CHAPTER 1 INTRODUCTION

INTRODUCTION
In this modern era due to the various inventions and technological advancements, our life has become very smooth and easy. Today we all can do most of our day to day work at the click of a button. Thanks to technology. Many organizations too have applied latest technology to operate efficiently. The advanced technologies have not only helped the organizations to operate efficiently, but also to benefit the society. The new advanced technology is not only limited to any one particular industry or sector, but to all the industries and sectors. Then in such a scenario how can banks stay away? These days even the banks have adopted latest technologies to operate better and serve its clients in a better way. One of such technologies is lectronic !und Transfer " !T#. In India !T can be classified into$ % !T &T'( )( In the further chapters lets discuss about the above mentioned technologies in detail so that we can get to know more about the above mentioned systems and a brief overview about the Indian bank.

1.1 Indian Bank Profile

1.1.1 A premier bank owned by !e "o#ernmen of India
Indian bank was established on *+th ,ugust *-./ as part of the (wadeshi movement. (ince then it is now serving the nation with a team of over 00, ... dedicated staff. It is a premier bank owned by the 'overnment of India. Indian bank head office is situated in )hennai. Its total business as on 1*..1.0..- crossed &s. *, 02, 2*1 )rores. 3ank4s Operating 5rofit increased to &s. 0, 006.61 )rores as on 1*..1.0..-. The %et 5rofit increased to &s. *, 02+.10 )rores as on 1*..1.0..-. The Indian 3ank has successfully implemented )ore 3anking (olution ")3(# in all */+. branches.

International 5resence
Indian bank has branches not only in India, but also outside India. Its overseas branches are in $in%apore and Colombo including a !oreign )urrency 3anking 7nit which is situated in )olombo. In addition to that Indian bank has 02. Overseas )orrespondent banks in /. countries.

1.1.& Di#er'ified bankin% a( i#i ie') * $+b'idiary (ompanie'

,long with the normal banking functions Indian bank has also diversified in various banking activities. It has incorporated 1 subsidiary companies namely$ Indbank Merchant 3anking (ervices 8td. Indbank 9ousing 8td. Indfund Management 8td.

1.1.* Indbank ,er(!an Bankin% $er#i(e' - d.

Indbank Merchant 3anking $er#i(e' 8imited "Indbank# was incorporated in the year *-6- as a subsidiary of Indian 3ank. Indbank is engaged in Merchant 3anking$ Indbank is a )ategory * Merchant 3anker registered with (ecurities :change 3oard of India "( 3I# undertaking assignments under various capacities like 8ead Manager, )o;Manager, ,dvisor, ,rranger etc. for public issues and private placement. It also takes assignments for ac<uisition of shares = takeovers under ( 3I "(ubstantial ,c<uisition of shares and Takeovers# &egulations, *--/, ( 3I "3uyback of (ecurities# &egulations, *--6 and ( 3I ">e;listing of (ecurities# 'uidelines, 0..1. ,lso takes assignments for mployee (tock Option (cheme?(tock 5urchase (cheme by mployee (tock )orporate under the ( 3I " mployee (tock Option (cheme and 5urchase (cheme#, 'uidelines, *---.

 ,dvisory (ervices$ ,dvisory services include valuation of shares = other financial instruments, syndication of loans, ac<uisitions, mergers = amalgamations and pro@ect counseling, appraisal = feasibility studies. (tock 3roking$ Indbank is a ( 3I registered member of %ational (tock The )ounter :change of

India "%( #, 3ombay (tock :change "3( #, Madras (tock :change "M( # and Over :change of India "OT) I#. Indbank currently operates in the )ash, >erivatives = Aholesale >ebt Market (egments of %( for both retail and institutional investors and in cash segment of 3( . >epository 5articipant ,ctivities$ Indbank is a ( 3I registered >epository 5articipant with %ational (ecurities = >epository 8imited "%(>8# and is governed by the >epositories ,ct *--B, ( 3I ">epositories = 5articipants# &egulations, *--B and circulars issued by ( 3I and %(>8 from time to time. >istribution of Mutual !und and other Investment products$ ,s a part of broking, Indbank distributes Mutual !und and investment products and is registered with the ,ssociation of Mutual !unds of India ",M!I# for distribution of Mutual !und products. Online Trading$ To enable the customer to trade from anywhere under Internet based trading system, Indbank has launched a powerful and user friendly online trading facility which is completely safe and secure. The facility is designed to provide you an e:pedient and paperless trading e:perience.

1.1.. Ind/+nd ,ana%emen - d.

Indian 3ank Mutual !und "I3M!# was formed as a trust during *--. sponsored by Indian 3ank with a corpus of &s. 0+ lakhs. The schemes of I3M! were managed by trust during the years *--.;*--2. To comply with the ( 3I "M!# &egulations, *--1, Indfund Management 8td. "I!M8#, the ,sset Management )ompany was formed during Canuary *--2 as a wholly owned subsidiary of Indian 3ank with a paid up capital of &s.+ crores. (ince Canuary *--2, the schemes of I3M! are being managed by I!M8. I3M! launched *0 close;ended schemes and raised &s.B0/.*. crore. Out of the *0 schemes - schemes

were redeemed on maturity dates. Three schemes, i.e., Ind %avratna, Ind (helter and Ind Ta: (hield schemes were transferred to Tata Mutual !und during %ovember 0..*.

1.1.0 A fron r+nner in 'pe(iali'ed bankin%

Indian is a front runner in specialised banking. It has -. !ore: ,uthorised branches inclusive of * (pecialised Overseas 3ranch at )hennai e:clusively for handling fore: transactions arising out of :port, Import, &emittances and %on &esident Indian business. ,part from that Indian bank has * (mall (cale Industries 3ranch, e:tending finance e:clusively to ((I units.

1.1.1 -eader'!ip in R+ral De#elopmen

Indian bank being a responsible bank is not only focusing on the urban parts of the country but also e:tending an immense support to the rural parts of the country to help them develop. Indian bank is pioneer in introducing (elf 9elp 'roups and !inancial Inclusion 5ro@ect in the country. It is ,ward winner for :cellence in ,gricultural 8ending from 9onorable 7nion Minister of !inance. Indian bank has also bagged the 3est 5erformer ,ward for Micro;!inance activities in Tamil %adu and 7nion Territory of 5uducherry from %,3,&>. ,part from these it has established / specialized e:clusive Microfinance branches called DMicrosateE across the country to cater the needs of the urban poor through (9' "(elf 9elp 'roup#?C8' "Coint 8iability 'roup# concepts. It has a special window for Micro finance viz., Micro )redit Fendras are functioning in 22 &ural?(emi 7rban branches. Indian bank is harnessing I)T "Information and )ommunication Technology# for &ural >evelopment and Inclusive 3anking. Indian bank has a provision of technical assistance and pro@ect reports in ,griculture to entrepreneurs through ,gricultural )onsultancy and Technical (ervices ",)T(#. 1.1.2 A pioneer in in rod+(in% !e la e' e(!nolo%y in Bankin% Indian bank has been a pioneer in introducing the latest technology. Indian bank has *..G )ore 3anking (olution ")3(# 3ranches. Its business is *..G 3usiness )omputerized. That is the reason it works operates efficiently. Indian bank has *B6 )enters throughout the country covered under H,nywhere 3anking4. It has -BB connected ,utomated Teller Machines ",TM# in 0B. cities?towns. Indian bank provides a 02I/ service through 2.... ,TMs under shared network. It is leader in Internet and Tele 3anking (ervices to all )ore 3anking customers. It provides ;payment facility for

corporate customers. The other services provided by Indian 3ank are )ash Management (ervices, >epository (ervices, &euter (creen, Telerate, &euter Monitors, >ealing (ystem provided at Overseas 3ranch, )hennai. Indian bank has launched I3 )redit )ard.

1.1.3 4i'ion5 To ake bankin% e(!nolo%y o !e (ommon man. 1.1.6 ,i''ion5 To be a (ommon man7' bank o pro#ide all finan(ial 'er#i(e'
under one roof at an affordable cost in a fair and transparent manner to all our customers

1.1.18 -o%o5

1.& Na ional Ele( roni( /+nd Tran'fer 9NE/T:

1.&.1 In rod+( ion5
%ational lectronic !und Transfer "% !T# is an online system for transferring funds of Indian financial institutions "especially banks#. This facility is used mainly to transfer funds below &s. *, .., .... The &eserve 3ank of India has instructed banks that they should not use &eal Time 'ross (ettlement "&T'(# for amounts below &s. * lakh "*.. thousand#. The new rule came into effect on * Canuary 0../. !or small transactions, &3I has asked banks to offer %ational lectronic !und Transfer "% !T# which provided TJ. and TJ* settlement system "depending on the time a customer gives instruction to the bank for transferring the fund#.

Individuals, firms or )orporates maintaining accounts with a bank branch can transfer funds using % !T. ven such individuals, firms or )orporates who do not have a bank account "walk in customers# can also deposit cash at the branch with instructions to transfer funds using % !T. , separate Transaction )ode "%o. +.# has been allotted in the % !T system to facilitate walk;in customers to deposit cash and transfer funds to a beneficiary. (uch customers have to furnish full details including complete address, telephone number etc. % !T, thus, facilitates originators or remitters to initiate funds transfer transactions even without the need for having a bank account. % !T is a credit; push system i.e. transactions can be originated only to transfer funds to the beneficiary. (o a transaction cannot be originated to receive funds from another account. % !T can also be used to transfer funds from or to a %on;&esident Indian "%&I# or %on; &esident :ternal "%& # accounts in the country. This, however, is sub@ect to :change Management ,ct, 0... "! M,#. applicability of provisions of the !oreign bank branches in the country. % !T is on net settlement basis. It involves B settlement cycles a day -$.. am, **$.. am, *0 noon, *$.. pm, 1... pm and +$.. pm. Thus if a customer has given instruction to its bank to transfer money through % !T to another bank in the morning hours, money would be transferred the same day, but if the instruction is given later during the day, money would be transferred ne:t day. % !T is available in B0, ... branches of -2 banks in India "out of /+, ... bank branches#. % !T is available only in *+ locations where &3I has its clearing house. There is no minimum value for % !T.

% !T system can be used only for remitting Indian &upees between the participating

1.&.& ;orkin% of NE/T 'y' em5

(tep*$ ,n individual?firm?corporate intending to originate or transfer funds through % !T has to fill an application form giving details of the beneficiary "like, name of the beneficiary, name of the bank branch where the beneficiary has an account, I!() of the beneficiary bank branch, account type and account number#. The application form will be available at the originating bank branch. The originator authorizes the branch to debit hi?her account and remit specified amount to the beneficiary. )ustomers en@oying net

banking facility offered by their bankers can initiate the funds transfer re<uest online. (ome banks offer the % !T facility even through the ,TMs. Aalk;in customers will, however, have to give their contact details "complete address and telephone no. etc.,# to the branch. This will help the branch to refund the money to the customer in case credit could not be afforded to the beneficiary4s bank account or the transaction is re@ected or returned for any reason. (tep 0$ The originating bank branch prepares a message and sends the message to its pooling center "also called the % !T (ervice )enter#. (tep 1$ The pooling centre forwards the message to the % !T )learing )entre "operated by %ational )learing )ell, &eserve 3ank of India, Mumbai# to be included for the ne:t available batch. (tep 2$ The )learing )entre sorts the funds transfer transactions destination bank;wise and prepares accounting entries to receive funds from "debit# the originating banks and give the funds to "credit# the destination banks. Thereafter, bank;wise remittance messages are forwarded to the destination banks through their pooling centre "% !T (ervice )enter#. (tep +$ The destination banks receive the remittance messages received from the )learing )entre and pass on the credit to the beneficiary accounts. The beneficiary can e:pect to get credit for the first four batches on week days "i.e., transactions from - am to * pm from Monday to !riday# and the first two batches on (aturdays "i.e., transactions from - to ** am# on the same day. !or transactions settled in the last two batches on week days "i.e., transactions settled in the 1 and + pm batches# and the last batch on (aturdays "i.e., transactions handled in the *0 noon batch# beneficiaries can e:pect to get credit either on the same day or on the ne:t working day morning "depending on the type of facility en@oyed by the beneficiary with his?her bank#. In case of non;credit or delay in credit to the beneficiary account, the % !T )ustomer !acilitation )entre ")!)# of the respective bank can be contacted "the originator can contact his bank4s )!)K the beneficiary may contact the )!) of his bank#. >etails of % !T )ustomer !acilitation )enters of banks are available on the websites of the

respective banks. The details are also available on the website of &eserve 3ank of India at http$??www.rbi.org.in?scripts?neft.asp:. If the issue is not resolved satisfactorily, the % !T 9elp >esk "or )ustomer !acilitation )entre of &eserve 3ank of India# at %ational )learing )ell, &eserve 3ank of India, Mumbai may be contacted through e;mail or by addressing correspondence to the 'eneral Manager, &eserve 3ank of India, %ational )learing )entre, !irst !loor, !ree 5ress 9ouse, %ariman 5oint, Mumbai;2...0*.

1.&.* Pro(e''in% or $er#i(e' (!ar%e' for NE/T ran'a( ion'5

&eserve 3ank of India had waived the processing or service charges for member banks till March 1*, 0.*.. ,ccordingly, member banks participating in % !T need not pay any processing or service charges to &eserve 3ank of India. !urther, processing or service charges to be levied by the member banks from their customers have also been rationalized by &eserve 3ank of India as under$ a# Inward transactions at destination bank branches "for credit to beneficiary accounts# !ree, no charges to be levied from beneficiaries.

b# Outward transactions at originating bank branches "charges for the remitter# !or transactions up to &s. * lakh L charges not e:ceeding &s. +. !or transactions of &s. * lakh and above L charges not e:ceeding &s. 0+.

There is no value limit for individual transactions. The receiving branch acknowledges every transaction it receives after crediting the beneficiary4s of the account. The acknowledgement particulars reach the remitting branch as an inward message on >ay 1 !T processing cycle. The remitting branch will, therefore, have precise information as to when the beneficiary4s account was credit. It is not necessary for all branches to have computer systems. 3ranches can send the remittance details to their service branch in paper format "the copies of the !T ,pplication !orms submitted by the remitting customers accompanied by a &emittance (croll#. The service branch will make data entry and transmit the funds transfer

10

information electronically to local %)). 3ut, if a branch has computer facility, it can transmit funds transfer information electronically to its service branch either on a floppy or through a network. This would minimize the data entry work at service branch. ach participating bank has to identify a branch at the respective center to act as the link point for transmitting all outward messages and receiving all inward messages. The (ervice 3ranch?Main 3ranches of banks who have been coordinating the che<ue;clearing are in the best position to discharge this role. (o no additional organizational infrastructure is re<uired to be created.

1.* Real Time "ro'' $e lemen 9RT"$:

The acronym H&T'(4 stands for &eal Time 'ross (ettlement. &T'( system is a funds transfer mechanism where transfer of money takes place from one bank to another on a Mreal timeM and on MgrossM basis. It came into effect from March 0..2. This is the fastest possible money transfer system through the banking channel. (ettlement in Mreal timeM means payment transaction is not sub@ected to any waiting period. The transactions are settled as soon as they are processed. M'ross settlementM means the transaction is settled on one to one basis without bunching with any other transaction. )onsidering that money transfer takes place in the books of the &eserve 3ank of India, the payment is taken as final and irrevocable. The &T'( system is primarily for large value transactions. The minimum amount to be remitted through &T'( is &s.* lakh. There is no upper ceiling for &T'( transactions. %o minimum or ma:imum stipulation has been fi:ed for % !T transactions. In &T'( system, under normal circumstances the beneficiary branches are e:pected to receive the funds in real time as soon as funds are transferred by the remitting bank. The beneficiary bank has to credit the beneficiaryMs account within two hours of receiving the funds transfer message. The remitting bank receives a message from the &eserve 3ank that money has been credited to the receiving bank. 3ased on this the remitting bank can advise the remitting customer that money has been delivered to the receiving bank. If the money is not credited to the beneficiary4s account then it is e:pected that the receiving bank will credit the account of the beneficiary instantly. If the money cannot be credited for any reason, the receiving bank would have to return the money to the

11

remitting bank within 0 hours. Once the money is received back by the remitting bank, the original debit entry in the customerMs account is reversed. The &T'( service window for customerMs transactions is available from .-$.. hours to *6$.. hours on week days and from .-$.. hours to *2$1. hours on (aturdays for settlement at the &3I end. 9owever, the timings that the banks follow may vary depending on the customer timings of the bank branches. The 5rocessing )harges?(ervice )harges for &T'( transactions are as follows$ a. Inward transactions$ !ree, no charge is levied. b. Outward Transactions$ &s. *lakh to &s. +lakh$ &s. 0+?; per transaction &s. +lakh and above$ &s. +.?; per transaction. The remitting customer has to furnish the following information to a bank for affecting a &T'( remittance$ *. ,mount to be remitted. 0. 9is?her account number which is to be debited. 1. %ame of the beneficiary account. 2. %ame of the beneficiary customer. +. ,ccount number of the beneficiary customer. B. (ender to receiver information, if any. /. The I!() number of the receiving branch. (ince India is such a huge country and the banks in India have such a wide network, so all the bank branches in India are not &T'( enabled. ,s on >ecember 1*, 0..6, more than +0, ... bank branches are &T'( enabled. The list of such branches is available on &3I website www.rbi.org.in?(cripts?3sNview&T'(.asp:

12

(ome banks with internet banking facility provide remittance transaction tracking service. Once the funds are credited to the account of the beneficiary bank, the remitting customer gets a confirmation from his bank either by an e;mail or by a short message on the mobile. In case of non;credit or delay in credit to the beneficiary account, the remitter can contact his?her bank?branch. If the issue is not resolved satisfactorily, the )ustomer (ervice >epartment of &3I may be contacted at ; The )hief 'eneral Manager, &eserve 3ank of India, )ustomer (ervice >epartment, *st !loor, ,mar 3uilding, !ort, Mumbai; 2.. ..*. On a typical day, &T'( handles about B., ... transactions a day for an appro:imate value of &s. 0, /.. billion.

1.. Ele( roni( Clearin% $er#i(e 9EC$:

1...1 In rod+( ion5
lectronic )learing (ervice " )(# is a mode of electronic funds transfer from one bank account to another bank account using the services of a )learing 9ouse. This is normally for bulk transfers from one account to many accounts or vice;versa. This can be used both for making payments like distribution of dividend, interest, salary, pension, etc. by institutions or for collection of amounts for purposes such as payments to utility companies like telephone, electricity, or charges such as house ta:, water ta:, etc or for loan installments of financial institutions?banks or regular investments of persons.

1...& Type' of EC$5

There are two types of )( called )( ")redit# and )( ">ebit#. )( ")redit# is used for affording credit to a large number of beneficiaries by raising a single debit to an account, such as dividend, interest or salary payment. institution. )( ">ebit# is used for raising debits to a number of accounts of customers?account holders for crediting a particular

13

1...* ;orkin% of EC$ Credi $y' em5

)( payments can be initiated by any institution "called )( user# that have to make bulk or repetitive payments to a number of beneficiaries. They can initiate the transactions after registering themselves with an approved clearing house. )( users also have to obtain the consent as also the account particulars of the beneficiary for participating in the )( clearings. The )( userMs bank is called as the sponsor bank )( beneficiary account holder is called the destination under the scheme and the

account holder. The destination account holderMs bank or the beneficiaryMs bank is called the destination bank. The beneficiaries of the regular or repetitive payments can also re<uest the paying institution to make use of the )( ")redit# mechanism for effecting payment. The )( users intending to effect payments have to submit the data in a specified format to one of the approved clearing houses. The list of the approved clearing houses or the list of centers where the )( facility has been provided is available at www.rbi.org.in. The clearing house would debit the account of the )( user through the account of the )( sponsor bank on the appointed day and credit the accounts of the recipient banks, for affording onward credit to the accounts of the ultimate beneficiaries. ,t present facility is available at more than B. centers and the full list is available at the web;site of &3I. The beneficiaries need to maintain an account with one of the banks at these centers in order to avail of the benefit of )(. The beneficiary has to furnish a mandate giving his consent to avail of the )( facility. 9e should also communicate to the )( user the details of his bank branch and account particulars. (uch authorization form is called a mandate. In case the information?account particulars undergo change, then the beneficiary has to notify the )( user to carryout changes in order to ensure continued benefits from the )( user. In case the account particulars at the destination branch do not match, the destination branches would return the credit through their service branch to the clearing house. It is the responsibility of the )( user to communicate to the beneficiary the details of credit that is being afforded to his account, indicating the proposed date of credit, amount and the relative particulars of the payment, so that the beneficiary can match the same with the details furnished by the bank in the account statement?passbook.

14

%o value limit on the amount of individual transactions has been prescribed under the scheme. &3I has deregulated (ervice )harges to be levied by sponsor banks.

1.... Ad#an a%e' of EC$ Credi $y' em5

*# ,dvantages to the ultimate beneficiary$ a# The end beneficiary need not make fre<uent visits to his bank for depositing the physical paper instruments. b# 9e need not apprehend loss of instrument and fraudulent encashment. c# The delay in realization of proceeds after receipt of paper instrument. 0# ,dvantages to the corporate bodies?institutions$ a# The )( user saves on administrative machinery for printing, dispatch and reconciliation. b# ,voids chances of loss of instruments in postal transit. c# ,voids chances of frauds due to fraudulent access to the paper instruments and encashment. d# ,bility to make payment and ensure that the beneficiariesM account gets credited on a designated date. 1# ,dvantages to 3anks$ a# 3anks handling )( get freed of paper handling. b# 5aper handling also creates lot of pressure on banks as they have to encode the instruments, present them in clearing, monitor their return and follow up with the concerned bank and customers. c# In )( banks simply get the payment particulars relating to their customers. ,ll they need to do is to match the account particulars like name, a?c number and credit the proceeds. d# Aherever the details do not match, they have to return it back, as per the procedure.

15

1...0 ;orkin% of EC$ Debi $y' em5

It is a scheme under which an account holder with a bank can authorize an )( user to recover an amount at a prescribed fre<uency by raising a debit in his account. The )( user has to collect an authorization which is called )( mandate for raising such debits. These mandates have to be endorsed by the bank branch maintaining the account. ,ny )( user desirous of participating in the scheme has to register with an approved clearing house. The list of approved clearing houses is available at &3I web;site www.rbi.org.in. 9e should also collect the mandate forms from the participating destination account holders, with bankMs acknowledgement. , copy of the mandate should be available with the drawee bank. The )( user has to submit the data in specified form through the sponsor bank to the clearing house. The clearing house would pass on the debit to the destination account holder through the clearing system and credit the sponsor bankMs account for onward crediting the )( user. ,ll the unprocessed debits have to be returned to the sponsor bank within the time frame specified. 3anks will treat the electronic instructions received through the clearing system on par with the physical che<ues. &3I has deregulated (ervice )harges to be levied by sponsor banks.

1...1 Ad#an a%e' of EC$ Debi $y' em5

*# ,dvantage to the ultimate beneficiary$ a# Trouble free; liminates the need to go to the collection centers?banks by the customers and no need to stand in long HO4s for payment. b# 5eace of mind; )ustomers also need not track down payments by last dates. c# The debits would be monitored by the )( users.

0# ,dvantages to the corporate bodies?institutions$ a# The )( user saves on administrative machinery for collecting the che<ues, monitoring their realization and reconciliation. b# 3etter cash management.

16

c# ,voids chances of frauds due to fraudulent access to the paper instruments and encashment. d# &ealize the payments on a single date instead of fractured receipt of payments.

1# ,dvantages to 3anks$ a# 3anks handling )( get freed of paper handling. b# 5aper handling also creates lot of pressure on banks as they have to encode the instruments, present them in clearing, monitor their return and follow up with the concerned bank and customers. c# In )( banks simply get the mandate particulars relating to their customers. ,ll they need to do is to match the account particulars like name, a?c number and debit the accounts. d# Aherever the details do not match, they have to return it back, as per the procedure.

17

CHAPTER & RE$EARCH ,ETHODO-O"<

18

RE$EARCH ,ETHODO-O"<
&.1 In rod+( ion
, research design is a logical and systematic plan prepared for directing a research study. It specifies the ob@ectives of the study, the methodology and techni<ues to be adopted for achieving the ob@ectives. It constitutes the blueprint for the collection, measurement and analysis of data. It is Dthe plan, structure and strategy of investigation conceived so as to obtain answers to research <uestionsE. The plan is the overall scheme or program of research. , research design is the program that guides the investigator in the process of collecting, analyzing and interpreting observations. The preparation of a research plan for a study aids in establishing direction to the study and in knowing e:actly what has to be done and how and when it has to be done at every stage. Aithout a research plan or research design, research work becomes unfocussed and aimless empirical wandering. The use of research design prevents such a blind search and indiscriminate gathering of data and guides him to proceed in the right direction. The design also enables the researcher to anticipate potential problems of data gathering, operations of concepts, measurement, etc.

&.& $ a emen of !e Problem

5rior to implementation of !T system people used to transfer money from one bank account to another bank account through the means of >emand >raft ">>#, Mail Transfer "MT#, Telegraphic Transfer "TT#, 5ay Order "5O# and checks etc. !or each such transaction, the bank used to charge some commission. It was a means of revenue generation to bank. ,fter !T system4s implementation the commission charges for the transactions were reduced. ,long with this a customers4 view is also taken regarding their behavior towards implementation of !T through a <uestionnaire. Thus, this pro@ect will help us in knowing the changes in commission for the transfer of money and revenue generated through money transfer post implementation of !T system and the behavior of customers towards !T.

19

&.* Re#iew of -i era +re

In this modern era due to the various inventions and technological advancements, our life has become very smooth and easy. Today we all can do most of our day to day work at the click of a button. Thanks to technology. Many organizations too have applied latest technology to operate efficiently. The advanced technologies have not only helped the organizations to operate efficiently, but also to benefit the society. The new advanced technology is not only limited to any one particular industry or sector, but to all the industries and sectors. Then in such a scenario how can banks stay away? These days even the banks have adopted latest technologies to operate better and serve its clients in a better way. One of such technologies is lectronic !und Transfer " !T#. My degree being 3), encouraged me to take up implementation of !T as the dissertation topic. The article DThe 8iability of 3anks in electronic fund transfer transactionE authored by ,lgudah and !ayyad inspired me to select this topic for my dissertation. Their thesis discusses the liability of banks in electronic fund transfer " !T# transactions under the 3ritish and the 7nited (tates law. It covers banks4 liability in lectronic !und Transfer at the 5oint Of (ale " !T5O(#, ,utomatic Teller Machines ",TM# and home and office banking. In the absence of 3ritish legislation in this area, an analogy is made with the traditional methods of payment. ,n attempt is also made to e:tract the applicable rules from the general principles of law and the banking practice. The discussion, under the 7nited (tates law, relies on analyzing the and commercially based !T transactions. ,nalyzing consumer preference is perceived as cornerstone of a successful marketing strategy. )onsumer preference is the mental and emotional processes and the observable behaviour of consumers during searching purchasing and post consumption of a product and service "3atra = Fazmi, 0..2#. (imilarly for personal consumption. ngel "et al, *--.# refers consumer behaviour as the action and decision process of people who purchase goods and services lectronic !und Transfer ,ct of *-/6 and ,rticle 2, of the 7niform )ommercial )ode, which concern banks4 liability in consumer

20

%ow this suggested me to also include the customer4s perception towards this system of funds transfer implemented by banks, so that it will help the funds transfer <uicker and also it will lessen the burden of charges which the customers had to pay. The other important reason is in today4s competitive world, for any organization making profits is not really easy. They have think twice before taking any action and any action taken should satisfy the customers. lse all that is done is a waste. (o I thought of making a <uestionnaire and taking customer4s views.

&.. Ob=e( i#e' of !e $ +dy

This research is based on the comparative study of revenue generation of banks through funds transfer before and after implementation of !T and to study the behavior of customers towards !T. The ob@ectives of the study are$ To know awareness of customers of Indian banks, about lectronic !unds Transfer. To know the preferences ? opinions of the customers about !T usage. To know the working of !T and its implication. To study the behavior of customers towards !T.

&.0 $(ope of !e $ +dy

The scope of this study is very huge. Feeping in mind this aspect total care is taken that no point is missed. The main ob@ective of this research is to compare the revenue generation of banks prior to and after implementation of !T. ,long with this keeping customer4s behavior in mind, a <uestionnaire was designed to know what the customers have to say about the change and how this change has impacted them.

&.1 Re'ear(! De'i%n

The research design followed in the present research is descriptive in nature.

21

&.2 $amplin% ,e !od

The present research has used convenient sampling method to collect data through a pre; tested <uestionnaire.

&.3 $ample $i>e

, sample of +. respondents representing different age, gender, income group and family size was taken for the present research. ,lso a few banks were visited.

&.6 $o+r(e' of Da a
The data to be collected for the purpose of study is divided into two bases$ 5rimary (ource$ The data has been collected directly from respondent with the help of structured <uestionnaires. (econdary (ource$ The secondary data has been collected from books, @ournals, government publications, a few banks and other information sources.

&.18 -imi a ion'

The research may suffer through the following problems ; The research is purely done for academic purpose and covers only the city of >ombivli " ,(T#. The research has constraint of funds as the research is not funded by any organizations and solely depends on the researcher4s funds. The sample size of +. is taken due to the constraint of duration of time and to meet the research deadline.

&.11 Tool of Analy'i'

(tandard techni<ues like 5ie ; graph are used to analyze and interpret the raw data. The analyzed and interpreted data are presented in the form of tables and graphs.

22

CHAPTER * INDU$TR< PRO/I-E

23

INDU$TR< PRO/I-E
*.1 Hi' ory of Bankin% in India
Aithout a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other e:ternal and internal factors. !or the past three decades IndiaMs banking system has several outstanding achievements to its credit. The most striking is its e:tensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India4s growth process. The governmentMs regular policy for Indian bank since *-B- has paid rich dividends with the nationalization of *2 ma@or private banks of India. %ot long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money. Today, he has a choice. 'one are days when the most efficient bank transferred money from one branch to other in two days. %ow it is simple as instant messaging or dialing a pizza. Money has become the order of the day. The first bank in India, though conservative, was established in */6B. !rom */6B till today, the @ourney of Indian 3anking (ystem can be segregated into three distinct phases. They are as mentioned below$ arly phase from */6B to *-B- of Indian 3anks

%ationalization of Indian 3anks and up to *--* prior to Indian banking sector &eforms. %ew phase of Indian 3anking (ystem with the advent of Indian !inancial = 3anking (ector &eforms after *--*.

To make this write;up more e:planatory, I prefi: the scenario as 5hase I, 5hase II and 5hase III.

24

*.1.1 P!a'e I
The 'eneral 3ank of India was set up in the year */6B. %e:t came 3ank of 9industan and 3engal 3ank. The ast India )ompany established 3ank of 3engal "*6.-#, 3ank of 3ombay "*62.# and 3ank of Madras "*621# as independent units and called it 5residency 3anks. These three banks were amalgamated in *-0. and Imperial 3ank of India was established which started as private shareholders banks, mostly uropeans shareholders. In *6B+ ,llahabad 3ank was established and first time e:clusively by Indians, 5un@ab %ational 3ank 8td. was set up in *6-2 with head<uarters at 8ahore. 3etween *-.B and *-*1, 3ank of India, )entral 3ank of India, 3ank of 3aroda, )anara 3ank, Indian 3ank, and 3ank of Mysore were set up. &eserve 3ank of India came in *-1+. >uring the first phase the growth was very slow and banks also e:perienced periodic failures between *-*1 and *-26. There were appro:imately **.. banks, mostly small. To streamline the functioning and activities of commercial banks, the 'overnment of India came up with The 3anking )ompanies ,ct, *-2- which was later changed to 3anking &egulation ,ct *-2- as per amending ,ct of *-B+ ",ct %o. 01 of *-B+#. &eserve 3ank of India was vested with e:tensive powers for the supervision of banking in India as the )entral 3anking ,uthority. >uring those days, public had lesser confidence in the banks. ,s an aftermath deposit mobilization was slow. ,breast of it the savings bank facility provided by the 5ostal department was comparatively safer. Moreover, funds were largely given to traders.

*.1.& P!a'e II
'overnment took ma@or steps in this Indian 3anking (ector &eform after independence. In *-++, it nationalized Imperial 3ank of India with e:tensive banking facilities on a large scale especially in rural and semi;urban areas. It formed (tate 3ank of India to act as the principal agent of &3I and to handle banking transactions of the 7nion and (tate 'overnments all over the country. (even banks forming subsidiary of (tate 3ank of India was nationalized in *-B. on *-th Culy, *-B-, ma@or process of nationalization was carried out. It was the effort of the then 5rime Minister of India, Mrs. Indira 'andhi. *2 ma@or commercial banks in the country were nationalized.

25

(econd phase of nationalization Indian 3anking (ector &eform was carried out in *-6. with seven more banks. This step brought 6.G of the banking segment in India under 'overnment ownership. The following are the steps taken by the 'overnment of India to &egulate 3anking Institutions in the )ountry$ *-2-$ nactment of 3anking &egulation ,ct. *-++$ %ationalization of (tate 3ank of India. *-+-$ %ationalization of (3I subsidiaries. *-B*$ Insurance cover e:tended to deposits. *-B-$ %ationalization of *2 ma@or banks. *-/*$ )reation of credit guarantee corporation. *-/+$ )reation of regional rural banks. *-6.$ %ationalization of seven banks with deposits over 0.. crore. ,fter the nationalization of banks, the branches of the public sector bank India rose to appro:imately 6..G in deposits and advances took a huge @ump by **,...G. 3anking in the sunshine of 'overnment ownership gave the public implicit faith and immense confidence about the sustainability of these institutions.

*.1.* P!a'e III

This phase has introduced many more products and facilities in the banking sector in its reforms measure. In *--*, under the chairmanship of M %arasimham, a committee was set up by his name which worked for the liberalization of banking practices. The country is flooded with foreign banks and their ,TM stations. fforts are being put to give a satisfactory service to customers. 5hone banking and net banking is introduced. The entire system became more convenient and swift. Time is given more importance than money. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any e:ternal macroeconomics shock as other ast ,sian )ountries suffered. This is all due to a fle:ible e:change rate regime, the foreign reserves are high,

26

the capital account is not yet fully convertible, and banks and their customers have limited foreign e:change e:posure.

*.& Na ionali>a ion of Bank' in India

The nationalization of banks in India took place in *-B- by Mrs. Indira 'andhi, the then prime minister. (he nationalized *2 banks then. These banks were mostly owned by businessmen and even managed by them. The banks that were nationalized then were$ )entral 3ank of India 3ank of Maharashtra >ena 3ank 5un@ab %ational 3ank (yndicate 3ank )anara 3ank Indian 3ank Indian Overseas 3ank 3ank of 3aroda 7nion 3ank ,llahabad 3ank 7nited 3ank of India 7)O 3ank 3ank of India 3efore the steps of nationalization of Indian 3anks, only (tate 3ank of India "(3I# was nationalized. It took place in Culy *-++ under the (3I ,ct of *-++. %ationalization of (even (tate 3anks of India "formed subsidiary# took place on *-th Culy, *-B.. The (tate 3ank of India is IndiaMs largest commercial bank and is ranked one of the top five banks worldwide. It serves -. million customers through a network of -,...

27

branches and it offers ;; either directly or through subsidiaries ;; a wide range of banking services. The second phase of nationalization of Indian banks took place in the year *-6.. (even more banks were nationalized with deposits over 0.. crores. Till this year, appro:imately 6.G of the banking segments in India were under 'overnment ownership.

*.* $(!ed+led Commer(ial Bank' in India

The commercial banking structure in India consists of$

(cheduled )ommercial 3anks in India 7nscheduled 3anks in India (cheduled 3anks in India constitute those banks which have been included in the (econd (chedule of &eserve 3ank of India "&3I# ,ct, *-12. &3I in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 20 "B# "a# of the ,ct. The scheduled commercial banks in India comprise of (tate bank of India and its associates "6#, nationalized banks "*-#, foreign banks "2+#, private sector banks "10#, co; operative banks and regional rural banks. P(cheduled banks in IndiaP means the (tate 3ank of India constituted under the (tate 3ank of India ,ct, *-++ "01 of *-++#, a subsidiary bank as defined in the (tate 3ank of India "(ubsidiary 3anks# ,ct, *-+- "16 of *-+-#, a corresponding new bank constituted under section 1 of the 3anking )ompanies ",c<uisition and Transfer of 7ndertakings# ,ct, *-/. "+ of *-/.#, or under section 1 of the 3anking )ompanies ",c<uisition and Transfer of 7ndertakings# ,ct, *-6. "2. of *-6.#, or any other bank being a bank included in the (econd (chedule to the &eserve 3ank of India ,ct, *-12 "0 of *-12#, but does not include a co;operative bankP.

*.. Bankin% $ r+( +re in India

The banking institutions in India can be broadly categorized into two types i.e. scheduled banks, non scheduled banks and specialized institutions. (cheduled banks are again

28

categorized as public sector banks and private sector banks. !oreign banks are part of private sector banks. The ma@or differentiating parameter that distinguishes banks from each other banks in the Indian banking is the level of service that is offered to the customer. )urrently, India has -B scheduled commercial banks "()3s# ; 0/ public sector banks "that is with the 'overnment of India holding a stake#, 1* private banks "these do not have government stakeK they may be publicly listed and traded on stock e:changes# and 16 foreign banks. They have a combined network of over +1,... branches and */,... ,TMs. ,ccording to a report by I)&, 8imited, a rating agency, the public sector banks hold over /+ percent of total assets of the banking industry, with the private and foreign banks holding *6.0G and B.+G respectively.

*.0 ,a=or Reform' and Ini ia i#e'

(ome of the ma@or reform initiatives in the last decade that have changed the face of the Indian banking are$ Interest &ate >eregulation;Interest rates on deposits and lending have been with banks en@oying greater freedom to determine their rates. 'overnment e<uity in banks has been reduced and strong banks have been allowed to access the capital market for raising additional capital. %ew private sector banks have been set up and foreign banks permitted to e:pand their operations in India including through subsidiaries. %ew areas have been opened up for bank financing like; insurance, credit cards, infrastructure financing, leasing, gold banking, besides of course investment banking, asset management, factoring, etc. 3anks have specialized committees to measure and monitor various risks and have been upgrading their risk management skills and systems. ,doption of prudential norms in terms of capital ade<uacy, asset classification, income recognition, provisioning, e:posure limits, investment fluctuation reserve, etc. deregulated

29

/i%+re *.1 Bankin% ' r+( +re in India

Reserve bank of India

Scheduled banks

Commercial banks

Co-operative banks

Foreig n banks

RRB

Urban CB

Rural CB

Public sector banks

Private sector banks

30

31

CHAPTER . DATA ANA-<$I$ AND INTERPRETATION

32

ANA-<$I$ AND INTERPRETATION O/ DATA

*. %umber of respondents who have transferred funds to other accounts prior to implementation of !T system or without using !T system. Table5 ..1 Tran'ferred f+nd' wi !o+ +'in% E/T ,nswer yes no Total !re<uency 12 *B +. 5ercent B6 10 *..

/i%+re5 ..1 Tran'ferred f+nd' wi !o+ +'in% E/T

Analy'i'5 The above table 2.* and figure 2.* clearly shows$ B6G of the respondents have transferred funds prior to !T system or without using !T system. 10G of the respondents have not transferred funds using %on; !T method. In erpre a ion5 !rom the table 2.* and figure 2.* it is evident that B6G people have transferred funds prior to implementation of funds transfer. !T method or use %on; !T method of

33

0. Most preferred means of transfer of funds by %on; !T method. Table ..& ,ean' of Non)E/T Tran'fer
!re<uency 0+ 1 1 *6 * +. 5ercent +. B B 1B 0 *..

>emand >raft Mail Transfer Telegraphic Transfer )he<ue %, Total

/i%+re ..& ,ean' of Non)E/T Tran'fer

Analy'i'5 !rom the table 2.0 and figure 2.0, we can say$ +.G of the respondents prefer >emand >raft ">># mode of funds transfer whilw using %on; !T method. %e:t most preffered method is )he<ue, which is used by 16G respondents. 9ardly anybody uses the other 0 modes of funds transfers "TT = MT#.

In erpre a ion5 !rom the table 2.0 and figure 2.0 we can interpret that the most preferred means of %on; !T method of funds transfer is >emand >raft "+.G# followed by )he<ue "1BG#. There are hardly any bank account holders who use Telegraphic Transfer or Mail Transfer or who don4t transfer at all.

34

1. &eason for using %on; !T Table ..* Rea'on for +'in% Non)E/T !re<uency 7ser !riendly */ asily ,ccessible 02 )harges * Others / %, * Total +. /i%+re ..* Rea'on for +'in% Non)E/T

5ercent 12 26 0 *2 0 *..

Analy'i'5 !rom the table 2.1 and figure 2.1, we can say$ 26G respondents said %on; !T is easily available or accessible. 12G feel it is user friendly.

In erpre a ion5 !rom the table 2.1 and figure 2.1 it is clearly evident that 26G of the respondents use %on; !T means for funds transfer because it is accessible them. Then 12G said it is user friendly. Only 0G said they used %on; !T means for it4s charges.

35

2. ,wareness of !T Table ... Awarene'' of E/T !re<uency 26 0 +. /i%+re ... Awarene'' of E/T 5ercent -B 2 *..

yes no Total

Analy'i'5 Table 2.2 and figure 2.2 shows the awareness level of !T among the respondents$ The study shows that a whooping -BG of the respondents are aware about the !T. Only 2G of the respondents are not aware about it. In erpre a ion5 One good news for the technology inventors is that a whooping -BG respondents responded positively when they were asked, whether they were of this technology. Only 0 respondents said that they are not aware of this system.

36

+. Information about !T Table ..0 $o+r(e of Informa ion !re<uency 6 0. *1 6 * +. 5ercent *B 2. 0B *B 0 *..

%ewspapers = Magazines Internet Qour bank staff Others %, Total

/i%+re ..0 $o+r(e of Informa ion

Analy'i'5 Table 2.+ and figure 2.+ shows how the respondents got to know about the !T$ 2.G of the respondents say they got to know about the !T through internet. 0BG of the respondents were assissted by their respective bank staff.

In erpre a ion5 !rom the table 2.+ and figure 2.+ we can easily interpret that most of the respondents "2.G# got to know about the !T from the internet followed by their respective bank staff "0BG#. Internet is obvious as technology rules in this 0*st century.

37

B. 7se of !T Table ..1 U'e E/T !re<uency 00* +. /i%+re ..1 U'e E/T 5ercent +6 20 *..

yes no Total

Analy'i'5 Table 2.B and figure 2.B shows how many people use !T$ +6G of the respondents still don4t use !T or are not willing to use !T. This means 20G people still use the conventional method of funds transfering. In erpre a ion5 though there was a tremendous response when it came to awareness level of !T among the respondents, but when it comes to usage of this facility, the number is very low. Only +6G of the respondents use this facility.

38

/.

!T means of !und Transfer Table ..2 E/T ,ean' of /+nd Tran'fer

% !T &T'( %, Total

!re<uency 01 B 0* +.

5ercent 2B *0 20 *..

/i%+re ..2 E/T ,ean' of /+nd Tran'fer

Analy'i'5 Table 2./ and figure 2./ shows the most preferred transfer$ 2BG of the respondents use % !T for !T funds transfer. &T'( users are still less.

!T means of funds

In erpre a ion5 %ow the table 2./ and the figure 2./ shows that among the +6G !T users, 2BG respondents use the % !T facility and only *0G respondents use the &T'( facility.

39

6. &eason for using !T system for funds transfer Table ..3 ;!y prefer E/T
!re<uency Time (aving ,dvanced Technology 7ser !riendly %, Total 00 B 0 0. +. 5ercent 22 *0 2 2. *..

/i%+re ..3 ;!y prefer E/T

Analy'i'5 Table 2.6 and figure 2.6 shows that$ 22G of the respondents use !T because it saves time. *0G use it becausr of advanced technology. Only 2G feel its user friendly In erpre a ion5 !rom the table 2.6 and figure 2.6 it is evident that 22G of the respondents, who value time, use !T facility because it saves their time. The *0G respondents, who are tech savvy, use this facility simply because of its advanced technology. 9ardly anybody said they said use it for its charges, though it being lower than the %on; !T means

40

-. Technical Fnowledge of !T Table ..6 Te(!ni(al know !ow

!re<uency 12 *B +. 5ercent B6 10 *..

yes no Total

/i%+re ..6 Te(!ni(al know !ow

Analy'i'5 Table 2.- and figure 2.- shows the technical knowledge or awareness about the !T B6G know how the !T system works technically. 10G don4t know how thw !T system works technically.

In erpre a ion5 !rom the table 2.- and figure 2.- it can be interpreted that B6G of the respondents know how the !T system works technically. Though -BG respondents had said that they are aware about the !T system earlier.

41

*.. 5reference for !T or %on; !T Table ..18 Preferen(e for E/T?Non)E/T

!re<uency 20 6 +. 5ercent 62 *B *..

!T %on; !T Total

/i%+re ..18 Preferen(e for E/T?Non)E/T

Analy'i'5 The table 2.*. and figure 2.*. shows$ 62G of the respondents prefer to use !T for funds transfer. *BG of them prefer %on; !T fund transfer.

In erpre a ion5 !rom the table 2.*. and figure 2.*. we can say that ma@ority of the people "62G respondents# are willing to use technology. !T system of funds transfer in future. Though many still don4t know about it, but they all are willing to learn and use this

42

**. !re<uency of transfer of funds after implementation of !T Table ..11 /re@+en(y of Tran'fer of /+nd' af er Implemen a ion of E/T
!re<uency 1 *6 *2 *0 1 +. 5ercent B 1B 06 02 B *..

(trongly ,gree ,gree )anMt (ay >isagree (trongly >isagree Total

/i%+re ..11 /re@+en(y of Tran'fer of /+nd' af er Implemen a ion of E/T

Analy'i'5 Table 2.** and 2.** shows$ 1BG of the respondents agreed that their fre<uency of transferring funds to other accounts has increased. 0BG respondents said can4t say. 02G disagreed.

In erpre a ion5 !rom the table 2.** and figure 2.** we can interpret that 1BG of the respondents said that ever since they started using !T, their fre<uency of transferring funds has increased. Ahereas 02G said cant say or it4s at same level. There were also 02G respondents who denied to the statement

43

*0. )onvenience Table ..1& E/T (on#enien !an Non)E/T

!re<uency ** 00 *+ 0 +. 5ercent 00 22 1. 2 *..

(trongly ,gree ,gree )anMt (ay >isagree Total

/i%+re ..1& E/T (on#enien !an Non)E/T

Analy'i'5Table 2.*0 shows the convenience of respondents with !T and %on; !T 00G (trongly ,gree to the statement that !T is convenient than %on; !T. 22G agreed to this ststement. 1.G said cant say or its same. %obdy (trongly >isagreed with this statement.

In erpre a ion5 the table 2.*0 and the figure 2.*0 shows that 22G of the respondents feel that the !T system of funds transfer is more convenient than the %on; !T system. 00G of the respondents strongly agreed to this statement. %ot a single respondent strongly disagreed to this though 2G of the respondents disagreed.

44

CHAPTER 0 /INDIN"$A $U""E$TION AND CONC-U$ION

45

/INDIN"$
0.1 /indin%' from !e $e(ondary Da a5 >oing something new which we have not done earlier, like taking up a new pro@ect, reading a new book or e:perimenting something new gives us a lot to learn. Ae get to know many new things which we did not know earlier. Thus this time I too got to learn many things during my pro@ect. My findings are as given below. )harges for the funds transfer prior to implementation of !T system or when the funds are transferred without using !T$ %on; !T means of transfer are as follows$ >emand Transfer ">>#. Mail Transfer "Mail Transfer#. Telegraphic Transfer "TT#. )he<ue. %ow let us look at the charges for using these means to transfer funds. (ince India has 0/ public sector banks and 1. private sector banks, the charges for the non electronic means of funds transfer is almost same in all the public sector banks. The charges in private sector banks differ from those of nationalized banks. The following two tables, table +.* and table +.0 gives us the breakup of charges of two banks. One is Indian 3ank "nationalized bank# and the other is I%' Rysya 3ank "private bank#.

46

Table 0.1 9Indian Bank: ,mount "I%&# 7p to +..?; +.* L *, ... *, ..* L +, ... +, ..* L *., ... *., ..* L *, .., ... ,bove &s. *,.. ,... Outstation >>?MT?TT "I%&# 1.?; 1.?; 1.?; 1.?; &s. 1 per thousand with a 35O "5ay Order# "I%&# 1.?; 1.?; 1.?; 1.?; &s. 1 per thousand with a

minimum of &s. 1.?; minimum of &s. 1.?; &s. 0.B.?; per thousand with a &s. *.+.?; per thousand with a minimum of &s. 1..?; minimum of &s. 1..?;

Table 0.& 9IN" 4y'ya Bank: ,mount "I%&# Outstation >>?5O?TT "I%&# 7p to *., ...?; *.,..* L +., ...?; +., ..* L 0,..,...?; ,bove &s. 0,..,... +.?; &s. 0.+.?; per &s. *,...?; or part thereof sub@ect to a minimum of &s. +.?;. &s. 0?; per &s. *,...?; or part thereof sub@ect to the minimum of &s.*0+?; &e *?; per &s. *,...?; or part thereof sub@ect to the minimum of &s. 2..?; = ma: &s. B..?; The above charges in the table is applicable only to the account holders of those banks. Those who do not have account in those banks, are charged *.+ times of the charges mentioned above in the public sector banks and private banks it varies from bank to bank. ,nother method of funds transferring is through che<ues. 9ere the person who is issuing che<ue is not charged, but the person who is collecting is charged if the collector is having bank account in another bank or the che<ue issued to him is of another bank. This charge is known as Hcollection charge4. The following charges are charge by the Indian 3ank$

47

Table 0.* 9Indian Bank: ,mount "I%&# 7p to *., ...?; *.,... L *,..,...?; ,bove *,..,...?; )harges "I%&# +.?; per che<ue *..?; per che<ue *+.?; per che<ue

In private sector banks, the charges differ from bank to bank. The charges are higher in the private sector banks when compared to the nationalized banks. %ow let us look at the charges aplplicable when the !T mode of funds transfer is used to transfer funds. The !T funds transfer is classifed into % !T and &T'(.

Table 0.. 9NE/T C!ar%e': ,mount "I%&# 7p to *,..,...?; ,bove *,..,...?; Table 0.0 9RT"$ C!ar%e': ,mount "I%&# *,..,..* L +,..,.. ,bove +,..,...?; )harges "I%&# 0+?; per transaction +.?; per transaction )harges "I%&# +?; per transaction 0+?; per transaction

,ccording to &3I guidelines, an electronic funds transfer up to &s. *,..,... is considered as % !T. ,ny amount above &s. *,..,... is considered as &T'(. %ow from the above information it clearly noticable that charges collected through !T is very much less when compared to %on; !T mode of transfer. (o !T has been a boon to the customers when it comes to the charges of the funds transfer. %ow this leaves a <uestion, whether banks have lost their revenue by implementing !T? ,nswer is no, because this !T facility has increased the volume of transaction. ven from the analysis of the <uestionnaire it is visible that people have increased their volume of transactions after the implementation of !T. (ince the data re<uired was very much confidential so

48

we could not get the e:act figures. 3ut from the bank staff we got the information that compared to earlier transactions the volume of transactions has increased.

0.& /indin%' from !e @+e' ionnaire5 There are as many as 10G people who have not transferred funds prior to implementation of !T or have still not used !T. +.G of the respondents use >emand >raft to transfer funds while using %on; !T method. !ollowed by )he<ue, which is used by 1BG. &arely anybody uses the other 0 means like Mail Transfer and Telegraphic Transfer to transfer funds. The reason why people use %on; !T method of transfer is that it is easily accessible. It can be done through any branch. Ahereas % !T and &T'( is available in limited number of branches. Ahen it came to awareness level of !T, whopping -BG respondents said that they are aware of !T. ,nd ma@ority of them "2.G# said that they got to know about !T through internet followed 0BG respondents who said they got to know about it from their bank staff. Ahen it comes to usage of !T, +6G said that they are using !T and the most preferred means of !T is % !T. 22G respondents feel that using !T saves their time, and that is reason why they use it. Ahile *0G said that they use it for its advanced technology. B6G of the respondents said that they know how the !T system works technically. Ahen it came to preference of !T and %on; !T, 62G respondents said that they prefer !T. 20G of the respondents agreed and strongly agreed to the statement that they have increased their transfer of funds post implementation of disagreed to this statement. !T. 02G of the respondents

49

 00G of the respondents strongly agreed and 22G agreed to the statement !T is more convenient than the %on; !T means of transfer. More respondents in the age group of 0*;B. years use !T than in the age group of less than 0. years and more than B. years. Therefore group. !T usage is not dependent on the gender of the respondents. 3oth male and female use it e<ually. !T usage is dependent on the age

$U""E$TION$
,fter looking at the various aspects earlier in this research, the following are the suggestions$ Maintain a striking balance between the volumes of transfer of funds through %on; !T and !T methods. The reason is, as we have seen the difference between the commission charges charged by the banks for the funds transfer by both the methods is huge. The commission charged for %on; !T method is almost B times than that of !T. 3anks can take an initiatve to educate people about the !T systyem, because from the <uestionnaire we could see that -BG respondents were aware of !T system but among those -BG only +6G use !T. ,nd also very few know how the system works technically. (o this may be the reason that people hesitate yo use it. Ahen more people start using !T then it will the volume of transactions and thus help the bank to generate revenue. 3anks can make sure that all their branches are *..G computerised and this facility is available in all the branches. !rom the <uestionnaire we can make out that people use %on; !T methods because it is easily accessible and user friendly. Ae have seen that people in the low income group prefer not to visit bank for payments such as telephone bills, electric bill etc due high charges charged by banks. If banks can convert this group to customers. !T customers then it will be profitable to both bank and the

50

 , notable point was that only 20G of the respondents said that their fund transfer transactions have increased after the implementation. In a country of *.* billion population, this number is <uite small. (o if the banks can think of some schemes wherein the the customers who are depositing funds to other accounts by directly visiting to that particlucar bank branch, which is free of cost, can be encouraged to use !T. ,s the charges of !T is very low the customers would not mind if the process is made simpler. The banks can thionk of doing the same thing using (M( service. ,s mobile phonis are very popular.

CONC-U$ION
,ny pro@ect is incomplete without a successful and meaningful conclusion. ,n ideal conclusion should be brief yet informative. The research conducted by me has the following conclusion$ The implementation of !T system has been a boon to the customers and bankers. !or customers, it has saved their valuable time and also the charges which they had to pay to transfer their own money. Ahen the amount was high the charges were also very high. Thus the implementation of !T has brought a great relief to the customers. !or bankers it has reduced their manual work and also has helped them to work <uickly and efficiently without much error. (ince it uses the computer system, the error rate has dropped significantly. !rom the analysis of the <uestionnaire it is <uite evident that -BG of the respondents were aware of !T system but only +6G use this system and B6G known how the system works technically. ,lso people in the age group of 0*;2. years are more prone to use this system. This is a good sign as in the coming years the younger generation, who, now are below 0. years will follow their elders4 footsteps and use this !T system to a great e:tent. Thus, once again technology is proving to be an integral part of 0*st century.

51

BIB-IO"RAPH<

52

BIB-IO"RAPH<
Book' Referred5
Mohammed ,rif 5asha$ B/inan(ial ,arke ' and In ermediarie'CA !irst 5ublished by Falyani 5ublications, 0..6 )ooper >onald &$ (chindler 5amela (. "0..2#. D 3usiness &esearch MethodsE, 2th dition,Tata Mc'raw;9ill 5ublication )ompany 8imited, %ew >elhi. 3arney Aarf$ BE)B+'ine'' De#elopmen and ,ana%emen in !e "lobal E(onomyC 0..- edition. dition,

$i e' Referred5
www.indianbank.org www.rbi.org http$??www.nlm.nih.gov?services?docNefts.html. http$??www.rbi.org.in?scripts?neft.asp: www.rbi.org.in?(cripts?3sNview&T'(.asp:

53

54

ANNEDURE

55

ANNEDURE
%,M ,' "Qrs# $ $ 0.;2. 2.;B. MO& T9,% B.

8 (( T9,% 0. ' %> & M,8 O))75,TIO% (T7> %T ( 8! M58OQ > $ $

! M,8

5&IR,T

M58OQ $ 0;2 8,F9

'ORT. M58OQ NNNNNNNNNNNNNNNNN"58 ,( (5 )I!Q#

OT9 &(

I%)OM 5 & ,%%7M "I%&# 3 8OA * 8,F9 *;0 8,F9

,3OR

8,F9

>O QO7 9,R 3,%F ,))O7%T? Q ( %O

>O QO7 T&,%(! & !7%>( TO OT9 & ,))O7%T(? Q ( %O

EUE$TIONNAIRE
*. 9,R QO7 T&,%(! && > !7%>( TO OT9 & ,))O7%T( 5&IO& TO

IM58 M %T,TIO% O! !T (Q(T M? Q ( %O

0. A9I)9 M ,%( O! T&,%(! & O! !7%>( QO7 5& ! & MO(T TO 7( !O& T&,%(! &&I%' !7%>( AIT9O7T !T? > M,%> >&,!T T 8 '&,59I) T&,%(! & M,I8 T&,%(! & )9 O7 %?,

56

1. A9,T I( T9 & ,(O% !O& 7(I%' T9 5& ! && > M ,%( M,&F > ,3OR ? 7( & !&I %>8Q )9,&' ( 2. ,& QO7 ,A,& O! T9 Q ( OT9 &( ,(I8Q ,)) ((I38 %?,

!T (Q(T M? "I! %O (FI5 T9 % ST O7 (TIO%#? %O

+. 9OA >I> QO7 ' T TO F%OA ,3O7T !T? % A(5,5 &( = M,',TI% ( I%T &% T OT9 &( QO7& 3,%F (T,!! %?,

B. >O QO7 7(
O7 (TIO%(#?

!T (Q(T M !O& T&,%(! &&I%' !7%>(? "I! %O, (FI5 T9 % ST 0

Q (

%O

/. I! Q (, A9I)9 M ,%( O! !T !7%>( T&,%(! & QO7 7( ? % !T 6. A9Q >O QO7 5& ! & TO 7( TIM (,RI%' 7( & !&I %>8Q -. >O QO7 F%OA 9OA T9 Q ( &T'( !T (Q(T M? ,>R,%) > T )9%O8O'Q %?, !T (Q(T M AO&F( T )9%I),88Q %O %?,

*.. I! 3OT9 !T (Q(T M ,%> %O%; !T (Q(T M I( ,R,I8,38 !O& T&,%(! & O! !7%>(, A9I)9 O% AI88 QO7 5& ! &? !T %O%; !T

57

**. IM58 M %T,TIO% O! !T 9,( M,> M T&,%(! & !7%>( MO& O!T % T9,% ,&8I &? (T&O%'8Q ,'& ,'& ),%4T (,Q >I(,'& (T&O%'8Q >I(,'& *0. I !I%> !T MO& )O%RI%I %T T9,% %O%; !T(Q(T M O! !7%> T&,%(! &? (T&O%'8Q ,'& ,'& ),%4T (,Q >I(,'& (T&O%'8Q >I(,'&

58