The banking sector in India has undergone rapid transformation in recent decades. With the entry of private players and new technologies like ATMs, internet banking, and mobile banking, consumers now have many convenient options beyond traditional branch banking. Looking ahead, the Reserve Bank of India plans to introduce new payment systems like a domestic debit/credit card network and a real-time 24/7 funds transfer system to modernize banking infrastructure and increase financial inclusion. Future banking is expected to be defined by greater technological innovation and the development of India's own domestic payment systems.
1. New Face of Banking Sector 1 http://embaitm.blogspot.com
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5. For the first time consumers got the choice of conducting transactions either the traditional way (through the bank branch), through ATMs, the telephone or through the internet. Technology played a key role in providing this multi-service platform.
6. The entry of private players combined with new RBI guidelines forced nationalized banks to redefine their core banking strategy. And technology was central to this change.3 http://embaitm.blogspot.com
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8. But despite the benefits offered by other technologies in terms of lower costs or better reach, it looks like branch banking is very much here to stay.
9. Traditional banking is great because you can develop relationships with your bank representatives. This is helpful when you’re borrowing money, looking for sound advice or just like to know the people who are managing your money.
10. Traditional banking also offers the convenience of easy deposits and withdrawals. You know that your deposit will be in your account the same day or the next day. And you can withdraw money during regular banking hours.
11. The downside to traditional banks is that you have to stick to their business hours, which aren’t always convenient. You cannot access your bank account when you’re out of town, and every time you need to process a transaction you have to go to the bank.4 http://embaitm.blogspot.com
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13. In the 1990s, the banking sector in India saw greater emphasis being placed on technology and innovation. Banks began to use technology to provide better quality of services at greater speed.
14. Electronic banking systems consist of a service that allows you to conduct transactions without physically being in a bank branch. This includes ATMs, Internet banking, pay-by-phone banking and direct deposit accounts.
15. Internet banking and mobile banking made it convenient for customers to do their banking from geographically diverse places. 5 http://embaitm.blogspot.com
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17. RTGS is an electronic funds transfer system designed to allow the real time settlement of inter bank payments in a fully secure environment.
18. Some of the systems implemented earlier included the electronic clearing service (1995), electronic funds transfer (EFT) facility (1997) and special electronic funds transfer system (2003). 6 http://embaitm.blogspot.com
25. NEFT Process Meaning : National Electronic Funds Transfer (NEFT) system is a nation wide funds transfer system to facilitate transfer of funds from any bank branch to any other bank branch. The National Electronic Funds Transfer (NEFT) system has been successfully handling significant volumes, ever since its launch in November 2005. More than 6 million transactions were processed by the system during the month of January 2010 alone. The coverage has also increased substantially with the participation of over 63,000 bank branches spread across the length and breadth of the country. 11 http://embaitm.blogspot.com
26. NEFT Process Step-1: The remitter fills in the NEFT Application form giving the following particulars of the beneficiary and authorises the branch to remit the specified amount to the beneficiary by raising a debit to the remitter’s account. (This can also be done by using net banking services offered by some of the banks.) Beneficiary's name Beneficiary's bank name Beneficiary's branch name Beneficiary's account type Beneficiary's account No. Beneficiary's Branch IFSC Step-2: The remitting branch prepares a Structured Financial Messaging Solution (SFMS) message and sends it to its Service Centre for NEFT. 12 http://embaitm.blogspot.com
27. NEFT Process Step-3: The Service Centre forwards the same to the local RBI (National Clearing Cell, Mumbai) to be included for the next available settlement. Presently, NEFT is settled in six batches at 0930, 1030, 1200, 1300, 1500 and 1600 hours on weekdays and 0930, 1030 and 1200 hours on Saturdays Step-4: The RBI at the clearing centre sorts the transactions bank-wise and prepares accounting entries of net debit or credit for passing on to the banks participating in the system. Thereafter, bank-wise remittance messages are transmitted to banks. Step-5: The receiving banks process the remittance messages received from RBI and effect the credit to the beneficiaries’ accounts. 13 http://embaitm.blogspot.com
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29. ICICI Bank's iMobile is answer to banking on the move.The next generation iMobile is key to a faster, easier and simplified banking service. Now do Banking and more, all from your mobile phone 14 http://embaitm.blogspot.com
36. Placement of service request such us ordering of cheque books, bank account statements, cheque status and balance enquiry
37. Book movie tickets and recharge your pre-paid mobile15 http://embaitm.blogspot.com
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39. ATM payments (increasing accessibility to the public, Bringing transparency and reasonableness in charges),
40. Rationalisingcharges for electronic payments (NEFT / RTGS) and Collection of outstation cheques, Mobile payments, Pre-paid payment instruments, etc.16 http://embaitm.blogspot.com
44. India Card – Rival to Visa & Master Card17 http://embaitm.blogspot.com
45. Future Banking Implementing a new and feature rich RTGS system : For scaling the existing the RTS facility with latest technologies for more flexibility in operations and better liquidity saving features. 2. India MoneyLine – A 24×7 system for one-to-one funds transfers: The existing NEFT system operates during weekdays from 9 am to 5 pm and on Saturdays from 9 am to 12 noon. With “India MoneyLine”, RBI is considering to extend NEFT to function on a 24×7 basis or to develop a new system akin to the Faster Payments Service in the UK which operates on a 24×7 basis. 3. India Card – A domestic card initiative: RBI is actively looking at introducing a domestic payment card (India Card) and a POS (Point of Sales)switch network for issuance and acceptance of payment cards. The need for such a system arises from two major considerations 18 http://embaitm.blogspot.com
46. Future Banking (a) The high cost borne by the Indian Banks for affiliation with international card associations in the absence of a domestic price setter (b) The connection with international card associations resulting in the need for routing even domestic transactions, which account for more than 90% of the total, through a switch located outside the country The value of credit card transactions were Rs.65,356/- crores in 2008-09, a 100 per cent jump in the last three years. This means almost Rs 60,000 crore was settled outside India through Visa and Mastercard which act as the payment link on behalf of the bank, merchant and card holder. Debit card transactions amounted to Rs 18,547 crore in 2008-09. So, this new initiative by RBI makes high sense and its very timely. The Indian Banks Association is also in favour of setting up a payment card. If everything has to go as planned, then we might see this new RBI card as a major rivalry to the existing Visa and MasterCards. 19 http://embaitm.blogspot.com
47. Future Banking 4. Redesigning ECS (Electronic Clearing Service) to function as a true Automated Clearing House (ACH) for bulk transactions: Currently, Local ECS (to facilitate bulk electronic transactions with one-to-many and many-to-one variants) is operational at 76 centres. Centralisationof this process is already underway. RBI is building a technology and feature-rich ACH network by totally redesigning the existing ECS to provide end-to-end processing in a straight-through manner. 5. Mobile Payments Settlement Network Mobile phones are expected to emerge as an important channel for transmission of payment instructions. Efficient mobile payments would require real time transfer of funds with adequate security. Currently all inter-bank mobile transfers are payment instructions for settling funds through existing payment systems. So, RBI is building a new national infrastructure for facilitating real time mobile payments. 20 http://embaitm.blogspot.com
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49. The future will not be more of the same… Thank you…… … we need to be ready.. 22 http://embaitm.blogspot.com
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