E-Banking Module 5

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Questions and Answers

What feature does the Platinum Plus Card offer?

World Luxury benefits

Cash back at Railway, Hospitals, Medical stores

24 x 7 online MIS availability

2 reward points on all general purchases (correct)

The Platinum Business card is suitable for those who travel for work.

True

What benefit does the Women's Gold Card provide?

discounts, rewards, and more

The Titanium Credit Card offers zero ________ on lost card.

liability Signup and view all the answers

What is the main purpose of BHIM app?

To facilitate mobile-based banking services Signup and view all the answers

IMPS transfers can be done only on weekdays.

False Signup and view all the answers

What does ECS stand for?

Electronic Clearing System Signup and view all the answers

Cloud banking involves four levels of service provision: 1. Business process as a service, 2. Software as a service, 3. Platform as a service, and 4. __________ as a service.

Infrastructure Signup and view all the answers

What does MICR stand for?

Magnetic Ink Character Recognition Signup and view all the answers

What does an MICR code comprise of?

City, Bank, Branch codes Signup and view all the answers

MICR technology uses magnetic ink to avoid forgery.

True Signup and view all the answers

The ______ on which MICR cheques are printed must be the CBSI (Clearing Bank Specification 1 or Clearing Bank Standard 1).

paper Signup and view all the answers

Match the following types of credit cards with their descriptions:

Revolving credit card = Allows users to carry a balance from month to month Charge card = Requires full payment each month Standard credit card = Offers credit limits and revolving balances Business cards = Designed for business expenses Signup and view all the answers

What is the meaning of E-banking or Electronic Banking?

Conducting banking operations through electronic devices. Signup and view all the answers

E-Banking allows for 24-hour access to banking services.

True Signup and view all the answers

What is the main benefit of E-Banking for banks?

Better brand image Signup and view all the answers

ATMs offer round the clock ________.

banking Signup and view all the answers

Match the following electronic banking services with their descriptions:

Internet Banking = Allows customers to access banking services online Mobile Banking = Conducts banking operations on mobile phones Tele-Banking = Banking transactions carried out via telecommunications network Electronic Fund Transfer = Immediate transfer of funds from one account to another Signup and view all the answers

Study Notes

E-Banking or Electronic Banking

Conduct of banking operations through electronic means or devices, such as computers, telephones, mobile phones, and ATMs.
Provision of banking products and services directly to customers through electronic delivery channels.

Characteristics of E-Banking

Performance of banking operations through electronic means or tools.
Relying on information technology and absence of physical bank branch to deliver banking services to customers.
24-hour access, enabling customers to access banking services anywhere and anytime.

Significance and Benefits of E-Banking

Better brand image for banks.
Higher rate of retention of existing customers for banks.
Availability of innovative banking facilities attracting new customers.
Scope for offering differential services under e-banking.
Opportunity for participation in shared networks, expanding the bank's operation base.
Low operational cost for banks, contributing to profitable banking.
Risks of banks can be better monitored and controlled by establishing a centralized database.

Benefits of E-Banking to Customers

Enjoy new and innovative banking products and services at reduced costs.
Increased comfort and time-saving facilities with 24-hour access.
No physical interaction with the bank.
Quicker and easier access to information.
Ability to handle many bank transactions through personal computers.
Sense of financial discipline by recording each and every transaction.
Lower risk and higher security for customers.
Facility for online payments for purchases of goods and services.

Constraints or Drawbacks of Electronic Banking

Huge initial startup cost.
Training and maintenance requirements.
Lack of skilled personnel.
Security threats.
Obsolescence of technology.
Adoption of technology by customers.
Legal issues.

Facets or Dimensions of E-Banking

Customer-to-Bank (C-to-B) e-banking.
Bank-to-Bank (B-to-B) e-banking.
Electronic central banking.
Internet procurement.

E-Banking Transactions

Account enquiry.
Fund transfer.
Payment of electricity, water, telephone bills, etc.
Online payment for transactions performed through the internet.
Request for a statement of accounts.
Access to the latest scheme of the bank.
Access to rates of interest and other service charges of the bank.

E-Services

Automated Teller Machines (ATMs).
Internet Banking.
Tele-Banking.
Mobile Banking.
Electronic Fund Transfer.
Standing Instructions.
Online Mutual Fund Investment.
Smart Cards.

Tele Banking

A system that enables banking transactions to be carried out by means of a telecommunications network.
Features include:
- Automatic balance voice out for the default account.
- Balance inquiry and transaction inquiry in all accounts.
- Inquiry of all term deposit accounts.
- Statement of account by Fax, email, or ordinary mail.
- Cheque book request.
- Stop payment, which is on-line and instantaneous.
- Transfer of funds with CBS, which is automatic and instantaneous.
- Utility bill payments.
- Renewal of term deposit, which is automatic and instantaneous.
- Voice out of last five transactions.

Online Banking

A computerized service that allows a bank's customers to get online with the bank via telephone lines to view the status of their accounts and transaction history.
Features include:
- Viewing account balances.
- Viewing recent transactions.
- Downloading bank statements, for example in PDF format.
- Viewing images of paid cheques.
- Ordering cheque books.
- Downloading periodic account statements.
- Downloading applications for M-banking, E-banking, etc.
- Funds transfers between the customer's linked accounts.
- Paying third parties, including bill payments and telegraphic/wire transfers.
- Investment purchase or sale.

Mobile Banking

Conduct of banking operations on mobile (cell) phones.
Features include:
- Mobile customers.
- M-commerce (Mobile commerce).
- Technology-based.
- Types of services.
- Eligibility.
- Application.
- Registration.

Automated Teller Machines (ATMs)

An electronic machine installed by a commercial bank, operated by the customer himself, to withdraw money and make other financial transactions.
Features include:
- Installed at any place, allowing banking anywhere.
- Round-the-clock access.
- Safe and secure.
- User-friendly.
Types of ATMs:
- On-site ATM.
- Off-Site ATM.

Advantages of ATMs

Permits cash withdrawals.
Permits cash deposits.
Enables making enquiry about the bank balance.
Facilitates requests for statements of accounts.
ATM card holders can have access to cash and service at any location.
Privacy in transactions.
Permits change of personal identification number (PIN).
Facilitates transfer of funds From/To accounts of the same and different branches.
Facilitates bill payments.
Facilities are available at any time, day or night, all the 24 hours, and 7 days a week, 365 days in a year.

Disadvantages of ATMs

Initial cost of installation of ATMs is very high.
If ATMs are on-site, then there will not be anywhere banking.
ATM system demands literacy on the part of users.
ATM system requires full computerization of all bank branches.
There are certain restrictions on the ATM facilities, for instance, customers cannot withdraw more than a particular amount.

Electronic Funds Transfer (EFT)

A system by which cheques, pay-in-slips, and other financial papers are replaced by computer-controlled invisible and immediate transfer of funds from one account to another.
Objective: To help banks offer money transfer service from one account of a bank branch to another account of a bank branch, both inter-city and intra-city.

Features of EFT

Offers facility for transfer of funds within 24 hours inter-bank, inter-city across 15 major cities.
Money transfer is only among public sector banks.
Remitter and receiver of funds can be from different banks.
Some services are levied for the transfer of funds.
There was a ceiling on the amount of transfer.

Merits of EFT

Funds can be transferred from one bank to another bank.
Funds are credited to the beneficiary's account instantly, this scheme is fast and timely.
Frauds in remittance of funds can be avoided.
Economical.
Minimizes the loss of interest for customers.

RTGS (Real-Time Gross Settlement)

A funds transfer system that settles payments on an individual order basis without netting debits with credits across the books of a central bank.
Features:
- Real-time gross settlement is the continuous process of settling interbank payments on an individual order basis across the books of a central bank.
- This system's process is opposed to netting debits with credits at the end of the day.
- Real-time gross settlement is generally employed for large-value interbank funds transfers.
- RTGS systems are increasingly used by central banks worldwide and can help minimize the risks related to high-value payment settlements among financial institutions.

Benefits of RTGS

Saves time.
Saves paper.
There is no threat of money being stolen or cheques being forged, since all the process is done online.
Huge sums of money can be transferred easily.
Helps companies manage their business capital in a much better way.
This is in turn also ensures a better supplier-buyer relationship.

NEFT (National Electronic Funds Transfer)

An electronic payment system that facilitates one-to-one funds transfer.
Features:
- NEFT is an electronic payment system that uses a secure mode of transferring funds from one bank branch to another bank branch.
- There is no minimum or maximum limit of amount of funds that could be transferred using NEFT.
- The remitter can track the NEFT transaction through the originating branch.

Benefits of NEFT

Efficient Service: NEFT facilitates an efficient, secure, economical, reliable, and expeditious system of funds transfer and clearing in the banking sector throughout India.
Freedom from Paper Handling: NEFT relieves the stress on the existing paper-based funds transfer and clearing system.

Disadvantages of NEFT

Highly Technical.
Risk involved with online payments.

Difference between NEFT and RTGS

NEFT stands for "National Electronic Fund Transfer".
RTGS stands for "Real-Time Gross Settlement".
The settlement in NEFT is slower.
RTGS is faster.
NEFT has no minimum transfer limit.
RTGS has a minimum transfer limit of Rs. 2 lac.

Internet Banking or Net Banking

Provision of banking services by a bank to its customers through its website.

Benefits of Internet Banking

Enables the customers to have every banking activity which a customer could do from his office or home with comfort.
Banks' websites act as an economical means of advertising their products and services.
Customers can interact with a bank at all hours from home, office, and perform any transaction at the cost of a local phone call.
Allows access to the largest number of customers and prospects at the lowest cost.
Additional benefits - easy access to NRI's who can access their accounts and conduct financial transactions at the click of the mouse.
Customers have a complete view of the services offered by the bank and their financial information at a glance.
Customers can have banking with the bank, and not just with a branch.

Limitations of Internet Banking

Security of internet banking is one of the key issues or problems.
Identity confirmation.
Accessibility.
The initial cost of installation of web sites and provision of internet banking is quite### BHIM
Features of BHIM:
- Send Money
- Request Money
- Scan and Pay
- Transactions
- Profile
- Bank Account
Benefits of BHIM:
- Easy money transfer without knowing recipient's bank or account number
- Use of USSD to access bank account details without internet connection
- Support for multiple languages (English and Hindi, with more in pipeline)
- Fixed amount transfer via QR code without sharing phone number
- Support from almost all commercial banks
- Aadhaar-based payments with biometric authentication
Disadvantages of BHIM:
- App is new and has many bugs
- Slow server response
- Issues with OTP generation
- Transaction limits (₹10,000 per transaction, ₹20,000 per day)
- No support for Maestro cards

UPI (Unified Payments Interface)

Features of UPI:
- Instant real-time payment system
- Developed by National Payments Corporation of India (NPCI)
- Regulated by Reserve Bank of India (RBI)
- Works on mobile platform
- Single app to manage multiple bank accounts and payments
- "Single Click 2 Factor Authentication" for secure transactions
Advantages of UPI:
- Minimal charges
- Instant money transfers
- No need to fill in details
- No registration required
- Always available
Disadvantages of UPI:
- Transaction limit
- Requires internet and smartphone
- Difficult to convince customers

Cloud Banking

Features of Cloud Banking:
- Four levels of service provision:
  - Business process as a service
  - Software as a service
  - Platform as a service
  - Infrastructure as a service

ECS (Electronic Clearing System)

Features of ECS:
- Used for bulk transfers of funds
- Used by institutions for making payments like dividend, interest, salary, pension, etc.
- Facilitates bulk transfer of monies from one bank account to many bank accounts or vice-versa
Advantages of ECS Credit Scheme:
- Benefits to beneficiary: cost-effective, no need to visit bank, and funds received on due date
- Benefits to user: savings on printing costs, efficient payment mode, and cost-effective
- Benefits to bank: freedom from paper handling, ease of processing, and cost-effective

MICR (Magnetic Ink Character Recognition)

Features of MICR:
- Code printed on cheques using magnetic ink
- Enables identification of cheques and faster processing
- 9-digit code that uniquely identifies bank and branch participating in ECS
Benefits of MICR:
- Fast and accurate processing of cheques
- Improved security measures
- Watermark, microprint, magnetic ink, invisible UV fluorescent, and chemical sensitivity features for added security

Basel Norms

Types of Basel Norms:
- Basel I (1988): focused on credit risk
- Basel II (2004): refined version of Basel I, focused on credit risk, market risk, and operational risk
- Basel III (2010): introduced in response to financial crisis, focused on strengthening banking system
Key features of Basel III:
- Increasing capital requirements
- Improving quality of bank regulatory capital
- Specifying minimum leverage ratio requirement
- Introducing capital buffers
- Focus on four important banking parameters: capital, leverage, funding and liquidity, and capital conservation buffer

Credit Cards and Debit Cards

Key differences between Credit Cards and Debit Cards:
- Credit limit
- Interest charges
- Credit period
- Payment method
Types of Credit Cards:
- Revolving credit card
- Charge card
- Standard credit card
- Business card
- Gold card
- Domestic card
- International card
- Proprietary card
- Master card
- Visa card
Features and benefits of Credit Cards:
- Convenience
- Credit facility
- Revolving credit facility
- Interest-free credit period
- Safety
- Record keeping
- Acceptability

Note: The study notes are organized by topic, with detailed bullet points and context to help with understanding and recall.

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Description

This quiz covers the recent developments in banking, focusing on e-banking or electronic banking, including ATMs, plastic money, and electronic fund transfers. It introduces the concept of e-banking and its impact on the banking sector.