TABLE OF CONTENTS

Introduction to the industry……………………………………………..01-47

Introduction to the Organization ……………………………………….48-72

Literature Review…………………………………………………………73-85
Research Methodology………………………………………………….86-91
→ Title of the Study………………………………………………….87

→ Duration of the project……………………………………………87

→ Objective of Study………………………………………………..87

→ Type of Research…………………………………………………88

→ Sample Size and method of selecting sample…………………89

→ Scope of Study……………………………………………………90

→ Limitation of Study……………………………………………….91

Analysis and Interpretation……………………………………………….92-110

Facts and Findings………………………………………………………110-113
Conclusion……………………………………………………………….114-116
Recommendation and Suggestions…………………………………………115
Appendix………………………………………………………………….116-120
Bibliography………………………………………………………………121-122
 CHAPTER – 1

INTRODUCTION TO INDUSTRY

The first banks were probably the religious temples of the ancient world, and were
probably established in the third millennium B.C. Banks probably predated the invention
of money. Deposits initially consisted of grain and later other goods including cattle,
agricultural implements, and eventually precious metals such as gold, in the form of
easy-to-carry compressed plates. Temples and palaces were the safest places to store
gold as they were constantly attended and well built. As sacred places, temples
presented an extra deterrent to would-be thieves. There are extant records of loans
from the 18th century BC in Babylon that were made by temple priests/monks to
merchants.

By the time of Hammurabi's Code, banking was well enough developed to justify the
promulgation of laws governing banking operations. Ancient Greece holds further
evidence of banking. Greek temples, as well as private and civic entities, conducted
financial transactions such as loans, deposits, currency exchange, and validation of
coinage. There is evidence too of credit, whereby in return for a payment from a client, a
moneylender in one Greek port would write a credit note for the client who could "cash"
the note in another city, saving the client the danger of carting coinage with him on his
journey. Pythius, who operated as a merchant banker throughout Asia Minor at the
beginning of the 5th century B.C., is the first individual banker of whom we have
records. Many of the early bankers in Greek city-states were ―metics‖ or foreign
residents. Around 371 B.C., Passion, a slave, became the wealthiest and most famous
Greek banker, gaining his freedom and Athenian citizenship in the process. The fourth
century B.C. saw increased use of credit-based banking in the Mediterranean world. In
Egypt, from early times, grain had been used as a form of money in addition to precious
metals, and state granaries functioned as banks. When Egypt fell under the rule of a
Greek dynasty, the Ptolemies (332-30 B.C.), the numerous scattered government
granaries were transformed into a network of grain banks, centralized in Alexandria
where the main accounts from all the state granary banks were recorded. This banking

1
network functioned as a trade credit system in which payments were effected by
transfer from one account to another without money passing. In the late third century
B.C., the barren Aegean island of Delos, known for its magnificent harbor and famous
temple of Apollo, became a prominent banking center. As in Egypt, real credit receipts
replaced cash transactions and payments were made based on simple instructions with
accounts kept for each client. With the defeat of its main rivals, Carthage and Corinth,
by the Romans, the importance of Delos increased. Consequently, it was natural that
the bank of Delos should become the model most closely imitated by the banks of
Rome.

Christ drives the Usurers out of the Temple, a woodcut by Lucas Cranach the Elder in
Passionary of Christ and Antichrist.

Banking during Roman times was not as we understand banking in modern times.
During the Participate, the majority of banking activities were conducted by private
individuals, and not by large banking corporations that exist today. Money lending not
only allowed for those people who needed money to have access to it, but that through
direct transference between bankers, the actual usage of currency was not needed
because it could be done purely through financial intermediation. Large investments
were conducted and financed by the federators (trans. financier), whilst those that
worked professionally in the money business and were recognized as such were known
by various names, such as argentarii (trans. banker), nummularii (trans. money
changer), and coactores (trans. debt collector), but the vast majority of money-lenders
in the Empire were private individuals, since anybody that had any additional capital and
wished to lend it out, could easily do so.

The rate of interest on loans varied in the range of four percent to 12 percent, but when
the interest rate was higher, it typically was not 15 or 16 percent, but 24 or 48 percent.
The apparent absence of intermediary rates suggests that the Romans may have had
difficulty calculating rates. They quoted them on a monthly basis, as in the loan
described here, and the most common rates were multiples of twelve. Monthly rates

2
tended to range from simple fractions to three or four percent, perhaps because lenders
used Roman numerals.

Columella advised people setting up vineyards to include the interest on borrowed

money among their costs as a matter of course and clearly understood that investors
need to think about the cost of invested funds, whether borrowed or not. His advice
shows financial sophistication in addition to suggesting the presence of loans for
productive purposes.

Money lending during this period was largely a matter of private loans being advanced
to people short of cash, whether persistently in debt or temporarily until the next
harvest. For the most part exceedingly rich men who were prepared to take on a high
risk if the profit looked good undertook it; interest rates were fixed privately and were
almost entirely unrestricted by law. Thus, investment was always regarded as a matter
of seeking personal profit, often on an exorbitant scale. Banking was of the small back-
street variety, run by the urban lower-middle class of petty shopkeepers. By the 3rd
century, acute currency problems in the Empire drove them into a state of decline.

Western banking history

The Church officially prohibited usury, which reafirmed the view that it was a sin to
charge interest on a money loan. The development of double entry bookkeeping would
provide a powerful argument in favor of the legitimacy and integrity of a firm and its
profits. While archival evidence suggests the emergence of bookkeeping practices
during the course of the 13th century, the earliest extant evidence of full double-entry
bookkeeping is the Farolfi ledger of 1299-1300. Giovanno Farolfi & Company were a
firm of Florentine merchants whose head office was in Nîmes whose ledger shows that
they also acted as moneylender to Archbishop of Arles, their most important customer.
His patronage must also have shielded the Florentines from any trouble over the
Church's official ban on usury, which in any case was not seriously enforced, provided
the rate of interest was not extortionate; the Archbishop himself borrowed from the
Farolfi at 15 per cent per annum.

3
 Banking in the modern sense of the word can be traced to medieval and early
Renaissance Italy, to the rich cities in the north like Florence, Venice, and Genoa. The
Bardi and Peruzzi families were dominated banking in 14th century Florence,
establishing branches in many other parts of Europe. Perhaps the most famous Italian
bank was the Medici bank, set up by Giovanni Medici in 1397. Modern Western
economic and financial history is usually traced back to the coffee houses of London.
The London Royal Exchange was established in 1565. At that, time moneychangers
were already called bankers, though the term "bank" usually referred to their offices,
and did not carry the meaning it does today. There was also a hierarchical order among
professionals; at the top were the bankers who did business with heads of state, next
were the city exchanges, and at the bottom were the pawn shops or "Lombard"'s. Some
European cities today have a Lombard street where the pawnshop was located.

Banking offices were usually located near centers of trade, and in the late 17th century,
the largest centers for commerce were the ports of Amsterdam, London, and Hamburg.
Individuals could participate in the lucrative East India trade by purchasing bills of credit
from these banks, but the price they received for commodities was dependent on the
ships returning (which often didn't happen on time) and on the cargo they carried (which
often wasn't according to plan). The commodities market was very volatile for this
reason, and because of the many wars that led to cargo seizures and loss of ships.

Capitalism

Around the time of Adam Smith (1776) there was a massive growth in the banking
industry. Banks played a key role in moving from gold and silver based coinage to paper
money, redeemable against the bank's holdings.

Within the new system of ownership and investment, the state's role as an economic
factor changed substantially.

Global banking

4
In the 1970s, a number of smaller crashes tied to the policies put in place following the
depression, resulted in deregulation and privatization of government-owned enterprises
in the 1980s, indicating that governments of industrial countries around the world found
private-sector solutions to problems of economic growth and development preferable to
state-operated, semi-socialist programs. This spurred a trend that was already prevalent
in the business sector, large companies becoming global and dealing with customers,
suppliers, manufacturing, and information centers all over the world.

Global banking and capital market services proliferated during the 1980s and 1990s as
a result of a great increase in demand from companies, governments, and financial
institutions, but also because financial market conditions were buoyant and, on the
whole, bullish. Interest rates in the United States declined from about 15% for two-year
U.S. Treasury notes to about 5% during the 20-year period, and financial assets grew
then at a rate approximately twice the rate of the world economy. Such growth rate
would have been lower, in the last twenty years, were it not for the profound effects of
the internationalization of financial markets especially U.S. Foreign investments,
particularly from Japan, who not only provided the funds to corporations in the U.S., but
also helped finance the federal government; thus, transforming the U.S. stock market by
far into the largest in the world.

Nevertheless, in recent years, the dominance of U.S. financial markets has been
disappearing and there has been an increasing interest in foreign stocks. The
extraordinary growth of foreign financial markets results from both large increases in the
pool of savings in foreign countries, such as Japan, and, especially, the deregulation of
foreign financial markets, which has enabled them to expand their activities. Thus,
American corporations and banks have started seeking investment opportunities
abroad, prompting the development in the U.S. of mutual funds specializing in trading in
foreign stock markets.

Such growing internationalization and opportunity in financial services has entirely

changed the competitive landscape, as now many banks have demonstrated a
preference for the ―universal banking‖ model prevalent in Europe. Universal banks are

5
free to engage in all forms of financial services, make investments in client companies,
and function as much as possible as a ―one-stop‖ supplier of both retail and wholesale
financial services.

Many such possible alignments could be accomplished only by large

acquisitions, and there were many of them. By the end of 2000, a year in which a record
level of financial services transactions with a market value of $10.5 trillion occurred, the
top ten banks commanded a market share of more than 80% and the top 5, 55%. Of the
top ten banks ranked by market share, seven were large universal-type banks (three
American and four European), and the remaining three were large U.S. investment
banks who between them accounted for a 33% market share.

This growth and opportunity also led to an unexpected outcome: entrance into
the market of other financial intermediaries: nonbanks. Large corporate players were
beginning to find their way into the financial service community, offering competition to
established banks. The main services offered included insurances, pension, mutual,
money market and hedge funds, loans and credits and securities. Indeed, by the end of
2001 the market capitalization of the world‘s 15 largest financial services providers
included four nonbanks.

In recent years, the process of financial innovation has advanced enormously

increasing the importance and profitability of nonbank finance. Such profitability priory
restricted to the nonbanking industry, has prompted the Office of the Comptroller of the
Currency (OCC) to encourage banks to explore other financial instruments, diversifying
banks' business as well as improving banking economic health. Hence, as the distinct
financial instruments are being explored and adopted by the banking and nonbanking
industries, the distinction between different financial institutions is gradually vanishing.

Major events in banking history

Florentine banking — The Medicis and Pittis among others.

Knights Templar- earliest Euro wide /Mideast banking 1100-1300.
Banknotes — Introduction of paper money.

6
 1602 - First joint-stock company, the Dutch East India Company founded.
1720 - The South Sea Bubble and John Law's Mississippi Scheme, which
caused a European financial crisis and forced many bankers out of business.
1781 - The Bank of North America was found by the Continental Congress.
1800 - Rothschild family founds Euro wide banking.
1930-33 in the wake of the Wall Street Crash of 1929, 9,000 banks close, wiping
out a third of the money supply in the United States.
1986 - The "Big Bang" (deregulation of London financial markets) served as a
catalyst to reaffirm London's position as a global centre of world banking.
2008 - Washington Mutual collapses. It was the largest bank failure in history.

Oldest private banks

Monte dei Paschi di Siena 1472–present, the oldest surviving bank in the world.
Founded in 1472 by the Magistrate of the city-state of Siena, Italy.
Rolo Banca founded 1473 - now part of Unicredit Group of Italy
C. Hoare & Co founded 1672
Barclays, which was founded by John Freame and Thomas Gould in 1690 [19] and
renamed to Barclays by Freame's son-in-law, James Barclay, in 1736
Rothschild family 1700–present
Wegelin & Co. Private Bankers 1741–present, the oldest Swiss bank, founded in
1741 in St. Gallen, third largest private bank in Switzerland
Hope & Co., founded in 1762

Oldest national banks

Bank of Sweden — The rise of the national banks, began operations in 1668
Bank of England — The evolution of modern central banking policies, established
in 1694
Bank of America — The invention of centralized check and payment processing
technology
Swiss banking

7
 United States Banking
The Pennsylvania Land Bank, founded in 1723 and receiving the support of
Benjamin Franklin who wrote "Modest Enquiry into the Nature and Necessity of a
Paper Currency" in 1729.
Ziraat Bank (Turkey) — Founded in 1863 to finance farmers by providing
agricultural loans.
Bulgarian National Bank — the central bank of the Republic of Bulgaria with its
headquarters in Sofia, has been established in 25 January 1879 and is one of the
oldest central banks in the world. The BNB is an independent institution
responsible for issuing all banknotes and coins in the country, overseeing and
regulating the banking sector and keeping the government's currency reserves.
Imperial Bank of Persia (Iran) Founded in 1888 and was merged in Tejarat Bank
in 1979 — History of banking in the Middle-East

History of Banking in India

For the past three decades, India's banking system has several outstanding
achievements to its credit. The most striking is its extensive reach. It is no longer
confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system
has reached even to the remote corners of the country. This is one of the main reasons
of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividends with
the nationalization of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for
getting a draft or for withdrawing his own money. Today, he has a choice. Gone are
days when the most efficient bank transferred money from one branch to other in two
days. Now it is simple as instant messaging or dial a pizza. Money have become the
order of the day.

8
The first bank in India, though conservative, was established in 1786. From 1786 until
today, the journey of Indian Banking System can be segregated into three distinct
phases. They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks

Nationalization of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.
New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and
Phase III.

Phase I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan
and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of
Bombay (1840), and Bank of Madras (1843) as independent units and called it
Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of
India was established which started as private shareholders banks, mostly Europeans
shareholders.

In 1865, Allahabad Bank was established and first time exclusively by Indians, Punjab
National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and
1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank,
and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase, the growth was very slow and banks also experienced
periodic failures between 1913 and 1948. There were approximately 1100 banks,
mostly small. To streamline the functioning and activities of commercial banks, the
Government of India came up with The Banking Companies Act, 1949 which was later
changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of

9
1965). Reserve Bank of India was vested with extensive powers for the supervision of
banking in India as the Central Banking Authority.

During those, day‘s public has lesser confidence in the banks. As an aftermath, deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal
department was comparatively safer. Moreover, funds were largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform after independence.
In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a large
scale especially in rural and semi-urban areas. It formed State Bank of India to act as
the principal agent of RBI and to handle banking transactions of the Union and State
Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19
July 1969, major process of nationalization was carried out. It was the effort of the then
Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country
were nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried out in 1980
with seven more banks. This step brought 80% of the banking segment in India under
Government ownership.

The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country:

1949: Enactment of Banking Regulation Act.

1955: Nationalization of State Bank of India.
1959: Nationalization of SBI subsidiaries.
1961: Insurance cover extended to deposits.
1969: Nationalization of 14 major banks.
1971: Creation of credit guarantee corporation.
1975: Creation of regional rural banks.

10
 1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.Banking
in the sunshine of Government ownership gave the public implicit faith and immense
confidence about the sustainability of these institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector in its
reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was
set up by his name, which worked for the liberalization of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being put
to give a satisfactory service to customers. Phone banking and net banking is
introduced. The entire system became more convenient and swift. Time is given more
importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from
any crisis triggered by any external macroeconomics shock as other East Asian
Countries suffered. This is all due to a flexible exchange rate regime, the foreign
reserves are high, the capital account is not yet convertible, and banks and their
customers have limited foreign exchange exposure.

Nationalization of Banks in India

The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then
prime minister. It nationalized 14 banks then. These banks were mostly owned by
businesspersons and even managed by them.

Central Bank of India

Bank of Maharashtra
Dena Bank

11
 Punjab National Bank
Syndicate Bank
Canara Bank
Indian Bank
Indian Overseas Bank
Bank of Baroda
Union Bank
Allahabad Bank
United Bank of India
UCO Bank
Bank of India

Before the steps of nationalization of Indian banks, only State Bank of India (SBI)
was nationalized. It took place in July 1955 under the SBI Act of 1955. Nationalization of
Seven State Banks of India (formed subsidiary) took place on 19 July 1960.

The State Bank of India is India's largest commercial bank and is ranked one of
the top five banks worldwide. It serves 90 million customers through a network of 9,000
branches and it offers -- either directly or through subsidiaries -- a wide range of
bankingservices.

The second phase of nationalization of Indian banks took place in the year 1980. Seven
more banks were nationalized with deposits over 200 crore. Until this year,
approximately 80% of the banking segment in India was under Government ownership.

After the nationalization of banks in India, the branches of the public sector banks
rose to approximately 800% in deposits and advances took a huge jump by 11,000%.

1955: Nationalization of State Bank of India.

1959: Nationalization of SBI subsidiaries.
1969: Nationalization of 14 major banks.

12
 1980: Nationalization of seven banks with deposits over 200 crores.

Scheduled Commercial Banks in India

The commercial banking structure in India consists of:

Scheduled Commercial Banks in India

Unscheduled Banks in India

Scheduled Banks in India constitute those banks, which have been included in the
Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn includes only
those banks in this schedule which satisfy the criteria laid down vide section 42 (6) (a)
of the Act.

As on 30th June, 1999, there were 300 scheduled banks in India having a total network
of 64,918 branches. The scheduled commercial banks in India comprise of State bank
of India and its associates (8), nationalized banks (19), foreign banks (45), private
sector banks (32), co-operative banks and regional rural banks.

"Scheduled banks in India" means the State Bank of India constituted under the State
Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of
India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted
under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank
included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934),
but does not include a co-operative bank".

"Non-scheduled bank in India" means a banking company as defined in clause

(c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a
scheduledbank".

13
The following are the Scheduled Banks in India (Public Sector):

State Bank of India

State Bank of Bikaner and Jaipur
State Bank of Hyderabad
State Bank of Indore
State Bank of Mysore
State Bank of Saurashtra
State Bank of Travancore
Andhra Bank
Allahabad Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Overseas Bank
Indian Bank
Oriental Bank of Commerce
Punjab National Bank
Punjab and Sind Bank
Syndicate Bank
Union Bank of India
United Bank of India
UCO Bank
Vijaya Bank

14
The following are the Scheduled Banks in India (Private Sector):

ING Vysya Bank Ltd

Axis Bank Ltd
Indusind Bank Ltd
ICICI Bank Ltd
South Indian Bank
HDFC Bank Ltd
Centurion Bank Ltd
Bank of Punjab Ltd
IDBI Bank Ltd
Jammu & Kashmir Bank Ltd.

The following are the Scheduled Foreign Banks in India:

American Express Bank Ltd.

ANZ Gridlays Bank Plc.
Bank of America NT & SA
Bank of Tokyo Ltd.
Banquc Nationale de Paris
Barclays Bank Plc
Citi Bank N.C.
Deutsche Bank A.G.
Hongkong and Shanghai Banking Corporation
Standard Chartered Bank.
The Chase Manhattan Bank Ltd.
Dresdner Bank AG.

15
 INTRODUCTION OF INTERNET BANKING

Internet banking-Internet banking is changing the banking industry and is having the
major effects on banking relationships. Banking is now no longer confined to the
branches were one has to approach the branch in person, to withdraw cash or deposit a
cheque or request a statement of accounts. In true Internet banking, any inquiry or
transaction is processed online without any reference to the branch (anywhere banking)
at any time. Providing Internet banking is increasingly becoming a "need to have" than a
"nice to have" service. The net banking, thus, now is more of a norm rather than an
exception in many developed countries due to the fact that it is the cheapest way of
providing banking services.

WHAT IS E-BANKING?
E-banking is defined as the automated delivery of new and traditional banking products
and services directly to customers through electronic, interactive communication
channels. E-banking includes the systems that enable financial institution customers,
individuals or businesses, to access accounts, transact business, or obtain information
on financial products and services through a public or private network, including the
Internet. Customers access e-banking services using an intelligent electronic device,
such as a personal computer (PC), personal digital assistant (PDA), automated teller
machine (ATM), kiosk, or Touch Tone telephone. While the risks and controls are
similar for the various e-banking access channels, this booklet focuses specifically on
Internet-based services due to the Internet‘s widely accessible public network.
Accordingly, this booklet begins with a discussion of the two primary types of Internet
websites: informational and transactional

Traditional banks offer many services to their customers, including accepting customer
money deposits, providing various banking services to customers, and making loans to
individuals and companies. Compared with traditional channels of offering banking
services through physical branches, e-banking uses the Internet to deliver traditional
banking services to their customers, such as opening accounts, transferring funds, and
electronic bill payment.

16
E-banking can be offered in two main ways. First, an existing bank with physical offices
can also establish an online site and offer e-banking services to its customers in
addition to the regular channel. For example, Citibank is a leader in e-banking, offering
walk-in, face-to-face banking at its branches throughout many parts of the world as well
as e-banking services through the World Wide Web. Citibank customers can access
their bank accounts through the Internet, and in addition to the core e-banking services
such as account balance inquiry, funds transfer, and electronic bill payment, Citibank
also provides premium services including financial calculators, online stock quotes,
brokerage services, and insurance.

E-banking from banks like Citibank complements those banks' physical presence.
Generally, e-banking is provided without extra cost to customers. Customers are
attracted by the convenience of e-banking through the Internet, and in turn, banks can
operate more efficiently when customers perform transactions by themselves rather
than going to a branch and dealing with a branch representative.

E-banking services are delivered to customers through the Internet and the web using
Hypertext Markup Language (HTML). In order to use e-banking services, customers
need Internet access and web browser software. Multimedia information in HTML
format from online banks can be displayed in web browsers. The heart of the e-banking
application is the computer system, which includes web servers, database management
systems, and web application programs that can generate dynamic HTML pages.

One of the main concerns of e-banking is security. Without great confidence in security,
customers are unwilling to use a public network, such as the Internet, to view their
financial information online and conduct financial transactions. Some of the security
threats include invasion of individuals' privacy and theft of confidential information.
Banks with e-banking service offer several methods to ensure a high level of security:
(1) identification and authentication, (2) encryption, and (3) firewalls. First, the
identification of an online bank takes the form of a known Uniform Resource Locator
(URL) or Internet address, while a customer is generally identified by his or her login ID
and password to ensure only authenticated customers can access their accounts.

17
Second, messages between customers and online banks are all encrypted so that a
hacker cannot view the message even if the message is intercepted over the Internet.
The particular encryption standard adopted by most browsers is called Secure Socket
Layer (SSL). It is built in the web browser program and users do not have to take any
extra steps to set up the program. Third, banks have built firewalls, which are software
or hardware barriers between the corporate network and the external Internet, to protect
the servers and bank databases from outside intruders. For example, Wells Fargo Bank
connected to the Internet only after it had installed a firewall and made sure the firewall
was sufficiently impenetrable.

HISTORY OF E- BANKING

On October 1, 2000, the electronic signatures bill took effect, recognizing documents
signed online as legal. Some banks plan to begin usin electronic checks as soon as
they can work out various security measures.

18
The range of e-banking services is likely to increase in the future. Some banks plan to
introduce electronic money and electronic checks. Electronic money can be stored in
computers or smart cards and consumers can use the electronic money to purchase
small value items over the Internet. Electronic checks will look similar to paper checks,
but they can be sent from buyers to sellers over the Internet, electronically endorsed by
the seller, and forwarded to the seller's bank for electronic collection from the buyer's
bank. Further, banks seek to offer their customers more products and services such as
insurance, mortgage, etc.

EVOLUTION OF E-BANKING
The story of technology in banking started with the use of punched card machines like
Accounting Machines or Ledger Posting Machines. The use of technology, at that time,
was limited to keeping books of the bank. It further developed with the birth of online
real time system and vast improvement in telecommunications during late 1970‘s and
1980‘s.it resulted in a revolution in the field of banking with ―convenience banking‖ as a
buzzword. Through Convenience banking, the bank is carried to the doorstep of the
customer.
The 1990‘s saw the birth of distributed computing technologies and Relational Data
Base Management System. The banking industry was simply waiting for these
technologies. Now with distribution technologies, one could configure dedicated
machines called front-end machines for customer service and risk control while
communication in the batch mode without hampering the response time on the frontend
machine. Intense competition has forced banks to rethink the way they operated their
business. They had to reinvent and improve their products and services to make them
more beneficial and cost effective. Technology in the form of E-banking has made it
possible to find alternate banking practices at lower costs. More and more people are
using electronic banking products and services because large section of the banks
future customer base will be made up of computer literate customer, the banks must be
able to offer these customer products and services that allow them to do their banking
by electronic means. If they fail to do this will, simply, not survive. New products and

19
services are emerging that are set to change the way we look at money and the
monetary system.

NEED FOR E-BANKING

One has to approach the branch in person, to withdraw cash or deposit a cheque or
request a statement of accounts. In true Internet banking, any inquiry or transaction is
processed online without any reference to the branch (anywhere banking) at any time.
Providing Internet bankings increasingly becoming a "need to have" than a "nice to
have" service. The net banking, thus, now is more of a norm rather than an exception in
many developed countries due to the fact that it is the cheapest way of providing
banking services. Banks have traditionally been in the refront of harnessing technology
to improve their products, services and efficiency. They have, over a long time, been
using

Bank Information technology Customer

electronic and telecommunication networks for delivering a wide range of value added
products and services. The delivery channels include direct dial – up connections,
private networks, public networks etc and the devices include telephone, Personal
Computers including the Automated Teller Machines, etc. With the popularity of PCs,
easy access to Internet and World Wide Web (WWW), Internet is increasingly used by
banks as a channel for receiving instructions and delivering their products and services
to their customers. This form of banking is generally referred to as Internet Banking,
although the range of products and services offered by different banks vary widely both
in their content and sophistication.

20
DIAGRAM OF E-BANKING SYSTEM

21
Types of E-Banking

The common assumption is that Internet banking is the only method of on-line banking.
However, this is not strictly the case, as several types of service are currently available:

PC Banking - The forerunner to Internet banking has been around since the late
1980's and is still widely used today. Individual banks provide software which is
loaded on to an SME's office computer. The SME can then access their bank
account via a modem and telephone link to the bank. Access is not necessarily
via the Internet.
Internet Banking - Using a Web browser, a user can access their account, once
the bank's application server has validated the user's identity.
Digital TV Banking- Using the standard digital reception equipment (set top box
and remote control), users can access their bank account. Abbey National and
HSBC services are available via Digital TV providers. One of its main selling
points is that no account details are transmitted via the World Wide Web;
Text Phone Banking - HSBC have introduced this service to allow customers
with text phones to check their balance, pay bills and transfer money.

Internet banking can be split into two distinct groups:

Traditional banks and building societies use the Internet as an add-on service
with which to give businesses access to their accounts.
New Internet-only banks have no bricks and mortar presence on the High Street.
Therefore, they have lower overheads and can offer higher rates of interest and
lower charges.

FEATUERS OF E-BANKING

 E-Banking provide exceptional rates on Savings, CDs, and IRAs

 Checking with no monthly fee, free bill payment and rebates on ATM
surcharges

22
 credit cards with low rates
 Easy online applications for all accounts, including personal loans and
mortgages
 24 hour account access
 It provides Quality customer service with personal attention
 It provides the quick services to their customers.
 Enables transfer of funds from one place to another(banks).
 Exchange of statisticals information amongs banks.
 Enables foreign exchange operations.
 Inter-bank applications like settlement of funds between banks.
 Provides facilities like demat operation, ATM operation, online banking.

BENEFITS OF E-BANKING

For Banks:

Price- In the long run a bank can save on money by not paying for tellers or for
managing branches. Plus, it's cheaper to make transactions over the Internet. Customer
Base- The Internet allows banks to reach a whole new market- and a well off one too,
because there are no geographic boundaries with the Internet. The Internet also
provides a level playing field for small banks who want to add to their customer base.
Efficiency- Banks can become more efficient than they already are by providing Internet
access for their customers. The Internet provides the bank with an almost paper less
system.

Customer Service and Satisfaction- Banking on the Internet not only allow the customer
to have a full range of services available to them but it also allows them some services
not offered at any of the branches. The person does not have to go to a branch where
that service may or may not be offer. A person can print of information, forms, and
applications via the Internet and be able to search for information efficiently instead of
waiting in line and asking a teller. With more better and faster options a bank will surly
be able to create better customer relations and satisfaction.

23
Image- A bank seems more state of the art to a customer if they offer Internet access. A
person may not want to use Internet banking but having the service available gives a
person the feeling that their bank is on the cutting image.

For Customers:

Bill Pay: Bill Pay is a service offered through Internet banking that allows the customer
to set up bill payments to just about anyone. Customer can select the person or
company whom he wants to make a payment and Bill Pay will withdraw the money from
his account and send the payee a paper check or an electronic payment

Other Important Facilities: E- banking gives customer the control over nearly every
aspect of managing his bank accounts. Besides the Customers can, Buy and Sell
Securities, Check Stock Market Information, Check Currency Rates, Check Balances,
See which checks are cleared, Transfer Money, View Transaction History and avoid
going to an actual bank. The best benefit is that Internet banking is free. At many banks
the customer doesn't have to maintain a required minimum balance. The second big
benefit is better interest rates for the customer.

Internet Banking

Internet banking, sometimes called online banking, is an outgrowth of PC banking.

Internet banking uses the Internet as the delivery channel by which to conduct banking
activity, for example, transferring funds, paying bills, viewing checking and savings
account balances, paying mortgages, and purchasing financial instruments and
certificates of deposit. An Internet banking customer accesses his or her accounts from
a browser— software that runs Internet banking programs resident on the bank‘s World
Wide Web server, not on the user‘s PC. Net Banker defines a ― true Internet bank‖ as
one that provides account balances and some transactional capabilities to retail
customers over the World Wide Web. Internet banks are also known as virtual, cyber,
net, interactive, or web banks. his is basically the banking industry's attempt to jump on
the "e-business" band wagon. E-banking is a term that attempts to broadly describe

24
today's alternate delivery channels. Different banks - and vendors - will describe this
differently.

Rather than spending too much time on the term, I'd suggest you open a dialogue with
your customers about the types of services they are interested in, and begin to prioritize
your investment in these new services. Ideas would include image delivery via Internet,
Internet Commercial cash management, and on-line bill pay.

MAIN CONCERNS IN INTERNET BANKING

In a survey conducted by the Online Banking Association, member institutions rated

security as the most important issue of online banking. There is a dual requirement to
protect customers' privacy and protect against fraud. Banking Securely: Online Banking
via the World Wide Web provides an overview of Internet commerce and how one
company handles secure banking for its financial institution clients and their customers.
Some basic information on the transmission of confidential data is presented in Security
and Encryption on the Web. PC Magazine Online also offers a primer: How Encryption
Works. A multi-layered security architecture comprising firewalls, filtering routers,
encryption and digital certification ensures that your account information is protected
from unauthorized access.

Internet Banking in India

The Internet banking is changing the banking industry and is having the major effects on
banking relationships. Even the Morgan Stanley Dean Witter Internet research
emphasized that Web is more important for retail financial services than for many other
industries. Internet banking involves use of Internet for delivery of banking products &
services. It falls into four main categories, from Level 1 - minimum functionality sites that
offer only access to deposit account data - to Level 4 sites - highly sophisticated
offerings enabling integrated sales of additional products and access to other financial
services- such as investment and insurance.

25
DRIVERS OF CHANGE

Advantages previously held by large financial institutions have shrunk considerably. The
Internet has leveled the playing field and afforded open access to customers in the
global marketplace. Internet banking is a cost-effective delivery channel for financial
institutions. Consumers are embracing the many benefits of Internet banking. Access to
one's accounts at anytime and from any location via the World Wide Web is a
convenience unknown a short time ago. The six primary drivers of Internet banking
includes, in order of primacy are:

 Improve customer access

 Facilitate the offering of more services
 Increase customer loyalty
 Attract new customers
 Provide services offered by competitors
 Reduce customer attrition

The banking industry in India is facing unprecedented competition from non-traditional

banking institutions, which now offer banking and financial services over the Internet.
The deregulation of the banking industry coupled with the emergence of new
technologies, are enabling new competitors to enter the financial services market
quickly and efficiently.

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

26
  View balance and statements;
 Brings door to door services
 Create, view and maintain Standing Orders
 Have evolutionary trend at a globle scenario.

ADVANTAGES OF E-BANKING:-

• Convenience - Unlike your corner bank, online banking sites never c lose; they‘re
available 24 hours a day, seven days a wee k, and they‘re only a mouse click away.
With pressures on time and longer travelling periods, more and more people find
it tiresome waiting in queues. People want flexibility, and Internet banking offers
just that.

• Ubiquity - If you‘re out of state or even out of the country when a money
problem arises, you can log on instantly to your online bank and take care of
business, 24\7.

• Transaction speed - Online bank sites generally execute and confirm transactions
at or quicker than ATM processing speeds.

• Efficiency- You can access and manage all of your bank accounts, including
IRA‘s, CDs, even securities, from one secure site.

• Effectiveness- Many online banking sites now offer sophisticated tools, including
account aggregation, stock quotes, rate alert and portfolio managing program to help
you manage all of your assets more effectively. Most are also compatible with money
managing programs such as quicken and Microsoft money.

• Cheaper alternative : - With increasing competition, it seems to be the cost

factor that is driving banks to offer the facility. The Internet is still a very cheap
alternative to opening a physical branch, and most of the push seems to be coming
from the supply side. The costs of a banking service through the Internet form a
fraction of costs through conventional methods.

27
• From snob value to necessity:- A couple of years ago, there was a belief even among
bankers that customers opening new accounts wanted the online banking facility,
just to "feel good" and very few of them actually used the services. Today,
bankers believe that the trend from `nice to have' is changing to `need to have'. The
"snob value" of banking with an organization that could offer service on the Internet has
given way to a genuine necessity, he feels. "It all depends on how busy a person is."

DISADVANTAGES OF INTERNET BANKING

• Start-up may take time -Ioorder to register for your bank‘s online program, you
will probably have to provide ID and sign a form at a bank branch. If you and your
spouse wish to view and manage their assets together online, one of you may have
to sign a durable power of attorney before the bank will display all of your holdings
together.

•Learning curves- Banking sites can be difficult to navigate at first. Plan to invest
some time and\or read the tutorials in order to become comfortable in your virtual
lobby.

•Bank site changes- Even the largest banks periodically upgrade their online
programs, adding new features in unfamiliar places. In some cases, you may
have to re-enter account information.

HOW E-BANKING CAN EASE YOUR LIFE

Indian banks are trying to make your life easier. Not just bill payment, you can make
investments, shop or buy tickets and plan a holiday at your fingertips. In fact, source s
from ICICI Bank tell us, "Our Internet banking base has been growing a t an
exponential pace over the last few years. Currently around 78 percent of the
bank's customer base is registered for Internet banking." To get started, all you
need is a computer with a modem or other dial-up device, a checking account with a
bank that offers online service and the patience to complete about a one-page
application-- which can usually be done online. You can a vail the following services.

28
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.
Payee‘s ac count 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 a bout three working days. ICICI Bank says that online
bill payment service and fund transfer facility have been their most popular online
services.

3. Credit card customers : 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 the ir 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 aamjanta. Indian
Railways has tie d 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 Mumba i, 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
ca n also be a great friend for lazy investors. Now investors with interlinked
demat account and bank account can easily trade in the stock ma rket and the

29
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 a bout filling those big
forms for mutual funds, they will now be just a few c licks 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 : 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 pre
paid mobile cards by logging in to Internet banking. By just selecting the operator's
name, entering the mobile number and the amount for re charge , 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.

Mobile banking use cases

A mobile user has to be seen from his context when using the application. Needs and
expectations are not generic, but bound to this context.

As a typical mobile banking user, we consider someone who already is an electronic

banking user shows significant affinity to technology and often finds himself in situations
where he can not (or does not want to) rely an infrastructure necessary for electronic
banking.

In the following, we introduce four use cases. These have been developed in the
course of two group discussions; each group consisted of mobile banking users and
mobile commerce experts. The groups focused on identifying real-life situations in which

30
the use of mobile banking provides an informational added value. The resulting
situations have been aggregated to the use cases The use cases are not exhaustive,
but representative: Each case stands for a series of cases, which are similar in the
depth of the desired information and/or the conditions of the usage. For each use case
we identify the most important, concrete need that the user has in this particular
situation.

Use case 1: Request of account balance.

The user is in a mobile situation (e.g. in a department store) and intends to know his
account balance, e.g. to verify his account before realizing a spontaneous purchase.
Resulting need: Quick obtainment of account balance.

Use case 2: Control of account movements.

The user is waiting for an important cash receipt on his account. He intends to have the
exact details of the cash receipt. Resulting need: Continuous control over movements
on the account.

Use case 3: Instant payment.

The user is in a mobile situation and intends to make a payment by bank transfer from
his account. Resulting need: Instant execution of a bank transfer.

Use case 4: Administration of the account.

The user intends to use spare time (e.g. using a train or waiting on the airport) to
administrate his account. Resulting need: Quick and easy-to-use execution of
transactions and administration is possible.

Business models and new ways to interact with customers. The ability to perform
banking transactions online has created new players in the financial industry, such as
online banks and brokers who offer personalized services through their Web portals.
This increased competition is driving traditional financial institutions to find new ways to

31
add the value to their products and services, gain competitive advantage and increase
customer loyalty while also attracting new, high-value clients.

Mobile and wireless technology, combined with the wide variety of portable
devices available today, enables new revenue opportunities for financial services
organizations. This provides a new channel that can be used to refresh and expand the
customer base, attract prime customers and enhance loyalty. With mobile and wireless
technology, banks can offer a wide possibilities of services to their customers, from the
freedom of paying bills while stuck in traffic, to receiving notification of a change in stock
price while having lunch, the convenience and time saving benefits of wireless financial
services are huge. The challenge, then, is how to turn these possibilities into a reality for
the customers.

Benefits Description

Developing wireless applications and services targeted

Grow new
at the mobile mass market will allow attracting new, high-
customer base
value customers into mobile banking portal and
and markets
expanding the reach to global markets.

The convenience of having personalized wireless

access to critical financial information is an invaluable

Increase share service for customers on the move. Enabling the

of customer execution of time-sensitive financial transactions

wallet anywhere, anytime, provides the opportunity to

strengthen the relationships with existing customers.
This ultimately results in an increased share of the
customers' transactions--preventing them from taking a

32
 portion of their financial business elsewhere.

Granting customers flexible access to financial

Grow assets,
information and accounts enables them to perform
number of
transactions when it's most convenient for them. As a
transactions and
result, they have the opportunity to conduct transactions
fees
more frequently, driving increased revenue from fees.

Brand and reputation for convenience, service and

innovation will be strengthened and enhanced each

Expand and time customers on the move stop to check their stock

enhance brand portfolio or to pay bills wirelessly. This also offers

presence significant potential to grow the market awareness

through word-of-mouth.

33
General conditions of mobile banking

Electronic banking is one of the most successful business- to-consumer applications in

electronic commerce (EC).

Banks greatly support this not only because they could meet their customers‘ need for
convenience but also because of the enormous economic impacts in replacing a high-
cost channel (bank clerks) through a low-cost channel (a central web server) for simple
transactions, with the additional benefit of eliminating the necessity for a media
conversion.

Since users considered their mobile phone as a personal trusted device making it to an
integral part of their lives and more and more of these devices became Internet-
enabled, the regular conclusion was the transformation of banking applications to
mobile devices as the next step of electronic banking development.

For mobile banking, the advantages even go much further than for electronic banking:
The high penetration of mobile phones reaches all social levels; mobile applications
disband the limitations of electronic banking as they allow for a use anytime-anywhere
and the subjective and objective security of the device is higher than that of a personal
computer. Despite all of this, more than four years after the start of the first mobile
banking applications customers simply do not use them and utilization figures stay very
far behind all expectations (e.g. [1]). Mobile banking as an established channel still
seems to be a distant prospect.

The reasons for this great disappointment are to be analyzed. Doing so in the following
sections, we do not intend to start with current applications (which could mean biased)
but from scratch, with an analysis of the customer requirements to such applications.

34
 Customer requirements for mobile banking applications Set
of customer requirements

Technical requirements

Usage is possible with both kinds of devices

Adaptation to device
Usage regardless of network operator
Small amount of transmitted data

Usability requirements

Possibility to work offline

Simple data input method
Resumption of usage at the same point
One-Click-Request

Design requirements

Possibility to personalize the application

Possibility to scale the application
Announcement of events
Wide range of functionality

Security requirements

Encrypted data transmission

Authorization of access
Simple Authorization

35
General considerations

A mobile banking application is, first of all, a mobile application. To conceptualize

a mobile application, additional informational added values have to be targeted, using
mobile added values [14]. In other words, it is far from sufficiency to just porting an
existing Internet application on a mobile device. Mobile applications have to be
specifically made-to-measure on the one hand side to the needs and expectations of
the mobile user and on the other hand side to the specific restrictions of mobile
communication techniques and mobile devices. In order to derive a set of requirements
to mobile banking applications we pursue two steps: Firstly we identify general
characteristics of the mobile use which are relevant. Secondly we closely watch the
user and his context when wanting to use mobile banking.

Characteristics of the mobile use

The use of mobile applications underlies several specific restrictions. We consider five
characteristics of the mobile use to be particularly relevant as they greatly influence the
design of mobile banking applications and the suitability of certain technical solutions. A
mobile application is used via a mobile device. For these devices (currently either a
mobile phone or a PDA), special limitations are valid .For the mobile banking context,
above all, these are the limited input and display capabilities. The connection is
provided by a mobile network operator (MNO). This is especially important if
applications need to access certain parts of the infrastructure which are under control of
the MNO (e.g. the SIM card). In the case of negotiations, these have to be pursued with
all MNO on the designated market. The use of mobile data transmission is expensive. In
the case of circuit-switched data transmission.

Sensitive data is transmitted. This implicates the use of adequate security

measures. A disruption of the usage is possible at any time. This is principally already
true for electronic banking as well (the connection may e.g. be disrupted by a
breakdown of the transmission or of the operating system of the client Computer) and
provides a special necessity to avoid incomplete transactions. For mobile banking, it is
extremely more probable as a mobile usage causes a continuous change of conditions,

36
e.g. through geographical influences or cell-handover. Thus, it is also important for the
usability of a service: It is not acceptable for a user if he almost completed a transaction
and his train enters a tunnel that he has to wait until the end of the tunnel and restart his
transaction from the beginning (hoping the next tunnel is far away enough). It is
important that the named restrictions have to be considered as early as possible, which
means in the phase of conceptualization.

Mobile Banking: No wires, No worries, New Customers

Mobile communication devices are revolutionizing banking transactions over wireless

network and the Internet. To attract and retain customers, bank need to exchange their
full range of services across a wide range of Mobile, wireless devices without having an
impact on their current infrastructure and the delivery channels it currently supports.
Wireless Networks, Mobile Gateways, Wireless Application Protocol (WAP) & Wireless
Markup Language (WML) all play an important role in bringing mobile banking strategy
to the market.

In addition to established traditional channels, including branch banking and ATM

banking, most major banks in today market now offers e-banking as an extension to
their existing array of services & conveniences of wired consumers & businesses, the
next phase in the revolution is wireless-mobile-banking that is available anytime
anywhere from ‗always-on‘ mobile devices like mobile phones and personal digital
assistant (PDA). With the proliferation & cost effectiveness of mobile delivery channel,
banks have a built-in delivery mechanism that can offer services & 24×7 access
regardless of where the customer happens to be. Unlike PC-Based e-banking, m-
banking provides banks with the unprecedented opportunity to reach their customers in
an unrestricted environment. The big benefits for banks? Higher customer satisfaction &
loyalty, no transaction-based fee revenue, lower cost of ownership and integrated
customer relationship management channel.

37
Mobile banking applications

Examined applications

In the following, the main types of existing mobile banking applications are introduced.
These build standard types as each of them is representative for a series of comparable
applications. While WAP-banking and mobile banking via PDA are generic, SMS-
banking and mobile banking with SIM Toolkit use specialties of the GSM standard.

WAP-banking

The most widespread solution for mobile banking is based on micro-websites following
the WAP standard (Wireless Application Protocol). The function of WAP banking is in
many ways similar to the function of Electronic banking using http. The client sends a
request and gets a response with page content which is stored on or dynamically
generated by a standard web server. The main difference is in the usage of a WAP
gateway for the conversion of the protocols. At banks must be considered that very
sensitive data is processed. While a normal content provider doesn‘t has to observe
special security precautions, and in some cases can even use the services of extern
providers, has to secure its web server and WAP Gateway especially against
unauthorized access. This is especially necessary because of the fact that inside the
WAP Gateway the encryption protocol is converted from SSL/TLS to WTLS with the
effect that data is not encrypted while it is processed. While authentication is assured
via a PIN (personal identification number) of the user, authorization for transactions is
realized via transaction numbers (TAN). This concept, known from the electronic
banking, forces the user to carry a TAN list with him in order to make transactions.

SMS-banking

The Short Message Service (SMS) is a GSM service to exchange text messages
up to 140 byte (or 160 characters of 7 bit). The transmission of mobile-originated short
messages is carried out by the short message service center (SMSC) of the particular
network operator. The SMSC is receiving the message from the mobile device and
routing it to the destination device. For generating mobile-terminated short messages, it
38
is possible that a company or a special service provider runs an own SMSC. Thus, a
bank could generate SMS from bank data like account balance or account movements
and send it to the mobile device of the customer. This technique is used at SMS-
banking: The customer sends an SMS with a request to the bank, and gets the desired
data as an answer.

The customer has to include a PIN for authorization in every SMS he sends to
his bank. Alike the WAP banking, one should pay special attention on the security of the
location of the SMSC. The operation of SMSC is offered as a service by many service
providers. The usage of such a service is out of question for banks, because of the high
sensitive character of the transmitted data. For this reason it is mandatory for banks to
run their own SMS-Gateway and secure it from unauthorized access. The main problem
with this kind of transmission is the missing encryption of the data during the on-the air
transmission between the service center and the mobile phone. An encryption of pure
text-SMS is not possible (unless an application on the mobile device would be able to
decrypt the information). So the data is transmitted unencrypted. Because of this
missing encryption, banks

MOBILE NETWORKS PROVIDE THE FOLLOWING COMPETITIVE ADVANTAGES

1. Always – on 24 ×7 access:
Mobile networks will provide the ability for consumers to be transaction- ready ,
much in the way cable access has facilitated online pc access and reduced consumer
dial up delays 3555.

2. Advanced penetration of mobile networks:

2G (second generation) networks already cover more than 90 percent of the
population in the western world, and this number is growing steadily.

3. Personalization:
Through SIM (Subscriber Identity Module) cards, mobile customers have a
specific profile that enables customized functionality that directly reflects the way they

39
want to transact business over mobile devices. Through the convenient addition of a
multi-application relationship card, mobile customers will also have a built in platform for
a host of other application services, including security keys, virtual credits cards, and
other customized payment instruments.

4. Rapid evolution of global protocols such as WAP (wireless application

protocol):
This enables the communication channel between computers and mobile
devices. The WAP component essentially provides the facility for reformatting data for
display on wireless handsets.

5. Faster Data Processing Speeds:

Increases in bandwidth and data transmission a speed makes mobile data
services efficient and cost - effective in a real time environment.

6. Security:
Effectively, the mobile banking transaction can be protected by a private key
stored on SIM card and hence mobile phone can become a wireless wallet to protect
proprietary and financial information.

Dangers of E-Banking

Most services suffer from disadvantages, and on-line banking is no exception.

Recently, there have been a number of technical incidents, where customer information
was disclosed to other users. Banks have been quick to react, and have either reverted
back to the previous system or have solved the problem immediately

The main disadvantages are those related to fear of the unknown. The main fear is
that transferring money electronically will somehow cause it to disappear into the
electronic abyss. Banks are aware of this concern and do assure account holders that

40
such an event should not occur. There is some speculation, currently, that Internet-only
banks will not be able to sustain their high interest rates.

Other drawbacks to using Internet-only banks include:

Penalties for phone transactions;

Access to cash (ensure that there is sufficient access to ATMs).

We may perceive this method of banking to be instantaneous. For example, when a

bill is paid, the expectation is that the transaction is completed with immediate effect.
However, this is not the case, as the systems are still connected to the UK clearing
system, which takes three working days to clear payments., it appears that in many
cases basic risk principles have been ignored in the rush. Banks could lose the whole e-
trust business if they are unable to rise to the challenge of meeting customers' ever-
rising demands in a secure trading environment. Use Dangers in E-banking to reduce
the level of risks to a minimal level whilst ensuring that your business is not justify
behind in the race to retain and win new electronic customers.

How can this report help you? - It identifies the major risks which have been
encountered so far and pinpoints areas which are to become big risks for e-bankers in
the future.

Security

One of the main concerns with on-line banking is that of security. Fraudulent and
accidental security breaches are a rare occurrence. Banks employ many procedures
and systems in order to prevent these incidents. As a result they invest a considerable
amount of time and money in developing systems which will prevent fraud and
unauthorized access. If a security breach is discovered, the bank is liable for all money
stolen, and, as a result, insures them against the possibility.

The security used in on-line banking is a combination of technology and user

authentication. The bank will use a 128 bit Secure Session Layer (SSL) encryption

41
protocol, between its server and the user's browser. The user's browser will show a
padlock when the session is secure. Using SSL can be thought of as preventing
eavesdropping. If a hacker were to attempt to listen to the data transmission, they would
have to guess the decryption key - which is a 1 in 3.4 x10 to the power of 38 chances,
making it infinitely secure. From a technology point of view, on-line banking is secure.

The weakest link of on-line banking is user authentication. Typically, a user has to
supply a set of answers to questions, which they have previously entered upon
registration, as well as a username and password. The banks place the responsibility of
keeping these answers secure with the user. If any are disclosed and money is stolen,
the liability lies solely with the account holder, not the bank. With this in mind the
following is sound advice to users:

Make sure the Web Address starts https:\\ rather than http:\\, this shows that the
session is encrypted;
Look for the closed padlock in the browser;
Do not use simple or easily guessable passwords (use a combination of letters
and numbers) and change it frequently;
Do not write down any username, password or any other information required;
Always empty the cache of the browser after banking;
Always sign-off when you are finished;
Do not leave the PC unattended while banking;
Do not use the "Auto Complete" feature within the browser;
Check the Terms and Conditions for any notes on where you can and cannot
access the on-line accounts. (e.g. an Internet café is not as secure as your home
PC);
Use additional software that your bank might recommend (firewall or anti-virus
software)
Keep your Web browser up-to-date with the latest patches and versions;
Never send any account information in an email as this is insecure. Be wary of
any e-Mail‘s from your bank which ask you to send details via email, banks will
not do this;

42
 Also, be wary of emails from banks which ask you to log into a Web site and
resubmit your details. These fake Web sites have been set-up by fraudsters. If
you are unsure of an email play it safe and contact your bank to verify the email.

INTERNET BANKING IN INDIA

The Reserve Bank of India constituted a working group on Internet Banking. The
group divide d the internet banking products in India into 3 types based on the levels
of access granted. They are :

•Information Only System: General purpose information like interest rates, branch
location, bank products and their features, loan and deposit calculations are provided
in the banks website. There exist facilities for downloading various types of
application forms. The communication is normally done through e-mail. The re is
no interaction between the customer and bank's application system. No
identification of the customer is done. In this system, there is no possibility of any
unauthorized person getting into production systems of the bank through internet.

•Electronic Information Transfer System: The system provides customer- specific

information in the form of account balances, transaction details, and statement of
accounts. The information is still largely of the 'rea d only' format. Identification and
authentication of the customer is through password. The information is fetched from
the bank's application system either in batch mode or off-line. The application
systems cannot directly access through the internet.

•Fully Electronic Transactional System: This system allows bi-directional

capabilities. Transactions can be submitted by the customer for online update. This
system requires high degree of security and control. In this environment, web server
and application systems are linked over secure infrastructure. It comprises
technology covering computerization, networking and security, inter-bank payment
gateway and legal infrastructure. It includes the followings:

43
O ATM

O DEBIT CARDS

O SMART CARDS

O MOBILE BANKING

THE INDIAN SCENARIO

DRIVERS OF CHANGE: Advantages previously held by large financial institutions have

shrunk considerably. The Internet has levelled the playing field and afforded open
access to customers in the global marketplace. Internet banking is a cost-
effective delivery channel for financial institutions. Consumers are embracing the
many benefits of Internet banking. Access to one's accounts at anytime and from any
location via the World Wide Web is a convenience unknown a short time ago. Thus, a
bank's Internet presence transforms from brouchre ware' status to 'Internet
banking' status once the bank goes through a technology integration effort to
enable the customer to access information about his or her specific account
relationship. The six primary drivers of Internet banking includes, in order of primacy
are:

• Improve customer access

• Facilitate the offering of more services

• Increase customer loyalty

• Attract new customers

• Provide services offered by competitors

• Reduce customer attrition

EMERGING CHALLENGES

Information technology analyst firm, the Meta Group, recently reported "financial
institutions who don't offer home banking by the year 2000 will become marginalized."
44
By the year of 2002, a large sophisticated and highly competitive Internet Banking
Market will develop which will be driven by

• Demand side pressure due to increasing access to low cost electronic services.

• Emergence of open standards for banking functionality.

• Growing customer awareness and need of transparency.

• Global players in the fray

• Close integration of bank services with web based E-commerce or even

disintermediation of services through direct electronic payments (E- Cash).

• More convenient international transactions due to the fact that the Internet along
with general deregulation trends eliminates geographic boundaries.

• Move from one stop shopping to 'Banking Portfolio' i.e. unbundled product
purchases. Certainly some existing brick and mortar banks will go out of
business. But that's because they fail to respond to the challenge of the
Internet. The Internet and its underlying technologies will change and transform
not just banking, but also all aspects of finance and commerce. It represents
much more than a new distribution opportunity. It will enable nimble players to
leverage their brick and mortar presence to improve customer satisfaction and gain
share. It will force lethargic players who are struck with legacy cost basis, out of
business-since they are unable to bring to play in the new context.

E-BANKING WORLD WIDE

Since its inception, Internet banking has experienced strong and sustained
growth. World Bank report on leapfrogging in e-finance pointed out that the three
countries with impressive progress in information technology in this sense are
Estonia, Republic of Korea and Brazil. Creation of the world‘s leading electronic
banking systems has been done at a remarkably low cost compared to other
world-class internet banks.

45
In the European Union, 60 million people, representing 18 per cent of the adult
population, use online banking In France, the number of online banking
accounts is recording an annual growth rate of 75 per cent. However, Estonia is a
country that has become a leader in Internet banking (which now reaches 18 per
cent of the population), not only among Eastern European countries but in world
rankings, through a combination of easy to- use software, free-of-charge
transactions and behavior changes resulting from the influence of the Nordic
countries‘ IT culture on Estonia.

A sector in which Latin America is see ms to be performing better than in other

industries is online retail banking. Growth in this area has been driven by
traditional banks, which have used the online channel to generate customer loyalty
and improve their operating margins. Two Brazilian banks, Bradesco and Banco
do Brasil; have thus achieved more than 4 million online customers each. Mexico is
another leader of Internet banking in Latin America. It adopted legislation providing
for the development of both E-Commerce and e-finance. In Mexico, the number
of online bank users more than tripled from 700,000 in 2000 to 2.4 million in 2001, and
it could reach 4.5 million in 2005 (E-Marketer 2002b). One reason for the
success of Latin American banks‘ online ventures seems to be the attention they
have paid to providing retail customers with multiple ways to access their
accounts (Internet, telephone, wireless). However, given that the share of the
total population that actually has a bank account is relatively small, the
expansion of Latin American online banking may be facing a bottleneck.

Compared with overall Internet usage estimated at 4.4 million in Australia, the major
banks together have attracted only 1.2 million to online banking. The Internet is
a global phenomenon and so is e-finance. Its deployment is not limited to
developed countries, and indeed some developing countries – such as India and the
Republic of Korea – are experiencing particularly strong growth in E-Banking. In Asia
one of the most impressive records has been achieved by the Republic of Korea. The
Republic of Korea is lea ding in online brokerage and in mobile banking. In

46
South-East Asia Internet banking is also developing rapidly in Thailand, Malaysia,
and Singapore and to a lesser extent, in the Philippines

In Bangladesh there is a large gap between the computerization of foreign banks

and that of local commercial banks and as regards the state of their intra - and inter-
branch online networks. However, 75 per cent of local banks are planning to
introduce E- Banking, which implies very dynamic improvements. Apart from North
and South Africa the Sub Saharan Africa is the region that is

seriously lagging behind in Internet banking, although it is giving to the rest of

the world the good example of microfinance developments.

47
 CHAPTER – 2

INTRODUCTION OF HDFC AND ICICI BANK

HDFC COMPANY PROFILE

INTRODUCTION

HDFC Bank (NYSE: HDB), one amongst the firsts of the new generation, tech-savvy
commercial banks of India, was incorporated in August 1994, after the Reserve Bank
of India allowed setting up of banks in the private sector. The Bank was promoted by
the Housing Development Finance corporation Limited, a premier housing finance
company (set up in 1977) of India.

HISTORY

The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set
up a bank in the private sector, as part of the RBI's liberalization of the Indian
Banking Industry in 1994. The bank was incorporated in August 1994 in the name of
'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank
commenced operations as a Scheduled Commercial Bank in January 1995.

BRANCH NETWORK

Currently HDFC Bank has 1416 branches, 3382 ATMs, in 550 cities in India, and all
branches of the bank are linked on an online real-time basis. The bank offers
many innovative products & service s to individuals, corporate, trusts,
governments partnerships, financial institutions, mutual funds, insurance companies.

It is a path breaker in the Indian banking sector. In 2007 HDFC Bank acquired
Centurion Bank of Punjab taking its total branches to more than 1,000. Though,

48
the official license was given to Centurion Bank of Punjab branches, to continue
working as HDFC Bank branches, on May 23, 2008.

BUSINESS FOCUS

HDFC Bank's mission is to be a World-Class Indian Bank. The Bank's aim is to build
sound customer franchises across distinct businesses so as to be the preferred provider
of banking service s in the segments that the bank operates in and to achieve
healthy growth in profitability, consistent with the bank's risk appetite. The bank is
committed to maintain the highest level of ethical standards, professional integrity and
regulatory compliance. HDFC Bank's business philosophy is based on four core
values: Operational Excellence, Customer Focus, Product Leadership and People.

BUSINESS PROFILE

HDFC Bank caters to a wide range of banking services covering commercial and
investment banking on the wholesale side and transactional/branch banking on the
retail side. The bank has three key business areas:

• Wholesale Banking Services : The Bank's target market is primarily large, blue chip
manufacturing companies in the Indian corporate sector and to a lesser extent,
emerging midsized corporate. For these corporate, the Bank provides a wide range of
commercial and transactional banking services, including working capital finance,
trade services, transactional services, cash management, etc. The bank is also a
leading provider of structured solutions that combine cash' management services with
vendor and distributor finance for facilitating superior supply chain management for
its corporate customers.

• Retail Banking Services: The objective of the Retail Bank is to provide its target
market customers a full range of financial products and banking services, giving the
customer a one stop window for all his/her banking requirements. The products
are backed by world-class service and delivered to the customers through the
growing branch network, as well as through alternative delivery channels like ATMs,
Phone Banking, Net Banking and Mobile Banking.

49
The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank
Plus and the Investment Advisory Services programs have been designed keeping in
mind needs of customers who seek distinct financial solutions, information and
advice on various investment avenues. The Bank also has a wide array of retail
loan products including Auto Loans, Loans against marketable securities, Personal
Loans and Loans for Two-wheelers. It‘s also a leading provider of Depository
Services to retail customers, offering customers the facility to hold their investments
in electronic form. HDFC Bank was the first bank in India to launch an
International Debit Card in association with VISA (VISA Electron) and issues the
MasterCard Maestro debit card as well. The debit card allows the user to directly
debit his account at the point of purchase at a merchant establishment, in India
and overseas. The Bank launched its credit card in association with VISA in November
2001. The Bank is also one of the leading players in the "merchant acquiring"
business with over 25,000 Point-of-sale (POS) terminals for debit / credit cards
acceptance at merchant establishments. The Bank is well positioned as a leader in
various net-based B2C opportunities including a wide range of Internet banking
services for Fixed Deposits, Loans, Bill Payments., etc.

Treasury Operations: Within this business, the bank has three main product areas-
Foreign Exchange and Derivatives, Local Currency Money Market & Debt
Securities, and Equities With the liberalization of the financial markets in India,
corporate need more sophisticated risk management information, advice and product
structures, These and fine pricing on various treasury products are provided through
the bank's Treasury team. To comply with statutory reserve requirements, the bank is
required to hold 25% of its deposits in government securities. The Treasury business
is responsible for managing the returns and market risk on this investment portfolio.

HDFC BANK SERVICES

NET BANKING: Net Banking is HDFC Bank's Internet Banking service. Providing up-
to-the-second account information, Net Banking lets you manage your account
from the comfort of your mouse - anytime, anywhere.

50
HDFC Bank Net Banking Secure Access. HDFC Bank has implemented a new
security solution for its customers - Secure Access .As your security is our top
priority, we have initiated the Secure Access solution to protect you from fraudsters
and hackers - who are looking to find away to access your account. Currently following
transactions are covered under Secure Access

• Transfer from one HDFC Bank account to other HDFC Bank account holders (under
distinct customer ID)

• Transfer from HDFC Bank account to any other Bank's account (also known as
RTGS & NEFT)

• Visa Money Transfer

• Third Party Demand Draft through Net Banking.

Third Party Transfer-Third-Party Transfer is a Net Banking feature for which you
will need your unique Customer ID and IPIN (password). Login to Net Banking to
confirm that your ID is active in our records.

What is TPT?

With Third-Party Transfer (TPT) you can transfer funds online from your HDFC
Bank account to another HDFC Bank/Other Bank account (beneficiary), anywhere in
India. This is a real-time transaction and the debit and credit will reflect in the
respective accounts immediately.

Third Party Transfer can be initiated:

• From your Account to other Bank Accounts using

• National electronic Funds Transfer (NEFT) - Funds will be credited to the beneficiary
account in two working days

• Real Time Gross Settlement (RTGS) - Funds will be credited to the beneficiary
account on the same working day.

51
• From your HDFC Bank account to other HDFC Bank accounts (different cut sides).

• From your account to any Visa Card (Debit or Credit) within India.

• For issuance of Third Party Demand Drafts from your account. You c an transfer up
to a maximum of Rs. 10, 00,000/- per cuts id per day using this facility. This amount
can be transferred in parts or on a single basis.

INSTA IPIN FACILITY

It has be en our constant endeavor to make banking a hassle-free experience for

you. At HDFC Bank, we understand that it is quite possible to forget even important
things like your Net Banking password (IPIN). But that should not be holding you back
from accessing your bank account. You can now re-generate your Net Banking
password instantly with the help of your Debit Card details and start using your
ne w password (IPIN) immediately. No need to request for a new password and await
its arrival. And it is even better as you select your new HDFC Bank password yourself
so it become s much easier to remember the same .

CREDIT CARDS ONLINE

We take great pleasure in announcing that the HDFC Bank Net Banking service
is now available for Credit Cards also. Now using your HDFC Bank Credit Card
ha s become more convenient and time saving. You can now access your Credit
Card ac count from home or office or even while traveling. With Net Banking you ca n
view your card account information and do much more just a t the click of a
button. Currently the following Credit Cards Net banking features are available:-

• Account Information

• Unbilled Transactions

• Credit Card Statement

• Download Card Statement (upto last 6 months)

52
ONEVIEW:

One View is a revolutionary service from HDFC Bank that allows you to manage
multiple accounts in different banks through one single online interface. If you are an
HDFC Bank customer and have one or more accounts with Citibank, ICICI Bank,
HSBC India, Standard Chartered Bank then One View is just right for you.

FEATURES & BENEFITS

No need to individually log on to internet banking of every account. Just log on

to One View and manage upto FIVE accounts in different banks.

• Remember only ONE password.

• No charges whatsoever

HOW SECURE IS ONEVIEW?

One View gives you the world class banking security and technology
sophistication you'd expect of HDFC Bank, with features such as:

• Robust firewall protection makes it nearly impossible to break through.

• All information is transmitted using advanced 128 bit Secure Socket Layer
(SSL)

encryption technology.

• Automatic time-outs ensure that your account details are not viewed by others.

• You can only view your accounts and cannot transact, so your money is
absolutely safe.

INSTA ALERTS: Now you can get regular updates on your bank account on your
mobile phone or email ID. Just register for our Insta Alert service and receive
updates on your account as and when the select transaction happens - all this
without visiting the branch or ATM.You can register for any or all of the following alerts:

53
• Debit transactions greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000.

• Credit in account greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000

• Account Balance below Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000-

• Weekly account balance

• Salary Credits

• Utility bill payment due Alert

MOBILE BANKING:

Your Mobile is now your bank! Now access your bank ac count and conduct a
host of banking transactions through your mobile, with our unique Mobile Banking
service. You can check your account level information such as balance details, mini
statement, and cheque status as well as carry out financial transactions such as
Funds Transfer using HDFC Bank Mobile Banking service.

FEATURES OF MOBILE BANKING

Using our Mobile Banking service, you can avail of a host of features a t your finger tips

• Perform funds transfers.

• Get your balance details.

• Obtain your last 3 transaction details.

• Request a cheque book.

• Stop a cheque payment.

• Enquire cheque status.

• Request an account statement.

• Get Fixe d Deposit details.

54
• Request for I-PIN generation.

• Request a cheque book.

AUTOMATED TELLER MACHINE: With wide spread network of 4,000 ATMs across India,
enjoy the following benefits at your convenience.

• 24-hour access to Cash- Withdraw up to Rs.10, 000/- per day on your ATM Card
and up to Rs. 15,000 on your Debit Card.

• Personalized Cash Withdrawals – Save time on your cash withdrawal

transactions by pre -setting your preferred language / account / amount.

• View Account Balances & Mini-statements - Get details of the last 9

transactions on your account with the mini-statement, along with your account balance.

• Change ATM PIN - Change your ATM PIN at any given point in time.

• Order a Cheque Book / Account Statement

• HDFC Bank Credit Card Payment - Make payment of your HDFC Bank Credit
Card dues using the ATM. The primary account of your Debit / ATM card will be
debited.

• Deposit Cash or Cheques - Deposit Cash or Cheques into your account without
visiting the Branch. Available at Non-Branch HDFC Bank ATMs

• Transfer Funds between accounts – Transfer money between your accounts. Both
accounts must be linked to your ATM / Debit Card. Maximum of 16 A/Cs
(Savings / Current) can be linked to a card.

REFILL YOUR PREPAID MOBILE – Refill your prepaid mobile using Prepaid
Mobile Refill service instantly. HDFC Bank offers – Prepaid Mobile Refill, which
allows you to re charge your pre paid mobile phone anytime from any where and
pay directly from your Bank account. Avoid hassles of withdrawing cash or searching
for a retailer for buying the re charge card.

55
• You can avail of this service in two convenient ways: Prepaid Mobile Refill on Internet
Prepaid Mobile Refill on ATM Prepaid Mobile Refill on Internet You can now recharge
your Prepaid Mobile phone right here on the HDFC Bank website.

Enjoy Convenience e of: Recharging your prepaid mobile phone from the comfort
of your home or office anytime. Paying directly from your Bank account - a void the
hassle of withdrawing c ash from

an ATM or Branch. To avail the facility, customer has to go to the recharge page
and do the following steps:

• Select Mobile Operator Name, enter Mobile Number, Amount for Top-Up

• Confirm payment by logging into Net Banking using your Customer ID and IPIN
(Net Banking password).

• Depending on the recharge option chosen, your phone will be recharged in a

few seconds.

PHONE BANKING:

Your phone is now your bank. When you dial in to Phone Banking, a voice
prompt will guide you through the various transactions. You may also talk to a
Phone Banker, who will provide you with the required assistance. Avail of the following
services via Phone Banking:

• Check your account balance - Get up-to-the-second details of your Savings or

Current Accounts and your Fixed De posits. You can also get the details of the last 5
transactions on your account, or have a mini statement of last 9 transactions
faxed across to you.

• Enquire on the cheque status - You can use Phone Banking to check on the status
of cheques issued or deposited from anywhere in India.

• Order a Cheque Book / Account Statement - Just call Phone Banking and get
your Cheque Book or latest Account Statement de livered at your doorstep.

56
• Stop Payment - Stop payment of a single cheque or a series of cheques, 24
hours a day. Loan Related queries - Get details of the outstanding loan amount,
enquire about your loan account, request for an inte rest certificate and repayment
schedule, etc. Just call Phone Banking in your city and dial 4 to speak to our
Phone Banker

• Open a Fixed deposit or Enquire on your Fixed deposits / TDS*# - Talk to our Phone
Banker to easily open a Fixed Deposit over the phone, by simply authorizing a
transfer of funds from your Savings Account.

• Transfer Funds between accounts*# - You can also transfer money from one of
your accounts to another. Both accounts must be linked to your Customer ID. You
can transfer amounts upto Rs 1 Lac in a single day.

• Pay your bills - Pay your cellular, telephone, electricity and HDFC Bank Credit
Card bills through Phone Banking using Bill Pay, a comprehensive bill payments
solution.

• Report loss of your ATM / Debit Card / Forex Plus Card - If your ATM / Debit /
Forex plus Card are lost, call any Phone Banking number to deactivate your card(s).

• Lear n about all our other products - Get details on HDFC Bank products & services by
talking to our Phone Banker.

• Enquire about latest Interest / Exchange rates - Get latest Interest rates on Deposits
and Foreign Exchange rates by talking to our Phone Banker.

• Request a Demand Draft / Manager 's Cheque #** -Call Phone Banking and get
a Demand Draft / Manager's Cheque delivered to your doorstep.

• Demat Related Queries - Get the Account holding de tails, Transaction details,
ISIN Number of a scrip, Status of Depository Slips, details of Client Master list
(Dividend account, Charges Debit account, PAN etc.) & others. Call Phone
Banking in your city & dial 5 to speak to our Phone Banker.

57
ICICI BANK PROFILE

INTRODUCTION

ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion
(US$ 7 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$
648.8 million) for the nine months ended December 31, 2009. The Bank has a
network of 1,723 branches and about 4,883 ATMs in India and presence in 18
countries. ICICI Bank offers a wide range of banking products and financial
services to corporate and retail customers through a variety of delivery channels
and through its specialized subsidiaries and affiliates in the areas of investment
banking, life and non-life insurance, venture capital and asset management. The
Bank currently has subsidiaries in the United Kingdom, Russia and Canada,
branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and
Dubai International Finance Centre and representative offices in United Arab
Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia.
Our UK subsidiary ha s established branches in Belgium and Germany. ICICI
Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE).

The Bank is expanding in overseas markets and has the largest international
balance sheet among Indian banks. ICICI Bank now has wholly owned subsidiaries,
branches and representatives offices in 19 countries, including an offshore unit in
Mumbai. This includes wholly owned subsidiaries in Canada, Russia and the UK (the
subsidiary through which the Hi save savings brand is operated), offshore banking units
in Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium, Hong
Kong and Sri Lanka, and representative offices in Bangladesh, China, Malaysia,
Indonesia, South Africa, Thailand, the United Arab Emirates and USA. Overseas, the
Bank is targeting the NRI (Non-Resident Indian) population in particular.

58
 ICICI reported a 1.15% rise in net profit to 1,014.21 crore on a 1.29% increase
in total income to 9,712.31 crore in Q2 September 2008 over Q2 September 2007.
The bank's CASA ratio increased to 30% in 2008 from 25% in 2007.

ICICI Bank is one of the Big Four Banks of India, along with State Bank of
India, Punjab National Bank Bank of India and Canara Bank — its main competitors.

HISTORY

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was
reduced to 46% through a public offering of shares in India in fiscal 1998, an equity
offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition
of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary
market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was
formed in 1955 at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a development
financial institution for providing medium-term and long-term project financing to Indian
businesses.

In 1954, The Industrial Credit and Investment Corporation of India Limited (ICICI)
was incorporated at the initiative of World Bank, the Government of India and
representatives of Indian industry, with the objective of creating a development financial
institution for providing medium-term and long-term project financing to Indian
businesses. In 1994, ICICI established Banking Corporation as a banking subsidiary.
Formerly known as Industrial Credit and Investment Corporation of India, ICICI Banking
Corporation was later renamed as 'ICICI Bank Limited'. ICICI founded a separate legal
entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit
cards, car loans etc. In 2001, ICICI acquired Bank of Madura (est. 1943). Bank of
Madura was a Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933)
and Illanji Bank (established 1904) in the 1960s. In 2002, The Boards of Directors of
ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI Personal Financial

59
Services Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all
necessary regulatory approvals, ICICI integrated the group's financing and banking
operations, both wholesale and retail, into a single entity. At the same time, ICICI
started its international expansion by opening representative offices in New
York and London. In India, ICICI Bank bought the Shimla and Darjeeling branches
that Standard Chartered Bank had inherited when it acquired Grindlays Bank.

In 2003, ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in
the UK it established an alliance with Lloyds TSB. It also opened an Offshore Banking
Unit (OBU) in Singapore and representative offices in Dubai and Shanghai. In 2004,
ICICI opened a representative office in Bangladesh to tap the extensive trade between
that country, India and South Africa. In 2005, ICICI acquired Investitsion no-Kreditny
Bank (IKB), a Russia bank with about US$4mn in assets, head office in Balabanovo in
the Kaluga region, and with a branch in Moscow. ICICI renamed the bank ICICI Bank
Eurasia. Also, ICICI established a branch in Dubai International Financial Centre and
in Hong Kong. In 2006, ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI
opened representative offices in Bangkok, Jakarta, and Kuala Lumpur. In 2007, ICICI
amalgamated Sangli Bank, which was headquartered in Sangli, in Maharashtra State,
and which had 158 branches in Maharashtra and another 31 in Karnataka State. Sangli
Bank had been founded in 1916 and was particularly strong in rural areas. With respect
to the international sphere, ICICI also received permission from the government
of Qatar to open a branch in Doha. Also, ICICI Bank Eurasia opened a second branch,
this time in St. Petersburg. In 2008, The US Federal Reserve permitted ICICI to convert
its representative office in New York into a branch. ICICI also established a branch
in Frankfurt. In 2009, ICICI made huge changes in its organization like elimination of
loss making department and retrenching outsourced staff or renegotiate their charges in
consequent to the recession. In addition to this, ICICI adopted a massive approach aims
for cost control and cost cutting. In consequent of it, compensation to staff was not
increased and no bonus declared for 2008-09.

On 23 May ICICI Bank announced that it would merge with Bank of

Rajasthan through a share-swap in a non-cash deal that values the Bank of Rajasthan

60
at about 3,000 crore. ICICI announced that the merger expand ICICI Bank's branch
network by 25%.

On 18h October 2010, ICICI will inaugurate I-Express, an instant cross-border

money transfer option for Non-Resident Indians (NRIs). This service will be available
through the ICICI Bank's select partners in the Gulf Cooperation Council.

In the 1990s, ICICI transformed its business from a development financial institution
offering only project finance to a diversified financial services group offering a wide
variety of products and services, both directly and through a number of subsidiaries and
affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first
bank or financial institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the

emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the managements of ICICI and ICICI Bank formed the view that the
merger of ICICI with ICICI Bank would be the optimal strategic alternative for both
entities, and would create the optimal legal structure for the ICICI group's universal
banking strategy. The merger would enhance value for ICICI shareholders through the
merged entity's access to low-cost deposits, greater opportunities for earning fee-based
income and the ability to participate in the payments system and provide transaction-
banking services. The merger would enhance value for ICICI Bank shareholders
through a large capital base and scale of operations, seamless access to ICICI's strong
corporate relationships built up over five decades, entry into new business segments,
higher market share in various business segments, particularly fee-based services, and
access to the vast talent pool of ICICI and its subsidiaries.

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the
merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal
Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The
merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the
High Court of Gujarat at Ahmadabad in March 2002, and by the High Court of

61
Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the
merger, the ICICI group's financing and banking operations, both wholesale and retail,
have been integrated in a single entity.

ICICI Bank has formulated a Code of Business Conduct and Ethics for its
directors and employees.

ICICI net banking / internet banking offers various facilities and has been registering
increasing number of customers as well. The facility of net banking is immense and
hence it offers one of the largest customer bases. Some e-banking facilities provided by
ICICI bank are as follows-
Transfer Funds Online.
Account-2-Card Fund Transfer.
Link your Bank/Card/Demat Accounts.
Use your Debit Card Online.
Pre-paid Mobile Recharge.
Pay your Utility Bills.
Send a Smart Money Order.
Open Fixed Deposits and Recurring Deposits.
Order a Demand Draft / Pay Order.
Subscribe for Mobile Banking.
Request a Cheque Book.
Request a change of address.
Stop Payment Request.
Request a Debit Card.
Monthly Bank Account Statement by E-mail.
Re-issue/Upgrade of ATM/Debit Card.
Link Bank Accounts to ATM/Debit Card.
Renewal / Premature Closure of FD/RD.
De-block/Activate ATM/Debit Card.

62
 Secure Mailbox.
Request a Duplicate Physical Bank Statement

ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28
billion
(US$ 77 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$
648.8 million) for the nine months ended December 31, 2009. The Bank has a
network of 1,723 branches and about 4,883 ATMs in India and presence in 18
countries. ICICI Bank offers a wide range of banking products and financial services
to corporate and retail customers through a variety of delivery channels and through
its specialized subsidiaries and affiliates in the areas of investment banking, life and
non-life insurance, venture capital and asset management. The Bank currently has
subsidiaries in the United Kingdom, Russia and Canada, branches in United States,
Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance
Centre and representative offices in United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established
branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on
Bombay Stock Exchange and the National Stock Exchange of India Limited and its
American Depositary Receipts (ADRs) are listed on the New York Stock Exchange
(NYSE).

Subsidiaries

 I-Express, an instant cross-border money transfer option.

 ICICI Lombard
 ICICI Prudential

Acquisition
2005 - Investitsionno-Kreditny Bank (IKB), a Russian bank
2007 - Sangli Bank , Maharashtra State
23 May - Bank of Rajasthan

63
Recognition
The Brand Trust Report, launched in 2011, has ranked ICICI in the 15th place as the
most trusted brand of India.

Controversy

ICICI Bank has been in focus in recent years because of alleged harassment of
customers by its recovery agents. Listed below are some of the related news links:

 ICICI Bank was fined 55 lakh for hiring goons (known coloquially as "goondas") to
recover a loan. Recovery agents had, allegedly, forcibly dragged out a youth (who
was not even the borrower) from the car, beaten him up with iron rods and left him
bleeding as they drove away with the vehicle. "We hold ICICI Bank guilty of the
grossest kind of deficiency in service and unfair trade practice for breach of terms of
contract of hire-purchase/loan agreement by seizing the vehicle illegally","No
civilised society governed by the rule of law can brook such kind of conduct" said
Justice Kaleem, who was born in Laddhawala, Muzaffarnagar is the president of the
consumer commission.
 Four ICICI loan employees arrested on theft charges in Punjab
 ICICI Bank told to pay 1 lakh as compensation for using unlawful recovery
methods.
 RBI warns ICICI Bank for coercive methods to recover loans
 ICICI Bank drives customer to suicide - Four men including an employee of ICICI
Bank booked under sections 452, 306, 506 (II) and 34 of IPC for abetting
suicide. According to the suicide note they advised him, "If you cannot repay the
bank loan, sell off your wife, your kids, yourself, sell everything at your home. Even
then if you cannot not pay back the due amount, then it's better if you commit
suicide." India biggest private bank has compensated the life by money.
 ICICI Bank on huge car recovery scam in Goa - ICICI Bank invest in car-jackers to
recover loans in Goa. A half an hour investigative report on CNN-IBN's 30 Minutes.
The under cover report was executed by CNN-IBN's Special Investigations Team
from Mumbai, led by Ruksh Chatterji.

64
 Family of Y. Yadaiah alleged that he was beaten to death by ICICI Bank‘s recovery
agents, for failing to pay the dues. Four persons were arrested in this case.
 A father while talking to Times of India, alleged that "ICICI Bank recovery agents
visited his house and threatened his family. And his son Nikhil consumed poison
because of the tension".
 Oppressed by ICICI Bank's loan recovery agents, Shakuntala Joshi (38), committed
suicide by hanging. The suicide note stated that she was upset with the ill-treatment
meted out by ICICI Bank's recovery agents and had thus decided to end her life.
 In another case of a suicide it is alleged that ‗goondas‘ sent by ICICI Bank abused
Himanshu and his wife in front of the entire residential colony before taking away his
vehicle. Feeling frustrated and insulted, he reportedly committed suicide.
 C.L.N Murthy, a scientist with the Hyderabad-based Indian Institute of Chemical
Technology, was allegedly tortured by recovery agents of ICICI Bank after he
defaulted on his loan.―They humiliated me no end. They ripped my shirt, shaved my
moustache, cut my hair and gave electric shocks on my chest and even spat on my
face" adds Murthy.
 A dozen recovery agents of ICICI Bank, riding on bikes, allegedly forced a prominent
lawyer, Someshwari Prasad, to stop his car. They held Prasad at gunpoint and also
slapped him to force him. A manager of the ICICI Bank branch, Rakesh Mehta,
along with four other employees were arrested.
 In a landmark case, Allahabad High Court had ordered registration of an FIR against
ICICI Bank's branch manager, President, Chairman and Managing Director on a
complaint of 75-year-old widow Prakash Kaur. She had complained that ―goondas‖
were sent by the bank to harass her and forcibly took away her truck. When the
Supreme Court wanted to know about the procedure adopted by the Bank, ICICI
Bank counsel said notice would be sent to a defaulter asking him either to pay the
installments or hand over the vehicle purchased on loan, failing which the agents
would be asked to seize it. When the Bench pointed out that recovery or seizure
could be done only legally, ICICI Bank counsel said, "If we have to go through the
legal process it would be difficult to recover the installments as there are millions of
defaulters"

65
 Taking strong exception to ICICI Bank's use of 'goondas' against a defaulter, the
president of Consumer Disputes Redressal Forum said, "The fact leaves us aghast
at the manner of functioning and goondaism in which the bank is involved for a petty
amount of 1,889... such attitude is deplorable and sends chills down the
spine....The bank had the option to recover dues through legal means. They have no
legal right to snatch the vehicle in such a manner which amounts to robbery,". In this
case recovery agents pointed a pistol at a defaulter when he tried to resist. ICICI
bank argued that they had taken peaceful possession of the vehicle "after due
intimation to the complainant as he was irregular in remitting the monthly
instalments". But the court found out that the records proved otherwise.
 Two senior ICICI Bank officials were booked for abducting one Vikas Porwal from
his house and keeping him hostage in the Bank's premises.
 The credit card division of the ICICI Bank allegedly threatened a senior citizen in
Chandigarh with a fictitious arrest warrant on account of a default that never was.
 A Consumer Commission has asked ICICI Bank MD K V Kamath to appear before it
in respect a complaint. A borrower on protesting against the forceful dispossession
of his car, as seen in the post-incident photographs, was roughed up and sustained
injuries.
 An 18-year-old boy was allegedly kidnapped and detained at the Pune branch of
ICICI Bank.
 There have been several other minor legal cases accusing harassment by ICICI
Bank
 A consumer court imposed a joint penalty of 25 lakh on ICICI Bank and American
Express Bank for making unsolicited calls.

ICICI BANK SERVICES

ICICI net banking / internet banking

ICICI net banking / internet banking offers various facilities and has been registering
increasing number of customers as well.

66
The facility of net banking is immense and hence it offers one of the largest customer
bases.

You can get the luxury of linking many accounts with the same customer id apart from
that you can view all the transactions online as well. You can transfer the funds to other
accounts of the same bank or to other banks as well. Official website for accessing icici
net banking / internet banking is www.icicibank.com.

Apart from that, you can transfer funds from bank account to credit cards. If in case you
have done any transactions through your credit card, there will be auto debit. If you
want to see the account statement, you don‘t need to go to the bank, instead you can
see through email as well. One of the best things again relates with the fact that you can
file online taxes.

Now all your important transactions can be done online and are just a click away as
well. Since the bank offers so many facilities as a result it has become one of the
preferred choices of the people and it‘s the love and affection of the people which has
made the bank coming up with innovations to ease the lives of people so that you can
have many reasons to opt for icici net banking / internet banking

MOBILE BANKING: Conducting banking operations using the mobile phone has been
fast catching up around the world for its convenience. We have launched mobile
services in India to convenience our customers. You can do your banking operations
sitting anywhere, anytime. It is discreet, personalized and on your phone. Use it when at
a meeting, in a movie hall, while having your Sunday brunch or at any other place you
cannot usually expect to get the information you want from your bank. It is an
empowering and user friendly mode of accessing your bank account. To get started,
take a look at the menu on the left and go through our various services

You can now access the following ICICI Bank services via your mobile phone:

67
INSTA BANKING
Insta Banking makes your banking simpler, faster, and more convenient.
Through these 5 great channels - Internet Banking, Mobile Banking, ICICI Bank
ATMs, Instant Voice Response (IVR) Banking and I Mobile - you can do your day
today banking anytime, anywhere.

INTERNET BANKING
ICICI Bank brings convenience and security to your desktop. Now you can
check your account balance, transfer funds, download your account statement, and pay
bills or even book tickets online, from the comfort of your home or in the middle of a busy

68
day at the office. Explore the power of simpler and smarter Banking whether you are a
Banking, Credit Card, Loan or Demat customer.

ATM BANKING

Bank 24/7 through a widespread network of ICICI Bank ATMs making life easy
and convenient for you. User-friendly graphic screens and easy to follow
instructions available in a choice of local languages, makes ATM Banking with ICICI
Bank a smoother experience. ICICI Bank's widespread network of ATMs makes it easy
and convenient for you to bank 24/7. With over 4,883 + ATMs and 1,626 + branches set
up within India, we ensure that you are never too far from an ICICI Bank ATM. User-
friendly graphic screens and easy to follow instructions in a choice of local languages,
makes ATM Banking with ICICI Bank a smooth experience.

ICICIBank.com also features the easy to access ATM Locator, making it easy for
you to find an ICICI Bank ATM in your neighborhood.

The ICICI Bank edge

Cash withdrawal up to Rs. 25,000/- per day from your account (50,000 for
HNI's). Fast Cash option facilitates withdrawal of prefixed amounts; Ultra Fast
Cash allows withdrawal of Rs. 3000/- in one shot.
Check your ledger balance and available balance.
Print out your Mini Statement which displays your last 8 transactions and the
current balance.
Deposit Cash / Cheques at all full function ATMs; cash deposited in ATMs will
be credited to the account on the same day if deposited before the clearing and
cheques are sent for clearing on the next working day.
Transfer funds from one account to another linked account in the same branch.
Change the Personal Identification Number (PIN) of your ATM or Debit card Pay
bills, make donations to temples / trusts, buy internet packs, airtime
recharges for prepaid mobile phones, etc.

69
 Request for a cheque book from our ATMs; concerned branch dispatches it to
reach you within 10 working days.
No charge is levied on ICICI Bank customers for transacting through ICICI
Bank's ATMs. But, if the minimum quarterly average balance is not
maintained in your savings account, first 6 transactions in the quarter are free
and thereafter, Rs. 25 per transaction is charged.

I MOBILE

ICICI Bank's I Mobile is a breakthrough innovation in banking that allows you to

transfer funds, make your credit card payments, pay utility bills, check your balance and
do lots more, for free. So why wait anymore. Just download the I Mobile
application on your phone by sending us an SMS and experience I Mobile. . ICICI
Bank brings to you the 2nd generation I Mobile that has newer features, smarter
interface, quicker navigation and enhanced functionality. ICICI Bank's I Mobile is
your answer to banking on the move. The next generation I Mobile is your key to a
faster, easier and simplified banking service. Using GPRS enabled on your mobile
handset or through SMS, I Mobile helps you to connect directly to your bank account.
This Rich Client Based Application needs to be installed on your mobile thereby
enabling a single click access to your account.

Services available with i Mobile:

Payment of utility bills and credit card bills

Transfer of funds to any bank account
Payment of insurance premium
Placement of service request such us ordering of cheque books, bank account
statements, cheque status and balance enquiry.

Access the following ICICI Bank services via I Mobile:

70
Bank Account

Funds transfer

Bill Payment
Balance Enquiry
Last 5 transactions
Cheque Book Request
Stop Cheque request
Cheque status Enquiry

Credit Card

Balance Details
Last Payment Details
Payment Due Date
Reward Point Status

Demat A/c
Holding Enquiry
Transaction Status
Bill Enquiry
ISIN Enquiry

Loan A/c
Provisional IT Certificate
Final IT Certificate
Reset Letter
Rescheduled Letter
Loan Agreement Copy

M Shop

Prepaid Mobile Recharge

Other Services

Status of Service Request Raised

71
 Locate US

IVR BANKING
Find answers to all your banking needs from your phone. ICICI Bank's Instant
Voice Response (IVR) Banking is free of charge, fully automated and at the same time
user-friendly. Just having an ATM PIN for your account and credit card ensures that
your transactions are secure.

Saving A/C
Credit cards
Demat
Bonds
Others

TV BANKING
At ICICI Bank, we've introduced India to an all new way of banking. TV
Banking. This pioneering initiative now enables you to get information regarding
loans, accounts, deposits and a lot more while you're watching that exciting cricket
match or your favorite sitcom.

72
 CHAPTER – 3

REVIEW OF LITRETURE

Author Name: Malhotr a, Pooja & Singh, B. Topic: ― Determinants of Internet banking
adoption by banks in India‖ Date: December, 2010.

This study is an attempt to present the present status of Internet banking in India and
the extent of internet banking services offered by Internet banks. In addition, it seeks
to examine the factors affecting the extent of Internet banking services. The data for
this study are based on a survey of bank websites explored during July 2008.
The sample consists of 82 banks operating in india at 31 March 2007. Multiple
regression technique is employed to explore the determinants of the extent of
Internet banking services. The results show that the private and foreign Internet
banks have performed well in offering a wider range and more advance d services
of Internet banking in comparison with public sector banks. Among the
determinants affecting the extent of Internet banking services, size of the bank,
experience of the bank in offering Internet banking , financing pattern and
ownership of the bank are found to be significant. The primary limitation of the study
is the scope and size of its sample as well as other variables (e.g. market,
environmental, regulatory etc ) which may have an effect on the decision of the
banks to offer a wide range of Internet banking services. The purpose of the study is
to help fill significant gaps in knowledge about the Internet banking landscape in India.
The findings are expected to be of great use to the government, regulators,
commercial banks, and other financial institutions, e.g. co-operative banks
planning to offer Internet banking , bank customers and re searchers. The bankers
as well as society at large will come to know where the banks lag in terms of
adoption of Internet banking And in providing different products and services. An
understanding of the factors affecting the extent of Internet banking services is
essential both for economists studying the determinants of growth and for the

73
creators and producers of such technologies. Moreover, this paper contributes to
the empirical literature on diffusion of financial innovations, particularly Internet
banking , in a developing country, i.e. India

Author Name: Polaris Software Lab Limited (POLS.BO) Topic: ―Polaris Software and
IndusInd Bank launch INTELLECT PRIVACY Internet Banking Security Card‖, PR
Newswire‖ Date: May, 21, 2010.

In this study Polaris Software Lab Limited (POLS.BO), a leading Financial Technology
Company, launched Intellect(TM) PRIVACY based on state-of-the-art technology
and four patents filed by the India n Institute of Technology Madras. IndusInd
Bank has be come the first bank in India to implement Intellect(TM) PRIVACY, an
online and internet banking security card, for its internet banking customers. The
technology will protect customers and banks from practically all kinds of phishing
attacks, viz. deceptive e-mail, key/screen logger, brute force/dictionary attacks and
Trojans, etc. Intellect PRIVACY uses multi factor, dynamic authentication
technology providing for authorizing online banking transactions, in a completely
secure platform. Commenting on the innovation, Professor L S Ganesh,
Coordinator of the programmer, said, "At IIT Madras, the Department of
Computer Science and Engineering and the Department of Management Studies
got particularly interested in designing an internet security technology that is cost
efficient and easy to use in a rapidly growing e-commerce scenario, and
transferring it commercially. We chose the Cost-Usability-Security (CUS) approach
to arrive at a solution and Polaris Software created an eminently usable
application for the banking industry. IndusInd Bank, which was looking for
providing greater security for web based transactions, became the first organization to
adopt it." Intellect PRIVACY is a simple plastic card that customers c an use to
generate a one-time password (OTP) for carrying out any kind of online banking
transaction including the sign on. Banks can issue booklets containing a desired
number of cards that would last many transactions. The card has no pilferage value by

74
itself and customers can easily manage its life cycle, including making a request for a
new booklet and reporting loss of cards through online banking.

Author Name: Azouzi, D. Topic: ―The Adoption of Electronic Banking in Tunisia‖,

Journal of Internet Banking and Commerce‖ Date: June, 09 2009.

This paper aims to check if the current and prompt technological revolution
altering the whole world has crucial impacts on the Tunisia n banking sector.
Particularly, this study seeks some clues on which we can rely in order to
understand the customers' behavior regarding the adoption of electronic banking.
To achieve this purpose, an empirical research is carried out in Tunisia and it reveals
that panoply of factors is affecting the customers-attitude toward e-banking. For
instance; age, gender and educational qualifications seem to be important and they
split up the group into electronic banking adopters and traditional banking defenders
and so, they have significant influence on the customers' adoption of e-banking.
Furthermore, this study shows that despite the presidential incentives and in spite
of being fully aware of the e-banking's benefits, numerous respondents are still
using the conventional banking. It is worthy to mention that the fear of loss because
of transactions errors or hackers plays a significant role in alienating Tunisian
customers from online banking.

Author Name: B. Dizon, J.A. Topic: ―Special Feature: Electronic Banking‖. Date:
January, 22, 2009.

In this study they have founded that while big banks still conduct the bulk of
their business in brick and mortar bank branches, the finance sector has been
increasingly investing on e-banking facilities to offer 24-hour, queue- free services to
their regular clients, whether through ATM machines, mobile phones or the Internet.
"E- Banking's appeal is primarily its convenience. Clients nowadays want instant
results; they don't want to wait anymore," said Francisco M. Caparros, Jr., senior
vice-president of Asia United Bank and president of Banc Net. It's also turned out
to be a more efficient way to process transactions, as e-banking does away with most of
the paperwork that clients have to accomplish. "A lot of people don't like filling forms,"
Mr. Caparros added. "Online banking, in particular, relies on user names and
passwords which need to be protected," said Ferdinand G. La Chica, first vice-
president and marketing group head for Sterling Bank of Asia. These anti- theft

75
barriers are at time s supplemented by transaction passwords and "tokens",
often a keychain-like device that is issued to the client and generates random,
one-time passwords to enable him to log into his account online. Last year, the
Rural Bank Association of the Philippines announced that its members are
looking to appoint local merchants like sari-sari stores as third party agents where
consumers can open new accounts and make large payments. Such informal
outlets will enable banks to reach out to small-income businesses and individuals,
particularly those in the agrarian sector, most of who are based outside the city
center.

Name: Uppal, R.K. & Chawla, R. Topic: ―E-Delivery Channel-Based Banking

Services: An Empirical Study. Institute of Chartered Financial Analysts of India
(Hyderabad)‖. Date: Feb,06,2009.

This study highlights customer perceptions regarding e-banking services. A survey

of 1,200 respondents was conducted in October 2008 in Ludhiana district,
Punjab. The respondents were equally divided among three bank groups namely,
public sector, private sector and foreign banks. The present study investigates the
perceptions of the bank customers regarding necessity of e-banking services, quality
of e-banking services, bank frauds, future of e-banking, preference of bank customers
regarding banks, comparative study of banking services in various bank groups,
preferences regarding use of e-channels and problems faced by e-bank customers.
The major finding of this study is that customers of all bank groups are
interested in e-banking services, but at the same time are facing problems like,
inadequate knowledge, poor network, lack of infrastructure, unsuitable location,
misuse of ATM cards and difficulty to open an account. Keeping in mind these
problems faced by bank customers, this paper frames some strategies like
customer education, seminars/meetings, proper network and infrastructure
facilities, online shopping facilities, proper working and installation of ATM
machines, etc., to enhance e-banking services. Majority of professionals and business
class customers a s well as highly educated and less educated customers also
feel that e-banking ha s improved the quality of customer services in banks.

Author Name: Reeti, Sanjay, and Malhotra, A. Topic: “The Customers‘ perspective
s regarding e-banking in an e merging economy.‖ Date: June,28, 2009.

76
Stated about the Customers‘ perspective s regarding e-banking in an e merging
economy. So that, the author determining various factors affecting customer
perception and attitude towards and satisfaction with e- banking is an essential
part of a bank's strategy formulation process in an emerging economy like India.
To gain this understanding in respect of Indian customers, the study was
conducted on respondents taken from the northern part of India. The major findings
depict that customers are influenced in their usage of e-banking service s by the
kind of account they hold, their age and profession, attach highest degree of
usefulness to balance enquiry service among e -banking services, consider security
& trust most important in affecting their satisfaction level and find slow
transaction speed the most frequently faced problem while using e-banking.

Author Name: Hsun, K.S. Topic: coherence of the financial service sector and
adopts different observational variables to identify innovation capital (training and
R&D density) and process capita l (IT system sufficiency). Date: March,22,2008.

This study considers the coherence of the financial service sector and adopts
different observational variables to identify innovation capital (training and R&D
density) and process capita l (IT system sufficiency). The results show that human
capital has a direct impact on both innovation capita l and process capital, which
in turn affect customer capita l; while finally, customer capital affects business
performance. In addition, there is a negative relationship between process capital
and customer capital in the financial service sector. It suggests that in the financial
service sector, customer satisfaction relies on a sufficient degree of training and R&D
density. Intemperate investment on the support of e-banking operation systems
may not be a good answe

Author Name: Laukkanen, P., Sinkkonen, S. & Laukkanen, T. Topic: ―Consumer

resistance to internet banking: postponers, opponents and rejecters‖ Date:
September,11,2008.

The purpose of this paper is to further the understanding of innovation resistance

by dividing internet banking non-adopters into three groups based on their

77
intentions to use the innovation. Thereafter, the aim is to identify how the
resistance differs in these customer groups. This study identifies three groups of
internet banking non-adopters, namely postpones, opponents and rejecters. The
data were collected by conducting an extensive postal survey among the retail
banking customers in Finland who had not adopted internet banking. The
measurement development was based on consumer resistance theory and the
earlier literature on internet banking. Principal component analysis was used to
classify the resistance items into five adoption barriers derived from the earlier
literature. Thereafter, analysis of variance was used to analyze the statistical
differences in resistance to internet banking between the three groups. Significant
differences were identified between the groups explored. The resistance of the
rejecters is much more intense and diverse than that of the opponents, while the
postpones show only slight resistance. The results also indicate that
psychological barriers are even higher determinants of resistance than usage and
value, which are constructs relate d to ease-of-use and usefulness determining
acceptance in the traditional technology acceptance model. Moreover, the findings
highlight the role of self-efficacy in bank customers' risk perceptions to internet
banking. This study provides further understanding of what inhibits internet
banking adoption by comparing three non-adopter groups with respect to their
resistance to internet banking. It also has implications for management in
overcoming non-adopters' resistance to the innovation.

Author Name: Routray Topic: ―Wire less ATM: A Technological Framework to M-

Banking‖ Date: August 19, 2008.

The study describes that are becoming enablers for organizations to conduct
business more effectively and efficiently. One of the most effective applications is
mobile banking (m-banking). For any application to gain recognition technological
advancements play a vital role. To make m-banking application a success
bandwidth management is an important issue. The increased flexibility and mobility
feature of wireless ATM and its bandwidth on demand function is motivating a large
number of carriers towards deployment of the WATM networks. But there are

78
certain issues which are required to be addressed in WATM. The issues are cost
effective planning of network, location management and handover management. In
this paper we have suggested and evaluate d a technological framework for the m-
banking application using wireless ATM which optimizes the bandwidth usage a nd
provides a n effective handover management. Simulation results show that the
resultant framework is very effective in handling the bandwidth and the handover issue
in wireless ATM and provides an effective WATM framework model.

Author Name: Malhotr a, P. & Singh, B. Topic: ―An analysis of Internet banking
offerings and its determinants in India ‖. Date: November 07, 2007.

Stated about this research tells us that the larger banks, banks with younger
age, private ownership, higher expenses for fixed assets, higher deposits and
lower branch intensity evidence a higher probability of adoption of this new
technology. Banks with lower market share also see the Internet banking
technology as a means to increase the market share by attracting more and
more customers through this new channel of de livery. Further, the adoption of
Internet banking by other banks increases the probability that a decision to adopt will be
made. An understanding of the factors affecting this choice is essential both for
economists studying the determinants of growth and for the creators and
producers of such technologies. From this perspective, understanding the factors
determining the adoption of technology becomes highly relevant from the policy
point of view. Moreover, the studies on the adoption of financial innovations a re
related to developed markets, e.g. US or European banking markets. Hence, this
paper contributes to the empirical literature on diffusion of financial innovations,
particularly Internet banking, in a developing country.

Author Name: Shah & Braganza Topic: ―A Survey of Critical Success Factors in e-
banking‖, Date: April 18, 2007.

This survey indicates the Critical Success Factors in e- banking and the author
suggest in this article that the organizational factors, which are critical to the success
of e -banking, are investigated. Different piece s of literature report different factors

79
as key to success and generally based on subjective, perceptual data. A synthesis of
existing literature is a basis for survey questions. The data was collected from UK
based financial sector organizations who are offering their services on electronic
channels, using postal questionnaires. The top factors found to be most critical for
the success in e-banking are: quick responsive products/services, organizational
flexibility, services expansion, systems integration and enhanced customer service.
An important lesson from this research is that organizations need to view the e-
banking initiative as a business critical area rather than just a technical issue.
The y need to give attention to internal integration, which may include channels,
technology and business process integration, and improving the overall services
to their customers.

Author Name: Bauer, Malik & Falk Topic: ―Measuring the quality of e banking
portals‖, Date: July 27, 2007.

This article reviews the measuring the quality of E-Banking portals. In the
internet economy, the business model of web portals has spread rapidly over the
last few years. Despite this, there have been very few scholarly investigations into
the service s and characteristics that transform a web site into a portal as well as
into the dimensions that determine the customer‘s evaluation of the portal‘s service
quality. Based on an empirical study in the field of e-banking the authors validate
a measurement model for the construct of web portal quality based on the
following dimensions: security and trust, basic services quality, cross- buying
services quality, added value, transaction support and responsiveness. Findings –
The identified dimensions ca n reasonably be classified into three service
categories: core services, additional services, and problem-solving services.
Originality/value – The knowledge of these dimensions as major determinants of
consumer‘s quality perception in the internet provides banks a promising starting
point for establishing an effective quality management for their e-businesses.

Author Name: Picado, Gonzalez & Eckelman Topic: ―Customer Satisfaction Using
QFD‖ Date: October 20,2004.

80
This study investigated the customer satisfaction using QFD and a research on
service quality and customer satisfaction has become significant in the service
industries. This study develops a case study that considers both external and
internal service management issues and subsequent service innovations based on
the framework of quality function deployment (QFD). The application of the
customer window quadrant (CWQ) and the action plan matrix in the analysis of
customer and service elements constitute a different approach for QFD. Some
benefits and disadvantages of the QFD process are discussed as compared to
extant service quality and customer paradigms. Finally, suggestions and directions
are offered for future applications, with particular interest in the e-bank service
management issues.

Author Name: Nitsure, R.R. Topic: ―E-Banking: Challenges and Opportunities‖.

Date: December 25, 2004.

This article indicates the E-banking Challenges and opportunities lies in the banking
industry. E-banking has the potential to transform the banking business a s it
significantly lowers transaction and delivery costs. This pa per discusses some of the
problems developing countries, which have a low penetration of information and
telecommunication technology, face in realizing the advantages of e- banking
initiatives. Major concerns such as the 'digital divide' between the rich and poor,
the different operational environments for public and private sec tor banks,
problems of security and authentication, management and regulation, and inadequate
financing of small and medium scale enterprises (SMEs) are highlighted.

Author Name: Asghar Topic: ―Banking In a Cloud of Electrons‖. Date: March 17, 2004.

The study depicts that online banking and the web channel are here to stay. Financial
services rely on multiple distribution channels and e-banking represents the
channel of the future. Success stories around e-banking have taken shape
through a mix of innovation and experience. The financial services sector needs to

81
apply both these factors to their advantage to produce the desired results. Win-win
implementation of e-banking not only require s high Internet penetration rates and
stable infrastructures, but more importantly, for companies to realize the powerful
revenue opportunity of this business arm vis-à-vis the traditional brick and mortar
system of operation. Therefore, it is imperative that all e-banking implementations are
seamlessly integrate d with the core 'traditional' services thereby making the
online experience truly holistic for the customer.

Author Name: Anthony Topic: ―User Friendly E-Banking: A Survey of Online E-

Banking Retail Initiatives‖ Date: September 20, 2004..

This article discusses the importance of usability within the E-Banking sector and
identifies common usability problems and ways to resolve them. It is widely
recognized that online banking provides more revenue per customer and costs less
per transaction than any other channel, including phone banking. Encouraging
news from Forrester Research states that by 2007 the number of Europeans
banking online will double to 130 million. Based on the principles of Human
Computer Interaction (HCI), web usability has become a recognized success factor
for all e-business, including online banking. Users most enjoy those sites that
provide clear information, easy navigation and an engaging customer experience. Yet
people will naturally gravitate to the ones which a re easiest to use and offer the
best service. Banks aiming to profit the most from the increase in online banking
volumes should consider the usability and accessibility of all aspects of the ir site to
welcome them.

Author Name: Veneeva Topic: ―E-Banking (Online Banking) and Its Role in Today's
Society‖, Date: April 27, 2006.

This article describes that world is changing at a staggering rate and technology
is considered to be the key driver for these changes around us. Many activities
are handled electronically due the acceptance of information technology at home
as well as at workplace. Internet can be seen as a truly global phenomenon that has
made time and distance irrelevant to many transactions. The evolution of

82
electronic banking started from the use of automatic teller machines (ATM) and
has passed through telephone banking, direct bill payment, electronic fund
transfer and the revolutionary online banking (Alter, 2002). The future of electronic
banking ac cording to some is the acceptance of WAP enabled banking and
interactive-TV banking (Petrus & Nelson, 2006). But it has been forecasted that
among all the categories, online banking is the future of electronic financial
transaction. The rise in the e-commerce and the use of interne t in its facilitation
along with the enhanced online security of transactions and sensitive information has
been the core reasons for the penetration of online banking in everyday life.

Author Name: Maumbe Topic: ― Digital Financial Service Delivery to Poor

Communities in‖, Date: January 03, 2006.

This study depicts that most banks throughout the world, ICT have become the
back bone of financial service delivery and finance networks have shifted from paper-
based to the digital mode. However, digital financial service de livery confronts a
number of challenge s regarding its efficacy in closing the ―financial divide‖
affecting the poor. Although e-banking is considered an inexpensive way to reach
clients, its accessibility is hindered by a number of factors including poor Internet
penetration, lack of e-banking awareness and customer inflexibility to new
technology. In developing countries most of which are characterize d by extreme
poverty and poor infrastructure, universal Internet-based service provision remains
indefinable. Further, the author argues that developing nations need to improve
educational standards and computer literacy prior to broad-based adoption and
constructive use of Internet services. As result, the poor and unemployed remain
disadvantaged in terms of access to rural Internet based services. Rea l access to ―well-
functioning‖ and ―efficient financial services‖ has the potential to empower poor
communities.

Author Name: Kamiya Topic: ―How E-Banking Can Ease Your Life‖, Date: August 16,
2006.

83
This articles show that Indian banks are trying to make your life easier. Not just bill
payment, you an make investments, shop or buy tickets and plan a holiday a t your
fingertips. In fact, sources from ICICI Bank tell us, "Our Internet banking base
has been growing a t a n exponential pace over the last few years. Currently
around 78 per cent of the bank's customer base is registered for Internet
banking." To get started, all you need is a computer with a modem or other
dial-up device, a cheking account with a bank that offers online service and the
patience to complete about a one-page application--which can usually be done
online. You can avail the following services: Bill payment Services, Fund
Transfer, Credit Card, Internet shopping, and Investment though Internet e tc. Due to
the Internet banking the life of an individual becomes easy and raises the standard of
life of the humans.

Author Name: Awamleh Topic: ―Diffusion of Internet Banking amongst educated

consumers in a high income Non-OECD country‖, Date: July 29, 2007.

This study analyses the internet banking channels and service preferences of
educate d banking consumers in the UAE and examines the factors influencing
the intention to adopt or to continue the use of internet banking among both
users and non users of internet banking. It is shown that although the banking
sector in the UAE is a regional leader, internet banking in the UAE is yet to be
properly utilized a s a real added value tool to improve customer relationship and
to attain cost advantages. The Technology Acceptance Model (TAM) was used
to identify factors influencing the intention to adopt and continued use of internet
banking customers. Data was collected from internet banking users and potential users
in the United Arab Emirates and factor analyses and multiple regression
analyses were conducted to examine the data. Relative usefulness is introduced
as one of the factors and is defined as the degree to which a new technology is
better than existing ones. There is a significant difference between users and non-users
on six of the seven factors identified. Further, it was revealed that relative
usefulness, perceived risk, computer efficacy and image had a significant impact on
continued usage of internet banking for IB Users, while relative usefulness and

84
result demonstrability were the only ones significant for Non-users of internet
banking. The effects of age, gender, income, and e-commerce users also explored.
Result demonstrability is significant for all categories of non-users except for those
with income below AED 7,000. Implications of results were discussed, and future re
search directions outlined.

85
 CHAPTER - 4

RESEARCH METHODOLOGY

What is Research…?

Research is defined as human activity based on intellectual application in the

investigation of matter. The primary purpose for applied research is discovering,
interpreting, and the development of methods and systems for the advancement
of human knowledge on a wide variety of scientific matters of our world and the
universe.

The term research is also used to describe a n entire collection of information about a
particular subject.

Methodology

is the method followed while conducting the study on a particular project.

Through this methodology a systematic study is conducted on the ba sis of which
the basis of a report is produced.

It is a written game plan for conducting Research. Research methodology has

many dimensions. It includes not only the research methods but also considers
the logic behind the methods used in the context of the study and explains why
only a particular method or technique has bee n used. It also helps to
understand the assumptions underlying various techniques and by which they can
decide that certain techniques will be applicable to certain problems and other will
not. Therefore in order to solve a research problem, it is necessary to design a
research methodology for the problem as the some may differ from problem to
problem. The methodology adopted for studying the objectives was surveying the
in-house customers of these two banks in the city of Jalandhar.

86
4.1 TITLE

The title of this report is “Satisfaction from E-banking services. A comparative

study of HDFC and ICICI bank.”

4.2 OBJECTIVES OF THE STUDY

• To study about the factors that affects the customer perception towards e-
banking of HDFC and ICICI bank.

• To know about the current and future prospects of E-Banking to the customers.

• To find out the major problems faced by the customers while using e-banking
services.

NATURE

The methodology adopted to achieve the project objective involved descriptive

research method. The information required for fulfilling the objective of study was
collected from various primary and secondary sources.

4.3 TYPE OF RESEARCH

This study is DESCRIPTIVE in nature. It helps in breaking vague problem into

smaller and precise problem and emphasizes on discovering of new ideas and
insights.

RESEARCH DESIGN

Research design constitutes the blue print for the collection, measurement and
analysis of data. The present study seeks to identify the extent of preferences
of E- Banking over traditional banking among service class. The research design
is descriptive in nature. The research has been conducted on customers of
HDFC and ICICI Bank within JALANDHAR. For the selection of the sample,

87
convenient sampling method was adopted and an attempt has been made to
include all the age groups and gender of every class.

RESEARCH INSTRUMENT

The instrument used for gathering data was questionnaire. To get further insight in to
the research problem, interview regarding their buying practices too was made.
This was done to crosscheck the authenticity of the data provide d. To
supplement the primary data and to facilitate the process of drawing inference,
secondary data was collected from published sources like magazines, journals,
newspapers etc.

4.4 SAMPLE DESIGN AND SIZE

In this research project Descriptive research design is used. Judgment and

Convenience sampling method will be used to get the information about online
banking. This method is used because we are interested in exploring gender,
age, or occupation disparities in terms of online banking in the population. For
conducting this re search, a structured questionnaire is prepared and sample of
150 customers is taken from ICICI and HDFC bank.

SAMPLING SIZE

It indicates the numbers of people to be surveyed. Though large samples give

more reliable results than small samples but due to constraint of time and
money, the sample size was restricted to 150 respondents. The respondents
belong to different income group and profession.

SAMPLING UNIT

It defines the target population that will be sampled i.e. it answers who is to be
surveyed. In this study, the sampling unit is the people of ICICI and HDFC,
Jalandhar, Punjab.

88
TOOLS AND TECHNIQUES OF ANALYSIS:

The data so collected will be analyzed through the application of statistical

techniques, such as bar graphs and pie charts.

4.5 DATA COLLECTION

Keeping in view the nature of requirements of the study to collect all the
relevant information regarding the extent of awareness of the customers using E-
banking facilities offered by ICICI and HDFC bank, direct personal interview
method with structured questionnaire was adopted for the collection of primary
data. Secondary data has been collected through the various internet sites by
surfing on Interne t and from the records available with the bank.

SOURCE OF DATA

Following are the methods of sources of data:

SECONDARY DATA:

• Articles on E-Banking taken from journals, magazines published from time to time.

• Through internet.

PRIMARY DATA:

Questionnaire was used to collect primary data from respondents. The

questionnaire was structured type and contained questions relating to different
dimensions of e- banking preferences among service class such as level of
usage, factors influencing the usage of e-banking services, benefits accruing to the
users of e-banking services, problems encountered. An attempt was also made to
elicit reasons for its non-usage. The questions included in the questionnaire were
open-ended, dichotomous and offering multiple choices.

89
NEED OF THE STUDY

• To determining growth direction of online banking service.

• Promoting E-banking service s in banking industry.

• Customer perception will be taken into consideration about the internet banking.

HYPOTHESIS

EASE OF USE

Ho: Ease of use does not influence the use of E Banking services.

H1: Ease of use does influence the use of E Banking services.

DIRECT ACCESS

Ho: Direct Access does not influence the use of E Banking services.

H1: Direct Access does influence the use of E Banking services.

FRIENDS/RELATIVES

Ho: Friends/Relatives do not influence the use of E Banking service s.

H1: Friends/Relatives do influence the use of E Banking services.

4.6 SCOPE OF THE STUDY

• Area is restricted to only JALANDHAR because due to the time constraint and
not able to visit all the branches in other cities or states.

• All the classes of the customers were taken into consideration.

• This study was covered E-Banking service sector.

• This is a realistic source directly collected from the customers of Bank.

90
4.7 Limitation of Study

Every research is conducted under some constraints and this research is not an
exception. Limitations of this study a re as follows:-

• As a research is based on a sample, there fore, the findings may not reveal the
factual information about the research problem, though an utmost care will be taken to
select a truly representative sample.

• There may be some bias in the responses of the respondents which cannot be
ruled out fully.

• Sudden change in the e- banking practices during the course of research can
affect the results.

• The study is limited to area s of Jalandhar only.

• The sample size of only 150 was taken from the large population for the
purpose of study, so there can be difference between results of sample from
total population.

• People were reluctant to go in to details because of their busy schedules.

• Merely asking questions and recording answers may not always elicit the actual
information sought.

• Due to continuous change in environment, what is relevant today may be

irrelevant tomorrow.

91
 CHAPTER – 5

DATA ANALYSIS & INTERPRETATION AND

FACTS & FINDINGS

DATA ANALYSIS & INTERPRETATION

Gender

Male 114
Female 36
Total 150

120

100

80

60 Male, 114 Series1

40
Female, 36
20

0
Male Female

Interpretation: The result shows that majority of respondents i.e. 76% are males who
are using the E-banking services and 24% are the female who are using E-banking
services. Female are not using this service because they have less knowledge about

92
the internet and they trust face to face interaction more. So it shows that E-banking is
more famous among male.

Age
Age Total No.
Below 20 34
21-30 40
31-40 32
41-50 27
Above 50 17
Total 150

40
40
34
35 32

30 27

25
20 17
Series1
15
10
5
0
Below 20 21-30 31-40 41-50 Above 50

Interpretation: The result shows that majority of respondents i.e. 27% falls under the
category of 21-30 years and 23% falls under below 20years it shows that E-banking is
mainly famous among youngsters as they are the major users of E-banking and least
comes under above 50years.

93
 OCCUPATION

OCCUPATION TOTAL NO.

Government 37
Private 40
Business 48
Others 25
TOTAL 150

48
50
45 40
37
40
35
30 25
25
Series1
20
15
10
5
0
Government Private Business Others
man

Interpretation: The result shows that majority of respondents that are using Ebanking
are Businessman i.e. 32% they are using E-banking services because it results in time
saving. And 27% respondents are working in private sector and 24% respondents are
working in government organizations and 17% are others which include students and
housewives they are using E-banking because it saves time and students they have
complete knowledge of internet.

INCOME
INCOME TOTAL NO.
Below 10,000 23

94
 10,000-25,000 48
25,000-50,000 45
More than 50,000 34
TOTAL 150

48
50 45
45
40 34
35
30
23
25 Series1
20
15
10
5
0
Below 10000 10000-25000 25000-50000 Above 50000

Interpretation: The result of this study shows that 32% of the respondents who are
using E-banking fall under the income category of 10,000-25,000 and 30% falls under
the income category of 25,000 to 50,000 and 23% % falls under the income category of
more than 50,000 and 15% % falls under the income category of below 10,000.

Q-1) DO YOU THINK E-BANKING SERVICES IS NECESSARY IN PRESENT

SCENARIO.?
YES 135
NO 15
TOTAL 150

95
 100%
80%
60% 135 15 Series1
40%
20%
0%
YES NO

INTERPRITAYION: To make work easiest e-banking facility are very useful and
necessary in present scenario.

Q-2) IN WHICH BANK DO YOU YOU’RE YOUR ACCOUNT?

OPTION NO. OF RESPODENT

HDFC 39
ICICI 24
BOTH 87
TOTAL 150

96
 87
90
80
70
60
50 39
Series1
40
24
30
20
10
0
ICICI HDFC Both

Interpretation: According to this study majority of respondents i.e. 58% have their
accounts in both the banks HDFC and ICICI bank and 16% respondents have their
account in ICICI Bank and 26% have their account in HDFC bank so it means a large
no. of respondents have Experience of both the banks.

Q-3) WHILE OPENING UP THE ACCOUNT, WERE YOU AWARE OF EBANKING

SERVICES PROVIDED BY YOUR BANK?
OPTION NO. OF RESPONDENT
YEN 109
NO 41

97
 100%

80%

60%
Yes, 109
No, 41
40% Series1

20%

0%

Yes
No

Interpretation: According to this survey majority of respondents i.e.73% were aware

about E-banking services provided by their bank and 27% of respondents were not
aware about the E-banking services provided by their bank at the time of opening up of
their account because of lack of awareness and some are using banking services from
last so many years at that time bank was not offering E-banking service so they were
not aware at that time but now they are aware.

Q-4) ARE YOU AVAILING E-BANKING SERVICES?

Option No. of Respondent

Yes 96

No 13

98
 100
90
80
70
60
96 Series1
50
40
30
20
10 13
0
Yes No

Interpretation: The results show that 88% respondents who are aware of E-banking
they are availing E-banking services and 12% are not availing E-banking services yet
they are aware of E-banking the reason is that they still have faith in traditional banking.

Q-5) WHICH OF THE FOLLOWING E-BANKING SERVICES IS YOU AWARE OF?

Options No. of Respondent

Internet Banking 49
Mobile Banking 97
Phone Banking 67
One Line Banking 12
Debit Card 102
Others 21

99
 120
102
97
100

80
67
60 49
Series1
40
21
20 12

0
Internet mobile Phone One Line Debit Card Others
Banking Banking Banking Banking

Interpretation: According to this study almost every customer is using more one E-
banking service and Debit Card is used by almost 95% of respondents and mobile
banking is used but 89% of respondents and 61% respondents are using phone
banking and only 1% are using one line banking this shows the trend that how
customers are using E-banking and among all the E-banking products debit cards are
mostly used by respondents because they are easy to use and do not require technical
or computer knowledge.

Q-6) WHAT DO YOU PREFARE WHILE CHOOSING E-BANKING SERVICES.?

OPTION NO.OF RESPONDENT

Good Services 63

Cost Charges 30

People References 40

Others 17

TOTAL 150

100
 Others
17
11%
Good Service
People Good Service Cost Charges
References 63
40 42% People References
27%
Others

Cost Charges
30
20%

Interpretation: 63% people are prefer Good services then people references then cost
charges and last one is others. It‘s means that most of the people are want good
services in the comparison of cost charges. Means in present people are not much care
about service cost.

Q-7) TO WHAT EXTENT IS YOU SATISFIED WITH YOUR BANKS’ EBANKING

SERVICES?

E- banking services TOTAL NO.

Highly satisfied (1) 56

satisfied (2) 31

Neutral (3) 4

Dissatisfied (4) 15

Highly dissatisfied (5) 3

TOTAL 109

101
 60 56

50

40
31
30

20 15 Series1

10 4 3
0
Highly satisfied (2) Neutral (3) Dissatisfied Highly
satisfied (1) (4) dissatisfied
(5)

Interpretation: The most of the customers are really liked the facilities provided by
banks as hey strongly agree that the facilities are good for them so they like to avail the
E-banking services provided by the different banks and the result shows that 48%
respondents are highly satisfied with the e-banking services provided by their bank and
28% respondents are satisfied with the e-banking services provided by their bank and
14% respondents are dissatisfied with the e-banking services provided by their bank.

Respondents from HDFC and ICICI

Banks No. of Respondent
HDFC 39
ICICI 24

50

40

30

20 39 Series1

10 24

0
HDFC ICICI

102
Interpretation: In this we can easily say that out of the 150 respondents there are 39
respondents who are from HDFC and 24 are from ICICI. From this we can easily
understand that which bank provides good services to their customers and who are
satisfied their customers.

HDFC
E-Banking Service Total No.
Highly satisfied (1) 19
satisfied (2) 11
Neutral (3) 2
Dissatisfied (4) 6
Highly dissatisfied (5) 1
TOTAL 39

19
20
18
16
14 11
12
10
8 6
6
4 2 1 Series1
2
0

Interpretation: From this we can analysis that most of the respondents that is 19
respondents are satisfied with the services provided by the bank. That they like the E-
banking services provided by the by HDFC bank and the bank also easily satisfied their
customers.

103
ICICI
E-Banking Services Total No.
Highly satisfied (1) 11
satisfied (2) 8
Neutral (3) 1
Dissatisfied (4) 2
Highly dissatisfied (5) 2
TOTAL 24

11
12
10 8
8
6
4 2 2
1
2 Series1
0

Interpretation: From this we can analysis that most of the respondents that is 11
respondents are satisfied with the services provided by the bank. That they like the E-
banking services provided by the by ICICI bank and the bank also easily satisfied their
customers.

104
Q-8) WHICH OF THE FOLLOWING BENEFITS ACCRUE TO YOU, WHILE
USING E-BANKING SERVICES?

Benefit Total No.

Time Saving 56
Inexpensive 31
Easy Processing 14
Easy Fund Transfer 8
Total 109

60

50

40

30 56
Series1
20
31
10 14
8
0
Time Saving Inexpensive Easy Easy Fund
Processing Transfer

Interpretation: Most of the respondents think that the major benefit from E-banking
services is time saving facility. Because the major problem which the respondents faced
is time problem so E-banking eases their lives and save their time so they like this
facility because of this facility.

105
HDFC
Benefit Total No.
Time Saving 15
Inexpensive 11
Easy Processing 8
Easy Fund Transfer 5
Total 39
Easy Fund
Transfer
5
13%

Easy Time Saving

Time Saving
Processing 15 Inexpensive
8 38%
21% Easy Processing
Easy Fund Transfer

Inexpensive
11
28%

Interpretation: We can analysis that the customers of HDFC really satisfied with the
time saving facility of E-banking. They thought that it‘s a good for them to use the E-
banking services because it‘s save their time and they can easily access the service.

ICICI
Benefits Total No.

Time Saving 12

Inexpensive 8

106
 Easy Processing 2

Easy Fund Transfer 2

Total 24

Easy Fund
Transfer
2
Easy Processing 8%
2
8%
Time Saving
Inexpensive
Time Saving
12 Easy Processing
Inexpensive 50% Easy Fund Transfer
8
34%

Interpretation: We can easily understand that there is not at all the biggest difference
between the respondents of HDFC and ICICI they both use the E-banking services
because it‘s save their time and it‘s easily to handle.

Q-9) WHICH TYPE OF PROBLEM ARE YOUFACING WHILE USING E-BANKING

SERVICES.?

OPTION TOTAL NO.

More time taking in fund transfer 2

107
 Slow speed in working 7

Critical Process 17

Not easy for non educated person 24

Others 5

Total 55

24
25

20 17

15

10 7
5 Series1
5 2

0
More time Slow Critical Not easy Others
taking in speed in Process for non
fund working educated
transfer person

Interpretation: Not easy for Non Educated person option are choose by the most of
people because in india every person have a account but they are not well educated.
So, that‘s why this kind of problems are held by the most of peoples.

108
Q-10) YOU HAVE A OPTION TO SWITCH OVERYOUR BANK FOR USING THE E-
BANKING SERVICE. SO, DO YOU SWITCH YOUR BANK.

OPTION TOTAL NO.

HDFC 10

ICICI 14

TATAL 24

16
14
14

12
10
10

8
Series1
6

0
HDFC ICICI

Interpretation: Only 15-20 percent people are want to switch their bank for using e-
banking service. In this figure most are the customer are related to the ICICI bank. And
according to me the only reason are behind this is N on Educated person which they
are don‘t know knowledge about the E-banking processing.

109
 CHAPTER - 6

FACTS & FINDINGS OF THE STUDY

• From our study we find out that 114 male and 36 female are using E-banking
services of both the banks. The male are having more knowledge about the
transactions and having more knowledge about the services provided by the
banks. Only the working ladies having knowledge about the services or the
female having the knowledge but not of the all the service s which are provided by the
banks. So that‘s why we considered only those persons who are having knowledge
about all services of E-banking which is provided by the banks.

• Most of the respondents who lies under the age of 21-30 are using E-banking
services a s near about 40 respondents are using these services because under
the age of these respondents they are having more knowledge about the
services of e-banking.

• Most of respondents are business man are using E-banking services as near
about 48 respondents are using E-banking services. Because the benefits which
are having while using these services are more benefited by the business man
people so they are availing these services more than the other respondents.

• Most of the respondents who are using this facility having income lie between
10,000-25,000. And there is no at all a huge difference between the respondents
who are having income between 25,000-50,000.

• Among the overall percentage of the customers whose having their account in the
both the bank which we have conducted in our survey should be the 58%, and they
are using the services of both the banks and the categorical division is to be 16% in
ICICI and 26% in HDFC.

• The overall percentage of businessmen having complete knowledge a bout e-

banking services provided by the bank while opening an account in it is 73% and
the percentage of people have no awareness of e-banking services provided by

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the bank is 27%. It can reasonably, be concluded that nearly 73% of the population is
having awareness about e-banking services.

• Among those aware (which account for 150 in number) about 109 persons use e-
banking services, which is 73% of total population studied.

• E-banking constitutes services provided in terms of ATMs, Debit Card, Credit Card,
Phone Banking, Mobile Banking, Internet Banking etc, of which the first six have
been covered. Amongst these Debit Card scores the largest used service status
(68%) Close on the heels is Mobile Banking (64.66%), Phone Banking (44.66%),
while One Line banking lags behind by scoring the least ie.,0.08%.

• To find out the level of usage amongst the business class, percentage has been
calculated from the total completely filled in questionnaires and the incomplete
questionnaires were discarded. The frequency of usage of Debit card is highest
followed by ATM.

• A study of the factors, influencing the usage was made by listing out various
factors such as all time availability, ease of use, nearness etc., and amongst
the various factors status symbol is ranked as the major motivating factor,
followed by all time availability, friends, ease of use and direct access in
decreasing order of importance. Quite interestingly security symbol scored the least
motivating factors.

• When asked to list various benefits accruing from the usage of e-banking, time
saving received highest percentage score at 51.37% among different benefits
such as inexpensive (28.44%), easy processing (12.84%), easy fund transfer
(7.3%).Quite interestingly, easy processing feature scored more than the
inexpensiveness of the e-banking services. The other benefits accruing to the
people include ready availability of funds, removal of middlemen and no rude
customer relation executives.

• Among the users, various problems that are encountered while using e- banking
services. Firstly the y highly considered Difficulty in claiming false transactions are

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major reasons that create hurdles in its usage, while card misplaced and
misused, password forgetting, time consumption and internet connectivity issue
also considered seem to be the least bothering problems.

• From the non users, an attempt was made to elicit the reasons for its non
usage. most important factors which have been considered by customers who are
not using e banking services are no access to internet, mobile then hidden cost
factor, followed by dissatisfaction with traditional banking was considered as de-
motivating factor, followed closely by the fear of insecurity, then ‗botheration‘ factor,
which suggested their resistance to change, which to some extent can be countered
by aggressive advertisement and utilizing other modes of awareness dissemination a
s well.

• We easily from our interpretation find out that there is not at all as such
comparison between both the banks. As there are some of the services which are
equally good as the services of other bank. As the services of net banking is good in
HDFC as compare to ICICI. And if we compare the mobile banking services the n both
are at equally side. But if we compare the phone banking facility of both the
banks then ICICI provides totally satisfaction to their customers. So in findings
we can‘t say that overall which bank provides the satisfactory facility to their
customers only there is some services which is better of HDFC and some are
better of ICICI bank. Like out of 109 respondents 59 respondents prefer the E-
banking services of HDFC and 50 respondents prefer the services of ICICI bank.
So most of the respondents considered the services provided by HDFC bank are
better in respect of ICICI bank

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 Conclusion

This study attempted to identify key quality attributes of internet banking services
by analyzing internet banking customers & their comments on banking experience.
The findings of this study show that despite of many advantages of online banking.
People still consider it as an alternative for analyzing their bank records.
Although every bank today provides the facility of online banking but most of people
use it only once a month. This reason is that in case of internet banking interpersonal
interaction with customers is seldom possible. Identification & measurement of
customer‘s expectations of the internet banking services provide a frame of
reference & their relate d quality dimension. The main factors which persuade
people to use online banking are comfort & convenience & the facility which attracts
them most is quality & quantity of information. Therefore the implementation of quality
initiatives should begin with defining customer‘s need & preferences & their related
quality dimensions There is still a lot needed for the banking system to make
reforms and train their customers for using internet for their banking account.
Going through the survey the main problem lies that still customer have a fear of
hacking of accounts and thus do not go on for internet banking. Banks are trying
their level best by providing the best security options to the customers but then to
there is lot of factors which betrays a customer from opening an internet bank
account.

Banks a re providing free internet banking services also so that the customers can
be attracted. By asking the bank employs we came to know that maximum
numbers of internet bank account holders are youth and business man. E-Banking is an
innovative tool that is fast becoming a necessity. It is a successful strategic we upon
for banks to remain profitable in a volatile and competitive marketplace of today. If
proper training should be given to customer by the bank employs to open an
account will be beneficial secondly the website should be made friendlier from
where the first time customers can directly make and access their accounts. In
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future, the availability of technology to ensure safety and privacy of e-transactions
and the RBI guide lines on various aspects of internet banking will definitely help
in rapid growth of internet banking in India.

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 Recommendation

We can see the time is changing and we the passage of time people are
accepting technology there is still a lot of perceptual blocking which hampers the growth
it‘s the normal tendency of a human not to have changes work on the old track,
that‘s also one of the reason for the slow acceptance of internet banking accounts.

• Banks should obey the RBI norms and provide facilities as per the norms, which
are not being followed by the banks. While the customer must be given the
prompt services and the bank officer should not have any fear on mind to provide the
facilities as per RBI norms to the units going sick.

• Internet banking facility must be made available in all branches of these two
Banks.

• Each section of these Banks should be computerized even in rural areas also.

• Personalized banking should be given a thrust as more and more banks are
achieving in usual services.

• Covering up the towns in rural areas with ATMs so that the people in those area s
ca n also avail better services.

• Prompt dealing with permanent customers and speedy transactions without

harassing the customers.

• Fair dealing with the customers. More contributions from the employees of the
bank. The staff should be co-operative , friendly and must be capable of
understanding the problems of the customers.

• Give proper training to customers for using i-banking

• Create a trust in mind of customers towards security of their accounts

• Provide a platform from where the customers can access different accounts at
single time without extra charge.

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 Appendix

Dear Respondent,

We are conducting a research study of B We will appreciate your cooperation in

this regard by filling up the questionnaire carefully. I assure you that the
information provided by you will be kept confidential and will be used for academic
purpose only.

Please put a tic k (v) in appropriate brackets.

Questionnaire On “Satisfaction from E-Banking Services. A

comparative study of HDFC and ICICI bank.

A. Personal Information

Name of the customer:_________________________________________________________.

Address:_____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________.

Phone no.:___________________________________________________________________.

E-mail id:____________________________________________________________________.

Age:_________________________.

B. General Information

1. Do you think that E-banking services are necessary in present scenario.

(a) Yes (B) No
2. From which bank you are availing these services.
(a) SBI Bank
(b) PNB Bank

116
 (c) HDFC Bank
(d) ICICI Bank
(e) Others (Please Specify)_______________________.

3. What do you prefer while choosing E-Banking services.

(a) Good service
(b) Cost charges
(c) People References
(d) Other(Please specify)_________________________.

4. What are the reason for selecting this particular bank.?

(a) Good brand
(b) Good Service
(c) Other References
(d) Other (Please specify)_________________________.

5. Which type of E-Banking services you want to use.?

(a) Transfer funds online
(b) Online purchase and payment.
(c) Regular checking of bank statement.
(d) Request any card or cheque book services.
(e) Other(Please specify)__________________________.

6. Are you satisfied with your E-Banking Service?

(a) Yes (b) No

7. Give rating of your E-Banking Services.

(a) Excellent
(b) Very good
(c) Good
(d) Average
(e) Below average.

117
8. Which type of problem are you facing while using E-banking services.
(a) More time taking in fund transfer.
(b) Slow speed in working.
(c) Critical Process.
(d) Not easy for Non educated persons.
(e) Other(Please specify)________________________.

9. What your bank is doing to solve out these problems.

_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_______________________.

10. If given any option to switch, Which bank you prefer for using E-Banking service & Why.?
(a) SBI Bank
(b) PNB Bank
(c) HDFC Bank
(d) ICICI Bank
(e) Other(Please specify)___________________________.

C. Suggestion for Improvement.

______________________________________________________________________
______________________________________________________________________
_____________________________________________________________________.

Signature

Dated:

Thank you very much for your kind support and co-operation.

118
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