INSTITUTE OF MANAGMENT STUDIES, DAVV, INDORE

FINANCE AND ADMINISTRATION – SEMESTER IV

CREDIT MANAGEMENT AND RETAIL BANKING

ELECTRONIC BANKING
 When customer is not required to visit branch to do banking transaction but uses tele-banking or
remote banking facility is called electronic banking.

 Anytime Banking/ Anywhere Banking

 ATM and tele-banking – financial details can be accessed from remote locations and basic
transactions can be effected even outside the bank.
 Mutual arrangements between banks are made for allowing use of any other banks ATM
 With implementation of Rangarajan committee report, govt. is allowing to set up ATM at non branch
locations such airport, shopping mall, office complex etc.

 Internet Banking – with the popularity of PCs and easy access to Internet and World Wide Web
(www) banks are using the source for delivering products and services to customer through internet
banking.
 Levels of services provided are of three types
- Basic level service which disseminate information of different products and services to customer
and reply customer queries.
- In next level allows customer to submit their instructions, application for different services, query
of balance etc. but does not permit any fund based transaction of their account.
- Third level offers fully transactional type which allow customer to operate the account for
transfer of funds, payment of utility bill, transact purchase and sale of security etc.

 Home Banking (Corporate and Personal)

 Today bank customers are more technologically sophisticated than ever before, hence more and
more of them have become comfortable with idea of using machine for wide range of banking
service.

 Corporate Banking – banks are providing customer terminal at the office of corporate where he
require only computer, a telephone connection and modem. Some of the banking facilities provided
are – getting their current balance and statement of account, ordering cheque book, ordering intra
bank and interbank fund transfer, instructions for stop payment of cheque, international remittance
and opening LC. By obtaining special SWIFT authentication facility customer can prepare message
in SWIFT format by sitting in office and transfer template to banker which will directly authenticate
transaction, thereby entire transaction is completed across the globe in minutes.

 Personal Banking - by using tele-banking facility customer can dial up the branch and after
identification number will be able to get connectivity with branch computer and can have access to
his balance, can place order for statement of account or request for cheque book etc through
tele(phone) banking. If the customer has PC and modem at home he can have direct connectivity
with branch through telephone line and obtain all above service and additionally transfer of funds.
Number of services offered at present is however limited.

 Tele-banking – based on voice processing facility available with bank computer. In this system
software identifies the caller by keyword and provide services like balance in the account. Some
bank use a telephone answering machine which is not a telebanking facility but a telephone
answering machine.
 Mobile banking –
 Mobile banking comes with features like 128 bit encryption and open internet technology i.e. not
dependent on any specific service provider and handset company.
 Customer can check his bank balance, or order for DD, stop payment of cheque, request for cheque
book, look for current interest rate, last 3-5 transactions on his mobile screen.
 RBI approval is necessary for banks providing mobile banking.
 Only rupee based transactions are permitted through mobile banking, no cross border transactions
are allowed.
 KYC to be followed.
 Customer is required to register his mobile number to bank.
 Initially there was a cap for amount, now RBI has removed any restriction about amount to be
transacted through mobile banking, however bank should do it on own risk perception.
 Customer has to download bank’s App.

 Electronic commerce (e-commerce)

 It is a digital parlance.
 It is not limited to only business to business (B2B) transactions.
 Other developments are higher degree of personalization, round the clock, fast, immediate
customer reaction and reduction in operating cost.

 Signature storage and Retrieval system

 Signature card is scanned using scanner, which is device which takes image of signature and
converts it to a digital which is then stored on hard disk of computer. Along with signature other
details like account number name operating instructions are also input to computer. Data is then
verified, validated and authenticated. When the cheque is presented for payment the signature can
be retrieved.

 Cheque Truncation
 Section 6 of NI Act was amended in Sept. 2002 to include electronic and truncated cheques in
definition of cheque.
 Section 6b – a cheque which is truncated during the course of clearing cycle, either by the Clearing
House or by the bank, whether paying or receiving payment, immediately on generation of an
electronic image for transmission, substituting the further physical movement of cheque in writing.
 Characteristics of truncated cheque are –
- It is an electronic image of paper cheque
- Only the banks involved in clearing can truncate the cheque
- This image will substitute the physical cheque from now onwards
- To be done only during the course of clearing cycle
- Paper cheque after truncation to be kept in custody of bank

CORE BANKING SOLUTIONS

 Core banking has a centralized branch computerization model where branches are connected to
central host which incorporate branch automation module and online multiple delivery channel like
ATM, Debit card, tele-banking, mobile banking, internet banking etc. under one roof. There is a
central data base where transactions are done centrally online. It offers services to customers
round the clock.
 Various business modules like retail banking, deposit, loans, locker, clearing, forex, govt. module
etc. MIS, integrate with ATM, internet banking, kiosks and other delivery channels.
 Efficient and effective MIS, HRMS, ALM and risk management, BPR etc using central data pool.
Needs to be manned round the clock to offer 24 x 7 service to customers.

Prepared by
Arvind Paranjape, M.Sc. CAIIB
9425067026
paranjape.arvind@yahoo.com