E-Banking

E-banking – transforming Banking sector

Mrs. Binny Pahwa

Deptt of  Commerce

 

E-banking has the potential to revolutionise access to financial services. The potential of e-banking to significantly extend the reach of financial institutions into rural areas and urban areas, without investing in “bricks and mortar” branches, is widely acknowledged. In India. Reserve Bank in its Vision statement has set the objective to proactively promote electronic payments with an objective towards less cash society. The formation of National Payments Corporation (NPCI) in the year 2009 has set the stage for the development of retail electronic payments which offers enormous opportunity to move towards cashless and less

Cash society.

 

Meaning of e banking

E-banking allows customers of financial institutions to carry financial transactions on a secure website.

To access a financial institution's online banking facility, a customer must be registered user of the institution and must have password for customer authentication. The password for online banking is normally not the same as for m-banking. A customer can access his/her account any time he wants over e-banking. E-banking has given birth to 24*7 banking, which earlier was just restricted to banking hours.

To access online banking, the customer would go to the financial institution's website, and enter an online banking facility using the user id and password. Some financial institutions have set up additional security steps for access, but there is no uniformity to the approach adopted.

 

Current Scenario of E-Banking

 In India, Internet Banking has become an integral part of banking system in India. The concept of e-banking is of fairly recent origin in India. Till the early 90’s traditional model of banking i.e. branch based banking was prevalent, but after that non-branch banking services were started. The Indian government enacted the IT Act, 2000, with effect from the 17th October 2000. To examine different aspects of Internet banking RBI set up a committee on Internet Banking. The committee had focused on three major areas of Internet banking, Technology and security issues, legal issues and regulatory and supervisory issues. RBI had accepted the suggestions and recommendations of the working committee and accordingly issued guidelines to banks to implement internet banking in India. The old manual systems which were prevalent in Indian banking for centuries seem to replace by modern technologies.. Indian banks are making sincere efforts for the adoption of advanced technology and installation of e-delivery channels but still the concept and scope of E-banking is still evolving. It facilitates an effective payment and accounting system thereby enhancing the speed of delivery of banking services considerably. While E-banking has improved efficiency and convenience, it has also posed several challenges to the regulators and supervisors. Several initiatives taken by the government of India, as well as the Reserve Bank of India (RBI), have facilitated the development of E-banking in India. The RBI has been preparing to upgrade itself as a regulator and supervisor of the technologically dominated financial system. It issued guidelines on risks and control in computer and telecommunication system to all banks, advising them to evaluate the risks inherent in the systems and put in place adequate control mechanisms to address these risks.

Indian Government is aggressively promoting digital transactions. The launch of United Payments Interface (UPI) and Bharat Interface for Money (BHIM) by National Payments Corporation of India (NPCI) are significant steps for innovation in the Payment Systems domain. UPI is a mobile interface where people can make instant funds transfer between accounts in different banks on the basis of virtual address without mentioning the bank account. 

Today banks aim to provide fast, accurate and quality banking experience to their customers. Today, the topmost agenda for all the banks in India is digitization. According to the RBI Report in 2016-17 there are 2,22,475 Automated Teller Machines (ATMs) and 25,29,141 Point of Sale devices (POS).  Implementation of electronic payment system such as NEFT (National Electronic Fund Transfer), ECS (Electronic Clearing Service), RTGS (Real Time Gross Settlement), Cheque Truncation System, Mobile banking system, Debit cards, Credit Cards, Prepaid cards have all gained wide acceptance in Indian banks. These are all remarkable landmarks in the digital revolution in the banking sector. Online banking has changed the face of banking and brought about a noteworthy transformation in the banking operations.

National Electronic Funds Transfer (NEFT) is the most commonly used electronic payment method for transferring money from any bank branch to another bank in India. It operates in half hourly batches. At present there are 23settlements. 

Real Time Gross Settlement (RTGS) is primarily used for high-value transactions which are based on 'real time'. The minimum amount to be remitted through RTGS is Rupees Two Lakhs. There is no upper limit. 

Immediate Payment Service (IMPS) is an instant electronic funds transfer facility offered by National Payments Corporation of India (NPCI) which is available24x7. 

The usage of prepaid payment instruments (PPIs) for purchase of goods & services and funds transfers has increased considerably in recent years. The value of transactions through PPI Cards (which include mobile prepaid instruments, gift cards, foreign travel cards & corporate cards) & mobile wallets have jumped drastically from Rs.105 billion and Rs. 82 billion respectively in 2014-15 to Rs. 277 billion and Rs. 532 billion respectively in 2016-17.  Many private banks are planning to deploy Robots for customer service, investment advisory and credit-approval process to improve the services and be cost effective in the long run. Digital Banking will be the most preferred form of banking in the coming years.

 

 

                        

 

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