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Transcript of 77530884 internet-banking-a-case-study-final
Internet Banking –A Case Study
1
Chpater 1 INTRODUCTION
Internet Banking –A Case Study
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1.1 Definition of Banking
As per Section 5 (b) Banking Regulation Act, 1949, Banking means accepting for
the purpose of lending or investment, of deposits of money from the public,
repayable on demand or otherwise and withdrawal by cheque, draft, order or
otherwise.
1.2 History Of Banking
Banking in India originated in the last decades of the 18th century. The first
banks were The General Bank of India which started in 1786, and the Bank of
Hindustan, both of which are now defunct. The oldest bank in existence in India is
the State Bank of India, which originated in the Bank of Calcutta in June 1806,
which almost immediately became the Bank of Bengal. This was one of the three
presidency banks, the other two being the Bank of Bombay and the Bank of
Madras, all three of which were established under charters from the British East
India Company. For many years the Presidency banks acted as quasi-central banks,
as did their successors. The three banks merged in 1921 to form the Imperial Bank
of India, which, upon India's independence, became the State Bank of India.
1.3 Development Of Banks In Post Independence Period:
Post-independence
The partition of India in 1947 adversely impacted the economies
of Punjab and West Bengal, paralyzing banking activities for months. India's
independence marked the end of a regime of the Laissez-faire for the Indian
banking. The Government of India initiated measures to play an active role in the
economic life of the nation, and the Industrial Policy Resolution adopted by the
government in 1948 envisaged a mixed economy. This resulted into greater
involvement of the state in different segments of the economy including banking
and finance. The major steps to regulate banking included:
In 1948, the Reserve Bank of India, India's central banking authority, was
nationalized, and it became an institution owned by the Government of India.
In 1949, the Banking Regulation Act was enacted which empowered the Reserve
Bank of India (RBI) "to regulate, control, and inspect the banks in India."
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The Banking Regulation Act also provided that no new bank or branch of an
existing bank could be opened without a license from the RBI, and no two banks
could have common directors.
However, despite these provisions, control and regulations, banks in India except
the State Bank of India, continued to be owned and operated by private persons.
This changed with the nationalization of major banks in India on 19 July 1969.
1.4 Liberalization In Banking:
The banking sector in India remained a regulated one and rigid since the
nationalization of banks in 1969. Up to 1990, the concept of an independent
regulatory authority had no relevance. With the liberalization of the Indian
Economy, the Indian banking system also followed it suit and slowly entered in to
a market driven competitive system.
The economic policy of structural adjustment got a big boost in India in June 1991.
A committee was setup for financial reforms which was to examine exhaustively
all aspects relating to the structure, organization functions and procedures of the
system. The committee recommended entry of foreign banks, new private sector
banks and local area banks. The committee further advocated the introduction of
universal banking, setting up of special recovery tribunals, introduction of banking
ombudsment scheme etc.
The liberalization and economic reforms in 1991 unleashed stiffer competiton
among banks. The financial sector became intensively competitive with several
new competitors like private banks, foreign banks, non-banking financial
companies, merchant bankers mutual fund, and insurance companies.
Besides Banking student need to understand Need, Scope and development of
Internet Banking. I decided to conduct a Micro Level study in which I am studying
Internet Banking facilities adopted by one specific Bank i.e Punjab National Bank.
The broad objectives of my project are:
I. To understand Internet Banking of Punjab National Bank
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II. To understand problem faced in Internet Banking
III. To understand problem faced by Punjab National Bank.
Study of project is mainly based on secondary data which is collected through
Internet Site, Periodicals, Magazines etc. To add to my knowledge I have taken
interview from an officials of Punjab National Bank Branch.
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Chpater 2
OVERVIEW OF INTERNET BANKING IN INDIA
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2.1 Origin Of Internet Banking
Internet is often described as “Network of Networks” born in 1970s. It is a number
of computers interconnected. It is an open standard for digital communication used
with World Wide Web Technologies. When two or more computers are connected
a network is created; connecting two or more network creates ‘inter-network’ or
Internet. The advent of the Internet and the popularity of personal computers
presented an opportunity and a challenge for the banking industry for new
development of Internet Banking.
Internet banking dates back to late 1990s. Most banks used a very simple
layout, which allows user to sign in, see their accounts and statements, and make
transfer from one account to other. It is really simple: we do not have to go down
to bank because bank is already in our computer at our desk waiting for us to enter.
Today’s online banking features allows us to do all those previous online banking
activities and also arrange for loan, set up direct debits, and pay bills online-all
with just a few clicks of our mouse.
Internet banking is usually conducted through a personal computer (PC) that
connects to a banking Web site via modem and a phone line or other
telecommunication connection. Now that its customers are connected to the
Internet via personal computers, banks envision similar economic advantages by
adapting those same internal electronic processes to home use.
Most people have heard about Internet banking but probably not tried it. We
still pay our bills by mail and deposit cheque at our bank branch. We might shop
online for loan, life insurance or a home mortgage, but when it comes time to
commit, we feel more comfortable working with banker or agent we know and
trust. Online banking isn’t out to change our money habits. Instead, it used today’s
computer technology to give us option bypassing the time consuming, paper-based
aspects of traditional banking in order to manage our finance more quickly and
efficiently.
Banks view Internet banking as a powerful “Value Added” tool to retain and
attract new customers and to eliminate costly paper handling in a increasingly
competitive banking environment.
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2.2 Definition Of Internet Banking
A system allowing individuals to perform banking activities at home, via the
internet. It is a web-based service that allows the bank authorized customer to
access their account information. In the system, customers are allowed to log on
the bank website with the help of identification issued by the bank and personal
identification number (PIN). Banks replies the user and enables customers to
access the desired services.
2.3 Internet Banking
“Internet Banking” to mean that a bank offering its customers the ability to
transact business with the bank over Internet. Internet banking refers to the use of
the Internet as a remote delivery channel for banking services. Subsequently, dial-
up connections, personal computers, tele-banking and automated teller machines
(ATMs) became the order of the day in most of the developed countries.
Nowadays, all banks provide online banking facility to their customers as an added
advantage. Gone are the days, when one had to transact with a bank which was
only in his local limits. Online banking has opened the doors for all customers, to
operate beyond boundaries. Nowadays, people are so busy in their work lives, that
they don't even have time to go to the bank for conducting their banking
transactions. Internet enable people to carry out most of their banking transactions
using a safe website, which is operated by their respective banks. It provides many
features and functions to their customers, and enables them to view their account
balance, transfer money from their account to another account (be it in their
respective bank or any other bank), view their account summary, etc.
In this procedure, many financial transactions can be carried out by simply
utilizing a computer with an Internet connection. The necessary things that a
person needs for using online banking are, an active bank account with balance in
it for transactions, debit or a credit card number, customer's user ID, bank account
number, the Internet banking PIN number, and a PC with access to the web. People
using Internet banking are certainly benefited by the online services their
respective banks are providing them with. The primary reason why it is so famous
and mostly used is that, customers are allowed to bank at non-working hours.
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Banks create their banking interfaces and websites in a viewable and user-
friendly manner, which enable customers to conduct their financial transactions
with ease. If they are stuck in any process while performing their online
transactions, banks have another helpful facility that is 'phone banking', wherein
customers can call the bank's toll-free number and get assistance in completing
their transactions. Electronic bill payment, viewing and downloading financial
records, and money transfers are some of the general transactions which the
customers generally carry out. All online banking services, provided by some
banks, are free of cost.
2.4 Internet Banking Services
The Internet banking sites offers following services:-
2.4.1 Mobile Banking
Mobile Phone banking takes banking one step ahead of internet banking.
One can do banking without even phone call. Mobile banking works through a set
of text messages.
Customer should first register for the facility and then can use wither SMS or
WAP in case he/se subscribes to any of the various carries. Presently two types of
services are available through Mobile Phone viz. Alert Services and Requests. This
service really offers “Any time anywhere Banking”. However, the bank should
have tie-up arrangement with the cellular service provider.
A pre-designated mobile number should be available at the bank. A user
needs to be provided to the customer to acquaint him with Bank’s specific codes
and menus. In case of loss/theft of mobile, the customer is required to inform the
bank immediately to deactivate or disable mobile banking service.
2.4.2 E-commerce and E-banking
E-commerce is the online selling. It is total delivery of products and services
to the customer through Internet to satisfy business objectives. It allows two-way
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communications and it is built around open standards. As a first step it will ensure
the conversion of office it will ensure the conversions of office business
equipment/machines into one digital platform. The interaction/communication
taking place digitally between producers, intermediaries and consumers are
referred to as the electronic market place. The sum total of commercial transaction
taking place in the electronic marketplace in called Digital Economy.
E-banking is an extension or a subset of E-commerce doing its process on
personal computers because of their origin within the Internet, a network of
computers. The first stage of expansion is within the installed base of computer
users. The second wave will come when more people will get access to computers
via lowered computer prices or cheaper devices. The third most important
expansion is predicted to be from those with non-computer access to the global
network through broadcast TVs, Cable TVs, Telephone Networks and new
appliances.
This widespread use of cheaper access media represents the phase of
bringing E-commerce access media represents the phase of bringing E-commerce
including E-banking into the living rooms of common people. It will give banks
like ours a chance to give a run for their money to giant multibillion foreign
banking corporate, both in India and abroad.
2.4.3 E MAIL- Banking
The most common and basic use of Internet is the exchange of E-Mail
(Electronic Mail). It is an extremely powerful and revolutionary result of internet,
which has facilitated almost instantaneous communi-cation with people in any [art
of the globe. With enhancement like attachment of documents, audio, video and
voice mail, this segment of Internet is fast expanding as the most used
communication medium for the whole world. Many websites offer
E-Mail as a free facility to individuals. Many corporate have interfaced their
private network with Internet in order to make their e-mail accessible from outside
their corporate network. In E-Mail security , a digital signature authenticates a
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transmission from a user in an un-trusted network environment. A digital signature
a sequence of bits appended to a digital document. Like a handwritten signature, it
is unique to the document being signed.
Digital signatures are a good method of securing E-Mail transmission in that
the signature. Digital signatures are based on a procedure called message digesting
which computes a short fixed length number called a digest for any message of any
length. Several different messages may have the same digest, but it is extremely
difficult to produce any of them from the digest. A message digest is 128 bit
cryptographically strong one-way hash function of the message. It is very similar
to a checksum in that it completely represents the message and is used to detect
changes in the message. In using digital signature for securing E-Mail messages,
there are two different types of encryption techniques used to ensure secured
messages. Messages can be secured using a (symmetric) secret key management
system using DES or a public key (asymmetric) management using RSA.
2.4.4 Automated Teller Machines (ATMs)
Automated Teller Machine (ATM) is a self-service terminal system. ATM as
the name indicates is a very user-friendly machine that can render 24 hours
services to help the bank customer perform basic bank transactions like depositing
cash or cheques and withdrawing money. It is an extension of “Anywhere,
anytime” concept of banking. When an ATM is connected to a online branch
network, it can additionally provide services such as balance enquires, transfer of
funds between the accounts, etc.
2.4.5 Electronic Data interchange (EDI)
EDI is a transmission in standards syntax of the unambiguous information of
business for strategic significance minimizes human intervention or re-keying. The
sending organization to perform a specific function.
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There is no need to send repetitive input of sender’s address, operational
instructions, authorized signatories which would already in the receiver’s computer
database. There are 3 components of EDI, a generally accepted business format
called DEI standards, translation capability i.e. ensured through EDI software and
mail service called Value Added Network (VAN). The VAN acts as an electronic
post office from where the messages are routed/picked up at regular intervals
facilitating data inter-change between large numbers of organizations and keep the
cost of network resources to the minimum.
2.4.5 Electronic Funds Transfer (EFT)
Electronic Funds Transfer (EFT) is the exchange is the exchange of money
via telecommunication without currency actually changing hands. EFT refers to
any financial transaction that transfers a sum of money from one account to
another, electronically. Usually, transactions originate at a computer at one
institution (location) and are transmitted to a computer at another institution
(location) with monetary amount recorded in the respective organization’s
accounts. Because of the potential high volume of money being exchanged, this
system may be in an extremely high-risk category. Therefore, access security and
authorization of processing are important controls.
Security in an EFT environment is extremely important. Security includes the
methods used by the customer to gain access to the system, the communications
network and the host or application processing site. Individual consumer access to
the EFT system is generally controlled by a plastic card and a personal
identification number (PIN). Both items are required to initiate a transaction.
Internet Banking –A Case Study
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2.5 Advantages And Disadvantages Of Internet Banking
2.5.1 Advantages
Advantages of Internet Banking are as follows:
2.5.1.1 Convenience
Unlike our corner bank, Internet banking sites never close; they’re available
24 hours a day, 7 days a week, and they are just a click away. Not only this but all
services that are usually available from the local bank can be found on a single
website. Rather that having to ring a separate number to order a new chequebook
or cancel a bankcard, or even go into the brancg to do so, it is possible to do all this
from our personal home page.
2.5.1.2 Ubiquity/portability
If we are out of states or even out of the country and when a money problem
arises, we can log on instantly to our online bank and take care of business, 24/7.
This is possibly the main advantage of Internet Banking as apposed to branch
based banking. Our account is extremely accesses able with an online account and
all the service which we expect to be provided by a banking service anytime
anywhere.
2.5.1.3 Transaction speed
Internet Banking sites generally executes and confirm transactions at the
same rate or quicker than, ATM processing speeds. This means that if a customer
withdraw or pay in money from/to his accounts then his balance will be updated at
the same speed or often quicker yhan if he had done so at branch bank ATM.
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2.5.1.4 Effectiveness
Many online banking sites now offer sophisticated tools, including account
aggregation, stock quotes, rate alerts and portfolio managing programs which help
us to manage all our assets more effectively. Most are also compatible with money
managing programs such as Quicken and Microsoft Money.
2.5.2 Disadvantages
Disadvantages of Internet Banking are as follows:
2.5.2.1 Start-up may take time
In order to register for our bank’s online program, we have to provide ID
and sign a form at a bank branch. If husband and wife wife to view and manage
their assetd together online, one of them may have to sign a durable power of
attorney before the bank will display all their holding together.
In comparison to opening a branch account this can be done real time
wereby customer goes into branch, give them his personal details, sign some forms
and once the account is activated he can use it almost straight away as the account
is activated within the branch while he is there. Online accounts undergo the same
form filling process but take up a week to be processed and validated before
account can be opened and accessed.
2.5.2.2 Learning Curve
Banking sites can be difficult to navigate at first. Plan to invest some time
and/or read the tutorials in order to become comfortable in the virtual lobby. Time
needs to be taken to understand such things as how to check the balance online or
how to setup a standing order. This alone can prevent some people considering
opening an online bank account even if the rates are much better than bricks and
mortar banks.
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2.5.2.3 Bank sites changes
The largest bank periodically upgrades their online programmes, adding new
features in unfamiliar places. In some cases, one may have to re-enter account
information.
2.5.2.4 The Trust Thing
For many people, the biggest hurdle to online banking is learning to trust it.
Did my transaction go through? Did I put my transaction button once oe twice?
Best bet: always print the transaction receipt and keep it with bank records until it
shows up on the personal site and/or bank statement.
2.5.2.5 Impersonal
Online banking lacks personal service. There is virtually no human contact
involved, and some people could see this as a drawback.
The disadvantages of internet banking can be overcome to a greater extent;
in the long run, the benefits out weight the risk involved. A testimonial to the
utility of online banking is the growing number of customers that are signing up
for it. In one way or another, most people who require some form of banking
services stand to gain from banking over that Internet.
2.6 Risk In Internet Banking
Internet is not an unmixed blessing to the banking sector. Along with
reduction in cost of transactions, it has also brought about a new orientation to
risks and even new forms of risks to which banks conducting Internet banking
expose themselves. Risk is potential that events, expected or unexpected, may have
an adverse impact on the bank’s earning or capital and reputation as well. These
risks are briefly describe as below.
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2.6.1 Strategic Risk
This risk is associated with the introduction of a new products or services. It
is also the current and prospective risk to earning and capital arising from adverse
business decision or improper implementation of business decisions. For reducing
such risk, banks need to conduct proper survey, consult experts from various fields,
establish achievable goals and monitor performance. Also they need to analyze the
availability and cost of additional resources, provision of adequate supporting staff,
proper training of staff and adequate insurance coverage.
2.6.2 Transaction Risk
Transaction risk is the current and prospective risk to earnings and capital
arising from fraud, error, and the inability to deliver product and services, maintain
a competitive position, and manage information. Transaction risk is evident in each
product and service offered and encompasses product development and delivery,
transaction processing, systems development, computing systems, complexity of
products and services, and the internal control environment.
A high level of transaction risk may exist with Internet banking products,
because of the need to have sophisticated internal controls and constant
availability. Most Internet banking platforms are based on new platforms which
use complex interfaces to link with legacy systems, thereby increasing risk of
transaction error.
2.6.3 Compliance Risk
Compliance risk is the risk to earnings or capital arising from violations of,
or nonconformance with, laws, rules, regulations, prescribe practices, or ethical
standards. Thus, the bank may face compliance and regulatory risk if it does not
adhere or follow the guidelines given by the supervisor or the regulator.
Banks need to carefully understand and interpret existing laws as they to
Internet baking and ensure consistency with other channels such as branch
banking. Customers are very concern about the privacy of their data and banks
Internet Banking –A Case Study
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need to be consummate transaction immediately may lead to bank relaxing
traditional controls, which aim to reduce compliance.
2.6.4 Reputation Risk
This is current and prospective risk to earnings and capital arising from
negative public opinion. This affects the institutions ability to establish new
relationships or services existing relationships. A bank’s reputation can suffer if it
fails to deliver on marketing claims or to provide accurate, timely services. A
bank’s reputation can be damaged by internet banking services that are poorly
executed.
2.6.5 Information Security Risk
This is the risk to earnings and capital arising out of lax information security
processes, thus exposing the institution to malicious hacker or insider attacks,
viruses, denial-of-services attack, data destruction and fraud. The speed of change
of technology and the fact that the internet channel is accessible universally make
this risk especially critical.
2.7 Bank fraud
Bank fraud is the use of fraudulent means to obtain money, assets, or other
property owned or held by a financial institution. In many instances, bank fraud is
a criminal offense. While the specific elements of a particular banking fraud law
vary between jurisdictions, the term bank fraud applies to actions that employ a
scheme or artifice, as opposed to bank robbery or theft. For this reason, bank fraud
is sometimes considered a white-collar crime.
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2.8 FRAUDS-PREVENTION AND DETECTION
A close study of any fraud in bank reveals many common basic features. There
may have been negligence or dishonesty at some stage, on part of one or more of
the bank employees. One of them may have colluded with the borrower. The bank
official may have been putting up with the borrower's sharp practices for a personal
gain. The proper care which was expected of the staff, as custodians of banks
interest may not have been taken. The bank's rules and procedures laid down in the
Manual instructions and the circulars may not have been observed or may have
been deliberately ignored.
Bank frauds are the failure of the banker. It does not mean that the external frauds
do not defraud banks. But if the banker is upright and knows his job, the task of
defrauder will become extremely difficult, if not possible.
2.8.1 Detection of Frauds
Despite all care and vigilance there may still be some frauds, though their number,
periodicity and intensity may be considerably reduced. The following procedure
would be very helpful if taken into consideration:
1. All relevant data-papers, documents etc. Should be promptly collected. Original
vouchers or other papers forming the basis of the investigation should be kept
under lock and key.
2. All persons in the bank who may be knowing something about the time, place a
modus operandi of the fraud should be examined and their statements should be
recorded.
3. The probable order of events should thereafter be reconstructed by the officer, in
his own mind.
4. It is advisable to keep the central office informed about the fraud and further
developments in regard thereto.
2.8.2 Classification of Frauds and Action Required by Banks
The Reserve Bank of India had set-up a high level committee in 1992 which was
headed by Mr. A. Ghosh, the then Dy. Governor Reserve Bank of India to inquire
Internet Banking –A Case Study
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into various aspects relating to frauds malpractice in banks. The committee had
noticed/observed three major causes for perpetration of fraud as given hereunder:
1. Laxity in observance of the laid down system and procedures by operational and
supervising staff.
2. Over confidence reposed in the clients who indulged in breach of trust.
3. Unscrupulous clients by taking advantages of the laxity in observance of
established, time tested safeguards also committed frauds.
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Chapter 3 Punjab National Bank
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3.1 Logic Of The Logo
Established in 1895 at Lahore, then undivided India, Punjab NationalBank (PNB)
has the distinction of being the first Indian bank to have been startedsolely with
Indian capital. The bank was nationalized in July 1969 along with 13other banks.
From its modest beginning, the bank has grown in size and stature tobecome a
front-line banking institution in India at present. It has more than 4000branches
and over 400 extension counters. Strong correspondent bankingrelationship, which
it maintains with over 200 leading international banks all overthe world, enhances
its capabilities to handle transactions worldwide. More than50 renowned
international banks maintain their Rupee Accounts with PNB.
With its presence virtually in all the important centers of the country, PNB offersa
wide variety
of banking services which include corporate and personal banking,industrial
finance, agricultural finance, financing of trade and internationalbanking. The large
presence and vast resource base have helped the bank to buildstrong links with
trade and industry. At the same time, the bank has beenconscious of its social
responsibilities by financing agriculture and allied activitiesand small-scale
industries.
The bank is committed to maintaining the highest standards of service and will be
covering more offices under this quality movement titled 'Alliance with Quality'
3.2 Introduction of Punjab National Bank
Established in 1895 at Lahore, undivided India, Punjab National Bank (PNB) has
the distinction of being the first Indian bank to have been started solely with Indian
capital. The bank was nationalized in July 1969 along with 13 other banks. From
its modest beginning, the bank has grown in size and stature to become a front-line
banking institution in India at present.
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A professionally managed bank with a successful track record of over 110 years.
Largest branch network in India - 4525 Offices including 432 Extension Counters
spread throughout the country.
Strategic business area covers the large Indo-Gangetic belt and the metropolitan
centers
Ranked as 248th biggest bank in the world by Bankers Almanac, London.
Strong correspondent banking relationships with more than 217 international banks
of the world.
More than 50 renowned international banks maintain their Rupee Accounts with
PNB.
Well equipped dealing rooms; 20 different foreign currency accounts are
maintained at major centers all over the globe.
With over 38 million satisfied customers and 4668 offices, PNB has continued to
retain its leadership position among the nationalized banks. The bank enjoys strong
fundamentals, large franchise value and good brand image. Besides being ranked
as one of India's top service brands, PNB has remained fully committed to its
guiding principles of sound and prudent banking. Apart from offering banking
products, the bank has also entered the credit card & debit card business; bullion
business; life and non-life insurance business; Gold coins & asset
management business, etc.
Since its humble beginning in 1895 with the distinction of being the first Indian
bank to have been started with Indian capital, PNB has achieved significant growth
in business which at the end of March 2009 amounted to Rs 3,64,463 crore. Today,
with assets of more than Rs 2,46,900 crore, PNB is ranked as the 3rd largest bank
in the country (after SBI and ICICI Bank) and has the 2nd largest network of
branches (4668 including 238 extension counters and 3 overseas offices).
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PNB has always looked at technology as a key facilitator to provide better
customer service and ensured that its ‘IT strategy’ follows the ‘Business strategy’
so as to arrive at “Best Fit”. The bank has made rapid strides in this direction.
Along with the achievement of 100% branch computerization, one of the major
achievements of the Bank is covering all the branches of the Bank under Core
Banking Solution (CBS), thus covering 100% of its business and providing
‘Anytime Anywhere’ banking facility to all customers including customers of
more than 2000 rural branches. The bank has also been offering Internet banking
services to the customers of CBS branches like booking of tickets, payment of bills
of utilities, purchase of airline tickets etc. Towards developing a cost effective
alternative channels of delivery, the bank with more than 2150 ATMs has the
largest ATM network amongst Nationalized Banks.
With the help of advanced technology, the Bank has been a frontrunner in the
industry so far as the initiatives for Financial Inclusion is concerned. With its
policy of inclusive growth in the Indo-Gangetic belt, the Bank’s mission is
“Banking for Unbanked”. The Bank has launched a drive for biometric smart card
based technology enabled Financial Inclusion with the help of Business
Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile
customer to provide cost effective and transparent services. The Bank has started
several innovative initiatives for marginal groups like rickshaw pullers, vegetable
vendors, diary farmers, construction workers, etc. The Bank has already achieved
100% financial inclusion in 21,408 villages.
Backed by strong domestic performance, the bank is planning to realize its global
aspirations. In order to increase its international presence, the Bank continues its
selective foray in international markets with presence in Hong Kong, Dubai,
Kazakhstan, UK, Shanghai, Singapore, Kabul and Norway. A second branch in
Hong Kong at Kowloon was opened in the first week of April’09. Bank is also in
the process of establishing its presence in China, Bhutan, DIFC Dubai, Canada and
Singapore. The bank also has a joint venture with Everest Bank Ltd. (EBL), Nepal.
Under the long term vision, Bank proposes to start its operation in Fiji Island,
Australia and Indonesia. Bank continues with its goal to become a household brand
with global expertise.
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Amongst Top 1000 Banks in the World, ‘The Banker’ listed PNB at 250th place.
Further, PNB is at the 1166th position among 48 Indian firms making it to a list of
the world’s biggest companies compiled by the US magazine‘Forbes’.
3.3 Punjab National Bank Internet Banking
Punjab National Bank Internet Banking is one of the most convenient services
offered by the bank to its retail as well as corporate customers. A large number of
customers can manage their funds and account more effectively and efficient by
getting the online banking services offered by PNB Bank. In order to enjoy net
banking facilities, customers are required to have an account in one of the net
banking branches of the bank. Then as a customer, you are required to register for
internet banking services by submitting an application form at the bank branch.
After submitting the application form, the user ID and the password will be
delivered to the address provided in the application form.
3.4 PNB Internet Banking Services
The representatives of the bank will call upon the applicants to collect their user -
ID and password to make first time login to http://netpnb.com/index.html. As soon
as a user login to the net banking site, he or she is advised to change the user ID
and the passwords with some other login ID and passwords that no one knows
other than the customer himself. To make online login, visit the login page and
choose the options corporate user or retail user and provide the user ID and
password. The following are some of the convenient services made available by
PNB net banking facility;
3.4.1 Bank account related services
Balance enquiry
Online details
Account details
Online account statement
Internet Banking –A Case Study
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3.4.2 Make Requests online
Make online fund transfer between CBS accounts
Send upto 17 different request to Relationship Manager of the bank branch
Change your password if you fear that someone may have known it
Enjoy fast and safe payment options or air tickets, phone bill payments, etc.
PNB internet banking application form is available on the official website of the
bank and one can download it free of cost. The bank protects its online banking
activities and important information of the customers with 128-bit Secure Socket
Layer encryption technology. However, it is essential for the customers to follow
some simple tips in order to maintain more security.
3.5 Core Banking
Core means "Basic", hence the basic services provided by the inter-networked
branches of bank is called "Core Banking". Core Banking is normally defined as
the business conducted by a banking institution with its retail and small business
customers. Many banks treat the retail customers as their core banking customers,
and have a separate line of business to manage small businesses. Larger businesses
are managed via the Corporate Banking division of the institution. Core banking
basically is depositing and lending of money.
Nowadays, most banks use core banking applications to support their operations
where CORE stands for "Centralized Online Real-time Exchange". This basically
means that all the bank's branches access applications from centralized datacenters.
This means that the deposits made are reflected immediately on the bank's servers
and the customer can withdraw the deposited money from any of the bank's
branches throughout the world. These applications now also have the capability to
address the needs of corporate customers, providing a comprehensive banking
solution. A few decades ago it used to take at least a day for a transaction to reflect
in the account because each branch had their local servers, and the data from the
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server in each branch was sent in a batch to the servers in the datacenter only at the
end of the day (EoD).
Normal core banking functions will include deposit accounts, loans, mortgages and
payments. Banks make these services available across multiple channels
like ATMs, Internet banking, and branches.
3.6 Core Banking Solutions In Punjab National Bank.
Computerization first started in PNB among the nationalized public sector banks. It
is divided in two parts:
Transactions: uses Finnacle software of Infosys
For transactional purpose most banks use software like Finnacle made by Infosys
as it is more convenient & user friendly from the perspective of customers & staff
members.
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3.7 Services offered by CBS in PNB
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3.7.1 Electronic Clearing Service (ECS)
3.7.1.1ECS – Credit
Is a medium of payment whereby an organization wanting to pay interest,
dividend, salary, pension etc. to a large no. of beneficiaries, can make payment
electronically instead of issuing paper instruments. In this scheme while the
companies have not to print and dispatch paper instruments, reconciliation is easier
for the paying bank.
3.7.1.2 ECS- Debit
ECS Debit is the medium that helps organizations to collect the proceeds of bills,
premium, installments on due date based on mandates received from the users of
their services.
To avail this service a customer has to prepare the payment data and submit it to
the Sponsor bank on magnetic media. The sponsor bank presents the data to local
Banker" clearing house (managed by RBI and SBI) authorizing the clearing house
to debit the sponsor bank's account and credit the accounts of destination banks
where the beneficiaries of transactions maintain their accounts.
The clearing house furnishes the service branches of destination banks, the details
relating to the transactions, which in turn pass on the authorization to concerned
branches of their banks for credit of the amount to the beneficiary's account.
The maximum ceiling amount of Rs.2 crore per transactions fixed earlier by RBI
removed by RBI as per Policy dated Oct 26, 2004.
3.7.1.3 Service Charges
A) ECS: CREDIT CLEARING: Charges (per data entry/record)
SPONSOR BANK: Minimum charges Rs.2000/- + charges payable to RBI
and Destination Bank, if any.
a) Upto 10000 records @Rs.5/- per record + charges payable to RBI and
Destination Bank, if any
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b) Above 10000 to 100000 records @Rs.3/- per record + charges payable to
RBI and destination Bank, if any. (Subject to a minimum of
Rs.50,000/-).
c) Above 100000 records @Rs.2/- per record + charges payable to RBI and
Destination
Bank, if any. (Subject to a minimum of Rs. 300000/-)
B) ECS: Debit Clearing ( Inclusive of service Tax and Education Cess)
ECS: Debit Clearing: Rs.3/- per transaction charges Minimum charges Rs.2000/- +
charges payable to RBI and destination Bank, if any. SUBJECT TO RECOVERY
OF ALL OUT OF POCKET EXPENSES INCLUDING
PROCESSING CHARGES IN CASE THEY ARE EVER AGAIN LEVIED BY
RESERVE BANK OF INDIA.
C) A sum of Rs.100/- be levied as returning charges on return of ECS (Debit) on
account of Insufficient
Funds
PNB INSTA-REMIT: NOTWITHSTANDING ANYTHING CONTAINED IN
ANY OTHER CIRCULAR, FOLLOWING
SERVICE CHARGES WOULD BE LEVIED FOR TRANSFER OF FUNDS
THROUGH:
REAL TIME GROSS SETTLEMENT (RTGS)
NATIONAL ELECTRONIC FUND TRANSFER(NEFT)
STRUCTURED FINANCIAL MESSAGING SYSTEM (SFMS)
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RBI charges, if any prescribed, shall be recoverable in all the following:
CATEGORY OF
TRANSACTION
Amount of
transaction
Charges ( Inclusive of
Service Tax &
Education Cess)
A Customer Related RTGS
Transactions
Re.1 to Rs.5 lac
Above Rs.5 lac
Rs.27.50 per transaction
Rs.55/- per transaction
B Inter Banks for clearing
purposes
Only
Re.1 to Rs.5 lac
Above Rs.5 lac
Rs.27.50 per transaction
Rs.55/- per transaction
C RTGS: Inward Remittances: Free
SERVICE charges for NEFT
CATEGORY OF
TRANSACTION
Amount of
transaction
Charges ( Inclusive of
Service Tax &
Education Cess)
D OUTWARD NEFT/SFMS-
FOR
CUSTOMER RELATED
TRANSACTIONS:
Upto Rs.1 lac
Above Rs.1 lac
Rs.5/- per transaction
Rs.27.50 per transaction
E Inward :NEFT Free
If handling of cash is involved, cash handling charges would be levied @ 30%
extra of normal
charges.
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3.7.2 Automated Teller Machine (ATM)
The ATM was one of the earliest core banking services, being introduced in the
mid 1970’s. It provided customers with the ability to withdraw or deposit funds,
check account balances, transfer funds and check statement information. As is the
case with any new technology, it took some time before customers became familiar
with the ATM and came to accept it as an alternative way of doing their banking.
ATMs are electronic machines which are operated by a customer himself to
deposit or withdraw cash. It can also be used to deposit cheques, getting balance
information, getting account statement for limited entries, payment of bills, transfer
of funds, etc. ATMs can be interior (ie located in the branch premises) or exterior
(located outside the branch premises such as in a shopping center, airport, railway
station, etc.)
3.7.2.1 Operation:
For using an ATM, a customer requires an ATM card which is a plastic card
magnetically coded & read by the machine. To use an ATM, the customer has to
insert the card in the machine & quote his PIN (Personal Identification Number).
After establishing the authentication of the customer, the ATM permits a customer
to make entries & after processing the transaction, the machine performs the
desired function. On completion of the transaction, the customer’s card is ejected.
3.7.2.2 Security:
In order to provide proper security, the ATMs are provided access locks covering
key board, monitor etc. that could be opened with the help of ATM card.
3.7.3 Personal Identification Number (PIN)
These are secret numbers used for internet banking or written on the plastic money
cards (say a debit card) with magnetic means & on insertion of the card into an
ATM, the machine enquires about PIN. The machine allows the operation only on
typing the correct PIN & it does not permit operation, in case the PIN is incorrect.
These code numbers should be kept secret without disclosing to anyone else, to
avoid misuse. PIN is similar to a password that a computer user has to quote for
operating a computer. It is randomly generated sequence of digits printed on paper
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& is automatically folded & sealed before it reaches the bank. The seal is required
to be opened by the card holder only & has to be kept secret.
In addition to normal PIN used as a password by the card holder, the PINS facility
could include dynamic signature verification, finger print verification, voice
recognition system, hand geometry, retinal pattern verification, vein recognition,
visual recognition.
A virtual keyboard used for entering PIN during an online transaction.
3.7.4 Charges related to ATM Cards
Sr.
No.
Particulars of Charges Charges
1 ATM/ Debit Card issue charges Free
2 ATM/ Debit Card (including Add on Cards) annual fee on
completion of one year and thereafter to be charged on
yearly
basis.
Rs. 100/-
3 Charges for issue of Add on card Rs. 50/-
per card
4 Charges for issue of duplicate PIN (However, if the card has
not
been used even once due to error in printing of PIN, issue of
duplicate PIN shall be free)
Rs. 25/-
5 Charges for issue of duplicate ATM/Debit card/
Replacement of
ATM/Debit card
Rs. 100/-
6 Issue of ATM/Debit card with photograph of the cardholder Rs. 25/-
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3.7.5 Plastic Cards (PLASTIC MONEY)
Plastic cards are used as a medium of payment & are of different kinds with
different features. These cards include:
Credit Card.
Debit Card.
Smart Card.
3.7.5.1 Credit Cards
Being an instrument of payment, the card holder can obtain either goods or
services from merchant establishments (called Point of Sale) without prior
payment, where such arrangements exist. At the time of purchase, charge slip is
prepared on the basis of which payment is claimed from the card issuer bank. The
amount is payable by the card holder to the issuer bank during a specified period.
3.7.5.2 Different types of Smart Cards
Stored value card: These are also known as pre-paid cards or value added cards.
Cards have magnetic stripe or a computer chip in which value is stored. On use of
card, funds are directly debited from the card.
3.7.5.3 Magnetic stripe card:
Conventional cards like ATM card, credit card are all magnetic stripe cards. But
smart card in the form of magnetic stripe card can store much more information
3.7.5.4 Re-loadable cards:
These are the cards where the value is replenished once it is used
3.7.5.5 Disposal cards:
These cards have specific value and once the value is used, these are discarded.
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3.7.5.6 Closed cards:
These are the cards the value of which can be used for a specified purpose like
phone cards.
3.7.5.7 Open Cards:
These can be used for several issuers and called electronic purse or electronic
wallet.
3.7.5.8 Electronic purse:
The electronic cards have the provision for use of different types of accounts of the
user. This facility is known as electronic pulse each having storage of separate
amount. It provides a new method of payment which permits the bank to enter into
transaction market complementary to the credit or debit card transaction market.
The cash in electronic purse cannot be spent if the purse if reported as lost.
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3.8 ELECTRONIC CASH
The card holder can load the funds into a card for use in the form of cash that could
be used for meeting various kinds of requirements after authorization through PIN.
3.8.1 Cheque Truncation
In cheque truncation, the physical flow of cheque is stopped at some point. In place
of the physical cheque, the image of the cheque moves.
In this process, once a cheque enters the banking system, its electronic image is
obtained and the physical cheque is stored at some point of time, may be the
collecting branch where the customer deposits the cheque or collecting link branch
(branch connected to the clearing house) and the processing of the cheque is done
on the basis of electronic image i.e. paying bank makes payment on the basis of
electronic image.
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Truncation can be done by using the MICR data or by use of the image processing.
3.8.2 Electronic Cheques
When a cheque is issued in electronic form instead of its normal physical form by
use of digital signature, it is called electronic cheque. It contains exact mirror
image of the paper cheque and is generated, written and signed in a secured system
by ensuring the minimum safety standards with the use of digital signature (with or
without biometrics signatures and asymmetric crypto system). Electronic cheque is
also a valid like a paper cheque, u/s 6 of Negotiable Instrument Act (as per 2002
amendment to NI Act).
For the time being, the Information Technology Act 1999 is applicable to cheques
only and not other negotiable instruments such as Bill of Exchange and promissory
notes.
3.8.3 Faster remittance services
Electronic Funds Transfer (EFT) has accelerated the movement of funds across the
globe. E-Cash or Cyber-Cash plays a predominant role in world commerce. Such
electronic funds movements amounting to a few trillion dollars are settled on a
daily basis at major international financial centers. Society for Worldwide Inter-
bank Financial Telecommunication (SWIFT) is a classic example of EFT among
banks with its own standards for messages, which ensures speed reliability,
security and accuracy. If large banks in India create such infrastructure for their
branches in India, this will lead to more efficient use of funds and contribute to
excellence in customer service in remittance and collection.
3.9 National Electronic Fund Transfer
In PNB NEFT Transactions are meant for public ie individual customers only.
There is no amount limit.
RBI's EFT system is result of the Shere Committee recommendations. EFT has
been defined as the series of transactions beginning with the Remitter's payment
order to the remitting branch made for the purpose of making payment to the
beneficiary. The EFT is completed when the remitting branch receives an
acknowledgement from the destination branch which indicates payment having
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been made to the beneficiary or a refund made by the destination branch due to
failure to make payment to the beneficiary for any of the valid reasons of non-
payment
It has been introduced by RBI to help banks offering their customers, money
transfer service from one account of a bank branch to another account of any bank
(including same bank's) branch, both inter-city and intra-city. The system is an
improvement over the existing system of demand draft, mail-transfers etc. as funds
are transferred on day2.
Under the scheme, the account of the receiving bank with RBI is credited on Day-2
for all
remittances affected by remitting bank on Day-1, up to prescribed cut-off time
(3.30 pm). The receiving bank can credit beneficiary's account on Day-2. Each
bank has to identify a branch at the respective centre to act as link point for
transmission of outward message and receipt of inward message.
3.9.1 Procedure
Applicant provides particulars of beneficiary and authorizes his banks to remit.
Remitting branch sends duplicate of EFT | application to service/link branch, for
EFT data preparation.
Service branch prepares EF T data file in software of RBI and transmits the same
to local RBI office (National Clearing Cell) by 3.30 pm.
RBI consolidates all files so received, sorts transactions city-wise and transmits to |
destination RBI offices.
At destination centre, RB1 consolidates the files and sorts bank wise, which in turn
are transmitted to concerned bank on Day-1.
On Day-2 the receiving banks credit the beneficiary’s account.
Acknowledgement for receipt is sent on Day-3 along with confirmation for having
credited beneficiary’s account.
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3.9.2 Ceiling on amount :
The ceiling of Rs.2 crore removed by RBI (Oct 04)
Service charges Rs.25, to be shared between remitting bank, receiving bank and
RBI (Rs.10, Rs.10 and Rs.5)
Under the facility the beneficiary gets the funds credited to his account within 24
hours. The system was introduced during 1996. Currently the scheme is available
across the banks at 15 centers where RBI manages its clearing house the centers
are Ahmadabad, Bangalore, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur,
Kanpur, Kolkata, Mumbai, Nagpur, New Delhi, Patna and Thiruvananatapuram.
3.10 Cash Management Services Of PNB.
Punjab National Bank had taken a major initiative for managing the funds of
Corporates. The services are essentially meant for pooling your funds spread
across the country at a place of your choice with the least time delay, if not
instantaneously in many cases. We shall collect your receivables from your
representative or your business associates at more than 2700 CBS branches spread
across 935 centers all over the country and pool the same at the branch specified by
you. The services can be custom designed to cater to your specific needs.
The Scheme offers the following options for you:
Option I: Instant credit through our CMS to your account, pending clearance of
funds.
Option II: Credit to your account through our CMS after realizations.
Option III: You can choose Option I or II according to your client profile and
indicate to us client-wise.
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A host of Daily/weekly/monthly reports and special report including center-wise
reports generated at our HUB at Delhi, can be sent you through electronic media as
per requirements of your funds Managers.
The Bank offers the above services at most competitive rates. The charges for the
services are given as under:-
(Charges in paisa/Rs. 1000)
For Metro locations
(metropolitan cities)
25 paisa
For Non-metro locations
(state capitals & District HQs)
50 paisa
For Remote locations
(all other locations)
90 paisa
In case your turnover crosses certain assured level we offer attractive discounts on
the above charges ranging from 20% to over 76%. For example, if your annual
turnover of collection exceeds Rs. 250 crores at Chennai (a metro location), the
charges shall be just 06 paisa per 1000/-.
3.11 SWIFT.
The Society for Worldwide Inter-bank Financial Telecommunications (SWIFT)
was formed during 1973 with its headquarters at Brussels & started functioning in
May 1977. RBI, 27 Public Sector Banks & a number of other private sector banks
obtained its membership.
It provides rapid, reliable & cost-effective mode of transmitting the financial
message worldwide to more than 125000 offices of SWIFT members.
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SWIFT-II system had been launched by the society to bring improvement in the
SWIFT-I for catering to the high growth in messages. SWIFT provides 24 hour
facilities such as:
Transfer of messages relating to the fixed deposits,
Interest payment,
Debit-Credit card statements,
Foreign exchange, etc.
It bears the liability arising from loss or delay in delivery of messages assumes the
responsibility for proper functioning of the net work & its security. The delivery of
message to other than member branches is responsibility of the user.
3.11.1 Security in SWIFT.
It is taken care of through use of Key Authentication mechanism, Encryption, &
Checksum. It is responsibility of the Regional Processor (in India in Mumbai).
Major message types in SWIFT.
It includes;
Customer transfers & cheques,
Financial institutions’ transfers,
Financial trading,
Collection & cash letters,
Documentary Credits & guarantees,
Securities,
Traveller’s cheque,
Cash management, &
Customer status & supporting system messages.
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3.12 Real Time Gross Settlement System. (RTGS).
This is used as a mode of transactions for corporate & public i.e. Individual
customers. Its limit being 1 lakh and above.
The inter-bank fund transfer system in India can be classified into the
Batch Mode (Net)
Real Time Gross Settlement System. (RTGS).
In Batch Mode (Net), the transmission, processing & settlement is done for a set of
transactions (say cheque clearing or sale or purchase of securities) at a particular
point of time & the settlement on a pre-fixed interval of time (say at the end of the
day).
In Real Time Gross Settlement System. (RTGS) on other hand, the transmission,
processing & settlement of an instruction are done on a continuous basis.
World over, it is used for high value clearing involving inter-bank fund transfers &
treasury related transactions, helping in reducing settlement & systemic risk. In
India it has been implemented wef March 26, 2004 & its implementation places
India at par with the best practices in world in terms of payment systems.
3.13 What is RTGS?
RTGS is a centralized payment system in which, inter-bank payment instructions
are processed & settled, transaction by transaction (one by one) & continuously
(online) throughout the day, as & when the instructions are received & finally
accepted by the system. RTGS uses INFINET & SFMS platform.
3.14 Need for RTGS?
Under the existing system, the settlement of the individual payment takes place on
a net basis (i.e. Difference of payment to be received & payment to be made) &
that too at a designated time. This causes the system participants to be exposed to
the financial risks for the period during which settlement is deferred. Due to such
delays in settlement, a no. of capital market & money market frauds have taken
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place in India in recent years. Further, the existing payment system is capable to
meet the requirement of the 80s or 90s when the no. & volume of financial
transactions was limited. But, due to change in the economic perspective, its
linkage with the global economies & the role of information technology, need has
been felt for a more accurate, risk free, efficient & effective system. RTGS is an
internationally compatible & transparent system which could be used to the full
advantage of the existing client base without dispensing with the benefits already
available to customers.
3.15 Process of RTGS
In India, the RTGS has been implemented by RBI. It uses Y shaped structure out
of the 4 message flow structures (V, Y, L, and T). In this structure, the following
flow of instructions takes place;
1. Each bank is required to have a single gateway interface called Participant
Interface (PI) for RTGS system. The payment message originates from the
participant’s host system.
2. This message is passed on by the PI to Inter-bank Funds Transfer Processor
(IFTP) acting as broker. Communication between PI & IFTP is through
RTGS only.
3. IFTP stores the message & in case of payment message construct settlement
message containing a core subset of the info required for the settlement &
routed to the RTGS system at RBI.
4. After receipt of this subset, RBI (the settlement agent) carries the settlement
by debit & credit of the accounts of respective banks & conveys the status to
IFTP.
5. On receipt of this confirmation, IFTP reconstructs the message by adding
back other details & sends settlement advice to both the originating &
beneficiary participant. The business info is not known to the settlement
agent i.e. RBI.
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3.16 RTGS Business Day: It has 4 phases.
1 RTGS Open Phase – all normal transactions are accepted & processed.
2 IDL Shut Phase- All transactions are processed as in RTGS open phase but
no new IDL will be requests.
3 IDL closed Phase- Restrictions on fresh IDl continues. No transaction which
debits a member with an outstanding IDL will be settled.
4 RTGS close phase—Transaction reversing outstanding IDL will only be
permitted. Outstanding multilateral net settlement Batch transactions for
settlement & MNSB return transaction are also permitted.
5
3.17 Present status of RTGS in India.
The system was launched on March 26, 2004 (on pilot basis by involving 4 banks)
by RBI for large value transactions for banks & their client. Majority of the banks
have already joined the system. Nearly 3000 bank branches across 275 cities/
towns in India are expected to go live on this online fund transfer system.
3.18 Structured Financial Messaging System (SFMS)
SFMS is an Electronic Data Interchange (EDI) system (like SWIFT) that permits
the exchange of structured messages (prepared according to the published
standards of Working Group on INFINET).
The system consists of 4 main elements:
Hub – that switches inter-bank message from sending bank’s gateway to receiving
bank’s gateway.
Bank gateway— that switches intra-bank message from one branch server to
another branch server & also out messages.
Branch serve— that receives & sends branch messages using online thin clients.
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SFMS security— it uses X.509 Digital signatures for access control &
authentication of messages. The outgoing messages are encrypted with the
receiving node’s public key for protection of confidentiality of messages in transit.
3.19 Automated Teller Machine (ATM)
The ATM was one of the earliest core banking services, being introduced in the
mid 1970’s. It provided customers with the ability to withdraw or deposit funds,
check account balances, transfer funds and check statement information. As is the
case with any new technology, it took some time before customers became familiar
with the ATM and came to accept it as an alternative way of doing their banking.
ATMs are electronic machines which are operated by a customer himself to
deposit or withdraw cash. It can also be used to deposit cheques, getting balance
information, getting account statement for limited entries, payment of bills, transfer
of funds, etc. ATMs can be interior (ie located in the branch premises) or exterior
(located outside the branch premises such as in a shopping center, airport, railway
station, etc.)
3.19.1 Operation:
For using an ATM, a customer requires an ATM card which is a plastic card
magnetically coded & read by the machine. To use an ATM, the customer has to
insert the card in the machine & quote his PIN (Personal Identification Number).
After establishing the authentication of the customer, the ATM permits a customer
to make entries & after processing the transaction, the machine performs the
desired function. On completion of the transaction, the customer’s card is ejected.
3.19.2 Security:
In order to provide proper security, the ATMs are provided access locks covering
key board, monitor etc. that could be opened with the help of ATM card.
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3.19.3 Advantage.
Quick & efficient services.
Provision for uninterrupted services for all days of the week & on any time
(24*7*365).
Any place availability to the customer of the bank amounting to anywhere
banking.
Extended working hours.
Helps in utilizing human resources in more productive functions by taking
over the routine payment functions.
ATMs provide round the clock service with ease & privacy of operations.
It reduces pressure on bank staff & avoids congestion in the bank premises.
3.20 Prepaid PNB World Travel Card
Punjab National Bank has introduce a new product, a Prepaid PNB World Travel
Card. This card is available to for US $, British ₤ and the Euro. This card does
away with the need for carrying Traveler Cheques and Currency. It has several
major advantages over other types of cards.
1. Your exposure to foreign currency is decided on the day the card is issued/
topped up and therefore you are protected against future currency fluctuations in
the currency of issue.
2. You do not need to look around for money changers and pay their transaction
charges in a foreign country.
3. In case of loss of card, you can immediately get it deactivated.
4. In the unlikely event of loss & subsequent misuse of your card, we are
insuring loss up to USD 5000.
5. PNB customers can access their card account on line to check balance,
spending etc.
6. The unspent balance can be surrendered.
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7. Your card can be reloaded for any number of times within your entitlement.
8. We also have a 24x7 call centre to provide information and hot listing of the
card in case of loss.
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3.21 CBS Products
.
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3.21.1 Mobile Banking
Mobile banking (also known as M-Banking, m-banking, SMS Banking etc.) is a
term used for performing balance checks, account transactions, payments etc. via a
mobile device such as a mobile phone. Mobile banking today (2007) is most often
performed via SMS or the Mobile Internet but can also use special programs called
clients downloaded to the mobile device.
A mobile banking conceptual model
In one academic model, mobile banking is defined as:
"Mobile Banking refers to provision and availment of banking- and financial
services with the help of mobile telecommunication devices. The scope of offered
services may include facilities to conduct bank and stock market transactions, to
administer accounts and to access customized information."
According to this model Mobile Banking can be said to consist of three inter-
related concepts:
Mobile Accounting
Mobile Brokerage
Mobile Financial Information Services
Most services in the categories designated Accounting and Brokerage are
transaction-based. The non-transaction-based services of an informational nature
are however essential for conducting transactions - for instance, balance inquiries
might be needed before committing a money remittance. The accounting and
brokerage services are therefore offered invariably in combination with
information services. Information services, on the other hand, may be offered as an
independent module.
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3.21.2 Challenges for a Mobile Banking Solution
Key challenges in developing a sophisticated mobile banking application are:
3.21.2.1 Handset operability
There are a large number of different mobile phone devices and it is a big
challenge for banks to offer mobile banking solution on any type of device. Some
of these devices support J2ME and others support WAP browser or only SMS.
Initial interoperability issues however have been localized, with countries like
India using portals like R-World to enable the limitations of low end java based
phones, while focus on areas such as South Africa have defaulted to the USSD as a
basis of communication achievable with any phone.
The desire for interoperability is largely dependent on the banks themselves, where
installed applications (Java based or native) provide better security, are easier to
use and allow development of more complex capabilities similar to those of
internet banking while SMS can provide the basics but becomes difficult to operate
with more complex transactions.
There is a myth that there is a challenge of interoperability between mobile
banking applications due to perceived lack of common technology standards for
mobile banking. In practice it is too early in the service lifecycle for
interoperability to be addressed within an individual country, as very few countries
have more than one mobile banking service provider. In practice, banking
interfaces are well defined and money movements between banks follow the IS0-
8583 standard. As mobile banking matures, money movements between service
providers will naturally adopt the same standards as in the banking world.
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3.21.2.2 Security
Security of financial transactions, being executed from some remote location and
transmission of financial information over the air, are the most complicated
challenges that need to be addressed jointly by mobile application developers,
wireless network service providers and the banks' IT departments.
The following aspects need to be addressed to offer a secure infrastructure for
financial transaction over wireless network:
Physical part of the hand-held device. If the bank is offering smart-card based
security, the physical security of the device is more important.
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Security of any thick-client application running on the device. In case the device is
stolen, the hacker should require at least an ID/Password to access the application.
Authentication of the device with service provider before initiating a transaction.
This would ensure that unauthorized devices are not connected to perform financial
transactions.
User ID / Password authentication of bank’s customer.
Encryption of the data being transmitted over the air.
Encryption of the data that will be stored in device for later / off-line analysis by
the customer.
3.21.2.3 Scalability & Reliability
Another challenge for the CIOs and CTOs of the banks is to scale-up the mobile
banking infrastructure to handle exponential growth of the customer base. With
mobile banking, the customer may be sitting in any part of the world (true anytime,
anywhere banking) and hence banks need to ensure that the systems are up and
running in a true 24 x 7 fashion. As customers will find mobile banking more and
more useful, their expectations from the solution will increase. Banks unable to
meet the performance and reliability expectations may lose customer confidence.
There are systems such as Mobile Transaction Platform which allow quick and
secure mobile enabling of various banking services. Recently in India there has
been a phenomenal growth in the use of Mobile Banking applications, with leading
banks adopting Mobile Transaction Platform and the Central Bank publishing
guidelines for mobile banking operations.
3.21.2.4 Application distribution
Due to the nature of the connectivity between bank and its customers, it would be
impractical to expect customers to regularly visit banks or connect to a web site for
regular upgrade of their mobile banking application. It will be expected that the
mobile application itself check the upgrades and updates and download necessary
patches (so called "Over The Air" updates). However, there could be many issues
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to implement this approach such as upgrade / synchronization of other dependent
components.
3.21.2.5 Personalization
It would be expected from the mobile application to support personalization such
as:
Preferred Language
Date / Time format
Amount format
Default transactions
Standard Beneficiary list
Alerts
SMS banking
SMS banking is a technology-enabled service permitting banks to operate selected
banking services over the customers' mobile phone using SMS messaging.
SMS banking services are operated using both Push and Pull messages. Push
messages are those that the bank chooses to send out to a customer's mobile phone,
without the customer initiating a request for the information. Typically push
messages could be either Mobile Marketing messages or messages alerting to an
event which happens in the customer's bank account, such as a large withdrawal of
funds from the ATM or a large payment using the customer's credit card, etc.
Another type of push message is a One-time password.
Pull messages are those that are initiated by the customer, using a mobile phone,
for obtaining information or performing a transaction in the bank account.
Examples of pull messages for information include an account balance enquiry or
requests for current information like currency exchange rates and deposit interest
rates.
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The bank’s customer is empowered with the capability to select the list of activities
(or alerts), that he/she needs to be informed. This functionality to choose activities
can be done either by integrating to the Internet Banking channel or through the
bank’s customer service call centre.
3.22 INTERNET BANKING.
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Online banking or e-banking can be defined as online systems which allow
customers to plug into a host of banking services from a personal computer by
connecting with the bank’s computer over the telephone wires. Technology
continues to make online banking easier for the average consumer. Banks are using
a variety of names for online banking services, such as PC banking, home banking,
electronic banking or Internet banking. Regardless of the given name, these
systems certainly offer specific advantages over the traditional banking methods.
E- Banking can be defined as “delivery of bank’s services to a customer at his
office or home using Electronic Technology.” The quality, range and price of these
electronic services decide a bank’s competitive position in the industry.
Technology in banking has been used in four major ways:
To handle a greatly expanded customer base
To reduce substantially the real; cost of handling payments
To liberate the banks from the traditional constraints on time and place
To introduce new products and services.
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3.23 Home Banking:
Under home banking the customer is served at his residence and there is no need
for the customer to visit the bank’s premises for a number of routine transactions.
If the customer needs some information the same can be got by contacting the bank
over the phone as described in the telebanking.
If the customer wants to put through transaction and wishes to see his account or to
get a statement of his account, he may have to use a PC.
This type of facility is available with a town, city or metropolitan area.
Under such a situation the customer should have a:
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PC
Modem
Telephone line
A compatible software for the home PC
The home banking service can be broadly classified under two groups, one without
using the information technology and another using information technology.
When customer contacts the bank o the phone no specific technology is involved
and the service of telebanking are provided to him.
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3.24 Impact of computer technology
Computer technology has impacted the banking system and its various constituents
(customer service, employees and services and products) in different manner as
under:
3.24.1 Impact on customer services.
Availability of 365 days and 24 hour banking services through ATMs, credit and
debit cards.
Networking of Branch-Banking to provide for anywhere Banking.
Client prepares a
Cheque
He goes to bank
Deposits the
Cheque in bank
Next day the
Money is transferred
Client logs on to
Bank’s web site
Keys in the user
Name & password
Gives instructions
Online
Money is transferred
Same day
EELLEECCTTRROONNIICC BBAANNKKIINNGG TTRRAADDIITTIIOONNAALL BBAANNKKIINNGG
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3.24.2 Impact on Employees.
Change in job content with more emphasis on new products, new services and
customer services
Enhanced productivity of the employee
Better working environment
Enhanced Job security for the employee due to better sustainability of the banking
system.
3.24.3 Impact on services.
Faster transactions
Availability of services for 24 hours
Improved quality of services with better features
Higher level of satisfaction to customers.
3.24.4 Impact on organizational structure and orientation.
Reduction in hierarchical tier systems and direct liaison between top management
and field functionaries.
Less dependence on middle tiers for data collection and MIS
Change in the outlook of top management as IT is seen as a functional requirement
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Chpater 4 Conclusion
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Internet Banking has become one of the important services which are provided by
bank. Many services provided by banks like SMS Banking, Online Payments etc
are preferred by the customers as they can do it at any place even sitting at home or
office etc.
Punjab National Bank has been providing Internet Banking Services Since 2002. It
provides all services such as Accounting Opening, Cheque Book Request, DD
Request, FD Breaking, FD Accounting, FD Renewal, Request Of NEFT,
Transaction Password Request, Request For RTGS, Request For Account
Statement etc.
They have a total number of ATM Network as on date 15th August 2010 3796 and
still growing. They are also equipped with Core Banking Solution. Bank provides
different services like Internet Baking, Home Banking, Mobile Banking etc. \
Bank also provide assistance to their customers regarding usage of Internet
Banking. They also educate them regarding Cyber Crime and Hacking. Bank
suggest customers to frequently change their password in order to prevent hacking
of their account.
Punjab National Bank is really old bank working since 1895.it has branch network
of 4525. More than 50 renowned banks keep their INR Account with Punjab
National Bank. With over 38 million satisfied customers and 4668 offices, PNB
has continued to retain its leadership position among the nationalized banks.
Apart from offering banking products, the bank has also entered the credit card &
debit card business; bullion business; life and non-life insurance business; Gold
coins & asset management business, etc.
PNB has always looked at technology as a key facilitator to provide better
customer service and ensured that its ‘IT strategy’ follows the ‘Business strategy’
so as to arrive at “Best Fit”. The bank has made rapid strides in this direction.
Along with the achievement of 100% branch computerization, one of the major
achievements of the Bank is covering all the branches of the Bank under Core
Banking Solution (CBS), thus covering 100% of its business and providing
‘Anytime Anywhere’ banking facility to all customers including customers of
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more than 2000 rural branches. The bank has also been offering Internet banking
services to the customers of CBS branches like booking of tickets, payment of bills
of utilities, purchase of airline tickets etc. Towards developing a cost effective
alternative channels of delivery, the bank with 3796 ATMs which is the largest
ATM network amongst Nationalized Banks.
With the help of advanced technology, the Bank has been a frontrunner in the
industry so far as the initiatives for Financial Inclusion is concerned. With its
policy of inclusive growth in the Indo-Gangetic belt, the Bank’s mission is
“Banking for Unbanked”. The Bank has launched a drive for biometric smart card
based technology enabled Financial Inclusion with the help of Business
Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile
customer to provide cost effective and transparent services.
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Bibliography
Books
Online Banking In India – A K Upal
Magazine
Indian Banker
Weblography
http://finance.indiamart.com/investment_in_india/punjab_national_bank.htm
l
www.pnbindia.com/
https://netbanking.netpnb.com/
www.pnbindia.in/PNB1063.pdf
www.wikepedia.org
www.netpnb.com
www.onlinebanksguide.com/punjab-national-bank/internet-banking.html
http://en.wikipedia.org/wiki/Banking_in_India#Post-independence
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Annexure
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Sample Questioner
1. When was Internet Banking introduced in Punjab National Bank?
2. Which services are provided through Internet Banking?
3. Is there any time limit for usage of Internet Banking?
4. After introduction of Internet Banking In Punjab National Bank have any
special training or special staff recruited?
5. Is Internet Banking service Chargeable?
6. Which type of customer prefers Internet Banking?
7. How does Bank educate their customers regarding Cyber Crime or
Hacking?
8. Is there any limit for customers regarding usage of Mobile
Banking?
9. Any special facility that Bank provides to its customer?
10. In which currency is this card available?
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