Banking System Important Defenition and Charts National Electronic Funds Transfer System
The parties to a funds transfer under this NEFT System Indian Banking System Universal Banking Centralized Funds Management System Indian Financial Network Universal Banking refers to those services offered by banks beyond traditional banking service such as saving accounts and loans and includes Pension Funds Manage-ment, undertaking equipment leas-ing, hire purchase
Fierce competition, innovative strategies and competitive spirit have satiated banks with palpating activities. Banks are adopting different strategies in an environment of increased competitive pressure. Active strategies with focus on new fields of business and defensive strategy concentrating on cost cutting are embraced together. Flawless service delivery is the target with diffused liabilities and multiple choices available to customers.
Technology has completely
changed the nature and pace of delivery of banking
services world over. The speed
has considerably improved along with the quality of the
services. Various delivery channels are available with
banks for customers. Broadly, the levels of banking
services offered through internet can be categorized in to three
types namely—Basic Level Service, Simple Transactional Websites and Fully Transactional
Websites.
Indian banking was provided an opportunity by the
liberalization in 1990s to extend its working Para-meters beyond geographical
borders. The banking reform has indeed helped
to restore semblance of efficiency and
stability. Our banking industry enjoys greater autonomy, operational
flexibility and liberalized norms allowing it to be more com-petitive.
Technology Driven Indian Banking System
The growing universalisation and
internationalization of banking operations have altered the face of banks
from one of mere inter-mediator
to one of provider of quick, efficient and consumer centric ser-vices. There
has been massive use of technology across many areas of
banking business in India, both from the asset and the liability side of a bank’s
balance sheet.
Banks pass through
phases namely the inception phase, where the technology behind the application
is in its infancy and a substantial amount of investment is required so
as to make the application widely
available commercially; the growth phase,
where the application is increasingly
available to the custo-mers and the technology behind the application is widely
available; and the maturity phase, wherein the
application is in widespread use and institutions not offering such
applica-tions are likely to be at a competitive disadvantage.
The introduction of MICR based
cheque processing—a first for the region, during the years
1986-88 was one of the earliest steps in Indian banking on the march of
technology.
Technological Changes in Indian Banking System
Core Banking Systems—the
introduction of Core Banking
Systems (CBS) which was at its nascent stages
has become full blown and all banks are at varying stages of
implementation of Core Banking Systems in their branches. There are 5
ingredients that form part of the Core Banking system viz. General
Ledger Customer, Information System, Deposit
System, Loan System and Management Information System.
INFINET—INFINET (Indian Financial Network),
is used by a large number of banks for funds and non-funds-based message
transfers, and is made available by the
Institute for Development and Research in
Banking Technology (IDRBT), Hyderabad.
INFINET is perhaps among the few networks in the world which uses
the latest in technology and security
called Public Key Infrastructure—PKI, which is not only
state-of-the-art and robust but also well within the legal
requirements of the Information Technology Act, 2000.
Centralized Funds Management System
The Centralized Funds
Management System (CFMS), is a system
to enable operations on current
accounts maintained at various offices of the Bank,
through standard message formats in a secure manner. It is set up, operated and
maintained by the Reserve Bank of India.
Presence of Women on Boards
Banking in the West has tradi-tionally been
a male bastion and continues to be
so. Study titled “Women on Corporate Boards
in India 2010” ranked the companies listed in the
Bombay Stock Exchange (BSE-100) in terms of the
gender diversity of their boards, with those with the highest percentage of
women on their boards appearing at the top. The BSE-100 comprises 26 industry
classifications with the banking industry
making up the largest group of companies.
Indian banks, with better gender equality on board than
their western counterparts, scraped though the economic
slowdown unscathed.
Mobile Branches
Domestic scheduled commercial banks (other than RRBs) were
granted general permission by RBI, to opera-tionalise Mobile branches in Tier 3
to Tier 6 centres (with population upto 49,999 as per Census 2001) and in
rural, semi urban and urban centres in the North
Eastern States and Sikkim, subject to reporting.
The mobile branch should be
stationed in each village/location for a reasonable time on specified days
and specified hours, so
that its services could be utilized properly by customers. The
business transacted at the mobile branch shall be recorded in the books of the
base branch/data centre. The bank may give wide
publicity about the mobile branch in the
village, including details of ‘specified
days and working hours’ at various locations so as to avoid any confusion to
local customers; and any change in this regard should also be publicized.
Social Responsibility, Sustain-able Development and Non-Financial Reporting
Government infused into bank-ing sector the ‘socialist’
constituent through nationalization of
major banks.
CSR entails the integration of social
and environmental concerns by companies in their business opera-tions as also
in interactions with their stakeholders. SD essentially refers to the
process of maintenance of the quality of environmental and social systems in
the pursuit of economic development. NFR is basically a
system of reporting by organizations on their activities in this context,
especially as regards the triple bottom line, that is, the environmental,
social and economic accounting.
RBI circular (dated December 20, 2007) on
Role of Banks in Cor-porate Social Responsibility, Sustain-able Development and
Non-Financial Reporting is appreciable. Stressing the need for Corporate Social
Res-ponsibility (CSR), RBI pointed out that these initiatives by the banks are
vital for sustainable development. Banks have been directed
to start; non-financial reporting will help to audit their initiatives towards
the corporate social responsibility (CSR). Such a reporting will cover the work
done by the banks towards the social, economic and environmental better-ment of
society.
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