RESEARCH PROJECT REPORT

ON

( ONLINE BANKING )
SUBMITTED TO

IN PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE AWARD OF THE DEGREE OF

BACHELOR OF COMMERCE
(HONOURS)
Batch 2013-16
Session 2015-16
Submitted by:

Supervised by:

(Krishna Pratap Singh)

(Deepika Pandoi )

Student of B. Com. (H) V Semester

Asst. Professor -Dept. of Mgmt.

Roll No.:134500035

GLA University, Mathura

CERTIFICATE

This is to certify that the research project report entitled online

banking, is submitted by Mr./Ms Krishna pratap singh student of B.
Com. (H) V Semester of Institute of Business Management, GLA

University, Mathura, under my supervision for the partial fulfillment for

the award of the degree of Bachelor of Commerce (Honours), Session
2015-16, Batch 2013-16.
Place: Mathura
Date:

(..
)
Name &
Signature of Supervisor

DECLARATION

I Krishna pratap singh, student of B. Com. (H) (V

Semester) Session 2015-2016,
hereby

declare

that

my

Batch 2013-2014
work

entitled

online banking, is the outcome of genuine efforts

done

by

me

under

the

able

guidance

of

Mr./Ms./Dr. Deepika pandoi and being submitted to

Institute

of

Business

Management,

GLA

University, Mathura as research project report in

partial fulfillment for the award of the degree of
Bachelor of Commerce (Honours) {B. Com. (H)}.

Place: Mathura
Date:

Name: Krishna pratap

singh
Course: B. Com. (H) (V Semester)
University Roll No :
134500035

ACKNOWLEDGEMENT
Firstly, I would like to express my sincere gratitude to Prof. A. M Agarwal
Pro Vice-Chancellor and Director - IBM without whose blessings my
summer training project work would not be completed.
I also want to thank our HOD - Prof. Somesh Dhamija for providing me
encouragement, motivation and moral support throughout the project work.
In addition to this I would also like to thank Mr. ,
Assistant Professor IBM who supervised my project. Under his unrelated
support and guidance, my project has taken this shape.
I am equally indebted to my family and friends who always inspired and
motivated me to do something better throughout this project.
At last I would like to extend my sincere thanks to all the respondents to
whom I visited for giving their support and valuable information, which helps
me in completing my project work.

Krishna pratap singh

Course B. Com. (H) V Sem.
University Roll No. 134500035

EXECUTIVE SUMMARY

The purpose of the study is to have a comparative study of the online banking .
For the above study a questionnaire was designed and the same was provided to the
respondents for their valuable inputs.
All the aspects of the study included introduction of the study, objective of the study,
research methodology, data interpretation and analysis, suggestions and
recommendations.
The data collection of the study was mainly taken from primary source i.e.
Questionnaire and secondary sources of the data i.e. internet

TABLE OF CONTENTS
CONTENTS

PAGE NO.

About the Company

Introduction to the Topic, Importance & Objectives
Research Methodology
Data Analysis & Interpretations
Findings, Conclusions, Recommendations & Suggestions
Bibliography

CHAPTER1

INTRODUCTIN
ABOUT THE
INDUSTRY

Introduction
Online Banking A Global Way to Bank!
Today we are in the era of globalisation. Multinational organisations
worldwide have adopted globalisation as their first strategic choice.
Advancement in technology has facilitated globalisation too. Same
holds true for banking industry. Technological advancement, changes
and innovations have always leveraged the standards of mankind. It has
given new dimensions to society. It has also altered the way services
can be offered. Information Technology has been a major driving force
of economies worldwide during the last 2 decades. Its impact has been
readily felt in banking industry also. With the invention of computer,
operations and database management became quite handy. When
ARPANET project of Defence Academy of US began, a new technology
was born with the advent of internet. The two technological
breakthroughs computers and internet has radically changed the way
world can interact and business could be done. Metamorphosis and
clubbing of these technologies gave rise to the growth of ITeS
(Information Technology enabled Services) across the globe. There has
been a marked improvement particularly in the area of maintenance,
storage, availability and transfer of data.

The world has literally shrunk

to become a "global village".IT has played a crucial role in the financial

services. Internet has proved a magic wand for financial services and
products, banking in particular. Banking sector has been early adopter
of technology to offer latest modes for transacting business. Banks have
transformed themselves and are offering services through internet. From
computerization to networking to ATMs and now
E-Banking banks have moved up the value chain. This phenomenon of
offering services through internet is referred as internet banking. The
8

current article discusses internet banking in India and focuses upon key
challenges before banking industry.
Online banking systems in India and the features available with different
banks across India. If you look into the modern age of banking , online
banks or net banking made things much easier for the people and saves
lot of time. The traditional way of standing in the queue and filling up
all the forms, now its no hassle for making any transaction with the
banks. Every bank has their own features and some banks still not
having the more advanced features like transferring money to any banks
across India, easy registration for net banking, etc.

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 emphasised 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. In other words a successful Internet banking
solution offers
Exceptional rates on Savings, CDs, and IRAs
Checking with no monthly fee, free bill payment and
rebates on ATM surcharges
Credit cards with low rates

 Easy online applications for all accounts, including

personal loans and mortgages
24 hour account access
Quality customer service with personal attention

Advantage of Internet Banking Facility

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 ones
accounts at anytime and from any location via the World Wide Web is a
convenience unknown a short time ago. Thus, a banks Internet presence
transforms from brouchreware 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

10

a. Banks with Internet Banking :In the current scenario, every bank in India has the internet
banking facility. Recently the banks are extending their presence
in rural areas to lure more customers and show them the
advantages of internet making by educating into the new system.
This gives the countries entire population to get the benefit of
technology advancement. As I said, still it is evolving and not all
the banks provide very advanced features. In our article I will
take few leading banks and explain the features they are
offering. Note that, the online banking can be for managing
your Savings

Accounts, Credit

Cards, Fixed

Deposit,

Insurance, etc. The following are the list of banks and their
online website address.
ICICI Net Banking
HDFC Net Banking
SBI Cards
LIC India

11

Top 10 Players in Banking

List of Banks in India
RBI
ABN

AMRO Andhra Bank

Axis Bank

Bank
Bank

Barclays Bank

Baroda
Canara Bank

Central

Citibank

Corporation

India
Dena Bank

Deutsche Bank
HSBC
Indiabulls

Bank
GE Financial
ICICI
Indian Bank

HDFC
IDBI
Indian

of Bank Of India

Financial
Services
ING Vysya

National

Bank

of

Overseas

Bank
Kotak

LIC

Housing

Mahindra

Finance Corporation

Bank
Oriental Bank PNB

Housing Bank
of Commerce
Punjab & Sind Reliance

SBI

Bank
Standard

Union Bank of India

Money
Syndicate

Chartered
Bank
United Bank of
India

12

Banking Services through Internet: The Basic Level Service is the banks web sites which disseminate
information on different products and services offered to customers
and members of public in general. It may receive and reply to
customers queries through e-mail,
In the next level are Simple Transactional Web sites which allows
customers to submit their instructions, applications for different
services, queries in their account balances, etc. but do not permit
any fund-based transactions on their accounts,
The third level of Internet banking service are offered by Fully
Transactional Web sites which allow the customers to operate on
their accounts for transfer of funds, payment of different bills,
subscribing to other products of the bank and to transact purchase
and sale of securities, etc. The above forms of Internet banking
service the customer or by new banks, who deliver banking service
primarily through Internet or other electronic delivery channels as
the value added services. Some of these
banks are known as Virtual banks or Internet only banks and may not
have physical presence in a country despite offering different
banking services.

The Indian Scenario: The entry of India banks into Net BankingInternet banking, both as a
medium of delivery of banking services and as a strategic tool for
business development.At present, the total internet users in the
country are estimated at 9 lakh. However, this is expected to grow
exponentially to 90 lakh by 2003. Only about 1 percent of Internet
13

users did banking online in 1998. This is increased to 16.7 percent

in March 2000 (India Research, May 29, 2000, Kotak Securities).
Cost of banking service through the Internet from a fraction of costs
through conventional methods. Rough estimates assume teller cost
at Re.1 per transaction, ATM transaction cost at 45 paise, phone
banking at 35 paise, debit cards at 20 paise and Internet banking at
10 paise per transaction.

Product and Services Offered: Banks in India are at different stages of the web-enabled banking cycle.
Initially, a bank, which is not having a web site, allows its customer
to communicate with it through an e-mail address communication,
is limited to a small number of branches and offices which have
access to this e-mail count.
With gradual adoption of Information Technology, the bank puts up a
web site that provides general information on deposits products,
application forms for downloading and e-mail option for enquiries
and feedback.
Vijaya Bank provides information on its website about its NRI and other
services. Customers are required to fill in applications on the Net
and can later receive loans or other products requested for at their
local branch.
A few banks provide the customer to enquire into his demat account
(security/shares) holding details, transaction details and status of
instructions given by him. These web sites still do not allow online
transactions for their customers.
14

Some of the banks permit customers to interact with them and transact
electronically with them. Such services include request for opening
of accounts, requisition for cheque books, stop payment of cheques,
viewing and printing statements of accounts, movement of funds
between accounts within the same bank, querying on status or
requests, instructions for opening of Letter of Credit and Bank
Guarantees, etc.
These services are being initiated by banks like ICICI Bank Ltd.,
Citibank, Global Trust Bank Ltd., UTI Bank Ltd., Bank of Citibank
Bank of Madura Ltd., Federal Bank Ltd., etc
Some of the more aggressive players in this area such as ICICI Bank
Ltd., HDFC Bank Ltd., UTI Bank Ltd., Citibank, Global Trust Bank
Ltd., and Bank of Punjab Ltd., offer the facility of receipt, review
and payment of bills online.
The Infinity service of ICICI Bank Ltd. Also allows online real time
shopping all payments to be made by customers.
HDFC Bank Ltd. Has made e-shopping online and real time with the
launch of its payment gateway.
Banks providing internet banking services have been entering into
agreements with their customers setting out the terms and conditions
of the services.
The terms and conditions include information on the access through
user-ID and secret password, minimum balance and charges,
authority to the bank for carrying out transactions performed
through the service, liability of the user and the bank, disclosure of
personal information for statistical analysis and credit scoring also,
non-transferability of the facility, notices and termination, etc.
15

The Future Scenario: Compared to banks abroad, India banks offering online services still
have a long way to go. For online banking to reach a critical mass,
there has to be sufficient number of users and the sufficient
infrastructure in place.
Various security options like line encryption, branch connection
encryption, firewalls, digital certificates, automatic sign-offs,
random pop-ups and disaster recovery sites are is in place or are
being looked at, there is as yet no Certification Authority in India
offering Public Key Infrastructure, which is absolutely necessary for
online banking.
The communication bandwidth available today in India is also not
enough to meet the needs of high priority services like online
banking and trading.
Banks offering online facilities also need to calculate their downtime
losses, because even a few minutes of downtime in a week could
mean substantial losses.
Users of Internet Banking Services are required to fill up the application
forms online and send a copy of the same by mail or fax to the bank.
A contractual agreement is entered into by the customer with the bank
for using the Internet banking services.
Domestic customers, for whom other access points such as ATMs,
telebanking, personal contact, etc. are available, are often hesitant to
use the Internet banking services offered by Indian banks. Internet
Banking, as an additional delivery channel, may, therefore, be
16

attractive/ appealing as a value added service to domestic customers.

Non-resident Indians, for whom, it is expensive and time consuming
to access their bank accounts maintained in India find net banking
very convenient and useful.
Cyber crimes are, therefore, difficult to be identified and controlled.
In order to promote Internet banking services, it is necessary that the
proper legal infrastructure is in place.
The Department of Telecommunications (DoT) is moving fast to make
available additional bandwidth, with the result that internet access
will become much faster in the future.
Reserve Bank of India has constituted a group to examine different
issues relating to i-banking and recommend technology, security
legal standards and operational standards keeping in view the
international best practices. In the following paragraphs a generic
set of risks discussed as the basis for formulating general risk
control guidelines.

Risk & Rewards

Information technology analyst firm, the Meta Group, recently
reported that "financial institutions who don't offer home banking
by the year 2000 will become marginalized." 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.
17

 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 Ecommerce 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, eliminate 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 it's underlying technologies will
change and transform not just banking, but 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.

Operational Risk: -

18

Operational risk, also referred to as transactional risk is the most

common form of risk associated with i-banking.
It takes them from of inaccurate processing of transactions, nonenforceability of contracts, compromises in data integrity, data
privacy and confidentiality, unauthorized access / intrusion to banks
systems and transaction, etc.
Such risks can arise out of weaknesses in design, implementation and
monitoring of banks information system.
Besides inadequacies in technology, human factors like negligence by
customers and employees, fraudulent activity of employees and
crackers/ hackers, etc. can become potential source of operational
risk.

Security Risk: Security risk arises on account of unauthorized access to a banks critical
information stores like accounting system, risk management system,
portfolio management system, etc.
Other related risks are loss of reputation, infringing customers privacy
and its legal implications, etc.
Attackers could be hackers, unscrupulous vendors, disgruntled
employee or even pure thrill seekers.
In addition to external attacks banks are exposed to security risk from
internal sources e.g. employee fraud. Employee being familiar with
different systems and their weaknesses become potential security
threats in a loosely controlled environment. They can manage to
acquire the authentication data in order to access the customer
accounts causing losses to the bank.
19

Unless specifically protected, all data/ information transfer over the

internet can be monitored or read by unauthorized persons.

System architecture and design: Banks face the risk of wrong choice of technology, improper system
design and inadequate control processes.
Numerous protocols are used for communication across internet. Each
protocol is designed for specific types of data transfer.
A system allowing communications with all protocols, say HTTP (Hyper
Text Transfer Protocol), FTP (File Transfer Protocol), telnet, etc. is
more prone to attack than one designed to permit say, only HTTP.
Many banks rely on outside service providers to implement, operate and
maintain their e-banking system.
Security related operational risk include access control, use of firewalls,
cryptographic techniques, public key encryption, digital signature,
etc.

Reputational Risk: Reputational risk is the risks of getting significant negative public
opinion, which may result in a critical loss of funding or customers.
Such risks arise from actions which cause major loss of the public
confidence in the banks ability to perform critical functions or
impair bank-customer relationship. It may be due to banks own
action or due to third parties action.
The main reasons for this risk may be system or product not working to
the expectations of the customers, significant security breach (both
due to internal and external attack), inadequate information to
20

customers about product use and problem resolution procedures,

significant problems with communication networks that impair
customers access to their funds or account information especially if,
there are, no alternative means of account access.

Legal Risk: Legal risk arises from violation of, or non-conformance with laws, rules,
regulations, or prescribed practices, or when the legal rights and
obligations of parties to a transaction are not well established.
A customer inadequately informed about his rights and obligations, may
not take proper precautions in using Internet banking products or
services, leading to disputed transactions, unwanted suits against the
bank or other regulatory sanctions.

Money Laundering Risk: As internet banking transactions are conducted remotely banks may find
it difficult to apply traditional method for detecting and preventing
undesirable criminal activities. Application of money laundering
rules may also be inappropriate for some forms of electronic
payments.
To avoid this, banks need to design proper customer identification and
screening techniques, develop audit trails, conduct periodic
compliance reviews, and frame policies in internet transactions.

Cross-Border Risks: 21

Internet banking is based on technology that, by its very nature, is

designed to extend the geographic reach of banks and customers.
Such market expansion can extend beyond national borders. This
causes various risks.
Such considerations may expose banks to legal risks associated with
non-compliance of different national laws and regulations, including
consumer

protection

laws,

record

keeping

and

reporting

requirements, privacy rules and money laundering laws.

The foreign-based service provider or foreign participants in internet
banking are sources of country risk to the extent that foreign parties
become unable to fulfill their obligations due to economic, social or
political factors.

Strategic Risk: For reducing such risk, banks need to conduct proper survey, consult
experts from various fields, establish achievable goals and monitor
performance.
Also they need to analyze the availability and cost of additional
resources, provision of adequate supporting staff, proper training of
staff and adequate insurance coverage.

Other Risk: Traditional banking risks such as credit risk, liquidity risk, interest rate
risk and market risk are also present in internet banking.

22

These risks get intensified due to the very nature of internet banking on
account of use of electronic channels as well as absence of
geographical limits.
Credit risk: Is the risk that a counterparty will not settle an obligation for
full value, either when due or at any time thereafter. Banks may not
be able to properly evaluate the creditworthiness of the customer
while extending credit through remote banking procedures, which
could enhance the credit risk.
Another facility of internet banking is electronic money. It brings
various types of risks associated with it. If a bank purchases emoney from an issuer in order to resell it to a customer, it exposes
itself to credit risk in the event of the issuer defaulting on its
obligation to redeem electronic money.
Liquidity risk: It is important for a bank engaged in electronic money
transfer activities that it ensures that funds are adequate to cover
redemption and settlement demands at any particular time. Failure
to do so, besides exposing the bank to liquidity risk, may even give
rise to legal action and reputational risk.

Risk of unfair completion: Internet banking is going to intensify the competition among various
banks. The open nature of internet may induce a few banks to use
unfair practices to take advantage over rivals. Any leaks at network
connection or operating system, etc. may allow them to interfere in a
rival banks system.
Thus, one can find that along with the benefits internet banking carries
various risks for bank itself as well as banking system as a whole.

23

Internet

2.

Banking:

Challenges

for

Banks

&

Regulators.

Internet Banking in the United States

New Risks

The Basel Committees Electronic Banking Group

e-Finance Oversight
Security Controls
Legal & Reputational Risk Management

Internet Banking in the United States: -

24

An average industry estimates indicates the about 13 million US

households banked online by the end of 2000 twice as many as in
the previous years.
At the beginning of 2001, 37% of all US national banks, including
nearly all of the largest national banks, were offering full
transactional capabilities online a near twofold increase in little
over a year.
Banks offering Internet-based transaction service and there are more
of them each day should be well positioned to compete in the
financial markets of the future.

New Risks: Internet banking poses risks that are different from those that bank
supervisors customarily dealt with in assessing credit, market, or
interest rate risk.
First, banks must manage the unprecedented speed of technological
change, and assess how it relates to their technology investments
and their ability to provide consistently high-quality customer
service.
Second, bank is increasingly dependent on third parties to provide the
necessary information technology.
Security is another area of significant risk. So far, relatively few
financial institutions have reported being victimized by online
security violations.

The Basel Committees Electronic banking Group: 25

The Basel Committee on Banking Supervision has taken the lead in this
area through the creation of its Electronic Banking Group (EBG) in
late 1999 a group whose members represent 17 Central banks and
bank supervisory agencies.
The major focus of the EBGs work has been to develop risk
management guidance for Internet banking that will guide bankers
and promote effective and consistent bank supervision around the
world.
The EBG has identified fourteen Risk Management Principles for
Electronic Banking to promote sound risk management of ebanking. These principles are intended to help banking institutions
expand their existing oversight policies and processes to cover their
e-banking activities.

e-Finance Oversight: The EBG has dedicated considerable time and effort to communicating
supervisory expectations and guidance for home country supervisors
to oversee cross-border Internet banking activity conducted by their
local institutions.
In February of this year, the Financial Stability Forums Contact Group
on E-Finance held its first formal meeting. This group was formed
to promote enhanced information-sharing among the various
international sector-based working groups dealing with e-finance
supervisory issues e-banking, e-trading, retail payments systems,
e-commerce, and so on.

26

Security Controls: Authentication

of

e-banking

customers.No

repudiation

and

accountability for e-banking transaction of duties.Appropriate

measures to ensure segregation of duties.
Proper authorization controls within e-banking systems, databases and
applications.
Data integrity of e-banking transactions, records and information.
Establishment of clear audit trails for e-banking transactions.
Confidentiality of key bank information.

Legal & Reputational Risk Management: Appropriate disclosure for e-banking services.
Privacy of customer information.
Capacity, business continuity and contingency planning to ensure
availability of e-banking systems and services.
Incident response planning. The complete EBG Report on Risk
Management Principles for Electronic Banking can be obtained at
the Bank for International Settlements web site at

What do Computers do in Banks

27

The different uses of Information Technology: Single Window System

Any Time Banking
Automated Teller machine
Shared Payment Network System
Customer Service
Telebanking
Home Banking
Electronic Fund Transfer
Plastic Cards as Media for Payment
Credit Card
Debit Card

28

Smart Card
ATM Card
Intra-bank and Inter-bank Applications

The different uses of Information Technology: -

a)

Single Window System (SWS): -

The cashier or teller who accepts the cash, keys in the data from his
terminal after receipt of the amount.
The amount is straight away posted to the system.
If the customer wishes to update passbook the same is also updated
through the security form printer/pass book printer.
If a customer wishes to obtain a draft, the clerk keys in the details of the
account to be debited and the particulars of the drafts to be issued on
the machine.
The customers account is debited and security form printer prints out
draft and clerk can hand over the same to customer duly signed.

29

b)

Any Time Banking: -

This refers to banking service available 24 hours a day and 365 days a
year.
Such facility is made available to the customer through the Automated
Teller machine.
Banking, being a service industry, is primarily driven by customers
needs.
Each customer is willing to pay a price for the services provided it is
made available to him when he wants and where he wants.
In the present day of server competition, banking services are driven by
technology, which is more oriented towards providing better
services to the customer.
The concept of banking hours has been changed from the fixed 4 hours
to 24 hours.
This has been made possible through use of ATMs. Even under the
manual service, the banks have stated to extend the service from the
traditional 4 hours to 5 hours and even up to 12 hours say from 8
AM to 8 PM.
Some banks have introduced the practice of Sunday Banking or Holiday
Banking.

c)

Automated Teller Machine (ATM): -

ATM is a machine in the nature of a computer in general sense, but is

dedicated to do certain types of specific jobs only.
30

The hardware and the proprietary i.e. the software used in one machine
cannot be used in one machine.

d)

Shared Payment Network System (SPNS): -

The SPNS, named SWADHAN, has been sponsored by the Indian

Banks Association (IBA).
It is a network of ATMs, points of sale terminals and Cash Dispensers
with a view to pool the resources of the banks and underlines the
spirit of competition through cooperation.
It became operational in Mumbai on 1 st February 1997 and in two years
about 150 ATMs were owned and installed by 38 banks including
foreign banks, public and private sector Indian commercial banks as
also cooperative banks.
The biggest advantage of the network is that the ATM cards issued by
different banks can used at any member banks ATM.
Banks can have as many ATM as they want and follow some standards
set by the SPNS committee.
The heart of the network is the Switch and its main components are:
Tandem Mainframe Computer, BASE 24 Software, Motorola
networking equipments and the leased lines.

31

e)

Customer Services: -

The following customer services are offered through the system:

Cash withdrawal (up to a specified limit)
Cheque/Cash deposit (the receipt being only for the deposit of the
envelope containing cash but not for the amount therein)
Enquiry about balances
Printing of statement of accounts
Request for cheque book and standing instructions.
Transfer of funds
PIN change

f)

Telebanking: -

From the conventional banking, where the services were provided

manually across the table, it has come to a stage where the customer
is not required to visit the bank enquiry of balance in the account,
sending a remittance, to get a statement of account, etc.
The concept has become so popular that in USA customers do not visit
the bank for 97% of their transactions and these are done from either
customers residence or office using a telephone or a home PC.
In telebanking the customer is required to open the account with the
bank initially by visiting the bank.
32

Telebanking services are, generally, provided by the bank over the

telephone on a special number.
The number at the bank is connected to a terminal in the bank, which is
either handled manually or is automated by connecting the same to
the computer network.
Where the system is automated, two types of technology are used.

g) Home Banking: Under home banking the customer is served at his residence and there is
no need for the customer to visit the banks premises for a number
of routine transactions.
If the customer needs some information the same can be got by
contacting the bank over the phone as described in the telebanking.
If the customer wants to put through transaction and wishes to see his
account or to get a statement of his account, he may have to use a
PC.
This type of facility is available with a town, city or metropolitan area.
Under such a situation the customer should have a:

PC
Modem
Telephone line

33

 A compatible software for the home PC

The home banking service can be broadly classified under two groups,
one without using the information technology and another using
information technology.
When customer contacts the bank o the phone no specific technology is
involved and the service of telebanking is provided to him.

h) Electronic Fund Transfer (EFT): In India the fund transfers are basically done through Mail Transfer,
Draft or Telegraphic Transfer.
In case of Telegraphic Transfer (TT) again the Department of
Telecommunication was the sole provider of Telephone, Telex and
Telegram facilities.
With the process of liberalization private operators have started
providing alternative voice communication channels through mobile
phones and vast communication as an alternative channels for data
communication.
It was normal for any TT to be credited to the beneficiarys account after
delay of 2 to 4 days
The different forms of EFT prevalent in the use are:
EFT through Electronic Data Interchange
34

 BANKNET
RBINET
IDRBT VSAT Network
EFT from Point of Sales
Electronic Cash
SWIFT- Global System for Funds Transfer
Electronic Clearing Settlement

i) Plastic Cards as Media for Payment: -

There are four types of plastic cards being used ad media for making
payments. These are:

Credit Card
Debit Card
Smart Card
ATM Card
35

1. Credit Cards: -

The credit card enables the cardholders to:

Purchase any item like clothes, jewellery, railway/air tickets, etc.
Pay bills for dining in a restaurant or boarding and lodging in a hotel
Avail of any service like car rental, etc.

2. Debit Card: A debit card is issued on payment of a specified amount by the issuing
company like a telephone company to a customer on cash payment
or on debiting his account by a bank.
Thus it is like an electronic purse, which can be read and debited by the
required amount.
It may be noted that while through a credit card, the customer first
makes a purchase or avails service and pays later on, but for getting
the debit card, a customer has to first pay the due amount and then

36

make a purchase or avail the service. For this reason, debit card are
not as popular as credit cards.

3. Smart Cards: Smart Cards have a built-in microcomputer chip, which can be used for
storing and processing information. For example, a person can have
a smart card from a bank with the specified amount stored
electronically on it. As he goes on making transactions with the help
of the card, the balance keeps on reducing electronically. When the
specified amount is utilized by the customer, he can approach the
bank to get his card validated for a further specified amount. Such
cards are used for paying small amounts like telephone calls, petrol
bills, etc.
In India, a smart card, suiting Indian banking environment, is being
developed and tested at IIT, Mumbai, in collaboration with the RBI
and SBI. The card is being used as an experimental tool for
promoting cashless society in and around the IIT Campus. The latest
smart card being developed will combine all the features of
electronic purses, credit cards and ATM cards.

4. ATM Cards: The card contains a PIN (Personal Identification Number) which is
selected by the customer or conveyed to the customer and enables
him to withdraw cash up to the transaction limit for the day. He can
also deposit cash or cheque.

37

Function of ATM Card: -

The customer has to enter the card into the machine slot. The machine
first reads for hot carding of the card number, i.e. it checks whether
the card has already been cancelled or placed on the rejection list.
Rejection can be because of the reason like lost card or stolen card.
The machine then reads the PIN and asks for the PIN from the customer.
If the PIN matches, it presents the main menu on the screen. The menu
contains options from which the withdrawal option is selected.
The ATM then checks whether the amount is under the day limit
magnetically inscribed by the customer. Accordingly, the ATM
dispenses cash. It then releases the card and a printed statement
comes out of the slot.

5. Intra-Bank & Inter-Bank applications: -

Computerization is now all pervasive in banks. Almost all the activities

in a bank can be performed more efficiently with the help of
computers.

Broadly,

we

can

divide

the

applications

of

computerization in banks in two types

A)Intra-Bank Applications: 38

Funds transfer and payment message

Banks owned ATM/Credit Card and other application on the corporate
network
Inter-Branch Reconciliation
Quick disposal of loan/investment proposal
Funds information from clearing centers to the fund management office
for optimal allocation of funds.
Cash Management Product
Treasury Management
Any Branch Banking
Asset Liability Management
E-mail
Software distribution in the bank
Organizational bulletin boards may contain the following:
Circulars
Newsletters, phone and address directories
Undesirable parties
Missing security items
Confidential circular on attempted frauds.
39

Human Resources Development and Personnel Administration

Auditing and Inspecting computerized branches using the network
Organizational database may include
Statutory returns
Control returns
Standardized returns
Management Information Systems
Borrowers profile
Branch profile
Employee analysis
Product/service profile
Business profile of branches.
Apart from providing efficient service to customers the financial
network will also fulfill the following objectives:
Timely information to top management
Helping in development of new products
Speedy communication among branches and with the controlling
offices.

B) Inter-Bank Applications: 40

Electronic Funds Transfer

Retail EFT (Small value credit transfer) on net settlement basis.
Wholesale EFT (Large value credit transfer) on Real Time Gross
Settlement (RTGS) basis for time critical payments.
Clearing and settlement systems for securities Delivery vs. Payment
(DVP). The final delivery of securities will occur if and only if final
payment occurs.
Transferring balance from net settlement systems to RTGS Server at
periodic intervals. The net obligation could be from:
Local paper-based clearing
Inter-city paper-based clearing (including IT discounting facilities)
Bulk payments ECS (Debit, Credit, RAPID) including intercity.
Shared ATM networks

Smart cards and other pre-paid/pre-authorized debit cards

Exchange of defaulting borrowers list among RBI and banks
EDI services to the extent they pertain to payment cycle to EDI
(Electronic Data Interchange)
Consolidation of current account balance from the existing DAD
(Deposit Accounts Department in RBI Offices) applications
synchronously/asynchronously to facilitate balance enquiry by
41

banks on all India/center-wise basis and if necessary to activate

transfer of funds among DADs at different centers.
Reporting of government account transactions
Reporting of BSR (Basic Statistical Returns) etc. to RBI
Asset Liability Management
Intranet in RBI to enable banks to get circulars, press releases etc.
Returns to be submitted by the banks to Departments of Banking
Supervision (DBS) for off-site supervision and monitoring.

Credit Card Frauds

42

Credit Card Frauds

Meaning
Defrauder
Aware of Credit Card
Advantages of Credit Card
Credit Card Frauds

The Prevention of Frauds

Duplicate Card
White plastics
43

Bankers Role
Cyber Laws
Altering Sale terminals
Internet Relays
Monitoring Deposit
Risk Management
Central Credit Card Clearing House
Loss of Credit Cards in Transit
Fraud Consciousness
Physical Evidence
Check the handwriting

How to Accept the Master Card

How to get Reimbursed
ICICI Bank: Case Study

Credit Card Frauds: -

Meaning: 44

A credit card is a money transaction device without using cash or

fiduciary documents.

Defrauder: The defrauder has been slow to exploit the credit card, for making a fast
buck. In USA, he made 15 million dollars. Through the cards, in
1981, In 1982 his earning through the card, rose to 50 million
dollars. In 1983, the fraudulent card brought over 100 million
dollars to its creators. The fraudulent card industry is rising higher
and higher to dizzy height every year. Like other countries if the
genuine credit card has come in India, the fraudulent credit card
cannot be far behind.

Aware of Credit Card: The credit card, as already seen, is a money transaction device. The
institutions issuing the credit card give the card holders authority to
obtain money, goods, services or any other thing of value, on credit.
They guarantee payment of debit so raised. These institutions are
banks and other financial institutions, clubs and travel agencies and
departmental stores, etc. Credit Cards, Bob Cards, Master Cards,
Visa Cards, express Cards, Euro Cards have wide circulation. Some
of them have wide circulation. Some of them have world-wide
circulation..

45

Advantages of Credit Cards: -

Following types of safety measures are being introduced increasingly in

the credit card manufacture. They can be adopted with advantages
Simultaneous printing on both sides of the cards,; creating some
superimposed graphics, patterns, digits or writings.
Multi-layered laminates incorporating lateen images which may
distinguish the genuine from the forged.
Intricate graphics and distinctive letter and digit designs.
Laser printing to engrave the letter and digits on the credit card.
Three dimensional insignia, logo of high artistic quality on the credit
card.
Encoded information track in magnetic inks on magnetic stripe.
Cards inserted in the imprinter head, designed and manufactured to rigid
specification to permit limited tolerance to admit only genuine credit
cards.
Secure Signature Panel.
3- Dimensional hologram.
U.V. fluorescent images and designs.
Micro printing
Optically illusive figures, designs, etc.

46

Heavy duty embossing logo.

Credit Card Frauds: Credit card frauds manifest themselves in a number of ways:
Genuine cards are manipulated.
Genuine cards are altered.
Counterfeit cards are created.
Fraudulent telemarketing is done with credit cards.
Genuine cards are obtained on fraudulent applications in the
names/addresses of other persons and used.

It is feared that with the expansion of E-Commerce, M-Commerce, and

Internet facilities being available on massive scale, the fraudulent
fund freaking via credit cards will increase tremendously. The shape
it takes will be limited only by the ingenuity of the future.

4.2 The Prevention of Frauds

47

Duplicate Card: -

The duplicate fraudulent credit cards are those where the defrauders
have made sincere efforts to duplicate the original cards through
photo-mechanical processes.

They follow the footsteps of the original manufactures of the genuine

credit cards to produce as close a replica of the genuine card as
possible, employing similar materials and similar processes of
printing and embossing, besides magnetic encodings.
White Plastic: -

The counterfeit credit cards known as white plastics are imitations of

credit cards in general aspect.

Bankers Role: -

The credit card industry is one of the fastest growing activities of the
banking industry. The artist has to be there (where the money is).
The banks have to suffer losses.

48

Cyber Laws: -

Information Technology Ministry be approached for stringent laws

against credit card crimes.

Altering Sales terminals: -

Internet E-Mail should be utilized on the pattern of Hot Box organized

about a decade ago suitably modified to benefit from the advances
the information technology has made since them.

Internet Relays: -

Computers should be pressed into service via internet connection by

suitably upgrading the Television System Vertical blanking Intervals
for notifying the fraudulent cards in the market.

49

Monitoring Deposit: -

Monitoring system can help locate the unscrupulous merchants who use
or allow the use of white plastics and fraudulent cards, knowing
full well their fraudulent nature for making a fast back.

Risk Management: -

To meet the menace one of the top card companies has imitated risk
management service to identify these high risk centers where daily
all the inter-change transactions of the areas are scrutinized and the
credit card
number are checked against those which have been declared fraudulent,
stolen or lost.

Central credit Card Clearing House: There should be a joint list of credit card holders on central basis with
their addresses and other details, if any. New applicants to any bank
for credit cards should be checked: If he is holding card from other issuers.
If he has held a card at other times. If so, when? Why did he
discontinue?
If he has applied to more than one credit card issuers
50

The new card holders business transactions should be watched for some
time.

Loss of Credit cards in Transit: It must be prevented.

It is simple for either the customer to collect personally or the banker
should deliver it personally, or it should be sent by courier and
confirmation obtained on telephone, in addition to the paper receipt.

Fraud Consciousness: The problem of credit card frauds must be brought to the notice of users
as well as of the servers at sale terminals.
Proper training in the check up of the credit card in its various aspects
has no substitute and in view of the huge issues the same is
indispensable.

Physical Evidence: -

Immediately on the discovery of fraud all the physical evidence

available should at once be taken into possession and the case
reported to the police for investigation.

Check the Handwriting: -

51

Handwriting (in signatures) is available on sale drafts and on credit

cards. The comparison of hand-writing inter se and with that of the
suspect and of genuine card holders, can lead to the identity or nonidentity of alleged writer.

How to accept the Master Card: Master Card International guarantees payment of all Master Card
Travelers Cheques if the following procedures are followed: Watch the customer signs each cheque in ink on the countersignature
line.
Compare this signature to the original signature. Ensure they look the
same.
If a cheque is already countersigned, or if you doubt the two signatures
are the same, ask the customer to sign the cheque again on the back
for comparison. Also, request identification such as a passport,
driving license or similar document, and write the details on the
back of the cheque.
If a cheque is presented by anyone other than the original purchaser,
treat it the same way you would a personal check from a third party.
You should know the customer and be able to contact the customer
if theres problem.

52

CHAPTER2

INTRODUCTION ABOUT THE

STUDY

SWOT ANALYSIS:

A SWOT Analysis is an effective tool which can be used to examine the

issues which will directly affect the success of alternative delivery
mechanisms. In our opinion, the SWOT analysis is as follows:
Strengths:
Customer access to information 24 hours per day.
Timely access to information.
The ability to offer a customer more than one method of retrieving
information.
53

 Sophisticated technology systems will help to make a banking

institute "future-proof."
Diversity helps capture different types of markets.
The ability to cut internal costs due to advanced technology.
Increased efficiency due to automation.
Increased accuracy of banking transactions.
Weaknesses:
High price of service.
Continual altering of customer wants and needs.
Hostile feelings of employees due to possible pending lay-offs due to
automation.
Multiple options for the customer.
Initial investment in technology will be expensive.
Opportunities:
The ability to obtain a larger customer base.
Global expansion. This is an enormous market, which will be a great
opportunity in the future.
The ability to take advantage of the growing popularity of Internet
banking.
Threats:
Continual changing technology.
Uncertainty of the banking industry.
Competition from "lower price" operations.
Possible failure of product due to non-acceptance of customer.
General competitiveness of the banking industry.

54

Multi-national and private sector banks in India have been very

successful in setting up Internet banking services. This is mainly
because these banks already had a robust
Stamp or write your company name on the front of the cheque where it
says, Issuer will pay to the order of.. and also endorse at the
back of the cheque.
Deposit cheques in your bank as cash items. US dollar Master Card
Travelers Cheques, regardless of location of issuer, are cleared and
paid in the US.
Do not send cheque directly to the issuing institution.

4.5: Credit Card Fraud in ICICI Bank:

ICICI Bank Credit Card Division is a Shame:

I lost my card a few months back and it was used by someone to make a
transaction of about 18k I raised a dispute with ICICI Bank which
was settled against me. After spending a month trying to get a copy
of the investigation report from ICICI Bank customer care and their
hallowed and inaccessible Chargeback Department - I have finally
received it, and guess what, its an utter pack of LIES!!
I am not kidding - some of it is plain unbelievable.
Here are some snippets from the report. CM=customer, ME=merchant
ME told us that CM came to his outlet and taken original charge slip &
bill, no clue found, however the identity of card user was not
55

ascertained, on asking CM of show charge slip and bill copy he

refused to show.
Wow! I was never asked for a charge slip by the investigator, nor did I
have one. I accompanied the police to Big Bazaar (the merchant),
where the police collected the IMEI codes (the card was used to buy
a couple of phones), but not the charge slips. I went again recently,
and I was told that I could not get the charge slip from the merchant
now, without the consent of the bank.
So the investigator not only turned me into someone who refused to
show charge slip (when he has a disputed transaction of 18k!), he
has turned the merchant into a liar as well! So they dont just screw
their retail customers, but even their merchants!
CM had not informed field team that he himself had visited to ME BIG
BAZAAR for investigation, When asked for charge slips CM
refused to show charge slip and bill copy.
CM was not responding well during Investigation.
The point is reiterated, and evidently I had not informed the field team
I had visited the merchant. This when I myself, gave the field team
the contact number of the concerned
employee at Big Bazaar. Oh! By the way that amounts to
not responding well during investigation
CM is not working anywhere and staying in a hostel in Gurgaon.
This one takes the cake. It literally threw me over the edge. Here I
am, a director of a pvt. ltd. company, staying with my parents in
Gurgaon - he turns me into an unemployed hosteller! Phew!

56

Unbelievable. And this is when the investigator visited me at my

residence!
So, you see what a fraud ICICI Bank credit card division is. Until now,
my concerns were around long waiting times, long turnaround times
- but this takes it to a whole new level.

Banks Control in Online Banking

Will Banks Control Online Banking: o Internet Banking in India
o Real threats
o Online
Banking in the Cyber world: o Internet Purchases without Payment Gateways
o Risk of Gateway

Will Banks Control Online Banking: Internet Banking in India: -Online banking is expected to explode in the
next few years. We will be entering the age of non-physical
exchange of cash aided by complete transparency leading to
perfectly competitive electronic market place and inevitably to
customer supremacy. Growth in online banking will be driven by the
following reasons:
Increasing access to low cost electronic services
Emergence of open standards in the banking industry
57

Improved customer awareness

Entry of global majors in the market
Integration of banking services with e-commerce and emergence of ecash
Convenient international transactions as Internet eliminates geographic
boundaries
Shift from one-stop shopping to unbundled product purchases
Internet Banking sites can be segregated into four categories from Level
I, which offer just minimum functionalities such as access to ones
deposit account data, to Level IV sites that offer sophisticated
services. To be successful, an Internet bank must offer:
High rates on deposits
24 hour access
Free checking and bill payment facilities with rebates on ATM
surcharges
Credit cards with low rates
Simple and easy online applications for all accounts including personal
loans
Innovative products
High quality customer service

Real Threats: -

58

 A majority of leading online brokers are beginning to offer

banking products and services as part of their overall offers.
They are actively seeking to capture excess balances in existing
checking and saving accounts by offering better rates.
There are other threats to banks as well. Several leading system
providers have developed bank-in-a-box solution unbranded,
electronic, full-service, virtual-bank system that can be bought,
branded, and offered to consumer by any authorized company
that wishes to provide banking service.

Online: An online service that merely mimics an offline one has a second
problem as well; it doesnt give customers an adequate inducement
to move a significant portion of their banking online.
As a result, most customers tend to tend to treat online banking as no
more than an extra channel to check their balance and transaction
histories, and they continue to do the rest of their business at the
ATM or the teller window.
A vicious offering increase the banks total costs. This makes the banks
reluctant to make further large investments in the online channel,
which thus, does nothing to move customers away from tellers and
ATMs.
In fact, consumers didnt stop using tellers to the extent that banks has
hoped, but they also used ATMs so frequently that the reduction in
cost per use was more than offset by the higher volume of
transactions.

59

The study of information systems through broad band connection,

satellite, a network or through a view chat.
This online information system provides information about all aspects,
Information providing on the demand of the subscriber.
This online information system may be of study program, a graduation
program or sharing of data through internets, extranet and internet.

Sharing of Data: The data base store data and information extracted from selected
operational and external databases. The database has most needed
information by a manager or any end users. This database can be
accessed by the ONLINE ANALYTICAL POCESSING (OLAP)
systems.
This network model can access a data element by several paths. In an
organization departmental records can be related to more than one
employee record.
Thus in an organization data can be shared through internet, internet and
extranet.

Online Learning: This online information system provides online courses through internet,
broad band satellite connection.

60

The recent online course is provided by XLRI, (Xavier Labour Relations

Institute) joined hands with Hughes Escorts communication limited.
Their main course is on BUSINESS MANAGEMENT.
Hughes Escorts is the Indian Operations of US based communication
major, Hughes network systems, which is a wing of Hughes
electronics. This job is being done by Directing Global education
which is joint venture between Hughes network systems and one
touch knowledge systems.
This job arrangement with Hughes Escorts to offer Management training
on satellite platform will take expertise of XLRI faculty beyond the
borders of their concern.
This information has live videos, voice and transmission to classes
through Hughes broadband satellite network. Interaction is through
voice and data.
This course is conducted across through four metros, Trichy, Bangalore,
Hyderabad, Chandigarh, Pune, Kochi, Coimbatore and Madurai.
This course is targeted at working executives

Country Studies: This country studies by online service is from 1988 onwards. In this, the
study of every country is made.
B-B (Business Business E-Commerce). Despite the entire buzz, we
still dont know about what makes B-B. there is a growing relation
that B-B will take years to mature, and the rate of adoption even if
companies deliver a huge value equation improvement will be
61

gradual because it requires system and individuals to act in

fundamentally new ways.
The next thing after B-B is enabling technologies to incorporate more
sophisticated back-end integration system, financing options and
logistical support.
In India, NASSCOM puts the value of online B-B transactions at Rs.
400 crore in 1999-00 of total E Commerce of Rs. 450.
But the question is how much B-B-E-Commerce is really happening in
India? It is hard to quantify in terms of real numbers with no
established data available in specific reference to the Indian context.
But there is a possibility of this business assuming a huge
proportion in future.
B-B has been happening all through and a new channel has been opened
with the advent of the Internet. Obviously organizations will switch
over to this channel for the cost effectiveness it provides. The
market is emerging in the country and it will be a boom time in the
next year.

Banking in the Cyber world: Internet Purchases without Payment Gateway: The dangers are three-fold
Since a manual process requires human intervention, risk of information
leakage exists.

62

No exchange of Digital ID, so no authentication of the merchant risk

of bogus merchant.
No exchange of Digital Certificate to authenticate card holder risk of
repudiation of transaction by the card holder.
The benefits which the user would get by using the Internet payment
gateway are
Card details travel encrypted on the Net (if encryption facility available
on the gateway).
On-line status of order, if the gateway has on-line authorization.
Secure Merchant identification, so that fraudulent web sites posing as
genuine merchants get weeded out
A payment gateway is software that supports multiple payment models
simultaneously in a safe and secure manner.
Funds can be transferred through credit, debit and smart cards, cheques,
electronic payment wallets and even direct debits through a central
payment switch.
Put simply, a payment gateway enables on-line commercial transactions
on the internet on a secure system, which have firewalls against
hacking.

Risk of Gateways: Currently, in India HDFC Bank and ICICI have launched payment
gateways for business to customer (B2C) transactions.

63

Payments can be effected through credit cards or through directly

debiting the account of the customers of the respective banks.
Some payment mechanisms on the Internet are not safe, as they are in
the open-loop where a merchant portal can see the credit card
number.
This is unsafe for credit card holder and is susceptible to fraud as his
number can be physically seen.
The dust is yet to settle in the B2C payment gateways, but action is
already heating up in the business to business (B2B) arena.
Besides HDFC Bank and ICIC, Global Tele-System and a few other
non-bank companies are toying the idea of launching payment
gateways for inter bank and B2B transactions.
No prizes for guessing who they are targeting, Nationalized banks, of
course.

Recent E-Mail Fraud:ONLINE fraudsters targeted ICICI Bank customers through spam mail
that asked them to disclose passwords and other information, but the
bank said no financial loss was reported so far.
E-mails from `support@icici.com' with the subject `Important
information from ICICI Bank' and `Official information from ICICI
Bank' started circulating from Monday. Once opened, the mail asked
customers to click on a link.
"For security purposes your account has been randomly chosen for
verification. To verify your account information we are asking you
64

to provide us with all the data we are requesting. Otherwise we will

not be able to verify your identity and access to your account will be
denied. Please click on the link below to get to the ICICI secure
page and verify your account details. Thank you," the e-mail said.
The ingenuity of the e-mail is striking as when clicked on the link, it
opens a Web page that is an exact replica of ICICI Bank's and
simultaneously opens the bank Web site.
Customers were asked to key in their identification number, login and
fund transfer passwords. The link, however, didn't work on
Wednesday.
An ICICI Bank spokesman said so far no financial loss was reported
because of the fraud. "It's not easy to say how many of our
customers have got it. First, we felt it will be a large number. But
now our assessment is it's a small number," the spokesman said.
ICICI Bank sent e-mail to its customers, warning them about the fraud
and urging not to respond to such mails. "Such fraudulent
communication may also be sent via SMS or the phone," the bank
said.
The ICICI Bank spokesman said the bank has alerted the cyber crime
cells about the spam mails. But the origin of the spam mail had not
been traced, he said.
Such fraudulent mails are becoming rampant across the world as
Internet banking has grown in popularity. Online fraud: 60-yr-old
seeks police action against ICICI Bank officials:Karve Nagar resident Vinod Malhotra suffered a loss of Rs 95,000,
which was transferred through 19 phone bank transactions in just
two minutes
65

While cyber criminals are on the prowl, the increasing number of online
fraud has also put a question mark on the security system of banks.
Vinod Malhotra, a 60-year-old citizen from Karve Nagar, who lost
Rs 95,000 to an online fraud, gave a letter to the Shivajinagar police
station today requesting the investigation officer, police sub
inspector S B Ghorpade, to book the ICICI Bank authorities in the
case.
The police have so far booked Bhavin Gunwantilal Kakadia of Chira
Bazaar, Mumbai. That is because Malhotras money was transferred
into Kakadias account on June 2. But Malhotra has alleged that the
loss occurred because ICICI Bank failed to protect his account.
Malhotra received a fraudulent e-mail on April 18, carrying a logo of
ICICI Bank, seeking his credit card account details. Taking it to be
genuine request, the elderly citizen submitted the details. He then
sent an e-mail to ICICI Bank to check if they had actually sought the
information.
On April 20, the bank replied that it was a fraudulent email. But on April
21, fraudsters used his credit card for booking tickets worth Rs
4,000 for Adlabs theatre, Mumbai. On April 21, the credit card was
again used for online shopping worth Rs 3,083 through a US-based
website.
Malhotra received the customary SMS alert about this transaction. He
immediately contacted the bank and submitted details of the illegal
transactions. The bank replied that it was a phishing attack. The
bank then blocked his credit card and issued a new one, assuring
him that his account would be protected properly.

66

But again on June 2, Rs 95,000 was transferred from his savings

account. A stunned Malhotra filed a complaint with the Kothrud
police on June 3.
The case was transferred to Shivajinagar police station since his account
was with the Shivajinagar branch of ICICI Bank. When I went to
the bank with the police, a senior officer from the Operations
Department said that money was transferred from my savings
account through phone banking, said Malhotra.
The officer said that my mobile number was changed from the system.
The fraudster replaced it with an Airtel mobile number from Punjab
and then transferred money to Kakadias account through 19 phone
banking transactions of Rs 5,000 each in just two minutes, he
added. The money was further transferred to a private business
firms account in Mumbai and withdrawn by the fraudster using
cheques, he added.
Malhotra said that he had given his mobile phone number to ICICI Bank
only for receiving SMS alerts on account details. I never used the
net banking and phone banking facility. I dont even remember the
passwords required for these facilities. So there was no chance of
me submitting the passwords to any phishing mail or person. I
believe the fraud could have been avoided if ICICI Bank had not
failed to keep vigilance on its internal security system, he said.
Malhotra communicated with K V Kamath, the MD and CEO of the
bank, requesting him to investigate the case and repay his money.
After a 30-day internal investigation, ICICI Bank replied that it was
not at fault and would not compensate for the loss. So Malhotra
lodged a first information report (FIR) with the police on July 12.
On Tuesday, the bank replied that his case would be re-investigated.
67

When contacted, ICICI Bank Head (Corporate Communications)

Charudutta Deshpande said, ICICI Bank has a fool-proof security
system. But we dont doubt the genuineness of our customers.
Proper investigations will be done.
Police Sub-Inspector Ghorpade said, We have dispatched a team to
Mumbai for investigations. But there is not much progress because
the bank has not yet given us complete information about the
suspects. We have not yet booked the ICICI bank officials. But we
would be interrogating bank officials if required, he said.
Pune police Cyber Committee Coordinator Sudam Choure said, There
have been cases in the past where secret information was leaked
from banks. Usually, the bank employees on contract basis or
courier companies were involved in the frauds. There is need for the
banks to increase their internal security system.

Recommendations: -

Technological development has been nothing less than explosion. Banks

have been harnessing such technological innovations on one hand
and adapting themselves to such changes on the other hand.

68

The most significant event has been development of semi-conductor

technology, which has resulted in spectacular expansion of
automation.

Processing, storage and transmission of information is very essence of

banking and financial services.

The electronic technology has bought revolutionary changes in these

areas. The elimination of paper as medium for processing and
storage of transactions / information has been a great event. Large
volume of information can be processed, stored and retrieved very
economically at terrific speed, which is not possible manually.
The space required for managing enormous volume of information has
been reduced dramatically.
With the revolution in telecommunication technology, information can
be made accessible from remote distance at lightning speed. The
final output
of information after manipulation and analysis can be printed by printer
at high speed directly from computers.Thus, the computer now has
the ability to retrieve data or update files instantaneously.
Subsequently with the development in telecommunication, Local
Area Network (LAN)/Wide Area Network (WAN) have been
established.
ROLE AND SIGNIFICANCE:

69

If computerization has today become a byword in banking, its sustained

growth is wholly due to its role as an enabler in the smooth and
efficient conduct of a whole range of banking practices. Computers
were originally destined for a minor role in banks, primarily
intended to facilitate accounting transactions. Subsequently, once its
superiority was firmly established, it grew in status as a tool for
management information and a host of other inventions. Although
the accounting aspect is still quite important and relevant, IT has a
far greater role to play to day to day banking operations, especially
in decision making process. Further, facilities like ATM, Anywhere
Banking, Internet as well as Mobile Banking have been increasing
their presence. It has, to be conceded that Information Technology
is not the end in itself, but is useful tool in the hands of the
management to leverage business prospects in its favour and
enhance efficiency.
Banks now have come under great pressure to reduce operational costs
to safeguard their bottom lines. With banking tuning more and more
customer-centric with every passing day, technology as an enabler
has helped banks to launch a whole array of customer-centric
products such as ATMs, Debit Cards, 24 hour Anywhere Banking.
The nomenclature Banking Accounts have also yielded to more
sophisticated term banking relationship. Customer Relations
Management is now a very potent and potential concept. Internet Banking also has a role to play in ensuring a fair return to
shareholders, by facilitating in ensuring greater profits to the
banking sector. The recent emerging trends in self-service channels,
name ATM,s, Call-centers, Internet and mobile banking would
increase the use of E-banking as this offer the twin benefit i.e.
convenience to the customers and reduction and cost of operation to
the banks. Internet - Banking can increase the easy access of internet
70

facilities among the masses which would raise the comfort level for
transacting via the web. The popularity of internet banking likely
depends upon inculcating in customers about their security and
personal privacy of their money and assets.

71

Chapter3

Data analyses and interpretation

72

Q1. Do you know about online banking?

interpretation
In this graph yes is90%and no is 10%.

73

Q2. From how many years you are using internet banking ?

interpretation

in this graph there are 40% users using internet banking from 0-2 years ,
24 %users using e banking from 3-5 years,10% users using e banking
from 5 years and 26% users are using e banking more than 5 years.

74

Q3. Your Occupation?

interpretation

75

in this graph ,there are 6% users are occupation is service, 8% users are
doing business ,,4% users are retired and 82% users are comes in other
occupation.

Q4. Your Income (in Rs monthly)?

interpretation

76

30% users have income 10000-15000, 44% users have income 1500125000,
26% users have income above 25000.

Q5. How often do you use online services ?

77

interpretation

12% users using e banking in daily basis, 28% usres using ebanking in
weekly basis, 44% users using e bankig in monthly basis, and 16% are
not using e banking services.

Q6. What are the reason for choosing online banking services ?

78

interpretation

20 % users are choose for its convenience, 40 % users are choose for to
save time, 20 % usres are choose for 24 hours access to a/c and 20% are
others.

79

Q7. Which online feature do you use regularly?

interpretation

in this graph , 28% users uses regularly paybills ,32% users uses a/c
enquiry regularly , 18 % users uses transfer of fund , and 22 % users
uses
order e lerts regularly.

80

Q8. As a costumer how do you know about e-banking?

interpretation

81

in this graph , there are 22%users know e banking through bank

officials, 10% users are know about e banking through advertisement in
media, 16% users know about e banking through television $ radio , 52
% know through online advertisement.

Q9. Do you still visit banks since you started using online banking?

82

interpretation

in this graph , there are 76 % users who still visits the banks and 24%
users are not visit to the banks.

83

Q10.How satisfied are you with online banking services?

interpretation
in this graph , there are 58 % are satisfied by online bankig, 30 % users
are neutral , 2% are unsatisfied, and 10% are very unsatisfied.

84

suggestions: -

To prevent online banking from remaining an expensive additional

channel that does little to retain footloose customers, banks must act
quickly.

The first and most obvious step they should take is to see to it that the
basic problem fueling dissatisfaction have been addressed.

After repairing this basic deficiency, banks must ensure that their
services is competitive.

Obviously, it should include checking, savings and brokerage services,

which anchor customers to the institution.

In addition, to meet the challenge of online brokerage and other new

entrants, banks would need to add supermarkets selling products
such as mortgage, mutual funds and insurance.
85

Conclusion: -

Online-banking has become a necessary survival weapon and is

fundamentally changing the banking industry worldwide. To day, the
click of the mouse offers customers banking services at a much lower
cost and also empowers them with unprecedented freedom in choosing
vendors for their financial service needs. No country today has a choicewhether to implement online-banking or not given the global and
competitive nature of the economy. Banks have to upgrade and
constantly think of new innovative customized packages and services to
remain competitive. The invasion of banking by technology has created
an information age and commoditization of banking services.
Banks have come to realize that survival in the new e-economy depends
on delivering some or all of their banking services on the Internet while
continuing to support their traditional infrastructure. The rise of onlinebanking is redefining business relationships and the most successful
banks will be those that can truly strengthen their relationship with their
customers. Without any doubt, the international scope of E banking
provides new growth perspectives and Internet business is a catalyst for
new technologies and newbusiness processes. With rapid advances in
telecommunication systems and digital
technology, Online-banking has become a strategic weapon for banks to
remain profitable. It has been transformed beyond what anyone could
have foreseen 25 years ago. However, banks are uncertain about the
regulatory framework for conducting online-business and the regulatory
86

and taxation issues for governing cyberspace presents formidable

problems. Developing such a system is not easy as the Internet is not
organized geographically and it is almost meaningless to refer to a
website as national or local. Any successful attempt at governing
cyberspace will involve significant international cooperation. Tax issues
are

being

dealt

with

through

O.E.C.D

codes

along

with

intergovernmental cooperation. The Indian experience of online-banking

is gradually merging with its international counterparts. While the
private sector and foreign banks have been fast in adopting Internet
technology in client servicing, there is a gradual trend for the major
public sectors and numerous cooperative units to move in the same
direction. A mix of policy support and security assurance should propel
further Online-banking adoption in India.

Technology innovation and fierce competition among existing banks

have enable a wide array of banking products and services, being
made available to retail and wholesale customer through an
electronic distribution channel, collectively referred to as e-banking.
The integration of e-banking application with legacy system implies
an integrated risk management approach for all banking activities of
a banking institution. Latest recommendations of Basle Committee
recognize that each banks risk profile is different and requires a
tailored risk mitigation approach appropriate for the scale of ebanking operations, the materiality of the risks present and the
willingness and ability of the institution to manage their risks. This
implies that a one size fits all approach to e-banking risk
management issues may not be appropriate.

87

Banks have traditionally been in the forefront of harnessing technology

to improve product and efficiency. Technology is altering the
relationships between banks and its internal and external customers.
Technology has also eroded the entry barriers faced by many
industries. With one time investment, technology has brought about
superior products and channel management with a special focus on
customer relationship. The incremental costs incurred for expansion
and diversification are also more beneficial.

The major driving force behind the rapid spread of e-banking is its
acceptance as an extremely cost effective delivery channel. But on
the flipside, it is associated with risks such as reputation risk,
security risk, cross-border risk and strategic risk, which are unique
to e-banking. Banks need to have an effective disaster recovery plan
along with comprehensive risk management tool is significant not
only to the bank but also to the banking system as a whole. All these
issues underscore the importance of sound supervisory policies and
high level of international co-operation among the bank regulators.
The Basle Committee on banking Supervision has taken the lead in
this area through the creation of its Electronic Banking Group a
group comprising 17 central banks and bank supervisory agencies in
the late 1999. The main focus of this group has been to develop
sound risk management practices.
Internet has created plenty of opportunities for players in the banking
sector. While the new entrants have the advantage of latest
technology, the good-will of the established banks gives them a
special opportunity to lead the online world. By merely putting
existing service online wont help the banks in holding their
customer close. Instead, banks must learn to capitalize their
88

customers different online financial-services relationships. The

article Will Banks Control Online Banking? focuses on how
banks have to reinvent their role to remain as their customers
preferred bank.

Coming home, India is on threshold of a major banking revolution with

the invasion of net banking. With the concept of payment gateway
coming in, banks are vying with one another for the lions share in
the market. Highlighting the benefits of payment gateway over the
open-loop payment mechanism, the article Banking in the Cyber
worlds gives a brief report of the tug of war between the two major
Indian e-banking players

Internet Banking Questionnaire

Name (optional):-

Gender :- Male [ ]Female [ ]

Q1. Do you know about online banking?

a. Yes

[ ]

b. No

[ ]

Q2. From how many years you are using

a. From 0-2 Years

[]

c. More than 5 Years [ ]

Q3.

internet banking ?

b. From 3 to 5 Years
d. Non user

[ ]

Your
a. Service
c. Retired

Occupation?

[ ]
[ ]

[ ]

b. Business
d. Others

[ ]

[ ]

89

Q4.

Your

Income

a. 10000-15000

(in

Rs

[ ]

monthly)?

b. 15001-25000

[ ]

c. Above 25000 [ ]
Q5. How often do you use online services ?
a. Daily [ ]

b. Weekly

[ ] c. Monthly

[ ]

d. Never [ ]

Q6. What are the reason for chasseing online banking services ?
a.Convenience

[ ]

b. To save time

. c. 24 hours access to A/c

[ ]

d. Others

[ ]

[ ]

Q7. Which online feature do you use regularly?

a. Pay bills

[ ]

. c. Transfer funds

b. A/c enquiry
[ ]

d. Order e-alerts

[ ]
[ ]

Q8. As a costumer how do you know about e-banking?

a Through bank officials

[ ]

c Television & Radio [ ]

b Advertisement inMedia []
d On line Advertisement []

Q9. Do you still visit banks since you started using online banking?
a. Yes

[ ]

b. No [ ]

Q10.How satisfied are you with online banking services?

a. Satisfied

[ ]

c. Unsatisfied [ ]

b. Neutral
d. Very unsatisfied

[ ]
[]

90

. REFERENCES
1. RAVI, S. (2014). Entrepreneurship Development in the Micro,
Small and Medium Enterprises sector in India, Indian School of
Business P2.
2. GUPTA, R. (2014), Scope of Small Scale Industry in INDIA,
IBS Research Centers, Kolkata.
3. DAS, B. Shil, N.C., Pramanik, A. (2014). Strengthening SMEs
to make export competitive, Munich Personal RePEC Archieve
(MPRA)
4.Madhan, P. M. (2015, February 11). SME's as Growth Driver of
Indian Economy: Strategic HR Issues and Perspectives. Business
Strategies and Indias Economic Growth Conference (RBCON 2015).
5. Contribution made by msmes at heart of Indian economy.
(2014, August 24). New Indian Express .
6. India's MSME sector growing faster than overall GDP: Michel
Botzung. (2014, December 30). Business Standard.

91