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  1. 1. Introduction: A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers that have capital deficits to customers with capital surpluses.[citation needed] Due to their critical status within the financial system and the economy[citation needed] generally, banks are highly regulated in most countries. Most banks operate under a system known as fractional reserve banking where they hold only a small reserve of the funds deposited and lend out the rest for profit. They are generally subject to minimum capital requirements which are based on an international set of capital standards, known as the Basel Accords. The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.[1] History Banking in the modern sense of the word can be traced to medieval and early Renaissance Italy, to the rich cities in the north like Florence, Venice and Genoa. TheBardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe.[2] One of the most famous Italian banks was the Medici Bank, set up by Giovanni di Bicci de' Medici in 1397.[3] The earliest known state deposit bank, Banco di San Giorgio (Bank of St. George), was founded in 1407 at Genoa, Italy.[4] Origin of the word The word bank was borrowed in Middle English from Middle French banque, from Old Italian banca, from Old High German banc, bank "bench, counter". Benches were used as desks or exchange counters during the Renaissance by Florentine bankers, who used to make their transactions atop desks covered by green tablecloths.[5] One of the oldest items found showing money-changing activity is a silver Greek drachm coin from ancient Hellenic colony Trapezus on the Black Sea, modernTrabzon, c. 350–325 BC, presented in the British Museum in London. The coin shows a banker's table (trapeza) laden with coins, a pun on the name of the city. In fact, even today in Modern Greek the word Trapeza (Τράπεζα) means both a table and a bank. Another possible origin of the word is from the Sanskrit words ( ) 'byaya' (expense) and 'onka' (calculation) = byaya-onka. This word still survives in Bangla, which is one of Sanskrit's child languages. + = . Such expense calculations were the biggest part of mathmetical treatises written by Indian mathmeticians as early as 500 B.C. Definition The definition of a bank varies from country to country. See the relevant country page (below) for more information. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:[6]  conducting current accounts for his customers,  paying cheques drawn on him, and  collecting cheques for his customers. In most common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques does not depend on how the bank is organized or regulated. The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions:  "banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).  "banking business" means the business of either or both of the following: 1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period; 2. paying or collecting checks drawn by or paid in by customers.[7] Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has led legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect checks Economic functions
  2. 2. The economic functions of banks include: 1. Issue of money, in the form of banknotes and current accounts subject to check or payment at the customer's order. These claims on banks can act as money because they are negotiable or repayable on demand, and hence valued at par. They are effectively transferable by mere delivery, in the case of banknotes, or by drawing a check that the payee may bank or cash. 2. Netting and settlement of payments – banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economize on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement between them. 3. Credit intermediation – banks borrow and lend back-to-back on their own account as middle men. 4. Credit quality improvement – banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position. 5. Maturity transformation – banks borrow more on demand debt and short term debt, but provide more long term loans. In other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemption of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted to cash if needed, and raising replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets). 6. Money creation – whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of virtual money is created. BANKING TECHNOLOGY: Today banking is known as innovative banking. Information technology has given rise to new innovations in the product designing and their delivery in the banking and finance industries, customer services and customer satisfaction are their prime work. One of the most significant areas where IT has had a positive impact so on substitutes for traditional funds movement services. With the advent of electronic banking electronic funds transfer and other Similar products funds transfer within time frames which would have appeared impossible a few years age. With networking and inter connection new challenges are arising related to security privacy and confidentiality to transactions. Finally the banking sector will need to master a new business model by building management and customer services with a variety of products and controlled cost to stay in the long run. The traditional functions of banking are limited to accept deposits and to give loans and advances. Today banking is known as innovative banking. Information technology has given rise to new innovations in the product designing and their delivery in the banking and finance industries, customer services and customer satisfaction are their prime work. Current banking sector has come up with a lot of initiatives that oriented to providing a better customer services with the help of new technologies. Banking sector mirrors the larger economy its linkages to all sectors make it proxy for what is happening in the economy as a whole. Indian banking sector today has the same sense of excitement and opportunity that is evidence in the Indian Economy. The going developments in the global markets offers so many opportunities to the banking sector. In the competitive banking word improvement day by day in customer services is the most useful tool for their better growth. Bank offers so many changes to access their banking and other services. Banks plays an important role in the economic development of developing countries. Economic development involves investment in various sectors of the economy. The banks collects savings for investment in various projects. In normal banking the banks perform agency services for their customers and helps economic development of the country. The purchase and sales securities, shares, make payments, receive subscription funds and collect utility bills for the Government department. There for banks save time and energy of busy peoples. Bank arranges foreign exchange for the business transactions with other countries. Banking sector are not simply collecting funds but also serve as a guide to the customer about the investment of their money. Technology has brought about a complete paradigm shift in the functioning of banks and delivery of banking services. Gone are the days when every banking transaction required a visit to the bank branch. Today, most of the transactions can be done from the comforts of one’s home and customers need not visit the bank branch for anything. Technology is no longer an enabler, but a business driver. The growth of the internet, mobiles and communication technology has added a different dimension to banking. The information technology (IT) available today is being leveraged in customer acquisitions, driving automation and process efficiency, delivering ease and efficiency to customers. The increased penetration and impact on the scale of business can be judged from metrics such as deposit and credit per account, which according to the RBI data was INR6, 412 and INR20, 757 in 1992 and INR19, 898 and INR84, 618 in 2000 — these metrics increased to INR59, 217 and INR258, 751 in 2009, respectively, approximately thrice the levels in 2000 and 10 times the levels in 1992. Many of the IT initiatives of banks started in the late 1990s or early 2000 with an emphasis on the adoption of core banking solutions (CBS), automation of branches and centralization of operations in the CBS. Over the last decade, most of the banks completed the transformation to technology-driven organizations. Moving from a manual, scale-constrained environment to a global presence with automated systems and processes, it is difficult to envisage the adverse scenario the sector was in the era before the reforms, when a simple deposit or withdrawal of cash would require a day. ATMs, mobile banking and online bill payments facilities to vendors and utility service providers have almost obviated the need for customers to visit a branch. Branches are also transforming from operating as transaction processing points into relationship management hubs. The change has been very
  3. 3. productive for banks bringing in an increase in productivity and operational efficiency to be more competitive. Better risk management due to centralization of information and real time availability of critical data for decision making. With most of the banks being technology-enabled, the focus is shifting to computerizing regional rural banks (RRBs). In addition, banks are moving toward decision making and business intelligence software and trying to optimize the IT infrastructure created. Technology by changing the production techniques results in improvement in productivity. History has shown that modern economic growth has been inspired by the rapid and persistent upgradation of technology and scientific knowledge. It is estimated that one-third to one-half of the growth experienced by the industrially advanced countries has come from technological progress. Thus technology has emerged as the principal driving force for long term economic growth. Economic growth results both from slow and steady improvements in technology as well as from “break through” innovations. Break through innovations are, however, unpredictable and such innovations when they come up change the direction of the entire industrial structure. Technological innovations of a fundamental nature started two centuries ago. They began with the revolution in the textile sector. We are now in the fifth or the sixth wave of innovations and the current technological innovations have ushered in the electronic age. Far reaching changes in computers and communications technology have altered our way of life. It is this change which has also fundamentally altered the way in which banking is being performed. The basic functions of banking have remained the same but the way in which banking services are provided has altered. 4 India is somewhat of a late comer to the technology revolution in banking. The process of computerization of the banking industry in India started in the mid-1980s. It had a difficult beginning. Unfortunately, the trade unions were opposed to it. They did not at that stage fully grasp the potential of technology. In those early days, we had to cripple the memory of computers and even called them as ‘advanced ledger posting machines’. Fortunately, there has been a significant change in attitude and the Indian banking industry is well on the road to using the full potential of computers and communications technology. Development of banking technology: First, it started off with computerization of a few key functions and departments in principal branches through adoption of what I called earlier, advanced ledger posting machines. These systems were designed to take care of the accounts related functions of the banks which were at the heart of banking operations and which had assumed great significance in terms of the need for accuracy and control. 6 Second, the next progress was towards branch automation. This enabled setting up of “Single Window
  4. 4. Service” facilities which were focused on the customers. Third, there was the emergence of network based operations which were aimed at providing interbank connectivity. Fourth, an important stage in the evolution of the user friendly technology arrived with the deployment of ATMs and the adoption of Core Banking Solution which radically 7 transformed the way banking was done in India both by bankers and customers. Fifth, with the setting up of IDRBT, three most important technology infrastructures were created and these were INFINIT in 1999, the implementation of PKI based electronic data transfer and the Structured Financial Messaging System (SFMS) which facilitated the development of secured payment system practice in India. Sixth, a slew of innovations in newer delivery channels like internet banking, mobile banking and pre-paid cards 8 issued by non-banking entities emerged. India also became a member of the Basle Committee of Payment Settlement systems. The introduction of these various technology products has had a beneficial impact on both banks and customers. For the customers, the important benefits are Anywhere banking, Internet banking, ATM banking and Mobile banking. It has also facilitated the use of secured debit and credit cards. For the banks, the major benefits are centralization of customer information, centralized transaction process, 9 centralized accounting process, basic MIS reporting and realtime
  5. 5. information availability. The intermediation cost of the scheduled commercial banks has come down significantly from 2.59 per cent in 1991- 92 to 1.71 per cent in 2010-11. The cost-income ratio has declined from 55.3 per cent in 1999-2000 to 45.21 per cent in 2010-11. The business per employee as well as the business per branch have increased several fold. Among the several factors which have contributed to these changes, technology ranks high. 10 IT has had a positive impact on the payment and settlement systems of the country. With some path- breaking initiatives having been implemented in this area, the “electronification” of payment system has become the hall mark of the decade that has goneby. Electronics based payments are superior to paper system in terms of traceability, efficiency, speed and safety. The introduction of the Real Time Gross Settlement (RTGS) system has resulted in not only compliance with international standards but also paved the way for risk-free fund transfers settled on a real time basis. The facility for inter-bank funds settlement through RTGS is today available across more than 88,000 11 branches of banks spanning more than 5,000 centres of the country, a coverage that has been perhaps not witnessed anywhere else in the world. In this context, I must point to the significant contributions made by IDRBT to promoting the
  6. 6. electronic payment system in our country. As already noted, at the heart of IT enabled banking is the existence of a safe, reliable and effective communication network and messaging system. In India, such a backbone is being provided by IDRBT through Indian Financial Network-INFINIT-“a one-of- itskind” initiative for the banking sector. This network, as mentioned earlier, was set up in 1999. It has now incorporated low cost yet reliable technologies in the form of 12 Multi-Pocket-Label Switch” (MPLS) technology in an effort to offer state-of-the-art network. Safety and security are still challenging problems in this context and I am quite sure that the faculty members of IDRBT will continue to focus on these issues. I must also refer here to the setting up of the National Financial Switch (NFS) for interconnecting ATMS by IDRBT. The system which is based on indigenous effort was well received and the Reserve Bank has decided to spin it off from IDRBT and hand it over to the National Payments Corporation of India (NPCI) which is continuing to maintain it on the basis of the benchmarks set up by IDRBT. Despite the progress in electronic payment system, the paper based instruments are 13 still in vogue, although the total value of the paper based
  7. 7. clearing has been steadily declining, 59 per cent in volume of transactions and 10 per cent in value terms. This shows the progress which we have to make still. All of us recognize that Indian banks joined the technology bandwagon rather late in comparison with other major countries. This has, however, been beneficial in one sense, since Indian banks have been able to leap-frog to latest versions of technology. Today one can look back with satisfaction at some of the innovative technology based products and services which banks offer. Techno-banking 14 has thus come to stay. 1. FASTER REMITTANCE FACILITIES Electronic Fund Transfer (EFT) has accelerated the movement of funds across the world.E- cash knows as cyber cash plays a predominant role in business world. SWIFT (Society for World Wide Interbank Financial Telecommunication) is a classic example of EFT. The reasonsfor the success of an EFT system are speed, reliability, security and accuracy. It is an efficientmode of fund transfer across various banks. It significantly reduces the number of outstationcheques issued by customers. Consequently service load on bank could be reduced over a periodof time. Further this technique makes reconciliation automatic. 2. AUTOMATIC TELLER MACHINES ATM called electronic equipment allows card holdings customers to perform routine banking transactions without interacting with a human teller. It offers a range of services of modern banking namely deposit taking, cash withdrawal, and account balance verification etcwith the help of Personal Identification Number (PIN) system. It offers round the clock bankingservices to customers. It is safe with an electro-mechanical input and output system which isitself controlled by a fully electronic user interface. It prevents an unauthorized user of the cardfrom gaining access to the machine’s functions. 3. TELEPHONE BANKING Of late, this product introduced initially by a few foreign banks has started attracting thefancy of the urban customer for the sheer convenience of the facility. Any branch of acommercial bank which has computerized its operations should be able to offer this facility to itscustomers with the help of suitable software for this purpose. Digitization of voice has enabledthe introduction of this technological marvel. Elsewhere, organizations such as Airline, IndianRailways etc have already implemented voice response system based on this tech nology.Facilities offered through telephone banking can include a range of services such as balanceenquiries, enquiries about collections or specific credits / debits, transfer of funds, request for statements of account or account opening forms etc. telephone banking
  8. 8. services by the foreign banks include a wide spectrum of services such as opening accounts, ordering for demand draftsetc. such services, however, would include a suitable levy towards service change. Telephone 3 banking is appealing to the urban customers who faces several constrains in day-to-day livingsuch as transport bottlenecks, traffic jams, non-availability of time to visit the branch, etc. 4. HOME BANKING This is an extended and versatile version of telephone banking. The customer is able toaccess his branch for availing a variety of services through home banking. This facility is madeavailable through the customer’s personal computer attached to a telephone line and modem.Online banking facilities including normal transactions can be handled through this arrangement.Corporate customers can avail benefits through PC terminal and handle their documentary creditrelated transaction through this arrangement. The application software used this facility shouldincorporate security features such as encryption to protect the data over telephone lines. 5. CREDIT CARD FACILITY All major banks have introduced the credit card facility with a tie-up arrangement withVisa or Master card. The tie-up is needed to facilitate usage of the credit card at a large number of establishments. The business credit card is handled by banks through a separate strategic business unit for better focus. Branches serve as marketing outlets. They act as collection agentfor credit card dues of the customer.As this is a high volume, low value business with potential to breakeven only beyondcertain volume of credit card issued, dependence on technology is inevitable to keep the costs tothe minimum. All services such as the issue of credit cards, the processing of transactions, issueof statements, calculation and levy of overdue interest, service charges etc are totally automated.The regional offices of the credit card unit located at metros and major centers provide on-linevalidation of merchant transactions. This is helpful in preventing fraudulent transactions. Acombination of Smart Card technology computers and communication has enabled this kind of on-line validation possible. 6. PERSONAL LOANS Loans such as housing loans, car loans etc are offered by private banks to prospectivecustomers for their personal use. Application packages for handling these products are available.Since the accounting part is totally automated, more attention can be paid on services and 4 marketing. Some banks provide the required focus on this segment of business through their branches set up for this purpose only. 7. INTERNET BANKING The commercial transaction through internet has increased due to widespread popularityand cost effectiveness. Banks worldwide have launches their banking sites on the Internet WorldWide Web (WWW). The main attraction of internet is the cost effectiveness. Ba nkingtransactions connected through internet has 24 hour availability. Banks can offer their marketservice from any part of the globe at a fractional of the cost compared to traditional marketingchannels. The Internet banking services adds more value to NRI’s who can view their balanceonline and also effect funds transfer just at the click of a mouse. Moreover, Internet banking hasno time zones. It is accessible round the clock without restricting it to any geographi cal boundary. Computerization in Banks:
  9. 9. Technology has charged the face of the Indian banking sector through computation while new private sector banks and foreign banks have an edge in this regard. Among the total number of public sector bank branches, 97.8 percent are fully computerized at end – March 2010 whereas all branches of SBI are fully computerized. Automated clearing House (ACH): In clearing house, computers are employed to handle cheques. The nature of work involved in clearing operations in voluminous, repetitive, routine in nature. It is complex to clear, exchange and settle the transactions among several banks. Computers are deployed in clearing house to speed up the process and clearing the operations quickly and efficiently which is voluminous work. Automated clearing house (ACH) is an electronic network for financial transaction. ACH processes large number of debit and credit transaction in batches. National Automated clearing house Association (NACHA): It helps to debit transfers for point-of-purchase (POP) check conversion. Both government and the commercial sectors use ACH payment. Business are also increasing using ACH to collect payment online from customers, rather than accepting credit or debit cards. Rules and regulations governing the ACH network are established by NACHAand Federal Reserve. The Federal Reserve banks are collectively the nation's largest automated clearing house operator. FEDACH is the Federal Reserve's centralized application software used to process ACH transactions. Electronic Clearing Services (ECS): ECS is a mode of electronic funds transfer from one bank account to another bank account using the services of a clearing house. This is used for bulk transfers from one account to many accounts or vice-versa. Types of ECS:- There are two types of ECS called ECS (credit) and ECS (debit). 1. ECS (credit)- is used for affording credit to a large number of beneficiaries by raising a single debit to an account, such as dividend, interest, salary payment pension etc. 2. ECS (Debit)- is used for raising debits to a number of account of consumers/account holders for crediting a particular institution e.g. payment to utility companies liketelephone, electricity or charges such as house tax, water tax etc. [6][7][8][9][10] National Electronic fund Transfer (NEFT): National Electronic Fund Transfer (NEFT) is an online system for transferring funds of Indian Financial Institution (especially loans). This facility is used mainly to transfer funds below Rs. 2,00,000/- The NEFT system in India lives
  10. 10. with effect from 21 November 2005. NEFT was sent to cover all banks which were participating in the special electronic funds transfer (NEFT) clearing. NEFT was made on the structured financial messaging solution (SFMS) platform. Public key infrastructure (PKI) technique used in NEFT for maintaining security. Electronic Funds Transfer (EFT): Electronic Funds Transfer (EFT) is the electronic exchange or transfer of money from one account to another. The exchange takes place between a single financial or across multiple institutions, through computer based systems. RBI introduced EFT to help banks offering their customers money transfer service from account to account of any bank branch to any other bank branch. The EFT system presently covers all the branches of the 27 public sector banks and 55 scheduled commercial banks at the 15 centers viz:- Ahmadabad, Bangalore, Bhubaneswar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Japura, Kanpur, Mumbai, Nagpur, new Delhi, Patna, and Thriuvananthpuram. Cards Transaction: Debit card is a plastic card which provides an alternative payment method for cash when making transaction. Using debit card cardholder can see balance available on account. Debit card is mainly used for cash withdraw from ATM, at point of sale (POS), also on the internet for online purchase, funds transfer, paying bills, accessing detail account information, charging PIN etc. Bank provides debit card free of cost at the time of opening account. From 1st Jan 2011, RBI declared that for every transaction with debit card on ATM user has to enter password for every transaction. This is done for security purpose. Core Banking: Presently, a technological development is closely related to computerization in banks branches for adoption of the core banking solution (CBS). An important development in the percentage of branches of public sector banks implementing CBS. The percentages of such branches increased by 79.4 % at end March 2009 to 90% at the end of March-2010. Automated TellerMachine (ATM): Even through ATM originally developed for cash dispenses, now it includes many other bank related functions such asCash withdraw, Paying routing bills fees and taxes., Printing bank statement., Funds transfer., Purchasing online products, Train tickets reservations, Products from shopping mall, Donating to charities, Claque processing module, Adding pre-paid cell phone/mobile phone credit, Advertising channels for own or third party products and services, Pay premium. ATMs installed In the country at end-March 2009, new private sector banks had the largest share in off-site ATMs,
  11. 11. while nationalised banks has the largest share in on-site ATMs. The use of electronic payment has witnessed manifold increase, partly reflecting increased adoption of technology. The growth of volume of ATMs indicates that customer most prefer ATMs for transactions. ATMs provide different kinds of services per customer. The volume of ECS credit and more significantly ECS debit continued to show an increasing trend during 2008-09 in line with the trend witnessed during past few years. Magnetic Ink Character Recognition (MICR): In India, MICR introduced in 1987 in the four metros cities. The MICR clearing is now in operation in 14 centers viz- Hyderabad, Bangalore, Ahmadabad, Kanpur, Japura, Nagpur, Baroda, Pune, Gauhati, Trivandrum. It is proposed to be extended to a total 22 centers were volume of clearing transactions in large. Recently the paper-based system still continue to dominated in terms of volume, and therefore are categorized as system wide important payment system(SWIPS), its share has; Table 2: ECS transaction in Rs. Crores Item 2005-06 2006-07 2007-08 2008-09 2009-10 ECS Credit 32,324 83,277 7,82,222 97,487 1,17,833 ECS Debit 12,986 25,441 48,937 66,976 69,819 Source: RBI, Annual Report 2009-10 Table 3: EFT/NEFT Transactions in Rs. Crores Item 2005-06 2006-07 2007-08 2008-09 2009-10 EFT / NEFT 61,288 77,446 1,40,326 2,51,956 4,11,088 Source: RBI, Annual Report 2009-10 Table 4: Card based payment Transaction Value (Rupees Crores) Item 2005- 06 2006- 07 2007- 08 2008- 09 2009-10 Credit Cards 33,886 41,361 57,985 65,356 62,950 Debit Cards 5,897 8,172 12,521 18,547 26,566 Source: RBI, Annual Report 2009-10 Table 5: Branches under Core Banking (in %) Name of the Bank Branches under core banking solutions Public Sector Banks 90% Nationalised Banks 85.9% State Bank Group 100 Source: Report on Trend and Progress of Banking in India 2009-10, P-55 Table 6: Growth in ATM Installation (2005 To 2009) Year Number of ATMs 2005 -06 21110 2006-07 25247 2007-08 34547 2008-09 43651 Source: Cyber Media DQ Estimates Research Graph1: Report on Trend and Progress of Banking in India 2008-09 0 10000 20000
  12. 12. 30000 40000 50000 2005 -06 2006-07 2007-08 2008-09 Number of ATMs Installed Number of ATMs N o . o f A T M s Table7: Branches and ATMs of Scheduled Commercial Banks Bank Group Rural Semi-Urban Urban Metro-Politian Total On-site Off-site Total Nationalised 13,381 8,669 8,951 8,375 39,376 10,233 5,705 15,938 State Banks 5,560 4,835 3,043 2,624 16,062 7,146 4,193 11,339 Old Private Banks 842 1,554 1,344 933 4,673 1,830 844 2,674 New Private Banks 271 1,084 1,371 1,478 4,204 5,166 7,480 12,646 Foreign Banks 4 4 52 233 293 270 784 1,054 Total 20,058 16,146 14,761 13,643 64,608 24,624 19,006 43,651 Source: Report on Trend and Progress of Banking in India 2008-09 Graph2: Showing Number of ATMs per Banks 0 2000 4000 6000 8000 10000 12000 On-site Off-site Number of ATMs Bank wise Technological Developments in Indian Banking SectorVol.1,Issue.IX/Sept; 11 Indian Streams Research Journal 3 however, been declining both in volume and value terms in recent years. Speed clearing, introduced in 2008, operating on the core banking infrastructure of banks has now been mode available as a part of MICR. Dearing at all the 66 MICR cheque processing centers(CPCS). Real time gross settlement (RTGS): Real time means payment transaction is not subjected to any waiting period. In RTGS the transaction are settled as they are processed. Gross settlement means the transaction is settled on one to one basis without bunching or netting with any other transaction. “RTGS is funds transfer system where transfer of money or securities takes place from one bank to another on a “real
  13. 13. time” and on “gross basis”. Once processed, payment are final and irrevocable. INFINET: For working of e-banking, it requires various components like- communication channels, servers, connecting networks etc. Reserve Bank of India (RBI) having prime control on ebanking services. RBI monitor, control of e-banking by establishing and connecting various service providers in India. Following are the service some of providers- INFINET stands for Indian Financial Network. There is a satellite based wide area network using VSAT (Very Small Aperture Terminal) technology set up by the RBI in June 1999. The hub and the Network Management System of the INFINET are located in the Institute for Development and Research in Banking Technology, (IDRBT) Hyderabad (an institute set up by the RBI). Services provided by INFINET: Among the major applications identified for porting on the INFINET in the initial phase are e-mail, Electronic Clearing Service - Credit and Debit, Electronic Funds Transfer and transmission of Inter-city Cheque Realisation advices. Later, other payment system related applications as well as Management Information System (MIS) applications are proposed to be operationalised.[31] BANKNET: BANKNET is a internet based communication network. It provides speed of financial transaction. BANKNETis set up in 1991 by the RBI, this backbone is meant to facilitate transfer of inter-bank (and inter-branch) messages within India by Public Sector banks who are members of this network. [31] Service Centers - At present, service centers are viz. Mumbai, Delhi, Calcutta, Madras, Nagpur, Bangalore , Pune, Ahmedabad, Kanpur, Lucknow, Chandigarh, Kochi, Jaipur, Bhopal, Patna, Bhubaneshwar, Thiruvananthapuram, Guwahati, Panaji Jammu. Society forWorldwide Inter-bank Financial Telecommunication (S.W.I.F.T): The S.W.I.F.T provides reliable and expeditious telecommunication facilities for exchange of financial message all over the world. The gateway is in Mumbai and efforts are on to other cities through leased lines/public data network. The majority of international interbank messages use the SWIFTnetwork. As of September Institute for Development and Research in Banking Technology (IDRBT): The main purpose of IDRBT is to adopt research and development as well as consultancy in the application of technology to the banking and financial sector in the country. Reserve Bank of India (RBI) established IDRBTin 1996. Structured Financial Messaging Solution (SFMS):
  14. 14. Structured Financial Messaging Solution (SFMS) is helpful for inter-bank and intra-bank messaging. This messaging is useful for applications like Electronic Funds Transfer (EFT), Real Time Gross Settlement (RTGS), Delivery verses Payment (DVP), Centralised Funds Management System (CFMS). The SFMS was launched in India on December 14, 2001 by RBI. National Payment Corporation of India (NPCI) : NPCI consolidate and integrate the multiple systems with varying service levels to nation-wide uniform and standard business process for all retail payment systems. Also it helps to facilitate an affordable payment mechanism to benefit the common man across the country and help financial inclusion. Mobile Banking: Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for performing balance checks, account transactions, payments, credit applications etc. via a mobile device such as a or Personal Digital Assistant (PDA). Dmat Card: The demat account has to be treated virtually like a account with the difference being that instead of actual cash there are shares in the account. A beneficiary account is an account opened by the investors or broker with a Depository Participants (DP) of his choice, to hold shares in detmaterialised (demat) form and undertake scripless trading. The investors must open a demat account with a DP. Opening a demat account Conclusion: Use of technology in expanding banking is one of the key focus areas of banks. The banks in India are using Information Technology (IT) not only to improve their own internal processes but also to increase facilities and services to their customers. Efficient use of technology has facilitated accurate and timely management of the increased transaction volume of banks of that comes with larger customer base. By designing and offering simple, safe and secure technology, banks reach at doorstep of customer with delight customer satisfaction..........