The document discusses financial sector reforms and e-banking in India. It outlines the development of payment systems and their importance to modern financial systems. E-banking enables strategic benefits like enhancing knowledge, improving customer service, strengthening governance, and ensuring efficiency. Information technology plays a key role in the banking sector by providing information and infrastructure. Key aspects of IT in banking include balancing costs, control, and customer service. Emerging payment systems in India range from basic checks and drafts to sophisticated electronic funds transfers in real-time. Popular e-banking products discussed are NEFT, RTGS, ATMs, mobile banking, and electronic clearing services. Adoption of e-banking brings overall benefits but India still has progress

1. FINANCIAL SECTOR REFORMS AND E-BANKING
INTRODUCTION
Payment System today is a priority in the transformation of economies,developing banking system
and emerging money markets.The development of payment systemhas significant implication for the
accounting and legal framework.Building up safe and efficient payment systemis therefore,critical to the
effective functioning of any modern financial system.E-banking in the banking sectorhas an overall reflecting
the words in the quotation:
“Enabling E-Banking as a strategic resource for
Enhancing Enterprise knowledge
Improving customer service
Strenthening Governance
Increasing overall efficiency and
Ensuring Environment friendly system”
Information Technology (IT) in Financial Sector:
The Reserve Bank of India (RBI) has successfully navigated the financial sectorto
the safe shores based on information availabilityjudgement Technology infrastructure played a key role in
information in the fast evolving macro space.In this background ,the role of IT in banking sectorneeds to be
focus on:
 Introducing technologies that balance 3Cs – Cost ,Control and Customer Service
 Adoption of technology based strategies for financial inclusion
 Usage of analytics for improvement of Customer Relationship Management (CRM), Risk
Management and Fraud Detection/prevention
E-Payment System:
In India ,we have multiple payment systems (like cheques,drafts,etc)to sophisticated
electronic fund transfer systemthat offer real time settlement
Banking
scenario
ssc
Electronic fund
transfer Electronic
payment
Cardbased(debit/c
redit/smart)
Internet
banking
Real Time Gross
Settlement
E-Banking

2. Latest products of E-Payment
1. Electronic Fund Transfer System:
Basically,Fund transfer from account can take place in three ways:
 It can be a single account (Cheque.Demand Draft etc…)
 It can be from a single account to many accounts
 It can be from many accounts to a single account,foreg, all utility payments
2. Internet Banking:
The latest wave on E-babking is internet banking.It is becoming more obvious that the internet
has unleashed a revolution that is impacting every sphere of life.
Electronic Clearing Service(ECS):
ECS was introduced in 1994 to meet the requirement of cost effective systemwhich
would serve as an alternate method of effecting bulk,lowvalue,recurring payment transactions.
(a)Electronic Credit System
Under this systemcredit ensures multiple repetitive credits to the accounts of constituents
of banks situated at various branchea of banks on the basis of a single debit to the account of a
customer.For example,salary payments,dividend payments and Income Tax refund etc.
(b)Electronic Debit System:
Debit ensures multiple repetitive debits to the accounts of banks,situated at various
branches of banks.For example BSNL,LIC,MTNL,electricity board bills,credit card payments,EMI
payments etc.
National Electronic Fund Transfer(NEFT):
NEFT was introduces in November 2005 as a retail electronicfunds transfer
mechanism.It facilitates paper less interbank and intrabankfund transfers,both inter and intra city.There are
eleven hourly settlements a day from 0900 to 1700 hours on week days and 0900 to 1300 hours on Saturdays
Real Time Gross Settlement(RTGS):
RTGS was introduced in India in 2004,to facilitate predominantly the settlement of inter-bank
payments on a “real time”and “gross” basis so as to reduce the incidence of risks in the payment system.The
minimum amount is quite high for ordinary people to use the system to transfer money.In RTGS there is no
maximum celing for funds transfer but subject to a minimum of RS.1 lakh per transaction.
Automated Teller Machines(ATM):
ATM is the new gamut technology for the benefit of the customer.It enabled customer to use
bank at their own convenience for withdrawing cash.Now the whole array of services is offered through
ATM’s.Another interesting fact is,in case of ATM transactions,where the customer’s account was
debited,though cash was not dispensed,RBI has advised banks to reimburse the customers within a maximum
period of 12 days from the date of receipt of customer complaints.
Mobile Banking:
The Reserve Bank has been encouraging the usage of mobile banking as this is one of the
avenues for giving thrust to financial inclusion.Mobile banking is a banking led model and not a mobile service
provider led model unlike in some countries.RBI has so far permitted seven banks to operate Instant Mobile
Payment Service.

3. CONCLUSION
Adoption of electronic banking no doubt brings about all round benefit to all participants and is
a boon to economy itself.As of now,value wise about 90 percent of our transaction are done electronically,but
volume wise it is only 40 percent indicating that we still have a long way to go.Ultimately ,issuing/accepting
cheques will done away with by 2018.
REFERENCE
 www.thebanker.com
 www.banknetindia.com
 www.iib.org.in
 Financial sector reforms and the banking industry in India :Dr.K.Sasikumar
&
Dr.Gabriel Simon Thattil