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Vinayak - Final - Project - Hard Copy1 PDF
Vinayak - Final - Project - Hard Copy1 PDF
REFERENCE TO SBI”
A PROJECT
submitted to
UNIVERSITY OF MUMBAI
under the
FACULTY OF COMMERCE
By
MR. VINAYAK VASANT KADAM
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.
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.
Certified by
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.
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
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.
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.
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
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
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.
In brief, this is a new area, nobody knows all the answers, and banks need to exercise
particular caution.
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
2. SECURITY RISK
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:
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.
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.
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.
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.
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.
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
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
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 :
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.
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
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.
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.
FIIs/GDRs/OCBs/NRIs 11.17%
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.
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).
• MY SBI.
• MY CUSTOMER FIRST.
• We will create products and services that help our customers achieve their goals.
• We will imbibe state of art technology to drive excellence. Strengths of State Bank
of India
Values of SB
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.
3. Bank of Bhutan
Foreign Subsidiaries
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.
The management of the State Bank1 vests in a Central Board of Directors which
consists of:
• Two Managing Directors appointed by the Central Board of Directors with the
approval of the Central Government.
• Two directors to be appointed to represent the officers and the staff of the bank.
Major competitors
Some of the major competitors for SBI in the banking sector are large other public
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
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
Mobile banking
Mobi cash
ATM Services
Demat Services
Service Charges and Fees
Aadhar seeding
Cash Deposit machine
SBI Credit Cards
SBI Quick Transfer
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
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:
Miscellaneous
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:
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.
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
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:
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.
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.
With the proper precautions you can help protect your State Bank accounts and
personal information from harmful pop-up windows.
1. Know the Scams
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.
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.
Downloads may contain hidden programs that can compromise your computer‟s
security. Likewise, email attachments from unknown senders may contain harmful
viruses.
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
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.
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.
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.
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
4. DATA ANALYSIS
Yes No
100% 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:
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%
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?
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%
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?
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%
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?
20%
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%
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
The following are the suggestions for the further improvement of Internet Banking in
India:
Do proper advertising
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
Trainings
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
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