Easy Banking In India
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A decade before, it was tough to belief that banking secctor will be at a finger tip. Now its possible. A mobile hand set with a connection is the only instrument needed to make a gateway to your banking transaction, the latest innovation of technology.
Apart from the Mobile Banking, including of SMS Banking, Net Banking and ATMs are the major steps taken by the banks in India towards modernisation. With all these devises and systems, there is a complete freedom to experience.
Check your account, transfer your fund, make payments and what more, do anything of everything what has been followed in physical banking since ages. But this time no standing for hours in front of cash counter and no time boundation in withdrawing your own money.
Automated Teller Machine (ATM)
The first bank to introduce the ATM concept in India was the Hongkong and Shanghai Banking Corporation (HSBC). It was in the year 1987. Now, almost every commercial banks gives ATM facilities to its customers.
The first bank to cross 1,000 marks in installing ATMs in India is ICICI. SBI is following the concept of 'ATMs in Quantity'. But Private Sector Banks have taken the lead. ICICI, UTI, HDFC and IDBI counts more than 50% of the total ATMs in India.
Public Sector Banks are also taking the installation of ATMs seriously for Indian market. They are either setting up their own ATM centres or entering into tie-ups with other banks. The Corporation Bank has the second largest network of ATMs amongst the Public Sector Banks in India.
The Indian banks have also come up with a 'Swadhan' scheme. Under this scheme, the banks can use each other's ATM at a cost, usually Rs. 35 extra from their customers. The main feature of 'Swadhan Card' are as follows:
No exchange fee charged to change an old ATM card for a Swadhan card.
Rs. 3,000 fixed as the ceiling on withdrawal.
Exception made for select customers who can withdraw up to Rs10,000. Still, this is lower than the average withdrawal of Rs15,000 by regular ATMs.
IBA gives banks the discretion to decide a higher maximum amount for withdrawal.
Transactions conducted through any of the member banks appear on a bank statement, which is given only by your own bank.
All transactions conducted in any of the member banks appear on the bank statement, but only your own bank will provide this.
Note :- No overdraft facility is available on Swadhan cards.
How 'Swadhan Card' works
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All informations and transactions are routed among member institutions through a switch. The switch transmits the information and/or data to bank which has issued the card or to its processor, which on the other hand either approves or declines the transaction request and notifies the switch. The decision of the card-issuing bank's is then routed by the switch to the processor of the ATM, which completes the transaction.
The accounts among members are settled and account balances are transmitted at the end of the day to each member institution.
Cost of setting ATM center
Approximately Rs.1mn it takes for the setting of an ATM center. Rs.1.2-1.4mn per annum is needed for its maintenance. To keep the cost in equilibrium position, there should be around 250-300 transactions per day per ATM.
To overcome or to reach the break-even point, the banks are always encouraging its customers to use the ATMs. Banks like HDFC and Citibank even charge penalty if a customer visits the branch.
NCR India and HMA Die bold are the main two players in this market to set up ATMs in India. The market, according to them is whopping 100% and they are very optimistic to see 30,000 ATMs in India very soon
"The account that travels with you". This is needed in today's fast business environment with unending deadlines for fulfillment and loads of appointments to meed and meetings to attend. With mobile banking facilities, one can bank from anywhere, at anytime and in any condition or anyhow. The system is either through SMS or through WAP.
Mobile Banking is the hottest area of development in the banking sector and is expected to replace the credit/debit card system in future. In past two years, mobile banking users has increased three times if we compare the use of either debit card or credit card. Moveover 85-90% mobile users do not own credit cards.
Mobile banking uses the same infrastructure like the ATM solution. But it is extremely easy and inexpensive to implement. It reduces the cost of operation for bankers in comparison to the use of ATMs.
Using compact HTML and WAP technologies, the following operations can be conducted through advanced mobile phones which can is further viewed on channels such as the Internet via the Channel Manager.
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Any many more which is also available in SMS Banking
In countries like Korea, two SIM Card is used in mobile phones. One for the telephonic purpose and the other for banking. Bank account data is encrypted on a smart-card chip. About 3.3 million transactions were reported by Bank of Korea in 2004.
Businesses are in move. So is to be your money.
You may have to thank the banks which are providing banking at the send-of-your-sms. The technology is at its highest level to move your money while you are on the move. If you are having non-WAP enabled mobile handset, you can use the facility of SMS services. The following operations can be easily used by the service provider:
Last three transactions
Cheque payment status
Cheque book request
Demat - Free Balance Holding
Demat - Last two Transactions
The SMS facility brings peace of mind to customers and opens doors to many more technological possibilities and innovative services. It is very similar to how an ATM works.
To use ATM, a card is necessary and to use SMS service, a mobile phone is needed. In both the cases, secret number is necessary to access.
SMS banking is also very much safe. First, one authenticates the mobile number with the authentications key. Second, the customer uses secret Mobile Personal Iddentification Number (MPIN).
A new concept has been developed by Bank of Punjab Ltd. They call it "Mobile Wallet". With the support of this technology, a customer can make payment and receive payment of account of buy/sell (merchants) through SMS.
In this system, a buyer sends a message for buying and the bank in return sends a message confirming the purchase both to the merchant as well as to the buyer. Debit card number is the key field which is used for the authenticity of the customer.
The processes of the service are simplified as under:
Customer has to send "REG(one space)(Account Number)(one space)(Debit Card Number)" as an SMS to bank's mobile number 9810999992 for registration. For e.g. "REG 06SB11052122 5047531105000109109" Bank will confirm the registration with the return message.
After that customer will visit nearest branch to collect the service brochure and get it filled.
Registration will be a one time process.Once registered, customer would be able to buy things from any of the registered merchant of the bank.
Customer need to send "PAY(one space)(merchant code)(one space)(amount)(one space)(Debit card number)" as an SMS on bank's mobile number 9810999992. For e.g for making a payment of Rs. 56.16 to merchant BOPSTC from card no. 5047531105000109109, Send the following message "PAY BOPSTC 56.16 5047531105000109109"
The transaction will be validated online and immediately funds will be transferred from customer account to merchant account.
Bank would send transaction confirmation as an message to both merchant and customer(buyer).
An SMS report will be sent to both merchant & buyer everyday stating the total number of transaction & total amount of transaction made during previous one day.
Note :- There is obviously a limit to the volume of transactions now.
Some Useful Tips
Generally with 3 invalid login attempts, SMS Banking services are locked. Immediately contact the branch for unlocking the services. In case one forgets the password, obtain a new password from the branch. To log out, choose the "Log out" option in the handset and SMS Banking session ends
Net Banking is conducting ones banking or bank account online through a computer and a net connection. The system is updated immediately after every transaction automatically. In other words it is said that it is updated 'on-line, real time'. Through netbanking one can check the status of his/her account, place queries and also can be facilitated with a wide range of transactions simultaneously.
In India, the regulatory body has not yet sanctioned virtual bank, in abroad there are banks like EGG Bank or NET Bank, which only have a virtual presence without any physical branches.
Net Banking has three basic features. They are as follows:
The banks offer only relevant informations about their products and services to the mass.
Few banks provide interaction facility between the banks and its customers.
Banks are coming up with arrangements of utility payments, like telephone bills, electricity bills, etc.
The current statistics show that hardly 10 per cent of Indian customers uses the internet for banking. Among all the facilities provided, the maximum of them uses only for checking balance or requesting for a cheque book. Very few customers uses the advance interactive services provided by the banks.
According to HDFC and ICICI Bank, 17 per cent of ICICI customers use the Internet for banking and 10 per cent of HDFC customers prefer it.
Cost of installation of services
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For basic features, the cost for providing such services to the banks come around Rs 40 lakh to Rs 50 lakh. For the third level service or sophisticated services, the investments mount to the tune of Rs 4 crore to Rs 5 crore. These investments is just a fraction if compared to the operations of the bank using physical infrastructure.
Services provided by Net Banking
Inquire about cheque status
Ask for a Statement
Ask for a Cheque Book
Inquire about Fixed Deposit
Inquire about TDS details
See Demat Account
Stop a Cheque
Ask for a Demand Draft
Transfer funds between your accounts
Transfer funds to a third party
Request for a new Fixed Deposit
Pay Bank Credit Card Dues
Advantages of Net Banking
It removes the traditional geographical barriers as it could reach out to customers of different countries/legal jurisdiction. This has raised the question of jurisdiction of law/supervisory system to which such transactions should be subjected.
It has added a new dimension to different kinds of risks traditionally associated with banking, heightening some of them and throwing new risk control challenges.
Security of banking transactions, validity of electronic contract, customers' privacy, etc., which have all along been concerns of both bankers and supervisors have assumed different dimensions given that Internet is a public domain, not subject to control by any single authority or group of users.
It poses a strategic risk of loss of business to those banks who do not respond in time to this new technology, being the efficient and cost effective delivery
Proxy Banking in India
Indian villages were miles away from mutual funds, insurance and even equity trading. Thanks to Internet Kiosk and the ATM duo which has made it possible for rural India. This kiosk has been set up by ICICI Bank in partnership with network n-Logue Communications in remote villages of Southern part of the country. This is known as Proxi Banking. With the help of fibre optic cables, this kiosk works on wireless in local loop technology.
Reasons for setting-up of Proxi Banking
58% of rural households still do not have bank accounts.
Only 21% of rural households have access to credit from a formal source.
70% of marginal farmers do not have deposit account.
87% households have no formal credit.
Only 1% rural househlods rely on a loan from a financial intermediary. · The loans take between 24 to 33 weeks to get sanctioned.
Consumers bribe officials to get loans approved which varies between 10 and 20 per cent of the loan amount.
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Branch banking in rurals is a loss-making.
Benefits to rurals
Small loans given for buying buffaloes.
Loans for setting up a tea shop.
Life and non-life insurance provided.
Weather insurance given to farmers.
Insurance policies sold to farmers like groundnut, castor, soya, paddy crop, etc.
The Proxy Banking is an innovative approach to rural lending and will add to the government's expanding base of kisan credit cards and the good old guidelines for agricultural lending