E- Banking in India.

Defining E Banking.
Internet banking refers to systems that enable bank customers to access accounts and general information on bank products and services through a personal computer (PC) or other intelligent device. Compared with traditional channels of offering banking services through physical branches, eebanking uses the Internet to deliver traditional banking services to their customers.

 Internet banking may mirror products and services offered through other bank delivery channels. In recent time EE-banking has spread rapidly all over the globe. All Banks are making greater use of EE-banking facilities to provide batter service and to excel in competition.

Products/ Services offered via EE- Banking

Internet banking products and services can include wholesale products for corporate customers as well as retail products for consumers. Some examples of wholesale products and services include: Cash management. Wire transfer. Automated clearinghouse (ACH) transactions. Bill presentment and payment.

 Examples of retail and products and services include: Balance inquiry. Funds transfer. Downloading transaction information. Bill presentment and payment. Loan applications. Investment activity. Other value-added services

Objectives of E Banking.
To Enable Online Payment of Bills To View Transactions. Transfer Money Between Accounts Online Protection 24*7 Service. Reduce Manpower Reduction in Cost Facilitate Online Shopping Ease & Convenience

Types of Internet Banking

Currently, the following three basic kinds of Internet banking are being employed in the marketplace:

1. Informational 2. Communicative 3. Transactional

Informational
Informational The bank has marketing information about the banks products and services on a standstand-alone server. The risk is relatively low, as informational systems typically have no path between the server and the banks internal network. This level of Internet banking can be provided by the bank or outsourced. While the risk to a bank is relatively low, the server or Web site may be vulnerable to alteration. Appropriate controls therefore must be in place to prevent unauthorized alterations to the banks server or Web site.

Communicative
Communicative This type of Internet banking system allows some interaction between the banks systems and the customer. The interaction may be limited to electronic mail, account inquiry, loan applications, or updates like name and address changes. These servers may have a path to the banks internal networks, the risk is higher than informational systems. Appropriate controls need to be in place to prevent, monitor, and alert management of any unauthorized attempt to access the banks internal networks and computer systems.

Transactional
Transactional This level of Internet banking allows customers to execute transactions. Since a path typically exists between the server and the banks or outsourcers internal network, this is the highest risk architecture and must have the strongest controls. Customer transactions can include accessing accounts, paying bills, transferring funds, etc.

Types of Internet Banking in India

The Reserve Bank of India constituted a working group on Internet Banking. The group divided the internet banking products in India into 3 types based on the levels of access granted. They are: i) Information Only System. ii) Electronic Information Transfer System. iii) Fully Electronic Transactional System.

Commonly used EE-Banking services.

ATM - Automated Teller Machine is designed to perform the most important function of bank. It is operated by plastic card with its special features. The plastic card is replacing cheque, personal attendance of the customer, banking hours restrictions and paper based verification. The onon-line ATM enables the customer to avail banking facilities from anywhere. In offoff-line the facilities are confined to that particular ATM assigned.

 Credit Cards/Debit Cards: The Credit Card holder can spend with his Credit Card within the limits fixed by his bank. Credit Card is a post paid card. Debit Card, on the other hand, is a prepaid card with some stored value. Every time a person uses this card, the Internet Banking house gets money transferred to its account from the bank of the buyer. The buyers account is debited with the exact amount of purchases. An individual has to open an account with the issuing bank which gives debit card with a Personal Identification Number (PIN).

 How Credit/Debit Cards Works: When customers makes a purchase, he enters his PIN on shops PIN pad. When the card is slurped through the electronic terminal, it dials the acquiring bank system - either Master Card or VISA that validates the PIN and finds out from the issuing bank whether to accept or decline the transactions. The customer can never overspend because the system rejects any transaction which exceeds the balance in his account or the credit limit fixed by the bank.

 Smart Cards : Banks are adding chips to their current magnetic stripe cards to enhance security and offer new service, called Smart Cards. Smart Cards allow thousands of times of information storable on magnetic stripe cards. In addition, these cards are highly secure, more reliable and perform multiple functions. They hold a large amount of personal information, from medical and health history to personal banking and personal preferences.

 EFT: Electronic Fund Transfer - An ATM is an Electronic Fund Transfer terminal capable of handling cash deposits, transfer between accounts, balance enquiries, cash withdrawals and pay bills. Any customer possessing ATM card issued by the Shared Payment Network System can go to any ATM linked to Shared Payment Networks and perform his transactions.

Advantages Of E Banking.
The spread of EE-banking has also greatly benefited the ordinary customer in general and corporate world in particular. 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 low cost.

Benefits to Consumers:
Customer can withdraw money at any time and can also have mini banks statements through ATMs that are now widely available throughout the country. Through Internet Banking customer can operate his account while sitting in his office or home. There is no need to go to the bank in person for such matter. E banking has also greatly helped in payment of utility bill. Now there is no need to stand in long queues outside banks for his purpose.

 All services that are usually available from the local bank can be found on a single website. The Growth of credit card usage also owes greatly to EE-banking. Now a customer can shop world wide without any need of carrying paper money with him. Banks are available 24 hours a day, seven days a week and they are only a mouse click away. Customers account is extremely accesses able with an online account.

Benefits to Banking Industry:

The growth of EE-banking has greatly helped the banks in controlling their over heads and operating cost Many repetitive and tedious tasks have now been fully automated resulting in greater efficiency, better time usage and enhanced control. The rise of EE-banking has made banks more competitive.

 Electronic banking has greatly helped the banking industry to reduce paper work, thus helping them to move the paper less environment. Electronic banking has also helped bank in proper documentation of their records and transactions. The reach and delivery capabilities of computer networks, such as the Internet, are far better than any branch network.

Benefits to General Economy:

E-Banking has resulted in creation of a better enabling environment that supports growth, productivity and prosperity. E-Bankings electronically controlled and thoroughly monitored environment discouraged many illegal and illegitimate practices associated with banking industry like money laundering, frauds and embezzlements. E-banking has helped banks in better monitoring of their customer base. E-banking has also helped in documentation of the economic activity of the masses.

Disadvantages Of EE-Banking.
1. EE-banking promotes lack of socialising/social contacts 2. Hackers may intercept data and defraud customers 3. Phone bills can increase 4. Customers will be more vulnerable to phishing. 5. Customers are compelled to have computers at home, Internet access and computers skills 6. Easier for customers to mismanage their accounts due to the 2424-hour service that will be available