GROUP 4

E - B A N K I N G S E RV I C E S A N D
SECURITY MEASURES
• E-Banking - Electronic banking has many names like e banking, virtual banking, online
banking, or internet banking. It is simply the use of electronic and telecommunications
network for delivering various banking products and services. Through e-banking, a
customer can access his account and conduct many transactions using his computer
or mobile phone.

• Levels of e banking
• Level 1 –information about the banks products and services

• Level 2 – In this level, banks allow their customers to submit instructions or

applications for different services, check their account balance.

• Level 3– In the third level, banks allow their customers to operate their accounts for
funds transfer and bill payments.
• E-banking in India
• In India, since 1997, when the ICICI Bank first offered internet banking services, today, most
new-generation banks offer the same to their customers. In fact, all major banks provide e-
banking services to their customers.

• Popular services under e-banking in India

• ATMs (Automated Teller Machines)

• Telephone Banking
• Electronic Clearing Cards
• Smart Cards
• EFT (Electronic Funds Transfer)
• ECS (Electronic Clearing Services)
• Mobile Banking & Internet Banking
• Bill payment, Funds transfer, Investing & Shopping
• Banks
• Lesser transaction costs – electronic transactions are the cheapest modes of transaction
• A reduced margin for human error – since the information is relayed electronically, there is
no room for human error
• Lesser paperwork – digital records reduce paperwork and make the process easier to
handle. Also, it is enviroment-friendly.
• More loyal customers – since e-banking services are customer-friendly, banks experience
higher loyalty from its customers.

• Customers
• Convenience – a customer can access his account and transact from anywhere 24x7x365.
• Lower cost per transaction – since the customer does not have to visit the branch for
every transaction, it saves him both time and money.
• No geographical barriers – In traditional banking systems, geographical distances could
hamper certain banking transactions. However, with e-banking, geographical barriers are
reduced.
• Online Banking
• Online banking also known as internet banking, is an electronic payment system
that enables customers of a bank to conduct a range of financial transaction through
their website.

• The online banking system will typically connect to or be part of the core banking
system operated by a bank.

• Banking websites are of two types:

• Informational Websites – These websites offer general information about the bank
and its products and services to customers.

• Transactional Websites – These websites allow customers to conduct transactions

on the bank’s website.
• Mobile Banking
• Mobile banking is a service provided by a Bank that allows its customers to conduct financial
transactions remotely using a Mobile phone or Tablet.

• Unlike the related Internet Banking it uses software, usually called an App provided by the bank for the
purpose or it is done through Calling and SMS.

• Some Banks have restrictions on which accounts may be accessed through mobile banking, as well as a
limit on the amount that can be transacted.

• Mobile banking is dependent on the availability of an internet or data connection to the mobile device
and Network service.

• Services which can be performed are monitoring of account, transfer of funds, bill payments, investing
and shopping, etc.

• Examples :YONO SBI, HDFC mobile banking app, BOI Mobile etc.
• ATM ( Automated teller machines )
• National Financial Switch (NFS) is the largest network of shared automated teller machines
(ATMs) in India.It was designed, developed and deployed by the Institute of Development & Research
in Banking Technology (IDRBT) in 2004, with the goal of inter-connecting the ATMs in the country and
facilitating convenience banking. It is run by the National Payment Corporation Of India(NPCI).

• Services offered by NFS through ATM’s

• Cash Withdrawal
• Balance Enquiry
• PIN Change
• Mini Statement

• History- The National Financial Switch was launched by the IDRBT on 27 August 2004, connecting the
ATMs of three banks, Corporation Bank, Bank of Baroda and ICICI Bank
• By December 2009, the network had grown to connect 49,880 ATMs of 37 banks, thereby emerging as
the largest network of shared ATMs in the country.
• Any bank that provides Core Banking services with 24x7 transaction banking capabilities with or
without ATMs may join the National Financial Switch through a sponsor bank.

• Which allows non-scheduled Urban Co-operative banks (UCBs) and Regional Rural Bank (RRBs) to
gain access to the national network of over 103,000 ATMs in the country.

• Before 14 August 2011, access was limited to Scheduled Banks with RTGS membership.

• The sponsorship scheme was started to increase the connectivity of ATMs across the country, and to
enable customers to use ATMs across India.
• Core Banking Solutions - is a banking service provided by a group of networked bank branches
where customers may access their bank account and perform basic transactions from any of the
member branch offices.
• Core banking is often associated with Consumer banking. Core banking covers basic depositing and
lending of money.
• Core banking functions will include Handling of Accounts, Providing loans & Making Payments .

• Banks make these services available across multiple channels like :

• Internet Banking
• Mobile Banking
• ATM
• POS
• Fund Transfers – NEFT & RTGS
• Branches
• For the bank which implements CBS , the customer becomes the bank’s customer instead of
customer of particular branch.
• POS
• A point of sale terminal (POS terminal) is an electronic device used to process card
payments at retail locations. A POS terminal generally does the following:
• Reads the information off a customer’s credit or debit card
• Checks whether the funds in a customer’s bank account are sufficient
• Transfers the funds from the customer’s account to the seller’s account (or at least,
accounts for the transfer with the credit card network)
• Records the transaction and prints a receipt
• Electronic Clearing System (ECS) - ECS is an electronic method of fund transfer
from one bank account to another.
• It is generally used for bulk transfers performed by institutions for making payments
like dividend, interest, salary, pension, etc.
• ECS can also be used to pay bills such as telephone, electricity, water, or for making
equated monthly instalments payments on loans.
• Here the customer gives standing orders to the bank to perform the various services
of ECS

• Types of ECS:
• ECS Credit – paying to a large number of beneficiaries eg. dividend, interest, salary,
pension, etc.

• ECS Debit – paying to a single beneficiary eg. Telephone bills, electricity bill, water bill,
or for making equated monthly instalments payments on loans.
• ELECTRONIC FUNDS TRANSFER

• NEFT - National Electronic Funds Transfer is the most commonly used online
payment option to transfer money from one bank account to another. Usually, salary
transfers by companies are done using NEFT.

• The funds are transferred on a deferred settlement basis, which implies that the
money is transferred in batches.
• There is no maximum limit but this depends from one bank to another. For instance,
the retail banking limit set by SBI is Rs. 10 lakhs.

• Cost Involved
• For transferring money to a different bank, Rs 2.50 to Rs 25 can be charged, based
on the amount being transferred.
• Constraints
• The money can be transferred only during the bank working days. The
transactions cannot be completed over the weekends and on bank
holidays.
• It will be completed on the next working day. Thus, you cannot make
instant transactions using NEFT.

• Requirements-
• Recipient’s name
• Recipient’s bank name
• Recipients’ account number
• IFSC code of the beneficiary bank
• RTGS - You can transfer money from one bank to another on a real-time basis
using Real Time Gross Settlement or RTGS method.
• There is no maximum transfer limit, but the minimum is Rs. 2 lakhs.
• The transactions are processed throughout the RTGS business hours.
• Usually, the amount is remitted within 30-minutes.
• To be able to transfer money through RTGS, it is required for the sender and the
receiver bank branch to be RTGS enabled.
• You can find the list of RTGS authorized banks on the RBI website.

• Cost Factor-
• It costs a little more than NEFT. But still, it will not cost you more than Rs. 30 for
transactions up to Rs. 5 lakhs. The fee varies from one bank to another.
• Requirements-
• Amount to be sent
• Account number of the remitter or sender
• Name of the recipient or beneficiary
• Account number of the beneficiary
• Beneficiary’s bank and branch name
• IFSC code of the receiving branch
• Sender to receiver information, if any
• IMPS or Immediate Payment Service
• The money is transferred instantaneously through mobile phones using this
interbank electronic fund transfer service.
• You can make the transactions 24X7X365 across banks including all weekends and
bank holidays. The money can be transferred using phones, ATMs, Mobile Money
Identifier (MMID) and internet banking. The idea is simple – to allow users to make
payments with the mobile number of the beneficiary.

• Requirements -
• 7 Digit MMID Number
• Name of the beneficiary
• Beneficiary’s mobile number
• Account Number of the recipient
• IFSC Codes of the beneficiary bank
Comparison
NEFT RTGS IMPS
Category

Settlement
Half hourly batches Real time Real time
Type

Minimum
Transfer Re.1 Rs.2 lakh Re.1
Limit

No Limit
Maximum
Transfer However, maximum amount per transaction is limited to No limit Rs.2 lakh
Limit Rs.50,000/- for cash-based remittances within India and to
Nepal under the Indo-Nepal Remittance Facility Scheme.

8:00 AM – 7:00 PM all working days except 2nd and

8:00 AM – 6:00 PM all working days
Service 4th Saturday of the month
Unavailable on Sunday and Bank Holidays Available 365 days 24/7
Timings Unavailable on Sunday and Bank Holidays
.
Operates in 23 half-hourly settlement batches

Charges are decided by the individual

Transaction Charges from 25 to 50 rupees
Charges from 2.50 to 25 rupees member banks.
Charges GST is also applicable
The taxes are included.

Payment
Online and Offline Online and Offline Online
Options
• Unified Payments Interface - UPI-enabled apps allow you to make transactions (up to Rs
1 lakh) with any smartphone using a VPA (Virtual Payment Address).
• The steps are comparatively fewer and the apps enable users to transfer money in much
faster.
• Moreover, it is possible to transfer the funds round the clock and the transactions are done
on a real-time basis.
• It eliminates the need to enter bank details or other sensitive information each time a
customer initiates a transaction.
• The interface is regulated by the Reserve Bank of India
• Apps - Google pay, Phone pe, BHIM UPI and Paytm

• The Cost Factor

• There are no charges attached to using the UPI platform for transferring money from one
person to another.
• E-WALLET
• E-wallet stands for electronic wallet. It is a type of electronic card which is used for
transactions made online through a computer or a smartphone.
• The utility of e-wallet is same as a credit or debit card. An e-wallet needs to be
loaded with money from the individual's bank account to make payments.
• The main objective of e-Wallet is to make paperless money transaction easier.

• How to use e-Wallet?

• Download the app on your device.

• Sign-up by entering the relevant information. The user will receive a password.
• Load money using debit/credit card or Netbanking.
• Start making transactions or payments.
• For Merchant
• Merchant downloads the app on his/her device.
• Sign-up by entering the relevant information. The user will receive a password.
• Self-declare yourself as a merchant.
• Start accepting payments.

• What do you need to start using an e-wallet?

• Bank Account.
• Smart phone.
• 2G/3G/4G connection.
• A free wallet app

• PayTM, Amazon Pay, PhonePe and Yono by SBI.

 DIFFERENCE BETWEEN UPI AND E-WALLET

UPI E-WALLET
• KYC not required • KYC is required
• No Middleman • Middleman is involved
• Faster • Slower
• Interest is earned • Interest is not earned
• Security Measures in E – banking
• ATM pin ( 4 digits )
• MPIN - Mobile Banking Personal Identification Number ( 6 digits )
• UPI pin ( 6 digits )
• MMID - Mobile Money Identifier ( 8 digits )
• Profile ID
• Profile Password
• Transaction Password
• OTP – One Time Password
• CVV – Card verification value
• KYC – Know your customer
• RBI’s recommendation on E-Banking
• The RBI has a working group which examines various issues of e-banking and suggests different ways
to solve them. Some of these recommendations are:
• Keeping security concerns in mind, all banks in India must follow a standard. Also, the Indian Banks
Association should design this standard.

• All banks must adopt adequate security measures to maintain the secrecy and confidentiality of data.
Further, they must use logical access control to implement it.

• In order to mitigate the money laundering risk, banks must develop an anti-money laundering (ALM)
technology for reporting and querying.

• All banks must have an explicit security plan along with documentation. Further, banks must strictly
ensure physical access control.

• Banks must adopt an extensive e-banking network so that the rural and remote areas of the country
can also benefit.
• INFORMATION TECHNOLOGY REGULATIONS IN INDIAN BANKING
• IT Act, 2000 validates and recognize the contracts and transactions formed through electronic
means, facilitates electronic filling of documents with the government agencies and supports its
admissibility in the courts.
• The act does not apply to the Negotiable Instruments, powers of Attorney, Trusts, Wills or other
Testamentary Dispositions, Contracts for the sale of immovable property and other transactions
notified by the Central Government.

• IT act amended the following legislations.

• The Indian Penal Code, 1860: - Section 446 (Dealing with forgery of records), a register include in
electronic form.
• In section 354D(Stalking) if any man monitors the use of internet, email or other electronic
communications shall be punished with imprisonment upto 3 years and fine and on further
conviction imprisonment for 5 years and with fine.
• Indian Evidence Act, 1872:- Electronic records covering digital signatures and digital certificates
are included in evidence and can be presented in the court
• Sec 65 B any information in electronic records are deemed as document to be admissible for
evidence in the court.
• In Sec 67A other than secure electronic signatures digital signature of any subscriber shall be
proved.
• Sec 73A Court may verify Digital Signature Certificate to prove digital signature.

• Bankers Books Evidence Act, 1891: Included all electro-magnetic data storage device in
the bankers book.

• The Reserve Bank of India Act, 1934: Empowered the central board to make
regulations for fund transfer through electronic means between the banks or other
financial institutions.
• Security Lapse in E-Banking
• Security Risk
• When we talk about banking transactions, security of the transaction is of most importance. All
customers want their transactions to be confidential.
• However, since all information is online, there is always a chance that someone might get the
information and misuse it.
• The security risk of e-banking also arises from hacking threats and unauthorized access to the bank’s
systems.
• System Architecture and Design Risk
• In order to manage various operational and security risks of e-banking, it is important that the bank
has appropriate system architecture and controls in place. Banks always carry the risk of choosing the
wrong system design or technology
• If the bank has an outdated system which is not upgradable, then it can turn into an investment loss
for the bank along with inefficient service.
• Banks need to keep updating their systems to keep up with the rapidly changing technology to avoid
any holes in its security system. Further, the bank’s staff requires regular training to keep up with the
new technologies too.