Questions and Answers
What feature does the Platinum Plus Card offer?
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.
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What is the main purpose of BHIM app?
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IMPS transfers can be done only on weekdays.
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What does ECS stand for?
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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.
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What does MICR stand for?
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What does an MICR code comprise of?
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MICR technology uses magnetic ink to avoid forgery.
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The ______ on which MICR cheques are printed must be the CBSI (Clearing Bank Specification 1 or Clearing Bank Standard 1).
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Match the following types of credit cards with their descriptions:
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What is the meaning of E-banking or Electronic Banking?
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E-Banking allows for 24-hour access to banking services.
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What is the main benefit of E-Banking for banks?
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ATMs offer round the clock ________.
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Match the following electronic banking services with their descriptions:
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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
- Four levels of service provision:
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.
