Synopsis Toc Banking Proj

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    INTRODUCTION

    E-banking is the wave of the future. It provides enormous benefits to

    consumers in terms of ease and cost of transactions, either through Internet,

    telephone or other electronic delivery. Electronic finance (Efinance) has

    become one of the most essential technological changes in the financial

    industry. E-finance as the provision of financial services and markets using

    electronic communication and computation. In practice, e-finance includes

    e-payment, e-trading, and e-banking.

    According to the definitions from the Bank for International Settlement

    (BIS-EBG, 2003b), e-payment creates considerable efficiencies and is

    superior to traditional paper based solution. E-trading is referred to as a wide

    variety of systems that provide electronic order routing, automated trade

    execution, and electronic dissemination of pre-trade and post-trade

    information. With the help of the e-trading systems, the transactions can be

    executed at a remote server and information can be conveyed to a remote

    location. And e-banking means the provision of retail and small value

    banking products and services through electronic channels and large value

    electronic payments and other wholesale banking services delivered

    electronically. Although clients have enjoyed great convenience of e-

    banking and bankers have improved cost efficiency of banks (Lin and Lin,

    2006, 2007), e-banking may lead to unstable financial environments. In

    other words, e-banking could make the financial markets less manageable by

    the regulators. Internetbanking refers to the deployment over the Internet of

    retail and wholesale banking services. It involves individual and corporate

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    TYPES OF E-BANKING

    Types of Internet Banking:

    Information: This is the most basic level of Internet banking. The bank has

    marketing information about its products and services on a stand-alone server.

    This level of Internet banking service can be provided by the bank itself or by

    sourcing it out. Since the server or Web site may be vulnerable to alteration,

    appropriate controls must therefore be in place to prevent unauthorized alterations

    to data in the server or web site.

    Communication: This type of Internet banking allows interaction between the

    banks systems and the customer. It may be limited to electronic mail, account

    inquiry, loan applications, or static file updates. The risk is higher with this

    configuration than with the earlier system and therefore appropriate controls need

    to be in place to prevent, monitor, and alert management of any unauthorized

    attempt to access banks internal network and computer systems. Under this

    system the client makes a request to which the bank subsequently responds.

    Transaction: Under this system of Internet banking customers are allowed to

    execute transactions. Relative to the information and communication types of

    Internet banking, this system possesses the highest level of risk architecture and

    must have the strongest controls. Customer transactions can include accessing

    accounts, paying bills, transferring funds, etc. These possibilities demand very

    stringent security.

    The six primary drivers of Internet banking includes, in order of primacy are:

    Improve customer access

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    Facilitate the offering of more services

    Increase customer loyalty

    Attract new customers

    Provide services offered by competitors

    Reduce customer attrition

    Impact of the Information and Technology Act, 2000:

    The information and technology act is an act to provide legal recognition for transactions

    carried out by means of electronic data interchange and other means of electronic

    communication commonly referred to as "electronic commerce".

    Reasons for adopting the online banking:

    The growth of online banking has been fuelled by broadband availability as well as secures

    connections over the Internet. Many banks now offer some form of online banking activity,

    whether it is checking bank balance, paying bills online or even simple cash transfer

    transactions. As customers gain more confidence in carrying out secure transactions over

    the Internet, vulnerabilities are present and can be exploited by cyber criminals to obtain a

    user's personal banking details. In one of the latest developments, FSecure, a leading

    security provider for Internet and mobile networks, has issued a warning against computer

    users of an upsurge in attacks against banking sites, targeting personal user data. It started

    with software that was capable of retrieving the data typed into the computer keyboard and

    then more complex mechanisms arrived on the scene such as Phishing1 and Pharming2. .

    1 Phishing typically involves fraudulent bulk e-mail messages that guide recipients to legitimate-lookingbut fake Web sites and try to get them to supply personal information like account passwords2 Pharming tampers with the domain-name server system so that traffic to a Web site is secretly redirectedto a different site altogether, even though the browser seems to be displaying the Web address you wanted

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    A new concept of cell phone banking has taken over the Indians. Basix, an organization

    that specializes in bringing micro loans and other financial services to India's poor, has

    teamed up with Axis, an Indian commercial bank, to begin offering accounts to workers in

    Delhi's slums. Its approach relies on a combination of high technology and old-fashioned

    shoe leather.

    The main risk of online banking is the security concerns. For this the IT Act has a

    provision, Section 3(2) which, provides for a particular asymmetric crypto system and

    function as a means of authenticating electronic record. Any other method used by banks

    for authentication should be recognized as a source of legal risk.

    The provisions for the offences committed:

    Under the chapter IX Section 43, the punishments for the offences so caused are defined.

    By this act under chapter X, Section 48 defines the establishment of a cyber appellate

    tribunal. But there is one fundamental difficulty in punishing the cyber criminals. It is the

    matter of jurisdiction. This is because any person who possesses a computer and an internet

    can commit this crime and it is practically impossible to trace the person out. Even if the

    person can be traced, there is no geographical border to bring him under the jurisdiction of

    a particular country. However the banking regulatory body, RBI has issued a guideline

    dated 14th June, 2001, which discusses issues pertaining to his territorial jurisdiction within

    which the internet banking products can be made available.

    Advantages of Internet Banking System:

    to visit.

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    The benefits of Internet banking are plentiful as witnessed by the consequential reaction of

    a tremendous rise in usage and application. The potential appears to be unlimited ranging

    from virtual banks to e-cash.

    Reduced Transaction Costs: It has been repeated shown that as a delivery or

    distribution channel, the Internet could bring a substantial cost advantage for banks. No

    doubt the ATM is considerably cheaper than a teller, but even so, the Internet is nearly

    3 times cheaper than the ATM usage. In short, replacing a teller with an Internet

    channel should in theory, show a 10 fold increase in the distribution revenue for the

    bank. This reason alone should be sufficient for banks to encourage this form of

    distribution channel.

    Perfect Information: Internet makes perfect information available to all market

    participants by bringing about efficiencies in the search process. For buyers of banking

    services, there are sites that aggregate information on product offerings from different

    providers at a single location. By merely making information available to customers

    about multiple providers, the Internet performs the function of dismantling the

    oligopoly of a few providers and bringing about a structure favorable towards perfect

    competition.

    Perfect Competition: This is achieved by two means. The first is through the

    aggregation of buyers and sellers and also through the provision of a search function

    platform. The second is by bringing about efficiency in determining price that is

    enabled by the online auction mechanism which makes pricing transparent and also

    makes it dynamic since it is driven by near perfect market conditions of demand and

    supply. Similarly, by creating competition among the providers of capital, the Internet

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    helps companies raise money at much finer spreads. Also banks using the Internet have

    pioneered the use of online auction to price Initial Public Offerings (IPOs). In this

    manner market forces are given greater prominence thus ensuring conditions for perfect

    or near perfect competition.

    Disadvantages of Internet Banking System:

    There are always two sides to a coin. Similarly Internet banking too has a bane side to it.

    The bane lies in its inexorable slide towards higher risk from various facets of bank

    operations. Risk is the potential that unexpected events may have an adverse impact on the

    banks earnings. Internet banking risks consists of risk associated with credit, interest rate,

    transaction, etc. These risks are not mutually exclusive but invariably all of these are

    associated with Internet banking.

    Credit Risk: Credit risk is the risk to earning and eventually capital, arising from a

    borrowers failure to meet the terms of a credit contract with the bank or otherwise to

    perform as agreed. It is found in all activities where success depends on counterparty,

    issuer, or borrower performance. It arises any time bank findings are extended,

    committed, invested, or otherwise exposed through actual or implied contractual

    agreements, whether on or off the banks balance sheet..

    Interest Rate Risk: Interest rate risk is the risk to earnings arising from

    movements in interest rates. From an economic perspective, a bank focuses on the

    sensitivity of the value of its assets, liabilities and revenues to changes in interest rates.

    Interest rate risk arises from differences between the timing of rate changes and the

    timing of cash flows (repricing risk); from changing rate relationships among different

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    yield curves affecting bank activities (basis risk); from changing rate relationships

    across the spectrum of maturities (yield curve risk); and from interest-related options

    embedded in bank products (options risk) (Comptrollers Handbook, 1999).

    Liquidity Risk: Liquidity risk is the uncertainty arising from a banks inability to

    meet its obligations when they are due, without incurring unacceptable losses. Liquidity

    risk includes the inability to manage unplanned changes in market conditions affecting

    the ability of the bank to liquidate assets quickly and with minimal loss in value.

    Transaction Risk: Transaction risk is the current and prospective risk to earnings

    and capital arising from fraud, error, the inability to deliver products or services, the

    failure to maintain a competitive position and services, and the inability to manage

    information properly. This 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 (Comptrollers Handbook, 1999). A high level of transaction risk

    may exist with Internet banking products, particularly if those lines of business are not

    adequately planned, implemented, and monitored.

    Total Reliability Risk: As with most other Internet ventures, an exclusive reliance

    on virtual channels is probably not a very wise move. A strategy of combining brick

    and mortar with click and avatar is probably more viable. There are transactions such as

    balance enquiry that are ideally suited for the Internet. But transactions such as working

    capital loan applications are more detailed and personal discussions may be necessary.

    In the latter, the absence of a physical channel is a problem.

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    Internet banking is on the rise. When viewed as another channel, its benefits are modest.

    However, when integrated with other channels, Internet banking becomes a powerful tool

    for improving customer satisfaction and increasing cross-selling opportunities. But at the

    same time banks must keep in mind that, every electronic channel including the Internet

    has its short falls which can have major consequences. Keeping track of the ever changing

    banking industry and the latest update in Internet technology, banks need to equip

    themselves for the competition. Even though there are enormous opportunities and virtual

    banks are on the rise brick and mortar banks and transactions should not be neglected or

    relegated to the sidelines.

    However, Indian internet banking faces following challenges3:

    Proper understanding of the customer - i.e. proper identification of their needs

    and wants. For this a massive survey must be undertaken may be in collaboration

    with other banks.

    There is need for transparency in offering services as customers awareness has

    grown considerably.

    Breach of privacy: online transactions enter straightaway into the records

    revealing the identity of customer. Thus black money cannot be transferred with

    ease.

    Bandwidth: Though companies claim to offer good speed and high bandwidth,

    still there are problems in accessing high speed on net. Internet banking can go

    high only on the wings of proper infrastructure comprising telecommunications and

    bandwidth.

    Computer literacy in India is still very low and that is a barrier in fast

    acceptance of Internet banking.

    3

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    The mindset of the Indian customer need to be changed.

    Customer has to be protected against being "net-jacked" i.e. he needs to be

    protected from fraud. Threats19 can be

    Cracking login and passwords is a common way of fiddling with the data.

    Denial of services: Directing millions of queries can block computer network.

    Data Diddling: Data can be modified in an unauthorized manner. A customer

    can therefore receive bills of higher amounts than the actual transactions

    Session hijacking: Hijackers become unauthorized intermediaries between the

    server and the client; they can then hijack the data and prevent it from reaching

    the destination.

    HISTORY OF E-BANKING

    In countries like Korea, two SIM Card is used in e-banking. One

    for the telephonic purpose and the other for banking. Bank account

    data is encrypted on a smart-card chip. About 3.3 million transactions

    were reported by Bank of Korea in 2004. In a move that will take thefrontiers of banking transactions beyond the ATM and internet, full-

    fledged banking transactions through e-banking have been

    introduced by ICICI Bank. The bank has now kicked off a e-banking

    service, where a customer can replicate all transactions through e-

    banking similar to an internet banking transaction. Till now,

    customers were only able to get all information like balance in the

    account and e-banking alerts through e-banking.

    The past few years have seen customers migrating from branch

    banking to a host of non-branch channels like ATMs, call centre and

    internet banking. In case of ICICI Bank, around 55% of the

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    transactions now happen through ATMs, 22% through the internet,

    12% through call centre and the remaining through branches.

    Incidentally, around five years ago, transactions through internet

    banking was a minuscule 2%. Through the new platform Mobile, allinternet banking transactions can now be done on e-banking.

    Customers can now transfer funds to ICICI Bank and non-ICICI Bank

    accounts, pay their utility bills and insurance premium and do a host

    of other operations. The application covers savings accounts, demat,

    credit card and loan accounts.

    According to ICICI Bank ED V Vaidyanathan said, the new

    service will help to give more power to the customer. They can now

    transact from practically anywhere. He expects the new service to see

    transactions of over 40% over a period of time.

    Both GPRS and non-GPRS customers would be able to use the

    service. Customers will be required to enter four-digit PIN to enter

    the e-banking application, which will prevent unauthorized use of the

    service.

    Currently, ICICI Bank has 13 million customers, Of which, there

    are 2.5-million active customers. It also has 7-million registered

    customers for SMS alerts. The bank currently sends around 20

    million alerts a month. Citi and HSBC have this service in other parts

    of the world. Some of these banks are now looking at launching these

    services here. Until now, e-banking services, which were provided by

    banks, have been SMS-enabled. Moreover, these were push-services

    like SMS alerts and balance enquiries. There have also been security

    http://economictimes.indiatimes.com/Forget_bank_visits_try_mobile_banking/rssarticleshow/2694156.cmshttp://economictimes.indiatimes.com/Forget_bank_visits_try_mobile_banking/rssarticleshow/2694156.cms
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    concerns plaguing the introduction of such services since the SMS

    route, through which the information travels, is totally unsecured.

    Aditya Menon, Chief IT officer of Obopay India a e-

    bankingpayments solutions company said many banks have been

    working on a mobile-payment solution. Obopay is working with six

    other banks to provide a service that will enable bank customers to

    transfer funds to anyone who has a e-bankingphone and a bank

    account. In fact, banks like Corporation Bank and Union Bank of

    India also have similar products in the pipeline.

    The first e-banking and payment initiative was announced

    during 1999. The first major deployment was made by a company

    called Pay box (largely supported financially by Deutsche Bank). The

    company was founded by two young German's (Mathias Entemann

    and Eckart Ortwein) and successfully deployed the solution in

    Germany, Austria, Sweden, Spain and the UK. At about 2003 more

    than a million people were registered on Pay box and the company

    was rated by Gartner as the leader in the field. Unfortunately

    Deutsche Bank withdraws their financial support and the company

    had to reorganize quickly. All but the operations in Austria closed

    down.

    Another early starter and also identified as a leader in the fieldwas a Spanish initiative (backed by BBVA and Telephonica), called

    Mobi Pago. The name was later changed to Mobi Pay and all banks

    and e-banking operators in Spain were invited to join. The product

    was launched in 2003 and many retailers were acquired to accept the

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    special USSD payment confirmation. Because of the complex

    shareholding and the constant political challenges of the different

    owners, the product never fulfilled the promise that it had. With no

    marketing support and no compelling reason for adoption, thisinitiative is floundering at the moment.

    Many other large players announced initiatives and ran pilots with

    big fanfare, but never showed traction and all initiatives were

    ultimately discontinued. Some of the early examples are the famous

    vending machines at the Helsinki airport supported by a system from

    Nokia. Siemens made announcements in conjunction with

    listed and high-flying German e-commerce company, Brocket.

    Brocket also won the lucrative Vodafone contract in 2002, but

    crashed soon afterwards when it runs out of funds. Israel (as can be

    expected) produced a large number of e-banking payment start-ups.

    Of the many, only one survived - Trivet. Others like Advantech and

    Patty disappeared after a number of pilots but without any successful

    production deployments.

    Initiatives in Norway, Sweden and France never got traction.

    France Telecom launched an ambitious product based on a special e-

    banking with an integrated card reader. The solution worked well, but

    never became popular because of the unattractive, special phone thatparticipants needed in order to perform these payments. Since 2004,

    e-banking and payment industry has come of age. Successful

    deployments with positive business cases and big strategic impact

    have been seen recently.

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    E- BANKING SERVICES:

    1. Bill payment service

    Each bank has tie-ups with various utility companies, service providers and

    insurance companies, across the country. It facilitates the payment of electricity

    and telephone bills, mobile phone, credit card and insurance premium bills.

    To pay bills, a simple one-time registration for each biller is to be completed.

    Standing instructions can be set, online to pay recurring bills, automatically. One-

    time standing instruction will ensure that bill payments do not get delayed due to

    lack of time. Most interestingly, the bank does not charge customers for online

    bill payment.

    2. Fund transfer

    Any amount can be transferred from one account to another of the same or any

    another bank. Customers can send money anywhere in India. Payees account

    number, his bank and the branch is needed to be mentioned after logging in the

    account. The transfer will take place in a day or so, whereas in a traditional

    method, it takes about three working days. ICICI Bank says that online billpayment service and fund transfer facility have been their most popular online

    services.

    3. Credit card customers

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    Credit card users have a lot in store. With Internet banking, customers can not

    only pay their credit card bills online but also get a loan on their cards. Not just

    this, they can also apply for an additional card, request a credit line increase and

    God forbid if you lose your credit card, you can report lost card online.

    4. Railway pass

    This is something that would interest all the aam janta. Indian Railways has tied

    up with ICICI bank and you can now make your railway pass for local trains

    online. The pass will be delivered to you at your doorstep. But the facility is

    limited to Mumbai, Thane, Nasik, Surat and Pune. The bank would just charge

    Rs 10 + 12.24 percent of service tax.

    5. Investing through Internet banking

    Opening a fixed deposit account cannot get easier than this. An FD can be

    opened online through funds transfer. Online banking can also be a great friend

    for lazy investors.

    Now investors with interlinked demat account and bank account can easily trade

    in the stock market and the amount will be automatically debited from their

    respective bank accounts and the shares will be credited in their demat account.

    Moreover, some banks even give the facility to purchase mutual funds directly

    from the online banking system.

    So it removes the worry about filling those big forms for mutual funds, they will

    now be just a few clicks away. Nowadays, most leading banks offer both online

    banking and demat account. However if the customer have there demat account

    with independent share brokers, then need to sign a special form, which will link

    your two accounts.

    6. Recharging your prepaid phone

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    Now there is no need to rush to the vendor to recharge the prepaid phone, every

    time the talk time runs out. Just top-up the prepaid mobile cards by logging in to

    Internet banking. By just selecting the operator's name, entering the mobile

    number and the amount for recharge, the phone is again back in action within

    few minutes.

    7. Shopping at your fingertips

    Leading banks have tie ups with various shopping websites. With a range of all

    kind of products, one can shop online and the payment is also made

    conveniently through the account. One can also buy railway and air tickets

    through Internet banking.

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    List of some banks operating E-Banking in India

    Bank Name Technology Vendor Service offering

    ABN AMRO Bank Infosys (Bank Away) NetBanking

    Abu Dhabi Commercial Bank Infosys (Bank Away) ADCB NetLink

    Bank of India I-flex BOIonline

    Citibank Orbitech (now Polaris) Citibank Online

    Corporation Bank I-flex CorpNet

    Deutsche Bank db direct

    Federal Bank Sanchez FedNet

    Global Trust Bank Infosys (BankAway) ibank@gtb

    HDFC Bank i-flex/ Satyam NetBanking

    HSBC Online@hsbc

    ICICI Bank Infosys, ICICI Infotech Infinity

    IDBI Bank Infosys (Bank Away) i-net banking

    IndusInd Bank CR2 IndusNet

    Punjab National Bank Infosys (Bank Away) Internet Banking

    Standard Chartered Bank In-House Me Standard Chartered Online

    State Bank of India Satyam/Broadvision onlinesbi.com

    UTI Bank Infosys (Bank Away) I connect

    mailto:ibank@gtbmailto:Online@hsbcmailto:ibank@gtbmailto:Online@hsbc
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    PROJECT SCOPE

    The projects aim is to automate the system,pre-checking the inclusion of all

    required material and automatically process the transactions used in a

    banking. The criterions which include over here is to creation of an account

    and its all respective perspectives. The data used by the system is stored in a

    database that will be the centre of all information held about the customer

    and the base for the remainder of the process after initial signing up been

    made. This enables things to be simplified and considerably quickened,making the jobs of the involved people easier. It supports the current

    process but centralizes it and makes it possible for decisions to be made

    earlier and easier way.

    The main goal of the system is to automate the process carried out in the

    bank with improved performance an realize the vision of paperless banking.

    some of the goals of the system are listed below:-

    Manage large number of customer details with ease.

    Manage all details of the student who are registered with the bank and send

    appropriate details about latest policy of the bank to each of its customer.

    Create customer account and maintain its data efficiently and effectively.

    View all the details of the customer.

    Create a statistical report to facilitate the finance department work.

    Activities like updating, modification, deletion of records should be easier.

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    OBJECTIVES OF THE

    PROPOSED SYSTEM

    The aim of the proposed system is to address the limitations of the

    current system .The requirements for the system has been gathered

    from the defects recorded in the past and also based on the feedback

    users of the previous metrics tools.

    Manual Process

    Inquires for an existing serviceor some specific information

    Customerphysically visits

    the bank

    The incharge clerk checks the

    specification and answers the

    query

    Associated and integrates the

    information as needed

    Leaves

    the

    bank

    Raises a request for new

    checkbook by filling in the

    prescribed form

    Customer

    physically visits

    the bank

    The incharge clerk accepts the

    request and prepares the

    cheque book with respect to

    given specification

    The cheque book is sent for

    manages initials

    Customer

    makes a

    counter sign

    and receives

    the checkbook

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    The development of the new system contains the following activities

    which try to automate theentire process keeping in view of the

    database integrationapproach. Following are the Objectives of the

    proposed system:

    1. The administrators have grates accessibility in collecting the consistent

    information that is very much necessary for the system to exist and coordinate.

    2. The system at any point of time can give the customers information related to their

    Accounts and accounts status

    The balance enquiry

    The fund transfer standards

    The cheque book request

    3. The system can provide information related to the different types of accounts that

    are existing within the bank.

    4. The system can provide the bank administration with information on the number of

    customers who are existing in the system.

    5. The system at any point of time can provide the information related to the executed

    transactions by the customer.

    6. The system with respect to the necessities can identify all the history details of the

    trial participants along with their outcome of the results.

    7. The system with respect to the necessities can provide the status of research and

    development process that is under schedule within the organization currently.

    8. With proper storage of the data in a relational environment the system can

    Applegate itself to cater to the standards of providing a clear and easy path for future

    research standards that may arise due to organizational policies.

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    FEASIBILITY STUDY

    A significant transformation in banking system has occurred in the world.The online system of banking and improvements has been made throughrecognizing difficulties encountered by the customer and the authority.Both qualitative and quantitative research, through parent/career surveys.Focus groups and staff training sessions have influenced the online process.As a result this had produced an efficient and user friendly system, thatrelies on an effective online form, but on the coordination between ban andits customer.A comprehensive feasibility study of social, economical and technicalaspects has also been made and implemented as below:-

    Social Feasibility It has simplified the banking procedure.

    Customers and banking authority had a huge acceptance to the notion.

    It had a good social impact and no objections or problems regardingthe project is found

    Economic Feasibility The project is economically Feasible since we are getting ample

    economic support required for the project from banking authorities.

    Technical Feasibility Minimum requirement for execution of the project is a java

    supporting operating system since the connection to the database willbe made using JSP and SERVLETS,minimum of 64 MB of RAM, adatabase software, a server and a web browser with which we werepreviously equipped.

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    DATABASE DRIVEN WEB

    APPLICATION

    A database wb application is an appliction wizard based on WWW(WORLDWIDE WEB) and database using web browser as a client

    TRADITIONAL CLIENT-SERVER(2-tier archietechture)

    A client computer handles the user interface (Access forms, Oracle forms,

    reports) and a database server stores the data.The actual functionality

    (business logic)of the application resides on the client and/or in the

    databases.

    WEB BASED MULTI-TIER ARCHIETECHTURE

    A client computer uses a browser to access information from two or more

    servers(web servers, application servers, database servers) i.e. a web serverhandles a web request, an application server handles the dynamic request

    and a database server stores the data.

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    System Specification

    SOFTWARE SPECIFICATION

    Client on Internet: Web browser(any),operating system(any)

    Client on Intranet: Client software, Web Browser, Operating System

    (any)

    Web server: Apache Tomcat or Glassfish, Operating System(any)

    Database Server: MS-access, Operating System(Microsoft

    Windows)

    Development End: Net beans (J2EE, Java, Servlets, JSP), MS-

    Access (DBtool).

    HARDWARE SPECIFICATION

    CLIENT SIDE :-PROCESSOR RAM DISK SPACE

    INTERNET

    EXPLORER 6.0

    PENTIUM II at 500

    MHz

    64 MB 500 MB

    SERVER SIDE :-APACHE TOMCAT PENTIUM III at

    1GHz

    512 MB 1GB

    MS-ACCESS PENTIUM III at1GHz

    512 MB 512 MB

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    DATABASE TABLE

    OVERVIEW

    The database tables which are used over here are ten in number which are

    customer,administrator,account,transaction,businessloan,homeloan,

    personal loan,educational loan,agricultural loan.The structures of the tables

    are shown as follows:

    1.customerATTRIBUTE NAME ATTRIBUTE TYPE ATTRIBUTE SIZE

    F_NAME Text 50

    L_NAME Text 50

    ACC_NO Number 50

    E_MAIL Text 20

    BR_NAME Text 40

    USER_ID Text 10

    PIN Text 5

    DOB Text 10

    2.administrator

    ATTRIBUTE NAME ATTRIBUTE TYPE ATTRIBUTE SIZE

    USER_ID Text 20

    PASS_WD Text 10

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    2.account

    ATTRIBUTE NAME ATTRIBUTE TYPE ATTRIBUTE SIZE

    ACC_NO Number 50

    OPENDATE Text 10

    BALANCE Number 100

    2.transaction

    ATTRIBUTE NAME ATTRIBUTE TYPE ATTRIBUTE SIZE

    SL_T Number

    ACC_NO Number 50

    DOT Text 10

    DESOT Text 20

    CORD Text 5

    AMOUNT Number

    2.businessloanATTRIBUTE NAME ATTRIBUTE TYPE ATTRIBUTE SIZE

    TYPEOF_BUSINESS Text 100

    ANN_INC Number 100

    AMT_LOAN Number 100

    TENURE Number 10

    SECURITY_DET Text 100

    PAN_NO Text 50

    BR_NAME Text 20

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    F_NAME Text 50

    L_NAME Text 50

    ADD Text 100

    ACC_NO Number 50

    CON_NO Number 10

    2.homeloan

    ATTRIBUTE NAME ATTRIBUTE TYPE ATTRIBUTE SIZE

    LOC_PRO Text 100

    AR_CONS Text 100

    OCC_DET Text 100

    AMT_LOAN Number 100

    TENURE Number 10

    SECURITY_DET Text 100

    PAN_NO Text 50

    BR_NAME Text 20

    F_NAME Text 50

    L_NAME Text 50

    ADD Text 100

    ACC_NO Number 50

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    CON_NO Number 10

    3.personalloan

    ATTRIBUTE NAME ATTRIBUTE TYPE ATTRIBUTE SIZE

    REASON_LOAN Text 100

    OCC_DET Text 100

    ANN_INC Number 100

    AMT_LOAN Number 100

    TENURE Number 10

    SECURITY_DET Text 100

    PAN_NO Text 50

    BR_NAME Text 20

    F_NAME Text 50

    L_NAME Text 50

    ADD Text 100

    ACC_NO Number 50

    CON_NO Number 10

    4.educationalloan

    ATTRIBUTE NAME ATTRIBUTE TYPE ATTRIBUTE SIZE

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    TYPEOF_COURSE Text 100

    PRE_EDU_QUALIFICATION Text 100

    SEC_MARKS Number 100

    HIGHSEC_MARKS Number 100

    GRADUATION_MARKS Number 10

    ANN_INC Text 100

    TENURE Number 10

    PAN_NO Text 50

    BR_NAME Text 20

    F_NAME Text 50

    L_NAME Text 50

    ADD Text 100

    ACC_NO Number 50

    CON_NO Number 10

    4.agriculturalloan

    ATTRIBUTE NAME ATTRIBUTETYPE

    ATTRIBUTE SIZE

    AR_LAND Text 100

    ANN_PRO Text 100

    OCC_DET Number 100

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    ANN_INC Text 100

    TENURE Number 10

    SECURITY_DET Text 50

    PAN_NO Text 50

    BR_NAME Text 20

    F_NAME Text 50

    L_NAME Text 50

    ADD Text 100

    ACC_NO Number 50

    CON_NO Number 10

    PROS N CONS

    Features of Internet banking

    The features available from an on-line bank account are similar to those

    which are available via 'phone banking or visiting the local branch. On-

    line banking features do differ between the banks, but usually include:

    Transfer of funds between accounts; It brings efficiency in CRM(Customer relationship management)

    Make Payment of bills

    Introduces new & innovative products &services.

    View balance and statements.

    Brings door to door services.

    Create, view and maintain Standing Orders

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    Have evolutionary trend at a globle scenario.

    Customer can View Direct Debits.

    Advantages of Internet Banking

    Opening & closing of accountes

    Make the payments of merchandise transaction through Debit & Credit

    cards.

    It gives reliefs to their customer from carrying heavy cash.

    Enables prompt & speedy operation to clients.

    It saves lot of time to their customers &convenient to access.

    Disadvantages of Internet Banking

    Customer may have to face risky transaction & fraud.

    Failure of power supply cause to break down of system.

    Loss of heavy income at times of settlement of higher magnitude.

    Cost involved in trainning staff may not be profitable specially in times

    of attrition.

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    Development of an attitude of lethargy.

    PROFILE OF THE TEN BANKS UNDER STUDY

    1. State Bank of India:

    State Bank of India (SBI) is the leading commercial bank in India, offering services such as

    retail banking, commercial banking, international banking and treasury operations. The

    bank is an integral part of State Bank Group, which includes seven other banks and offers

    additional services such as mutual funds and insurance. The bank primarily operates in

    India. It is headquartered in Mumbai, India and employs about 179,205 people.

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    The company recorded revenues of INR902,188.1 million (approximately $22,410.4

    million) in the financial year ended March 2008 (FY2008), an increase of 34.4% over

    2007. The operating profit of the company was INR183,315.4 million (approximately

    $4,553.6 million) in the financial year 2008, an increase of 27.4% over 2007. The net profit

    was INR89, 606.1 million (approximately $2,225.8 million) in the financial year 2008, an

    increase of 40.8% over 2007.

    The company primarily operates through four business units, treasury, wholesale banking,

    mid corporate group, retail banking and other banking business.

    The retail banking comprises the bank's national banking group (NBG), which consists of

    business groups, personal banking, small & medium enterprise (SME), government

    banking. The bank's wholesale banking group consists of strategic business units, corporate

    accounts group (CAG), project finance & leasing SBU, stressed assets management group

    and mid corporate group. The mid corporate group (MCG) has been serving the needs of

    mid corporate units through relationship management and quicker credit processing. 695

    new mid corporate clients were added to the MCG during the year 2007.

    In keeping with its integrated approach to all treasury activities in various markets in

    different time zones i.e., forex, interest rates, bullion, equity and alternative assets, the bank

    redesignated its treasury operations into global markets. The other banking businesses

    include rural business unit serves the financial needs of farmers through different schemes

    such as adoption of villages for overall development and economic upliftment and so far

    237 villages have been adopted and self help groups. International banking has a network

    of 84 overseas offices spread over 32 countries.

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    The bank offers a range of services such as SBI foreign travel cards, broking services,

    ATM services, internet banking, bill payments, gift cheques, safe deposit lockers and

    foreign inward remittances. The bank has a factoring services arm under the name SBI

    Factors and Commercial Services and Global Trade Finance. Through its subsidiary, SBI

    Capital Markets, it offers merchant banking services throughout the country. SBI offers life

    insurance association with BNP Paribas through its subsidiary SBI Life Insurance

    Company.

    SBI is the largest (public sector scheduled commercial bank) bank in India on several

    parameters (number of branches/offices, employees, deposits, loans/advances, assets, and

    profits etc). The bank has over 10,186 domestic branches and it offers more than 8,460

    ATMs (Automated Teller Machines). In fact, SBI has the second largest bank branch

    network in the world. The dominance of the bank in the Indian banking sector is evident

    from the fact that it commands around 16.11% market share in total deposits and 16% in

    advances.

    Online cash transactions (E-transactions) are gaining popularity, with more people

    preferring to send and receive money electronically. As more bank branches get

    interconnected through core banking systems, settlements through the electronic systems

    have almost tripled since April 2007. According to RBIs data, the number of transactions

    settled through electronic funds transfer (EFT) and the national electronics funds transfer

    system (NEFT) increased to 1.92 million a month in June 2008 from 0.7 million in April

    2007, although the value of transactions have not picked up at the same pace. The total

    amount settled electronically was INR121.6 billion in April 2007. It went up to INR200.7

    billion by May 2008. The substantially lower costs and ease of transaction have been major

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    factors for the increased adoption of electronic fund transfers. The value of these

    transactions has also grown considerably over the past year.

    RBI has been promoting the use of electronic funds transfer systems for a while now, and it

    has made it mandatory for all payments between entities it regulates to be done

    electronically. In fact, all branches that are on the core-banking network are equipped to

    carry out NEFT transactions. Since, SBI has the country's largest network of NEFT-

    enabled branches, it is expected that SBI would gain maximum (in comparison to other

    banks) from the increasing adoption of E-transactions4.

    2. Canara Bank Ltd.:

    Canara Bank5was founded by Shri Ammembal Subba Rao Pai, a great visionary and

    philanthropist, in July 1906, at Mangalore, then a small port in Karnataka. The Bank has

    gone through the various phases of its growth trajectory over hundred years of its

    existence. Growth of Canara Bank was phenomenal, especially after nationalization in the

    year 1969, attaining the status of a national level player in terms of geographical reach and

    clientele segments. Eighties was characterized by business diversification for the Bank. In

    June 2006, the Bank completed a century of operation in the Indian banking industry. The

    eventful journey of the Bank was strewn with many memorable milestones. Today, Canara

    Bank occupies a premier position in the comity of Indian banks. With an unbroken record

    of profits since its inception, Canara Bank has several firsts to its credit. These include:

    Launching of Inter-City ATM Network

    4 Datamonitor, (2008) Company Profile State Bank of India, source: www.datamonitor.com5 Datamonitor, (2008) Company Profile Canara bank Ltd., source: www.datamonitor.com

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    Obtaining ISO Certification for a Branch

    Articulation of Good Banking Banks Citizen Charter

    Commissioning of Exclusive Mahila Banking Branch

    Launching of Exclusive Subsidiary for IT Consultancy

    Issuing credit card for farmers

    Providing Agricultural Consultancy Services

    Over the years, the Bank has been scaling up its market position to emerge as a major

    'Financial Conglomerate' with as many as nine subsidiaries/sponsored institutions/joint

    ventures in India and abroad. As at September 2008, the Bank has further expanded its

    domestic presence, with 2710 branches spread across all geographical segments. Keeping

    customer convenience at the forefront, the Bank provides a wide array of alternative

    delivery channels that include over 2000 ATMs- the highest among nationalized banks-

    covering 698 centres, 1351 branches providing Internet and Mobile Banking (IMB)

    services and 2027 branches offering 'Anywhere Banking' services. Under advanced

    payment and settlement system, all branches of the Bank have been enabled to offer Real

    Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities.

    3. Indian Overseas Bank:

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    Indian Overseas Bank was established in 1937 with the aim to specialize in foreign

    exchange and overseas banking business in India. It started with simultaneously three

    branches in Chennai, India; Rangoon, Burma (Now Myanmar) and Penang. On the

    Independence Day, Indian Overseas Bank had expanded to 38 branches within the country

    and 7 branches abroad.

    Before nationalization in 1969, the bank had ventured into consumer credit, had begun

    computerization of their branch in 1964 and had established an independent department for

    agricultural finance. In 1969, IOB had 195 branches in India. In 1977, Indian Overseas

    Bank opened a branch in Seoul followed by a foreign currency-banking unit in Colombo in

    1979. In 1997, the bank launched its official website and introduced online Bill Payment

    Services for MTNL Bills to its New Delhi branch customers in 1999.

    The IOB presence is marked in key trade centres of the world like Singapore, Seoul, Hong

    Kong, Bangkok and Germany. Its India presence is well networked branch system

    spanning the country with multiple branches in major cities like Bangalore, Chennai,

    Mumbai, Noida, Hyderabad, New Delhi, Coimbatore, Pune, Faridabad, Gurgaon and

    Kolkata.

    Indian Overseas Bank currently provides specialized banking services to its retail

    customers that include Any Branch Banking (ABB), ATM Banking, IOB STARS (Indian

    Overseas Bank - Speedy Transfer And Realization Service) and the most popular and latest

    one is the 8% Saving (Taxable) Bond Scheme.

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    4. Axis Bank:

    Axis Bank6was founded in 1994 as UTI Bank. Axis Bank is a banking corporation offering

    retail and corporate banking services, including retail loans, corporate and business credit,

    forex and trade finance services, investment banking, depository services, and investment

    advisory services.The bank primarily operates in India, where it is headquartered in

    Mumbai and employs about 15,000 people.

    The company recorded revenues of INR88,010 million (approximately $2,186.2 million) in

    the fiscal year ended March 2008, an increase of 60.9% over 2007. Its net profit was

    INR10,591.4 million (approximately $263.1 million) in fiscal 2008, an increase of 61.9%

    over 2007.

    The business of the bank is divided into four segments: treasury, corporate/wholesale

    banking, retail banking and other banking business. Treasury operations include

    investments in sovereign and corporate debt, equity and mutual funds, trading operations,

    derivative trading and foreign exchange operations on the proprietary account and for

    customers and central funding corporate. Corporate / Wholesale banking includes corporate

    relationships not included under retail banking, corporate advisory services, placements

    and syndication, management of public issue, project appraisals, capital market related

    services and cash management services Retail banking constitutes lending to

    individuals/small businesses subject to the orientation, product and granularity criterion

    and also includes low value individual exposures not exceeding the threshold limit of

    6 10. Datamonitor, (2008) Company Profile Axis bank Ltd., source: www.datamonitor.com

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    INR50 million. Retail banking activities also include liability products, card services,

    internet banking, ATM services, depository, financial advisory services and NRI (non-

    residence Indian) services. Other banking business includes all banking transactions not

    covered under any of the above three segments.

    In 1998, UTI bank went for an initial public offering (IPO). In the following year, the

    banks Cashmanagement services (CMS) were launched. In 2000, the bank launched its

    internet banking module, and iConnect retail loans was introduced by the bank in the same

    year. After two years, in 2002, the bank signed memorandum of understanding with BSNL

    regarding bill collection services across the country through both online and offline

    channels.

    UTI bank signed an agreement with Employees Provident Fund Organization (EPFO) for

    disbursement of pension in 2003. In the same year, the bank launched Travel Currency

    Card. In 2004, the bank signed a bilateral arrangement with State Bank of India (and its

    seven associate member banks) for a combined network of over 4,000 ATMs. UTI Bank

    was listed on the London Stock Exchange in 2005. In the same year, UTI Bank launched

    Smart Privilege, a special bank account designed for women. In 2006, UTI Bank and UTI

    Mutual Fund launched a new service for sale and redemption of mutual fund schemes

    through the Bank's ATMs across the country. In the same year, UTI Bank opened its first

    international branch in Singapore. UTI Bank along with Geojit Financial Services offered

    online trading service to its customers in 2006.

    Moreover in 2006, UTI Bank launched its Credit Card business and operations of UBL

    Sales, its sales subsidiary, and inaugurated its first office in Bangalore. In February 2007,

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    UTI Bank launched gift card and meal card. In the same month, the bank launched Co-

    branded credit card exclusively for Small Road Transport Operators (SRTOS). UTI Bank

    opened a branch in Hong Kong in March 2007. In the same month, UTI Bank formed an

    agreement with IIFCL to provide finance for infrastructural projects in India. In the

    following month, the Bank opened a branch in Dubai. In July 2007, the bank changed its

    name from UTI to Axis Bank.

    In September 2007, Axis Bank made a tie up with Banque Privee Edmond de Rothschild

    Europe for wealth management. In the following month, Axis Bank decided to incorporate

    a Public Limited Company, as a wholly owned subsidiary of the Bank to undertake the

    Trustee Services Business. In the same month, the bank also decided to incorporate an

    Asset Management Company as a subsidiary of the Bank to carry out the activities of Asset

    and Fund Management and Advisory and other related activities; and also proposed to

    establish a Mutual Fund, in the form of a Trust.

    In June 2008, Axis Bank decided to raise INR65,200 million (approximately $1619.6

    million) by way of upper Tier II capital in Indian or foreign currencies and/or lower Tier II

    capital in the form of sub-ordinate debentures. In the same Month, Axis Private Equity, an

    operating unit of Axis Bank, decided to invest a total of INR1,420 million (approximately

    $35.3 million) in two Indian companies namely Neesa Leisure and Corrtech International.

    In July 2008, Axis Private Equity, a unit of Axis Bank, invested $15 million in Vishwa

    Infrastructure & Services, a firm involved in water supply and sanitation projects.

    5. Dena Bank ltd.:

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    Dena Bank, in July 1969 along with 13 other major banks was nationalized and is now a

    Public Sector Bank constituted under the Banking Companies (Acquisition & Transfer of

    Undertakings) Act, 1970. Under the provisions of the Banking Regulations Act 1949, in

    addition to the business of banking, the Bank can undertake other business as specified in

    Section 6 of the Banking Regulations Act, 1949.

    Dena Bank was founded on 26th May, 1938 by the family of Devkaran Nanjee under the

    name Devkaran Nanjee Banking Company Ltd. It became a Public Ltd. Company in

    December 1939 and later the name was changed to Dena Bank Ltd.

    In July 1969 Dena Bank Ltd. along with 13 other major banks was nationalized and is now

    a Public Sector Bank constituted under the Banking Companies (Acquisition & Transfer of

    Undertakings) Act, 1970. Under the provisions of the Banking Regulations Act 1949, in

    addition to the business of banking, the Bank can undertake other business as specified in

    Section 6 of the Banking Regulations Act, 1949.

    Bank has set up its own network DENANET using leased lines, VSATs, dial-up lines

    and ISDN Backup for ATMs connecting more than 1051 branches and 34 offices spread

    over 100 centres. Dena m-banking offers customers an easy, hassle free means to access

    banking information with the help of Mobile phones 24 hours a day, 7 days a week. Now

    our customers can get the required information regarding their bank account by using SMS

    facility from their mobile phones. Presently m-banking provides facilities like

    Balance Inquiry

    Mini Statement of accounts

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    Status of the cheques issued.

    6. Syndicate Bank:

    Syndicate Bank was established in 1925 in Udupi, the abode of Lord Krishna in coastal

    Karnataka with a capital of Rs.8000/- by three visionaries - Sri Upendra Ananth Pai, a

    businessman, Sri Vaman Kudva, an engineer and Dr.T M A Pai, a physician - who shared a

    strong commitment to social welfare. Their objective was primarily to extend financial

    assistance to the local weavers who were crippled by a crisis in the handloom industry

    through mobilising small savings from the community. The bank collected as low as 2

    annas daily at the doorsteps of the depositors through its Agents under its Pigmy Deposit

    Scheme started in 1928. This scheme is the Bank's brand equity today and the Bank

    collects around Rs. 2 crore per day under the scheme.

    The progress of Syndicate Bank has been synonymous with the phase of progressive

    banking in India. Spanning over 80 years of pioneering expertise, the Bank has created for

    itself a solid customer base comprising customers of two or three generations. Being firmly

    rooted in rural India and understanding the grassroot realities, the Bank's perception had

    vision of future India. It has been propagating innovations in Banking and also has been

    receptive to new ideas, without however getting uprooted from its distinctive socio-

    economic and cultural ethos. Its philosophy of growth by mutual sustenance of both the

    Bank and the people has paid rich dividends. The Bank has been operating as a catalyst of

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    development across the country with particular reference to the common man at the

    individual level and in rural/semi urban centres at the area level.

    The Bank is well equipped to meet the challenges of the 21st century in the areas of

    information technology, knowledge and competition. A comprehensive IT plan is being put

    in place and the skills and knowledge of the Bank's personnel are being upgraded through a

    variety of training programmes to promote customer delight in every sphere of its activity.

    The Bank has launched an ambitious technology plan called Centralised Banking Solution

    (CBS) whereby 500 of our strategic branches with their ATMs are being networked

    nationwide over a 4 year period.

    7. HDFC Bank:

    HDFC Bank specializes in the provision of banking and other financial services to

    corporate and institutional clients.The company's services include commercial,

    transactional and electronic banking products. It also provides treasury services, retail

    banking and capital markets infrastructure. The company primarily operates in India.

    HDFC Bank is headquartered in Mumbai, India and employs about 14,900 people.

    The company recorded revenues of INR124,928 million (approximately $3,131.9 million)

    during the fiscal year ended March 2008, an increase of 51.9% over 2007. The net profit

    was INR15901.8 million (approximately $398.7 million) in fiscal year 2008, an increase of

    39.3% over 2007.

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    HDFC Bank was incorporated in 1994 and was amongst the first to receive an 'in principle'

    approval from the Reserve Bank of India, to set up a bank in the private sector. HDFC

    Bank began operations as a Scheduled Commercial Bank in early 1995.

    TimesBank (a private sector bank promoted by Bennett, Coleman & Co/Times Group)

    merged with HDFC Bank in 2000.The amalgamation added significant value to HDFC

    Bank in terms of increased branch network, expanded geographic reach, enhanced

    customer base, skilled manpower and the opportunity to cross-sell and leverage alternative

    delivery channels.

    HDFC Bank was the first bank in India to launch an international debit card (in association

    with VISA) and also issued the MasterCard Maestro debit card. The bank launched its

    credit card in association with VISA in the year 2001. In the same year, HDFC became the

    first private sector bank authorized to collect income tax for Central Government.

    Following this, the bank listed its stock on NYSE through ADS issue of $172.5 million.

    The bank also launched credit card business in Chennai during the year.

    In the following year, the bank's branch network expanded to 200. Also during the year, the

    bank entered into a joint venture agreement for non-life insurance with Chubb Corporation

    (a global non-life insurer). In 2003, the bank was named 'Best Local Bank- India' by The

    Asian Bankers Journal. The bank launched its credit card in over 100 cities, with its credit

    card base crossing one million by 2004. HDFC's branch network expanded to 400 in the

    same period. The bank was included in the Forbes Global listing of 'best under a billion',

    100 best smaller size enterprises in Asia Pacific and Europe.

    8. UCO Bank:

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    Founded in 1943, UCO Bank is a commercial bank and a Government of India

    Undertaking. Its Board of Directors consists of government representatives from the

    Government of India and Reserve Bank of India as well as eminent professionals like

    accountants, management experts, economists, businessmen, etc.

    UCO Bank, with years of dedicated service to the Nation through active financial

    participation in all segments of the economy - Agriculture, Industry, Trade & Commerce,

    Service Sector, Infrastructure Sector etc., is keeping pace with the changing environment.

    With a countrywide network of more than 2000 service units which includes specialised

    and computerised branches in India and overseas, UCO Bank has marched into the 21st

    Century matched with dynamism and growth.

    9. Punjab National Bank:

    Punjab National Bank (PNB) is a India based banking corporation. It offers a range of

    banking services such as corporate and personal banking, industrial finance, agricultural

    finance, financing of trade and international banking. The bank primarily operates in India.

    It is headquartered in New Delhi, India and employs about 56,000 people.

    The company recorded revenues of INR162,625.8 million (approximately $4,039.6

    million) in the fiscal year ended March 2008, an increase of 25.4% over 2007.The

    company's operating profit was INR40,062.4 million (approximately $995.2 million) in

    fiscal year 2008, an increase of 10.7% over 2007. Its net profit was INR20,487.6 million

    (approximately $508.9 million) in fiscal year 2008, an increase of 33% over 2007.

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    The bank was nationalised in 1969. In September 2007, PNB partnered with Venture

    Infotech Global (VIG) and American International Group (AIG) Consortium to form a

    Joint Venture for credit card business in Bhutan. In the following month, PNB entered into

    a memorandum of understanding with India Infrastructure Finance Company (IFCL) to

    finance infrastructure projects in the country. In the same month, PNB launched a pilot

    project on financial inclusion at Neemrana in Alwar district of Rajasthan as part of a plan

    to cover 75 million people by 2010.

    10. ICICI Bank:

    ICICI Bank is a diversified financial services company that provides a range of banking

    and financial services to customers, including retail banking, project and corporate finance,

    working capital finance, insurance, venture capital and private equity, investment banking,

    broking, and treasury products and services. The company operates in, India, the UK,

    Canada and Russia. It is headquartered in Mumbai, India and employs about 25, 400

    people.

    The company recorded revenues of INR257.6 billion (approximately $5.8 billion) during

    the fiscal year ended March 2006, an increase of 52.2% over 2005. The net profit was

    INR24.2 billion (approximately $0.5 billion) in fiscal year 2006, an increase of 30.7% over

    2005.

    In early 2004, ICICIBank.com, the online banking channel of ICICI Bank, became the first

    online air booking service in India. Teaming up with India mobile, ICICI launched mobile

    banking in India in mid-2004. Later in the year, offshore banking unit was opened in

    Bahrain. The company launched a new remittance service in 2005 in partnership with the

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    US bank Wells Fargo. Following that Lloyds TSB inaugurated an Indian banking service

    with ICICI.

    In January 2006, the company opened its first branch in Sri Lanka, establishing a branch

    presence for the first time outside India in the SAARC region. ICICI Bank signed

    cooperation agreement with BMW India for offering finance through BMW Financial

    Services and Raiffeisenlandesbank Oberosterreich for intensifying cooperation between

    India and Austria in financial sector; in February 2007. It also entered into an agreement

    with Sarovar Hotels, to launch the ICICI Bank Sarovar Hotels co-branded credit card.

    The Reserve Bank of India approved the amalgamation of Sangli Bank with ICICI Bank in

    April 2007. In the same month ICICI Bank received a license to set up a branch in the

    Qatar Financial Centre, Doha, Qatar.

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    RESEARCH METHODOLOGY

    Population:

    All the Branches of Commercial Banks in Mangalore region.

    Customers having Accounts in Banks in Mangalore, i.e. both users and non users of

    Internet banking Services.

    Sample Size and Sampling Techniques:

    10 Banks operating in Mangalore that provides Internet Banking Services selected

    using Simple Random Sampling technique.

    100 Customers of banks selected using Stratified Random Sampling from the above

    selected 10 Banks.

    Scope of the Study:

    The Area covered for this study is Mangalore. This study is relevant only to Mangalore

    Region and the Banks performing in Mangalore. Also, it is relevant only to the time period

    when this study is conducted since the Technology is fast growing and there might be more

    advancement in Banking Services. This study also is useful for those who are interested in

    the Banking sector to know the recent advancements in Banking Industry as of this time

    period.

    Data Source:

    Required data was collected from two main sources:

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    The statistical tools used are:

    Chi- Square technique to test whether the usage of Internet Banking Services

    depends on the perception regarding the security level in Banking transactions.

    ANOVA technique to find whether the average of the maximum amount transacted

    by different customers through the Banks IBS in 10 different banks are equal or not.

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    DEVELOPMENT OF E-BANKING

    So, these are some of the particular risks arising in E-banking

    that we have hitherto identified in the UK domestic environment

    though I suspect that many of my regulator colleagues outside the UKwould share many of these views. I would like to move on to the

    international side.

    Supervision in todays global environment can only ever be

    effective if it has an international dimension. This is especially the

    case with e-banking because of its non-territorial nature, the ease

    with which customers outside the home country can access the site

    and the opportunity to buy several types of product. Of course,

    regulators have long had to deal with the regulatory problems of

    international banking. They had set up mechanisms for cross-border

    supervision; agreements over home/host responsibilities (especially

    within the Community), bilateral agreement for information sharing

    and general standards by which they expect all banks, including those

    offshore territories, to abide. In principle, the expectation is that this

    general mechanism for international supervision will be robust

    enough to work just as well in the e-banking as the physical

    environment.

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    Nevertheless, it will not be quite as easy as that! Inevitably the

    nature of e-banking raises particular issues in the application of the

    general approach outlined here. E-banking makes it even more

    necessary to develop a cohesive international approach to regulation not only in the field of prudential regulation where Basel has made

    much progress, but also in the areas of conduct of business for

    consumer protection.

    The Basel Committee E-Banking Group believes that Basel

    "should provide the international supervisory community with a

    broad set of advisory guidance with respect to electronic banking,"

    thereby providing a basis for domestic regulation and supporting

    consumer and industry education. Globally, such guidance would

    assist international co-operation and act as a foundation for a

    coherent approach to supervising e-banking. It could facilitate

    international e-banking by creating consumer confidence in sound

    banks based in different, possibly less satisfactory, regimes and mightdissuade host supervisors from imposing additional, potentially

    draconian, regulation on such banks. The Group identified:

    Authorization,

    prudential standards,

    transparency,

    privacy, money laundering, and

    cross border supervision

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    as issues on which they felt that there is need for further work, both at

    the analytical and policy level before any such guidance could be

    developed. The FSA is involved in the Basel Group and will be

    contributing to the work, participating in the drafting of papers andhosting both the groups next meeting and a roundtable for its

    members and a number of European banks and service providers. We

    welcome any contributions from the industry to this debate; and have

    indeed been actively soliciting them.

    Cross-border issues

    There are also significant cross-border issues.

    We foresee difficulties for depositors identifying the jurisdiction

    within which e-banks offering services in the UK are based, given the

    potential absence of physical presence and the ability for e-banks to

    move to a new jurisdiction relatively rapidly. These concerns have

    prompted a considerable amount of debate and analysis in the

    international supervisory community. Within Europe home v host

    state supervision is a particularly important issue. Banks may tend to

    seek authorization wherever the tax, compliance and costs are lowest,

    as location will become less of a critical issue since services may easily

    be provided on a cross-border basis. E-banking is likely therefore to

    significantly increase the usage of the 2BCD passport (that is theCommunity equivalent of your passport, but for a bank), thereby

    making it even more crucial that all European regulators undertake

    supervision in a satisfactory (and harmonised) manner and that

    communication between regulators is adequate.

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    A number of initiatives with implications for home and host

    state supervision are being discussed, for example the draft e-

    commerce and distance marketing directives and the Rome and

    Brussels conventions. The debate is far from being resolved and aconsiderable degree of uncertainty remains. For example within the

    e-commerce Directive home and host have been replaced with

    home and country of origin, the implications of which are as yet

    unclear. The current drafting (agreed at Council) is sufficiently vague

    to potentially allow numerous regulators to assert jurisdiction over an

    Internet service, thereby nullifying the main advantage of the

    Directive, home state regulation. However we would expect that a

    suitable compromise on the point will be worked out so as to avoid

    this outcome. Certainly this is what we at the FSA are working

    towards.

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    CHALLENGES AND OPPORTUNITIES

    E-banking is a generic term for delivery of banking services and

    products through electronic channels, such as the telephone, the

    internet, the cell phone, etc. The concept and scope of E-banking is

    still evolving. It facilitates an effective payment and accounting

    system thereby enhancing the speed of delivery of banking services

    considerably. While E-banking has improved efficiency and

    convenience, it has also posed several challenges to the regulators and

    supervisors. Several initiatives taken by the government of India, as

    well as the Reserve Bank of India (RBI), have facilitated thedevelopment of E-banking in India. The government of India enacted

    the IT Act, 2000, which provides legal recognition to electronic

    transactions and other means of electronic commerce. The RBI has

    been preparing to upgrade itself as a regulator and supervisor of the

    technologically dominated financial system. It issued guidelines on

    risks and control in computer and telecommunication system to all

    banks, advising them to evaluate the risks inherent in the systems and

    put in place adequate control mechanisms to address these risks. The

    existing regulatory framework over banks has also been extended to

    E-banking. It covers various issues that fall within the framework of

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    technology, security standards, and legal and regulatory issues. This

    book containing 12 scholarly articles will benefit those interested

    in the technological developments of E-banking in India

    Electronic banking is the wave of the future. It provides

    enormous benefits to consumers in terms of the ease and cost of

    transactions. But it also poses new challenges for country authorities

    in regulating and supervising the financial system and in designing

    and implementing macroeconomic policy.

    Electronic banking has been around for some time in the form

    of automatic teller machines and telephone transactions. More

    recently, it has been transformed by the Internet, a new delivery

    channel for banking services that benefits both customers and banks.

    Access is fast, convenient, and available around the clock, whatever

    the customer's location (see illustration above). Plus, banks can

    provide services more efficiently and at substantially lower costs. For

    example, a typical customer transaction costing about $1 in a

    traditional "brick and mortar" bank branch or $0.60 through a phone

    call costs only about $0.02 online.

    Electronic banking also makes it easier for customers to

    compare banks' services and products, can increase competition

    among banks, and allows banks to penetrate new markets and thus

    expand their geographical reach. Some even see electronic banking as

    an opportunity for countries with underdeveloped financial systems

    to leapfrog developmental stages. Customers in such countries can

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    access services more easily from banks abroad and through wireless

    communication systems, which are developing more rapidly than

    traditional "wired" communication networks.

    The flip side of this technological boom is that electronic

    banking is not only susceptible to, but may exacerbate, some of the

    same risks-particularly governance, Legal, operational, and

    reputational-inherent in traditional banking. In addition, it poses new

    challenges. In response, many national regulators have already

    modified their regulations to achieve their main objectives: ensuring

    the safety and soundness of the domestic banking system, promoting

    market discipline, and protecting customer rights and the public trust

    in the banking system. Policymakers are also becoming increasingly

    aware of the greater potential impact of macroeconomic policy on

    capital movements.

    MACROECONOMIC CHALLENGES

    But the challenges are not limited to regulators. As the advent

    of e-banking quickly changes the financial landscape and increases

    the potential for quick ross-border capital movements,

    macroeconomic policymakers face several cdifficult questions.

    If electronic banking does make national boundaries

    irrelevant by facilitating capital movements, what does

    this imply for macroeconomic management?

    How is monetary policy affected when, for example, the

    use of electronic means makes it easier for banks to avoid

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    reserve requirements, or when business can be conducted

    in foreign currencies as easily as in domestic currency?

    When offshore banking and capital flight are potentially

    only a few mouse clicks away, does a government have

    any leeway for independent monetary or fiscal policy?

    How will the choice of the exchange rate regime be

    affected, and how will e-banking influence the targeted

    level of international reserves of a central bank

    Can a government afford to make any mistakes? Will the spread

    of electronic banking impose harsh market discipline on governments

    as well as on businesses?

    The answers to these questions fall into two emerging strands of

    thought. First, the technological revolution-- particularly the

    expansion of electronic money but also, more broadly, electronic

    advances in banking practices-- could result in a decoupling of

    households' and firms' decisions from the purely financial operations

    of the central bank. Thus, the ability of monetary policy to influence

    inflation and economic activitywould be threatened.

    Second, as electronic banking expands, financial transaction

    costs can decline significantly. The result would be tantamount to a

    reduction in the "sand in the wheels" of the financial sector

    machinery, making capital flows even easier to effect, with a potential

    erosion of the effectiveness of domestic monetary policy. In this

    regard, proponents of the Tobin tax--which would tax short-term

    capital flows to increase their cost and, thereby, the sand in the

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    wheels-- would feel that electronic banking makes an even more

    compelling case for introducing such a tax.

    CHALLENGES

    Key challenges in developing a sophisticated e-banking application

    1. Interoperability

    There is a lack of common technology standards for e-banking.

    Many protocols are being used for e-banking HTML, WAP,

    SOAP, XML to name a few. It would be a wise idea for the vendor

    to develop a e-banking application that can connect multiple

    banks. It would require either the application to support multiple

    protocols or use of a common and widely acceptable set of

    protocols for data exchange.

    There are a large number of different e-bankingphone devices

    and it is a big challenge for banks to offer e-banking solution on

    any type of device. Some of these devices support J2ME and others

    support WAP browser or onlySMS.

    Overcoming 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)

    http://en.wikipedia.org/wiki/SOAPhttp://en.wikipedia.org/wiki/XMLhttp://en.wikipedia.org/wiki/SMShttp://en.wikipedia.org/wiki/SOAPhttp://en.wikipedia.org/wiki/XMLhttp://en.wikipedia.org/wiki/SMS
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    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.

    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 e-banking application developers, wireless networkservice 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 deviceis more important.

    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 banks customer.

    Encryption of the data being transmitted over the air.

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    Encryption of the data that will be stored in device for later /

    off-line analysis by the customer.

    3. Scalability & Reliability

    Another challenge for the CIOs and CTOs of the banks is to scale-

    up the e-banking infrastructure to handle exponential growth of

    the customer base. With e-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 e-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.

    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 e-

    banking application. It will be expected that the e-banking

    application itself check the upgrades and updates and download

    necessary patches (so called Over the Air updates). However, therecould be many issues to implement this approach such as

    upgrade / synchronization of other dependent components.

    5. Personalization

    http://en.wikipedia.org/wiki/CIOhttp://en.wikipedia.org/w/index.php?title=Over_The_Air&action=edit&redlink=1http://en.wikipedia.org/wiki/CIOhttp://en.wikipedia.org/w/index.php?title=Over_The_Air&action=edit&redlink=1
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    It would be expected from the e-banking application to support

    personalization such as:

    Preferred Language

    Date / Time format

    Amount format

    Default transactions

    Standard Beneficiary list

    Alert.

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    IMPACT OF E-BANKING ON

    TRADITIONAL SERVICES

    One of the issues currently being addressed is the impact of e-

    banking on traditional banking players. After all, if there are risks

    inherent in going into e-banking there are other risks in not doing so.

    It is too early to have a firm view on this yet. Even to practitioners the

    future of e-banking and its implications are unclear. It might be

    convenient nevertheless to outline briefly two views that are prevalent

    in the market. The view that the Internet is a revolution that will

    sweep away the old order holds much sway. Arguments in favor are as

    follows:

    E-banking transactions are much cheaper than branch or even

    phone transactions. This could turn yesterdays competitive

    advantage - a large branch network, into a comparative

    disadvantage, allowing e-banks to undercut bricks-and-mortar

    banks. This is commonly known as the "beached dinosaur"

    theory.

    E-banks are easy to set up so lots of new entrants will arrive.

    Old-world systems, cultures and structures will not encumber

    these new entrants. Instead, they will be adaptable and

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    responsive. E-banking gives consumers much more choice.

    Consumers will be less inclined to remain loyal.

    E-banking will lead to an erosion of the endowment effect

    currently enjoyed by the major UK banks.

    Deposits will go elsewhere with the consequence that these

    banks will have to fight to regain and retain their customer base. This

    will increase their cost of funds, possibly making their business less

    viable. Lost revenue may even result in these banks taking more risks

    to breach the gap. Portal providers, are likely to attract the most

    significant share of banking profits. Indeed banks could become

    glorified marriage brokers. They would simply bring two parties

    together e.g. buyer and seller, payer and payee. The products will be

    provided by monoclines, experts in their field. Traditional banks may

    simply be left with payment and settlement business even this could

    be cast into doubt. Traditional banks will find it difficult to evolve.

    Not only will they be unable to make acquisitions for cash as opposed

    to being able to offer shares, they will be unable to obtain additional

    capital from the stock market. This is in contrast to the situation for

    Internet firms for whom it seems relatively easy to attract investment.

    There is of course another view which sees e-banking more as an

    evolution than a revolution. E-banking is just banking offered via anew delivery channel. It simply gives consumers another service (just

    as ATMs did). Like ATMs, e-banking will impact on the nature of

    branches but will not remove their value. Traditional banks are

    starting to fight back.

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    The start-up costs of an e-bank are high. Establishing a trusted

    brand is very costly as it requires significant advertising expenditure

    in addition to the purchase of expensive technology (as security andprivacy are key to gaining customer approval). E-banks have already

    found that retail banking only becomes profitable once a large critical

    mass is achieved. Consequently many e-banks are limiting themselves

    to providing a tailored service to the better off.

    Nobody really knows which of these versions will triumph. This is

    something that the market will determine. However, supervisors will

    need to pay close attention to the impact of e-banks on the traditional

    banks, for example by surveillance of: strategy customer levels

    earnings and costs advertising spending margins funding costs

    merger opportunities and threats.

    Before talking about the issues of risks and responses to E

    banking, I would like to spend a little time considering the widerquestion of what the e-banking revolution might mean for the future.

    I take "E" to mean anything electronic whether it be Internet,

    television, telephone or all three.

    One of the issues currently being addressed is the impact of e-

    banking on traditional banking players. After all, if there are risks

    inherent in going into e-banking there are other risks in not doing so.It is too early to have a firm view on this yet. Even to practitioners the

    future of e-banking and its implications are unclear. It might be

    convenient nevertheless to outline briefly two views that are prevalent

    in the market.

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    Th