Electronic Banking in India - Explained in Easy Language

Electronic Banking in India

Fast Bullet Points:

• Electronic Banking is one of the largest emerging trends in the banking system of India.
• In early 1990, the uses of Electronic Banking in India were restricted to the Foreign Banks and Foreign Exchange branches of leading PSU banks.
• In 1991, it gained popularity popular in India after liberalization of banking system.
• When the Private Sector banks had started their operation in India in 1994, the banking system took a step ahead towards the full computerization and Electronic Banking.
• Electronic Banking means Banking done through the electronic systems (through Internet of Computer or mobile phone) for the customers instead of the traditional manual system of the banking.
• Electronic Banking involves the banking based on Information Technology.

Impact of Information Technology on Banking:

• Introduction of the technology based Banking channels like ATM, Internet Banking and Tele Banking.
• It enables the customers to deposit, pay or withdraw money at any time at anywhere and provides 24*7 banking facilities.
• It makes banking system faster, secure and safe.
• Banking services becomes more convenient through the inter-connectivity of the branches.
• Through the Direct Credit Systems, the money can be transferred directly from one’s account to others via Electronic Fund Transfer system.
• Non- Banking services like payment of electricity, telephone, gas bills, insurance installments and receipt of interest/ pension etc can be made through their mobile phones or personal computer.
• Through Internet Banking, the book-keeping system of the banks can be automated fast and accurately.
• The Electronic Banking helps the Management Information systems to function properly.
• Through Cross-Selling method, various financial products have been made easy due to various electronic marketing channels and data mining. 
• E-Banking offers the customers the opportunity to pay using the Debit Cards/ Credit Cards. They have to swipe the cards at the Point of Sale (POS) Transfer Terminals installed at the merchant’s stores for the purchase of any goods or items.

Services Provided by the E-Banking-
ATM (Automated Teller Machine) –

• It is cash rendering teller machine which helps in cash dispensing, deposit of cash, generating account balance inquiry 24*7.
• A plastic card with a unique PIN number is used for this purpose.

Smart Card-

• These cards have a specific amount of credit stored in it electronically. It is also called as “Stored-Value cards.

Home Banking-

• The customers can avail the banking facility from their homes through computer or mobile phone avoiding the long queue in the branches of bank.

Mobile Banking-

• This banking tries to reach the customer to enable him/ her to transact banking.
• It can be carried out by different ways i.e. banking Through a Mobile van (Mobile Bank) and ATM on ship or Airliner.
• The Mobile Banking offers all the basic banking functions including cash deposits, withdrawal, cheque collection and issue, pass book update etc.
• It provides larger area coverage, online communication with base office, safety and security of the cash, equipment and records. 
• It needs lower capital investment as compared to the brick and Mortar Bank.

Tele Banking-

• It requires authorized customers to use a special telephone number of the bank.
• It can be done from anywhere at any time.
• There are no geographical or time restrictions in this kind of banking.
• It can be made by two ways i.e. Public Inquiry and Private Inquiry.
• In Public Inquiry, general information regarding banking services are provided to the customers. The customers have to dial the special inquiry number of the call center of the banks.
• In Private Inquiry, The account specific information is provided to the consumers. This service can be obtained by disclosing secret PIN number and customer ID.

Internet Banking-

• In this banking, a consumer can access his/ her bank account online via internet.
• The account details are displayed on the screen of the Personal Computer and can be browsed by the consumer.
• The consumer cannot order cash withdrawal in this banking but can transfer money from his/her account to others.

Virtual Banking-

• This banking system includes a very small or no branch network. It offers financial services through Telephone Banking, Mail Banking, Online Banking, ATM etc.

INFINET-

• It stands for the Indian Financial Network. It is the backbone of communication for Indian Banking sector.