10

1.5. Banking grouping in India

The banks in India’s are in many shapes and forms that can be categorized on the

basis of ownership, functions and operations. The Indian banking system is

regulated by the Reserve Bank of India (RBI) that comprises of scheduled and non-

scheduled banks and these are classified in various sub-categories as follows:-

1.5.1 Scheduled Banks:

“Scheduled Banks in India are those banks which have been included in the Second

Schedule of Reserve Bank of India (RBI) Act, 1934.” [28]

As on 30th June, 1999, there were 300 scheduled banks in India having a total

network of 64,918 branches and till March 31, 2002, this figure is increased 418

banks in India with its wide network of all over India.

Figure – 1 (Scheduled Banking Structure in Indian, (As on March 31, 2002) ) (Source: INDIAN BANKING by S. Natarajan, R. Parameshwaran)

“Scheduled banks in India, means the State Banks of India constituted under the

State bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the

State bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding

new bank constituted under section 3 of the Banking Companies (Acquisition and

Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking

Scheduled Banks in India

Scheduled Commercial Banks Scheduled Co-operative Banks

Public Sector Banks (27)

Private Sector Banks (30)

Foreign Banks in India (40)

Regional Rural Banks (196)

Scheduled State Co-operative

Banks (16)

State Bank of India & Its

Associates (8)

Old Private Banks (22) New Private Banks (8)

Scheduled Urban Co-operative Banks (52)

Nationalized Banks (19)

11

Companies (Acquisition and Transfer of Undertakings) Act, 1980 ( 40 of 1980), or

any other bank being a bank included in the Second Scheduled to the Reserve Bank

of India Act, 1934 ( 2 of 1934), but does not include a co-operative bank.”[29]

The following are the Scheduled Banks in India:

Public Sector Private Sector Foreign Banks in India State Bank of India Vysya Bank Ltd. American Express Bank Ltd. State Bank of Bikaner and Jaipure

ICICI Bank ANZ Gridlays Bank Plc.

State Bank of Hyderabad Axis Bank Ltd. Bank of America NT & SA State Bank of Indore Indusind Bank Ltd. Bank of Tokyo Ltd. State Bank of Maysore Global Trust Bank Ltd. Banquc National de Paris State Bank of Patiala HDFC Bank Ltd. Barclays Bank Plc State Bank of Saurashtra Centurion bank Ltd. City Bank N.C. State Bank of Travancore Bank of Punjab Ltd. Deutsche Bank A.G. Andhra Bank IDBI Bank Ltd. Hong Kong and Shanghai

Banking Corporation Allahabad Bank Yes Bank Standard Chartered Bank. Bank of Baroda The Chase Manhattan Bank Bank of India Dresdner Bank AG Bank of Maharashtra ABN AMRO Bank Canara Bank Abu Dhabi Commercial

Bank Central Bank of India Corporation bank Dena Bank Indian Overseas Bank Indian Bank Oriented Bank of Commerce Punjab National Bank Punjab and Sind Bank Syndicate Bank Union Bank of India United Bank of India UCO Bank Vijaya Bank

Jammu & Kashmir Bank Ltd. (Table-2: Scheduled banks in India)

(Source: http//www.answer.com/topic/scheduled-banks)

The network of the banks in India is very wide and scattered all over the country.

“Amongst the public sector banks the State Bank of India and Associates had

13,684 branches as on June 30, 2005. The nineteen nationalized banks had 33,865

offices all over the country. In recent years in order to meet the credit requirements

of the weaker sections, small and marginal farmers, landless labourers, artisans and

12

small entrepreneurs, the regional rural banks have been set up in different parts of

the country. On June 30, 2005 their branches numbered 14,496. The foreign

scheduled banks operate mostly in big cities and their number of branches in the

whole country is just 251. Other scheduled commercial banks are private sector

banks and their branches numbered 6,181 as on June 30, 2005.”[30]

1) Public sector banks in India:

In India Public Sector was considered as the major vehicle for development of the

country. Similarly Public Sector Banks are carried as important established

working for the sound banking and financial system of the country. The growth and

development of these banks are presented below:

i) The State Bank of India: The State Bank of India is a statutory institution like

the RBI and it is governed by the SBI Act 1955. The history of the State Bank of

India is divided into four phases:

(Figure-2: phases State Bank of India)

(Source: INDIAN BANKING by S. Natarajan, R. Parameshwaran)

There were three Presidency Banks of Bombay, Calcutta and Madras before 1921.

In 1921, by the amalgamation of these three banks the Imperial Bank was

established. It was governed by the Imperial Bank of India Act of 1920. The

Imperial Bank was mainly a commercial bank owned by private shareholders. But

it was simultaneously performing some of the functions of Central Bank such as the

1 Before 1921

2 From 1921

to 1934

3 From 1934

to 1955

4 After 1955

13

banker to the government, bankers’ bank and national clearing house. But it was

not given the powers to issue notes or to engage in foreign business. The Imperial

Bank was functioning on this line till 1934 when a separate central bank i.e. RBI

was established. Then the Imperial Bank of India Act was amended by the Imperial

Bank (Amendment) Act of 1934. In addition to its regular functions, the Imperial

Bank acted as the agent of the Reserve Bank of India in all places where the later

had no branches of its own. On the recommendation of the Rural Credit Survey

Committee the Imperial Bank of India was converted into the State Bank of India

on July 1, 1955. Its 92 % shares were acquired by the RBI, and thus it had the

distinction of becoming the first State owned commercial bank in the country.

In 1956 the State Bank of India (Associate Banks) Act, was passed and this paved

the way for creating the State Bank Group. They are State Bank of Bikaner, State

Bank of Jaipur, State Bank of Indore, State Bank of Mysore, State Bank of Patiala,

State Bank of Hyderabad, State Bank of Saurashtr, State Bank of Travancore. Over

the years, the State Bank of India and seven associate banks have expanded their

business in a big way. On June 30, 2005 the State Bank of India and its Associate

Banks together accounted for around 20 % of the total branches of all commercial

banks in the country. The share of the banking business with them was roughly

30%. In 1993, the State Bank of India Act was amended to enable it to have access

to the capital market. The State Bank of India raised over Rs. 2,400 crore through

public issue. The RBI shareholding is now 59.7% as against 99 percent earlier. The

Management of the SBI is very wide. The head offices of the SBI is located in

Mumbai and the bank has local offices at Calcutta, Mumbai, Chennai, New Delhi,

Lucknow, Ahmedabad, Hyderabad, Patna, Bhopal, Bhubaneswar, Chandigarh,

Guwahati and Bangalore. “The bank is administered by a central board of director

consisting of:

14

Members Number

(a) Chairman (appointed by the Central Government in consultation with RBI)

1

(b) Vice-Chairman (appointed by the Central Government in consultation with RBI)

1

( c) Managing Directors (appointed by the central board with the approval of the central government)

2

(d) Directors (Elected), (elected by the shareholders other than RBI)

6

( e) Director (Nominated) (nominated by the central government in consultation with RBI to represent territorial and economic interest having commerce, industry, banking of finance)

8

(f) Director (Nominated) (nominated by the central government)

1

(g) Director (Nominated) nominated by RBI

1

Total Members 20

(Table-3: Members of S.B.I) (Source: INDIAN BANKING by S. Natarajan, R. Parameshwaran)

Functions of State Bank of India:

The functions of SBI can be grouped under two categories:

A) Central Banking Functions and B) General Banking Functions.

A. Central Banking Functions:

The SBI acts as agent of the RBI and renders the following function:

(i) Banker to the government

(ii) Banker to banks in a limited way

(iii) Maintenance of currency chest

(iv) Acts as clearing house

(v) Renders promotional functions

(i) Banker to the Government: The SBI functions as the banker to the central and

state governments. It receives and pays money on behalf of the governments.

Especially it renders the following functions as directed by the RBI in this regard.

(a) Collection of charges on behalf of the government e.g. collection of tax and

other payments

(b) Grants loans and advances to the governments

15

(c) provides advises to the government regarding economic conditions, etc.,

(ii) Banker’s Bank: Commercial Banks have accounts with SBI. When the banks

face financial shortage, the SBI provides assistance to them as it is considered a big

brother in the banking industry. It discounts the bills of the other commercial

banks. Due to the functions on this line the SBI is considered in a limited sense as

the banker’s bank.

(iii) Currency Chest: The RBI maintains currency chests at its own offices. But

RBI Offices are situated only in big cities. SBI, buy its wide network of branches

operate in urban as well as rural areas. RBI therefore, in such places keeps money

at currency chests with SBI. Whenever needs arise, the currency is withdrawn from

these chests under proper accounting and reporting to RBI. Presently RBI entrust

currency chest to other Public Sector Banks and a few Private Sector Banks also.

(iv) Acts as Clearing House: In all the places, where RBI has no branch, the SBI

renders the functions of clearing house. Thus, it facilitates the inter bank

settlements. Since, all the banks in such places have accounts with SBI; it is easy

for the SBI, to act as clearing house.

(v) Renders Promotional Functions: State Bank of India also renders various

promotional functions. It provides facilities to the following priority sectors:

(1) Agriculture

(2) Small-Scale Industries

(3) Weaker sections of the society

(4) Co-operative sectors

(5) Small-traders

(6) Unemployed Youth

(7) Others.

In this respect SBI is like any other commercial bank of the country.

B) General Banking Functions:

SBI perform the ordinary banking functions under the section 33 of the Act.

1. Accepting deposits from the public under current, savings, fixed and recurring

deposit accounts.

16

2. Advancing and lending money and opening cash credits upon the security of

stocks, securities, etc.

3. Drawing, accepting, discounting, buying and selling of bills of exchange and

other negotiable instruments.

4. Investing funds, in specified kinds of securities.

5. Advancing and lending money to court of wards with the previous approval of

State Government, etc.

(ii) Nationalised Banks in India: The second category of public sector banks in

India is of nineteen commercial banks, of which fourteen were nationalized on July

19, 1969. Each one of these fourteen banks had deposits of Rs.50 crore or more.

This step had changed the very complexion of the banking structure in the country.

The nationalization was justified by the government on the ground that, the major

banks could not be any more allowed to remain captive organization of the big

business. Their policies should be inspired by the larger social purpose and be in

accordance with the national priorities and objectives. Hence, a fundamental shift

in their approach was witnessed in the post-nationalization phase. The banking

system in this period became an instrument of development. The Lead Bank

Scheme formulated in December 1969 played a significant role in transforming

these profit maximizing institutions of yester years into catalysts of local

development, serving all segments of the society.

After nationalization of 14 banks, there was rapid expansion of branch net-work.

On April 15, 1980 six more private owned commercial banks were nationalized.

The purpose was ‘to control the heights of the economy, to meet progressively and

serve better the needs of the development of the economy and to promote welfare

of the people, in conformity with the policy of the state’. With the nationalization

of six more banks, the share of private sector in the entire banking declined to just 9

per cent. In 1993, New Bank of India merged with Punjab National Bank. As a

result the number of public sector banks other than the State Bank of India and its

associates declined to nineteen. The total number of branches of the nineteen

nationalized banks was 33,865 as on June 30, 2005.

17

2) Private sector commercial banks in India:

There are ten newly established private banks with a network of 6,181 branches are

operating in the private sector. Private Scheduled Banks is functioning on par with

the other public sector banks in various respects. Since, they have been included in

the second schedule of Reserve Bank of India Act; they are enjoying the privileges

as that of any other scheduled banks. These privileges, importantly, include

refinance facility from RBI and participation in money market activities. “The joint

stock banks in the private sector in India numbered 35 at present out of which 34

are scheduled banks and one non-scheduled bank. Of the 34 private sector banks, 9

are newly set up under liberalized policy. These banks together accounted for 10.3

per cent of total assets of all commercial banks in India as on 31st March 1998.

They have made net profit of Rs.841.88 crore during 1997-98 as compared to

Rs.685.77 crore in 1996-97”[31]. In 2004-05 new private sector banks accounted for

12.9 per cent of total banking assets.

3) Foreign Banks:

The foreign banks in private sector are the branches of banks where as incorporated

in foreign countries. There are 42 such foreign banks in India. Their branches are

mainly located in the big cities. The foreign banks perform mostly the same range

of services as being performed by local banks. However, they are more active

players in export/import trade and transactions relating to foreign exchange

operations. The role of foreign banks is also important for the development of the

economy of the country, particularly for the development of foreign trade. On June

30, 2004 the country had foreign banks with 218 branches located mainly in big

cities.

4) Regional Rural Banks:

The Regional Rural Banks are established for promoting regional development in

general and rural development in particular. “The Regional Rural Banks were set-

up by the Government by promulgating an ordinance in September, 1975. The

Ordinance was replaced by the Regional Rural bank Act, 1976. The Ordinance was

replaced by the Regional Rural bank Act, 1976. The Regional Rural Banks were

set-up on the recommendations of a working group headed by Mr.Narasimhan. To

18

start with, there were only 5 Regional Rural Banks on October, 2, 1975, with an

authorized capital of Rs.1 crore each. Every rural bank is expected to cover a

population of one crore through about 100 branches.”[32] The Regional Rural Banks

raise their resources through:

(a) Owned capital;

(b) Deposits from the public;

(c) Borrowings from sponsor banks; and

(d) Refinance from NABARD.

The objective of establishing the Regional Rural Banks was to develop the rural

economy by developing agriculture, trade, commerce and industry and other

productive activities in the rural areas. As on June 30, 2005, there were 196

regional rural banks with a network of 14,496 branches in the country.

1.5.2. Non Scheduled banks:

Non-Scheduled banks are those not included in the 2nd schedule of the Reserve

Bank of India Act. Their number has progressively declined over the years. These

are also known as non-banking financial companies. “The non-bank financial

companies (NBFCs) are financial institutions that provide banking services with

out meeting the legal definition of a bank, i.e. one that does not hold banking

licenses. Operations are, regardless of this, still exercised under bank regulation.”[33]

The activities of non-bank institution are suppliers of loans and credit facilities,

supporting investments in property, trading money market instruments, funding

private education, wealth management such as Managing portfolios of stocks and

shares and, underwrite stock and shares, retirement planning, advise companies in

merger and acquisition, prepare feasibility, market of industry studies for

companies, discounting services e.g., discounting of instruments.

As per the nature of the activities performed by the non-banking financial

companies can be classified into the various groups like development finance

institutions, leasing companies, investment companies, modaraba companies, house

finance companies , venture capital companies, discount & guarantee houses etc.

19

1.6. Functions of Modern Banks:

Modern banks not only deal in money and credit but they also perform various

functions, namely, agency functions, management of foreign trade, finance, etc.

The meaning of modern banks is used in narrow sense of the term as commercial

banks. The various functions of commercial banks can be seen from the following

chart:

(Figure: 3 functions of commercial bank )

(Source: Banking and Finance by C.M Chaudhary)

1.6.1. Primary or Traditional Functions:

These functions are performed by banks from their very inception.

They are classified into two categories, namely:

(1) Accepting Deposits

(2) Advancing of Loans.

Functions of Commercial Banks

Primary Function

Agency Function

General Utility function

Foreign Trade

Management

1. Accepting Deposits 2. Loans and Advances

1. Collection of Payment of Cheques, Bills Of Exchange 2. Payments of Cheques, bills Of Exchange etc. 3. Receiving Payment of Customers 4. Making Payments 5. Transfer of Money 6. Purchase and Sale of shares And securities 7. Manager, Trustee & executor 8. Underwriting Function 9. Other Agency Function

Credit Creation

1. Security Of Wealth and Assets 2. Traveler’s Cheques & Letter of Credit 3. Information Relating to Economic Position 4. Financial Adviser 5. Publication 6. Acceptance Of bill of Exchange 7. Personal Credit 8. Management Of public Debt 9. Function of Share Market

Documentary credit

20

(1) Accepting Deposits: The primary function of bank is accepting deposits and

advancing of loans. Banks require money to make loans and advances. Their share

capital does not create adequate funds for advancing loans. Hence they accept

deposits from individuals and institutions and make payment for deposits as

interest. For the safety point people and institutions deposit their money with the

banks and they get interest. For this purpose banks operate various types of

accounts in which the deposits are attracted. Commercial banks operate various

types of accounts as given under:

(i) Fixed Deposits Accounts: It is also called time deposit account. In such accounts

money is deposited for a fixed period. After the maturity of the account the bank

repays the principal plus interest for that given period.

(ii) Current Account: This account is generally opened by traders, businessmen and

industrialists. Customers have facility to deposit and withdraw from such account

as many times as they wish.

(iii) Saving Account: Such accounts are opened for the convenience of middle and

lower salaried or income groups. Small savings are collected and deposited in such

accounts which are used for capital formation in the country. Such account can be

opened by any individual by depositing Rs.100 to Rs.300 in any bank. Such facility

is available in nationalized private commercial banks.

(iv) Home Safe Account: This account is useful for those who save fewer amounts

out of their income. Under this facility bank provides a safe to the customer.

Customer takes away the safe. Customer collects money in the safe and when the

safe is full, it is deposited in the bank. It leads to accumulation of individual

savings. The very low rate of interest is payable on such accounts.

(v) Indefinite Period Deposit Account: Deposits are accepted in such accounts for

indefinite period. Money is withdrawn from such accounts in special cases. Bank

makes interest payment to its customers. The deposits in such accounts can be

invested by the banks and for that reason high rate of interest is paid. Such accounts

are not operating in India.

(vi) Other Deposit Accounts: Banks also accepts deposits for the accounts other

than the above mentioned.

21

(i) Recurring Deposit Account: Account holder deposits a given amount every

month and it is deposited for a given period. At the time of maturity the principal

and interest earned is paid to the account holder. A large amount is obtained by the

holder. The rate of interest is higher than the saving bank account and lower than

the fixed deposit account.

(ii) Daily Saving Deposit Scheme: Under this scheme bank employee goes to the

residence of account holders and daily savings is collected by him. It is useful to

daily wage earners and small shopkeepers.

(iii) Retirement Scheme: Under this scheme saver saves a given amount for a given

period. After a given period the amount is repaid in installments with interest. It

assists the pensioners in their old age.

Besides these schemes, there are some schemes namely, monthly interest deposit

scheme, minor’s saving scheme, home deposit scheme, insurance benefit saving

account, etc. The objective of such schemes is to attract and collect savings and

help persons.

(ii) Advancing of Loans: Another important primary function of commercial

banks is advancing of loans. It is performed because banks have to pay interest on

various deposits. Thus banks charge high rate of interest on advancing of loans and

earn profit. Banks collect small savings and are used for advancing of loans for

production purposes. Banks makes advancing of loans to industrialists, traders,

farmers, self-employed persons. Generally, commercial banks advance loans for the

following purpose:

(i) Cash Credit: Under this scheme bank advances loans for a given period on the

security of shares, debentures and movable and immovable properties. The loaner

withdraws money from the bank as per his requirements from time to time.

Generally, bank charges interest on the amount which has been withdrawn by the

account holder. Sometimes traders borrow from banks on the security of goods.

Borrower has the right to get the dividend and interest on the securities pledged for

loan.

(ii) Loans and Advances: Banks provide loans and advances to its customers on

adequate security. Such amount of loans and advances are deposited in the account

22

of the borrower and the borrower can withdraw the amount as and when he

requires. Such facility is given for a given period. After the given period the loans

and advances are repaid to the bank. If the borrower does not repay the amount, the

bank is empowered to sell the security and recover the amount advanced by the

bank.

(iii) Overdraft: When a bank allows its customers having current account to

withdraw the amount more than the deposits in the account it is called overdraft.

The overdraft depends on the credit of the customers. Such facility is given for

short term and emergency purposes. Banks require security from the customer for

such facility. In some cases banks give relaxations to their customers. Such facility

is given on current account only.

(iv) Discounting of Bills of Exchange: It is also a method for borrowing from the

bank. Under this method bank provides credit against the dated bill of exchange

before its maturity. Seller writes such bill and buyer accepts it. The buyer promises

to pay given amount for given period. Such bills are discounted by banks and

payment is made to the customers. If the buyer does not make the payment of the

bill then the bank gets the payment from the seller of the bill.

1.6.2. Agency Functions

Commercial banks play the role of agent of their customers and providing the

multiple services. Some charges are levied by the banks on such services. Some

services are rendered free of charges. The following are the agency functions of

commercial banks provided to their customers.

(i) Collection of Payments of Cheques, Bills of Exchange and other Letters of

Credit: Banks collect payment of cheques, bills of exchange, hundis and other

letters of credit deposited by the customers in the bank. Banks act as an agent on

behalf of the customers and collect and deposit. The local collection is free of

charge while outstation collection of these instruments attracts charges.

(ii) Payment of Cheques, Bills of Exchange and other Letters of Credit: Banks

make payment on the basis of various instruments written by the customer and the

amount is debited. Many a times, bank accepts the bill of exchange on behalf of

customer and makes payment in time.

23

(iii) Receiving Payment for Customers: Banks also receive rent, interest,

installment of loan, pension, dividend, etc. on behalf of their customers and the

amount is deposited in their accounts.

(iv) Payment on behalf of Customers: Banks not only receive payments on behalf

of their customers but also make payment on behalf of customers in the form of

rent, interest, dividend, installment of loan, insurance premium, commission, etc.

Such amount is written in customer’s account and banks charge commission for

conducting these functions.

(v) Transfer of Money: Banks transfer money from one place to another as directed

by their customers. Bank draft, postal and telegraphic transfers are the methods

through which such transfers take place. Bank charges some commission for

conducting these functions.

(vi) Purchase and Sale of Shares and Securities: Banks purchase and sale shares

and securities on behalf of their customers. Generally, banks have more knowledge

regarding such activities. Banks purchase and sale shares and securities in their

customer’s interest. Banks charges commission for this purpose.

(vii) Functions of Manager, Trustee and Executor: On the direction of customer’s

banks perform the functions of manager, trustee and executor whenever such work

is assigned. Court orders or government orders are implemented by the banks on

behalf of their customers.

(viii) Underwriting Function: Large industrial and business units raise capital from

the market. Debentures are underwritten by the banks. It helps the companies to

collect the minimum capital on their guarantee. If the shares and debentures are not

purchased in adequate quantum, the bank itself purchases all these shares and

debentures. It increases the trust of the public in the company concerned. Bank

charges commission for underwriting function.

(ix) Other functions: Banks also do correspondence on behalf of customers relating

to passport and foreign exchange.

1.6.3. General Utility Functions

Banks also carry on some utility functions which are useful to their customers.

These functions are as under:

24

(i) Security of Wealth and Assets: Lockers are provided by bank to their customers.

Their valuables, namely, important documents, ornaments, gold, shares,

debentures, deposit receipts, etc. are kept in these lockers. Some annual charges are

charged by the banks for the purpose.

(ii) Arrangement of Traveler’s Cheques and Letters of Credit: Banks issue

traveler’s cheques and letters of credit for their customers. Customers need not to

carry cash while they are on tour. The risk involved in carrying cash is done away

with.

(iii) Information relating to Economic position: Banks provide information to their

customers relating to economic position of inland and foreign businessmen.

Customers conduct transactions on such information. It reduces the risks of

customers.

(iv) Financial Adviser: Banks advise their customers on economic and financial

matters. It helps customers to take correct decision.

(v) Publication of information: Large commercial banks collect information

relating to economic and business activities and after analyzing these facts, they are

published in the form of annual reports, etc. Economic and business decisions are

easily taken on the basis of such publications.

(vi) Accepting Bills of Exchange: The bills of exchange written by customers are

accepted by banks and they take the liability for making payment at the time of

maturity.

(vii) Security of Loans: Large banks guarantee on the loans taken by industrial and

business units from national and international sources. It helps industrial and

business units in getting loans from these sources.

(viii) Personal Credit: Banks provide consumer loans to their customers on the

basis of personal credit. These loans are provided to purchase consumer goods like

car, scooter, refrigerator, washing machine, air conditioner, etc. Such loans are

repaid in installments.

(ix) Management of Public Debt: Commercial banks manage public debts on behalf

of central bank when central and state governments raise loans through debentures

or bonds.

25

(x) Share Market function: Banks also settle the accounts on behalf of their

customers when they are purchasing and selling shares debentures in the share

market.

(xi) Management of Foreign exchange: Commercial banks are authorized dealers in

foreign exchange. Customers who get foreign exchange or who are in need of such

currencies are given the facility by banks to them.

1.6.4. Foreign Trading

Commercial banks have played a dominant role in the expansion of foreign trade.

Short term credit is provided for foreign trade by banks. These banks accept and

discount the commercial bills, hundies, and letters of credit. It facilitates in the

international transactions. Banks contact the importers and exporters and finalize

the transactions between two parties. It facilitates the international payments and

increases the foreign trade.

1.6.5. Credit Creation

Banks attract deposits from the public and on the basis of these deposits; they make

loans and advances to the public. Such amount of loan is deposited in the account

of loan holders. Thus loans create deposits. On the basis of these deposits loans are

further granted. Thus loans from deposits and deposits from loans are encouraged.

This process is called credit creation. The supply of money increases indirectly.

1.7. Banking Regulation Act 1949:

The banking system in India is regulated by the RBI, the central banking authority

in the country in keeping with the Reserve Bank of India Act, 1934 and Banking

Regulation Act, 1949. The Reserve Bank of India (RBI) was constituted under the

Reserve Bank of India Act, 1934 and began functioning w.e.f. 1st of April, 1935.

Although it is the oldest amongst the central banks operating in developing

countries. RBI is a state-owned institution under the Reserve Bank (Transfer of

Public Ownership) of India Act, 1948. This Act empowers the Union Government,

in consultation with the Governor of RBI, to issue such directions, necessary in

public interest, to the RBI. The Governor and the four Deputy Governors of the

RBI are appointed by the Union Government. The RBI is controlled by the Central

Board of Directors, comprising of the Governor, the four Deputy Governors and

26

fifteen directors nominated by the Union Government. The RBI’s internal

management is based on functional specialization and coordination amongst

various departments, with the headquarters located at Mumbai, the financial capital

of the country.

1.7.1. Main Provisions of the Act

“Some of the important sections of the Banking Regulation Act of 1949 are

discussed below:

Section 5(i) (b)

The section defines banking as “accepting for the purpose of lending or investment,

deposits of money from the public, repayable on demand or otherwise and

withdraw able by cheque, draft and order or otherwise”.

Section 5(i) (c)

Banking company has been defined as any company which transacts the business

of banking in India.

Section 6

Business of a banking company may consist of the following:

(1) Carrying on and transacting every kind of guarantee and indemnity business;

(2) Acting as an agent for any government or local authority or any other person or

persons, the carrying on of agency, business of any description;

(3) Contracting for public and private loans and negotiating and issuing the same;

(4) The borrowing, revising or taking up of money, lending or advancing of money

either upon or without security, drawing, marking, accepting, discounting, buying,

selling, collecting and dealing in the bills of exchange, hundies, promissory notes,

coupons, drafts, scripts and other investments and securities;

(5) Undertaking and executing trusts;

(6) Managing, selling and realizing any property which may come into the

possession of the company in satisfaction;

(7) Undertaking the administration of estates as executor, trustee, or otherwise

doing all such other things as are incidental or conductive to the promotion or

advancement of business of the company;

27

(8) Any form of business notified by the central government as lawful for a bank to

engage in, etc; and

(9) The effecting, insuring, guaranteeing, underwriting, participating in

management and carrying out of any issue public of private, of state, municipal or

other loans or shares, stocks, debentures, stock of any company, corporation or

association and lending of money for the purpose of any such issues.

Section 8: Prohibition of Business

A banking company under section 8 of the Act cannot directly or indirectly deal in

the buying or selling or borrowing of goods except in connection with the

realization of security given to or held by it or engage in any trade or buy, sell or

barter goods for others or otherwise than in connection with the bills of exchange.

Section 9: Prohibition of Non-Banking Assets

Under the section banking company is prohibited from holding any immovable

property, howsoever, acquired except for its own use for the period exceeding

seven years from its acquisition.

Section 10: Prohibition of Employment and Restriction on Certain

Employment

A banking company cannot have any managing agents and it cannot be managed by

any person:

(1) Who is, or at any time, has been adjudicated an insolvent, or has suspended

payment to or compounded with his creditors or who is, or has been convicted by a

criminal court of an offence involving moral turpitude;

(2) Whose remuneration of part there of takes the form of commission or of a share

in the profits of the company other than legitimate bonus;

(3) Whose remuneration is, in the opinion of RBI, excessive.

(4) Who is a director of any other company, not being a subsidiary company of the

banking company registered under section 25 of the Companies Act of 1956?

(5) Who is engaged in any other business or vocation; and

(6) Whose term of office as a person managing the company is for a period

exceeding five years at any time.

28

Section 12: Regulation of Capital and Voting Rights

Under this section authorized, subscribed and paid-up capital of banking companies

incorporated on or after 15th January 1973 has been regulated as given under:

(1) Subscribed capital must at least be one-half of the authorized capital and the

paid-up capital at least one-half of the subscribed capital.

(2) The capital shall consist of ordinary shares only or of ordinary shares and such

preference shares as may have been issued before July 1, 1944.

Section 13: Commission and Sale of Shares

No banking company can pay directly or indirectly by way of commission,

brokerage, discount or remuneration in any form in respect of any share issued by it

of any amount exceeding in the aggregate 2.5 per cent of the paid-up value of the

said shares.

Section 14: Prohibition of Charge on Paid-up Capital

A banking company has been prohibited under the section from charging upon

unpaid capital. No banking company can create a floating charge on the

undertaking or any property of the company or any part there of without a

certificate in writing from RBI that such floating charge is not detrimental to the

interests of the depositors.

Section 15(2): Dividends of its Shares

The Amendment Act of 1959 permits a banking company to pay dividends on its

shares without writing off:

(1) The depreciation in the value of its investments in approved securities where

such depreciation has not actually been capitalized or otherwise accounted for a

loss;

(2) Depreciation in the value of its investments in shares, debentures or bonds

where adequate provision for such depreciation has been made to the satisfaction of

the auditor of the banking company; and

(3) bad-debts, if any, where adequate provision for such bad-debts has been made

to the satisfaction of its auditors.

29

Section 16: Prohibition of Common Director

Under the section a banking company has been prohibited to appoint a director who

is a director of:

(1) Any other banking company; or

(2) Of companies which among themselves are entitled to exercise voting rights in

excess of 20 per cent of the total voting rights of all the shareholders of the banking

company.

Section 17: Reserve Fund

Under this section every Indian banking company must maintain a reserve fund and

transfer at least 20 per cent of its net profits each year. Central government can

exempt the company on the recommendation of RBI provided at the time of

relaxing, the amount in the share premium together with the amount in the share

premium account is not less than the paid-up capital of the banking company.

Section 18: Cash Reserve

Every banking company other than a scheduled bank is required to maintain in

India a cash reserve either with itself or in a current account with RBI or State Bank

of India (SBI) or any other bank notified by the central government in this behalf

partly in cash or partly in such accounts a sum equivalent to at least 3 pre cent of

the total of its time and demand liabilities in India.

Section 20: Restrictions on Loans and Advances

Under the section a banking company is prevented to:

(1) Advance any loan or advance on the security of its own shares; or

(2) Enter into any commitment for granting any loan or advance to or on behalf; of

(i) Any of its directors,

(ii) Any firm, partner, manager, employee or guarantor, or

(iii) Any company of which any of this directors of the banking company is a

director, manager, employee or guarantor or in which he holds substantial interest,

or

(iv) Individual.

30

Section 21: Power of RBI to Control Advances by Banking Companies

RBI is empowered to control the advances by banking companies in the public

interest or in the interest of depositors or if necessitated by the banking policy. RBI

may direct regarding the purposes, margins, maximum amount and rates of interest

for such advances.

Section 22: Licensing of Banking Companies

Every banking company is required to obtain a license from RBI. Before granting

the license the following conditions should be fulfilled by the bank:

(1) The company is or will be in a position to pay its present or future depositors in

full as their claims accrue;

(2) The affairs of the company are not detrimental to the interests of its present or

future depositors; and

(3) In case of foreign companies, they should work in the public interest and they

should not discriminate, in any way, against banking companies and they comply

with the provision of the Act.

RBI is also empowered to cancel such license in case:

(1) Where the company does not carry out banking business; or

(2) At any time fails to comply with or fulfill the conditions mentioned above.

Section 24: Statutory Liquidity Ratio

Under this section every banking company is required to maintain in cash, gold or

unencumbered approved securities, valued at price not exceeding current market

price, an amount equal to at least 25 percent of its total time and demand liabilities.

It ensures the liquidity of assets of the banks.

Section 25:

It is required that every banking company should have at least 75 percent of its

demand and time liabilities as assets in India.

Section 26: Return of Unclaimed Deposits

Every banking company is required to submit within 30 days after the close of each

calendar year, a return in the prescribed form and manner to RBI of all accounts

which have not been operated upon for ten years.

31

Section 27: Return of Assets and Liabilities

Every banking company is required to submit to RBI a return in the prescribed

form and manner showing its assets and liabilities in India at the close of business

on last Friday of every month.

Section 28: Power to Publish Information

RBI is empowered to publish any information obtain by it under the Act in the

interest of the public.

Section 29 to 34: Accounts and Balance Sheet

Under these sections every banking company is required to prepare accounts,

balance sheet, profit and loss accounts and they should be audited by a competent

and qualified auditor.

Section 35: Inspection of banking companies

RBI is empowered to inspect the books and accounts of a banking company at any

time. But such powers should be exercised when asked for by the central

government.

Section 36: AE and AF: Acquisition of the Banking companies

The central government is empowered under sections 36 AE and 36 AF to take

over the business of any banking company where:

(1) a particular bank has failed to comply with the directions of RBI as the

directions relate to banking policy, or

(2) Where the bank is being managed in a manner detrimental to the interests of its

depositors; or

(3) Where it is necessary to acquire the undertaking in the interest of depositors or

banking policy.

Section 37: Suspension of Business

If RBI is satisfied that the affairs of the banking company are being conducted in a

manner detrimental to the interests of the depositors, it may apply to the High Court

for the winding-up of the company.

Section 38: Winding-up by High Court

RBI is empowered to apply for winding-up if the banking company:

32

(1) Fails to comply with the requirements of section

11 (minimum paid-up capital and reserves); or

(2) Has become disentitled by reason of section 22 to carry on banking business in

India; or

(3) Has been prohibited from receiving fresh deposits by an order either under

section 35(4)(a) or section 42(3A)(b) of the RBI Act of 1934; or

(4) Has failed to comply with any requirements of the Act.

Section 44A: Amalgamation of Banking Companies

No banking company can be amalgamated with any other banking company

without the prior written section of RBI under the Act.

Section 46: Penalties

RBI is empowered to impose penalties in the following cases:

(1) For submission of false or inaccurate return the penalty is imprisonment up to

three to five years;

(2) For failure to furnish documents, account or information during inspection,

penalty is a fine up to Rs. 2,000 and if default persists, Rs.100 per day during the

default period;

(3) For receiving deposits in contravention of an order by RBI, the penalty is twice

the amount of deposit so received, and

(4) For default in complying with the provisions of the Act, the penalty is a fine up

to Rs.2, 000 and if continued, a further fine up to Rs.100 per day.

Section 46A: Public Servant

Every chairman, director, auditor, liquidator, manager and other employee of a

banking company will be regarded as a public servant for the purpose of chapter IX

of the Indian Penal Code.

Section 47 and 48: Powers and Procedures Relating to Cognizance of Offences

and Fines

RBI has been empowered to take cognizance of offences and to impose fines under

the Act.

33

Section 56: Cooperative Banks

The cooperative banks have been brought under the Banking Regulation Act by

passing an Amending Act 23 of 1956 which is called Banking Laws (Application to

Cooperative Societies) Act of 1965.

Provisions not Applicable to Cooperative Banks

The following sections of the Banking Regulation Act of 1949 will not apply to

cooperative banks:

(1) Section 10: Employment of managing agents and certain forms of employment.

(2) Section 10A: Constitution of the Board of Directors.

(3) Section 10B: The whole time chairman.

(4) Section 10C: Chairman or Director appointed by RBI not to hold qualification

shares.

(5) Section 17: Reserve funds.

(6) Section 36 AA: Removal of managerial and other persons from office.

(7) Sections 37 and 38-45: Suspension of business and winding up of banking

companies.

(8) Sections 45 A to 45X in part III: Special provisions for speedy winding-up.”[34]

1.8. Banking Development in Modern Era:

The traditional function of banking is limited to accept deposits and to make loans

and advances. Today’s banking is known as Innovative banking. The coming

together of information technology, communication and entertainment (ICE) has

given rise to new innovations in the product design and their delivery in the

banking and finance industry. Driven by new technologies, changing customer

preferences, and increased competition, banks have taken to heavy investments in

new distribution channels such as: new branch formats and teams of sales agents,

remote and electronic channels like advance automated teller machines, telephone

systems, and on-line banking, one of the reasons for internet applications not to

have picked up as expected so far have been to concern about the security and lack

of the legal framework related to such transactions. This hurdle has been reduced to

34

a large extent in the recent past with framing of laws enabling financial transactions

through electronic media.

The electronic banking (e-banking) is an offshoot of such an innovative

development. The Indian banking industry has started making progress in e-

banking. The most of the private and nationalised banks have entered in the

technology age and providing various types of electronic products and services to

their customer. The research work is based on analysis of the “E-BANKING

IMPLEMENTATION IN INDIAN BANKS, A STUDY OF BANKS IN

MAHARASHTRA STATE”.

1.9. Review of Literature: During the period of research various libraries/ institutions in India were visited

and surfing various sites like IEEE, OCC (office of the Comptroller of the

Currency) etc. The available related literature in these libraries/ institutions and

sites was studied which proved to be very useful in getting an insight into the main

objectives of the study & in finalizing the methodology. Therefore, in this part, an

attempt is made to review the available literature on the topic of E-banking.

Reports on Internet Banking, various sites of banks on Internet, research studies,

books and articles, research papers published in leading research journals are also

reviewed. Therefore, a brief review of the literature is presented below:

Andrea Schaechter [35] (2002), conducted the study that using electronic delivery

channels for banking services and products has become increasingly popular in

recent years. Electronic banking makes it possible to offer banking services around

the world 24 hours a day. The dependence on technology for providing the services

with the necessary security, and the cross-border nature of transactions, involve

additional risks for banks and new challenges for banking regulators and

supervisors. In this paper author provides an overview of some of the issues

resulting from the development of electronic banking and how they are currently

being addressed by regulatory and supervisory authorities.

Ankur Gupta, [36] analyzed that, Consumer Internet Banking, with its ability to

reach each and every nook and corner of the world holds great importance for a

nation like India, where conventional Banking services are out of reach for a large

35

proportion of the masses. But to make it a successful it requires more than just an

adequate internet enabling infrastructure. There is a dire need for an adequate legal

and regulatory frame work to be out into place. One of the crucial elements of such

a legal and regulatory framework will be Data Protection provisions. The emphasis

of this article is on the aspect of data protection in the electronic banking sector.

The article is an attempt to highlight the importance of data protection in internet

banking and well upon possible legal recourses which may adopt keeping in mind

the current legal frame work in India with regards regulation of Information

Technology.

C. M. Chaudhary [37] in his book, “BANKING AND FINANCE”, (2003), has

discussed about the banking with special reference to Indian Banking. He also

focused on Law and Practices of banking, public finance dealing with theory and

practices of public finance with special reference to India. He has covered the

innovative banking or e-banking and new products and services provided by banks.

Dr. S.P. Rajagopalan [38] in his article briefly highlighted the e-Banking in the

Indian Scenario and the evolution of e-banking as world wide. He has discussed

about electronic products and services provided by private banks in India like

ICICI and HDFC banks and about the e-banking products and services like

Electronic Fund Transfer (EFT), Automatic Teller Machines (ATM), Mobile

banking etc. The article has also covered the benefits of electronic product to banks

etc.

Dr. R.V.Kulkarni and B.L. Desai [39] in their book, “Knowledge-based Systems in

Banking Sector”, (2004)., explained the picture of Indian banking system before

1990, it is found that, banking industry in India was a near monopoly of the

Government and in January 1993, the Reserve banks issued guideline for licensing

of new banks in the private sector. Since then, competition in the banking sector

has increased with the entry of private banks, permission to foreign banks to open

new branches and relaxation of various restrictions on public sector banks which

are now allowed to access the capital market to raise funds. They have also focused

on the banking sector has already taken strides towards computerization and

automation of their operations; however, this alone will not solve their problems in

36

processing large amount of data and decision making in scrutinizing and vetting

proposals and projects for advances. It is difficult to handle loan proposals which

need to be appraised from legal, technical, and economical angle. They described

about the need for electronic processing of loan proposals with the help of an

expert system. Expert systems are a type of decision support systems and represent

an application from the field of artificial intelligence. The authors have also

explained recent developments in Indian banking. More specifically, it deals with

how the experts in the field should take decisions in the process of evaluating a

loan proposal, particularly small-scale industry term loans.

Dr. Nirmala Prasad & K. Chandradass J. [40] in their book, “BANKING AND

FINANCIAL SYSTEM” (2004), discussed about the changes of Indian financial

systems during the last few years. They also focused on modern banking and

financial system and also discussed the banking law and financial services etc.

Dr. Lisa Harris and Dr. Laura J. Spence [41] (2002), in their paper authors

explored the ethics of business-to-business electronic commerce, with a focus on

the banking sector. A case study of online foreign exchange developments at an

investment bank is used to help illustrate some key moral issues. Important areas

identified for further research include freedom of choice, trust and transparency of

business-to-business transactions and limits to responsibility. They concluded that

only with careful consideration of a broad range of management issues, the

traditional companies effectively address the challenges of electronic commerce.

The barriers to be dealt with are far from being just technical solutions to doing

business in cyberspace.

Dr. N. Sundaram [42] (2007) has conducted the study of e-banking and discussed

in the paper that, Invention of Computer and Internet elevated Internet banking or

E-banking which is a revolution in banking services. The banks provide the

services like on-line shopping and payment, on-line donations and subscriptions,

routine transactions like loan and investment etc., electronic bill payments, fund

transfer facilities, money transfer to India from NRIs. He also highlighted the

scope and benefits of Internet banking in India, disadvantage of Internet banking,

challenges & problems that are faced by Internet Banking.

37

D.Ramani [43] (2007), studied the Innovative Internet Banking – emerging issues

and challenges. He has started on the concept of Internet banking. Internet banking

enables a customer to perform banking transactions through the bank’s website. He

further discusses the Internet Banking services, features and Introduction &

adoption of Internet banking in India. The author also covered the drawbacks and

Emerging Issues and Challenges of Internet banking in his study.

Dr. Md. Abdul Hannan Mia, Mohammad Anisur Rahman, Md. Main Uddin [44] (2007), has analyzed that the beginning of the E-business age has been

shivering the business environment and breaking out innovative and un

conventional ways of doing business. One of the latest outcomes of this E-Business

is internet banking or E-banking. Banking sector is now reengineering itself to

adopt the change and to be in the race of globalization. Thus it has become

imperative for the banking industry to better gauge the E-Banking phenomenon.

This study painstakingly attempts to bestow the evolution, competitive forces,

strategy, present status, and prospect of E-Banking, so that the existing banks and

potential e-banks could better understand this opportunity and could reap the best

befits from it.

Dr. Mrs. Pratibha Rasal [45] (2001), conducted the study on cyber laws. She

discusses that, computer, Internet and cyberspace, together known as Information

Technology, presents challenges for the law. Challenges, which are not, confined to

any single traditional legal category but in almost all established categories of law

such as criminal law, contract, tort, as well as legal concepts of property,

expression, identity, movement etc. She has study in this paper the laws related to

cyber crimes that is computer laws, Information technology laws, or cyber laws.

She covered laws of e-commerce, Intellectual property; Issues related to morality,

Jurisdictional Issues, cyber crimes etc.

Dr. A. Nelson [46] (2007), has conducted the study on Internet and Hi-tech banking

technology. He highlighted on the use of most modern and advanced method and

equipments in banking industry like ATM, EFT, shared payment network system,

Electronic clearing services, Electronic Data Interchange, Tele banking, credit/

38

debit cards, smart card, digital signature, cheque traction and mobile wallet. He has

also discussed on core banking solution.

Francisco Javier Miranda, Rosa Cortes and Cristiana Barriuso [47] (2006),

conducted the study on quantitative Evaluation of E-Banking Web Sites. The study

is conducted on Spanish banks. The authors have discussed in their paper that,

Online banking research to data is to a large extent anecdotal. Only a very limited

number of studies have explored Electronic Banking in recent years. In this work

an objective investigation of the issue has been conducted by manually accessing

and evaluating the web sites of Spanish private and saving banks. Quality of web

home pages was determined using an original Web Assessment Index, which

focuses on four categories: accessibility, speed, navigability and content. A detail

report of the results arising from this investigation is presented and systematically

analyzed. These findings will be useful for both researchers and practitioners who

seek to understand the issues relevant to electronic banking.

Indian Institute of Banking and Finance [48] in the book “Information System for

Banks” (2005), conducted the study on five different modules consisting of a)

Technology in Banks, b) Technology- System, Development, Process,

Implementation, c) Security and Controls, Standards in Banking d) Continuity in

business e) Overview of legal frame works. The primary objective is to understand

the conceptual framework. There is a rigorous coverage of an analytical technique,

substantial information about the operational risks that the banks are facing, and

how those risks are managed by appropriate measures.

Indian Institute of Banking and Finance [49] in the book, “Know Your Banking-I,

Basics of Banking”, (2005), has provided a comprehensive coverage of the

principles of banking and other important aspects of banking in India. The

subject—matter is wide and covers the topics: Introduction of banking, Banking

regulation, Banks- customer relationships, types of customers and their accounts,

negotiable instruments, fee-based banking services, electronic banking, basics of

accounting and bank marketing etc. It has focused on the role of DSA (Direct

Selling Agents) and DMA (Direct Marketing Agents) in Marketing Bank Products.

39

Jason Dong and Michael Bliemel [50] (2008), have studied the rapid growth of

online banking over the last decade. This research examines the benefits of online

banking. How Canadian banks accommodate various financial activities through

different service channels, including online, telephone, ABM and in-branch. A

framework is introduced for categorizing the most common activities by their need

for physical interaction and assistance and to align activities with their ideal service

channel. The research concludes with the presentation of strategies for integrating

different customer channels.

Jia Hu and Ning Zhong [51] (2006), have analyzed that E-finance industry is

rapidly transforming and evolving towards more dynamic, flexible and intelligent

solutions. The paper describes a model with dynamic multi-level workflow

corresponding to a multi-layer Grid architecture, for multi-aspect analysis in

building e-finance portals on the Wisdom Web. The application and research

demonstrate that mining-grid centric three-layer Grid architecture of effective for

developing intelligent risk management and decision making financial systems. E-

finance is progressing, with the enhancements of e-paying, e-trading, e-banking, e-

commerce, and e-business. This model is particularly appropriate for existing

financial institutions with established resources and will help them transform

themselves to complete successfully in the new financial environment.

Kori L. Egland, Karen Furst, Daniel Nolle, and Douglas Robertson [52] (1998),

they discuss on Banking over the Internet is attracting a great deal of attention in

the banking and regulatory communities, and developments in this new delivery

channel are the subject of this articles. In this article the authors have discussed

about the key characteristics of banks offering transactional Internet banking, study

of banks provided the transactional Internet banking, privacy statements and

transactional Internet banking and growth of transactional Internet banking.

Leo Puri [53] (2007), “The CEO as CIO: An interview with K.V. Kamath of

ICICI”, in this article the author has discussed the interview of K.V. Kamath, CEO

of ICICI bank. The Industrial Credit and Investment Corporation of India (ICICI)

was a vulnerable institution whose primary purpose was to provide industrial loans

to support India’s economic development. Today, with assets around $56 billion,

40

ICICI Bank is the country’s largest private bank, with a vast consumer based

serving from more than 614 branches and 2,200 ATMs in 13 countries. The bank

provides many other electronic banking products and services to their customers. In

this article Kamath discussed the bank’s journey and technology’s role in it, with

McKinsey’s Leo Puri at ICICI’s modern campus in Mumbai.

Lj.Antovski, M. Gusev [54] (2001), has conducted the study on e-banking,

developing with advanced technologies. He has discussed that internet forces are

affecting the banking sector transition more than any other financial provider

group. E-Bank solution should deliver three key requirements: High Availability,

Scalability and Security. End-to-end security consideration includes network

security, data integrity and identity authentication security. Framework architecture

for multi channel B2C solution enforced by reliable Network and N-Tier

architecture is proposed. The architecture is designed to fulfill the key

requirements.

Mrs. Suma Devi [55], has conducted the study on Electronic Banking-Entry in the

Indian Banking Scenario and has discussed about the evolution of electronic

banking in India, the catalyst in Initiating Electronic Based Delivery System,

Implementation of e-banking in Indian private banks, e-banking in foreign banks

operating in India, e-banking in Indian public banks, Indian financial Institutions,

Retail clientele, corporate clients, Correspondent bank clientele, The new

distributed model. She has also focused on issues in electronic banking, legal

recognition of electronic contracts and future of electronic banking technology etc.

Mark J. Cotteleer, Christopher A. Cotteleer, and Andre Prochnow [56], (2007),

have discussed the challenges and choices in B2B, E-PAYMENTS. The objective

of this paper is to discuss about the open network payment systems which are the

future of corporate payments, assuming they address the challenges of integration,

security and remittance standards. The studies are based on business-to-business

(B2B) payments system of U.S Market. Changes in the marketplace for business-

to-business (B2B) payments increasingly demand executives’ attention. Growing

numbers of e-payments, decreasing paper check volumes and new legislation in the

U.S. are the main motivators. Businesses are beginning to realize they must add

41

new payment options to a process still dominated by paper checks, wire transfers,

and automated clearing house (ACH) transactions. The authors highlighted B2B

payment methods, projected growth in B2B e-payments, life cycle of a B2B

payment, e-payment technologies, associated product attributes and optimal e-

payment application.

Mohammed Sadique Khan and Siba Sankar Mahapatra [57] (2009), this study

aims at evaluating the service quality of internet banking (i-banking) services in

India from customer’s perspective. The authors begin the study with discussing the

development of i-banking in India, status of i-banking in India and Internet users in

India. The service quality in the context of i-banking can be viewed from two

perspectives i.e. a) customer perspective and b) bank perspective. The study was

based on a survey. A structured questionnaire containing 44 quality items was

administered to various target groups. Seven quality dimensions viz. reliability,

accessibility, user friendliness, privacy/security, efficiency, responsiveness and

fulfillment, are identified, based on principal component factor analysis.

Demographic analysis of data revealed that gender is hardly a bias for use and

evaluation of service quality of i-banking in most of the cases across various

categories of customers. A valid statistical model is proposed to access the overall

service quality using regression analysis. The results show that customers are

satisfied with quality of service on four dimensions such as reliability, accessibility,

privacy/security, responsiveness and fulfillment but least satisfied with the ‘user-

friendliness’ dimension. The empirical findings not only priorities different

parameters but also provide guidelines to bankers to focus on the parameters on

which they need to improve.

Marcin Dabrowski and Piotr Pacyna [58] (2008), have based their study on the

distributed identity discovery services for non-federated system. Today, multiple

digital identities of a person are managed by independent identity providers. These

identities are unlinked with each other; therefore existing identity discovery

mechanisms are restricted to discovery by way of a known identifier, within a

certain identifier domain or federation of identifier domains. In the future,

automatic service personalization will make extensive use of identity attributes.

42

Therefore, next generation Identity Management Systems will have to include a

discovery framework for automatic exchange of identity attributes not only within

federations, but also between the non-federated domains, such as the Internet,

healthcare, e-government, e-banking and entertainment. The future identity

discovery framework should allow to sufficient to bootstrap trust relation between

the attribute provider and the service provider. This paper proposes an interoperable

distributed identity discovery service which alleviates the above limitation and

allows for cross-domain discovery of identities in different and non-federated

identifier domains. To the best of our knowledge, it is the first proposition of a

cross-federation discovery service for unlinked identities of the person.

MU Yibin [59] (2003), conducted the study on Status and Impact of E-banking on

traditional banking. The author has discussed the major applications of e-banking

especially in SME- finance. In the next part of the study, he has analyzed the

challenges and policy implications. In which cross-border e-banking activities and

its policy implications, from the society perspective, from bank’s perspectives and

from the authorities perspective (banking supervisor, central bank, related

government depts.), are discussed.

Marc Pasquet, Vincent Alimi, Sylvain Vernois, Christophe Rosenberger [60]

(2008), conducted the study on an e-banking platform for collaborative work

between Education, industry and Research. They paper presents an e-banking

platform used as a collaboration tool between more than 15 industrial companies, a

school of engineering and different research laboratories. The main objective of this

collaboration is to prepare the new e-banking protocols that will take place into the

SEPA program (Single Euro Payments Area). This program has for objective to

harmonize bank payment systems in Europe. It began to take effect in January 2008

and will continue through 2010. Many engineers have to be trained, lots of tests

have to be realized from end to end in the e-banking chain with new protocols and

recent research developments have to be integrated. Some quantitative results show

the interest of this platform for all the partners.

M. Upendar [61] (2004), analyzed Internet Banking, Security Related Issues. He

discussed the various aspects like Internet based Financial Business Dynamics,

43

Effect of Internet on banks, Geographical expansion of Internet banking in world

wide, opportunities and threats, Some Impediments to Development of Internet

Banking, competition etc.. The author has further discussed on Future holds, Risks

and security Issues Related to Internet banking. He has highlighted the Internet

banking in Indian scenario, Recommendations of the RBI Group on Internet

Banking etc.

Madhu Vij [62], she has stated that, Technology innovation witnessed by the

corporate sector during the nineties have changed the way business needs to be

conducted. I.T. has introduced new business paradigms and is increasingly playing

a significant role in improving the services in the banking industries. E-banking is

becoming more and more popular today, as is banking via digital television.

Beyond doubt, a substantial part of the future of banking business lies in a banking

environment that is less and less branch-based and where customers are able to

access banking services remotely. In the context of the above perspective, the

author has discussed about the e-banking and the innovations, the regulatory and

taxation issues of e-banking. She concludes the paper by presenting a case study on

ICICI bank.

Prof. Sharad Padwal and Dr. Vasant Godse [63] in their book,

“TRANSFORMATION OF INDIAN BANKS WITH INFORMATION

TECHNOLOGY” (2004), had focused on the period of transformation of Indian

banks with information technology or computerization. The banking and financial

services industry was redefined as trading on information on related to customer,

money, market and risk. They have tried to understand integration of financial

sector’s i.e. banking, insurance and capital market in the context of globalization

mainly due to usage of Internet and related IT products and services and also

analysis that how emerging new products and services of IT such as Data

Warehousing, Business Intelligence, Customers Relationships Management aided

financial institutions to innovate new products and services in financial sector with

in-built risk analysis capabilities. It also helps understanding of usage of IT for

benefit of portfolio management and operations of credit, investment, treasury,

assets/liabilities, and foreign exchange. It elaborates on how availability of multi-

44

channels capabilities enabled by IT such as core banking solution integrating

branches, ATM network, EFT-POSs , Internet banking ,Telephone banking, Mobile

banking, e-commerce made financial sector more competitive. The electronic

payment system has provided the opportunities for foreign direct investment and

made the movement of finances from one country to another possible within

minutes. They also had given the brief review of technology adoption processes in

Indian financial sector and identified the contemporary and emerging issues and

tried to provide points to the answers for such issues.

Prof. N.P.Agarwal & Prof. Sugan C. Jain. [64], in their book “Information

Technology and E-Business” (2002), has presented the use of electronics in

information technology and commerce. It has brought revolutionary changes in the

management styles of conducting business. The authors have discussed the area of

E-business and its benefits. They also focused on impact of electronic commerce on

accounting, impact of e-commerce on personnel, e-commerce and banking, Internet

banking,

Prof. T. Uma Mahesware Rao and Ch. L. Hymavathi [65], (2005), have

conducted a study on Internet Banking in Indian Scenario. They have discussed the

Banking through Internet. Internet banking is a web-based service that allows the

banks authorized customer to access their account information. In this system,

customers are allowed to log on to the bank’s website with the help of

identification issued by the bank and a Personal Identification Number (PIN).

Banks replies the user and enables him to access the desired services. Internet

bank’s products or services are divided into three types: a) Information Kiosks,

b)Basic Internet banking c) E-commerce Banking. The authors had further

discussed the Net banking as global experience, and also highlighted the e-banking

services of Indian banks like ICICI, HDFC, Foreign banks operating in India etc.

Rajiv Dewan and Abraham Seidmann, [66] (2001), have carried out a study on

the current issues in e-banking. The main objectives of this article was to study that

being at the forefront of technology adoption for many years, the financial services

industry faces cutting-edge technological and strategic issues before other

45

industries encounter similar issues. The article presented to inspire and inform our

financial considerations at present and into the future.

R.K. Uppal [67] in his book “INDIAN BANKING INDUSTRY and Information

Technology” (2006), the author considered and discussed that the process of

economic liberalization in India, initiated in 1991, had a deep impact on the

banking industry of the country significantly. Economic reforms over the last one

and a half decades have radically transformed the operational environment of the

banking sector. Introduction of Information Technology played an important role in

financial sector especially in banks. He further explained that, the Information

Technology (IT) revolution has not only changed the way banking business was

carried out but also widened the range of products offered by the banks. The

nationalized banks, with their social obligations, were having a large number of

branches operating manually and a huge customer base. However, with the coming

of new private and foreign banks with their attractive products and service

packages, the customers now have various options. The new products and service

offered by these banks are fast luring the customers away from the nationalized

banks which are slow to adjust to new environment. But the growing competition

among the banks forcing the nationalized banks to provide prompt and reliable

customer services and offer the variety of electronic banking products and services.

He also evaluates the impact of Information Technology on the growth and

performance of a cross-section of banks in India. It offers various guidelines for the

banking industry to improve its performance in the changed scenario characterized

by openness, competition and prudence.

Raghunath Desai [68] in his book “E-BANKING” (2007), has focused on the

various decent concept of electronic banking. He has discussed various modern

concepts of e-banking like the Evolution & Generation of cyber cash, Electronic

money, managing online money, delivery of financial services, impact of

technology on financial services, Institutional structure of banking in digital age,

deregulation of large and community banks, future of banking as per international

perspective etc. He has put forward clear and concise instructions for using the

electronic banking products and services.

46

Sanjiv Singhal [69] in his book “A BANKER’S GUIDE TO INTERNET

STRATEGY IN THE POST DOTCOM ERA – INTERNET BANKING THE

SECOND WAVE” (2003), has discussed about the Internet applications and

strategies in the banking sector. Its insightful analysis of the key concept from the

Internet euphoria in financial services should be very useful in devising strategies

for the future. The author has included, a)Reviews the initial hype and the events

that led to the eventual disenchantment with Internet banking and also discusses the

potential of the Internet, how it changes everything and what it specifically

promises to do for banking, b) Attempts to reconcile the dichotomy between the

theoretical promise of the Internet and the empirical evidence on the field and

faltering Internet banking ventures, c) Outline the new delivery structures for

existing banking products like credit cards, loans and corporate treasury. Examines

how the Internet allows cheaper and faster delivery as well as ease of transacting,

d) Presents a troika of Internet enabled products that have been introduced in the

past few years and which portend a paradigm shift in banking. These products are

electronic bill presentment and payments (EBPP), account aggregation and person-

to-person (P2P) payments, e) Case studies are presented which compare the

Internet strategies of three banks. f) Describes the trends in mobile telephony and

wireless access to the Internet that point to a speedy and pervasive dissemination of

the new technology and also provides an overview of the different mobile payment

systems being piloted. At end the author has discussed about the g) rounds up the

leanings from the experience of the plays seen in the Internet banking space thus far

and predicts that even though many ventures that pioneered the Internet enabled

innovations in banking have collapsed, the underlying business models will sustain.

S.S. Kaptan [70] in his book, “New Concepts in Banking” (2002), has discussed

about the changes in the economic and banking environment all over the world.

The changes take place because of technology and technology is facilitating the

creation of new approaches to banking and financial services. The new financial

products and services will be more customer friendly and easy to operate. The state

of art technology has changed the nature and system of banking operations. The

electronic age has brought several changes in banking sector. These changes

47

include the implementation of ATM, internet banking and high level automation.

He has also examined the likely implications of automation and technology on

customer services in banking sector and discussed the variety of issues related to

credit cards and other aspects concerned to convenience banking. The basic

concepts described by the author are, new concepts in banking, changing role of

bank, mechanization of banking, financial automation for better banking , credit

cards etc.

S.M. Padwal [71] in his book, “IT, MIS AND PRODUCTIVITY IN BANKS”,

(1997), has discussed the various aspects of information technology in financial

sector or especially in banks. He has described the banking and technology in India

from 2001, Impact of liberalization and Computerization in Indian financial

system, IT, computers and communication in banking etc. He also focused on

security, safety of Information technology in banks, productivity in

computerization environment, MIS in Indian banks, GIS for development banking

in India and risk management etc.

S. Natarajan and R. Parameswarn [72] in their book, “INDIAN BANKING”

(2006), have focused on how the world over, dramatic changes are taking place in

banks and banking operations. The global financial integration has brought about

bigger challenges to the Indian banking and also discussed that how the

complexities arise in the banking operations due to innovations in the banking

products and services. They start the discussion form the basics of banking,

evolutionary changes in the Indian banking system, its structure and purpose, the

ongoing developments etc. The traditional banking system helps us to understand

the primary concepts of banking. Numerous tables, figures and examples are used

to understand the operations of banking. The authors also focused on merchant

banking, mutual funds etc. They have also discussed the functioning of various

types of banks existing in India and especially discussed the electronic banking

concepts.

Stuart Mathison [73] (2007), conducted the study on MFI (microfinance

institutions i.e. specialist microfinance institutions, commercial banks and

generalist development organization etc.), who provide financial services to poor

48

households through e-banking. In this paper the author has discussed about how the

technology evolution took place in less developed economies and also highlighted

the two current imperatives within the microfinance sector i.e. ‘outreach’ and

‘sustainability’. The main objective of this study was to describe the application of

electronic banking in microfinance operations. He has discussed the microfinance

and ICT applications in back office management Information system (MIS),

Corresponding banking (equipped with technology such as an EFTPOS devices,

barcode readers and/or keypads, a personal computer), Card services, EFTPOS and

ATMs, Internet banking, Electronic community banking, Mobile phone banking

etc.

Sheebs Kapil [74] conducted the study on E-Banking: In Nascent Stage in India.

She stated that, to keep pace with the changing environment worldwide, Indian

banking industry is fast adopting technology. It has embraced many new features

like Internet banking, ATMs, Phone banking etc. With the help of new technology,

banks are now able to offer products and services which were difficult or

impossible with traditional banking. But the banks in India still to go a long way

before making themselves technology savvy. In this paper she has highlighted, E-

banking, banking and IT, ATM, Technology Solution for Indian Banks,

Precautions Taken by banks to sustain their Customers and Market Share, e-

banking in India and Cluster Banking Model for e-banking.

S.P. Dhandayuthapani [75] (2007), has discussed about the role of information

technology on banking. He highlighted on the concept of electronic banking, any

time and any where banking, tele-banking, online banking. He analyzed the

benefits of I.T. to the banks and benefits to customer etc.

T. R. Nagesh [76] (2007), has analyzed the Internet banking and a regulatory

challenge. He discussed that, advancement in technology has resulted in the rise

of multiple channels of banking. Internet banking evolved as an effective delivery

channel. The article throws light on the risks involved in banking on the net and the

issues of concerns for the regulators. The author has also discussed on the

development in Internet banking in major countries.

49

Vasu Deva [77], in his book, “E-Banking” (2005) have discussed that how,

liberalization and financial reforms era has totally changed the picture of banking

sector. Banks are actively looking at centralized core banking solution. Banks are

now looking at solutions that provide a unified view of the customer across all

service lines. Changes in the regulatory regime and the move to participate in the

Global banking system based to look at technology in a big way. The advent of

Internet has initiated an electronic revolution. The Internet is one of the major

distribution channel of banking products and services. Due to advances in Internet

security and the relevant protocol, banks play their role as financial intermediators

of commercial transaction. The E-banking strategies that banks implement are

aimed at deriving maximum value through the online channel. He has also

elaborated the E-banking transactions and how the Internet has transformed

banking transactions and use of Internet as an information delivery tool to improve

relationship with customers. The main topics that author has focused on, are

conceptual framework of e-banking and financial services, global perspectives,

strategies, internet and portals, mobile banking, risks, e-finance, e-money, e-

payment system, digital signature, banking services and information technology,

financial services and financial solution and integration etc.

Vasant Desai [78] in his book, “INDIAN BANKING NATURE & PROBLEMS”,

(1979), has analysed the nature and problems of Indian banking system. He also

studied in depth, the impact of banking on rural and backward areas and evaluates

the role of banks in the development of backward areas, and examines in detail the

administrative issues involved in taking banking to the countryside. But through

and beyond this, he discusses a fresh and critical appraisal in Indian banking as a

whole, its achievements and potentials.

Verena Veneeva [79] conducted the study on e-banking/online banking and its role

in today’s society. The world is changing at a staggering rate and technology is

considered to be the key driver for these changes around us. An analysis of

technology and its uses show that it was permeated in almost every aspect of our

life. 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

50

phenomenon that has made time and distance irrelevant to many transactions. The

transformation from the traditional banking towards e-banking has been a ‘leap’

change. 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. The author states

discus that, the fundamental shift towards the involvement of the customer in the

financial service provision with the help of technology, especially internet, has

helped in reduced 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. Customer evaluation of the electronic services is influenced by

attributions of success and failure in inter-personal service situations. The use of

electronic banking has removed the banking personnel that facilitate the

transactions and has placed additional responsibilities on the customers to transact

with the service. Thus it can be concluded that a fit between task i.e. the banking;

technology i.e. the user interface and its reliability; and individual i.e. the

customers and their knowledge about using the service, is the key to successful E-

banking services.

William Hudson, [80] (2002), has studied about the e-banking websites. In this

article author focused on the problems faced by the user/ bank customers at the

time of surfing on internet e-banking sites. He has discussed that in many cases e-

banking websites are serving a captive audience and they faced the problems of

inconvenience with security, aggressive navigation and Precambrian design

philosophy.

Witold Chmielraz [81] (2002), discusses the Profitability aspects of electronic

banking applications for small companies. The main goal of the paper is the

presentation of the evaluation methodology of electronic-banking system from the

point of view of small companies. The study was based on e-banking services for

small companies offered by the selected banks operating in Poland, whose services

were used by small companies the most frequently in 2000.

Will Ferrell [82] ,This paper explores the common issue financial institutions face

with dated internet banking solutions, concerns these institutions have in converting

51

to a new solution, how to identify the ideal internet Banking solution and best

practices in a successful conversion. In addition, this paper will help financial

institutions gain a deeper insight into the capabilities today’s online bankers

demand. The basic points the author has covered that importance of internet

banking, meeting today’s customer needs in Internet banking, common challenges

with Internet Banking Providers, choosing the right Internet banking solutions etc.

Ziqi Liao and Michael Tow Chenug [83] (2003), had highlighted the challenges

faced by banks and customers while using the internet e-banking product and

services. The authors have studied that how commercial banks face significant

challenges on both the supply side and demand side, associated in particular with

competition, product-service quality and differentiation, transaction security, cost

efficiency & demographic change etc.

Ziqi Liao and Machael Tow Cheung [84] , (2008), conducted study on Measuring

Consumer Satisfaction in Internet Banking and also tried to find out what service-

quality attributes must Internet banks offer to induce consumers to switch to online

transactions and keep using them?. They have applied Herbert Simon’s seminal

idea of bounded rationality to construct a frame-work for measuring consumer

satisfaction with Internet banking in terms of a core subset of attributes. This

construction facilitates decision-cost-effective thinking and applications on the part

of the e-bank’s operations and IT mangers to enhance customer service quality and

boost market share in this expanding but increasingly competitive business area.

An increasing number of banks worldwide offer facilities that allow customers to

access accounts and execute transaction through Internet. Internet banking is the

requirement that mangers and strategists identify, measure, and compare the key

determinants such as usefulness, reliability and security of service quality. The

authors in their study have discussed about the Technology Accepted Model

(TAM), Servqual, and transaction cost analyses are used to measure consumer’s

attitudes toward B2C e-commerce. They have conducted this study on the base of

standard areas of questionnaire design, survey implementation and quantitative

analysis. The Survey was conducted in Hong Kong. The conclusion of the study

was that the potential exists for Internet banking to become significantly more

52

important in the increasingly technology- and information- based global economy.

Financial institution must therefore deliver ever-better services quality in their

online operations and products. Given that a large number of services-quality

attributes can potentially affect consumer attitudes toward Internet banking.

A review of the literature on the subject indicates that the introduction of E-banking

is very vital for the present banking system. The concept of E-banking in its present

form is new, in Indian scenario and little old in abroad countries like US. & UK.

The authors of the above literature had discussed the various aspects of e-banking

but their studies were limited and confined to different aspects and areas, and no

serious attempts seems to have been made to study and analyze the e-banking

implementation in Indian banks and especially banks in Maharashtra State.

Maharashtra is one of the financially sound states in India. There are many public

and private sector banks. But the major problem is that, the many interior areas of

Maharashtra are backward, rural and illiterates. It is challenging to study that to

what extent the people of these areas are aware of this new technology. Since a

large part of India is similar to Marathwada, hence it has been assumed that the

results obtained will be applicable to all such areas of the country. A brief survey of

the literature indicates that very little attention was paid to find out the reaction of

the people living in backward areas like Marathwada, hence the findings of the

study highlight the need and demands of the people of the areas. Therefore, it is

sufficient ground to say that the study undertaken by the researcher on the topic “E-

Banking Implementation in Indian Banks, A Study of Banks in Maharashtra State.”

is relevant and essential.

1.10. Research Methodology:

1.10.1. Introduction

With the growth and development of economic activates the functions of banks

have enlarged in modern time. The activities of banks are increasing by leaps and

bounds. The Banking in India can be by and large grouped into three eras, Pre-

Nationalization era, Post-Nationalization era and Post-Liberalization era. Each era

has significantly changed the face of Indian economy, banking and banking

practices. During the Pre-nationalization era till 1969 banks were focused more on

53

basic principles of banking- accepting deposits for the purpose of lending.

Customers approached bankers for giving deposits which bankers accepted for the

purpose of lending and making profits. During the post-nationalization era till

1994, several banks were brought under government control and directed to give a

major thrust to rural lending and poverty alleviation programs. Employment

generation was the focus. Target approach was adopted. Banks were re-orienting

themselves to open and manage branches in the remotest corners of the country to

meet the region-wise, sector-wise lending targets. Thousands of employees were

recruited. Lakhs of borrowers benefited. Crores of rupees were mobilized as

deposits and were also lent with focus on increasing agricultural product,

developing small scale sector, self employment programs and so on. Deposits were

mobilized (re: accepted) for the purpose of lending for economic growth and

prosperity of the country (re: profitability). “The Post-liberalization era started in

the late 1990s and continuing even now, fuelled by emergence of IT sector as major

export earner for the country. The Government thrust to capital adequacy,

profitability, privatization, and telecommunication infrastructure triggered both the

private sector as well as public sector banks to embrace technology for offering

state of the art banking services at reduced cost and increasing availability and

customer convenience. Core banking has been redefined as on line banking which

address many of the problems of post-nationalization era faced by the banks” [85].

The Internet is one of the major distribution channel of banking products and

services. Due to advances in Internet security and the relevant protocols, banks play

their role as financial intermediators of commercial transactions. Banks have

chosen a route of establishing a direct web presence as well as owner of financial

services. There is a need for clear and concise Internet commerce strategy.

Electronic finance offers considerable opportunities for banks to expand their base

and rationalizes the business. The E-Banking strategies that banks implement to

derive maximum value through the online channel. E-banking transactions and how

Internet has transformed banking transitions and use of Internet as an information

delivery tool to improve relationship with customers. Moreover, the Internet poses

a range of risk and threats. While the Internet has enabled banks to deliver desired

54

products/service, the challenge is to enhance customer touch, ease of operation of

their web sites and other initiatives. India would emerge as the preferred investment

destination by attracting global funds into a market that offers the best of returns

with efficiencies. The need of transition from a product centric to customer centric

approach understands the customer base. The relationship a customer has with the

banks and to realize the bank and financial services strategy. In India 2001 major

banks were either offering e-banking services at various levels or planned to do so

in the near future. Some of the private banks included ICICI bank, HDFC bank,

IDBI bank, CITI bank, Global Trust Bank, AXIS (UTI) Bank etc. Due to the

changes in banking provided by the Nationalized banks as well as cooperative

banks in India too.

Maharashtra is a financially advanced state in the country and banking is the largest

financial sector. The state comprises many big cities: Mumbai, Pune, Nagpur,

Aurangabad etc. There are number of banks spread all over the state. There are

nationalized banks, Private commercial banks, and cooperative banks and due to

globalization many foreign banks in the state. SBI, SBH and Bank of Maharashtra

are the prominent nationalized banks. There are many private commercial banks

like ICICI, HDFC, IDBI, YES bank etc., providing the banking services to their

customers and also provide the funds for Industrial development and housing

development needs of the people. The cooperative banks also help in economic

development. Today, all the nationalized banks and Private commercial banks are

providing 24*7 banking (e-banking) services to their customers. The networks of

these banks are connected all over the India and outside. The cooperative banks of

the state are also entering in the field of e-banking. The term ‘E-BANKING’ can be

defined as “the use of electronic delivery channels for banking products and

services, and is a subset of electronic finance. The most important electronic

delivery channels are the Internet, Wireless Communication Networks, ATMs, and

telephone banking. Internet banking is a subset of e-banking that is primarily

carried out by means of the Internet.”[86] Another definition of e-banking is:

“Electronic banking refers to e-banking, where in the entire operation are done by

the customer through his computer system by using a code. Customer need not

55

necessary to visit banks to carry out their banking transactions and can not meet

their requirement through means of electronic banking facility”[87]. At Present the

Electronic services provided by all the banks are: ATM cum Debit cards, Credit

cards, Electronic Fund Transfer (EFT), Phone Banking, Mobile banking, Electronic

Data Interchange (EDI), Internet banking – online banking, D-mate accounts, E-

cheques etc. There was flow of electronic-oriented products and services all over

the country. All types of banks are applying the electronic products and services in

their banks. Therefore, the present work is an attempt to find out the extent of

application of e-banking and to measure the level of understanding and usage by

the people of backward areas.

1.10.2. Meaning & Definition:

The world ‘Research’ is derived from the French Word. ‘Researcher’ meaning the

‘to search back’. Some of the important definitions of research by well known

authors are given below:

a) Fred Kerlinger: “Researcher is an organised enquiry designed and carried out to

provide information for solving a problem.” [88]

b) Francis Rummel: “Research is a careful inquiry or examination to discover new

information or relationships and to expand and to verify existing knowledge” [89].

c) Robert Ross: “Research is essentially an investigation, a recording and analysis

of evidence for the purpose of gaining knowledge.”[90]

The selected topic deals with applied research. It aims to study about e-banking, its

implementation in Indian banks and special study of banks in the backward areas.

The backward districts of Maharashtra are taken as a sample for the study.

1.10.3. Hypothesis:

The study aims at testing the following hypothesis:

1. E-Banking is not suitable in backward regions:

The study is based on the E-Banking of Maharashtra state. Even today, there are

various areas in Maharashtra, which are considered as backward. Therefore,

implementation of e-banking is not suitable because of:

a) Non-availability of electricity

b) Availability of inadequate number of skilled manpower in I.T.

56

c) Lack of education & awareness

e) Economically poor.

2. E-Banking creates unemployment.

It is commonly assumed thee implementation of E-Banking has directly affected

the Employment and productivity. On the one hand an e-banking service has

increased the productivity. On the other hand, e-banking created the

unemployment. Earlier banking system was human-oriented, which provided

various job opportunities but modern banking system is machine-oriented, which

creates the unemployment and human task are shifted towards machine.

3. Implementation of e-banking increases the cost which is ultimately passed on to the consumers. Implementation of e-banking involves huge amount of investment, it increase the

cost. These costs may be application costs, hardware cost hardware maintenance

costs, system software costs, network bandwidth costs, Roll out costs, Data centre

management and storage and disaster recovery costs etc. which are assumed to be

ultimately recovered through the service charges of the customers.

4. Chances of failure of machines and technologies.

E-banking is machine/technology oriented there are chances of machine failure and

problems in technology, which will effect/stop the regular task of the bank.

5. E-banking- lack of external & internal security.

It is commonly believed that e-banking is prone to external attacks by hackers and

unscrupulous consumers. Several incidents have been reported in media. At the

same time, the persons/employees in charge of handling the system too has ample

opportunities to commit the frauds. Therefore it is also believed that e-banking

suffers from external as well as internal security threats.

1.10.3. Objectives:

The study intends to cover the following objectives:

1. The objective of the study is to test the hypothesis and get the results.

2. To analyse the Basics of Banking to obtain the knowledge about the Indian

banking, this will help to get the clear concept of banking system.

3. To analyse E-banking innovation i.e. history

4. To analyse the over all view of E-banking.

57

5. To analyse the E-banking and its implementation in Indian banks.

6. To evaluate the empirical and theoretical work in the field of e-banking

7. To study ‘Banking Information system’ to get an idea of internal

requirement of bank.

8. To analyse the Impact of e-banking in Maharashtra state.

9. To analyse e-banking laws, right and Acts.

10. To analyse the banks customers perception and attitudes about e-banking.

1.10.4. Universe of the study:

The present study is based on the analysis of the e-banking in Indian banks and the

Universe of the present study is restricted to Maharashtra state. “Maharashtra is

India’s third largest state in area and second largest in population after Uttar

Pradesh. It is bordered by the state of Gujarat, Madhya Pradesh, Chhattisgarh,

Andhra Pradesh, Karnataka, Goa and Union territory of Dadra and Nagar Haveli.

The Arabian Sea makes up the state’s western coast. Mumbai, India’s most

populous city is the capital of Maharashtra. Mumbai is a cosmopolitan city, and

serves as the financial and entertainment capital of the country. Maharashtra is

divided into thirty-five districts, which are grouped into six divisions: Aurangabad

Division, Amravti Division, Konkan Division, Nagapur Division, Nasik Division

and Pune Division. These are official revenue divisions of government of

Maharashtra. Geographically, historically and according to political sentiments

Maharashtra have five main regions: Vidarbha or Berar (Nagpur and Amravati

divisions), Marathwada (Aurangabad division), Khandesh and Northern

Maharashtra (Nashik division), Desh or Western Maharashtrs (Pune division) and

Konkan (Konkan division).” [91] Maharashtra is a financially and industrially one of

the most developed state in the country. The banking is one of the important

financial sectors in the state. It is found that, there are 45 banks (including private

commercial and nationalized) and its number of branches all over in India. These

banks with its wide network of branches are also spread over in the Maharashtra.

Therefore sample size of the bank is 22% of the banks from total population are

selected form both public and private sector for the study purpose.

58

These banks are:

1. ICICI BANK 6. STATE BANK OF INDIA

2. HDFC BANK 7.STATE BANK OF HYDERABAD

3.YES BANK 8. BANK OF MAHARASHTRA

4. DCB BANK 9 BANK OF BARODA

5. AXIS BANK 10. IDBI

Thus, the scope of the universe of the present study is limited to 10 banks and their

electronic products and services.

1.10.5. Sampling:

Sampling is taking any portion of a population or universe as representative of that

population or universe. In this study, researcher has used ‘Random sampling

method’. “Random Sampling is that method of drawing a portion (or sample) of a

population or universe so that each member of the population or universe has an

equal chance of being selected. In other words, Random sampling is that method of

drawing a portion (sample) of a population or universe so that all possible samples

of fixed size ‘n’ have the same probability of being selected.”[92] Therefore, the

researcher has selected ten different banks by applying the Random Sampling

techniques for the study purpose.

1.10.6. Data collection technique:

Data collection work is the backbone of any research. The ‘Questionnaire’ is one of

the data collection techniques of research. This technique is “used primarily in

making status studies of current practices and in conducting opinion polls up by

informants rather than by researcher. The researcher must construct the

questionnaire so cleverly as to elicit reliable and authentic information. The

information is a competent source of data. The respondent must have the ability to

understand the questions asked. Questionnaire construction is an art. A good

questionnaire is the product of long and painstaking process. The researcher should

decide what facts and opinion are to be sough for. The researcher should also

determine the persons to whom the questionnaire is to be sent. The arrangement

59

and appearance of the questionnaire is of prime importance in getting good returns.

The format should be attractive. There should be minimum difficulty in passing

from one question to another and filling in the intended response.”[93] Therefore, we

have selected the questionnaire technique for data collection.

1.10.7. Primary data:

The primary data are used for this research and the data collection work is done

through the data collection techniques i.e. interview schedule and survey

questionnaire. “Schedule is the name usually applied to a set of questions which are

asked and filled in by an interviewer in a face to face situation with an other

person.”[94].

As the interview-schedule is felt suitable to this particular research, so it is used.

The objectives of this research are to study the implement of e-banking in Indian

banks and especially the banks in Maharashtra state, so it became imperative to

collect the data from bank’s Managers. The study required in-depth information on

the various aspects of the e-banking products and services provided by the different

banks in the states, e-banking in private banks and especially e-banking

implementation in nationalized banks. We have conducted a survey of the sample

bank customers. There are two sections in the questionnaire format i) General

section with ten parameters and ii) In second section twenty seven questions are

placed. We have selected the ‘selection type’ or ‘closed-ended’ questions which are

in the form of ‘yes’ or ‘no’.

This study is based on the survey and the data which is collected through the issue

of questionnaire to the bank’s customers. Personal interaction and discussion with

the customer have helped to understand their perception and attitudes about E-

banking products and services.

1.10.8. Secondary data:

Secondary data source are also utilized for this study. The secondary sources of

information includes Banks Annual Reports, Broachers of E-banking products and

services, Reports of RBI on Internet Banking, various sites of banks on internet,

research studies, books and articles, research papers published in leading research

60

journals and magazines etc. Thus the data collected from the above sources are

utilized for this research work.

1.10.9. Tabulation and Analysis:

After completion of data collection task, the data were organised, tabulated and

analyzed. The tables and graphs were prepared and interpretation was carried out.

For the purpose of analysis of data, computer software is used and statistical tool

also applied like: application of Chi-Square test.

a) Analysis:

For the purpose of analysis, the findings of the survey are classified into two

groups:-

i) Finding on the basis of general parameters ii) Cross section Analysis.

i) General Parameter Analysis:

The first part of the questionnaire consists of the following parameters:

1. Occupation

2. Gender

3. Marital Status

4. Age

5. Qualification

6. Annual Income

7. Accounts types wise analysis

8. Analysis on the basis of age of accounts

Occupational-wise analysis:

Of the total respondents, it is found that approximately 45% are from service

category. Business category occupies only 15%. Professionals are 7% of the total

and students are 30% of the total. Housewife category forms the neglible part of the

total.

From the above it is observed that business class, which is expected to use the e-

banking services to a large extent, is not doing so. Moreover, more and more

number of housewives should be encouraged to the use the e-banking services. This

may help in diverting the idle cash to the productive uses.

61

Gender-wise analysis:

On the basis of gender category, it is found that the male respondents are 72% and

very few respondents are from female category i.e. 27%.

From the above it can be analysed that existence of a large number of male

respondents is as per the expectations, because female respondents are also include

the housewives who are more interested in investing in non-productive

investments.

Marital Status wise analysis:

It is revealed that there are 53% of single respondents and 47% of respondents are

married.

From the above it is analysed that both married and single respondents are

approximately similar banking sense.

Age-wise Analysis:

Of the total respondents, age group 18-20 are 15.9%, 21-30group 51.5% , 31-40

group 19.7%, 41-50 group 9.9% , 51-60 group 2.3% and 61 & above there are only

0.7% respondents.

The age group 21-30 and 31-40 contains service people, businessman and

professionals. Therefore it is expected that maximum number of respondents are in

these group. As the age group 18-20 consists of a maximum number of students,

who are not having their savings. But in the age group 41-50 and 51-60 which also

occupies service, business and professionals, the banking habits are at the decline.

In the 61 & above very few respondents are because of there old age and unable to

perform the banking transactions.

Qualification wise analysis:

As an analysis it is found that HSC qualified respondents are 16.1%, Graduates are

approximately 46% and post Graduates are Approximated 38 %.

Qualification wise analysis of the data reveals that graduate & postgraduates

constitute an approximately 84% of the total. Other categories account for just 16%

of total. This indicates the lack of interest and awareness on the part of less

educated and uneducated masses towards the usage of banking services.

62

Income wise analysis:

Of the total respondents, it is found that 1,00,000 and above income are 48.5% ,

Below 1,00,00 income respondents are approximately 18.4% and no earning

respondents(i.e. students & house wives) are approximately 33.1%.

From the above study reveals that only the persons having more than one lakh

rupees annual income are using the banking services. The people with the lower

income perhaps have no savings. Hence they don’t need any banking services.

Accounts types wise analysis:

On the basis of account type analysis, it is found that the saving respondents are

90.2%, current account holders are 8.9% and very few respondents are from

recurring and term deposit i.e. 0.2%.

From the above it can be analysed that saving account holders are more as compare

to current account holders.

Analysis on the basis of age of accounts:

Of the total respondents, 1yr to 4 yrs old customer of the bank is 70.6%, 5yrs to 10

yrs are 23.6%, 11 yrs to 15 yrs are 4.3%, 16 yrs to 20 yrs & 21 yrs and above are

very few i.e. 0.8% only.

From the above it can be analysed that recent account holders i.e. 1yr to 4 yrs old

more preferred to use electronic banking as compared to others.

ii) Cross Section Analysis:

b) Findings:

As an analysis it is revels that all the respondents have acknowledged their

awareness of the e-banking concepts (ie.100%). But the response to the query

whether their banks are providing it, we observed that 95.9% respondents have

given positive response and 4.1% have given the negative response. Almost 92.1%

of the respondents agree that the electronic services are more convenient and

suitable in present life. On the other hand 7.9% respondents disagreed. It is also

observed that 52% of respondents do agree to the fact that Indian customer feels

shy, hesitative and keep away from using electronic banking transactions and 48%

of the respondents disagreed with this statement and they think that Indian people

are much comfortable in accessing the e-banking. It is also found that 95.5%

63

respondent’s banks are providing ATM cum Debit card services, in which 87.4%

respondents accessing these services. But 4.5% respondents are disagreed that their

bank provides this service. It is also found that 12.6% respondents are not using

ATM cum Debit card services. It is revealed that 90.7% of the respondents think

that using an ATM is easier, authenticated and safe for conducting banking

transaction and 9.3% of the respondents deny this statement. It is also found that

73.2% of the respondents are satisfied with the banking charges of ATM services

and 26.8% feel that ATM using charges are high and they are not satisfied. A

further analysis shows that 45% respondents used their debit cards for bills

payments and 55% respondents are not using it for bill payment purpose. It is

analysed that maximum number of respondent i.e. 58.6% prefer to using their ATM

cum Debit card for purchasing in market but 41.4% have shown their dislike. It is

revealed that 89.4% of the respondents think that Debit card is safer as compared to

carry the cash at the time of shopping and traveling and 10.6% respondents think

otherwise. It is found that 81.9% of the respondents are satisfied with ATM

machines and its services but 18.1% respondent accessing ATM are not satisfied.

As per the observation 86.8% respondent’s banks are providing credit cards in

which 38.9% respondents are using it. On the other hand, 13.2% of respondent

stated that their banks are not providing credit cards and 61.1% respondents are

those who are not using it. It is analysed that 68.3% feel that credit card charges are

heavier and 31.7% deny this. As per respondents’ feedback, it is found that 76.3%

respondent thinks that use of Debit card is better than Credit card and 23.7%

negated this statement. It is also found that 81.2% thinks that card transaction is

safe and secure and 18.8% respondents has shown negative attitude. It is revealed

that 46.9% respondent encountered processing error while transacting with card

and 53.1% has shown positive attitude. It is also found that 88.1% respondent’s

banks provides Internet banking and 85% respondent’s banks provides on line

banking and 11.9% stated that their bank do not provide internet and 15%

respondents also stated that their bank is not online e-banking services. On the

basis of analysis of respondents feed back it is found that 90.6% respondents feel

that online banking system save time and 74% say that it is financially secured. But

64

9.4% and 26% respondents do not agree for that online system is save and

financially secured. It is found that 81.1% respondent think that learning to use a

net banking/ online banking is easier but 18.9% disagree with this statement. As per

the feedback of respondents that 72.6% are aware that their bank provides mobile

banking services and 27.4% respondents said no. It is further observed that 77%

respondents’ thinks that mobile banking services are more useful but 23% do not

agree. It is found that 80.3% respondent’s bank provides EFT and 80.9%

respondents feel that it is more secure and time saving but 19.7% respondents deny

that their banks provides EFT services and 19.1% said that it is not safe and secure.

On the basis of the above analysis, the conclusion of the study may be drawn.

1.10.10 Conclusion:

On the basis of the analysis, it can be concluded usage of banking services is still

not wide open. In a country like India, where majority of population is less

educated and uneducated, the utility of banking services is not properly realized. It

is found that only educated, well to do persons, and male forms the majority of the

users. Housewives, small businessmen and persons from unorganized sectors still

feel shy and keep themselves away from the banking services.

Even though a majority of Indian and Foreign banks have introduced the advance

e-banking facilities, but it is observed that a large numbers of bank users do not

proper to use these services. This make due to the ignorance of the system of e-

banking or because of the distrust in the computer systems.

From the above, this can be concluded that there is an urgent need of spreading the

awareness among the common people. The small business men, the farmers, the

housewives, the person’s working in unorganized sector be convinced to use

banking and e-banking services. They should feel that their money is more safe and

secure with the banks. The lack of faith in the banking system is evident from the

present study.

65

References

[1] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [2] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [3] S. NATARAJAN R. PARAMESWARAN, “INDIAN BANKING”, S.CHAND & COMPANY LTD. Publication Ram Nagar, New Delhi (2006), p2. [4] Article by Julian Davidson, “History of Banking Systems in Different Parts of the World”, http://EzineArticles.com/? [5] Finance.indiamart.com/investment_in_india/banking_in_india.html,“History of banking in India”. [6] Finance.indiamart.com/investment_in_india/banking_in_india.html,“History of Banking in India”. [7] Finance.indiamart.com/investment_in_india/banking_in_india.html,“History of Banking in India”. [8] S. NATARAJAN R. PARAMESWARAN, “INDIAN BANKING”, S.CHAND & COMPANY LTD. Publication Ram Nagar, New Delhi (2006), p3 & p4. [9] Finance.indiamart.com/investment_in_india/banking_in_india.html,“History of Banking in India”. [10] Edna Carew, “The Language of Money”, ANZ Financial Dictionary Meaning for Bank.htm [11] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003) p.1. [12] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [13] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [14] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [15] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [16] http://en.wikipedia.org/wiki/History_of_banking, “History of banking” [17] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003) p.2. [18] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003), p.2. [19] INDIAN INSTITUTE OF BANKING & FINANCE, “Know Your Banking –I Basic of Banking”, Published by Taxman Publications Pvt. Ltd. 59/32, New Rohtak Road, New Delhi (2005), p3.

66

[20] INDIAN INSTITUTE OF BANKING & FINANCE, “Know Your Banking –I Basic of Banking”, Published by Taxman Publications Pvt. Ltd. 59/32, New Rohtak Road, New Delhi (2005), p3. [21] S. NATARAJAN R. PARAMESWARAN, “INDIAN BANKING”,S.CHAND & COMPANY LTD. Publication Ram Nagar, New Delhi (2006), p2. [22] INDIAN INSTITUTE OF BANKING & FINANCE, “Know Your Banking –I Basic of Banking”, Published by Taxman Publications Pvt. Ltd. 59/32, New Rohtak Road, New Delhi (2005), p3. [23] INDIAN INSTITUTE OF BANKING & FINANCE, “Know Your Banking –I Basic of Banking”, Published by Taxman Publications Pvt. Ltd. 59/32, New Rohtak Road, New Delhi (2005), p3. [24] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003) p.3. [25] INDIAN INSTITUTE OF BANKING & FINANCE, “Know Your Banking –I Basic of Banking”, Published by Taxman Publications Pvt. Ltd. 59/32, New Rohtak Road, New Delhi (2005), p3. [26] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003) p.3. [27] C.M. Chaudhary, “BANKING AND FINANCE”, Malik & Company Publication 337, Chaura Rasta ,Jaipur (2003) p.3. [28] http//www.answers.com/topic/scheduled-banks [29] http//www.answers.com/topic/scheduled-banks. [30] S.K. Misra and V.K. Puri, “ INDIAN ECONOMY”, Himalaya Publishing House Mumbai (2006), p.717 [31] S. NATARAJAN, R. PARAMESWARAN, “INDIAN BANKING”,S.CHAND & COMPANY LTD. Publication Ram Nagar, New Delhi (2006), p30. [32] Dr. Nirmala Prasad, K Chandradass J., “BANKING AND FINANCIAL SYSTEM”, Himalaya Publishing House, Mumbai, (2004) p9. [33] http//www.answers.com/topic/non-banking-financial-company [34] http://www.bankingindiaupdate.com/bra.htm -“BANKING REGULATIONS ACT 1949”. [35] Andrea Schaechter, “Issues in Electronic Banking: An Overview”, IMF (International Monetary Fund) Policy Discussion Paper, March 2002, http://www.imf.org/external/pubs/ft/pdf/2002/pdp06.pdf. [36] Ankur Gupta, “DATA PROTECTION IN CONSUMER E-BANKING”, Article, National Law Institute University, Bhopal. [37] C. M. Chaudhary., “BANKING AND FINANCE”, Published by Malik & Company, Jaipur (2003).

67

[38] Dr. S.P. Rajagopalan., “e-Banking: The Indian Scenario”, “BANKING in the New Millennium Issues, Challenges and Strategies”, Edited by Dr. S. Gurusamy, Kanishka Publishers, Distributors, New Delhi (2001). [39] Dr. R.V.Kulkarni and B.L. Desai., “Knowledge-based Systems in Banking Sector”, New Century Publications, New Delhi, India (2004). [40] Dr. Nirmala Prasad & K. Chandradass J., “BANKING AND FINANCIAL SYSTEM”, Himalaya Publishing House, Mumbai, (2004). [41] Dr. Lisa Harris and Dr. Laura J. Spence, “THE ETHICS OF EBANKING”, Journal of Electronic Commerce Research, VOL. 3, No.2, 2002. [42] Dr. N. Sundaram, “E-Banking”, Journal, Readers Shelf, Vol.3, Issue No. 10, July, 2007. [43] D.Ramani, “INNOVATIVE INTERNET Banking emerging Issues and Challenges”, Journal, E-Business, The Icfai University Press, February 2007. [44] Dr. Md. Abdul Hannan Mia, Mohammad Anisur Rahman, Md. Main Uddin, “E-banking: Evolution, Status and Prospects”, The Cost and Management, Vol. 35 No.1, January-February, 2007 pp.36-48. [45] Dr. Mrs. Pratibha Rasal, “CYBER LAWS- AWAY AHEAD”, International Conference on Cyber Law and Information Technology by Indian Law Institution, New Delhi, 2001. [46] Dr. A. Nelson, “Internet and Hi-tech banking Technologies: A Revaluation of Indian Banking Industry”, Journal Readers Shelf, August 2007. [47] Francisco Javier Miranda, Rosa Cortes and Cristiana Barriuso, “Quantitative Evaluation of E-Banking Web Sites. An Empirical study of Spanish Banks”, The Electronic Journal Information Systems Evaluation, 2006, Volume 9 issue 2, pp. 73-83, www.ejise.com. [48] Indian Institute of Banking and Finance, “Information System for Banks”, Taxmann Publications (P.) Ltd., New Delhi, (2005). [49] Indian Institute of Banking and Finance, “Know Your Banking-I, Basics of Banking”, Taxmann Publications (P.) Ltd., New Delhi, (2005). [50] Jason Dong and Michael Bliemel., “Strategies for Increased Integration of Online and In-Branch Services of Banks in Canada”, Journal of Internet Banking and Commerce, December 2008, Vol. 13, No.3. [51] Jia Hu and Ning Zhong, “Developing Mining-grid centric e-Finance Portal”, Proceedings of the 2006 IEEE/WIC/ACM International Conference on Web Intelligence, 2006 IEEE. [52] Kori L. Egland, Karen Furst, Daniel Nolle, and Douglas Robertson, “Banking Over the Internet”, Quarterly Journal, Vol. 17, No.4, December 1998. [53] Leo Puri, “The CEO as CIO: An interview with K.V. Kamath of ICICI”, Mc Kinsey on IT Spring 2007. www.mckinsey.com/clientservice/bto/point of view/pdf/ MOIT11_ICICInterview_F.pdf.

68

[54] Lj.Antovski, M. Gusev, “E-BANKING- DEVELOPMENT FUTURE WITH ADVANCED TECHNOLOGIES”, proceeding of the Second International Conference on Informatics and Information Technology CiiT Molika 20-30 Dec.2001. [55] Mrs. Suma Devi., “Electronic Banking - Entry in the Indian Banking Scenario” “BANKING in the New Millennium Issues, Challenges and Strategies”, Edited by Dr. S.Gurusamy, Kanishka Publishers, Distributors, New Delhi (2001). [56] Mark J. Cotteleer, Christopher A. Cotteleer, and Andre Prochnow, “CUTTING CHECKS: CHALLENGES AND CHOICES IN B2B E- PAYMENTS”, COMMUNICATONS OF THE ACM, June 2007/Vol. 50 No.6. [57] Mohammed Sadique Khan and Siba Sankar Mahapatra., “Service quality evaluation in internet banking: an empirical study in India”, Int.J. Indian cultural and Business Management, Vol. 2, No.1, 2009. [58] Marcin Dabrowski and Piotr Pacyna, “Distributed Identity Discovery Service For Non-Federated Systems”, Proceedings of MoMM2008, November 24-26, Linz, Austria. [59] MU Yibin. “E-banking: Status, Trends, Challenges and Policy Issues”, CBRC Seminar, The Development and Supervision of E-banking Shanghai, Nov. 24-26, November 2003. http://www1.worldbank.org/finance/assets/images/MU_Yibin_E-Banking_Nov_2003_paper.pdf. [60] Marc Pasquet, Vincent Alimi, Sylvain Vernois, Christophe Rosenberger, “An E-banking platform for collaborative work between Education, industry and Research”, International Symposium on Collaborative Technology and Systems (CTS), United States (2008). [61] M. Upendar, “Internet Banking: Security Related Issues”, INDIAN BANKING in the new Millennium, edited by M.P. SHRIVASTAVA & S.R.SINGH, Anmol Publication Pvt. Ltd., New Delhi (2004) pp. 440-461. [62] Madhu Vij, “E-Banking: An Emerging Perspective of the Regulatory and Taxation Issues”, University of Delhi, India. [63] Prof. Sharad Padwal and Dr. Vasant Godse., “TRANSFORMATION OF INDIAN BANKS WITH INFORMATION TECHNOLOGY”, Himalaya Publishing House, Mumbai, 2004. [64] Prof. N.P.Agarwal & Prof. Sugan C. Jain., “Information Technology and EBusiness” Raj Publishing House Jaipur, (2002). [65] Prof. T. Uma Mahesware Rao and Ch. L. Hymavathi, “INTERNET BANKING IN INDIAN SCENARIO”, Indian Journal of Marketing, April, 2005. [66] Rajiv Dewan and Abraham Seidmann., “Current Issues in E-BANKING”, COMMUNICATONS OF THE ACM, June 2001/Vol 44. No.6.

69

[67] R.K.Uppal., “INDIAN BANKING INDUSTRY and Information Technology”, New Century Publications, New Delhi, 2006. [68] Raghunath Desai., “E-BANKING” Srishti Book Distributors, New Delhi, (2007). [69] Sanjiv Singhal., “A BANKER’S GUIDE TO INTERNET STRATEGY IN THE POST DOTCOM ERA – INTERNET BANKING THE SECOND WAVE”, Tata McGraw Hill Publishing Company Limited, New Delhi, 2003. [70] S.S. Kaptan., “NEW CONCEPTS IN BANKING”, Prabhat Kumar Sharma for Sarup & Sons, Delhi, 2002. [71] S.M. Padwal., “IT, MIS AND PRODUCTIVITY IN BANKS”, Himalaya Publishing House, Mumbai, 1997. [72] S. Natarajan and R. Parameswarn., “INDIAN BANKING”, Published by S. Chand & Company Ltd., New Delhi, (2006). [73] Stuart Mathison., “E-banking with the poor: Opportunities and Implications For Microfinance providers”, Development Bulletin 72, (March 2007). [74] Sheebs Kapil, “E-Banking: In Nascent Stage in India”, IT in Banks Emerging Trends, Edited by Katuri Nageswara Rao & Yashpaul Pahuja, the ICFAI University Press Hyderabad, (2005) pp.78-86 [75] S.P. Dhandayuthapani, “ROLE OF INFORMATION TECHOLOGY ON BANKING”, Journal READERS Shelf, September, 2007. [76] T. R. Nagesh, “Internet Banking A Regulatory Challenge”, Professional Bankers, the Icfai University Press, December 2007. [77] Vasu Deva., “E-Banking” For Commonwealth Publishers, New Delhi, 2005. [78] Vasant Desai, “INDIAN BANKING NATURE & PROBLEMS”, Himalaya Publishing House, Bombay, (1979). [79] Verena Veneeva, “E-banking (online Banking) and its role in Today’s society”, http://EzineArticles.com /? expert = Verena_Veneeva. [80] William Hudson., “The Lost World of E-Banking” SIGCHI Bulletin September/October (2002). [81] Witold Chmielraz., “PROFITABILITY ASPECTS OF ELECTRONIC BANKING APPLICATIONS FOR SMALL COMPANIES”, ECIS 2002, June 6-8, Gdansk, Poland. [82] Will Ferrell, “Is your Internet Banking Solution Costing You Customers?” URL - First Data Corporation (2008) [83] Ziqi Liao and Michael Tow Chenug., “Challenges to Internet E-banking” COMMUNICATONS OF THE ACM, December 2003/Vol 46. No.12ve.

70

[84] Ziqi Liao and Machael Tow Cheung, “MEASURING CONSUMER SATISFACTION IN INTERNET BANKING: A CORE FRAMEWORK”, COMMUNICATONS OF THE ACM, April 2008/Vol. 51 No.4. [85] Indian Institute of Banking and Finance, “Information System for Banks”,Taxmann Publications (P.) Ltd., New Delhi, (2005).p3 &P4. [86] http//www.imforg/external/pubs/ft/pdf/2002. [87] S.P.DHANDAYUTHAPANI, “ROLE OF INFORMATION TECHNOLOGY ON BANKING”, Journal Readers shelf sept.2007. p13. [88] N. THANULINGOM, “RESEARCH METHODOLOGY”, By Himalaya Publishing House Mumbai, (2000), p3. [89] N. THANULINGOM, “RESEARCH METHODOLOGY”, By Himalaya Publishing House Mumbai, (2000),p3. [90] N. THANULINGOM, “RESEARCH METHODOLOGY”, By Himalaya Publishing House Mumbai, (2000),p3. [91] http://en.wikipedia.org/wiki/Maharastra [92] Fred N. Kerlinger, “Foundations of Behavioral Research”, by Surjeet Publications Delhi (1998), p118. [93] N. THANULINGOM, “RESEARCH METHODOLOGY”, By Himalaya Publishing House Mumbai, (2000), p91. [94] Goode W. and Hatt P.K., “Methods of Social Research” , Tata McGraw Hill, Tokyo Japan, 1952, P133.

---------