“RISK MANAGEMENT OF ONLINE BANKING WITH

REFERENCE TO SBI”

A PROJECT
submitted to

UNIVERSITY OF MUMBAI

For partial completion of the degree of

BACHELOR OF MANAGEMENT STUDIES

under the
FACULTY OF COMMERCE

By
MR. VINAYAK VASANT KADAM

Under the Guidance of

ASST.PROF. SHILPA SHELAR

SHETH T.J. EDUCATION SOCIETY,

SHETH N.K.T.T. COLLEGE OF COMMERCE &
SHETH J.T.T. COLLEGE OF ARTS
KHAKAR ALI, THANE (W) 400612

ACADEMIC YEAR 2018–2019

 SHETH TJ. EDUCATION SOCIETY‟S
SHETH N.K.T.T. COLLEGE OF COMMERCE &
SHETH J.T.T. COLLEGE OF ARTS
KHAKAR ALI, THANE (W) 400612

CERTIFICATE

This is to certify that MR. VINAYAK VASANT KADAM has worked and duly
completed her Project Work for the degree of Bachelor of Management Studies
under the Faculty of Commerce in the subject of BACHELOR OF
MANAGEMENT and her project is entitled,“RISK MANAGEMENT OF
ONLINE BANKING WITH REFERENCE TO SBI” under my supervision.

I further certify that the entire work has been done by the learner under my guidance
and that no part of it has been submitted previously for any Degree or Diploma of any
University.

It is his own work and facts reported by his/her personal findings and investigations.

ASST.PROF. SHILPA SHELAR

Name & Signature of Name & Signature of
Guiding Teacher Guiding Teacher
( External ) ( Internal )

College
seal

Date of Submission:
 DECLARATION

I the undersigned MR. VINAYAK VASANT KADAM here by, declare that the
work embodied in this project titled “RISK MANAGEMENT OF ONLINE
BANKING WITH REFERENCE TO SBI”, forms my own contribution to the
research work carried out under the guidance of ASST. PROF. SHILPA SHELAR is
a result of my own research work and has not been previously submitted to any other
University for any other Degree / Diploma to this or any other University.
Wherever reference has been made to previous works of others it has been clearly
indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Signature of the learner

MR. VINAYAK KADAM

Certified by

Signature of the Guiding Teacher

ASST.PROF.SHILPA SHELAR
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.

I would like to thank my Principal, DR. PALLAVI SHAH for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Co-ordinator, ASST. PROF. NIVEDITA

MUKHERJEE for her moral support and guidance.

I would like to express my sincere gratitude towards my project guide, ASST.

PROF. SHILPA SHELAR whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various reference
books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project.
 EXECUTIVE SUMMARY

This project is based on the Risk Management Of Online banking with Reference To
State Bank of India. An insight view of the project will encompass - what is all about,
what I aims to achieve whats its purpose and scope, the various methods used for
collecting data and their sources, further specifying the limitations of the study and in
the last, drawing inferences from the leaming so far. This project tries to evaluate the
risk management in State Bank of India.This project helps to identify and give
suggestion the area of weaker position of the business.

Banks are regarded as the blood of the nation's economy without them one cannot
imagine economy moving. Therefore banks should be operated very efficiently.
Advance is heart and recovery is oxygen for the bank and to survive it is necessary to
give advances and recover the amount at the appropriate time Through credit risk
management we have tried to learn the various aspects related to credit appraisal and
credit policy of SBM. Credit Risk Management covers all the areas right from the
beginning like inquiry ti the loan is paid up. We are preparing comprechensive report
on "Credit Risk Management at State Bank of State Bank of India" The basic idea of
project is to augment our knowledge about the industry in its totality and appreciate
the use of an integrated loom. This makes us more conscious about Industry and its
pose and makes us capable of analyzing Industry's position in the competitive market.
This may also enhance our logical abilities. There are various aspects, which have
been studied in detail in the project and have been added to this project report.
Though credit management, a very vast topic, we have tried to incorporate to the best
of our capacity from all possible aspects in this project.
 INDEX
CHAPTER PARTICULAR PAGE NO.
1. Introduction
1.1 Introduction to net banking
1.2 Risk associated with net banking
1.3 Changes brought by IT in banking
1.4 Company Profile of SBI
1.5 Internet banking in state bank of India
1.6 Frauds in net banking
1.7 SWOT analysis of SBI
2. Research Methodology
2.1 Objectives
2.2 Hypothesis
2.3 Scope of study
2.4 Limitations of the study
2.5 Significance of the study
2.6 Tools for data collection
3. Literature Reviews
4. Data Analysis & Interpretation
5. Findings, Suggestion & Conclusion
5.1 Findings keys
5.2 Suggestions
5.3 Conclusion
Bibiliography
Annexture
 CHAPTER - 1

1. INTRODUCTION

1.1 INTRODUCTION TO NET BANKING

Online banking, also known as internet banking, e-banking or virtual banking, is an

electronic payment system that enables customers of a bank or other financial
institution to conduct a range of financial transactions through the financial
institution's website. The online banking system will typically connect to or be part of
the core banking system operated by a bank and is in contrast to branch banking
which was the traditional way customers accessed banking services.

To access a financial institution's online banking facility, a customer with internet

access will need to register with the institution for the service, and set up a password
and other credentials for customer verification. The credentials for online banking is
normally not the same as for telephone or mobile banking. Financial institutions now
routinely allocate customers numbers, whether or not customers have indicated an
intention to access their online banking facility. Customer numbers are normally not
the same as account numbers, because a number of customer accounts can be linked
to the one customer number. Technically, the customer number can be linked to any
account with the financial institution that the customer controls, though the financial
institution may limit the range of accounts that may be accessed to, say, cheque,
savings, loan, credit card and similar accounts.

The customer visits the financial institution's secure website, and enters the online
banking facility using the customer number and credentials previously set up. The
types of financial transactions which a customer may transact through online banking
are determined by the financial institution, but usually includes obtaining account
balances, a list of the recent transactions, electronic bill payments and funds transfers
between a customer's or another's accounts. Most banks also enable a customer to
download copies of bank statements, which can be printed at the customer's premises
(some banks charge a fee for mailing hard copies of bank statements). Some banks
also enable customers to download transactions directly into the customer's
accounting software. The facility may also enable the customer to order a cheque
book, statements, report loss of credit cards, stop payment on a cheque, advise change
of address and other routine actions.

When the term “online banking” initially gained popularity in the late 1980s, the
phrase referred to the use of a terminal, keyboard and television or computer monitor
to access one‟s bank account using a landline telephone. Now the online banking
definition, or internet banking definition, includes any electronic payment system that
allows customers of a financial institution to conduct financial transactions through
the financial institution‟s website. Today, online banking services include mobile
internet banking technology, such as person-to-person payment smartphone apps and
text banking.

WHAT IS NET BANKING RISK

The growth of electronic banking has created a new basis with regard to the degree of
exposure to the risk and therefore consequently the need of not only a differentiated
regulating frame, but also mechanisms of monitoring to be formed, which has already
begun to be shaped in the fields of Basle Committee of Banking Supervision. The
business risk is the risk of not being able to achieve the business targets due to
inappropriate strategies, inadequate resources or changes in the economic or
competitive environment.

It has to do with the ability the credit institution has in order to achieve the operational
objectives by exploiting the available opportunities in the market. The big changes on
the banking sector and the adoption of fast paced evolving technology also change the
traditional strategic risks. A bank that will rush into the adoption of new technologies
so that it is rendered pioneer is risking losing its investment as information systems
lose their value in very short time interval.

Moreover, there is the risk of extensive investment in particular products or services,

which will not become acceptable by the end users. On the other hand, if it maintains
a more conservative attitude there is the risk of becoming last, in an environment
where the competition is moving fast and strengthens its place in the market. Internet
banking may soon convert from a complementary to the main provider of financial
services and products. Consequently, a possible failure of a bank entering this sector,
can have various consequences on its future position in the market, especially when
the competition of the banks, which are clearly connected with the I-banking and do
not have any physical substance (virtual banks), is already given.

WHAT IS NET BANKING RISK MANAGEMENT

For an increasing number of banks there may be a strategic reason for engaging in
electronic banking and electronic money activities. In addition, greater use of
electronic banking and electronic money may increase the efficiency of the banking
and payment system, benefiting consumers and merchants. At the same time, as the
preceding discussion indicates, there are risks for banks engaging in electronic
banking and electronic money activities. Risks must be balanced against benefits;
banks must be able to manage and control risks and absorb any related losses if
necessary. Risks from electronic banking and electronic money activities should also
be evaluated in the context of other risks the bank faces.

Even though electronic banking and electronic money activities may represent a
relatively small portion of the overall activities of banks currently, supervisors may
still require senior management‟s assurance that critical systems are not threatened by
the risk exposures banks take. The rapid pace of technological innovation is likely to
change the nature and scope of risks banks face in electronic money and electronic
banking. Supervisors expect banks to have processes that enable bank management to
respond to current risks, and to adjust to new risks.

A risk management process that includes the three basic elements of assessing risks,
controlling risk exposure, and monitoring risks will help banks and supervisors attain
these goals. Banks may employ such a process when committing to new electronic
banking and electronic money activities, and as they evaluate existing commitments
to these activities. It is essential that banks have a comprehensive risk management
process in place that is subject to appropriate oversight by the board of directors and
senior management. As new risks in electronic banking and electronic money
activities are identified and assessed, the board and senior management must be kept
informed of these changes. Prior to any new activity being commenced, a
comprehensive review should be conducted so that senior management can ensure
that the risk management process is adequate to assess, control and monitor any risks
arising from the proposed new activity.
1.2 RISK ASSOCIATE WITH NET BANKING

Risk of online banking

Internet banking creates new risk control challenges for national banks. From
supervisory perspective, risk is the potential that events, expected or unexpected, may
have an adverse impact on the banks earnings or capital. There are generally nine
categories of risks in internet banking, which are as follows:-

 Operational risk
 Security risk
 System architecture & design risk
 Reputational risk
 Legal risks
 Money laundering risk
 Strategic risk
 Other risk

1. Operational risk

Operations risk arises from fraud, processing errors, system disruptions, or other
unanticipated events resulting in the institution‟s inability to deliver products or
services. This risk exists in each product and service offered. The level of transaction
risk is affected by the structure of the institution‟s processing environment, including
the types of services offered and the complexity of the processes and supporting
technology. In most instances, e-banking activities will increase the complexity of the
institution‟s activities and the quantity of its operations risk, especially if the
institution is offering innovative services that have not been standardized. Since
customers expect e-banking services to be available 24 hours a day, 7 days a week,
financial institutions should ensure their e-banking infrastructures contain sufficient
capacity and redundancy to ensure reliable service availability Operational risk.
BANKS FACE THREE MAIN TYPES OF OPERATIONS RISK

(I) VOLUME FORECASTS

Accurate volume forecasts have proved difficult - One of the key challenges
encountered by banks in the Internet environment is how to predict and manage the
volume of customers that they will obtain. Many banks going on-line have
significantly misjudged volumes. When a bank has inadequate systems to cope with
demand it may suffer reputational and financial damage, and even compromises in
security if extra systems that are inadequately configured or tested are brought on-line
to deal with the capacity problems.

As a way of addressing this risk, banks should:

 undertake market research

 adopt systems with adequate capacity and scalability
 undertake proportionate advertising campaigns
 Ensure that they have adequate staff coverage and develop a suitable business
continuity plan.

In brief, this is a new area, nobody knows all the answers, and banks need to exercise
particular caution.

(II) MANAGEMENT INFORMATION SYSTEMS

Banks may have difficulties in obtaining adequate management information to

monitor their e-service, as it can be difficult to establish/configure new systems to
ensure that sufficient, meaningful and clear information is generated. Such
information is particularly important in a new field like e-banking. Banks are being
encouraged by the FSA (Financial Services Authorities) to ensure that management
have all the information that they require in a format that they understand and that
does not cloud the key information with superfluous details.

Operational risk is the risk of incurring financial loss due to human or technical errors
and fraud. Operational risk can arise from the failure to follow or complete one or
more steps in the prescribed authorization process. Operational risk includes the risks
associated with the failure of communications, the breakdown of data transport or
processing, internal control system deficiencies, human errors, or management failure.
As a result, the financial institution could experience delays or disruptions in
processing, clearing, and settling retail payment transactions, that could lead to credit
and liquidity problems at other financial institutions.

Operational risk can also arise from fraud. A financial institution‟s exposure to
operational risk from fraud is the risk that a wrongful or criminal deception will lead
to a financial loss for one of the parties involved. Currency and checks are more
vulnerable to loss or direct theft, whereas fraud is the primary concern in bank card
payment transactions.

(III) OUTSOURCING

Finally, a significant number of banks offering e-banking services outsource related

business functions, e.g. security, either for reasons of cost reduction or, as are often
the case in this field, because they do not have the relevant expertise in-house.
Outsourcing a significant function can create material risks by potentially reducing a
bank‟s control over that function. Outsourcing is of course neither new nor
unmanageable but banks should be mindful on outsourcing, which addresses these
risks.

2. SECURITY RISK

Security risk arises on account of unauthorized access to a bank,s critical information

stores like accounting system, risk management system, portfolio management
system, etc. A breach of security could result in direct financial loss to the bank. For
example, hackers operating via the Internet could access, retrieve and use confidential
customer information and also can implant virus. This may result in loss of data, theft
of or tampering with customer information, disabling of a significant portion of
bank‟s internal computer system thus denying service, cost of repairing these etc.
Other related risks are loss of reputation, infringing customers privacy and its legal
implications. Thus, access control is of paramount importance. Controlling access to
banks system has become more complex in the Internet environment which is a public
domain and attempts at unauthorized access could emanate from any source and from
anywhere in the world with or without criminal intent. Attackers could be hackers,
unscrupulous vendors, disgruntled employees or even pure thrill seekers.

In addition to external attacks banks are exposed to security risk from internal sources
e.g. employee fraud. Employees being familiar with different systems and their
weaknesses become potential security threats in a loosely controlled environment.
They can manage to acquire the authentication data in order to access the customer
accounts causing losses to the bank.

Unless specifically protected, all data / information transfer over the Internet can be
monitored or read by unauthorized persons. There are programs such as „sniffers‟
which can be set up at web servers or other critical locations to collect data like
account numbers, passwords, account and credit card numbers. Data privacy and
confidentiality issues are relevant even when data is not being transferred over the net.

Banks system must be technologically equipped to handle these aspects which are
potential sources of risk. Banks should have:

1. A strategic approach to information security, building best practice security

controls into systems and networks as they are developed

2. A proactive approach to information security, involving active testing of system

security controls (e.g. penetration testing), rapid response to new threats and
vulnerabilities and regular review of market place developments

3. Sufficient staff with information security expertise.

4. Active use of system based security management and monitoring tools.

5. Strong business information security controls

3. SYSTEM ARCHITECTURE AND DESIGN RISK

Appropriate system architecture and control is an important factor in managing

various Kinds of operational and security risks. A bank faces the risk that the systems
it chooses are not well designed or implemented. For example, a bank is exposed to
the risk of an interruption or slow-down of its existing systems if the electronic
banking or electronic money system it chooses is not compatible with user
requirements. Many banks are likely to rely on outside service providers and external
experts to implement, operate, and support portions of their electronic money and
electronic banking activities. Such reliance may be desirable because it allows a bank
to outsource aspects of the provision of electronic banking and electronic money
activities that it cannot provide economically itself.

However, reliance on outsourcing exposes a bank to operational risks. Service

providers may not have the requisite expertise to deliver services expected by the
bank, or may fail to update their technology in a timely manner. A service provider‟s
operations could be interrupted due to system breakdowns or financial difficulties,
jeopardizing a bank‟s ability to deliver products or services. The rapid pace of change
that characterizes information technology presents banks with the risk of systems
obsolescence. For example, computer software that facilitates the use of electronic
banking and electronic money products by customers will require updating, but
channels for distributing software updates pose risks for banks in that criminal or
malicious individuals could intercept and modify the software. In addition, rapid
technological change can mean that staff may fail to understand fully the nature of
new technology employed by the bank. This could result in operational problems with
new or updated systems.

4. REPUTATIONAL RISK

Reputational risk is the risk of getting significant negative public opinion, which may
result in a critical loss of funding or customers. Such risks arise from actions which
cause major loss of the public confidence in the banks' ability to perform critical
functions or impair bankcustomer relationship. It may be due to banks own action or
due to third party action. The main reasons for this risk may be system or product not
working to the expectations of the customers, significant system deficiencies,
significant security breach (both due to internal and external attack), inadequate
information to customers about product use and problem resolution procedures,
significant problems with communication networks that impair customers access to
their funds or account information especially if there are no alternative means of
account access. Such situation may cause customer-discontinuing use of product or
the service. Directly affected customers may leave the bank and others may follow if
the problem is publicized.

Other reasons include losses to similar institution offering same type of services
causing customer to view other banks also with suspicion, targeted attacks on a bank
like hacker spreading inaccurate information about bank products, a virus disturbing
bank‟s system causing system and data integrity problems etc.

Possible measures to avoid this risk are to test the system before implementation,
backup facilities, contingency plans including plans to address customer problems
during system disruptions, deploying virus checking, deployment of ethical hackers
for plugging the loopholes and other security measures.

It is significant not only for a single bank but also for the system as a whole. Under
extreme circumstances, such a situation might lead to systemic disruptions in the
banking system. Thus the role of the regulator becomes even more important as not
even a single bank can be allowed to fail.

5. LEGAL /COMPLIANCE RISK

Legal risk is the risk of non-compliance with legal or regulatory requirements. The
legal risks are directly related to the electronic banking and they are increased as its
use is extended. They mainly stem from the uncertainty that exists in the legal –
regulative framework concerning the electronic banking. In most countries an explicit
regulating framework does not exist and this is owed to the little experience regarding
the sector of electronic banking. The problem becomes even bigger when a bank
offers its electronic services to other countries as well, since a unified legal frame in
international level does not exist. Each country puts its own rules into effect and it is
difficult for a bank to constantly adapt its services and to be acquainted with all the
laws that are in effect in every country.

Another legal risk is related with the protection of the customers personal data. Bad
use by the bank personnel or by exterior malignant intruders can expose a bank in
serious legal risks. It is possible that the intruders acquire access in the databases of
the banks and use the data of customers in order to commit a fraud. In this case a legal
risk is created by the bad or not certified use of customers data.

The legal risks, in which the financial institutions will be exposed from the use of
electronic banking, are expected to increase because of the uncertainty that
characterizes the wider legal framework and the specific lawful regulations of
transactions through an open electronic network as the internet is. The uncertainty
withregard to the validity of transactions, the protection of personal data, the
involuntary consumer‟s exposure to foreign jurisdiction, the tax evasion, the
laundering of money, the electronic fraud but also the legal responsibility in case a
system collapses, increase the exposure to the legal regulatory risks.

6. MONEY LAUNDERING RISK

Money laundering is the practice of engaging in financial transactions in order to

conceal the identity, source, and destination of money, and is a main operation of the
underground economy. Money laundering is called what it is because that perfectly
describes what takes place - illegal, or dirty, money is put through a cycle of
transactions, or washed, so that it comes out the other end as legal, or clean, money.
In other words, the source of illegally obtained funds is obscured through a succession
of transfers and deals in order that those same funds can eventually be made to appear
as legitimate income. Every financial institution is charged with the responsibility of
developing policies and procedures to combat money laundering, which includes the
duty to be aware of trends and adaptations in the methods by which money laundering
is carried out. The most difficult aspect of this responsibility is a financial
organization‟s ability to anticipate new criminal behavior and to proactively
implement protocols before the criminal behavior occurs.
As Internet banking transactions are conducted remotely banks may find it difficult to
apply traditional method for detecting and preventing undesirable criminal activities.
Application of money laundering rules may also be inappropriate for some forms of
electronic payments. Thus banks expose themselves to the money laundering risk.
This may result in legal sanctions for non-compliance with “know your customer”
laws.

To avoid this, banks need to design proper customer identification and screening
techniques, develop audit trails, and conduct periodic compliance reviews, frame
policies and procedures to spot and report suspicious activities in Internet
transactions.

7. STRATEGIC RISK

On strategic risk E-banking is relatively new and, as a result, there can be a lack of
understanding among senior management about its potential and implications. People
with technological, but not banking, skills can end up driving the initiatives. E-
initiatives can spring up in an incoherent and piecemeal manner in firms. They can be
expensive and can fail to recoup their cost. Furthermore, they are often positioned as
loss leaders (to capture market share), but may not attract the types of customers that
banks want or expect and may have unexpected implications on existing business
lines.

Banks should respond to these risks by having a clear strategy driven from the top and
should ensure that this strategy takes account of the effects of e-banking, wherever
relevant. Such a strategy should be clearly disseminated across the business, and
supported by a clear business plan with an effective means of monitoring performance
against it.

Poor e-banking planning and investment decisions can increase a financial

institution‟s strategic risk. Early adopters of new e-banking services can establish
themselves as innovators who anticipate the needs of their customers, but may do so
by incurring higher costs and increased complexity in their operations. Conversely,
late adopters may be able to avoid the higher expense and added complexity, but do
so at the risk of not meeting customer demand for additional products and services.
8. OTHER RISKS

Traditional banking risks such as credit risk, liquidity risk, interest rate risk, and
market risk may also arise from electronic banking and electronic money activities,
though their practical consequences may be of a different magnitude for banks and
supervisors than operational, reputational, and legal risks. This may be particularly
true for banks engaged in a variety of banking activities, as compared to banks or
bank subsidiaries that specialize in electronic medium.

RISK MANAGEMENT PRINCIPLES

The risk should be assessed based on the category of client, theorganization‟s

transactional abilities, the importance and worth of the amassed data to the
organization and client, the simplicity of using the scheme and with degree and
magnitude of transactions. Running the risks and putting into practice controls for
online banking schemes tags along very similar standards with likewise procedures of
managing risks. Leaving this to “Information Technology (IT)” to manage or
indulging it as a technical setback can be a very unsafe thing to do. As above listing of
risks have suggested, there is a need for a top managerial role in order to effectively
monitor and combat these risks.

1. BOARD AND MANAGEMENT OVERSIGHT

The top managerial staff of the banking institution is obliged to ensure the effective
management of all forms of risks associated with online banking and also ensure
accountability and policy control in the execution of activities related to E- banking.
Also the top managerial officers should maximize to the fullest the opportunities
attached to online banking such as garnering of profits and to fulfill the main goals
and objectives of the institution. An unmistakable intention sets the tone for a healthy
risk position. It is the responsibility of high ranking officers to evaluate and endorse
the transactional report of the online banking as lack of evaluation could result into a
big problem for the institution. The report should be tactically analyzed and should
be subjected to affordable cost auditing. Also, top managerial officers should not be
involved in e-banking enterprise unless they are highly horned in riskmanagement.
Also the top managerial staff of any banking institution should decide the method of
risk management, reporting approaches and intensification methods. An official risk
analyses group should be appointed by the top managerial staff in line with
accountability, risk evaluation, alleviation and recognition. Also top managerial staff
should ensure thorough analyses of online banking before it is embarked upon.

2. Legal and reputational risk management

Legal and reputational risk management can be divided into the following:

1. Privacy

There should be a privacy rule from the bank and this must be communicated to all
prospective clients. Clients have to be given the opportunity to withdraw whenever
required and this should be laced with different alternatives of choice. Also client
permission should be sought before dissemination of information to external parties.
Finally if clients are from different locales, the strongest privacy law is therefore
applicable.

2. Availability

Business stability and emergency planning strategy which guarantees ease of

accessibility of online banking services to customers must be included by the banking
institution. This however is highly demanding based on the 24 h provision of services
and accessibility to customers and also the amount of transactions carried out.

3. Incident response:

There should be the creation of s device which identifies, contain and handles
promptly difficulties that might arise both internally and externally. There should be a
communication blueprint for clients by whom they canchannel their complaints and
the use of intensification pathways. Finally a medium by which forensic evidence is
protected in the case an assault should be created.
MANAGE ONLINE BANKING RISK

Simple Guidelines for Safe Internet banking :

 On no account utilize communal terminals like cyber cafes when you are carrying
out banking transactions online.
 The peril of compromise while making use of a wireless connection is to a large
extent greater. Clients should carry out online banking transactions through a
wireless connection provided that they are completely assured of the connection
safety.
 Clients should be certain that their spyware and anti-virus applications are up to
date and it is advisable to perform regular system scans.
 Clients should on no account log into a banking site via a link. Alternatively,
clients should type out the address of the bank‟s website into the browser bar.
 Clients should never access any other web site when they are logged into an
online banking site; they should be sure as to ascertain that there is only one
window open.
 Clients should choose their user name and password cautiously. Both password
and user name shouldn't be easy for anyone to deduce and they should be changed
regularly
 Client‟s computer software should be updated regularly.
 Clients should check for the padlock logo on the lesser right hand side of the
browser window (it shows that the website is secured).
 Once a client is done with his or her Online banking, the client should log out and
close the browser window.

On no account should a client give out his or her password on the Internet (via emails)
or through the phone to anybody
1.3 CHANGES BROUGHT BY IT IN BANKING SECTOR

Introduction:

Likemost other industries, the banking industry has seen its fair share of fluctuations
in recent years. Between the recession, the subsequent economic recovery and the
introduction of new financial technologies, the way people manage their money has
shifted dramatically – and that's not about to stop anytime soon.Big disruptions –
many of them driven by technology – are poised to rock the banking industry in the
very near future. Below, seven Forbes Finance Council members share predictions for
changes happening in the next five years.

Advantages of IT revolution :

1) Convenience:One of the biggest advantages of online banking

technology is that it allows you to handle transactions and monitor your
bank statements anytime, anywhere and anyplace. You can access your
account on your computer or smart phone 24/7 – when it‟s most
convenient for your schedule.

2) Fewer bank visits:Another great advantage is a new technology

known as Remote Deposit Capture. It‟s an online service that lets you scan
and deposit checks from your home, office or other locations without
having to go to your bank. It lets you make deposits faster, with less time
spent driving to your bank.

3) Faster transactions:When you conduct your banking online, your

transactions are processed almost instantly. For example, you can make
purchases or make payments with a debit card instead of a check, and the
transactions shows up on your account almost immediately. This gives you
more control of timing for transactions, and a better, more accurate view of
your current account balance.

4) Working with your accounting software:As a small business, you

probably use an accounting software program. Many banks now let you tie
your bank account information directly to your accounting software. This
 gives you more accurate and updated financial statements for your
company. It also lets you view your financial statements almost instantly,
without having to add your bank account numbers

5) Fund transfers: Many small businesses and entrepreneurs have

multiple bank accounts – personal accounts, company accounts, savings
accounts, etc. You often need to transfer funds from one account to
another, and ACH (Automated Clearing House) transfers lets you do it
relatively quickly. This can be a huge help in paying bills, meeting payroll
deadlines and managing cash flow.

6) Fast payment options: ACH gives you the ability to make payments
from your business account to any external account. The most common
uses for ACH are direct deposit payroll, vendor payments and membership
or monthly dues. Business Online Bill Pay is another payment option that
is commonly used by businesses to pay regular bills, such as utilities and
credit card payments. Finally, wire transfers can also be initiated online,
when transfers to external accounts need to be made the same business
day.

ADAVANTAGES OF INTERNET BANKING

The advantages of internet banking are listed below:

 Eliminates the use of paper and replaces it with computer screens.

 No need to stand in line at the bank; because all you have to do is log on to
the internet access your account.
 It is safe, hassle free, saves hours of time a month.
 Greater reach to customers.
 Quicker time to market.
 Ability to introduce new products and services quickly and successfully.
 Ability to understand its customer needs.
 Customers are given access to information easily across any location.
 Greater customer loyalty.
 It is convenient.
  There are no geographical barriers.
 Getting quarterly statements from the bank, transferring funds to
outstation.
 Services can be offered at a miniscule cost.

DISADVANTAGES OF INTERNET BANKING

Following are the disadvantages of Internet Banking

 Risk
 No perceived need
 Lack of knowledge about the service
 Inaccessibility
 Lacking the human touch
 Pricing concerns
 IT fatigue
 Inertia
 Managerial implications
 The infrastructural costs of providing such services are quite high.
 Limited criteria in online trading.
 Delay in fund transfer.
 When server downs the whole process handicapped.
 Technical problems occur sometimes which affect customers badly.
 Late processing also sometimes in some services create a hurdle causingdelay.
 Late security level in the service to cope with hacking problem
 1.4 COMPANY PROFILE- SBI BANK

INTRODUCTION OF STATE BANK OF INDIA (SBI)

Company profile State bank of India is the nation‟s largest and oldest bank. Tracing
its roots back some 200 years to the British East India Company (andinitially
established as the Bank of Calcutta in 1806), the bank operates more than15,000
branches within India, where it also owns majority stakes in six associate banks.State
Bank of India (SBI) has more than 80 offices in nearly 35 othercountries, including
multiple locations in the US, Canada, and Nigeria. The bankhas other units devoted to
capital markets, fund management, factoring andcommercial services, credit cards,
and brokerage services. The Reserve Bank ofIndia owns about 60% of State bank of
India.

StateBank of India (SBI) is an Indian multinational, public sector banking

and financial services company. It is a government-owned corporation with its
headquarters in Mumbai, Maharashtra On 1st April, 2017, State Bank of India, which
is India's largest Bank merged with five of its Associate Banks (State Bank of Bikaner
& Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and
State Bank of Travancore) and BharatiyaMahila Bank with itself. This is the first ever
large scale consolidation in the Indian Banking Industry. With the merger, State Bank
of India will enter the league of top 50 global banks with a balance sheet size of ₹33
trillion, 278,000 employees, 420 million customers, and more than 24,000 branches
and 59,000 ATMs. SBI's market share will increase to 22 percent from 17 percent. It
has 198 offices in 37 countries; 301 correspondents in 72 countries.The company is
ranked 232nd on the Fortune Global 500list of the world's biggest corporations as of
2016.

 An integrated solution for all financial challenges faced by the corporate

universe.
 The primary delivery channels are The Corporate Banking Group and the
National Banking Group
 The Corporate Banking Group consists of dedicated Strategic Business Units
that cater exclusively to specific client groups or specialize in particular
product clusters.
 The Corporate Banking Group consists of dedicated Strategic Business units
viz.
o Corporate Accounts Group (CAG),
o Project Finance unit and
o Leasing unit.
 The National Banking Group also delivers the entire spectrum of corporate
banking products to other corporate clients, on a nationwide platform.
HISTORY OF SBI BANK

The roots of the State Bank of India lie in the first decade of the 19th century,
when the Bank of Calcutta, later renamed the Bank of Bengal, was established on
2 June 1806. The Bank of Bengal was one of three Presidency banks, the other
two being the Bank of Bombay (incorporated on 15 April 1840) and the Bank of
Madras (incorporated on 1 July 1843). All three Presidency banks were
incorporated as joint stock companies and were the result of royal charters. These
three banks received the exclusive right to issue paper currency till 1861 when,
with the Paper Currency Act, the right was taken over by the Government of
India. The Presidency banks amalgamated on 27 January 1921, and the re-
organised banking entity took as its name Imperial Bank of India. The Imperial
Bank of India remained a joint stock company but without Government
participation.

Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve
Bank of India, which is India's central bank, acquired a controlling interest in the
Imperial Bank of India. On 1 July 1955, the imperial Bank of India became the
State Bank of India. In 2008, the Government of India acquired the Reserve Bank
of India's stake in SBI so as to remove any conflict of interest because the RBI is
the country's banking regulatory authority.

In 1959, the government passed the State Bank of India (Subsidiary Banks) Act.
This made SBI subsidiaries of eight that had belonged to princely states prior to
their nationalization and operatonal takeover between September 1959 and
October 1960, which made eight state banks associates of SBI. This une with the
first Five Year Plan, which prioritised the development of rural India. The
government integrated these banks into the State Bank of India system to expand
its rural outreach. In 1963 SBI merged State Bank of Jaipur (est. 1943) and State
Bank of Bikaner (est.1944).

SBI has acquired local banks in rescues. The first was the Bank of Bihar (est.
1911), which SBI acquired in 1969, together with its 28 branches. The next year
SBI acquired National Bank of Lahore (est. 1942), which had 24 branches. Five
years later, in 1975, SBI acquired KrishnaramBaldeo Bank, which had been
established in 1916 in Gwalior State, under the patronage of Maharaja
MadhoRaoScindia. The bank had been the DukanPichadi, a small moneylender,
owned by the Maharaja. The new bank's first manager was Jall N. Broacha, a
Parsi. In 1985, SBI acquired the Bank of Cochin in Kerala, which had 120
branches. SBI was the acquirer as its affiliate, the State Bank of Travancore,
already had an extensive network in Kerala.

There has been a proposal to merge all the associate banks into SBI to create a
"mega bank" and streamline the group's operations. The first step towards
unification occurred on 13 August 2008 when State Bank of Saurashtra merged
with SBI, reducing the number of associate state banks from seven to six. On 19
June 2009, the SBI board approved the absorption of State Bank of Indore. SBI
holds 98.3% in State Bank of Indore. (Individuals who held the shares prior to its
takeover by the government hold the balance of 1.7%. The acquisition of State
Bank of Indore added 470 branches to SBI's existing network of branches. Also,
following the acquisition, SBI's total assets will approach ₹10 trillion. The total
assets of SBI and the State Bank of Indore were ₹9,981,190 million as of March
2009. The process of merging of State Bank of Indore was completed by April
2010, and the SBI Indore branches started functioning as SBI branches on 26
August 2010. On 7 October 2013, Arundhati Bhattacharya became the first
woman to be appointed Chairperson of the bank. Mrs. Bhattacharya received an
extension of two years of service to merge into SBI the five remaining associated
banks.

Listings and shareholding

As on 31 March 2017, Government of India held around 61.23% equity shares in

SBI. Life Insurance Corporation of India is the largest non-promoter shareholder
in the company with 8.82% shareholding.
 Shareholders Shareholding

Promoters: Government of India 61.23%

FIIs/GDRs/OCBs/NRIs 11.17%

Banks & Insurance Companies 10.00%

Mutual Funds & UTI 8.29%

Others 9.31%

Total 100.0%

The equity shares of SBI are listed on the Bombay Stock Exchange, where it is a
constituent of the BSE SENSEX index, and the National Stock Exchange of India,
where it is a constituent of the CNX Nifty. Its Global Depository Receipts (GDRs) are
listed on the London Stock Exchange.

MAJOR SHAREHOLDERS OF THE BANK

The major shareholder of the bank is the president of India with 59.41 per cent share
holding. The other major share holders include Life insurance corporation of India –
Group with (11.83 percent), the Bank of New York Mellon (3.54 percent), HSBC
global investment funds a/c HSBC global investment funds Mauritius limited (0.91
percent), Europacific growth Fund (0.77 per cent), Goldman SACHS investments
(Mauritius) Ltd. (0.65 percent), Bajaj Allianz Life Insurance Co. Ltd. (0.61 percent),
General insurance corporation of India (0.54 percent), Janus Overseas Fund (0.41
percent) and Copthall Mauritius Investments Ltd. (0.32 percent).

Vision of State Bank of India

• MY SBI.
• MY CUSTOMER FIRST.

• MY SBI: FIRST IN CUSTOMER SATISFACTION.

Mission of State Bank of India

• We will be prompt, polite and proactive with our customers.

• We will speak the language of young India.

• We will create products and services that help our customers achieve their goals.

• We will go beyond the call of duty to make our customers valued.

• We will be of service even in the remotest part of our country.

• We will offer excellence in service to those abroad as much as we do to those in

India.

• We will imbibe state of art technology to drive excellence. Strengths of State Bank
of India

Values of SB

The values of State Bank of India are:

• We will always be honest, transparent and ethical.

• We will respect our customers and fellow associates.

• We will be knowledge driven.

• We will learn and we will share our learning.

• We will never take the early way out.

• We will do everything we can to contribute to the community we work in.

• We will nurture pride in India.

Associate Banks

SBI has five associate banks that with SBI constitute the State Bank Group. All use
the same logo of a blue keyhole and all the associates use the "State Bank of" name
followed by the regional headquarters' name. Originally, the then seven banks that
became the associate banks belonged to princely states until the government
nationalized them between October, 1959 and May, 1960. In tune with the first Five
Year Plan, emphasizing the development of rural India, the government integrated
these banks into State Bank of India to expand its rural outreach. There has been a
proposal to merge all the associate banks into SBI to create a "mega bank" and
streamline operations.

The first step towards unification occurred on 13 August 2008 when State Bank of
Saurashtra merged with State Bank of India, reducing the number of state banks from
seven to six. Then on 19 June 2009 the SBI board approved the merger of its
subsidiary, State Bank of Indore, with itself. SBI holds 98.3% in the bank, and the
balance 1.77% is owned by individuals, who held the shares prior to its takeover by
the government. The acquisition of State Bank of Indore added 470 branches to SBI's
existing network of 12,448 and over 21,000 ATMs. Also, following the acquisition,
SBI's total assets will inch very close to the Rs 10-lakh crore mark. Total assets of
SBI and the State Bank ofIndore stood at Rs 998,119 crore as on March 2009. The
process of merging of State Bank of Indore was completed by April 2010.

The subsidiaries of SBI are:

 State Bank of Indore

 State Bank of Bikaner & Jaipur
 State Bank of Hyderabad
 State Bank of Mysore
 State Bank of Patiala
 State Bank of Travancore
 Non-Banking Subsidiaries of SBI

1. SBI Capital Markets Ltd. (SBI CAP)

2. SBI Funds Management Pvt. Ltd (SBI FUNDS)

3. SBI Factors and Commercial Services Pvt. Ltd.

4. SBI DFHI (Discount & Finance House of India) Ltd.

5. SBI GILTS Ltd.

6. SBI Commercial and International Bank Ltd.

7. SBI Mutual Fund (A Trust)

 Joint Ventures of SBI

1. SBI Cards and Payment Services Pvt. Ltd.

2. Gt.Capital Business Process Management Service Pvt. Ltd.

3. SBI Life Insurance Co. Ltd.

4. Credit Information Bureau (India) Ltd. (CIBIL)

 Other Associates of SBI

1. Clearing Corporation of India Ltd.

2. Nepal SBI Bank Ltd.

3. Bank of Bhutan

4. UTI Asset Management Company Pvt. Ltd.

 Foreign Subsidiaries

1. SBI International Mauritius Ltd, Offshore Bank

2. SBI Canada

3. SBI Lagos

4. SBI California

The total number of branches and ATMs of State Bank of India and its associates as
on March 2011 is presented in Table 3.2. The total number of branches for rural,
semi-urban, urban, and metropolitan for State Bank of India and its associates is
discussed below. The total number of branches of State Bank group for all the four
areas is 17,913. The total branches of State Bank of India are 13,284 of which 4,972
are in rural areas, 3,865 are in the semi-urban areas, 2,382 are in urban areas, and
2,065 branches are located in the metropolitan areas. The total ATMs of the State
bank group are 24,651 of which 14,104 are onsite ATMs and 10,547 are off-site
ATMs. Further, the total number of ATMs of the State Bank of India is 20,084, while
on-site ATMs are 10,826 the off-site ATMs are 9,258. Also, from table 3.2 it can be
seen that the per cent of Off-site to total ATMs is 42.8 for the state bank group as a
whole and the per cent of Off-site tototal ATMs for State Bank of India is 46.1. The
per cent of ATMs to branches forthe total state bank group is 137.6 and for only the
State Bank of India is 151.2 percent.

ORGANISATION STRUCTURE AND MANAGEMENT

The management of the State Bank1 vests in a Central Board of Directors which
consists of:

• A Chairman and a Vice-Chairman appointed by the Central Government in

consultation with the Reserve Bank of India.

• Two Managing Directors appointed by the Central Board of Directors with the
approval of the Central Government.

• Six directors to be elected in the prescribed manner by the shareholders

other than the Reserve Bank.

• Eight directors to be nominated by the Central Government in consultation with the

Reserve Bank of India to represent territorial and economic interests in such a manner
that not less than two of them have special knowledge of the working of the
cooperative institutions and of rural economy and the others have experience in
commerce, industry, banking and finance

• One director to be nominated by the Central Government

• One director to be nominated by the Reserve Bank

• Two directors to be appointed to represent the officers and the staff of the bank.

 Recent awards and recognition

1. SBI was ranked as the top bank in India based on tier 1 capital by The Banker
magazine in a 2014 ranking
2. SBI was ranked 232nd in the Fortune Global 500 rankings of the world's
biggest corporations for the year 2016.
 3. SBI was named the 29th most reputed company in the world according to
Forbes 2009 rankings.
4. SBI was 50th Most Trusted brand in India as per the Brand Trust Report 2013,
an annual study conducted by Trust Research Advisory, a brand analytics
company and subsequently, in the Brand Trust Report 2014, SBI finished as
India's 19th Most Trusted Brand in India.

Major competitors

Some of the major competitors for SBI in the banking sector are large other public
sector banks,

1 • Punjab National Bank

2 • Bank of Baroda
3 • Canara Bank
4 • Bank of India

And large private sector banks

1. ICICI Bank
2. HDFC Bank,
3. Axis Bank
4. IndusInd Bank.

And However, in terms of average. market share, SBI is by far the largest player in
the mark
1.5 INTERNET BANKING IN STATE BANK OF INDIA

STATE BANK OF INDIA‟S NET BANKING

The Internet banking portal of our bank, enables its retail banking customers to
operate their accounts from anywhere anytime, removing the restrictions imposed by
geography and time. It's a platform that enables the customers to carry out their
banking activities from their desktop, aided by the power and convenience of the
Internet.
1. Using Internet banking services, you can do the following normal banking
transactions online:
 Funds transfer between own accounts.
 Third party transfers to accounts maintained at any branch of SBI
 Group Transfers to accounts in State Bank Group
 Inter Bank Transfers to accounts with other Banks
 Online standing instructions for periodical transfer for the above
 Credit PPF accounts across branches
 Request for Issue of Demand Draft
 Request for opening of new accounts
 Request for closure of Loan Accounts
 Request for Issue of Cheque Book
 Earn reward points for transactions through Internet Banking

2. Apart from these, the other salient value-added features available are:
 Utility bill payments
 Online Ticket Booking for travel by Road, Rail and Air
 SBILIFE, LIC and other insurance premia payments
 SBI and other Mutual funds Investments
 SBI and other Credit Card dues payments
 Tax Payment Income, Service, State Govt
 Customs Duty Payment
 Online Share Trading
 Online Application for IPO
 Fee Payment to select educational institutions including IITs and NITs
Truly smart services to cover most of your banking transactions. All this and much
more, from your desktop. All sbi branches are enabled for Internet Banking.Contact
your branch for availing this service. You can visit www.onlinesbi.com for
downloading the registration form.
On security front, the site is 'VeriSign' certified - indicating that it's absolutely safe
and secure for you to transact online. Additional layers of security are available for
doing transactions.

Internet Banking Service in SBI/ SBI Online Products and Services :

SBI Offers Personal banking, Agriculture, NRI services, corporate services,

SME, Domestic treasury and also international services. The SBI services include
the following.

 Internet banking
 Mobile banking
 Mobi cash
 ATM Services
 Demat Services
 Service Charges and Fees
 Aadhar seeding
 Cash Deposit machine
 SBI Credit Cards
 SBI Quick Transfer

SBI Retail Services and Loans :

The State Bank of India offers various services like personal banking, gold banking,
education loan, state bank rewards and various services. Check SBI retail services
from and loans from here bellow.

 Term Deposits
 Recurring Deposits
 Personal Loan
 Educational Loan
  Housing Loan
 Against Shares & Debentures
 Against Mortgage of Property
 Medi-Plus Scheme
 Plus Scheme
 Rates of Interest

SBI NRI Account Services :

The State Bank of India has spread in 32 countries across the world. In overseas SBI
is having 131 branches to serve the needs of its clients. It offers various NRI Banking
services such as,

Accounts/Deposits:

 NRE Savings Bank Account.

 NRE Term Deposits.
 Resident Foreign Currency Accounts.
 Foreign Currency Non-Resident Deposit Accounts.
 Non-Resident (Ordinary Accounts).
 NRI-Car Loan Schemes.

Miscellaneous

 Tax benefits for NRIs.

 Investment schemes for NRI
 Facilities for returning Indians.
 Remittances to India.

Corporate Banking

The Online SBI corporate banking application provides features to administer and
manage corporate accounts online. The corporate module provides roles such as
Regulator, Admin, Up loader, Transaction Maker, Authorizer, and Auditor.
These roles have access to the following functions:

 Manage users, define rights and transaction rules on corporate accounts

 Access accounts in several branches with a single sign-on mechanism
 Upload files to make bulk transactions to third parties, supplier, vendor and
tax collection authorities.
 Use online transactional features such as fund transfer to own accounts, third
party payments, and draft issues
 Make bill payments over the Internet.
 Authorize, modify, reschedule and cancel transactions, based on rights
assigned to the user Generate account statement
 Enquire on transaction details or current balance

Value added services:

 Tax payments to central and state governments through site to site integration.
 Supply Chain Finance( e-VFS- Electronic Vendor Finance Scheme)
 Direct Debit Facility
 E Collection Facilities
 Core Banking Transactions
 Internet Bank transactions for incoming RTGS/NEFT Transactions
 Internet banking transactions for SBI and associate banks
 Debit facility where suppliers can directly debit their
customer‟saccountthrough internet banking.

E-Ticketing

You can book your railway, air and bus tickets online through Online SBI. To book
your train ticket, just log on to irctc.co.in and create an ID there at if you do not have
one. Submit your travel plan and book the ticket(s)-either i-ticket (where the delivery
of tickets will be made at your address) or E-tickets (wherein after successful payment
transactions, an e-ticket is generated which can be printed any time. For an e-ticket,
the details of photo identity card will be required to be filled in).And selects State
Bank of India in the payment options. You will beredirected to Internet Banking site
of SBI. After submitting the respective ID and password, you can select your
account. After a successful debit, Railways will generate the ticket. E-ticket can be
printed by you whereas i-ticket will be dispatched by IRCTC at the given address.
Service charges @ Rs.10/- per transaction shall be levied in addition to the cost of the
ticket. Cancellation of E-ticket can be done by logging on to IRCTCs site; refund
amount will be credited to your account directly within 2-3 days. For cancellation of
i-ticket, you shall be required to submit your ticket at a computerized counter of
Railways and on cancellation; the amount shall be credited back to your account. To
book other forms of tickets the procedure is same. The customer is only needs to go to
the respective website and follow the necessary instruction.

SBI E-Tax

You can pay your taxes online through SBI E-Tax. This facility enables you to pay
TDS, Income tax, Indirect tax, Corporation tax, Wealth tax, Estate Duty and Fringe
Benefits tax. Click the e-Tax link in the home page. You are displayed with a page
with two links one is for Direct Tax and the other is for Indirect Tax. Click the Direct
Tax link. You will be redirected to the NSDL site where you can select an online
challenge based on the tax you wish to pay. Provide the PAN, name and address,
assessment year, nature of payment and bank name. On selecting the bank name as
SBI and submitting the form, you will be redirected to the Internet Banking site. After
submitting the respective ID and password, you can select your account for making
payment of taxes. After payment is successful you can print the E-Receipt for the
payment. The E-receipt can be printed at a later date also and the same can be
retrieved from by navigating to Enquiries > Find Transactions > Status Enquiries >
Click on the respective transaction to print the tax receipt. Theprocedure is same for
indirect tax, in case of indirect tax you are redirected to the website of CBEC (Central
Board of Excise and Customs).

Bill Payment

It is a simple and convenient service for viewing and paying your bills online. No
more late payments, No more queues, No more hassles of depositing cheques. Using
the bill payment the user can view and Pay various bills online, directly from your
SBI account. The user can pay telephone, electricity, insurance, credit cards and other
bills from the comfort of your house or office, 24 hours a day, 365 days a year.
Simply logon to (http://www.onlinesbi.com) with his credentials and register the biller
to which you want to pay, with all the bill details. Once the bill is uploaded by the
biller, the user can make payment online within just few steps. The user can also set
up Auto Pay instructions with an upper limit to ensure that your bills are paid
automatically whenever they are due. The upper limit ensures that only bills within
the specified limit are paid automatically, thereby providing the customer with
complete control over all these bill payments. The e-PAY service is available in
various cities across the country and you can now make payments to several billers in
your region.

Other online services

 RTGS/NEFT
 E-Payment
 Fund Transfer
 Third Party Transfer
 Demand Draft
 Cheque Book Request
 Account Opening Request
 Account Statement
 Transaction Enquiry
 Donation
1.6 Frauds in net banking

Internet Banking Fraud is a fraud or theft committed using online technology to

illegally remove money from a bank account and/or transfer money to an account
in a different bank. Internet Banking Fraud is a form of identity theft and is
usually made possible through techniques such as phishing.
There are some types of net banking fraud
1. Fake call fraud
2. Credit card fraud
3. E mail frauds
4. Hacking frauds

Case study
There are some fraud which are happen in SBI bank that frauds are as follows:

1) Hacking :

Mr. Mahesh have account State Bank of India, Vita branch. In December
he have activated his internet banking account. After activating internet
banking he have not transferred any amount to any third party account or
not done any internet banking activity. Only he have viewed his account
balance twice or thrice and changed passwords issued by SBI. he found
that on 13 Dec 2010 somebody transferred Amount of Rs. 6000.00 and
Rs.220.00 to Mr.RajkeshKashinathPatil on Borivali East Branch of SBI.
This conman added this account as third party beneficiary to his profile
and transferred amount from his account.

Here, he have not added this account as third party beneficiary and he
don‟t know who is that person. he have not disclosed his username and
both passwords to anybody. He has doubt that the hacker hacked the
webpage of SBI online and get all passwords and duped him and many
people like him. The SBI do not accept fact that its website is hacked and
refuse to take responsibility. And now he want his money back.
2) Fake call :

Mr.sahil have account of sbi. This happened On 28th of Jan 2010 he got a
call from a lady saying that she is from SBI customer care and she is
calling with regard to their security enhancement.She said him that he will
soon recieve a code from the SBI to his cell phone and she said she will
call him back to take that code. He recieved a message in which it says
"You have added SBI SECURITY as the Third party for the fund transfer.
Security Code is XXXXXXX". Then the lady called and asked for the
code. He disclosed the code with the lady. The lady said you will recieve
another code in a message to your cell phone once the security feature is
activated. Soon he recieved another message said something like this
"Security code for third party money transfer for SBI SECURITY is
XXXXXXX". The lady calls again and asks for the second code. He gave
the code to the lady. The next message he recieved on his cell phone was
something like this " An amount of Rs. 40,000 is debited from your
account". When he called that number back it was switched off. He
contacted the bank immediately to stop the transfer. But the bank officials
said it was credited to an account in Kolkata. That account(Kolkata
account) was opened just on 24th of Jan and they have also withdrawn the
cash(40k) 20K in each transaction in an ATM. Also the bank officials said
there is no photo associated with the Account. It is under the investigation
now.

3) E mail frauds:

Mr shree is a student enrolled at a university in Germany and was looking

for accommodation online, suddenly he got a mail from a person going by
the alias Jonathan Moore who promised to give a flat and said he would do
it via AirBnb and therefore he agreed. he sent them his details and he made
an agreement later Airbnb sent mrshree a mail saying that shree have to
make the payment within 48 hours and shreethought there was something
fishy about this so he looked it up online and he saw people getting the
exact same mails from the exact same name. that person doesn't know that
 shree have caught his act. And then mr.shree immediately block his
account

4) Credit card fraud:

Mr.vijayhave an aacount of sbi bank recently he received a threatening

from SBI credit card collection groups. First without his concern, his SBI
credit card is linked with a health insurance company and used to debit
money from his credit card. SBI credit used to send him wrong statement
bills since 2009.Then after he request them to close his SBI card.

Recently some one from SBI credit card threatened me in the name of
Director, Vigilance, Govt. of India and forced him to return the money
within two hours over phone. he was so panic and he have returned Rs.
30740/- without any letter notice or any bills. After the money is deposited
in SBI Card office, when he called the fraud person, he is not picking up
the phone and he switched up his mobile number. Just see how SBI Credit
card people is doing some strange communications in order to collect
money from innocent customers.

Measures taken by SBI bank to prevent against frauds in net

banking
To enhance the security in conductingonlie banking and other transactions, it is
recommended that customers adopt the following practices.

1. Bank send massege: if there is anything wrong in the account the bank send
message that your account has been hacked please change your password.
2. New security: Bank introduce new system in that if you are facing a problem
or with your account have any problem, you can inform to bank and bank will
find out who use your accout with new technology.
3. Suggetion of password: Username and password allow entry to the internet
banking site. Smart users avoid typing these on the keyboard while someone is
close by.
4. Maintain different passwords for Login and for Profile.
 5. Do not leave your computer unattended while you're connected to
www.onlinesbi.com.
6. Change your password regulary: It is advisable to change your password if
you believe that anyone has managed to get access to it. Using 'untrusted'
systems for banking transactions is best avoided
7. Log off: Please log off from https://www.onlinesbi.com and close the browser
window after you have finished your session. Improper logging off will leave
the connection between your machine and https://www.onlinesbi.com active
for some time.
8. Avoid writing down your Username and password: avoid writing down your
username in your diary or such place, which can be accessed by others.It is not
a good idea to let the computer 'remember' your Username and password.
9. Complain box: for customer sbi provided a customers complain box on
wedside on which we can write our all complain or we can told them thet what
is actually happens with you then bank will take action on it and bank will
solve your problem.
10. Don‟t ues free wifi: for oprating online banking don t use free wifi like cafe‟s
wifi your account will be hacked so don‟t youes free wifi.

Measures suggested by SBI bank to its customer to protect

themselves against frauds in net banking

With the proper precautions you can help protect your State Bank accounts and
personal information from harmful pop-up windows.
1. Know the Scams

 Phishing, Spoofing, Pop-up Fraud – types of online fraud used to obtain

personal information.
 Trojan Horse – Virus that can record your keystrokes. It can live in an
attachment or be accessed via a link in the email, website or pop-up window.
 Counterfeit Websites – URLs that forward you to a fraudulent site. To validate
a URL, you can type or cut and paste the URL into a new web browser
window and if it does not take you to a legitimate web site or you get an error
message, it was probably just a cover for a fraudulent web site.
2. Activate a pop-up window blocker

There are free programs available online that will block pop-up windows. Be sure to
perform an Internet search for “pop-up blocker” or look at the options provided by
major search engines. You will need to confirm that these programs are from
legitimate companies before downloading. Once you have installed a pop-up
blocker, you should determine if it blocks information that you need to view or
access. If this is the case, you should consider turning off the blocker when you are
on Web sites you know use pop-up windows to provide information you need or want
to view.

3. Scan your computer for spyware regularly

You can eliminate potentially risky pop-up windows by removing any spyware or
adware installed on your computer. Spyware and adware are programs that look in
on your Web viewing activity and potentially relay information to a disreputable
source. Perform an Internet search for “spyware” or “adware” to find free spyware
removal programs. As with a pop-up blocker, you will want to be sure that your
removal program is not blocking, or removing, wanted items, and if it is, consider
turning it off for some websites.

4. Avoid downloading programs from unknown sources.

Downloads may contain hidden programs that can compromise your computer‟s
security. Likewise, email attachments from unknown senders may contain harmful
viruses.

5. Keep your computer operating system and Internet browser

current.

6. Keep anti-virus software up-to-date.

Anti-virus software needs frequent updates to guard against new viruses. Select a
reputable provider. Download the anti-virus updates as soon as you are notified that a
new program update is available, or flag your program to download and install the
updates automatically if that option is available.

7. Keep your passwords secret.

Change them regularly, using a mixture of numbers and characters.

1.7 SWOT ANALYSIS OF SBI INTERNET BANKING

The following are the strength, Weakness opportunists and threats of InternetBanking
in India:

 Strength
 Aggression towards development of the existing standards of banks
 Strong regulatory impact by central bank to all the banks
 Presence of intellectual capital to face the change in implementation withgood
quality
 Fully computerized and techno savvy
 A person can access his account from anywhere he is
 A person can do banking transactions like funds transfer to any account, book
ticket, bill pay at any time of the day
 Weakness
 High bank service charges. All the bank charges highly to the customers forthe
services provided through internet banking
 Poor technology infrastructure
 Ineffective risk measures
 Easy Access of internet banking account by wrong people through email ids
 When the server is down the whole process is handicapped
 Opportunities
 Increasing risk management expertise
  Advancement of technologies, strong asset base would help in bigger growth
 Safety of using internet banking is robust, so more internet banking users in
future
 The international scope of internet banking provides new growth perspectives
and internet business is a catalyst for new technologies and new business
processes.

 Threats

 Banks provides all services through electronic computerized machines and this
creates problems to the less educated people
 Inability to meet the additional capital requirements
 Huge investment in technologies
 Internet banking will be replaced by mobile banking
 CHAPTER - 2

2. RESEARCH METHODOLOGY

In order to conduct the research an appropriate methodology becomes necessary. The

information provided in this project has been collected from various sources.

The data the material for the project has been collected keeping in view the objectives
of a project and accordingly data has been found out from the following two sources:

Primary Data:

In this research with sample size of 100 consumer‟s data will be available in the form
of questionnaire planning. All the individual age group between 18-55 years is taken
into consideration.

Secondary Data:

The secondary data has been collected referring the various books, websites,
magazines and other sources related to requirement planning. The data collected is
pertaining to the theoretical aspects. Collection of information for the project is done
from different kinds of books and through internet

2.1 OBJECTIVE

The overall objective of the present study is to analysis the role of reach ofInternet
banking in India. The specific objectives of the study are enunciated below
 To examine the reach of internet banking
 know risk involved in Internet banking
 To identify the level of security among customers in using Internet
bankingservices.
 To understand risk management techniques used in banks
 To know Internet services provided by SBI Bank
To nalyse the awareness & usage of internet banking by SBI customers.
To identify the strength and weaknesses of it and reasons of that.
 To suggest the appropriate measures to increase the use of internet banking by
customers.

2.2 Hypothesis

H0:1 The association of respondent with bank is depedent on his satisfaction level of
from bank services.

H0:2 The association of respondent with bank is independent on his satisfaction level
of from bank services.

2.3 SCOPE OF STUDY

The study involves the risk management of online baking and what safties for
customer and its benefits to the cutomer.
This is done by interviewing the bank manager, cutomers of bank. Therefore the
scope of study is limited to some existance information gathered by this people.
The study seeks to collect information from amoung the existing customer about their
satisfaction level with regards to risk management facilities provided by SBI bank.
The scope is limited to thane branch. The scope is also includes the findings the way
to address the problem of cutomer of the improving the satisfaction level.

2.4 Limitations of the study

 Study is limited Thane city only.

 Responses from 100 customers have been collected.
 Responses generated from the respondents are based on their personal views.
2.5 Significance of the study

 Significance the geographical scope of the study is restricted Thane only with the
sample of size of 100 customer. All the analysis and suggestion are based on the
both primary and secondary data. Therefore the scope of the study revolves
around the following aspects.
 Aware the Bank about the customer problems ,especially in case of the online
internet banking.
 Customer awareness about the banks online schemes and benefits.
 Customer perception towards online internet banking.

2.6 Tools for data collection

The study is based on online internet banking. The data required for the study
will be collected from customer reports of with their respective banks, journals and
reports on trend, newspaper and website.
 CHAPTER - 3

3. LITERATUE REVIEW

1. Rakesh H M &Ramya T J (2014) In their research paper titled “A Study on

Factors Influencing Consumer Adoption of Internet Banking in India” tried to
examine the factors that influence internet banking adoption. Using PLS, a model
is successfully proved and it is found that internet banking is influenced by its
perceived reliability, Perceived ease of use and Perceived usefulness. In the
marketing process of internet banking services marketing expert should emphasize
these benefits its adoption provides and awareness can also be improved to attract
consumers‟ attention to internet banking services.
2. Vijay M. Kumbhar (2011) In his research paper “Factors Affecting the
Customer satisfaction In E-Banking: Some evidences Form Indian Banks”. This
study evaluates major factors (i.e. service quality, brand perception and perceived
value) affecting on customers‟ satisfaction in e-banking service settings. This
study also evaluates influence of service quality on brand perception, perceived
value and satisfaction in e-banking. Required data was collected through
customers‟ survey. For conducting customers‟ survey liker scale based
questionnaire was developed after review of literature and discussions with bank
managers as well as experts in customer service and marketing. Collected data
was analyzed using principle component (PCA) using SPSS 19.0. A result
indicates that, Perceived Value, Brand Perception, Cost Effectiveness ,Easy to
Use, Convenience, Problem Handling, Security/Assurance and Responsiveness
are important factors in customers satisfaction in e-banking it explains 48.30 per
cent of variance. Contact Facilities, System Availability, Fulfillment, Efficiency
and Compensation are comparatively less important because these dimensions
explain 21.70 percent of variance in customers‟ satisfaction. Security/Assurance,
Responsiveness, Easy to Use, Cost Effectiveness and Compensation are predictors
of brand perception in e-banking and Fulfillment, Efficiency, Security/Assurance,
Responsiveness, Convenience, Cost Effectiveness, Problem Handling and
Compensation are predictors of perceived value in e-banking.
3. PoojaMalhotra&Balwinder SINGH (2009): In their research paper “The Impact
of Internet Banking on Bank Performance and Risk: The Indian Experience”. The
 paper describes the current state of Internet banking in India and discusses its
implications for the Indian banking industry. Particularly, it seeks to examine the
impact of Internet banking on banks‟ performance and risk. Using information
drawn from the survey of 85 scheduled commercial bank‟s websites, during the
period of June 2007, the results show that nearly 57 percent of the Indian
commercial banks are providing transactional Internet banking services. The
univariate analysis indicates that Internet banks are larger banks and have
efficiency ratios and profitability as compared to non-Internet banks. Internet
banks rely more heavily on core deposits for funding than non-Internet banks do.
However, the multiple regression results reveal that the profitability and offering
of Internet banking does not have any significant association, on the other hand,
Internet banking has a significant and negative association with risk profile of the
banks.
4. Talwar (1999): examined the IT Revolution in banking sector which had not only
provided improved service to the customer, but also reduced the operational cost.
The author brought out that computerization of banks, introduction of Real Time
Gross Settlement System, setting up of Infinet, Electronic Payment Products(such
as Electronic Clearing Service) had ensured better resource management,
systematic efficiency and substantially reduced inter-branch reconciliation entries.
However fear of hacking, tampering of data, secrecy maintenance were certain
issues which pose threats on usage of electronic banking. The challenges in
banking sector were manifold but still the constitution of National Payment
Council by RBI and development of the integrated payment and settlement system
was a step in this direction to remove the obstacles coming in the way of using
electronic banking.
5. Manoharan (2007): highlighted the e-payment system in India and its
performance impact on Indian banking sector. The author described that
competition in banking industry had forced the banks to rethink the way they
operate their business. So, e-banking has made it possible to find alternate banking
practices. In the paper, the author divided the payment system in India into three
parts, i.e., large value payment system, retail payment system, and retail electronic
system. Each one includes different categories of e-payment. The author studied
the performance of various Indian payment systems in the last 3 years in which
RTGS emerged as the principal payment system in India for wholesale payment.
 CHAPTER - 4

4. DATA ANALYSIS

1. Do you use internet banking?

Yes No
100% 0%

Use of net banking

0%

Yes
No

100%

Interpretation:
According to 100% of people have use internet banking and 0% of people do not use
internet banking.
 2. Are you satisfied with net banking service of your bank?

Yes No
82% 18%

Satisfy

18%

Yes
No

82%

Interpretation:
According to 82% of people satisfied with the net banking service and 18% of people
not satisfied with the net banking service.
 3. Whether according to you net banking is better than traditional banking?

Yes No
98% 2%

What is better
2%

Yes
No

98%

Interpretation:

Acoording to 98% of people according to net banking is better than traditional

banking and 2% of people according to net banking is better than traditional banking.
 4. How often you use net banking?

Once in a week Twice in a week Thrice in a week More than

that

46% 18% 27% 9%

Use of net banking

9%

Once in a week
27% 46% Twice in a week
Thrice in a week
More than that

18%

Interpretation:
According to 46% of customer use net banking once in a week,
18% of customer use net banking twice in a week,
27% of customer use net banking thrice in aweek,
9% of customer use net banking more than that in a week.
 5. Are you aware of all net banking services provided by bank?

Yes No

80% 20%

Aware of all services

20%

Yes
No

80%

Interpretation:
According to 80% of customer aware of all services net banking and 20% of customer
not aware of all services net banking.
 6. Is there fraud happens with you?

Yes No
80% 20%

Frauds

20%

Yes
No

80%

Interpretation:
According to 80% of people have frauds in a net banking and 20% of people have not
fraud in a net banking.
 7. Which type of fraud happen with you?

Call fraud E-mail fraud Hacking Credit card fraud

12% 19% 6% 63%

Which tpye of fraud

12%

Call fraud
19% E-mail fraud
Hacking
63% Credit card fraud

6%

Interpretation:
According to 12% of people have call fraud of the net banking, 19% of people E-
fraud of the net banking, 6% people hacking problem in a net banking and 63% of
people have credit card fraud in net banking.
 8. Complain solving process of your bank for net banking is?

Good Bad
70% 30%

Complain solving process

30%

Good
Bad

70%

Interpretation:
According to 70% of people have complain solving process of good in net banking
and 30% of people complain solving process are bad in net banking.
 9. On scale of 5 how much you will giverate to your bank‟s net banking?

Excellent Very good Good Average Poor

72% 10% 10% 5% 3%

Rate
3%
5%

10% Excellent
Very good
10%
Good
Average

72% Poor

Interpretation:
According to 72% of people give rate to banks net banking is excellent,
10% of people give rate to banks net bnking is very good,
10% of people give rate to banks net banking is good,
5% of people give rate to banks net banking is average,
3% of people give rate to banks net banking is poor.
 10. Whether you will refer your bank‟s net banking services to someone else?

Yes No
95% 5%

Net banking services

5%

Yes
No

95%

Interpretation:
According to 95% of people refers the banks net banking services to someone else
and 5% of people do not refers the banks net bankng services to someone else.
 11. Which problems faced by customers in bank ?

Bad
customer Huge errors Checks/funds
service bouncing
50% 20% 30%

Problems in bank

30%
Bad customer service
50% Huge errors
Checks/funds bouncing

20%

Interpretation:
According to 50% of people bad customer service problem faced by customer in
bank, 20% of people huge errors problem faced by customer in bank,
30% of people checks/funds bouncing problem faced by customer in bank.
 12. Which problems faced by customer in internet banking?

Lack of Lack of proper Technical

knowledge guidance bottlenecks
40% 40% 20%

Problems in net banking

20%

40% Lack of knowledge

Lack of proper guidance
Technical bottlenecks

40%

Interpretation:
According to 40% of people lack of knowledge problem faced in internet banking,
40% of people lack of proper guidance problem faced in internet banking,
20% of people technical bottlenecks problem faced in internet banking.
 13. What do you think internet banking is safe?

Yes No
80% 20%

Net banking safe

20%

Yes
no

80%

Interpretation:
According to 80% of people think internet banking is safe and 20% of peple don‟t
think that internet banking is safe.
 CHAPTER - 5
FINDINGS, SUGGESTIONS & CONCLUIONS

5.1 FINDINGS KEYS

From manager of sbi

what is risk?
risk mens frauds, which are happens mainly in internet banking that‟s why
people thinks the online banking is not good.
Why people use internet banking?
Internet banking is progressing because now a days all costomers are using
online banking and no body wants to come bank beause of busy schedule of
people
Sbi provide special facility to senior citizen who are above age of 50 and the
are also using online banking.
Difficulties in complain handling
There is zero difficulties while complain handling procedure of interet banking
of sbi
Proactive measures for risk managemet
When people open account that time sbi told them about the frauds and gives
them some instructions like don‟t use online banking in open wifi your
account will bw hack.
Process of Complain handling
For complain handling sbi takes many measures but in that main measure is
the on web side of sbi bank have complain box in which we can write our
complain and bank will take action on it.
Appoint a committee for risk management
sbi never appoint any committee for online risk managemet because this all
thing are sovled by the sbi‟s employee.
Employees training
 For employee have a training section in that every employee train for handling
internet banking and handling complain about internet banking
Why risk managemet is important
Risk means simply frauds if frauds are happens with each and every customer
then that is not good for bank and banks reputation that‟s why risk managemet
is important.
Scope of internet banking in india
There is huge scope for internet banking because now banking is easy you can
keep it in your pocket so there is bright future of internet banking
Improvement
Sbi makes modification in internet banking they are trying to introduces new
securities
Awareness
Many of the customer don‟t know about all securies which are provided by sbi bank
so sbi trying to people know about all this services through adverticing
5.2 SUGGESTIONS

The following are the suggestions for the further improvement of Internet Banking in
India:

 Do proper advertising

To prevent online banking from remaining customers to prompt this service

through advertising company.

 Competitive service

After repairing this basic deficiency, banks must ensure that their service is
competitive

 Customers satisfaction

All the complaints felt by the customers should be considered with seriousness
and solution based approach to keep them satisfied in long run

 Extend technology

SBI Bank should extend the technology which is used in internet banking in
order to remove the difficulties.

 Different languages

SBI Bank should provide the services in different languages.

 Trainings

SBI bank should give proper training to their employees

5.3 CONCLUSION

The project on Study of risk in Internet banking now familiar to all. I had a grater
pleaser to present the project. I studying about Internet banking systems like that
clients can now do banking at the leisure of their homes. I also studied that Internet
banking allows customers to conduct financial transactions on a secure website
operated by the retail or virtual bank. I study Internet banking risk which involved in
Internet banking. This Risk like oprating risk, security risk, reputational risk etc. I also
study the risk management principals its problems and solution and techniques which
are undertaken by banks. Study states that internet banking provides greater reach to
customers. Feedback can be obtained easily as internet is virtual in nature. Customer
loyalty can be gain. Personal attention can be given by bank to customer also quality
service can be served. Studying the project I came to know that Internet banking is
clearly the way forward for the State Bank of India. It provides comfort to customers
at the same time it provides cost cutting to SBI by eliminating physical
documentation. Internet banking saves time of bank as well as those of customers.
More banks are connecting to the any software company to running the E-banking
service. In these services the SBI banks is top in service of E-banking. SWOC
analysis of internet banking I dealt with opportunities like 95 % market of internet
market is untapped, SBI‟s path to become first virtual bank. Byencasing such
opportunities bank can become the leader in banking sector of India.
 BIBILIOGRAPHY

o https://en.m.wikipedia.org/wiki/State_Bank_of_India
o https://www.academia.edu/21490692/PROJECT_REPORT_ON_RISK_
MANAGEMENT_IN_BANKING_SECTOR_
o https://www.Risk-Management-in-Banking-a-Study-With-Reference-to-
State-Bank-of-India-sbi-A
 Annexture

Questionnaire for customers

1. Do you use internet banking?

o Yes
o No

2. Are you satisfied with net banking service of your bank?

o Yes
o No

3. Whether according to you net banking is better than traditional banking?

o Yes
o No

4. How often you use net banking?

o Once in week
o Twice in week
o Thrice in a week
o More than that

5. Are you aware of all net banking services provided by bank?

o Yes
o No

6. Is there fraud happens with you?

o Yes
o No

7. Which type of fraud happen with you?

o Call fraud
o E-mail fraud
o Hacking
o Credit card fraud

8. On scale of 5 how much you will give to your bank’s net banking
o 5 (Excellent)
o 4(Very good)
o 3(Good)
o 2(Average)
o 1(Poor)
9. Complain solving process of your bank for net banking is?
o Good
o Bad

10. Whether you will refer your bank’s net banking services to someone else?
o Yes
o No
11. Which problems faced by customers in bank ?
o Bad customer service
o Huge errors
o Checks/funds bouncing

12. Which problems faced by customer in internet banking?

o Lack of knowledge
o Lack of proper guidance
o Technical bottlenecks

13. What do you think internet banking is safe?

o Yes
o No