The Growth of E-Banking System in India

Description
Several initiatives have been taken by the Government of India as well as the RBI (Reserve Bank of India); have facilitated the development of e-banking in India. The government of India enacted the IT Act, 2000, which provides legal recognition to electronic transactions and other means of electronic commerce. The RBI has been preparing to upgrade itself as regulator and supervisor of the technologically dominated financial system. It issued guidelines on the risks and controls in computer and telecommunication systems to all banks, advising them to evaluate the risks inherent in the systems and put in place adequate control mechanisms to address these risks.

THE GROWTH OF E-BANKING TECHNOLOGY IN INDIA

INTRODUCTION: The first bank in India, though conservative, was established in 1786, from the till today, the journey of Indian banking system can be classified into three distinct phases: Phase I:Early phase from 1786 to 1969 of Indian banks: The General Bank of India was set up in 1786. Next came the Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units called them Presidency Banks. These three banks were amalgamated in 1920 and the Imperial Bank of India, which started as private shareholders banks established with mostly European Shareholders. The Reserve Bank of India (RBI) wasestablished in 1935.As per the Reserve Bank of India was constituted as on apex bank without major government ownership. To streamline the functioning and activities of commercial banks, the government of India came up with the Banking companies Act 1949, which was later changed to Banking Regulation Act,1949. Phase II:Nationalization of Indian Banks up to 1991 prior to the banking Sector reforms The government took major steps in the Indian Banking Sector Reform after independence. In 1955, it nationalized the Imperial Bank of India (The State Bank India Act) with extensive banking facilities on a large scale, especially in rural and semi-urban areas as the principle agent of RBI and to handle banking transactions of the Union and the State Governments of the Country.
The Government of India has taken the following steps to regulate banking institutions in the country:

1949 1955 1959 1961 1969 1971 1975 1980

: : : : : : : :

Enhancement of the Banking Regulations Act. Nationalization of State Bank of India Nationalization of SBI subsidiaries. Insurance cover extended to deposits Nationalization of 14 major banks. Creation of Credit Guarantee Corporation Creation of regional rural banks. Nationalization of seven more banks with deposits over Rs.200cr

Phase III: The advent of Indian Financial and Banking Sector Reforms after 1991. In 1991, under the chairmanship of Mr.M.Narasimham, committee was set up under his name, which worked for the liberalization of banking practices. The Country is flooded with foreign banks and their ATM stations. Efforts are being put in to give a satisfactory service to customers. Phone banking and net banking have been introduced. The entire system has become more convenient and SWIFT. Today, time is given more importance than money. E- BANKING INDIA: Several initiatives have been taken by the Government of India as well as the RBI (Reserve Bank of India); have facilitated the development of e-banking in India. The government of India enacted the IT Act, 2000, which provides legal recognition to electronic transactions and other means of electronic commerce. The RBI has been preparing to upgrade itself as regulator and supervisor of the technologically dominated financial system. It issued guidelines on the risks and controls in computer and telecommunication systems to all banks, advising them to evaluate the risks inherent in the systems and put in place adequate control mechanisms to address these risks. The story of technology in banking started with the use of punched card machines like Accounting Machines or Ledger Posting Machines. The use of technology, at that time, was limited to keeping books of the bank. It further developed with the birth ofonline real time system and vast improvement in telecommunications during late1970¶s and 1980¶s.it resulted in a revolution in the field of banking with ³conveniencebanking´ as a buzzword. Through Convenience banking, the bank is carried to thedoorstep of the customer. The 1990¶s saw the birth of distributed computing technologies and Relational DataBase Management System. The banking industry was simply waiting for thesetechnologies. Now with distribution technologies, one could configure dedicatedmachines called front-end machines for customer service and risk control whilecommunication in the batch mode without hampering the response time on the front-end machine.

E-BANKING SYSTEM:

E-COMMERCE

E-FINANCE

E-MONEY

E-BANKING

OTHER FINANCIAL SERVICES AND PRODUCTS

Allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society.

INTERNET BANKING

TELEPHONE BANKING

A service provided by a financial institution, which allows its customers to perform transactions over the telephone.

OTHER ELECTRONIC DEVLIVERY CHANNELS

Our new digital reading service puts all your favorite documents, news, blogs,

friend recommendations and more at arms reach, anytime and anywhere.

The difference between E-Banking and E-Money is that while E-Money balances are not kept in financial accounts with banks.

THE GROWTH OF E-BANKING IN INDIA:  e-Circular banks save uptoRs 1 crore per 500 branches annually29 September 2006  Yahoo launches search marketing solution for Indian marketers28 September 2006  HSBC commercial banking awarded in Britain27 September 2006  National e-Commerce portal in Vietnam reports growth in business27 September 2006 Internet advertising revenue breaks record26 September 2006  e-Ticketing attracts new players26 September 2006  60 percent of e-Commerce transaction in India is travel-related: Promod Haque25 September 2006 Sify, IRCTC team up for e-Ticketing22 September 2006  Sify, IRCTC team up for e-Ticketing22 September 2006  Landmark plans to increase its online presence22 September 2006  e-Payment of service tax mandatory in India22 September 2006  Matex Net to e-Auction Standard Motors' properties20 September 2006  eBay launches e-Commerce guide18 September 2006  India: Online trading in an increase15 September 2006  One-stop portal to book bus tickets online15 September 2006  Internet savvy consumers save in thousands on home loans15 September 2006  m-Commerce market boom in Japan08 September 2006  Law to regulate e-Commerce to be introduced06 September 2006  eBay targets rural markets sellers to sell products on eBay04 September 2006  Order food online04 September 2006  Jharkhand to e-Market crafts with the help of NID04 September 2006  eBay India expects huge growth in buyer from 'B' and 'C' cities01 September 2006  Internet coffee auction creates history in Ethiopia31 August 2006  BMC¶s e-initiatives to keep track property tax31 August 2006  First e-Shopping Portal launched in West Africa31 August 2006  Google makes multi-year agreement with eBay29 August 2006  Web auction fraud gains majority in Japan cybercrime report18 August 2006  Almost 80 percent SMEs use e-Commerce to shop online14 August 2006  Female e-Shopper to constitute 15-mln strong market by 2007-08: IAMAI11 August 2006 Indian entrepreneurs go Net savvy11 August 2006

 Andhra Bank launches 'AB e-R@il' to book tickets online10 August 2006  Online sale of software rolls out in India10 August 2006  Online shopping becomes latest fad in India: IAMAI10 August 2006  Karnataka Bank's Internet banking portal07 August 2006  eBay to explain concept of selling through web to jewelers at Hitex expo03 August 2006  Yatra releases online services at www.yatra.com02 August 2006  e-Filling forms to be available on website next month01 August 2006  Finance Ministry makes e-Procurement and e-Payment mandatory31 July 2006  Pay at restaurants via m-commerce28 July 2006  Online matrimony business booming in India27 July 2006  Commonwealth Bank in Australia warns customers of 'phishing' scam26 July 2006  Significant increase in application software among local authorities26 July 2006  GSI Commerce signed agreement as e-Commerce partner of BCBG Max Azria Group26 July 2006  e-Commerce in financial services soon in Barbados25 July 2006  Safe online transaction24 July 2006 CONCLUSION: The IT infrastructure and internet hasemerged as a powerful connecting force,allowing a firm to serve its customers, collaborate with partners and empowering theemployees to work more effectively than everbefore. The benefits of e-banking are analyzed from the point of view of banks, their clients and the economy in general. The paper demonstrates that e-banking is not a niche application to computer fans and innovative adopters, and a profound research is needed to map its consumer base and the impact of ebanking on the development of bank-customer relationships in the value creation process.
Reference:Books:  Modern Banking ±Theory and Practice ±D.Muralidharan.  Electronic Banking ± SCN Education B.V. (Eds)  Modern Banking Technology ± FirdosTemuraspShroff Website:  www.arraydev.com  www.scribd.com  www.slideshare.net

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