A

PROJECT REPORTON

E-Banking Preference among people with special reference to HDFC Bank.

SUBMITTED TO:-

PUNJAB TECHNICAL UNIVERSITY

In the partial fulfillment of the requirements for the degree of

MASTERS OF BUSINESS ADMINISTRATION

SUBMITTED BY

Ms. Taruna Gupta

MBA 4TH semester

DEPARTMENT OF BUSINESS MANAGEMENT

DEVRAJ GROUP’S TECHNICAL CAMPUS

AFFILATED TO

PUNJAB TECHNICAL UNIVERSITY, JALANDHAR

(2011-2013)

DECLARATION

1

I TARUNA GUPTA hereby declare that the dissertation report entitled “E-Banking

preferences among people” submitted for the partial fulfilment of the degree of Masters in

Business Administration from Punjab technical university is original document of mine and

data provided is authentic and to the best of way of my knowledge.

Taruna Gupta

2

ACKNOWLEDGEMENT

“Gratitude is not a thing of expression; it is more a matter of feeling”.

I feel immense pleasure to give the credit of my project work not only to one individual as

this work is integrated effort of all those who are concerned with it. I want to thanks to all

those individuals who guided me to move on the track.

The research on “E-Banking preferences among people in Chandigarh with special reference

to HDFC Bank” has been given to me as part of the curriculum in Two-Years Masters Degree

in Business Administration. I have tried my best to present this information as clearly as

possible using basic terms that I hope will be comprehended by the widest spectrum of

researchers, analysts and students for further studies.

I have completed this study under the table guidance and supervision of Mrs. Parveen Bala

and Miss. Nitika Gupta. I will be failed in my duty if I do not acknowledge the esteemed

scholarly guidance, assistance and knowledge. I have received from them towards fruitful and

timely completion of this work. Mere acknowledgement may not redeem the debt I owe to

my parents for their direct/indirect support during the entire course of this project.

“GUIDANCE IS THE BEST IN THE WAY PROGRESS”.

I am also thankful to my friend who helped me a lot in the completion of this project.

Taruna Gupta

3

PREFACE

With the rapid globalization of the Indian economy, enterprises are facing with ever changing

competitive environment. Enterprises are adopting strategies aimed at developing competitive

advantage based on enhanced customer value in terms of product differentiation, quality,

speed, service and costs. In the post liberalization era, with the deregulation of Indian

economy, the financial service sector witnessing a complete metamorphosis and technology

is playing a very significant role in this record. Over the last decade India has been one of the

fastest adopters of information technology, particularly because of its capability to provide

software solution to organizations around the world. This capability has provided a

tremendous impetuous to the domestic banking industry in India to deploy the latest in

technology, particularly in the Internet banking and e-commerce arenas. Banks are growing

in size by mergers and acquisitions, which have been driven by communication and

technology. Technology is playing a major role in increasing the efficiency, courtesy and

speed of customer service. It is said to be the age of E-banking. An Online Banking user is

expected to perform at least one of the following transactions online:

1. Checking account balance and transaction history

2. Paying bills

3. Transferring funds between accounts

4. Requesting credit card advances

5. Ordering checks

6. Managing investments and stocks trading

From a bank’s perspective, using the Internet is more efficient than using other distribution

mediums because banks are looking for an increased customer base. From the customers’

perspective, Online Banking provides a convenient and effective way to manage finances that

is easily accessible 24 hours a day, seven days a week.

4

CONTENTS

CHAPTER NO. CONTENTS PAGE NO.1 Introductions about Company 7-22

1.1 Organization chart 23-241.2 SWOT analysis 25-262 Introduction about project topic 27-43

2.1 Need of study 44-453 Objectives of study 46-474 Review of literature 48-535 Research Methodology 54-586 Data analysis & interpretation 59-70

6.1 Hypothesis testing 71-737 Results & findings 74-758 Suggestions & recommendations 76-779 Limitations 78-7910 Conclusion 80-8111 Annexure 82-8512 Bibliography 86-88

CHAPTER -1

5

INTRODUCTION

ABOUT

HDFC BANK

ABOUT HDFC BANK

HDFC Bank Ltd.

6

Headquarters Mumbai, India

Key people C.M. Vasudev

Products

Investment Banking

Commercial Banking

Retail Banking

Private Banking

Asset Management

Mortgages

Credit Cards

Revenue 20,266 crore (US$4.5 billion) (2010)

Operating income4,419 crore (US$981.02 million)

(2010)

Profit 3,032 crore (US$673.1 million) (2010)

Total assets US$ 53.670 billion (2010)

Total equity 21,158 crore (US$4.7 billion) (2010)

Employees 51,888 (2010)

Website HDFCBank.com

HDFC Bank (NYSE: HDB), one amongst the firsts of the new generation, tech-savvy commercial banks of India, was incorporated in August 1994, after the Reserve Bank of India allowed setting up of Banks in the private sector. The Bank was promoted by the Housing Development Finance Corporation Limited, a premier housing finance company (set up in 1977) of India. HDFC Bank has 1,725 branches and over 4,232 ATMs, in 779 cities in India, and all branches of the bank are linked on an online real-time basis. As of 30 September 2008 the bank had total assets of Rs.1006.82 billion. For the fiscal year 2008-09, the bank has reported net profit of 2,244.9 crore (US$498.37 million), up 41% from the previous fiscal. Total annual earnings of the bank increased by 58% reaching at 19,622.8 crore (US$4.36 billion) in 2008-09.

It is one of the Big Four banks of India, along with State Bank of India, ICICI Bank and Punjab National Bank—its main competitors.

7

History

HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation Limited (HDFC), India's largest housing finance company. It was among the first companies to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. The Bank started operations as a scheduled commercial bank in January 1995 under the RBI's liberalization policies.

Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., in 2000. This was the first merger of two private banks in India. Shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank.

In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than 1,000. The amalgamated bank emerged with a base of about Rs. 1, 22,000 crore and net advances of about Rs.89, 000 crore. The balance sheet size of the combined entity is more than Rs. 1, 63,000 crore.

Branch network

Currently HDFC Bank has 1416 branches, 3382 ATMs, in 550 cities in India, and all

branches of the bank are linked on an online real-time basis. The bank offers many innovative

products & services to individuals, corporates, trusts, governments, partnerships, financial

institutions, mutual funds, insurance companies. It is a path breaker in the Indian banking

sector. In 2007 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to

more than 1,000. Though, the official license was given to Centurion Bank of Punjab

branches, to continue working as HDFC Bank branches, on May 23, 2008.

BOARD OF DIRECTORS

• Mr. Aditya Puri (Managing Director)

• Mr. Keke Mistry

• Dr. (Mrs.) Amla Samanta

• Mr. Venkat Rao Gadwal

• Mr. Anil Ahuja

• Mr. Vineet Jain

• Mr. Ranjan Kapoor

• Mr. Bobby Parikh

8

• Mrs. Renu Karnal

VICE President (Legal ) & Co. Secretary

• Mr. Sanjay Dongre

Auditor

• P.C. Honsolia & Co. (Chartered Accountant)

Registered Office

HDFC Bank House

Senapati Bapat Marg

Loveer Parel Mumbai – 400013

Tel. No. 56521000

Fax No. 24960739

Web. Site – www.hdfcbank.com

BUSINESS FOCUS

HDFC Bank's mission is to be a World-Class Indian Bank. The Bank's aim is to build sound

customer franchises across distinct businesses so as to be the preferred provider of banking

services in the segments that the bank operates in and to achieve healthy growth in

profitability, consistent with the bank's risk appetite. The bank is committed to maintain the

highest level of ethical standards, professional integrity and regulatory compliance. HDFC

Bank's business philosophy is based on four core values: Operational Excellence, Customer

Focus, Product Leadership and People.

BUSINESS PROFILE

9

HDFC Bank caters to a wide range of banking services covering commercial and investment

banking on the wholesale side and transactional/branch banking on the retail side. The bank

has three key business areas:

(a) Wholesale Banking Services

The Bank's target market is primarily large, blue chip manufacturing companies in the Indian

corporate sector and to a lesser extent, emerging midsized corporate. For these corporate, the

Bank provides a wide range of commercial and transactional banking services, including

working capital finance, trade services, transactional services, cash management, etc. The

bank is also a leading provider of structured solutions that combine cash' management

services with vendor and distributor finance for facilitating superior supply chain

management for its corporate customers.

(b) Retail Banking Services

The objective of the Retail Bank is to provide its target market customers a full range of

financial products and banking services, giving the customer a one stop window for all

his/her banking requirements. The products are backed by world class service and delivered

to the customers through the growing branch network, as well as through alternative delivery

channels like ATMs, Phone Banking, Net Banking and Mobile Banking.

The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and

the Investment Advisory Services programs have been designed keeping in mind needs of

customers who seek distinct financial solutions, information and advice on various

investment avenues. The Bank also has a wide array of retail loan products including Auto

Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It’s

also a leading provider of Depository Services to retail customers, offering customers the

facility to hold their investments in electronic form. HDFC Bank was the first bank in India

to launch an International Debit Card in association with VISA (VISA Electron) and issues

the MasterCard Maestro debit card as well. The debit card allows the user to directly debit his

account at the point of purchase at a merchant establishment, in India and overseas. The Bank

launched its credit card in association with VISA in November 2001. The Bank is also one of

the leading players in the "merchant acquiring" business with over 25,000 Point-of-sale

(POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is

well positioned as a leader in various net-based B2C opportunities including a wide range of

Internet banking services for Fixed Deposits, Loans, Bill Payments., etc.

(c) Treasury Operations

10

Within this business, the bank has three main products areas-Foreign Exchange and

Derivatives, Local Currency Money Market & Debt Securities, and Equities With the

liberalization of the financial markets in India, corporate need more sophisticated risk

management information, advice and product structures. These and fine pricing on various

treasury products are provided through the bank's Treasury team. To comply with statutory

reserve requirements, the bank is required to hold 25% of its deposits in government

securities. The Treasury business is responsible for managing the returns and market risk on

this investment portfolio.

Strengths

• Highest level of ethical standards

• Professional integrity

• Corporate governance

• Regulatory compliance

Business Philosophy

The four values are the bank’s business philosophy,

• Operational Excellence

• Customer Focus

• Product Leadership

• People

Product Range

11

Product range of HDFC Bank

Accounts & Deposits

Loans CardsInvestment & Insurance

Forex Services

Access your bank

12

Accounts & Deposits

Savings A/C

Salary A/C

Current A/C

Fixed Deposit A/C

Demat A/C

Safe Deposits Locker

Loans

Education-al loan

Two- wheeler Loan

Personal loan

Home loan

Gold Loan

Loan against Property

Tractor Loan

Cards

Debit Card

Prepaid Card

Credit Card

Investment &Insurance

13

Mutual Fund

Insuran-ce

Bonds General & health Insurance

Knowledge Center

Equities & Derivativ--es

Mudra Gold Bar

Forex Services

Product & Services

Forex Limited

RBI Guidelines

Forex service Branch Locator

Trade Services

Access Your Bank

E-Mail Statement

Branch Network

Net banking

Phone Banking

Mobile Banking

ATM

ACHIEVEMENTS

2013

NASSCOM CNBC-TV18 IT Innovation Award

Best IT Driven Innovation in Banking (COMMERCIAL)

The National Quality Excellence Awards

Best Customer Service Result

FE Best Bank Awards

HDFC Bank wins in 3 categories at FE Best Bank Awards

Skoch Financial Inclusion Awards 2013

Organisation of the Year

14

2012

DSCI Information Technology Award 2012

- Security in Bank (2nd time in a row)- Security Leader of the Year (Banking)

Businessworld Awards for Banking Excellence 2012

- Most tech-friendly Bank - Deal of the year (Rupee Bonds)

HT-Mars Customer satisfaction survey

- Winner: Bank and Credit Card customer satisfaction Survey

CSO Forum Information Technology Award 2012

- Best Organisation for Information Security Practice (2nd time in a row)

Economic Times ET Awards for Corporate Excellence - Company of the Year 2012

CNBC TV18's India Best Banks and Financial Institutions Awards 2012

Best Private sector Bank

Mint-Aon Hewitt study on India's Best Managed Boards 2012

Our Bank among India's six best managed Boards 2012

Forbes Asia Fab 50 Companies - Winning for the 6th year

IBA Banking Technology Awards 2011

- Best Online Bank- Best use of Business Intelligence- Best Customer Relationship Initiative- Best Risk Management & Security Initiative- Best use of Mobility Technology in Banking

Dun & Bradstreet Banking Awards 2012

- Overall Best Bank- Best Private Sector Bank- Asset Quality - Private Sector- Retail Banking -Private Sector

IDRBT Banking Technology Excellence Awards 2011-12

Best Bank in 'IT for Operational Effectiveness' category

Asia Money 2012 Best Domestic Bank in India

India's Top 500 Companies -Dun & Bradstreet

Best Bank in India

15

Corporate Awards

Finance Asia - Best Managed Company- Best CEO - Mr. Aditya Puri

UTI Mutual Fund CNBC TV 18 Financial Advisor Awards 2011

- Best Performing Bank - Private

Asian Banker International Excellence in Retail Financial Services Awards 2012

- Best Retail Bank in India- Best Bancassurance- Best Risk Management

5th Loyalty Summit award

Customer and Brand Loyalty

Skoch foundation 2012

SHG/JLG linkage programme

ICAI Awards 2011 Excellence in Financial Reporting

HDFC Bank has been considered as the best bank by Bloomberg UTV's Financial

Leadership Awards 2011.

HDFC Bank wins IDC FIIA Awards 2011 for Excellence in Customer Experience.

Business Worlds Best Bank Award

HDFC Bank wins the Asian Banker Best retail Bank in India Award 2008 for

outstanding performance.

Best Bank in Private Sector in 2010

Has been listed as world’s top 1000 banks in the Banker magazine.

16

HDFC Bank wins IBA Banking Technology Awards 2010 for the winner of:

1) Technology Bank of the Year

2) Best Online Bank

3) Best Customer Initiative

4) Best Use of Business Intelligence

5) Best Risk Management System

Runners Up -

Best Financial Inclusion

HDFC Progress Chart

17

COMPETITORS

18

Competitors and other players in the field:-

Top Performing Public Sector Banks

• Andhra Bank

• Allahabad Bank

• Punjab National Bank

• Dena Bank

• Vijaya Bank

Top Performing Private Sector Banks

• SBI Bank

• ICICI Bank

• AXIS Bank

• Kotak Mahindra Bank

• Centurion Bank of Punjab

Top Performing Foreign Banks

• Citibank

• Standard Chartered

• HSBC Bank

• ABN AMRO Bank

• American Express

Capital adequacy as at December 31, 2012 (Standalone) ` lacs, except ratios Basel II

Tier-1 capital 3,129,419

Tier-2 capital 1,750,600

Total capital funds of the Bank 4,880,019

Total capital required 2,584,560

Tier-1 capital adequacy ratio 10.9%

Total capital adequacy ratio 17.0%

19

Balance sheet(Rs crore)

Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Sources of funds

Owner's fund

Equity share capital 469.34 465.23 457.74 425.38 354.43

Share application money 0.30 - - 400.92 -

Preference share capital - - - - -

Reserves & surplus 29,455.04 24,914.04 21,064.75 14,226.4311,142.8

0

Loan funds

Secured loans - - - - -

Unsecured loans 2,46,706.45 2,08,586.41 1,67,404.44 1,42,811.581,00,768

.60

Total 2,76,631.12 2,33,965.67 1,88,926.93 1,57,864.311,12,265

.83

Uses of funds

Fixed assets

20

Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Gross block 5,930.24 5,244.21 4,707.97 3,956.63 2,386.99

Less : revaluation reserve - - - - -

Less : accumulated depreciation 3,583.05 3,073.56 2,585.16 2,249.90 1,211.86

Net block 2,347.19 2,170.65 2,122.81 1,706.73 1,175.13

Capital work-in-progress - - - - -

Investments 97,482.91 70,929.37 58,607.62 58,817.5549,393.5

4

Net current assets

Current assets, loans & advances 21,721.64 14,601.08 5,955.15 6,356.83 4,402.69

Less : current liabilities & provisions 37,431.87 28,992.86 20,615.94 22,720.6216,431.9

1

Total net current assets -15,710.23 -14,391.78 -14,660.79 -16,363.79

-12,029.2

2

Miscellaneous expenses not written - - - - -

Total 84,119.87 58,708.23 46,069.63 44,160.4938,539.4

5

Notes:

Book value of unquoted investments - - - - -

Market value of quoted investments - - - - -

Contingent liabilities 8,83,985.32 5,88,550.98 4,87,176.37 4,14,533.935,99,928

.79

Number of equity sharesoutstanding (Lacs) 23466.88 4652.26 4577.43 4253.84 3544.33

Profit loss account(Rs crore)

21

Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Income

Operating income 32,539.11 24,393.60 19,958.76 19,770.72 12,354.41

Expenses

Material consumed - - - - -

Manufacturing expenses - - - - -

Personnel expenses 3,399.91 2,836.04 2,289.18 2,238.20 1,301.35

Selling expenses 152.48 158.95 83.12 108.68 114.73

Adminstrative expenses 5,146.73 4,552.96 4,936.73 4,583.86 2,247.48

Expenses capitalised - - - - -

Cost of sales 8,699.12 7,547.95 7,309.02 6,930.74 3,663.56

Operating profit 8,850.41 7,460.57 4,863.44 3,928.87 3,803.73

Other recurring income -103.98 - 17.72 - 43.04

Adjusted PBDIT 8,746.43 - 4,881.17 - 3,846.77

Financial expenses 14,989.58 9,385.08 7,786.30 8,911.10 4,887.12

Depreciation 542.52 497.41 394.39 359.91 271.72

Other write offs - - - - -

Adjusted PBT -6,785.66 -2,421.92 4,486.77 -5,342.14 -1,312.07

Tax charges 2,606.80 1,892.86 1,340.99 1,054.92 690.90

Adjusted PAT 5,165.58 3,927.22 2,944.68 2,240.75 1,589.48

Non recurring items 1.51 -0.82 4.02 4.19 0.70

Other non cash adjustments -2.12 -2.65 -0.93 -0.59 -0.06

Reported net profit 5,164.97 3,923.75 2,947.77 2,244.35 1,590.12

Earnigs before appropriation 11,339.21 8,456.55 6,403.33 4,818.98 3,522.15

Equity dividend 1,009.08 767.62 549.29 425.38 301.27

Preference dividend - - - - -

Dividend tax 163.70 124.53 91.23 72.29 51.20

Retained earnings 10,166.43 7,564.40 5,762.81 4,321.31 3,169.68

22

Cash flow(Rs crore)

Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Profit before tax 7,513.17 5,818.66 4,289.14 3,299.25 2,280.63

Net cashflow-operating activity -11,355.61 -375.83 9,389.89 -1,736.14 3,583.43

Net cash used in investing activity -686.85 -1,122.74 -551.51 -663.78 -619.82

Netcash used in fin. activity 3,286.19 1,227.99 3,598.91 2,964.66 3,628.34

Net inc/dec in cash and equivlnt -8,731.11 -273.56 12,435.78 564.74 6,591.95

Cash and equivalnt begin of year 29,668.83 29,942.40 17,506.62 14,778.34 8,074.54

Cash and equivalnt end of year 20,937.73 29,668.83 29,942.40 15,343.08 14,666.49

23

1.1

ORGANISATIONAL CHART OF HDFC BANK

24

ORGANISATIONAL CHART AS ON 31ST MARCH, 2013

25

1.2

SWOT ANALYSIS

26

SWOT ANALYSIS

STRENGTHS:

It has an extensive distribution network comprising of 535 branches in 312 cities &

one international office in Dubai this provides a competitive edge over the

competitors.

The Bank has a strong retail depository base & has more than million customers.

Bank has strong brand equity.

ISO 9001 certification for its depository & custody operations & for its backend

processing of retail operations & direct banking operation.

The bank is a market leader in cash settlement service for the major stock exchanges

in its country.

HDFC Bank is one of the largest private sector banks working in India.

It has a highly automated environment in terms of information technology &

communication system.

Infrastructure is one of the best in the country.

It has many innovative products like kids Advantage scheme, NRI services.

WEAKNESSES

Account opening and delivery of cheque book take more time. Lack of availability of

different credit products like CC Limit, Bill discounting facilities.

Complicated terms and conditions of products, which is not easily understandable by

the layman.

OPPORTUNITIES

Branch expansion

Door step services

Greater liberalization is foreign ownership via FDI in Indian Pvt. Sector banks.

Infrastructure movements & better systems for trading & settlement in the Govt.

Securities & foreign exchange markets.

THREATS

The bank has started facing competition from players like SBI, PNB in the finance

market itself. This may reduce the profit margins in the future.

Some Pvt. Banks have 7 days banking.

27

CHAPTER -2

INTRODUCTION

ABOUT

E-BANKING

28

WHAT IS E-BANKING?

Electronic banking is one of the truly widespread avatars of E-commerce the world over.

Various authors define E-Banking differently but the most definition depicting the meaning

and features of E-Banking are as follows:

1. Banking is a combination of two, Electronic technology and Banking.

2. Electronic Banking is a process by which a customer performs banking Transactions

electronically without visiting a brick-and-mortar institutions.

3. E-Banking denotes the provision of banking and related service through Extensive use of

information technology without direct recourse to the bank by the customer.

Electronic banking (or net banking) refers to an application of the Internet that allows

customers to dial into bank networks or their websites, using their own telephones and

computers, and to get a host of banking services directly on their home or office PCs. Net

banking offers you armchair convenience and access to your account information from

anywhere in the world, at any time of the day or night.

29

INFORMATION TECHNOLOGY

CUSTOMER

Electronic banking, also known as electronic fund transfer (EFT), uses computer and

electronic technology as a substitute for checks and other paper transactions. EFTs are

initiated through devices like cards or codes that let you, or those you authorize, access your

account. Many financial institutions use ATM or debit cards and Personal Identification

Numbers (PINs) for this purpose. Some use other types of debit cards such as those that

require, at the most, your signature or a scan. For example, some use radio frequency

identification (RFID) or other forms of “contactless” technology that scan your information

without direct contact. The federal Electronic Fund Transfer Act (EFT Act) covers some

electronic consumer transactions.

Electronic Fund Transfers EFTs offer several services that you may find practical:

• ATMs are electronic terminals that let you bank almost any time. To withdraw cash,

make deposits, or transfer funds between accounts, you generally insert an ATM card

and enter your PIN. Some financial institutions and ATM owners charge a fee,

particularly if you don’t have accounts with them or if you engage in transactions at

remote locations. Generally, ATMs must tell you they charge a fee and its amount on

or at the terminal screen before you complete the transaction. Check the requirements

with your institution and at ATMs you use for more information about these fees.

• Direct Deposit lets you authorize specific deposits, (like paychecks and Social

Security checks and other benefits) to your account on a regular basis. You also may

pre-authorize direct withdrawals so that recurring bills (like insurance premiums,

mortgages, utility bills, and gym memberships) are paid automatically. Be cautious

before you pre-authorize direct recurring withdrawals to pay companies you aren’t

familiar with; funds from your bank account could be withdrawn improperly. Also

monitor your bank account to ensure that direct recurring payments from your account

to others are for the correct amount.

• Pay-by-Phone Systems let you call your financial institution with instructions to pay

certain bills or to transfer funds between accounts. You must have an agreement with

the institution to make such transfers.

30

• Personal Computer Banking lets you handle many banking transactions via your

personal computer. For instance, you may use your computer to view your account

balance, request transfers between accounts, and pay bills electronically.

• Debit Card Purchase or PaymentTransactionslet you make purchases or payments

with a debit card, which also may be your ATM card. This could occur at a store or

business, online, or by phone. The process is similar to using a redit card, with some

important exceptions. While the process is fast and easy, a debit card purchase or

payment transfers money – fairly quickly – from your bank account to the company’s

account. So it’s important that you have funds in your account to cover your purchase.

This means you need to keep accurate records of the dates and amounts of your debit

card purchases, payments, and ATM withdrawals. Also be sure you know the store or

business before you provide your debit card information to avoid the possible loss of

funds through fraud. Your liability for unauthorized use, and your rights for error

resolution, may be different for a debit card than a credit card.

• Electronic Check Conversion converts a paper check into an electronic payment in a

store or when a company receives your check in the mail.When you give your check

to a cashier in a store, the check is run through an electronic system that captures your

banking information and the amount of the check. You’re asked to sign a receipt and

you get a copy for your records. When your check is handed back to you, it should be

voided or marked by the merchant so that it can’t be used again. The merchant

electronically sends information from the check (but not the check itself ) to your

bank or other financial institution, and the funds are transferred into the merchant’s

account. When you mail-in a check for payment to a merchant or other company, they

may electronically send information from your check (but not the check itself )

through the system, and the funds are transferred from your account into their

account. For a mailed check, you should still receive advance notice from a company

that expects to send your check information through the system electronically. For

example, the merchant or other company might include the notice on your monthly

statement. The notice also should state if the merchant or company will electronically

collect from your account a fee – like “bounced check” fee – if you have insufficient

funds to cover the transaction.

31

32

FEATURES OF E-BANKING

• E-Banking provides exceptional rates on saving, CDs and IRAs.

• Checking with no monthly fees, free bill payment and rebates on ATM surcharge.

• Credit cards with low rates.

• Easy online applications for all accounts, including personal loans and mortgage.

• 24 hours account access.

• It provides quality customer service with personal attention.

• It provides quick services to their customers.

• Enables transfer of funds from one place to another (banks).

• Exchange of statistical information amongst bank.

• Enables foreign exchange operations.

• Inter-bank applications like settlement of funds between banks.

• Provide facilities like Demat operation, ATM operation, online banking.

• Make payment of bills

33

NEED FOR E-BANKING

One has to approach the branch in person, to withdraw cash or deposit a cheque or request a

statement of accounts. In true Internet banking, any inquiry or transaction is processed online

without any reference to the branch (anywhere banking) at any time. Providing Internet

banking is increasingly becoming a "need to have" than a "nice to have" service. The net

banking, thus, now is more of a norm rather than an exception in many developed countries

due to the fact that it is the cheapest way of providing banking services.

Banks have traditionally been in the forefront of harnessing technology to improve their

products, services and efficiency. They have, over a long time, been using electronic and

telecommunication networks for delivering a wide range of value added products and

services. The delivery channels include direct dial – up connections, private networks, public

networks etc and the devices include telephone, Personal Computers including the Automated

Teller Machines, etc. With the popularity of PCs, easy access to Internet and World Wide

Web (WWW), Internet is increasingly used by banks as a channel for receiving instructions

and delivering their products and services to their customers. This form of banking is

generally referred to as Internet Banking, although the range of products and services offered

by different banks vary widely both in their content and sophistication.

34

EVOLUTION OF E-BANKING

The story of technology in banking started with the use of punched card machines like

Accounting Machines or Ledger Posting Machines. The use of technology, at that time, was

limited to keeping books of the bank. It further developed with the birth of online real time

system and vast improvement in telecommunications during late 1970’s and 1980’s.it

resulted in a revolution in the field of banking with “convenience banking” as a buzzword.

Through Convenience banking, the bank is carried to the doorstep of the customer.

The 1990’s saw the birth of distributed computing technologies and Relational Data Base

Management System. The banking industry was simply waiting for these technologies. Now

with distribution technologies, one could configure dedicated machines called front-end

machines for customer service and risk control while communication in the batch mode

without hampering the response time on the front end machine.

Intense competition has forced banks to rethink the way they operated their business. They

had to reinvent and improve their products and services to make them more beneficial and

cost effective. Technology in the form of E-banking has made it possible to find alternate

banking practices at lower costs. More and more people are using electronic banking products

and services because large section of the banks future customer base will be made up of

computer literate customer, the banks must be able to offer these customer products and

services that allow them to do their banking by electronic means. If they fail to do this will,

simply, not survive. New products and services are emerging that are set to change the way

we look at money and the monetary system.

35

Traditional Banking

Gunpowder

Personalized service, time-consuming, limited access.

Virtual or E- Banking

Nuclear Charged

Real time transactions, integrated platform, all time access.

E-BANKING PRODUCTS

Automated Teller Machine (ATM )

These are cash dispensing machine, which are frequently seen at banks and other locations

such as shopping centres and building societies. Their main purpose is to allow customer to

draw cash at any time and to provide banking services where it would not have been viable to

open another branch e.g. on university campus. An automated teller machine or automatic

teller machine (ATM) is a computerized telecommunications device that provides a financial

institution's customers a method of financial\ transactions in a public space without the need

for a human clerk or bank teller. On most modern ATMs, the customer identifies him or

herself by inserting a plastic ATM card with a magnetic stripe or a plastic smartcard with a

chip that contains his or her card number and some security information, such as an

expiration date or CVC (CVV). Security is provided by the customer entering a personal

identification number (PIN).

Using an ATM, customers can access their bank accounts in order to make cash withdrawals

(or credit card cash advances) and check their account balances. Many ATMs also allow

people to deposit cash or checks, transfer money between their bank accounts, pay bills, or

purchase goods and services.

ATMs are known by various casual terms including cash machine, hole-in-the wall, cash

point or Bancomat (in Europe and Russia). The occasionally-used ATM Machine is a

example of RAS syndrome.

36

Some of the advantages of ATM to customers are:-

• Ability to draw cash after normal banking hours

• Quicker than normal cashier service

• Complete security as only the card holder knows the PIN

• Does not just operate as a medium of obtaining cash.

• Customer can sometimes use the services of other bank ATM’s.

Tele Banking or Phone Banking

Telephone banking is relatively new Electronic Banking Product. However it is fastly

becoming one of the most popular products. Customer can perform a number of transactions

from the convenience of their own home or office; in fact from anywhere they have access to

phone. Customers can do following:-

• Check balances and statement information

• Transfer funds from one account to another

• Pay certain bills

• Order statements or cheque books

• Demand draft request

This facility is available with the help of Voice Response System (VRS). This system

basically, accepts only TONE dialed input. Like the ATM customer has to follow particular

process, initially account number and telephone PIN are fed for the process to start. Also the

VRS system provides the users within additional facilities such as changing existing

password with the new desired, information about new products, current interest rates etc.

Mobile Banking

Mobile banking comes in as a part of the banks initiative to offer multiple channel banking

providing convenience for its customer. A versatile multifunctional, free service that is

accessible and viewable on the monitor of mobile phone. Mobile phones are playing great

role in Indian banking- both directly and indirectly. They are being used both as banking and

other channels.

Internet banking

The advent of the Internet and the popularity of personal computers presented both an

opportunity and a challenge for the banking industry. For years, financial institutions have

used powerful computer networks to automate million of daily transactions; today, often the

only paper record is the customer’s receipt at the point of sale. Now that their customers are

37

connected to the Internet via personal computers, banks envision similar advantages by

adopting those same internal electronic processes to home use. Banks view online banking as

a powerful “value added” tool to attract and retain new customers while helping to eliminate

costly paper handling and teller interactions in an increasingly competitive banking

environment. In India first one to move into this area was ICICI Bank. They started web

based banking as early as august 1997.

ADVANTAGES OF INTERNET BANKING

• Convenience- Unlike your corner bank, online banking sites never close; they’re

available 24 hours a day, seven days a week, and they’re only a mouse click away.

• Ubiquity- If you’re out of state or even out of the country when a money problem

arises, you can log on instantly to your online bank and take care of business, 24\7.

• Transaction speed- Online bank sites generally execute and confirm transactions at

or quicker than ATM processing speeds.

• Efficiency-You can access and manage all of your bank accounts, including IRA’s,

CDs, even securities, from one secure site.

• Effectiveness- Many online banking sites now offer sophisticated tools, including

account aggregation, stock quotes, rate alert and portfolio managing program to help

you manage all of your assets more effectively. Most are also compatible with money

managing programs such as quicken and Microsoft money.

DISADVANTAGES OF INTERNET BANKING

• Start-up may take time-In order to register for your bank’s online program, you will

probably have to provide ID and sign a form at a bank branch. If you and your spouse

wish to view and manage their assets together online, one of you may have to sign a

durable power of attorney before the bank will display all of your holdings together.

• Learning curves- Banking sites can be difficult to navigate at first. Plan to invest

some time and\or read the tutorials in order to become comfortable in your virtual

lobby.

• Bank site changes- Even the largest banks periodically upgrade their online

programs, adding new features in unfamiliar places. In some cases you may have to

re-enter account information.

38

E- BANKING SERVICES

1. Bill payment service

Each bank has tie-ups with various utility companies, service providers and insurance

companies, across the country. It facilitates the payment of electricity and telephone bills,

mobile phone, credit card and insurance premium bills. To pay bills, a simple one-time

registration for each biller is to be completed. Standing instructions can be set, online to pay

recurring bills, automatically. One-time standing instruction will ensure that bill payments do

not get delayed due to lack of time. Most interestingly, the bank does not charge customers

for online bill payment.

2. Fund transfer

Any amount can be transferred from one account to another of the same or any another bank.

Customers can send money anywhere in India. Payee’s account number, his bank and the

branch is needed to be mentioned after logging in the account. The transfer will take place in

a day or so, whereas in a traditional method, it takes about three working days. ICICI Bank

says that online bill payment service and fund transfer facility have been their most popular

online services.

3. Credit card customers

Credit card users have a lot in store. With Internet banking, customers can not only pay their

credit card bills online but also get a loan on their cards. Not just this, they can also apply for

an additional card, request a credit line increase and God forbid if you lose your credit card,

you can report lost card online.

4. Railway pass

This is something that would interest all the common people. Indian Railways has tied up

with ICICI bank and you can now make your railway pass for local trains online. The pass

will be delivered to you at your doorstep. But the facility is limited to Mumbai, Thane, Nasik,

Surat and Pune. The bank would just charge Rs 10 + 12.24 percent of service tax.

5. Investing through Internet banking

Opening a fixed deposit account cannot get easier than this. An FD can be opened online

through funds transfer. Online banking can also be a great friend for lazy investors.

Now investors with interlinked demat account and bank account can easily trade in the stock

market and the amount will be automatically debited from their respective bank accounts and

39

the shares will be credited in their demat account. Moreover, some banks even give the

facility to purchase mutual funds directly from the online banking system. So it removes the

worry about filling those big forms for mutual funds, they will now be just a few clicks away.

Nowadays, most leading banks offer both online banking and demat account. However if the

customer have there demat account with independent share brokers, then need to sign a

special form, which will link your two accounts.

6. Recharging your prepaid phone

Now there is no need to rush to the vendor to recharge the prepaid phone, every time the talk

time runs out. Just top-up the prepaid mobile cards by logging in to Internet banking. By just

selecting the operator's name, entering the mobile number and the amount for recharge, the

phone is again back in action within few minutes.

7. Shopping at your fingertips

Leading banks have tie ups with various shopping websites. With a range of all kind of

products, one can shop online and the payment is also made conveniently through the

account. One can also buy railway and air tickets through Internet banking.

List of Top 10 Banks operating E- Banking in India

1. State bank of India

2. HDFC Bank

3. ICICI Bank

4. Punjab National Bank

5. UTI Bank

6. Hongkong and shanghai banking corporations

7. Kotak Mahindra

8. Sundaram Bank

9. Oriental Bank of Commerce

10. IDBI Bank

40

INTERNET BANKING VERSUS TRADITIONAL BANKING

In spite of so many facilities that Internet banking offers us, we still seem to trust our

traditional method of banking and are reluctant to use online banking. But here are few cases

where Internet banking will turn out to be a better option in terms of saving the money.

• 'Stop payment' done through Internet banking will not cost any extra fees but when

done through the branch, the bank may charge you Rs 50 per cheque plus the service

tax.

• Through Internet banking, you can check your transactions at any time of the day, and

as many times as you want to.

• On the other hand, in a traditional method, you get quarterly statements from the bank

and if you request for a statement at your required time, it may turn out to be an

expensive affair. The branch may charge you Rs 25 per page, which includes only 30

transactions. Moreover, the bank branch would take eight days to deliver it at your

doorstep.

• If the fund transfer has to be made outstation, where the bank does not have a branch,

the bank would demand outstation charges. Whereas with the help of online banking,

it will be absolutely free for you.

• As per the Internet and Mobile Association of India's report on online banking 2006,

"There are many advantages of online banking. It is convenient, it isn't bound by

operational timings, there are no geographical barriers and the services can be offered

at a miniscule cost."

41

Traditional bankingGunpowderPersonalized services, timeconsuming, limited access

Virtual or E-bankingNuclear chargedReal time transactions,integrated platform, all timeaccess

USAGE OF E-BANKING

The rise in the e-commerce and the use of internet in its facilitation along with the enhanced

online security of transactions and sensitive information has been the core reason for the

penetration of online banking in everyday life. According to the latest official figures from

the office of National Statistics ( ONS 2007) indicate that subscriptions to the internet has

grown more than 50% from 25 million in 2005 to 45 million in 2007 in India. It has also been

estimated that 60% of the population in India use internet in their daily lives. The

fundamental shift towards the involvement of the customer in the financial service provision

with the help of the technology especially internet has helped to reduce the costs of financial

institutions as well as helped client to use the service at anytime and from virtually anywhere

with access to an internet connection. The use of electronic banking has removed personnel

that facilitate the transactions and has placed additional responsibilities on the customers to

transact with the service. The computerization of the banking operations has made maximum

impact on:-

1) Internal Accounting System

2) Customer service

3) Diversification of system

42

E-BANKING WORLD WIDE

Since its inception, Internet banking has experienced strong and sustained growth.

World Bank report on leapfrogging in e-finance pointed out that the three countries with

impressive progress in information technology in this sense are Estonia, Republic of Korea

and Brazil. Creation of the world’s leading electronic banking systems has been done at a

remarkably low cost compared to other world-class internet banks. In the European Union, 60

million people, representing 18 per cent of the adult population, use online banking In

France, the number of online banking accounts is recording an annual growth rate of 75 per

cent. However, Estonia is a country that has become a leader in Internet banking (which now

reaches 18 per cent of the population), not only among Eastern European countries but in

world rankings, through a combination of easy to-use software, free-of-charge transactions

and behaviour changes resulting from the influence of the Nordic countries’ IT culture on

Estonia.

A sector in which Latin America is seems to be performing better than in other industries is

online retail banking. Growth in this area has been driven by traditional banks, which have

used the online channel to generate customer loyalty and improve their operating margins.

Two Brazilian banks, Bradesco and Banco do Brasil, have thus achieved more than 4 million

online customers each. Mexico is another leader of Internet banking in Latin America. It

adopted legislation providing for the development of both E-Commerce and e-finance.

43

In Mexico, the number of online bank users more than tripled from 700,000 in 2000 to 2.4

million in 2001, and it could reach 4.5 million in 2005 (E-Marketer 2002b). One reason for

the success of Latin American banks’ online ventures seems to be the attention they have

paid to providing retail customers with multiple ways to access their accounts (Internet,

telephone, wireless). However, given that the share of the total population that actually has a

bank account is relatively small, the expansion of Latin American online banking may be

facing a bottleneck.

Compared with overall Internet usage estimated at 4.4 million in Australia, the major banks

together have attracted only 1.2 million to online banking. The Internet is a global

phenomenon and so is e-finance. Its deployment is not limited to developed countries, and

indeed some developing countries – such as India and the Republic of Korea – are

experiencing particularly strong growth in E-Banking. In Asia one of the most impressive

records has been achieved by the Republic of Korea. The Republic of Korea is leading in

online brokerage and in mobile banking. In South East Asia Internet banking is also

developing rapidly in Thailand, Malaysia, and Singapore and to a lesser extent, in the

Philippines.

In Bangladesh there is a large gap between the computerization of foreign banks and that of

local commercial banks and as regards the state of their intra- and inter branch online

networks. However, 75 per cent of local banks are planning to introduce E-Banking, which

implies very dynamic improvements.

44

2.1

NEED FOR STUDY

45

NEED FOR STUDY

• To determining growth direction of online banking service.

• Promoting E-banking services in banking industry.

• Customer perception will be taken into consideration about the internet banking

46

CHAPTER -3

OBJECTIVES OF THE STUDY

47

OBJECTIVES OF THE RESEARCH

The main objectives of the study are:

• To study the awareness level of service class people regarding E-Banking.

• To find out the frequency and the factors that influences the adoption of E-Banking

services.

• To measure the satisfaction level of people.

• To know about the current and future prospects of E-Banking to the customers.

• To understand the problems encountered in by service class people while using E-

Banking services(ATM, Phone banking, etc)

48

CHAPTER -4

LITERATURE REVIEW

49

Literature Review

1. Product and Technology group, ICICI Bank

In its paper “Corporate banking using technology in transactions” it was inferred that

Information Technology has revolutionized the services and mode of services offered by

the banks to their corporate clients. The emergence of E-Banking has enabled the banks

to offer real-time transactions and integrate all customers’ related functions. Indian Banks

are utilizing the new technology to provide better technology and convenient access to its

customers and India is thus poised to for a huge growth in the world of electronic

banking.

2. Malhotra, Pooja & Singh, B. (2010)

This study is an attempt to present the present status of Internet banking in India and the

extent of Internet banking services offered by Internet banks. In addition, it seeks to

examine the factors affecting the extent of Internet banking services. The data for this

study are based on a survey of bank websites explored during July 2008. The sample

consists of 82 banks operating in India at 31 March 2007. Multiple regression technique

is employed to explore the determinants of the extent of Internet banking services. The

results show that the private and foreign Internet banks have performed well in offering a

wider range and more advanced services of Internet banking in comparison with public

sector banks. Among the determinants affecting the extent of Internet banking services,

50

size of the bank, experience of the bank in offering Internet banking, financing pattern

and ownership of the bank are found to be significant. The purpose of the study is to help

fill significant gaps in knowledge about the Internet banking landscape in India. The

findings are expected to be of great use to the government, regulators, commercial banks,

and other financial institutions, e.g. co-operative banks planning to offer Internet banking,

bank customers and researchers. The bankers as well as society at large will come to

know where the banks lag in terms of adoption of Internet banking and in providing

different products and services. An understanding of the factors affecting the extent of

Internet banking services is essential both for economists studying the determinants of

growth and for the creators and producers of such technologies. Moreover, this paper

contributes to the empirical literature on diffusion of financial innovations, particularly

Internet banking, in a developing country, i.e. India.

3. Azouzi, D. (2009)

This paper aims to check if the current and prompt technological revolution altering the

whole world has crucial impacts on the Tunisian banking sector. Particularly, this study

seeks some clues on which we can rely in order to understand the customers' behavior

regarding the adoption of electronic banking. To achieve this purpose, an empirical

research is carried out in Tunisia and it reveals that panoply of factors is affecting the

customers-attitude toward e-banking. For instance; age, gender and educational

qualifications seem to be important and they split up the group into electronic banking

adopters and traditional banking defenders and so, they have significant influence on the

customers' adoption of e-banking. Furthermore, this study shows that despite the

presidential incentives and in spite of being fully aware of the e-baking’s benefits,

numerous respondents are still using the conventional banking. It is worthy to mention

that the fear of loss because of transactions errors or hackers plays a significant role in

alienating Tunisian customers from online banking.

4. Chandana R, Unnithan, Paula M.C., Swatman

In their research paper titled “E-Banking Adaption’s and Dot.Com viability: A

comparison of Australian and Indian experiences in the Banking sector” a comparative

study of Australian and Indian experiences in E-Business was done, which seeks to

identify the effectiveness of dotcoms as indicators of e-Business uptake and success on a

sector-by-sector basis was undertaken. It was concluded that the banking industry is now

51

a very mature one and banks are being forced to change rapidly as a result of open market

forces such as the threat of competition, customer demand, and technological innovations

such as the growth of the Internet. E-Banking is a successful strategic weapon for banks

to remain profitable in a volatile and competitive market place of today in both Indian and

Australian Economies despite the differences of IT usage.

5. Uppal, R.K. & Chawla, R. (2009)

This study highlights customer perceptions regarding e-banking services. A survey of

1,200 respondents was conducted in October 2008 in Ludhiana district, Punjab. The

respondents were equally divided among three bank groups namely, public sector, private

sector and foreign banks. The present study investigates the perceptions of the bank

customers regarding necessity of e-banking services, quality of e-banking services, bank

frauds, future of e-banking, preference of bank customers regarding banks, comparative

study of banking services in various bank groups, preferences regarding use of e-channels

and problems faced by e-bank customers. The major finding of this study is that

customers of all bank groups are interested in e-banking services, but at the same time are

facing problems like, inadequate knowledge, poor network, lack of infrastructure,

unsuitable location, misuse of ATM cards and difficulty to open an account. Keeping in

mind these problems faced by bank customers, this paper frames some strategies like

customer education, seminars/meetings, proper network and infrastructure facilities,

online shopping facilities, proper working and installation of ATM machines, etc., to

enhance e-banking services. Majority of professionals and business class customers as

well as highly educated and less educated customers also feel that e-banking has

improved the quality of customer services in banks.

6. G. Kannabiran and P.C. Narayan

They discuss in their article the experiences of a private-sector bank in deploying Internet

banking and eCommerce in India. Strategic alignment of business and IT strategies,

planning and implementation of e banking initiatives, and management of benefits have

been captured, along with key contributions to development.

7. Huggins

He points to the fact that traditional boundaries in banking are disappearing. Using E-

Business methods, major retailers and telecom providers are starting to offer financial

services to their clients. Extending the value chain and offering versatile services seems to

be the key to retaining competitiveness in the sector. Attitudes are also shifting from

52

direct transactions to savings and investments, as the baby boomers reach their fortis and

fifties, and prepare for retirement.

8. Shah & Braganza (2007),

This survey indicates the Critical Success Factors in ebanking and the author suggest in

this article that the organizational factors, which are critical to the success of e-banking,

are investigated. Different pieces of literature report different factors as key to success

and generally based on subjective, perceptual data. A synthesis of existing literature is a

basis for survey questions. The data was collected from UK based financial sector

organizations who are offering their services on electronic channels, using postal

questionnaires. The top factors found to be most critical for the success in e-banking are:

quick responsive products/services, organizational flexibility, services expansion, systems

integration and enhanced customer service. An important lesson from this research is that

organizations need to view the e-banking initiative as a business critical area rather than

just a technical issue. They need to give attention to internal integration, which may

include channels, technology and business process integration, and improving the overall

services to their customers.

9. Veneeva (2006)

This article describes that world is changing at a staggering rate and technology is

considered to be the key driver for these changes around us. Many activities are handled

electronically due the acceptance of information technology at home as well as at

workplace. Internet can be seen as a truly global phenomenon that has made time and

distance irrelevant to many transactions. The evolution of electronic banking started from

the use of automatic teller machines (ATM) and has passed through telephone banking,

direct bill payment, electronic fund transfer and the revolutionary online banking (Alter,

2002). The future of electronic banking according to some is the acceptance of WAP

enabled banking and interactive-TV banking (Petrus & Nelson, 2006). But it has been

forecasted that among all the categories, online banking is the future of electronic

financial transaction. The rise in the e-commerce and the use of internet in its facilitation

along with the enhanced online security of transactions and sensitive information has

been the core reasons for the penetration of online banking in everyday life.

10. Mario Martinez Guerreroin

His paper titled “Profiling the adoption of Online banking Services in the European

Union” offers an empirical investigation on the adoption of online banking services

among European citizen. The use of E-banking services is explained on the basis of

53

socio-demographic and Internet – specific behavioural indicators. The performed analyses

provide support for the influence of country, age, profession and several Internet

behaviours on the use of E-banking.

11. Nitsure, R.R. (2003),

This article indicates the E-banking Challenges and opportunities lies in the banking

industry. E-banking has the potential to transform the banking business as it significantly

lowers transaction and delivery costs. This paper discusses some of the problems

developing countries, which have a low penetration of information and

telecommunication technology, face in realizing the advantages of e-banking initiatives.

Major concerns such as the 'digital divide' between the rich and poor, the different

operational environments for public and private sector banks, problems of security and

authentication, management and regulation, and inadequate financing of small and

medium scale enterprises (SMEs) are highlighted.

12. The Indian Internet Banking Journey

In 2001, a Reserve Bank of India survey revealed that of 46 major banks operating in

India, around 50% were either offering Internet banking services at various levels or

planned to in the near future. According to a research report,( India Research, Kotak

Securities, May 2000.) while in 2001, India's Internet user base was an estimated 9 lakh;

it was expected to reach 90 lakh by 2003. Also, while only 1% of these Internet users

utilized the Internet banking services in 1998, the Internet banking user base increased to

16.7% by mid- 2000.

54

CHAPTER -5

RESEARCH METHODOLOGY

55

RESEARCH: Research refers to the systematic method consisting of enumerating of

problem, formulating the hypothesis, collecting the facts or data, analyzing the facts and

reaching certain conclusions either in the form of solutions towards the concerned problem or

in certain generalizations for some theoretical formulation. Research is defined as human

activity based on intellectual application in the investigation of matter. The primary purpose

for applied research is discovering, interpreting, and the development of methods and systems

for the advancement of human knowledge on a wide variety of scientific matters of our world

and the universe.

NEED FOR RESEARCH

Every market has to be competitive in his operation to survive and also able to make more

profits. To achieve their objectives they must be careful about their customers. They must

know the satisfaction level of the customer and the usage of their products.

Customer is the king of the market. Today’s market is directed by the customer, so it

is necessary for each and every type of business to know about the varying nature of their

customers, by which they can provide best services to them. By this they will be able to retain

the customer for a long period. All this results in increased demand , higher market share and

more profits.

56

If a company knows about the needs and behavior of its customers, then it can

develop its strategies according to their need. It is also said that the cost of attracting a new

customer is five times more than as existing customer. So a company should try to satisfy its

customers.

So that’s why “Housing Development financial corporation” has decided to do a

research to know the awareness level of service class people regarding E- Banking services

and to understand the problems encountered while using E-banking services.

RESEARCH METHODOLOGY

Meaning of Research Methodology;-

A research methodology defines what the activity of research is, how to proceed, how to

measure progress, and what constitutes success.

Methodology is defined as

1. "the analysis of the principles of methods, rules, and postulates employed by a

discipline" or

2. "the development of methods, to be applied within a discipline"

3. "a particular procedure or set of procedures".

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. It is necessary for

the researcher to know not only the research methods/ techniques but also the

methodology. Researcher not only need to know how to develop certain indices or tests,

how to calculate the mean, median, mode or the standard deviation or chi-square, how to

apply a particular research technique, but they also need to know which of these methods

or techniques, are relevant and which are not.

57

Research methodology to be adopted for the study is as follows:-

Identification of the problem:-

The research project relates to know the “E-Banking Preference among people with special

reference to HDFC Bank.’. In it the problem proposed is to be researched is to find out the

frequency and the factors that influence the adoption of E-Banking services and the problems

which are faced by service class people while opting E-Banking Services.

Planning the research design:-

A suitable design has to be planned for any market research. It is the market plan specifying

the procedure for collecting & analyzing the needed information. As per objective of the

study mainly there are four types of research design viz: experimental, diagnostic, descriptive

& exploratory.

Here descriptive research design is proposed with focus on discovering of ideas & insight

about the particular problem.

Planning the sample design:-

The target for the study was consumers of Ferozepur and near by places. Survey has been

done using questionnaire method, open and close- ended questions being included in the

questionnaire. The secondary data for the research study has been collected from various

magazines, newspapers, journals, books and websites.

58

Major market players in the products the relevant areas have also been consulted for the

research.

Sampling technique:-

The sampling technique used for judgment is convenience and Judgement Sampling.

Sample size:-

The sample size of the research project has been taken 100 of the customers of Chandigarh.

Data collection:-

The relevant data for the research project is hybrid of primary and secondary data.

Primary data:-

Using personal interview technique, survey, questionnaire & observation method the data has

been collected from targeted focus groups, which are customers. The primary data collection

for judgment sampling has done. This purpose has been formatted with both open & close

ended structured questions.

Secondary data:-

In addition to the reactions of the selected consumers segments, the factual information

historic background including the sales volume by various manufactures of the product has

been collected with the help of various trade/business journals, company magazines,

brochures, and company reports and concern trade association reports.

CONTRIBUTION EXPECTED OF THE STUDY

The study will be useful to identify the following things:

1. To study the awareness level of service class people regarding E-Banking.

2. To find out the frequency and the factors that influences the adoption of E-Banking

services.

3. To measure the satisfaction level of people.

4. To understand the problems encountered in by service class people while using E-

Banking services(ATM, Phone banking, etc)

59

CHAPTER-6

DATA ANALYSIS & INTERPRETATION

60

1. In which bank do you have your account?

TABLE NO.1

BANKS NO. OF RESPONDENTS PERCENTAGE

SBI 24 24%

PNB 11 11%

ICICI 8 8%

HDFC 42 42%

SBP 2 2%

CANARA BANK 5 5%

BANK OF INDIA 3 3%

OBC 4 4%

OTHERS 1 1%

TOTAL 100 100%

CHART 1:

61

Interpretation:

The above table shows that out of the 100 respondents 24 respondents have

account in SBI, 11 in PNB, 8 in ICICI, 42 in HDFC, 2 in SBP, 5 in CANARA,

3 in BANK OF INDIA, 4 in OBC and 1 in others such as corporation bank

etc.

2. While opening up the account, were you aware of E-banking services provided

by your bank?

TABLE NO.2

RESPONSE NO. OF RESPONDENTS PERCENTAGE

FULLY AWARE 37 37%

HAD AN IDEA 46 46%

NO IDEA 17 17%

TOTAL 100 100%

CHART 2:

62

Interpretation:

As seen from Table 2, overall percentage of service class people having complete

knowledge about e-banking services provided by the bank while opening an account

in it is 37%, those having some idea about it is 46% and the percentage of people

having no awareness of e-banking services provided by the bank is 17%. It can

reasonably, be concluded that nearly 85% of the population is having awareness about

e-banking services

3. How did you get to know about E-banking services of your bank?

TABLE NO.3

RESPONSE NO. OF RESPONDENTS PERCENTAGE

PERSONAL VISIT 15 15%

EXECUTION FROM BANK

21 21%

ADVERTISEMENT 34 34%

FRIENDS/RELATIVES 26 26%

OTHERS 2 2%

TOTAL 100 100%

CHART 3:

63

INTERPRETATION: The above table shows that out of the 100 respondents 15 respondents get to know about E-Banking services through personal visit, 21 from execution from bank, 34 from advertisement,26 from friends/ relatives and 2 from others.

4. Which of the following E-Banking services are you aware of?

TABLE NO.4

RESPONSE NO. OF RESPONDENTS PERCENTAGE

ATM 34 34%

CREDIT CARD 16 16%

PHONE BANKING 12 12%

MOBILE BANKING 25 25%

INTERNET BANKING 13 13%

TOTAL 100 100

CHART 4:

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INTERPRETATION: E-banking constitutes services provided in terms of ATMs, Credit

Card, Phone Banking, Mobile Banking, Internet Banking etc, of which the first six have been

covered. Amongst these ATM scores the largest used service status (34%) as indicated by

table 4 figures. Close on the heels is Mobile banking (25%), Credit card (16%), while phone

banking lags behind by scoring the least ie.12%.

5. Do you use E-banking services?

TABLE NO.5

RESPONSE NO. OF RESPONDENTS PERCENTAGE

YES 100 100%

NO 0 0%

TOTAL 100 100%

CHART 5:

65

INTERPRETATION: The above analysis shows that all the respondents are using E-

Banking services.

6. If answer to question no.5 is yes, how frequently do you use these services?

FACTORS Once in aDay

Once in aWeek

Once in aFortnight

Once in amonth

A ATM 12 23 17 48C CREDIT CARD 23 12 15 50D PHONE BANKING 34 43 13 10E MOBILE BANKING 41 19 22 18F INTERNET BANKING 18 19 31 32

CHART 6:

66

INTERPRETATION: The above analysis show that out of 100 respondents mostly

respondents are using mobile banking services daily and then phone banking, credit card.

Mostly service class people use these services monthly and weekly.

7. Which of the following factors influence you the most to use E-banking services?

FACTORS STRONGLY MORE THAN AVERAGE

AVERAGE LESS THAN AVERAGE

NOT AT ALL

A All time availability

82 10 3 3 2

B Ease of use 77 13 7 3 0C Nearness 68 12 10 9 1D Security 54 12 20 14 0E Direct access 35 24 27 12 2F Friends/

Relatives28 12 14 25 21

G Status symbol 43 7 12 28 10

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CHART 7:

INTERPRETATION: A study of the factors, table 7, influencing the usage was made by

listing out various factors such as all time availability, ease of use, nearness etc., and from

which it came to fore that amongst the various factors all time availability is ranked as the

major motivating factor, followed by ease of use, status symbol, nearness, security in

decreasing order of importance. Quite interestingly friends and relatives, direct access scored

the least motivating factors.

8. Which of the following benefits accrue to you, while using E-banking services?

TABLE NO.8

RESPONSE NO. OF RESPONDENTS PERCENTAGE

TIME SAVING 47 47%

INEXPENSIVE 20 20%

EASY PROCESSING 21 21%

68

EASY FUND TRANSFER

10 10%

OTHERS 2 2%

TOTAL 100 100%

CHART 8:

INTERPRETATION: When asked to list various benefits accruing from the usage of e-

banking, time saving received highest percentage score at 47% among different benefits such

as inexpensive (20%), easy processing (21%), easy fund transfer(10%). Quite interestingly,

easy processing feature scored more than the inexpensiveness of the e-banking services. The

other benefits accruing to the people include ready availability of funds, removal of

middlemen and no rude customer relation executives.

9. What are the problems identified while using E-banking services?

FACTORS NO. OF RESPONDENTS

PERCENTAGE

A Time consuming 17 17%B Insecurity 10 10%C ATM out of order 44 44%E Problem of 12 12%

69

change inmobile number

F Password forgotten

7 7%

G Card misplaced 8 8%H Misuse of card 2 2%

TOTAL 100 100%

CHART 9:

INTERPRETATION: Most of the users face the problem of ATM out of order (45%),

followed by time consuming (18%), problem change in mobile number (12%) and then other

problems as insecurity, card misplaced, card misuse, etc

10. Kindly rate the following reasons enlisted for not using the E-banking services?

FACTORS HIGHLY IMPORTANT

MORE THAN AVERAGE

AVERAGE LESS THAN AVERAGE

A No need 18 28 43 11

B It seems like a botheration

23 17 32 28

70

C Insecurity 45 15 11 29D No access to

internet/mobile24 21 37 18

E Lack of operationalKnowledge

28 31 26 15

F Hidden costs 23 14 35 28

CHART 10:

INTERPRETATION: From the above analysis out of 100 respondents mostly people do not

use E-Banking services due to Insecurity and lack of operational knowledge.

11. To what extent are you satisfied with your Banks’ E-banking services?

FACTORS NO. OF RESPONDENTS

PERCENTAGE

A HIGHLY 58 58%

71

SATISFIEDB SATISFIED 22 22%C NEUTRAL 14 14%E DISSATISFIED 4 4%F HIGHLY

DISSATISFIED2 2%

TOTAL 100 100%

CHART 11:

INTERPRETATION: From the above analysis we came to know that out of 100

respondents 58 respondents are highly satisfied while 22 are satisfied 14 are neutral and other

are dissatisfied and highly dissatisfied.

72

6.1

HYPOTHESIS TESTING

CHI-SQUARE TESTS

Table 1) Finding Relationship between Age and usage of E-Banking Services:

NULL HYPOTHESIS: There exists a relationship between age and usage of E-Banking

Services.

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AGE

GROUP

ATM CREDIT

CARD

PHONE

BANKING

MOBILE

BANKING

INTENET

BANKING

TOTAL

15-25 14 5 1 4 2 2625- 35 7 7 2 15 7 3835- 45 5 3 2 4 3 1745&

ABOVE

8 1 7 2 1 19

TOTAL 34 16 12 25 13 100

OBSERVED FREQUENCY (O) EXPECTED (E) (O- E)²

14 8.84 {(34* 26)/100} 26.63(14-8.84)²5 4.16 {(16*26)/100} 0.71 (5- 4.16) ²1 3.12 {(12*26)/100} 4.49 (1- 3.12) ²4 6.5 {(25*26)/100} 6.25 (4- 6.5) ²2 3.38{(13*26)/100 1.9 (2- 3.38) ²7 12.9 {(34*38)/100} 34.81 (7- 12.9) ²7 6.08{(16*38)/100} 0.846 (7- 6.08) ²2 4.56 {(12*38)/100} 6.55 (2- 4.56) ²15 9.5{(25*38)/100} 30.25 (15- 9.5) ²7 4.94 {(13*38)/100} 4.24 (7- 4.94) ²5 5.78{(34*17)/100} 0.6084 (5- 5.78) ²3 2.7 {(16*17)/100} 0.09 (3- 2.7) ²2 2.04 {(12*17)/100} 0.0016 (2- 2.04) ²4 4.25 {(25*17)/100} 0.0625 (4- 4.25) ²3 2.21 {(13*17)/100} 0.624 (3- 2.21) ²8 6.5 {(34*19)/100} 2.25 (8- 6.5) ²1 3.04 {(16*19)/100} 4.16 (1- 3.04) ²7 3.2 {(17*19)/100} 14.44 (7- 3.2) ²2 4.8 {(25*19)/100} 3.24 (3- 4.8) ²1 2.5 {(13*19)/100} 2.25 (1- 2.5) ²

TOTAL 100 144.40

CHI- SQUARE = (O – E) ²

E

= 144.40

100

74

= 1.4440

CONCLUSION: Table Value of CHI- SQUARE at 5% level of significance

(N-1)

(20-1) = 19

Value of 19 @ 5% level of significance = 30.144

Since tabulated value is greater than calculated value

Hence null hypothesis is accepted.

Thus, there is a relationship between age and usage of E-Banking Services.

75

CHAPTER-7

RESULTS & FINDINGS

FINDINGS OF THE STUDY

Findings of the research study are as follows:-

1. From the survey, we came to know that most of the people have HDFC bank account.

2. Most of the people have an idea before opening a bank account regarding E-Banking

Services.

76

3. From the survey we came to know that mostly people are aware about E-Banking

services from Advertisement and Friends/ Relatives.

4. The survey helps me to know that most of the people are aware of ATM and Mobile

banking services of E-Banking services

5. All the respondents are using E-Banking services.

6. Mostly people operate E-Banking services such as ATM, Credit card, Mobile

Banking, Internet Banking monthly and weekly.

7. From the survey we came to know that influencing the usage was made by listing out

various factors such as all time availability, ease of use, nearness etc., and from which

it came to fore that amongst the various factors all time availability is ranked as the

major motivating factor.

8. Mostly people acquire time saving benefit while acquiring E-Banking Services.

9. The survey helps me to find out the problems faced by the respondents while using E-

Banking services such as ATM out of service, time consuming process etc.

10. Mostly people try to avoid using E-Banking Services due to insecurity and lack of

operational knowledge.

11. The respondents who respond to the questionnaire are aged between 15-35 years.

12. Mostly people are satisfied with the services of E-Banking.

77

CHAPTER-8

SUGGESTIONS & RECOMENDATIONS

SUGGESTIONS AND RECOMENDATIONS

The suggestion and recommendations are as follows:

78

Internet banking would drive us into an age of creative destruction due to non physical

exchange, complete transparency giving rise to perfectly electronic market place and

customer supremacy.

1. The bank should give proper training to customers for using E-Banking

services.

2. They should create a trust in the mind of customers towards security of their

accounts.

3. They should provide a platform from where the customers can access

different accounts at single time without extra charge.

4. Banks should make their sites more users friendly.

5. They need to create awareness among villagers regarding the usage of E-

Banking Services.

6. It is suggested to improve the services of various E-Banking Services so as to

attract more customers.

7. The E-Banking services should be convenient, safe, and easy to use and

should offers a set of on-demand banking services that can help the bank to

increase customer retention, reduce costs, support the business and retail

strategies, and offer more cross-sell opportunities.

79

CHAPTER-9

LIMITATIONS

LIMITATIONS OF THE STUDY

80

Limitations of the study are as follows:-

1. The preparation and interpretation of data may not be 100% free from errors and may

be effected by the respondents biased mindset to some extent.

2. Sampling size of targeted customer is small, so the response may not give true

reflections of the mental framework of the population.

3. Judgment/ convenience sampling will be used, so the data may not be of that quality

level as obtained by complete enumeration survey which is not possible due to

financial and time constraints.

81

CHAPTER-10

CONCLUSION

CONCLUSION

82

This study confirms that service class people, students, professionals are using the E-Banking

services and most of them are satisfied while using these services rather they met with some

problems while operating E-Banking services such as lack of operational knowledge, sense of

insecurity, time consuming problems. E-Banking is an innovative tool that is fast becoming a

necessity. It is a successful strategic weapon for banks to remain profitable in a volatile and

competitive marketplace of today. In future, the availability of technology to ensure safety

and privacy of e-transactions and the RBI guidelines on various aspects of internet banking

will definitely help in rapid growth of internet banking in India.

As I have taken the E-Banking Services of HDFC Bank and mostly people have their account

in that bank and are availing the services of that bank. During the survey I came to know that

HDFC Bank has a strong customer base. Through the survey we also came to know that

“HDFC BANK” has a very strong brand image among the people and it is the major

competitor of SBI, PNB, UBI, ICICI and OBC.

83

CHAPTER-11

ANNEXURE

Questionnaire

84

Dear Respondent,

We are conducting a research study of “E-banking Preferences among people in

Chandigarh”. We will appreciate your cooperation in this regard by filling up the

questionnaire carefully. All the information provided by you will be kept confidential.

1. In which banks do you have your account?

A. SBI ( ) B. HDFC ( )

C. PNB ( ) D. ICICI ( )

E. SBP ( ) F. CANARA BANK ( )

G. OBC ( ) H. BANK OF INDIA ( )

I. ANY OTHER, PLEASE SPECIFY ________________

2. while opening up the account, were you aware of E-banking services provided by

your bank?

A. FULLY AWARE ( ) B. HAD AN IDEA ( )

C. NO ( )

3. How did you get to know about E-banking services of your bank?

A. PERSONAL VISIT ( )

B. EXECUTION FROM THE BANK ( )

C. ADVERTISEMENT ( )

D. FRIENDS/ RELATIVES ( )

E. OTHERS ( )

4. Which of the following E-banking services are you aware of?

A. ATM ( )

B. CREDIT CARD ( )

C. PHONE BANKING ( )

D. MOBLIE BANKING ( )

E. INTERNET BANKING ( )

5. Do you use E-banking services?

A. YES ( ) B. NO ( )

6. If answer to question no.5 is yes, how frequently do you use each of the following

services?

FACTORS Once in a Once in a Once in a Once in a

85

day Week Fortnight monthA ATMB DEBIT CARDC CREDIT CARDD PHONE BANKINGE MOBILE BANKINGF INTERNET BANKING

7. Which of the following factors influence you the most to use E-banking services?

FACTORS STRONGLY MORE THAN AVERAGE

AVERAGE LESS THAN AVERAGE

NOT AT ALL

A All time availability

B Ease of use

C Nearness

D Security E Direct access

F Friends/ Relatives

G Status symbol

8. Which of the following benefits accrue to you, while using E-banking services?

A. TIME SAVING ( ) B. INEXPENSIVE ( )

C. EASY PROCESSING ( ) D. EASY FUND TRANSFER ( )

E. ANY OTHER, PLEASE SPECIFY ________________

9. What are the problems identified while using E-banking services?

A. TIME CONSUMING ( ) B. INSECURITY ( )

C. ATM OUT OF ORDER ( ) D. PROBLEM OF CHANGE IN MOBILE NO. ( )

E. PASSWORD FORGOTTEN ( ) F. CARD MISPLACED ( )

G. MISUSE OF CARD ( )

10. Kindly rate the following reasons enlisted for not using the E-banking services?FACTORS HIGHLY

IMPORTANTMORE THAN AVERAGE

AVERAGE LESS THAN AVERAGE

A No need( Satisfied withtraditional banking)

B It seems like a botheration

C InsecurityD No access to

internet/mobileE Lack of operational

knowledgeF Hidden costs11. To what extent are you satisfied with your Banks’ E-banking services?

86

A. Highly Satisfied ___________

B. Satisfied _________

C. Neutral ___________

D. Dissatisfied ___________

E. Highly dissatisfied ___________

12. What other services you would like to have through E-banking?

____________________________________________________________

____________________________________________________________

Respondent’s Profile

Name: ________________ Income level per month

Age: ________________ Less than Rs. 10,000 ( )

Gender (M/F): ________________ Rs.10,000 to Rs.20,000 ( )

Profession: ________________ Rs.20,000 to Rs.30,000 ( )

More than Rs.30, 000 ( )

87

CHAPTER-12

BIBLIOGRAPHY

BIBLIOGRAPHY

88

Journals

• As e-banking market grows, vendors shrink; Bill Orr; American Bankers Association. ABA Banking Journal, New York; Oct. 2002; Vol. 94, Iss.10; pg. 80, 2 pgs

• Is Internet banking profitable yet?; Bill Orr; American Bankers Association.ABA Banking Journal, New York; Jul 2001; Vol. 93, Iss. 7; pg. 57, 3 pgs

Books

Research Methodology by Kothari.

Websites • http://www.imf.org/external/pubs/ft/fandd/2002/09/nsouli.htm

• http://www.worldjute.com/ebank.html

• http://www.hdfcbank.com/aboutus/cg/Profiles_of_Directors.htm

• http://en.wikipedia.org/wiki/HDFC_Bank

• http://en.wikipedia.org/wiki/Online_banking

• http://www.nbs.sk/_img/Documents/BIATEC/BIA06_06/22_25.pdf

• http://ekikrat.in/HDFC-Bank

• http://www.slideshare.net/amitsoni/hdfc-bank-presentation

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• http://www.bankersonline.com/technology/gurus_tech081803d.html

• http://www.google.co.in/search?

hl=en&site=imghp&tbm=isch&source=hp&biw=1366&bih=677&q=hdfc+progress+c

hart2012&oq=hdfc+progress+chart2012&gs_l=img.3...979.12078.0.12359.27.13.1.13

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=isch&sa=1&q=hdfc+bank+progress+graph+2012&oq=hdfc+bank+progress+graph+

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d9FeCrM98&bav=on.2,or.r_qf.&bvm=bv.45373924,d.bmk&fp=60bea549dca93765&

biw=1366&bih=677&imgrc=fhBrYWAxv6DL4M%3A%3BRShVkLcZNbaTFM

%3Bhttp%253A%252F%252Fwww.ankmitra.com%252Fwp-content%252Fuploads

%252F2012%252F07%252FHDFC-Bank-Q1 FY13.jpg%3Bhttp%253A%252F

%252Fwww.ankmitra.com%252F%253Fp%253D266%3B771%3B707

• http://www.docstoc.com/docs/13533948/Project-on-E-banking

89

• http://money.rediff.com/companies/HDFC-Bank-Ltd/14030055/profit-and-loss

• http://www.iibms.org/pdf/Ebooks/E-Banking%20Management.pdf

• http://www.commbank.com.au/personal/apply-online/download-printed-

forms/ElectronicBanking_ADB2426.pdf

• http://money.rediff.com/companies/HDFC-Bank-Ltd/14030055/balance-sheet

• http://www.hdfcbank.com/htdocs/common/pdf/Basel_disclosure_dec2012.pdf

• http://www.kanakadharaventures.com/Assets/images/organizationchart.gif

• http://money.rediff.com/companies/HDFC-Bank-Ltd/14030055/cash-flow

• http://www.consumer.ftc.gov/articles/pdf-0109-electronic-banking.pdf

90