the chapter describes in brief about internetbanking

7/31/2019 The Chapter Describes in Brief About INTERNETBANKING

http://slidepdf.com/reader/full/the-chapter-describes-in-brief-about-internetbanking 1/12

The chapter describes in brief about INTERNETBANKING.Internet:-INTRODUCTION

: -There is a sea change in the media world. While most consumerssee the news

papers, the same magazines and li sten to the

samer a d i o p r o g r a m s , b e h i n d t h i s b l a n d p u b l i c e x t e r i o r t h e r ei s a seething world of innovation, acquisition, global partnership anddivorces, birthsand deaths… all of it most readily interpreted asthe inevitable result of thetechnological revolution that is in the pr oc es s of me rg in g te le ph on es ,computers , te levi s ions in to as ingle a ll s inging, a ll dancing magickit that will, very possible,change all of our lives more than we can imagine somedayT he re a re 2 w ay s y ou c an r es po nd t o t hi s 1 i s t o p an ic ,whi ch m a y m e a n s i m p l y c u r l in g u p i n a c o r n e r a n d w i s h i n gt h a t i t would all go away. The other is to embrace the new religionwithm e s s i a n i c f e r v o r a n d g o o u t t o p r o c l a i m t h e m i l l e n n i u m .I welcome you to the new emerging world of the Info-High-Way,destined to redefine

the world of communications:HISTORY

: -It is said that necessity is the mother of invention. And true, it isseeds of Internet weresown in the ashes of the worldwar H a v i n g b o m b e d t h e c i t i e s o f H i r o s h i m a a n d N a g a s a k i , U Smilitary was forced to provide the answer to the question – Whatif someone bombedthe USA? So for many years after the war,m o s t o f t h e U S m i l i t a r yr e s e a r c h c o n c e n t r a t e d o n w a y s a n d m ea ns t o s ur vi v e t he n uc le ar ho loc au st . And on e of the mos timportant strategic problems was- “Howwould usauthoritiesc o m m u n i c a t e w i t h e a c h o t h e r i n t h e a f t e r m a t h o f an u c l e a r a t t a ck ? ” c o m p ut e r s w er e a l r e a dy t h e r e . B u t , c om m u n ic a t i on networks were connected to each in a private fashion- in sort of ch ai ns :somewha t l ike an e l ec t r i c i ty l ine to your home. T h i smeans tha t i f even one chain in the middle were blown up, thewhole network wouldcollapse.Then in the 1960’s the problem was taken by America’s foremostmilitary think tank,the Rand Corporation. After a lot of ideaswere put up and knocked down, Paul

baron- a rand “thinker” hitupon an idea. “What if the network was not built like a chain butlike a fi sh net?” he sa id . If one st rand on the fish net broke then etwould s t i l l be func t iona l . Af te r sp end ing many agon iz ing

h o u r s o v e r i t , h e c a m e u p w i t h 1 1 - v o l u m e r e p o r tf o r t h e p e n t a g o n . B u t , a s f a t e w o u l d h a v e i t w a s r e j e c t ed .B y t h e n , young engineers were impressed by the idea and worked oni t.Well before the end of the decade, the fi rst net was createdandc a l l e d A R P A N E T , c o n n e c t i n g f o u r A m e r i c a n r e se a r c h organizations- university of Utah, university of California in LosAngeles andSanta Barbara, and Stanford research institute.In ter ne t as a com mu nica ti onme di um an d as a re po si to ry of information has caught the imaginationof computer users. Thisha s fu el le d an un pa ra ll el ed gr ow th in th e nu mb er of Internetusers.VARIOUS PARTS OF INTERNET

: -



The Internet is made up of terminal computers through whichsubscribersaccess the net; gateways servers which connect theusers to the rest of thenetwork (of computers); servers whichhost information in them; and, thecommunication network over which data actually flows.In tern e t o f f er s i t s user sa v ar i e ty o f serv i ces . Th e

s ubsc r iber s m a y h a v e a c c e s s t o a l l o r a n y o f t h e f o l lo w i n g s e r v i c e s depending upon the type of conn ection th at on e hassubscribedfor:1 ) E - M a i l 2)World Wide Web (WWW)3)File Transfer Protocol( F T P ) 4 ) T e l n e tTh e n et b an ki ng, th us , n ow is mo re of a n orm r at her t hananexception in many developed countri es due to the fact that it is the cheapestway of providing banking services.Internet banking r e f e r s t o t h e u s e o f t h e I n t e r n e t a s ar e m o t e d e l i v er y c h a n n e l f o r b a n ki n g s e r v i c es . S u c h s e r v i c es i n c l u d

e t r a d i t i o n a l o n e s , s u c h a s o p e n i n g a d e p o s i t ac c o u n t o r transf erring funds among different accounts, and new

bankings e r v i c e s , s u c h a s e l e c t r o n i c b i l l p r e s e n t m e n t a n d p a yment(allowing customers to receive and pay bills on a bank’s Website).Banks offer Internet banking in two main ways. An existing ban k wi th ph ys ica lo ff ic es ca n es ta bl is h a We b s it e an d of f er Internet banking to its customersas an addition to its traditionaldelivery channels. A second alternative is to establish a“virtual,”“branchless,” or “Internet-only” bank. The computer server thatlies at theheart of a virtual bank may be housed in an office thats e r v e s a s t h e l e g a la d d r e s s o f s u c h a b a n k , o r a t s o m e o t h e r location. Virtual banksmay offer their customers the ability tomake deposits and withdraw fundsvia ATMs or other remotedelivery channels owned by other institutions.The impactof E-transaction and authentication issues in bankingIt's hardly great news th at there has been tremendous growthint h e u s e o f t h e I n t e r n e t a n d o t h e r e l e c t r o n i c f a c i l i t i e s t o pr ocess financial transactions. According to the FederalDeposit Insurance Corp.,transactional Web sites have more thandou bl ed ea ch ye ar fo r th e pa st si xy ear s , g ro win g f rom on e in 1995 to nearly2,500 in 2000.T h i s g r o w t h i s a r e f l e c t i o n o f t h e f a c t t h a t o v e r t h e

p a s t f e w years, financial leaders have been consider in g various waysinwhich to a l low the i r cus tomers to t r ansac t bus iness us ing the In te

rn et . Th i s o bj ec ti ve i s n o w r ea ch i ng beyon d th e financialservicesindustry into non-electronic business segments, such asthe building supply industry.Furthermore, this growth is likelytoc o n t i n u e t o c l i m b a s t h e n u m b e r o f I n t e r n e t u s e r s , I nt e r n e t c o nn e ct i on s pe ed , an d th e nu m ber o f t r ansac t iona l Web s i t es continues to increase. The number of adults using PC banking isalso growing. Withthis growth, there is an increasedawarenessof the benefits of using online transaction processing, therebyfu el in g the th ou gh t t ha t a ll bu sin ess sh ou ld be ele ctr on ica ll yfacilitatedGartner predicts that worldwide business-to-business (B2B) e-c ommercewi l l t o t a l $3 .6 t r i l l i on by 20 0 3 and $8 .5 t r i l l i on i n2005 . On l in e

fin anci al act i vi t y had a slo wer sta r t , but has had steady growth, from6 million users in 1998 to 27.5 million



usersin 2000. During 2000, only 30 percent of the Internet-capablehouseholdswere using some form of Internet banking, indicatingthat there is tremendous room for increased use.The e-Commerce Value ChainConsider that th e consumer and the merchantare on either endsof the electronic commerce value chain,with the authenticationnetwork and transaction processor (bank) in the

middle. Banksh a v e t r a d i t i o n a l l y b e e n t h e t r u s t e d a g e n t s , ha v e t h e l a r g e s t c u s t o m e r b a s e , a n d h a v e r e c e i v e d t h e i ni t i a l b e n e f i t s f r o m electronic commerce. Value has begun a steady migrationtotheen ds of the va lue cha in . Cus tomers can rece ive and p ay bi l l s fromone point using products from multiple issuers. Merchantscan influence and enhancethe consumer experience by providinginnovative and time-saving means of doing

business. Merchantscan add value to the payment process, for example, byofferingdiscounted prices for electronic paymentMerchan t s can a l so r educe the i r cos t s by rece iv ing el ec tr on ic payments, which results in reducing and sometimes eliminatingthe need for data entry, as well

as reducing the error rate andthet i m e t o i n v e s t i g a t e a n d c o r r e c t t h e d a t a . B y i n c r e a s in g a n d effectively managing cash flow, merchants may also be able toreduce costsassociated with lines of credit The law def ines an electronic signature as "anelectronic sound,s ym bo l, o r p ro ce ss a tt ac h ed t o o r l og ic al lyass oci a ted wi th acontract or other record and executed or adopted by a person withthe intent tosign the record." Fortunately, the legislation does notattempt to define acceptable technologiesexcept to indicate thatthe technologies must be mutually acceptable to thetransacting p a r t i e s . S i n c e a v a l i d s i g n a t u r e c a n b e a s s i m p l ea s a d i g i t a l image of a signature (enabled through an electronic pen and pad)or ascomp lex as today ' s p ub l i c key in f ras t ruc tu re (PKI) andassociatedencryption methods, the technology decisionmaker mu s t d e f i n e r e l e v a n t b u s i n e s s o b j e c t i v e s a n d u n d e r s t a nd t h e r i s k s , s u c h a s c o s t a n d u n a u t h o r i z e d u s e a s s o c i a t ed w i t h alternativeimplementations.T h e r e a r e p o s s i b l e a d d i t i o n a l b e n e f i t s t o t h ei m p l e m e n t i n g o r g a n i z a t i o n . T h e s e i n c l u d e r e d u c e d t r a n s a c t io n t i m e l i n e s , r e d uc ti o n i n p aper p rocess in g cos t s , f ac i l i t a t ion o f cu s to me r m ig ra ti on t o t he I nt er n et a s a b us in es s c ha nn el , a ndi nc reas ed online transaction security. When compared to physical signatures, e-signaturetechnologiesa r e , i n g e n e r a l , a m o r e s e c u r e a u t h e n t i c a t i o n m e t h o

d . M a n y financial institutions are studying the possible implementation of a publickey infrastructure (PKI) system that will allow them toexchange electronic informationsecurely with unknown

parties.P K I i s t h e d e l i v e r y c h a n n e l f o r p u b l i c k e y c r y p t og r a p h y , a m e t h o d t h a t a l l o w s t h e p a r t i e s t o a t r a n s a c t i o n t o k e e p a communication private th rough the use of atwo-part key madeup of public and private components. To encryptmessages, the published public keys of the recipients are used. To decrypttheme s s a g e s , t h e r e c i p i e n t s u s e t h e i r u n p u b l i s h e d p r i v a t e k eys,known only to them. Quite simply, if the signer's private key isnotcompromised, which can happen by releasing the passwordor al low in g

a c c e ss t o t h e d e v i c e c o n t a i n in g t h e p r i v at e k e y , a d o c um e n t c a n n o t b e di gi t a l ly s ign ed h i s to ry o f i n tern et ban k in g T h e t e r m o n l i n e



b a n k i n g w a s f i r s t s t a r t e d i n 8 0 ’ s . T h e t e r m online became popular inthe late '80s and referred to the use of aterminal, keyboard and TV (or monitor) toaccess the bankingsystem using a phone line. ‘Home banking’ can also refer totheuse of a numeric keypad to send tones down a phone line withinstructionsto the bank. Online services started in New York

in1 9 8 1 w h e n f o u r o f t h e c i t y ’ s m a j o r b a n k s(

Citibank ,

Chase Manhattan,

Chemicaland

Manufacturers Hanover )

offered home banking services using the

videotexts y s t e m . B e c a u s e o f t h e c o m me r ci a l f a i lu r e o f vi d eo t ex t he s e b a nk in g s er vi ces n ev er b e c a m e p o p u l a r e x c e p t i n F r a n c e w h e r et h e u s e o f v i d e o t e x (Minitel

) wa s su bsi diz ed b y th e te leco m pr ovi der and the UK,where thePrestel

system was used.The UK’s first home online banking services was set up by theNottingham Building Society

(NBS) in 1983 .The system used was based on the UK'sPrestel

system and used a computer ,

such astheBBC Micro

, or keyboard (Tandata Td1400) connected tothet e l e p h o n e s y s t e m a n d t e l e v i s i o n s e t . T h e s y s t e m ( k n o w n as ' H o m e l i n k ' ) a l l o w e d o n - l i n e v i e w i n g o f s t a t e m e n t s ,

b a n k transfers and bill payments. In order to make bank transfers and bill payments,a written instruction giving details of the intendedrecipient had to be sent to the NBS

who set the details up on theHome link system. Typical recipients were gas,electricity andtelephone companies and accounts with other banks. Detailsof p ay me nt s t o b e ma de we re i np ut i nt o t he N BS s ys te m b yth eaccount holder via Prestel. A cheque was then sent by NBS to the payee and anadvice givin g details of the payment was sent tothe account holder.BACS

was later used to transfer the paymentdirectly.Stanford Federal Credit Union was the firstfinancial institutionto offer online internet banking services to all of its members inOct,1994. Later on it was adopted by worldwide banksState Bank of India (SBI) is that country's largest commercial bank. Thegovernment- controlled bank--the Indian governmentmaintains a stake of nearly

60 percent in SBI through the centralReserve Bank of India--also operates the world'slargest branchnetwork, with more than 13,500 branch offices throughout

http://en.wikipedia.org/wiki/Citibank

http://en.wikipedia.org/wiki/Chase_Manhattan


http://en.wikipedia.org/wiki/Chemical_Bank

http://en.wikipedia.org/wiki/Manufacturers_Hanover

http://en.wikipedia.org/wiki/Citibank



http://en.wikipedia.org/wiki/Chemical_Bank

http://en.wikipedia.org/wiki/Manufacturers_Hanover



India,s t a f f e d b y n e a r l y 2 2 0 , 0 0 0 e m p l o y e e s . S B I i s a l s o pr e s e n t worldwide, with seven international subsidiaries in theUnitedS t a t e s , C a n a d a , N e p a l , B h u t a n , N i g e r i a , M a u r i t i u s , a n dt h e U n i t e d K i n g d o m , a n d m o r e t h a n 5 0 b r a n c h o f f i ce s i n 3 0 countries. Long an arm of the Indian government's

infrastructure,agricultural, and industrial development policies, SBI has beenforced to revamp its operations since competition was introducedinto thecountry's commercial banking system. As part of thateffort, SBI has beenrolling out its own network of automatedt e l l e r m a c h i n e s , a s w e l l a s d e v e l o p i n g a n y t i m e- a n y w h e r e banking services through Internet and other technologies.SBIal s o h a s t a k e n a d v a n t a g e o f t h e d e r e g u l a t i o n o f t h e I n d i an banking sector to enter the, assets management, and securities brokeringsectors. In addition, SBI has been working on reigningin its branch network, reducingits payroll, and strengthening itsloan port fol io. In 2003, SBI reported revenue of $10.36 billionand total assets of $104.81 billion. The establishment of the

British colonial government in India brought with it calls for the formation of a Western-style bankings y s t e m , i f o n l y t o s e r v e t h e n e e d s a n d i n t e r e s t s o f t h eBr i t i sh imperial government and of the European trad ing housesdoing business there. The creation of a national banking system beganat the beginning of the 19th century.The first component of what was later to become the State Bank of Ind ia was c rea t ed in 1806 , i n Calcu tt a . Ca l l ed the Bank o f Ca lcu t ta , i t was a lso the coun try ' s f i r s t j o in t s to ck comp any .Originally established to serve the city's interests, the bank wasgran ted a chart er to serve all of Benga l in 1809 , becomingtheBan k of Benga l . T he in t roduc t ion o f West e rn - s ty le

b ank in g i n s t i t u t e d d e p o s i t s a v i n g s a c c o u n t s a n d , i ns o m e c a s e s , investment services. The Bank of Bengal also received the righttoissue its own notes, which became legal currency within theBengali region.This right enabled the bank to establish a solidfinancial foundation, buildingan interest-free capital base The spread of coloni a l inf luen ce a lsoex ten ded th e scop eo f government and commerc ia l f inanc ia l in f luence . Toward themiddle of the century, the imperial government created two moreregional banks. TheBank of Bombay was created in 1840, andwas soon joined by the Bank of Madras in 1843. Together withthe Bank o f Benga l , t hey became knownas th e "pres iden cy" banks.All three banks were operated as joint stock companies,

with theimperial government holding a one-fifth share of each bank. Theremainingshares were sold to private subscribers and,typically,wer e cl ai me d by the Wes te rn E urop ean t r ad ing f i rms . T hesefirms were represented on each bank's board of directors, whichwas presided over bya nominee from the government. While the banks performed typical banking functions, for theWestern firmsand population and members of Indian society, their mainrolew as t o a ct a s a l ev er f or r ai si ng l oa n c ap it al , a s we ll a sh elp stabilize government securities The chart ers backing the establishment of the presidency

banksg r a n t e d t h e m t h e r i g h t t o e s t a b l i s h b r a n c h o f f i c e s . I n t ot h e second half of the century, however, the banks remained single-

o f f i c e c o n c e r n s . I t w a s o n l y a f t e r t h e p a s s a g e o f t h e P a p e r Currency Act in 1861 that the banks began their first expansionef fo rt.



Th at le gi sla ti on ha d t ak en awa y t he pre si den cy ban ks' authority to issuecurrency, instead placing the issuing of paper currency under direct control of theBritish government in India,starting in1862.Y e t t h a t s a m e l e g i s l a t i o n i n c l u d e d t w o k e y f e a t u r es t h a t stimulated the growth of a national banking network. On the onehand, the

presidency banks were given the responsibility for thenew currency's managementand circulation. On the other,thego v e r n m e n t a g r e e d t o t r a n s f e r t r e a s u r y c a p i t a l b a c k i n g t hecur rency to the banks - -and esp ec ia l ly to the i r b ranch o f f i ces .T h i slatter feature encouraged the three banks to begin

build ingt h e c o u n t r y ' s f i r s t b a n k i n g n e t w o r k . T h e t h r e e ba n k s t h e n launched an expans ion effort , es tabli sh ing a sys tem of

brancho f f i c e s , a g e n c i e s , a n d s u b - a g e n c i e s t h r o u g h o u tt h e m o s t popula ted regions of the Indian coast, and into the inlandareasa s w el l. By t he e nd o f t he 1 87 0s , t he t hr ee p re si de nc y

b ank soperated nearly 50 branches among them. The rapid growth of the presidency

banks came to an abrupt haltin 1876, when a new piece of legislat ion , thePresidencyBanksAc t , p l a c e d a l l t h r e e b a n k s u n d e r a c o m m o n c h a r t e r - -a n d a common set of restrictions. As part of the legislation, the Britishimperialgovernment gave up its ownership stakes in the banks,although they continued to

prov ide a number of services tothegovernment , and re t a ined some of th e government ' s t r easurycap it a l . Th e major i ty o f th a t , h owev er , was t r an s f er red tothe th ree newly created Reserve Treasur ies , located in Calcut ta ,Bom

bay, and Madras. The Reserve Treasuries continued to lendcapi ta l to the pres idency banks , but on a more restr ic tive bas is.Th e min imum ba lance now guaran teed under the P res idencyBanks Act was applicable only to the banks' central offices. With branch offices no longer guaranteed a minimum balance

backed by govern men t fun ds , th e ban ks en ded dev elop men t o f the i r networks. Only the Bank of Madras continued to grow for somet i m e , s u p p l i e d a s i t w a s b y t h e i n f l u x of c a p i t a l f r o m development of trade among the region's port cities.T h e l o s s o f t h e g o v e r n m e n t - b a c k e d b a l a n c e sw a s s o o n compensated by India's rapid economic development at the endof the19th centu ry. The bui lding of a national railroad network launched the country

into a new era, seeing the rise of cash-cropf a r m i n g , a m i n i n g i n d u s t r y , a n d w i d e s p r e a di n d u s t r i a l d ev el op me nt . Th e t hr ee pr es id en cy ba nk s t oo k a ct iv ero le s in financing this development. The banks also extended their rangeo f s e r v i c e s a n d o p e r a t i o n s , a l t h o u g h f o r t h e t i m e b e i n gw a s excluded from the foreign exchange market.By the beginning of the 20thcentury, India 's banking industry boasted a host of new arr ivals , and

p ar t i cu la r ly fo re ign banksau th or ized to exch an ge cur ren cy . Th egrowth o f th e ban kin gsector, and the development of indigenous banks, in turncreateda need for a larger "bankers' bank." At the same time, theIndiang o v e r n m e n t h a d o u t g r o w n i t s c o l o n i a l b a c k g r o u n d a n d n

o w required a more centralized banking institution. These factors ledto the decision



to merge the three presidency banks into a new,single and centralized banking inst itu tion, the Imperial Bank of India.C r e a t e d i n 1 9 2 1 , t h e I m p e r i a l B a n k o f I n d i a a p p ea r e d t o i n a u gu r a t e a n ew e r a i n I n d i a ' s h i s t o r y - -c u l m i n a t i n g i n i t s d e c l a r a t i o n o f i n d e p e n d e n c e f r o m t h e B r i t

i s h E m p i r e . T h e I m p e r i a l B a n k t o o k o n t h e r o l e o f c e n t r a l b a n k f o r t h e I n d i an g o v e rn m e n t, w h i l e a c t i n g a s a b a n k e r s ' b a n k f o r t h eg ro wi n gI nd i an b an ki n g s ec to r. A t t he s am e t im e, t he I mp er ia lBank ,which , desp i t e i t s ro le in the government f inanc ia l s t ruc tu re r emai n ed ind ep en den t o f th e govern men t , ca r r i ed on i t sowncommercial banking operations.In 1926, a government commission recommendedthe creationof a t r u e c e n t r a l b a n k . W h i l e s o m e p r o p o s e d c o n v e r t i n gt h e I m p e r i a l B a n k i n t o a c e n t r a l b a n k i n g o r g a n i z a t i o n f o r t h e c o u n t r y , t h e c o m m i s s i o n r e j e c t e d t h i s i d e a an d i n s t e a d r e c o m m e n d e d t h a t t h e I m p e r i a l B a n k b e t r a n s f o

r m e d i n t o a purely commercial banking institution. The government took upthecommission's recommendations, drafting a new bill in 1927.Passage of the newlegislation did not occur until 1935, however,with the creation of the ReserveBank of India. That bank took over all central banking functions. Th e Imp er i a lBank then conver ted to fu l l commerc ia l s t a tus ,which accordinglyallowed it to enter a number of banking areas,such as currency exchange andtrus tee and estate management, from which it had previously been restricted.Despite the lossof i t s r o l e a s a g o v e r n m e n t b a n k i n g o f f i c e , t h e I m p e r i a l B a nk c o n t i n u e d t o p r o v i d e b a n k i n g s e r v i c e s t o t h e R e s e r v e B a nk , p a r t i c u l a r l y i n a r e a s w h e r e t h e R e s e r v e B a n k h a d n ot y e t established offices. At the same time, the Imperial Bank retainedits position as a

bankers' bank.By then, India had achieved its independence from Brita in .In19 51, t he n ew g ov er nmen t l aun ch ed i ts f ir s t F i ve Yea r P la n, ta rg et i ng i n p ar ti cu la r t h e d ev el op me nt o f t he c ou nt ry 'sruralareas. The lack of a banking infrastructure in these regions ledthegovernment to develop a state-owned banking entity tofillt h e g a p . A s p a r t o f t h a t p r o c e s s , t h e I m p e r i a l Ba n k w a s nationalized and then integrated with other existing government-owned

banking compon ents . The resu lt was the crea tion of theState Bank of India, or SBI, in 1955 The new state-owned bank now controlled more than one-fourthof India's

total banking industry. That position was expandedatt h e e n d o f t h e d e c a d e , w h e n n e w l e g i s l a t i o n w a s p a s s e d providing for the takeover by the State Bank of eightr e g i o n a l l y b a s e d , g o v e r n m e n t - c o n t r o l l e d b a n k s . A s s u c h t h eB a n k s o f Bikaner, Jaipur, Indore, Mysore, Patiala, Hyderabad,Saurashtra,a n d T r a v a n c o r e b e c a m e s u b s i d i a r i e s o f t h eS t a t e B a n k . Fo l lowin g th e 196 3 merger o f th e Bi kan er andJa ip ur ba nk s, their seven remaining subsidiaries were converted intoassociate banks.In the early 1960s, the State Bank's network alreadycontainednearly 500 branches and sub-offices, as well as the three originalhead officesinherited from the presidency bank era. Yet the StateB a n k n o w b e g a n a n e r a o f

e x p a n s i o n , a c t i n g a s a m o t o r f o r I n d i a ' s i n d u s t r i a l a n d a g r i c u l t u r a l d e v e l o p me n t t h a t w a s



t o transform it into one of the world's largest financial n etworks.Indeed, bythe early 1990s, the State Bank counted nearly15,000 branch es an d of f ices throug hout India , g iv in g i t the wo r ld ' s single largest branch network.SBI p layed an ex t remely imp or tan t ro le in deve lop ing Ind ia ' s ru ra l

regions, providing the financing needed to modernizetheco u n t r y ' s a g r i c u l t u r a l i n d u s t r y a n d d e v e l o p n e w i r r i g a t i on methods and cattle breeding techniques, and backing the creationof da i ryfa rmi ng , as wel l as por k an d pou lt ry in dus tri es . The bank also provided

backing for the development of the country'sin fras truc ture, part icu larly on a loca llevel, where it

prov idedcred i t coverage and deve lop ment a ss i s t ance to v i l l ages . T he n a t i o n a l i z a t i o n o f t h e b a n k i n g s e c t o r i t s e l f , a n e v e n tt h a t occurred in 1969 under the government led by Indira Gandhi,gave SBInew prominence as the country's leading bank E v e n a s i t p l a y e d a p r i m a r yr o l e i n t h e I n d i a n g o v e r n m e n t ' s industrial and agricultural development

policies, SBIcontinuedt o d e v e l o p i t s c o m m e r c i a l b a n k i n g o p e r a t i o n s . I n 1 9 72 , f o r example, the bank began offering merchant banking services. Byt h e m i d -1 9 8 0 s , th e b a n k ' s m e r c h a n t b a n k i n g o p e r a t i o n s h ad g r o w n s uf f i c i e n t l y t o s u p p o r t t h e c r e a t i o n o f a d e d i c a t e d subsidiary,SBI Capital Markets, in 1986. The following year, thecompany launched another subsidiary, SBI Home Finance,inc o l l a b o r a t i o n w i t h t h e H o u s i n g D e v e l o p m e n tF i n a n c e Corpora t i on . Then in the ear ly 19 90s , SBI addeds ubs i d ia r i es S B I F a c t o r s a n d C o m m e r c i a l S e r v i c e s , a n d t he n l a u n c h e d institutional investor services.SBI was allowed to dominate the Indian banking sector for moreth an two decad es .In th e ea rl y 19 90 s, th e In di an go ve rn me nt kicked off a series of reformsaimed at deregulating the bankingand financial industries. SBI was now forcedto brace itself for the arrival of a new wave of competitors eager to enter the fast-growing Indian economy's commercial banking sector . Yet yearsas a government-run ins ti tu tion had lef t SBI bloated-- the c iv il -servan t s ta tus of i t semployees h ad encou raged i t s payro l lt os w e l l t o m o r e t h a n 2 3 0 , 0 0 0 . T h e b u r e a u c r a t i c n a t u r e o f t he bank's management left little room for personal in itiative, nor incentive for controlling costs.In 199 4, th e ba nk hi red co ns ul ti ng gro up McK in sey &

Co. to help it restructure its operations. McKinsey then led SBI througha m a s si v eres t ruc tu r ing e f fo r t tha t l a s t ed th rough much o f thedecade and intothe beginning of the next, an effort thathelpedS B I d e v e l o p a n e w c o r p o r a t e c u l t u r e f o c us e d m o r e o n profitability than on social and political policy. SBI alsosteppedup i ts in ternational trade op erations, such as foreignexchanget r a d i n g , a s w e l l a s c o r p o r a t e f i n a n c e , e x p o r t c r e d i t , a n d international banking SBI had long been present overseas,operating some 50 offices in34 countries, including full- fledged subsi diaries inthe UnitedKingdom, the United States, and elsewhere. In 1995 the bank setup a newsubsidiary, SBI Commercial and International Bank Ltd., to back its

corporate and international bankings e r v i c e s . T h e b a n k a l s o e x t e n d e d i t s i n t e r n a t i o n a l n e t w o r k i n t o



n e w markets such as Russia, China, and SouthAfrica.B a c k h o m e , i n t h e m e a n t i m e , S B I b e g a n a d d r es s i n g t h e techno logy gap tha t ex i s t ed be tween i t and i t s fo re ign-

b acked c o m p e t i t o r s . I n t o t h e 1 9 9 0 s , S B I h a d y e t t oe s t a b l i s h a n automated teller network; indeed, it had not even

automated itsinformation systems. SBI responded by launching anambitioustechnology drive, rolling out its own ATM network, then teamingu p w i t h G EC a p i t a l t o i s s u e i t s o w n c r e d i t c a r d . I n t h e e a r l y 2000s, the bank

began cross-linking its banking network with itsATM n etwork an d In tern et andt e l e ph o n e a c c es s , r o l l i n g o u t " a n y t i me , a n y wh e r e " b a n k i n g a c c e s s .By 2 00 2 , th e ba nk h ad succeeded in networking its 3,000 most profitable

branches RETAIL BANKING:-

T h e R e t a i l b a n k i n g a p p l i c a t i o n i s a n i n t e g r a t i o n o f s e v e r a l f unctional areas, and enables customers to:Issue Demand Drafts online

Transfer funds to own and third party accountC r e d i t b e n e f i c i a r y a c c o u n t s u s i n g t h e V I S A M o n e y Transf er, RTGS/NEFT featureGenerate account statementsSetup Standing InstructionsConfigure profile settingsUse eTax for online tax paymentUse ePay for automatic bill paymentsI n t e r f a c e w i t h m e r c h a n t s f o r r a i l w a y a n d a i r li n e reservationsAvail DEMAT and IPO servicesCORPORATE BANKING:-

The OnlineSBI corporate banking application provides

featurest o a d m i n i s t e r a n d m a n a g e c o r p o r a t e a c c o u n t s o n l in e . T h e c o r p or a t e m o d u le p r ov i d e s r o l e s s u c h as R eg u l a t or , A dm in ,Uploader, Transaction Maker, Authorizer, and Auditor. Theseroles haveaccess to the following functionsAccess accounts in several branches with a single sign-onmechanismUpload f i les to make bulk transact ions to third part ies,supplier ,vendor and tax collection authorities.Use online transactional features such as fund transfer toown accounts, third

party payments, and draft issues

Make bill payments over the Internet.



Aut hori ze, modi fy, res ched ule and can cel t ra nsa ct i ons , based on rightsassigned to the user Generate account statement

Enquire on transaction details or current balanceValue added services

:Tax payments to central and state governments through siteto site integration.Supply Chain Finance( e-VFS- Electronic Vendor FinanceScheme)Direct Debit Facility

E Collection Facilities for:Core Banking Transactions

e- ticketing E-TICKETING :-

You can book your railway, air and bus tickets online throughOnlineSBI.To book your train ticket, just log on to irctc.co.in and create anID there at if you donot 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- t i cke t i s gen era tedwhich can be p r in ted any t ime .F or an e - t i cke t , t he de ta i l s o f p ho toi den t i ty ca rd wi l l required to be filled in)And select State Bank of India in the

payment options. You will be r ed i rec ted to In tern e t Bank in g s i t e of SBI (www.onlinesbi.com).After submitting the respective ID and password, you can selectyour accoun t. After a successful debit , Railways wil l generatethe t ic ket . E-t i cke t can be

p r i n ted by you whereas the i -t ic ke tw i l l b e d i s p a t c h e d b y I R C T C a t t h e g i v e n a d d r e s s . S e r v i c e

charges @ Rs.10/- per transaction shall be levied in addition tothe cost of t h e t i c k et . C a n c el l a t i o n o f E - t i ck e t c a n b e d o n e b y logging on toIRCTC's site; refund amount wil l be credited toyou r acc oun t dir ect l ywi th i n 2 -3 days . For can cel l a t ion of i -t i c k e t , y o u s h a l l b e r e q u i r e d t o s u b m i t y o u r ti c k e t a t a c o m p u t e r i z e d c o u n t e r o f R a i l w a y s a n d o n c a n c el l a t i o n ; t h e a m o u n t s h a l l b e c r e d i t e d b a c k t o y o u r a c c o u n t . You can also book your Air ticket through the e-ticketingfeature.Logon to Indian Airlines website to make a payment for an e-ticketthrough State Bank of India, you need to select SBI ast h e p a y m e n t o p t i o n . T h e p a y m e n t r e q u e s t w i l l b e r e d i r e c t e d t

o Internet Banking site. The request may be processed basedo n v a l u e s s e n t f r o m t h e a i r l i n e s w e b s i t e . O n c e a t r a n s a c t i o n i

http://www.onlinesbi.com/productandservices.html

http://www.onlinesbi.com/productandservices.html



s processed, an appropriate response will be sent to airlines site toupdate the statusof the transaction. You can print the E-ticketimmediately.To book bus ticketsto destinations in Karnataka, log on to theKSRTC website. Provide details aboutthe start and end

points of your journey , da te of j ourn ey and number o f t i cke t s . Ver i fy

a v a i l a b i l i t y o f s e a t s o n t h e s e l e c t e d d a t e a n d c o n f i r mt h et ransac t ion . Se lec t Onl ineSBI to make the p ayment . P rov ideyour credentials and select the SBI account that will be debitedfor the payment.You are provided a KSRTC reference number for your e-Ticket.2)SBI E-TAX:-

You can pay your taxes online through SBI E-Tax. This facilityenables you to pay TDS, Incometax, Indirect tax, Corporationtax, Wealth tax, Estate Duty and Fringe Benefits tax. Click the e-Taxlink in the home page. You are displayed a page with twolinks Direct Tax and Indirect Tax.Click theDirect Tax link. You will be redirected to the NSDLsite where you can select an online challan

based on the tax youwish to pay. Provide the PAN, name and address, assessmentyear, nature of payment and bank name. On selecting the bank name as SBI and submitting the form, you will be redirected tothe Internet Banking site. After submitting the respective IDand password, you can select your account for making payment of taxes. After paymentis successful you can print the E-Receipfor the payment. The E-receipt can be printed at a later date alsoand the same can beretrieved from: Enquiries > FindTransactions > Status Enquiries > Click on therespectivetransaction to print the tax receipt.The Indirect Tax link is used to make CentralExcise and ServiceTax payments to Central Board of Excise and Customs. Theonline payment featurefacilitates anytime, anywhere paymentand an instant E-Receipt is generated once thetransaction iscomplete. The Indirect Tax payment facility is available toRegistered CentralExcise/Service Tax Assessee who possessesthe 15 digit PAN based Assessee Code. You can makeCBEC payments using the Indirect Taxes link available in thePayments/Transfers tab. You need to

provide your assessee codeas registered with CBEC and select the minor headstowardswhich you intend to pay tax. Select the appropriate tax type andenter the taxamount. Select an account for debiting the total taxamount. You can use any of your transaction accounts to makethe payment. If a payment is successful, CBEC provides alink togenerate an E-Receipt for the payment.Internet banking customers can pay tax throughsite to site integration. For government agencies, which are not Internet-enabled,OnlineSBI offers the Government Tax Payment facility.This facility is available as a post loginfeature in the retail andcorporate banking sites of the Online SBI portal.Please note that the

cut-off time for OLTAS and CBEC paymentis 8 P.M. IST. Any transactions created after the cut off time will be processed after 7 A.M. on the following day.3)Bill Payment

:-

A simple and convenient service for viewing and paying your bills online.•No more late payments

•No more queues

•



No more hassles of depositing chequesUsing the bill payment you can 'view and Payvarious billsonline, directly from your SBI account. You can pay telephone,electricity, insurance,credit cards and other bills from thecomfort of your house or office, 24 hours a day, 365 days a year RTGS system facilitates transfer of funds from accounts in one bank to another on a "real time"and on "gross settlement" basis.This system is the fastest possible interbank money

transfer facility available through secure banking channels in India.RTGS transactionrequests will be sent to RBI immediatelyduring working hours post working hours requestsare registeredand sent to RBI on next working day. You can also schedule atransaction for a futuredate. You can transfer an amount of Rs.1lac and above using RTGS system. National Electronic FundsTransfer (NEFT) facilitates transfer of funds to the credit account with the other participating

bank. RBIacts as the service provider and transfers the credit to the other bank'saccount. NEFT transactions are settled in batches based on the followingtimings1.6settlements on weekdays - at 09:00, 11:00, 12:00, 13:00,15:00 and 17:00 hrs.2.3settlements on Saturdays - at 09:00, 11:00 and 12:00hrs. Conclusion:-

Studying the project we came to know that Internet banking isclearly theway forward for the State Bank of India. It providescomfort to customers at the

same time it provides cost cuttingtoSBI by eliminating physical documentation. Internet bankingsaves time of

bank as well as those of customers.Study states that internet banking provides greater reach tocustomers. Feedback can be obtained easily as internet is virtualin na ture.Customer loyalty can be gain. Personal attention can be given by bank tocustomer also quality service can be served.Bank should know that No system is

perfect, however a systemo f s u c h a t y p e w i l l n e e d t o b e v e r y s e c u r e .T h i s i s a s y s t e m w hi ch h ol ds ac co un t d et ai ls an d c us to mer sw e a lt h . I f s u c h a s y s t e m w a s n o t t r u s t e d a n d n o t r e l i a b l e, t h e n S B Iwo uld face serious laws and would lose business.After studying the SWOCanalysis, we came to know variousstrengths of SBI such as quality customer service, greater reach,customer loyalty, easy access to information, 24 hoursaccesseasy online applications etc. SBI should put efforts to multiplythe number of strengths. In terms of weakness I come to knowsome of the majo r w e a k n e s s e s t h e y a r e l a c k o f a w a r e n e s s o f internet banking among thecustomers, obsolesce of technologyrelated to securi ty, complicated proceduresof availing internet banking facilities, lack of knowledge among theemployees of SBI. SBI should concentrate on the weaknesses and reduce themtozero.In the third segment of SWOC analysis of internet banking wedealtwith opportunities like 95 % market of internet market isuntapped, SBI’s path

to become first virtual bank. By encashingsuch opportunities bank can become theleader in banking sector o f I n d i a . I n t h e l a s t s e g m e n t I c o m e t ok n o w a b o u tv a r i o u s c h a l l e n g e s w h i c h a r e i n f r o n t o f S B I , l i k e s a m en e s s i n I T i n f r a s t r u c t u r e w i t h i n v a r i o u s b a n k s , n e e d o f v a r io u s v e n d o r s u p p o r t s f o r c o m p l e x t e c h n o l o g y , m a i n t a i n i n g s ec u r e d I T infrastructure, alternative mechanism in case of failure of presentsecuritysystem.T h e c o m pa n y c a n t a k e t h e a d v a nt a g e o f t h e r e p u ta t i o n i th as created in the market for itself and become more competitiveTh erecommendat ions and suggest ions g iven, i f adop ted wi l l improve the

posi tion of the company subs tantial ly and op timal

the chapter describes in brief about internetbanking

Documents