the key
determinants such as usefulness, reliability and security of service quality. The
authors in their study have discussed about the Technology Accepted Model
(TAM), Servqual, and transaction cost analyses are used to measure consumer’s
attitudes toward B2C e-commerce. They have conducted this study on the base of
standard areas of questionnaire design, survey implementation and quantitative
analysis. The Survey was conducted in Hong Kong. The conclusion of the study
was that the potential exists for Internet banking to become significantly more
52
important in the increasingly technology- and information- based global economy.
Financial institution must therefore deliver ever-better services quality in their
online operations and products. Given that a large number of services-quality
attributes can potentially affect consumer attitudes toward Internet banking.
A review of the literature on the subject indicates that the introduction of E-banking
is very vital for the present banking system. The concept of E-banking in its present
form is new, in Indian scenario and little old in abroad countries like US. & UK.
The authors of the above literature had discussed the various aspects of e-banking
but their studies were limited and confined to different aspects and areas, and no
serious attempts seems to have been made to study and analyze the e-banking
implementation in Indian banks and especially banks in Maharashtra State.
Maharashtra is one of the financially sound states in India. There are many public
and private sector banks. But the major problem is that, the many interior areas of
Maharashtra are backward, rural and illiterates. It is challenging to study that to
what extent the people of these areas are aware of this new technology. Since a
large part of India is similar to Marathwada, hence it has been assumed that the
results obtained will be applicable to all such areas of the country. A brief survey of
the literature indicates that very little attention was paid to find out the reaction of
the people living in backward areas like Marathwada, hence the findings of the
study highlight the need and demands of the people of the areas. Therefore, it is
sufficient ground to say that the study undertaken by the researcher on the topic “E-
Banking Implementation in Indian Banks, A Study of Banks in Maharashtra State.”
is relevant and essential.
1.10. Research Methodology:
1.10.1. Introduction
With the growth and development of economic activates the functions of banks
have enlarged in modern time. The activities of banks are increasing by leaps and
bounds. The Banking in India can be by and large grouped into three eras, Pre-
Nationalization era, Post-Nationalization era and Post-Liberalization era. Each era
has significantly changed the face of Indian economy, banking and banking
practices. During the Pre-nationalization era till 1969 banks were focused more on
53
basic principles of banking- accepting deposits for the purpose of lending.
Customers approached bankers for giving deposits which bankers accepted for the
purpose of lending and making profits. During the post-nationalization era till
1994, several banks were brought under government control and directed to give a
major thrust to rural lending and poverty alleviation programs. Employment
generation was the focus. Target approach was adopted. Banks were re-orienting
themselves to open and manage branches in the remotest corners of the country to
meet the region-wise, sector-wise lending targets. Thousands of employees were
recruited. Lakhs of borrowers benefited. Crores of rupees were mobilized as
deposits and were also lent with focus on increasing agricultural product,
developing small scale sector, self employment programs and so on. Deposits were
mobilized (re: accepted) for the purpose of lending for economic growth and
prosperity of the country (re: profitability). “The Post-liberalization era started in
the late 1990s and continuing even now, fuelled by emergence of IT sector as major
export earner for the country. The Government thrust to capital adequacy,
profitability, privatization, and telecommunication infrastructure triggered both the
private sector as well as public sector banks to embrace technology for offering
state of the art banking services at reduced cost and increasing availability and
customer convenience. Core banking has been redefined as on line banking which
address many of the problems of post-nationalization era faced by the banks” [85].
The Internet is one of the major distribution channel of banking products and
services. Due to advances in Internet security and the relevant protocols, banks play
their role as financial intermediators of commercial transactions. Banks have
chosen a route of establishing a direct web presence as well as owner of financial
services. There is a need for clear and concise Internet commerce strategy.
Electronic finance offers considerable opportunities for banks to expand their base
and rationalizes the business. The E-Banking strategies that banks implement to
derive maximum value through the online channel. E-banking transactions and how
Internet has transformed banking transitions and use of Internet as an information
delivery tool to improve relationship with customers. Moreover, the Internet poses
a range of risk and threats. While the Internet has enabled banks to deliver desired
54
products/service, the challenge is to enhance customer touch, ease of operation of
their web sites and other initiatives. India would emerge as the preferred investment
destination by attracting global funds into a market that offers the best of returns
with efficiencies. The need of transition from a product centric to customer centric
approach understands the customer base. The relationship a customer has with the
banks and to realize the bank and financial services strategy. In India 2001 major
banks were either offering e-banking services at various levels or planned to do so
in the near future. Some of the private banks included ICICI bank, HDFC bank,
IDBI bank, CITI bank, Global Trust Bank, AXIS (UTI) Bank etc. Due to the
changes in banking provided by the Nationalized banks as well as cooperative
banks in India too.
Maharashtra is a financially advanced state in the country and banking is the largest
financial sector. The state comprises many big cities: Mumbai, Pune, Nagpur,
Aurangabad etc. There are number of banks spread all over the state. There are
nationalized banks, Private commercial banks, and cooperative banks and due to
globalization many foreign banks in the state. SBI, SBH and Bank of Maharashtra
are the prominent nationalized banks. There are many private commercial banks
like ICICI, HDFC, IDBI, YES bank etc., providing the banking services to their
customers and also provide the funds for Industrial development and housing
development needs of the people. The cooperative banks also help in economic
development. Today, all the nationalized banks and Private commercial banks are
providing 24*7 banking (e-banking) services to their customers. The networks of
these banks are connected all over the India and outside. The cooperative banks of
the state are also entering in the field of e-banking. The term ‘E-BANKING’ can be
defined as “the use of electronic delivery channels for banking products and
services, and is a subset of electronic finance. The most important electronic
delivery channels are the Internet, Wireless Communication Networks, ATMs, and
telephone banking. Internet banking is a subset of e-banking that is primarily
carried out by means of the Internet.”[86] Another definition of e-banking is:
“Electronic banking refers to e-banking, where in the entire operation are done by
the customer through his computer system by using a code. Customer need not
55
necessary to visit banks to carry out their banking transactions and can not meet
their requirement through means of electronic banking facility”[87]. At Present the
Electronic services provided by all the banks are: ATM cum Debit cards, Credit
cards, Electronic Fund Transfer (EFT), Phone Banking, Mobile banking, Electronic
Data Interchange (EDI), Internet banking – online banking, D-mate accounts, E-
cheques etc. There was flow of electronic-oriented products and services all over
the country. All types of banks are applying the electronic products and services in
their banks. Therefore, the present work is an attempt to find out the extent of
application of e-banking and to measure the level of understanding and usage by
the people of backward areas.
1.10.2. Meaning & Definition:
The world ‘Research’ is derived from the French Word. ‘Researcher’ meaning the
‘to search back’. Some of the important definitions of research by well known
authors are given below:
a) Fred Kerlinger: “Researcher is an organised enquiry designed and carried out to
provide information for solving a problem.” [88]
b) Francis Rummel: “Research is a careful inquiry or examination to discover new
information or relationships and to expand and to verify existing knowledge” [89].
c) Robert Ross: “Research is essentially an investigation, a recording and analysis
of evidence for the purpose of gaining knowledge.”[90]
The selected topic deals with applied research. It aims to study about e-banking, its
implementation in Indian banks and special study of banks in the backward areas.
The backward districts of Maharashtra are taken as a sample for the study.
1.10.3. Hypothesis:
The study aims at testing the following hypothesis:
1. E-Banking is not suitable in backward regions:
The study is based on the E-Banking of Maharashtra state. Even today, there are
various areas in Maharashtra, which are considered as backward. Therefore,
implementation of e-banking is not suitable because of:
a) Non-availability of electricity
b) Availability of inadequate number of skilled manpower in I.T.
56
c) Lack of education & awareness
e) Economically poor.
2. E-Banking creates unemployment.
It is commonly assumed thee implementation of E-Banking has directly affected
the Employment and productivity. On the one hand an e-banking service has
increased the productivity. On the other hand, e-banking created the
unemployment. Earlier banking system was human-oriented, which provided
various job opportunities but modern banking system is machine-oriented, which
creates the unemployment and human task are shifted towards machine.
3. Implementation of e-banking increases the cost which is ultimately passed on to the consumers. Implementation of e-banking involves huge amount of investment, it increase the
cost. These costs may be application costs, hardware cost hardware maintenance
costs, system software costs, network bandwidth costs, Roll out costs, Data centre
management and storage and disaster recovery costs etc. which are assumed to be
ultimately recovered through the service charges of the customers.
4. Chances of failure of machines and technologies.
E-banking is machine/technology oriented there are chances of machine failure and
problems in technology, which will effect/stop the regular task of the bank.
5. E-banking- lack of external & internal security.
It is commonly believed that e-banking is prone to external attacks by hackers and
unscrupulous consumers. Several incidents have been reported in media. At the
same time, the persons/employees in charge of handling the system too has ample
opportunities to commit the frauds. Therefore it is also believed that e-banking
suffers from external as well as internal security threats.
1.10.3. Objectives:
The study intends to cover the following objectives:
1. The objective of the study is to test the hypothesis and get the results.
2. To analyse the Basics of Banking to obtain the knowledge about the Indian
banking, this will help to get the clear concept of banking system.
3. To analyse E-banking innovation i.e. history
4. To analyse the over all view of E-banking.
57
5. To analyse the E-banking and its implementation in Indian banks.
6. To evaluate the empirical and theoretical work in the field of e-banking
7. To study ‘Banking Information system’ to get an idea of internal
requirement of bank.
8. To analyse the Impact of e-banking in Maharashtra state.
9. To analyse e-banking laws, right and Acts.
10. To analyse the banks customers perception and attitudes about e-banking.
1.10.4. Universe of the study:
The present study is based on the analysis of the e-banking in Indian banks and the
Universe of the present study is restricted to Maharashtra state. “Maharashtra is
India’s third largest state in area and second largest in population after Uttar
Pradesh. It is bordered by the state of Gujarat, Madhya Pradesh, Chhattisgarh,
Andhra Pradesh, Karnataka, Goa and Union territory of Dadra and Nagar Haveli.
The Arabian Sea makes up the state’s western coast. Mumbai, India’s most
populous city is the capital of Maharashtra. Mumbai is a cosmopolitan city, and
serves as the financial and entertainment capital of the country. Maharashtra is
divided into thirty-five districts, which are grouped into six divisions: Aurangabad
Division, Amravti Division, Konkan Division, Nagapur Division, Nasik Division
and Pune Division. These are official revenue divisions of government of
Maharashtra. Geographically, historically and according to political sentiments
Maharashtra have five main regions: Vidarbha or Berar (Nagpur and Amravati
divisions), Marathwada (Aurangabad division), Khandesh and Northern
Maharashtra (Nashik division), Desh or Western Maharashtrs (Pune division) and
Konkan (Konkan division).” [91] Maharashtra is a financially and industrially one of
the most developed state in the country. The banking is one of the important
financial sectors in the state. It is found that, there are 45 banks (including private
commercial and nationalized) and its number of branches all over in India. These
banks with its wide network of branches are also spread over in the Maharashtra.
Therefore sample size of the bank is 22% of the banks from total population are
selected form both public and private sector for the study purpose.
58
These banks are:
1. ICICI BANK 6. STATE BANK OF INDIA
2. HDFC BANK 7.STATE BANK OF HYDERABAD
3.YES BANK 8. BANK OF MAHARASHTRA
4. DCB BANK 9 BANK OF BARODA
5. AXIS BANK 10. IDBI
Thus, the scope of the universe of the present study is limited to 10 banks and their
electronic products and services.
1.10.5. Sampling:
Sampling is taking any portion of a population or universe as representative of that
population or universe. In this study, researcher has used ‘Random sampling
method’. “Random Sampling is that method of drawing a portion (or sample) of a
population or universe so that each member of the population or universe has an
equal chance of being selected. In other words, Random sampling is that method of
drawing a portion (sample) of a population or universe so that all possible samples
of fixed size ‘n’ have the same probability of being selected.”[92] Therefore, the
researcher has selected ten different banks by applying the Random Sampling
techniques for the study purpose.
1.10.6. Data collection technique:
Data collection work is the backbone of any research. The ‘Questionnaire’ is one of
the data collection techniques of research. This technique is “used primarily in
making status studies of current practices and in conducting opinion polls up by
informants rather than by researcher. The researcher must construct the
questionnaire so cleverly as to elicit reliable and authentic information. The
information is a competent source of data. The respondent must have the ability to
understand the questions asked. Questionnaire construction is an art. A good
questionnaire is the product of long and painstaking process. The researcher should
decide what facts and opinion are to be sough for. The researcher should also
determine the persons to whom the questionnaire is to be sent. The arrangement
59
and appearance of the questionnaire is of prime importance in getting good returns.
The format should be attractive. There should be minimum difficulty in passing
from one question to another and filling in the intended response.”[93] Therefore, we
have selected the questionnaire technique for data collection.
1.10.7. Primary data:
The primary data are used for this research and the data collection work is done
through the data collection techniques i.e. interview schedule and survey
questionnaire. “Schedule is the name usually applied to a set of questions which are
asked and filled in by an interviewer in a face to face situation with an other
person.”[94].
As the interview-schedule is felt suitable to this particular research, so it is used.
The objectives of this research are to study the implement of e-banking in Indian
banks and especially the banks in Maharashtra state, so it became imperative to
collect the data from bank’s Managers. The study required in-depth information on
the various aspects of the e-banking products and services provided by the different
banks in the states, e-banking in private banks and especially e-banking
implementation in nationalized banks. We have conducted a survey of the sample
bank customers. There are two sections in the questionnaire format i) General
section with ten parameters and ii) In second section twenty seven questions are
placed. We have selected the ‘selection type’ or ‘closed-ended’ questions which are
in the form of ‘yes’ or ‘no’.
This study is based on the survey and the data which is collected through the issue
of questionnaire to the bank’s customers. Personal interaction and discussion with
the customer have helped to understand their perception and attitudes about E-
banking products and services.
1.10.8. Secondary data:
Secondary data source are also utilized for this study. The secondary sources of
information includes Banks Annual Reports, Broachers of E-banking products and
services, Reports of RBI on Internet Banking, various sites of banks on internet,
research studies, books and articles, research papers published in leading research
60
journals and magazines etc. Thus the data collected from the above sources are
utilized for this research work.
1.10.9. Tabulation and Analysis:
After completion of data collection task, the data were organised, tabulated and
analyzed. The tables and graphs were prepared and interpretation was carried out.
For the purpose of analysis of data, computer software is used and statistical tool
also applied like: application of Chi-Square test.
a) Analysis:
For the purpose of analysis, the findings of the survey are classified into two
groups:-
i) Finding on the basis of general parameters ii) Cross section Analysis.
i) General Parameter Analysis:
The first part of the questionnaire consists of the following parameters:
1. Occupation
2. Gender
3. Marital Status
4. Age
5. Qualification
6. Annual Income
7. Accounts types wise analysis
8. Analysis on the basis of age of accounts
Occupational-wise analysis:
Of the total respondents, it is found that approximately 45% are from service
category. Business category occupies only 15%. Professionals are 7% of the total
and students are 30% of the total. Housewife category forms the neglible part of the
total.
From the above it is observed that business class, which is expected to use the e-
banking services to a large extent, is not doing so. Moreover, more and more
number of housewives should be encouraged to the use the e-banking services. This
may help in diverting the idle cash to the productive uses.
61
Gender-wise analysis:
On the basis of gender category, it is found that the male respondents are 72% and
very few respondents are from female category i.e. 27%.
From the above it can be analysed that existence of a large number of male
respondents is as per the expectations, because female respondents are also include
the housewives who are more interested in investing in non-productive
investments.
Marital Status wise analysis:
It is revealed that there are 53% of single respondents and 47% of respondents are
married.
From the above it is analysed that both married and single respondents are
approximately similar banking sense.
Age-wise Analysis:
Of the total respondents, age group 18-20 are 15.9%, 21-30group 51.5% , 31-40
group 19.7%, 41-50 group 9.9% , 51-60 group 2.3% and 61 & above there are only
0.7% respondents.
The age group 21-30 and 31-40 contains service people, businessman and
professionals. Therefore it is expected that maximum number of respondents are in
these group. As the age group 18-20 consists of a maximum number of students,
who are not having their savings. But in the age group 41-50 and 51-60 which also
occupies service, business and professionals, the banking habits are at the decline.
In the 61 & above very few respondents are because of there old age and unable to
perform the banking transactions.
Qualification wise analysis:
As an analysis it is found that HSC qualified respondents are 16.1%, Graduates are
approximately 46% and post Graduates are Approximated 38 %.
Qualification wise analysis of the data reveals that graduate & postgraduates
constitute an approximately 84% of the total. Other categories account for just 16%
of total. This indicates the lack of interest and awareness on the part of less
educated and uneducated masses towards the usage of banking services.
62
Income wise analysis:
Of the total respondents, it is found that 1,00,000 and above income are 48.5% ,
Below 1,00,00 income respondents are approximately 18.4% and no earning
respondents(i.e. students & house wives) are approximately 33.1%.
From the above study reveals that only the persons having more than one lakh
rupees annual income are using the banking services. The people with the lower
income perhaps have no savings. Hence they don’t need any banking services.
Accounts types wise analysis:
On the basis of account type analysis, it is found that the saving respondents are
90.2%, current account holders are 8.9% and very few respondents are from
recurring and term deposit i.e. 0.2%.
From the above it can be analysed that saving account holders are more as compare
to current account holders.
Analysis on the basis of age of accounts:
Of the total respondents, 1yr to 4 yrs old customer of the bank is 70.6%, 5yrs to 10
yrs are 23.6%, 11 yrs to 15 yrs are 4.3%, 16 yrs to 20 yrs & 21 yrs and above are
very few i.e. 0.8% only.
From the above it can be analysed that recent account holders i.e. 1yr to 4 yrs old
more preferred to use electronic banking as compared to others.
ii) Cross Section Analysis:
b) Findings:
As an analysis it is revels that all the respondents have acknowledged their
awareness of the e-banking concepts (ie.100%). But the response to the query
whether their banks are providing it, we observed that 95.9% respondents have
given positive response and 4.1% have given the negative response. Almost 92.1%
of the respondents agree that the electronic services are more convenient and
suitable in present life. On the other hand 7.9% respondents disagreed. It is also
observed that 52% of respondents do agree to the fact that Indian customer feels
shy, hesitative and keep away from using electronic banking transactions and 48%
of the respondents disagreed with this statement and they think that Indian people
are much comfortable in accessing the e-banking. It is also found that 95.5%
63
respondent’s banks are providing ATM cum Debit card services, in which 87.4%
respondents accessing these services. But 4.5% respondents are disagreed that their
bank provides this service. It is also found that 12.6% respondents are not using
ATM cum Debit card services. It is revealed that 90.7% of the respondents think
that using an ATM is easier, authenticated and safe for conducting banking
transaction and 9.3% of the respondents deny this statement. It is also found that
73.2% of the respondents are satisfied with the banking charges of ATM services
and 26.8% feel that ATM using charges are high and they are not satisfied. A
further analysis shows that 45% respondents used their debit cards for bills
payments and 55% respondents are not using it for bill payment purpose. It is
analysed that maximum number of respondent i.e. 58.6% prefer to using their ATM
cum Debit card for purchasing in market but 41.4% have shown their dislike. It is
revealed that 89.4% of the respondents think that Debit card is safer as compared to
carry the cash at the time of shopping and traveling and 10.6% respondents think
otherwise. It is found that 81.9% of the respondents are satisfied with ATM
machines and its services but 18.1% respondent accessing ATM are not satisfied.
As per the observation 86.8% respondent’s banks are providing credit cards in
which 38.9% respondents are using it. On the other hand, 13.2% of respondent
stated that their banks are not providing credit cards and 61.1% respondents are
those who are not using it. It is analysed that 68.3% feel that credit card charges are
heavier and 31.7% deny this. As per respondents’ feedback, it is found that 76.3%
respondent thinks that use of Debit card is better than Credit card and 23.7%
negated this statement. It is also found that 81.2% thinks that card transaction is
safe and secure and 18.8% respondents has shown negative attitude. It is revealed
that 46.9% respondent encountered processing error while transacting with card
and 53.1% has shown positive attitude. It is also found that 88.1% respondent’s
banks provides Internet banking and 85% respondent’s banks provides on line
banking and 11.9% stated that their bank do not provide internet and 15%
respondents also stated that their bank is not online e-banking services. On the
basis of analysis of respondents feed back it is found that 90.6% respondents feel
that online banking system save time and 74% say that it is financially secured. But
64
9.4% and 26% respondents do not agree for that online system is save and
financially secured. It is found that 81.1% respondent think that learning to use a
net banking/ online banking is easier but 18.9% disagree with this statement. As per
the feedback of respondents that 72.6% are aware that their bank provides mobile
banking services and 27.4% respondents said no. It is further observed that 77%
respondents’ thinks that mobile banking services are more useful but 23% do not
agree. It is found that 80.3% respondent’s bank provides EFT and 80.9%
respondents feel that it is more secure and time saving but 19.7% respondents deny
that their banks provides EFT services and 19.1% said that it is not safe and secure.
On the basis of the above analysis, the conclusion of the study may be drawn.
1.10.10 Conclusion:
On the basis of the analysis, it can be concluded usage of banking services is still
not wide open. In a country like India, where majority of population is less
educated and uneducated, the utility of banking services is not properly realized. It
is found that only educated, well to do persons, and male forms the majority of the
users. Housewives, small businessmen and persons from unorganized sectors still
feel shy and keep themselves away from the banking services.
Even though a majority of Indian and Foreign banks have introduced the advance
e-banking facilities, but it is observed that a large numbers of bank users do not
proper to use these services. This make due to the ignorance of the system of e-
banking or because of the distrust in the computer systems.
From the above, this can be concluded that there is an urgent need of spreading the
awareness among the common people. The small business men, the farmers, the
housewives, the person’s working in unorganized sector be convinced to use
banking and e-banking services. They should feel that their money is more safe and
secure with the banks. The lack of faith in the banking system is evident from the
present study.
65
References
[1] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [2] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [3] S. NATARAJAN R. PARAMESWARAN, “INDIAN BANKING”, S.CHAND & COMPANY LTD. Publication Ram Nagar, New Delhi (2006), p2. [4] Article by Julian Davidson, “History of Banking Systems in Different Parts of the World”, http://EzineArticles.com/? [5] Finance.indiamart.com/investment_in_india/banking_in_india.html,“History of banking in India”. [6] Finance.indiamart.com/investment_in_india/banking_in_india.html,“History of Banking in India”. [7] Finance.indiamart.com/investment_in_india/banking_in_india.html,“History of Banking in India”. [8] S. NATARAJAN R. PARAMESWARAN, “INDIAN BANKING”, S.CHAND & COMPANY LTD. Publication Ram Nagar, New Delhi (2006), p3 & p4. [9] Finance.indiamart.com/investment_in_india/banking_in_india.html,“History of Banking in India”. [10] Edna Carew, “The Language of Money”, ANZ Financial Dictionary Meaning for Bank.htm [11] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003) p.1. [12] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [13] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [14] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [15] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [16] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [17] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003) p.2. [18] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003), p.2. [19] INDIAN INSTITUTE OF BANKING & FINANCE, “Know Your Banking –I Basic of Banking”, Published by Taxman Publications Pvt. Ltd. 59/32, New Rohtak Road, New Delhi (2005), p3.
66
[20] INDIAN INSTITUTE OF BANKING & FINANCE, “Know Your Banking –I Basic of Banking”, Published by Taxman Publications Pvt. Ltd. 59/32, New Rohtak Road, New Delhi (2005), p3. [21] S. NATARAJAN R. PARAMESWARAN, “INDIAN BANKING”,S.CHAND & COMPANY LTD. Publication Ram Nagar, New Delhi (2006), p2. [22] INDIAN INSTITUTE OF BANKING & FINANCE, “Know Your Banking –I Basic of Banking”, Published by Taxman Publications Pvt. Ltd. 59/32, New Rohtak Road, New Delhi (2005), p3. [23] INDIAN INSTITUTE OF BANKING & FINANCE, “Know Your Banking –I Basic of Banking”, Published by Taxman Publications Pvt. Ltd. 59/32, New Rohtak Road, New Delhi (2005), p3. [24] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003) p.3. [25] INDIAN INSTITUTE OF BANKING & FINANCE, “Know Your Banking –I Basic of Banking”, Published by Taxman Publications Pvt. Ltd. 59/32, New Rohtak Road, New Delhi (2005), p3. [26] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003) p.3. [27] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003) p.3. [28] http//www.answers.com/topic/scheduled-banks [29] http//www.answers.com/topic/scheduled-banks. [30] S.K. Misra and V.K. Puri, “ INDIAN ECONOMY”, Himalaya Publishing House Mumbai (2006), p.717 [31] S. NATARAJAN, R. PARAMESWARAN, “INDIAN BANKING”,S.CHAND & COMPANY LTD. Publication Ram Nagar, New Delhi (2006), p30. [32] Dr. Nirmala Prasad, K Chandradass J., “BANKING AND FINANCIAL SYSTEM”, Himalaya Publishing House, Mumbai, (2004) p9. [33] http//www.answers.com/topic/non-banking-financial-company [34] http://www.bankingindiaupdate.com/bra.htm -“BANKING REGULATIONS ACT 1949”. [35] Andrea Schaechter, “Issues in Electronic Banking: An Overview”, IMF (International Monetary Fund) Policy Discussion Paper, March 2002, http://www.imf.org/external/pubs/ft/pdf/2002/pdp06.pdf. [36] Ankur Gupta, “DATA PROTECTION IN CONSUMER E-BANKING”, Article, National Law Institute University, Bhopal. [37] C. M. Chaudhary., “BANKING AND FINANCE”, Published by Malik & Company, Jaipur (2003).
67
[38] Dr. S.P. Rajagopalan., “e-Banking: The Indian Scenario”, “BANKING in the New Millennium Issues, Challenges and Strategies”, Edited by Dr. S. Gurusamy, Kanishka Publishers, Distributors, New Delhi (2001). [39] Dr. R.V.Kulkarni and B.L. Desai., “Knowledge-based Systems in Banking Sector”, New Century Publications, New Delhi, India (2004). [40] Dr. Nirmala Prasad & K. Chandradass J., “BANKING AND FINANCIAL SYSTEM”, Himalaya Publishing House, Mumbai, (2004). [41] Dr. Lisa Harris and Dr. Laura J. Spence, “THE ETHICS OF EBANKING”, Journal of Electronic Commerce Research, VOL. 3, No.2, 2002. [42] Dr. N. Sundaram, “E-Banking”, Journal, Readers Shelf, Vol.3, Issue No. 10, July, 2007. [43] D.Ramani, “INNOVATIVE INTERNET Banking emerging Issues and Challenges”, Journal, E-Business, The Icfai University Press, February 2007. [44] Dr. Md. Abdul Hannan Mia, Mohammad Anisur Rahman, Md. Main Uddin, “E-banking: Evolution, Status and Prospects”, The Cost and Management, Vol. 35 No.1, January-February, 2007 pp.36-48. [45] Dr. Mrs. Pratibha Rasal, “CYBER LAWS- AWAY AHEAD”, International Conference on Cyber Law and Information Technology by Indian Law Institution, New Delhi, 2001. [46] Dr. A. Nelson, “Internet and Hi-tech banking Technologies: A Revaluation of Indian Banking Industry”, Journal Readers Shelf, August 2007. [47] Francisco Javier Miranda, Rosa Cortes and Cristiana Barriuso, “Quantitative Evaluation of E-Banking Web Sites. An Empirical study of Spanish Banks”, The Electronic Journal Information Systems Evaluation, 2006, Volume 9 issue 2, pp. 73-83, www.ejise.com. [48] Indian Institute of Banking and Finance, “Information System for Banks”, Taxmann Publications (P.) Ltd., New Delhi, (2005). [49] Indian Institute of Banking and Finance, “Know Your Banking-I, Basics of Banking”, Taxmann Publications (P.) Ltd., New Delhi, (2005). [50] Jason Dong and Michael Bliemel., “Strategies for Increased Integration of Online and In-Branch Services of Banks in Canada”, Journal of Internet Banking and Commerce, December 2008, Vol. 13, No.3. [51] Jia Hu and Ning Zhong, “Developing Mining-grid centric e-Finance Portal”, Proceedings of the 2006 IEEE/WIC/ACM International Conference on Web Intelligence, 2006 IEEE. [52] Kori L. Egland, Karen Furst, Daniel Nolle, and Douglas Robertson, “Banking Over the Internet”, Quarterly Journal, Vol. 17, No.4, December 1998. [53] Leo Puri, “The CEO as CIO: An interview with K.V. Kamath of ICICI”, Mc Kinsey on IT Spring 2007. www.mckinsey.com/clientservice/bto/point of view/pdf/ MOIT11_ICICInterview_F.pdf.
68
[54] Lj.Antovski, M. Gusev, “E-BANKING- DEVELOPMENT FUTURE WITH ADVANCED TECHNOLOGIES”, proceeding of the Second International Conference on Informatics and Information Technology CiiT Molika 20-30 Dec.2001. [55] Mrs. Suma Devi., “Electronic Banking - Entry in the Indian Banking Scenario” “BANKING in the New Millennium Issues, Challenges and Strategies”, Edited by Dr. S.Gurusamy, Kanishka Publishers, Distributors, New Delhi (2001). [56] Mark J. Cotteleer, Christopher A. Cotteleer, and Andre Prochnow, “CUTTING CHECKS: CHALLENGES AND CHOICES IN B2B E- PAYMENTS”, COMMUNICATONS OF THE ACM, June 2007/Vol. 50 No.6. [57] Mohammed Sadique Khan and Siba Sankar Mahapatra., “Service quality evaluation in internet banking: an empirical study in India”, Int.J. Indian cultural and Business Management, Vol. 2, No.1, 2009. [58] Marcin Dabrowski and Piotr Pacyna, “Distributed Identity Discovery Service For Non-Federated Systems”, Proceedings of MoMM2008, November 24-26, Linz, Austria. [59] MU Yibin. “E-banking: Status, Trends, Challenges and Policy Issues”, CBRC Seminar, The Development and Supervision of E-banking Shanghai, Nov. 24-26, November 2003. http://www1.worldbank.org/finance/assets/images/MU_Yibin_E-Banking_Nov_2003_paper.pdf. [60] Marc Pasquet, Vincent Alimi, Sylvain Vernois, Christophe Rosenberger, “An E-banking platform for collaborative work between Education, industry and Research”, International Symposium on Collaborative Technology and Systems (CTS), United States (2008). [61] M. Upendar, “Internet Banking: Security Related Issues”, INDIAN BANKING in the new Millennium, edited by M.P. SHRIVASTAVA & S.R.SINGH, Anmol Publication Pvt. Ltd., New Delhi (2004) pp. 440-461. [62] Madhu Vij, “E-Banking: An Emerging Perspective of the Regulatory and Taxation Issues”, University of Delhi, India. [63] Prof. Sharad Padwal and Dr. Vasant Godse., “TRANSFORMATION OF INDIAN BANKS WITH INFORMATION TECHNOLOGY”, Himalaya Publishing House, Mumbai, 2004. [64] Prof. N.P.Agarwal & Prof. Sugan C. Jain., “Information Technology and EBusiness” Raj Publishing House Jaipur, (2002). [65] Prof. T. Uma Mahesware Rao and Ch. L. Hymavathi, “INTERNET BANKING IN INDIAN SCENARIO”, Indian Journal of Marketing, April, 2005. [66] Rajiv Dewan and Abraham Seidmann., “Current Issues in E-BANKING”, COMMUNICATONS OF THE ACM, June 2001/Vol 44. No.6.
69
[67] R.K.Uppal., “INDIAN BANKING INDUSTRY and Information Technology”, New Century Publications, New Delhi, 2006. [68] Raghunath Desai., “E-BANKING” Srishti Book Distributors, New Delhi, (2007). [69] Sanjiv Singhal., “A BANKER’S GUIDE TO INTERNET STRATEGY IN THE POST DOTCOM ERA – INTERNET BANKING THE SECOND WAVE”, Tata McGraw Hill Publishing Company Limited, New Delhi, 2003. [70] S.S. Kaptan., “NEW CONCEPTS IN BANKING”, Prabhat Kumar Sharma for Sarup & Sons, Delhi, 2002. [71] S.M. Padwal., “IT, MIS AND PRODUCTIVITY IN BANKS”, Himalaya Publishing House, Mumbai, 1997. [72] S. Natarajan and R. Parameswarn., “INDIAN BANKING”, Published by S. Chand & Company Ltd., New Delhi, (2006). [73] Stuart Mathison., “E-banking with the poor: Opportunities and Implications For Microfinance providers”, Development Bulletin 72, (March 2007). [74] Sheebs Kapil, “E-Banking: In Nascent Stage in India”, IT in Banks Emerging Trends, Edited by Katuri Nageswara Rao & Yashpaul Pahuja, the ICFAI University Press Hyderabad, (2005) pp.78-86 [75] S.P. Dhandayuthapani, “ROLE OF INFORMATION TECHOLOGY ON BANKING”, Journal READERS Shelf, September, 2007. [76] T. R. Nagesh, “Internet Banking A Regulatory Challenge”, Professional Bankers, the Icfai University Press, December 2007. [77] Vasu Deva., “E-Banking” For Commonwealth Publishers, New Delhi, 2005. [78] Vasant Desai, “INDIAN BANKING NATURE & PROBLEMS”, Himalaya Publishing House, Bombay, (1979). [79] Verena Veneeva, “E-banking (online Banking) and its role in Today’s society”, http://EzineArticles.com /? expert = Verena_Veneeva. [80] William Hudson., “The Lost World of E-Banking” SIGCHI Bulletin September/October (2002). [81] Witold Chmielraz., “PROFITABILITY ASPECTS OF ELECTRONIC BANKING APPLICATIONS FOR SMALL COMPANIES”, ECIS 2002, June 6-8, Gdansk, Poland. [82] Will Ferrell, “Is your Internet Banking Solution Costing You Customers?” URL - First Data Corporation (2008) [83] Ziqi Liao and Michael Tow Chenug., “Challenges to Internet E-banking” COMMUNICATONS OF THE ACM, December 2003/Vol 46. No.12ve.
70
[84] Ziqi Liao and Machael Tow Cheung, “MEASURING CONSUMER SATISFACTION IN INTERNET BANKING: A CORE FRAMEWORK”, COMMUNICATONS OF THE ACM, April 2008/Vol. 51 No.4. [85] Indian Institute of Banking and Finance, “Information System for Banks”,Taxmann Publications (P.) Ltd., New Delhi, (2005).p3 &P4. [86] http//www.imforg/external/pubs/ft/pdf/2002. [87] S.P.DHANDAYUTHAPANI, “ROLE OF INFORMATION TECHNOLOGY ON BANKING”, Journal Readers shelf sept.2007. p13. [88] N. THANULINGOM, “RESEARCH METHODOLOGY”, By Himalaya Publishing House Mumbai, (2000), p3. [89] N. THANULINGOM, “RESEARCH METHODOLOGY”, By Himalaya Publishing House Mumbai, (2000),p3. [90] N. THANULINGOM, “RESEARCH METHODOLOGY”, By Himalaya Publishing House Mumbai, (2000),p3. [91] http://en.wikipedia.org/wiki/Maharastra [92] Fred N. Kerlinger, “Foundations of Behavioral Research”, by Surjeet Publications Delhi (1998), p118. [93] N. THANULINGOM, “RESEARCH METHODOLOGY”, By Himalaya Publishing House Mumbai, (2000), p91. [94] Goode W. and Hatt P.K., “Methods of Social Research” , Tata McGraw Hill, Tokyo Japan, 1952, P133.
---------