Internet banking-of-sbi

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Internet Banking Of State Bank Of
India

Chapter I
Introduction to Project

The chapter describes the basic premise of the project. It also
sets forward the path in which the project was planned and is
being completed.

Background

Graduated in BBA as the background, and as a student of Fourth
Semester MBA with specialization in Finance and Marketing, I
was searching for a project area which should go along with my
career in Finance division of banking industry and utilizes most
of my Finance skills and knowledge. So it was narrowed down
to the study of Internet Banking of State Bank Of India.

Objectives
The main objectives of the study are:
• To understand the concept of Internet banking and
importance, to bank as well as customers.

• To get aware of various aspects of net banking

• To build up SWOC analysis of Internet banking of SBI
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• To build up various solutions for drawbacks in net
banking

Scope of study

The study is made taking consideration of whole State Bank of
India. With reference to experience availed at Amravati camp
branch.

Need of the Study
This study is needed to find out the working of Internet Banking
of SBI and its importance to customer as well as to bank.

Data Collection
The data is to be collected from Personal Development Manager
of SBI, Mr.Yadao Mohod, and by the official website of State
Bank Of India and Reserve Bank of India.

The project is divided into various chapters dealing with various
issues in the project. There are in total seven chapters.
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The title of each chapter is shown below:

Chapter I contain Introduction to Project,

Chapter II contain Company Profile

Chapter III contain History of Internet Banking

Chapter IV contains working of internet banking in SBI

Chapter V SWOC analysis

Chapter VI contain the Recommendations and Suggestions

Chapter VII will be Conclusion

Future scope

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The study of this topic will help to get the knowledge about
process of internet banking and usefulness to banking industry.
As the study contains the 360 degree information regarding SBI
and its internet banking, Hence the study will lead to new ways
to tackle the problems and the SWOC of SBI in respect of
internet banking.

This was all about how the project will go ahead and the findings
from it. The next chapter deals with the Company Profiles

Chapter 2
INTERNET BANKING

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The chapter describes in brief about INTERNET
BANKING.

Internet:-

INTRODUCTION: -

There is a sea change in the media world. While most consumers
see the news papers, the same magazines and listen to the same
radio programs, behind this bland public exterior there is a
seething world of innovation, acquisition, global partnership and
divorces, births and deaths… all of it most readily interpreted as
the inevitable result of the technological revolution that is in the
process of merging telephones, computers, televisions in to a
single all singing, all dancing magic kit that will, very possible,
change all of our lives more than we can imagine some day

There are 2 ways you can respond to this 1 is to panic, which
may mean simply curling up in a corner and wishing that it
would all go away. The other is to embrace the new religion with
messianic fervor and go out to proclaim the millennium. I
welcome you to the new emerging world of the Info-High-Way,
destined to redefine the world of communications:

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HISTORY: -

It is said that necessity is the mother of invention. And true, it is
seeds of Internet were sown in the ashes of the world war

Having bombed the cities of Hiroshima and Nagasaki, US
military was forced to provide the answer to the question – What
if someone bombed the USA? So for many years after the war,
most of the US military research concentrated on ways and
means to survive the nuclear holocaust. And one of the most
important strategic problems was- “How would us authorities
communicate with each other in the aftermath of a nuclear
attack?” computers were already there. But, communication
networks were connected to each in a private fashion- in sort of
chains: somewhat like an electricity line to your home. This
means that if even one chain in the middle were blown up, the
whole network would collapse.

Then in the 1960’s the problem was taken by America’s
foremost military think tank, the Rand Corporation. After a lot of
ideas were put up and knocked down, Paul baron- a rand
“thinker” hit upon an idea. “What if the network was not built
like a chain but like a fish net?” he said. If one strand on the fish
net broke the net would still be functional. After spending many

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agonizing hours over it, he came up with 11-volume report for
the pentagon. But, as fate would have it was rejected. By then,
young engineers were impressed by the idea and worked on it.
Well before the end of the decade, the first net was created and
called ARPANET, connecting four American research
organizations- university of Utah, university of California in Los
Angeles and Santa Barbara, and Stanford research institute.

Internet as a communication medium and as a repository of
information has caught the imagination of computer users. This
has fuelled an unparalleled growth in the number of Internet
users.

VARIOUS PARTS OF INTERNET: -
The Internet is made up of terminal computers through which
subscribers access the net; gateways servers which connect the
users to the rest of the network (of computers); servers which
host information in them; and, the communication network over
which data actually flows.
Internet offers its users a variety of services. The subscribers
may have access to all or any of the following services
depending upon the type of connection that one has subscribed
for:
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1) E-Mail
2) World Wide Web (WWW)
3) File Transfer Protocol (FTP)
4) Telnet

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The net banking, thus, now is more of a norm rather than an
exception in many developed countries due to the fact that it is
the cheapest way of providing banking services.
Internet banking refers to the use of the Internet as a remote
delivery channel for banking services. Such services include
traditional ones, such as opening a deposit account or
transferring funds among different accounts, and new banking
services, such as electronic bill presentment and payment
(allowing customers to receive and pay bills on a bank’s Web
site). Banks offer Internet banking in two main ways. An
existing bank with physical offices can establish a Web site and
offer Internet banking to its customers as an addition to its
traditional delivery channels. A second alternative is to establish
a “virtual,” “branchless,” or “Internet-only” bank. The computer
server that lies at the heart of a virtual bank may be housed in an
office that serves as the legal address of such a bank, or at some
other location. Virtual banks may offer their customers the
ability to make deposits and withdraw funds via ATMs or other
remote delivery channels owned by other institutions.
The impact of E-transaction and authentication issues in banking

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It's hardly great news that there has been tremendous growth in
the use of the Internet and other electronic facilities to
process financial transactions. According to the Federal
Deposit Insurance Corp., transactional Web sites have more than
doubled each year for the past six years, growing from one in
1995 to nearly 2,500 in 2000.
This growth is a reflection of the fact that over the past few
years, financial leaders have been considering various ways in
which to allow their customers to transact business using the
Internet. This objective is now reaching beyond the financial
services industry into non-electronic business segments, such as
the building supply industry. Furthermore, this growth is likely to
continue to climb as the number of Internet users, Internet
connection speed, and the number of transactional Web sites
continues to increase. The number of adults using PC banking is
also growing. With this growth, there is an increased awareness
of the benefits of using online transaction processing, thereby
fueling the thought that all business should be electronically
facilitated.

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Gartner predicts that worldwide business-to-business (B2B) e-
commerce will total $3.6 trillion by 2003 and $8.5 trillion in
2005. Online financial activity had a slower start, but has had
steady growth, from 6 million users in 1998 to 27.5 million users
in 2000. During 2000, only 30 percent of the Internet-capable
households were using some form of Internet banking, indicating
that there is tremendous room for increased use.
The e-Commerce Value Chain
Consider that the consumer and the merchant are on either ends
of the electronic commerce value chain, with the authentication
network and transaction processor (bank) in the middle. Banks
have traditionally been the trusted agents, have the largest
customer base, and have received the initial benefits from
electronic commerce. Value has begun a steady migration to the
ends of the value chain. Customers can receive and pay bills
from one point using products from multiple issuers. Merchants
can influence and enhance the consumer experience by providing
innovative and time-saving means of doing business. Merchants
can add value to the payment process, for example, by offering
discounted prices for electronic payment.

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Merchants can also reduce their costs by receiving electronic
payments, which results in reducing and sometimes eliminating
the need for data entry, as well as reducing the error rate and the
time to investigate and correct the data. By increasing and
effectively managing cash flow, merchants may also be able to
reduce costs associated with lines of credit.

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Digital Signatures
On October 1, 2000, the Electronic Signatures in National and
Global Commerce Act was signed. This act states that an
agreement, contract, or transaction signed electronically is
enforceable in a court of law. Accordingly, financial services
institutions can now legally transact business using electronic
signatures, allowing transactions such as mortgages, funds
transfers, opening and closing of accounts, benefits enrollment,
and beneficiary designations to occur in an electronic
environment.

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The law defines an electronic signature as "an electronic sound,
symbol, or process attached to or logically associated with a
contract or other record and executed or adopted by a person with
the intent to sign the record." Fortunately, the legislation does not
attempt to define acceptable technologies except to indicate that
the technologies must be mutually acceptable to the transacting
parties. Since a valid signature can be as simple as a digital
image of a signature (enabled through an electronic pen and pad)
or as complex as today's public key infrastructure (PKI) and
associated encryption methods, the technology decision maker
must define relevant business objectives and understand the
risks, such as cost and unauthorized use associated with
alternative implementations.
There are possible additional benefits to the implementing
organization. These include reduced transaction timelines,
reduction in paper processing costs, facilitation of customer
migration to the Internet as a business channel, and increased
online transaction security.

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When compared to physical signatures, e-signature technologies
are, in general, a more secure authentication method. Many
financial institutions are studying the possible implementation of
a public key infrastructure (PKI) system that will allow them to
exchange electronic information securely with unknown parties.
PKI is the delivery channel for public key cryptography, a
method that allows the parties to a transaction to keep a
communication private through the use of a two-part key made
up of public and private components. To encrypt messages, the
published public keys of the recipients are used. To decrypt the
messages, the recipients use their unpublished private keys,
known only to them. Quite simply, if the signer's private key is
not compromised, which can happen by releasing the password
or allowing access to the device containing the private key, a
document cannot be digitally signed

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What Is Internet Banking?

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Internet Banking System is a system that has been developed in
order to help clients with the daily day-to-day transactions.
Internet banking systems means that clients can now do banking
at the leisure of their homes.
Also known as online banking, the system allows both
transactional and non-transactional features.
Online banking or internet banking allows customers to conduct
financial transactions on a secure website operated by the retail
or virtual bank

History

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The term online banking was first started in 80’s. The term
online became popular in the late '80s and referred to the use of a
terminal, keyboard and TV (or monitor) to access the banking
system using a phone line. ‘Home banking’ can also refer to the
use of a numeric keypad to send tones down a phone line with
instructions to the bank. Online services started in New York in
1981 when four of the city’s major banks (Citibank, Chase
Manhattan, Chemical and Manufacturers Hanover) offered home
banking services using the videotext system. Because of the
commercial failure of videotex these banking services never
became popular except in France where the use of videotex
(Minitel) was subsidized by the telecom provider and the UK,
where the Prestel system was used.

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The UK’s first home online banking services was set up by the
Nottingham Building Society (NBS) in 1983 .The system used was
based on the UK's Prestel system and used a computer, such as
the BBC Micro, or keyboard (Tandata Td1400) connected to the
telephone system and television set. The system (known as
'Home link') allowed on-line viewing of statements, bank
transfers and bill payments. In order to make bank transfers and
bill payments, a written instruction giving details of the intended
recipient had to be sent to the NBS who set the details up on the
Home link system. Typical recipients were gas, electricity and
telephone companies and accounts with other banks. Details of
payments to be made were input into the NBS system by the
account holder via Prestel. A cheque was then sent by NBS to
the payee and an advice giving details of the payment was sent
to the account holder. BACS was later used to transfer the
payment directly.
Stanford Federal Credit Union was the first financial institution
to offer online internet banking services to all of its members in
Oct, 1994. Later on it was adopted by worldwide banks

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Chapter 3
Company Profile
The chapter describes the Company profile of State Bank Of India which was taken
for the study of project.

State bank of India:-

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State bank of India is the nation’s largest and oldest bank.
Tracing its roots back some 200 years to the British East India
Company (and initially established as the Bank of Calcutta in
1806), the bank operates more than 15,000 branches within
India, where it also owns majority stakes in six associate banks.
State Bank of India (SBI) has more than 80 offices in nearly 35
other countries, including multiple locations in the US, Canada,
and Nigeria. The bank has other units devoted to capital markets,
fund management, factoring and commercial services, credit
cards, and brokerage services. The Reserve Bank of India owns
about 60% of State bank of India.

Some facts and figures
SBI Share in Deposits & Advances
SBI Share in Deposits & Advances

SBI
SBI
18%
18%

SBI Share in Foreign Exchange
SBI Share in Foreign Exchange

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SBI
SBI
35%
35%

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SBI Share in Government Transactions
SBI Share in Government Transactions
(Receipts and payments on behalf of Government of India
(Receipts and payments on behalf of Government of India
and other provincial Governments )
and other provincial Governments )

SBI
SBI
60%
60%

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History of State bank of India:-

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State Bank of India (SBI) is that country's largest commercial
bank. The government-controlled bank--the Indian government
maintains a stake of nearly 60 percent in SBI through the central
Reserve Bank of India--also operates the world's largest branch
network, with more than 13,500 branch offices throughout India,
staffed by nearly 220,000 employees. SBI is also present
worldwide, with seven international subsidiaries in the United
States, Canada, Nepal, Bhutan, Nigeria, Mauritius, and the
United Kingdom, and more than 50 branch offices in 30
countries. Long an arm of the Indian government's infrastructure,
agricultural, and industrial development policies, SBI has been
forced to revamp its operations since competition was introduced
into the country's commercial banking system. As part of that
effort, SBI has been rolling out its own network of automated
teller machines, as well as developing anytime-anywhere
banking services through Internet and other technologies. SBI
also has taken advantage of the deregulation of the Indian
banking sector to enter the, assets management, and securities
brokering sectors. In addition, SBI has been working on reigning
in its branch network, reducing its payroll, and strengthening its
loan portfolio. In 2003, SBI reported revenue of $10.36 billion
and total assets of $104.81 billion.
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The establishment of the British colonial government in India
brought with it calls for the formation of a Western-style
banking system, if only to serve the needs and interests of the
British imperial government and of the European trading houses
doing business there. The creation of a national banking system
began at the beginning of the 19th century.
The first component of what was later to become the State Bank
of India was created in 1806, in Calcutta. Called the Bank of
Calcutta, it was also the country's first joint stock company.
Originally established to serve the city's interests, the bank was
granted a charter to serve all of Bengal in 1809, becoming the
Bank of Bengal. The introduction of Western-style banking
instituted deposit savings accounts and, in some cases,
investment services. The Bank of Bengal also received the right
to issue its own notes, which became legal currency within the
Bengali region. This right enabled the bank to establish a solid
financial foundation, building an interest-free capital base.

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The spread of colonial influence also extended the scope of
government and commercial financial influence. Toward the
middle of the century, the imperial government created two more
regional banks. The Bank of Bombay was created in 1840, and
was soon joined by the Bank of Madras in 1843. Together with
the Bank of Bengal, they became known as the "presidency"
banks.
All three banks were operated as joint stock companies, with the
imperial government holding a one-fifth share of each bank. The
remaining shares were sold to private subscribers and, typically,
were claimed by the Western European trading firms. These
firms were represented on each bank's board of directors, which
was presided over by a nominee from the government. While the
banks performed typical banking functions, for the Western
firms and population and members of Indian society, their main
role was to act as a lever for raising loan capital, as well as help
stabilize government securities.

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The charters backing the establishment of the presidency banks
granted them the right to establish branch offices. Into the
second half of the century, however, the banks remained single-
office concerns. It was only after the passage of the Paper
Currency Act in 1861 that the banks began their first expansion
effort. That legislation had taken away the presidency banks'
authority to issue currency, instead placing the issuing of paper
currency under direct control of the British government in India,
starting in 1862.
Yet that same legislation included two key features that
stimulated the growth of a national banking network. On the one
hand, the presidency banks were given the responsibility for the
new currency's management and circulation. On the other, the
government agreed to transfer treasury capital backing the
currency to the banks--and especially to their branch offices.
This latter feature encouraged the three banks to begin building
the country's first banking network. The three banks then
launched an expansion effort, establishing a system of branch
offices, agencies, and sub-agencies throughout the most
populated regions of the Indian coast, and into the inland areas
as well. By the end of the 1870s, the three presidency banks
operated nearly 50 branches among them.
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The rapid growth of the presidency banks came to an abrupt halt
in 1876, when a new piece of legislation, the Presidency Banks
Act, placed all three banks under a common charter--and a
common set of restrictions. As part of the legislation, the British
imperial government gave up its ownership stakes in the banks,
although they continued to provide a number of services to the
government, and retained some of the government's treasury
capital. The majority of that, however, was transferred to the
three newly created Reserve Treasuries, located in Calcutta,
Bombay, and Madras. The Reserve Treasuries continued to lend
capital to the presidency banks, but on a more restrictive basis.
The minimum balance now guaranteed under the Presidency
Banks Act was applicable only to the banks' central offices. With
branch offices no longer guaranteed a minimum balance backed
by government funds, the banks ended development of their
networks. Only the Bank of Madras continued to grow for some
time, supplied as it was by the influx of capital from
development of trade among the region's port cities.

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The loss of the government-backed balances was soon
compensated by India's rapid economic development at the end
of the 19th century. The building of a national railroad network
launched the country into a new era, seeing the rise of cash-crop
farming, a mining industry, and widespread industrial
development. The three presidency banks took active roles in
financing this development. The banks also extended their range
of services and operations, although for the time being was
excluded from the foreign exchange market.
By the beginning of the 20th century, India's banking industry
boasted a host of new arrivals, and particularly foreign banks
authorized to exchange currency. The growth of the banking
sector, and the development of indigenous banks, in turn created
a need for a larger "bankers' bank." At the same time, the Indian
government had outgrown its colonial background and now
required a more centralized banking institution. These factors led
to the decision to merge the three presidency banks into a new,
single and centralized banking institution, the Imperial Bank of
India.

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Created in 1921, the Imperial Bank of India appeared to
inaugurate a new era in India's history--culminating in its
declaration of independence from the British Empire. The
Imperial Bank took on the role of central bank for the Indian
government, while acting as a bankers' bank for the growing
Indian banking sector. At the same time, the Imperial Bank,
which, despite its role in the government financial structure
remained independent of the government, carried on its own
commercial banking operations.
In 1926, a government commission recommended the creation of
a true central bank. While some proposed converting the
Imperial Bank into a central banking organization for the
country, the commission rejected this idea and instead
recommended that the Imperial Bank be transformed into a
purely commercial banking institution. The government took up
the commission's recommendations, drafting a new bill in 1927.
Passage of the new legislation did not occur until 1935, however,
with the creation of the Reserve Bank of India. That bank took
over all central banking functions.

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The Imperial Bank then converted to full commercial status,
which accordingly allowed it to enter a number of banking areas,
such as currency exchange and trustee and estate management,
from which it had previously been restricted. Despite the loss of
its role as a government banking office, the Imperial Bank
continued to provide banking services to the Reserve Bank,
particularly in areas where the Reserve Bank had not yet
established offices. At the same time, the Imperial Bank retained
its position as a bankers' bank.
By then, India had achieved its independence from Britain. In
1951, the new government launched its first Five Year Plan,
targeting in particular the development of the country's rural
areas. The lack of a banking infrastructure in these regions led
the government to develop a state-owned banking entity to fill
the gap. As part of that process, the Imperial Bank was
nationalized and then integrated with other existing government-
owned banking components. The result was the creation of the
State Bank of India, or SBI, in 1955.

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The new state-owned bank now controlled more than one-fourth
of India's total banking industry. That position was expanded at
the end of the decade, when new legislation was passed
providing for the takeover by the State Bank of eight regionally
based, government-controlled banks. As such the Banks of
Bikaner, Jaipur, Indore, Mysore, Patiala, Hyderabad, Saurashtra,
and Travancore became subsidiaries of the State Bank.
Following the 1963 merger of the Bikaner and Jaipur banks,
their seven remaining subsidiaries were converted into associate
banks.
In the early 1960s, the State Bank's network already contained
nearly 500 branches and sub-offices, as well as the three original
head offices inherited from the presidency bank era. Yet the
State Bank now began an era of expansion, acting as a motor for
India's industrial and agricultural development that was to
transform it into one of the world's largest financial networks.
Indeed, by the early 1990s, the State Bank counted nearly 15,000
branches and offices throughout India, giving it the world's
single largest branch network.

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SBI played an extremely important role in developing India's
rural regions, providing the financing needed to modernize the
country's agricultural industry and develop new irrigation
methods and cattle breeding techniques, and backing the creation
of dairy farming, as well as pork and poultry industries. The
bank also provided backing for the development of the country's
infrastructure, particularly on a local level, where it provided
credit coverage and development assistance to villages. The
nationalization of the banking sector itself, an event that
occurred in 1969 under the government led by Indira Gandhi,
gave SBI new prominence as the country's leading bank.

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Even as it played a primary role in the Indian government's
industrial and agricultural development policies, SBI continued
to develop its commercial banking operations. In 1972, for
example, the bank began offering merchant banking services. By
the mid-1980s, the bank's merchant banking operations had
grown sufficiently to support the creation of a dedicated
subsidiary, SBI Capital Markets, in 1986. The following year,
the company launched another subsidiary, SBI Home Finance, in
collaboration with the Housing Development Finance
Corporation. Then in the early 1990s, SBI added subsidiaries
SBI Factors and Commercial Services, and then launched
institutional investor services.

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SBI was allowed to dominate the Indian banking sector for more
than two decades. In the early 1990s, the Indian government
kicked off a series of reforms aimed at deregulating the banking
and financial industries. SBI was now forced to brace itself for
the arrival of a new wave of competitors eager to enter the fast-
growing Indian economy's commercial banking sector. Yet years
as a government-run institution had left SBI bloated--the civil-
servant status of its employees had encouraged its payroll to
swell to more than 230,000. The bureaucratic nature of the
bank's management left little room for personal initiative, nor
incentive for controlling costs.
In 1994, the bank hired consulting group McKinsey & Co. to
help it restructure its operations. McKinsey then led SBI through
a massive restructuring effort that lasted through much of the
decade and into the beginning of the next, an effort that helped
SBI develop a new corporate culture focused more on
profitability than on social and political policy. SBI also stepped
up its international trade operations, such as foreign exchange
trading, as well as corporate finance, export credit, and
international banking.

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SBI had long been present overseas, operating some 50 offices in
34 countries, including full-fledged subsidiaries in the United
Kingdom, the United States, and elsewhere. In 1995 the bank set
up a new subsidiary, SBI Commercial and International Bank
Ltd., to back its corporate and international banking services.
The bank also extended its international network into new
markets such as Russia, China, and South Africa.
Back home, in the meantime, SBI began addressing the
technology gap that existed between it and its foreign-backed
competitors. Into the 1990s, SBI had yet to establish an
automated teller network; indeed, it had not even automated its
information systems. SBI responded by launching an ambitious
technology drive, rolling out its own ATM network, then
teaming up with GE Capital to issue its own credit card. In the
early 2000s, the bank began cross-linking its banking network
with its ATM network and Internet and telephone access, rolling
out "anytime, anywhere" banking access. By 2002, the bank had
succeeded in networking its 3,000 most profitable branches.

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The implementation of new technology helped the bank achieve
strong profit gains into the early years of the new century. SBI
also adopted new human resources and retirement policies,
helping trim its payroll by some 20,000, almost entirely through
voluntary retirement in a country where joblessness remained a
decided problem.
By the beginning of 2004, SBI appeared to be well on its way to
meeting the challenges offered by the deregulated Indian
banking sector. In a twist, the bank had become an aggressor into
new territories, launching its own line of banc assurance
products, and also initiating securities brokering services. In the
meantime, SBI continued its technology rollout, boosting the
number of networked branches to more than 4,000 at the end of
2003. SBI promised to remain a central figure in the Indian
banking sector as it entered its third century.

Key Dates:
1806: The Bank of Calcutta is established as the first Western-
type bank.
1809: The bank receives a charter from the imperial government
and changes its name to Bank of Bengal.
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1840: A sister bank, Bank of Bombay, is formed.
1843: Another sister bank is formed: Bank of Madras, which,
together with Bank of Bengal and Bank of Bombay become
known as the presidency banks, which had the right to issue
currency in their regions.
1861: The Presidency Banks Act takes away currency issuing
privileges but offers incentives to begin rapid expansion, and the
three banks open nearly 50 branches among them by the
mid-1870s.
1876: The creation of Central Treasuries ends the expansion
phase of the presidency banks.
1921: The presidency banks are merged to form a single entity,
Imperial Bank of India.
1955: The nationalization of Imperial Bank of India results in
the formation of the State Bank of India, which then becomes a
primary factor behind the country's industrial, agricultural, and
rural development.
1969: The Indian government establishes a monopoly over the
banking sector.
1972: SBI begins offering merchant banking services.
1986: SBI Capital Markets is created.

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1995: SBI Commercial and International Bank Ltd. are
launched as part of SBI's stepped-up international banking
operations.
1998: SBI launches credit cards in partnership with GE Capital.
2002: SBI networks 3,000 branches in a massive technology
implementation.
2004: A networking effort reaches 4,000 branches.

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Chapter IV
Internet banking at State Bank of India

The chapter describes the facts about working of internet
banking in state bank of India.

Where SBI was?

• In early 1990’s more than 7000 branches were using
traditional manual procedures.
• These manual procedures were inherited from the Imperial
Bank.
• Traditional procedures were evolved over decades
• Very few changes were brought in those procedures as per
the need of time.

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• In that time, mainframe or mini computers were used for
MIS, RECONCILLATION & FUND SETTLEMENT
PROCESS, or we can say that for backhand operations
purpose.

Changes brought in Information Technology by SBI:-

• In the next decade internet facility was provided for
individuals
• All SBI branches were connected and ATM’S were launch
• 2001 - KMPG appointed consultant for preparing IT Plan
for the Bank.
• Later on Core banking proposed by the IT consultancy
company.
• 2002 – All branches computerized but on decentralized
systems, there the initiative of core banking took place
• 2008- more than 6500 branches (95% of business) on Core
Banking Solution (CBS)

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• Internet Banking facility for Corporate customers were also
launched in early 2008
• More Interfaces developed with e-Commerce & other sites
through alternate channels like ATM & Online Banking
• All Foreign Offices were brought on Centralized Solution
• Large network is playing the role of backbone for
connectivity across the country
• Multiple Service Providers are providing the links – BSNL,
MTNL, Reliance, Tata & reliance which are making the
system errorless and provide high speed.
• Multiple Technologies to support the networking
infrastructure – Leased lines, Dial-up, CDMA & VSAT

CBS - Core Banking System Components

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CBS - Core Banking System
Components Datacenter
Branches
Application Developers

Desktops,
Branch Core-Banking
Servers Application

WAN, OS, Database
Internet
Alternative Internet-Banking
Channels
ATM

Branch User/Admins Network Administrators System Administrators

ELITEX-2008 8

Chapter 5
Services provided by SBI internet banking

Chapter deals with the information related to various services an
products of SBI internet banking

Online SBI (www.onlinesbi.com)

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State Bank of India is India’s largest bank with a branch
network of over 11000 branches and 6 associate banks located
even in the remotest parts of India. State Bank of India (SBI)
offers a wide range of banking products and services to
corporate and retail customers.

OnlineSBI is the Internet banking portal for State Bank of India.
The portal provides anywhere, anytime, online access to
accounts for State Bank’s Retail and Corporate customers. The
application is developed using the latest cutting edge technology
and tools. The infrastructure supports unified, secure access to
banking services for accounts in over 11,000 branches across
India.

RETAIL BANKING:-

The Retail banking application is an integration of several
functional areas, and enables customers to:

 Issue Demand Drafts online
 Transfer funds to own and third party accounts
 Credit beneficiary accounts using the VISA Money
Transfer, RTGS/NEFT feature
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 Generate account statements
 Setup Standing Instructions
 Configure profile settings
 Use eTax for online tax payment
 Use ePay for automatic bill payments
 Interface with merchants for railway and airline
reservations
 Avail DEMAT and IPO services

CORPORATE BANKING:-

The OnlineSBI corporate banking application provides features
to administer and manage corporate accounts online. The
corporate module provides roles such as Regulator, Admin,
Uploader, Transaction Maker, Authorizer, and Auditor. These
roles have access to the following functions:

 Manage users, define rights and transaction rules on
corporate accounts
 Access accounts in several branches with a single sign-on
mechanism

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 Upload files to make bulk transactions to third parties,
supplier, vendor and tax collection authorities.
 Use online transactional features such as fund transfer to
own accounts, third party payments, and draft issues
 Make bill payments over the Internet.
 Authorize, modify, reschedule and cancel transactions,
based on rights assigned to the user
 Generate account statement
 Enquire on transaction details or current balance

Value added services:

 Tax payments to central and state governments through site
to site integration.
 Supply Chain Finance( e-VFS- Electronic Vendor Finance
Scheme)
 Direct Debit Facility
 E Collection Facilities for:
 Core Banking Transactions
 Internet Bank transactions for incoming RTGS/NEFT
Transactions

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 Internet banking transactions for SBI and associate banks
 Debit facility where suppliers can directly debit their
customer’s account through internet banking

PRODUCTS AND SERVICES:-

• E-Ticketing
• SBI E-Tax
• Bill Payment
• RTGS/NEFT
• E-Payment
• Fund Transfer
• Third Party Transfer
• Demand Draft
• Cheque Book Request

• Account Opening Request
• Account Statement
• Transaction Enquiry
• Demat Account Statement
• Donation

1) E-TICKETING :-
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You can book your railway, air and bus tickets online through
OnlineSBI.

To book your train ticket, just log on to irctc.co.in and create an
ID there at if you do not have one. Submit your travel plan and
book the ticket(s)-either

• i-ticket (where the delivery of tickets will be made at your
address) or
• E-tickets (wherein after successful payment transactions,
an e-ticket is generated which can be printed any time.
For an e-ticket, the details of photo identity card will
required to be filled in)

And select State Bank of India in the payment options. You will
be redirected to Internet Banking site of SBI (www.onlinesbi.com).
After submitting the respective ID and password, you can select
your account. After a successful debit, Railways will generate
the ticket. E-ticket can be printed by you whereas the i-ticket
will be dispatched by IRCTC at the given address. Service
charges @ Rs.10/- per transaction shall be levied in addition to
the cost of the ticket. Cancellation of E-ticket can be done by
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logging on to IRCTC's site; refund amount will be credited to
your account directly within 2-3 days. For cancellation of i-
ticket, you shall be required to submit your ticket at a
computerized counter of Railways and on cancellation; the
amount shall be credited back to your account.

You can also book your Air ticket through the e-ticketing
feature. Logon to Indian Airlines website to make a payment for
an e-ticket through State Bank of India, you need to select SBI as
the payment option. The payment request will be redirected to
Internet Banking site. The request may be processed based on
values sent from the airlines website. Once a transaction is
processed, an appropriate response will be sent to airlines site to
update the status of the transaction. You can print the E-ticket
immediately.

To book bus tickets to destinations in Karnataka, log on to the
KSRTC website. Provide details about the start and end points of
your journey, date of journey and number of tickets. Verify
availability of seats on the selected date and confirm the
transaction. Select OnlineSBI to make the payment. Provide
your credentials and select the SBI account that will be debited
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for the payment. You are provided a KSRTC reference number
for your e-Ticket.

2) SBI E-TAX:-

You can pay your taxes online through SBI E-Tax. This facility
enables you to pay TDS, Income tax, Indirect tax, Corporation
tax, Wealth tax, Estate Duty and Fringe Benefits tax. Click the e-
Tax link in the home page. You are displayed a page with two
links Direct Tax and Indirect Tax.

Click the Direct Tax link. You will be redirected to the NSDL
site where you can select an online challan based on the tax you
wish to pay. Provide the PAN, name and address, assessment
year, nature of payment and bank name. On selecting the bank
name as SBI and submitting the form, you will be redirected to
the Internet Banking site. After submitting the respective ID and
password, you can select your account for making payment of
taxes. After payment is successful you can print the E-Receipt
for the payment. The E-receipt can be printed at a later date also
and the same can be retrieved from: Enquiries > Find
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Transactions > Status Enquiries > Click on the respective
transaction to print the tax receipt.

The Indirect Tax link is used to make Central Excise and Service
Tax payments to Central Board of Excise and Customs. The
online payment feature facilitates anytime, anywhere payment
and an instant E-Receipt is generated once the transaction is
complete. The Indirect Tax payment facility is available to
Registered Central Excise/Service Tax Assessee who possesses
the 15 digit PAN based Assessee Code. You can make CBEC
payments using the Indirect Taxes link available in the
Payments/Transfers tab. You need to provide your assessee code
as registered with CBEC and select the minor heads towards
which you intend to pay tax. Select the appropriate tax type and
enter the tax amount. Select an account for debiting the total tax
amount. You can use any of your transaction accounts to make
the payment. If a payment is successful, CBEC provides a link to
generate an E-Receipt for the payment.

Internet banking customers can pay tax through site to site
integration. For government agencies, which are not Internet-
enabled, OnlineSBI offers the Government Tax Payment facility.
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This facility is available as a post login feature in the retail and
corporate banking sites of the Online SBI portal.

Please note that the cut-off time for OLTAS and CBEC payment
is 8 P.M. IST. Any transactions created after the cut off time will
be processed after 7 A.M. on the following day.

3) Bill Payment :-

A simple and convenient service for viewing and paying your
bills online.

• No more late payments
• No more queues
• No more hassles of depositing cheques

Using the bill payment you can 'view and Pay various bills
online, directly from your SBI account. You can pay telephone,
electricity, insurance, credit cards and other bills from the
comfort of your house or office, 24 hours a day, 365 days a year.
Simply logon to http://www.onlinesbi.com/ with your credentials and
register the biller to which you want to pay, with all the bill
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details. Once the bill is uploaded by the biller, you can make
payment online. You can see 'how do i' to learn the steps for
using the facility.

You can also set up Auto Pay instructions with an upper limit to
ensure that your bills are paid automatically whenever they are
due. The upper limit ensures that only bills within the specified
limit are paid automatically, thereby providing you complete
control over these payments.

The e-PAY service is available in various cities across the
country and you can now make payments to several billers in
your region.

4) RTGS/NEFT :-

You can transfer money from your State Bank account to
accounts in other banks using the RTGS/NEFT service. The
RTGS system facilitates transfer of funds from accounts in one
bank to another on a "real time" and on "gross settlement" basis.

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This system is the fastest possible interbank money transfer
facility available through secure banking channels in India.
RTGS transaction requests will be sent to RBI immediately
during working hours post working hours requests are registered
and sent to RBI on next working day. You can also schedule a
transaction for a future date. You can transfer an amount of Rs.1
lac and above using RTGS system.

National Electronic Funds Transfer (NEFT) facilitates transfer of
funds to the credit account with the other participating bank. RBI
acts as the service provider and transfers the credit to the other
bank's account.

NEFT transactions are settled in batches based on the following
timings

1. 6 settlements on weekdays - at 09:00, 11:00, 12:00, 13:00,
15:00 and 17:00 hrs.
2. 3 settlements on Saturdays - at 09:00, 11:00 and 12:00
hrs.

Please note that all the above timings are based on Indian
Standard Time (IST) only.
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In order to transfer the funds to an account with other bank,
kindly ensure that the bank branch of the beneficiary is covered
under the RGTS/NEFT payment system. It is recommended that
you choose the Bank/ Branch from the drop down option
provided under the link "Add Interbank beneficiary".

Please exercise care to provide the correct account number and
name of the beneficiary.

5) E-Payment :-

You can pay your insurance premium, mobile phone bills and
also you can purchase mutual fund units by coming from the
biller’s website and selecting state bank of India in the payment
option.

LIC PREMIUM: For paying premium of LIC policy logon to
www.licindia.com and register your policy details. When the
premium is due select State Bank of India in the make payment
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option.

SBI Mutual FUND: You can invest in the SBI Mutual Fund
schemes online. Logon to www.sbimf.com and select the scheme in
which you want to make investment in the payment option select
State Bank of India.

CCAVENUES: Enjoy shopping at the CCAvenue Shopping
Mall and purchase from a wide variety of products and services
through CCAvenue Certified Vendors. Make payments for your
purchases using your Internet enabled SBI accounts.

6) Fund Transfer :-

The Funds Transfer facility enables you to transfer funds within
your accounts in the same branch or other branches. You can
transfer aggregating Rs.1 lakh per day to own accounts in the
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same branch and other branches. To make a funds transfer, you
should be an active Internet Banking user with transaction rights.
Funds transfer to PPF account is restricted to the same branch.

Just log on to retail section of the Internet Banking site with your
credentials and select the Funds Transfer link under
Payments/Transfers tab. You can see all your online debit and
credit accounts. Select the debit account from which you wish to
transfer funds and the credit account into which the amount is to
be credited. Enter the amount and remarks. The remarks will be
displayed in your accounts statement for this transaction. You
will be displayed the last five funds transfer operations on your
accounts. On confirming the transaction, you will be displayed a
confirmation page with the details of the transaction and the
option to submit or cancel the funds transfer request. A reference
number will be generated for your record.

7) Third Party Transfer :-

You can transfer funds to your trusted third parties by adding
them as third party accounts. The beneficiary account should be

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any branch SBI. Transfer is instant. You can do any number of
Transactions in a day for amount aggregating Rs.1lakh.

To transfer funds to third party having account in SBI, you need
to add and approve a third party, you need to register your
mobile number in personal details link under profile section.
You will receive a One Time SMS password on your mobile
phone to approve a third party. If you do not have a mobile
number, third party approval will be handled by your branch.
Only after approval of third party, you will be able to transfer
funds to the third party. You can set limits for third party
transactions made from your accounts or even set limits for
individual third parties.

8) Demand Draft :-

The Internet Banking application enables you to register demand
drafts requests online. You can get a demand draft from any of
your Accounts (Savings Bank, Current Account, Cash Credit or
Overdraft). You can set limits for demand drafts issued from
your accounts or use the bank specified limit for demand drafts.
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You can opt to collect the draft in person at your branch, quoting
a reference to the transaction. A printed advice can also be
obtained from the site for your record.

Alternatively, you may request the branch to courier it to your
registered address, and the courier charges will be recovered
from you.

If you have any queries, kindly approach your branch, quoting
the reference number generated for the request.

9) Cheque Book Request :-

You can request for a cheque book online. Cheque book can be
requested for any of your Savings, Current, Cash Credit, and
Over Draft accounts. You can opt for cheque books with 25, 50
or 100 cheque leaves. You can either collect it from branch or
request your branch to send it by post or courier. You can opt to
get the cheque book delivered at your registered address or you
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can provide an alternate address. Cheque books will be
dispatched within 3 working days from the date of request.

Just log on to retail section of the Internet Banking site with your
credentials and select the Cheque Book link under Requests tab.
You can view all your transaction accounts. Select the account
for which you require a cheque book; enter the number of
cheque leaves required and the mode of delivery. Then, submit
the same.

10) Account Opening Request:-

OnlineSBI enables you to open a new account online. You
can apply for a new account only in branches where you
already have accounts. You should have an INB-enabled
account with transaction right in the branch. Funds in an
existing account are used to open the new account. You
can open Savings, Current, Term Deposit and Recurring

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Deposit accounts of Residents, NRO and NRE types.

Just log on to retail section of the Internet Banking site
with your credentials and select the New Account link
under Requests tab. You can see all types of accounts.
Select the account and account type you wish to open and
submit the same. Then, you need to select the branch and
enter the initial amount to open the account. You can select
any of your accounts for debiting the initial amount. Then,
submit the transaction. Your new account opening request
will be processed by the branch.

11) Account Statement :-

The Internet Banking application can generate an online,
downloadable account statement for any of your accounts
for any date range and for any account mapped to your
username. The statement includes the transaction details,
opening, closing and accumulated balance in the account.

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You can generate the online account statement for any date
range or for any month and year. The account statement
can be viewed online, printed or downloaded as an Excel
or PDF file. You also have the option to select the number
of records displayed in each page of the statement. The
options are 25, 50, 75, 100 and ALL.

12) Transaction Enquiry :-

OnlineSBI provides features to enquire status of online
transactions. You can view and verify transaction details
and the current status of transactions. Your VISA
transactions can also be viewed separately. Just log on to
retail section of the Internet Banking site with your
credentials and select the Status Enquiry link under the
Enquiries tab. You will be displayed all online transactions
you have performed. To view details of individual
transactions, you need to click the Transaction Reference
number link. You are displayed the debit and credit

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account details, transaction amount, narration and
transaction status

13) Demat Account Statement :-

OnlineSBI enables you to view Demat account statement and
maintain such accounts. The bank acts as your depository
participant. In the third party site, you can mark a lien on your
Demat accounts and use the funds to trade on stock using funds
in your SBI savings account.

You can view Demat account details, and generate the following
statements: statement of holding, statement of transactions,
statement of billing.

14) Donation:-

You can make donation to religious and charitable institution by
using Internet Banking of SBI. Simply log on to
http://www.onlinesbi.com/ with your credentials and go to Payment and

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transfer and click on make donation link. After selecting the
debit account select the religious/charitable institution whom you
want to offer donation. After successful payment you can print
an E-receipt for the donation made.

Chapter 6
SWOC analysis of SBI’s internet banking

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The chapter describes Strengths, Weaknesses,
opportunities, challenges of State Bank of India.

Strengths:-
• Greater reach to customers
• Quicker time to market
• Ability to introduce new products and services quickly and
successfully
• Ability to understand its customers’ needs
• Customers are given access to information easily across
any location
• Greater customer loyalty
• Easy online application for all accounts, including personal
loans and mortgage
• 24 hours account access
• Quality customer service with personal attention

Weaknesses:-

• Lack of awareness among the existing customers regarding
internet banking
• Obsolesce of technology take place very soon specially in
terms of security on internet.
• Procedure for applying for id and password for using
services related to internet banking takes time.
• Lack of knowledge is found regarding internet banking in
employees of SBI

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• Implementation of newer technology is little bit
complicated
• Employees needs training to obtain knowledge regarding I-
banking

Opportunities:-

• Approximately 95% of customers are not using internet
banking.
• Core competency can be achieved in terms of banking if
focus is made on awareness of internet banking
st
• Can become 1 virtual bank of India.
• Concentration of various services should be made using
internet banking

Challenges:-

• Maintaining Business Edge over competitors in the context
of sameness in IT infrastructure
• Multiple vendor support is necessary for working of highly
complex technology
• Maintaining secured IT infrastructure for business
operations
• Alternative must be there in case of failure of system

Chapter 7
Recommendations and Suggestions

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The chapter gives recommendations and suggestions to SBI.

Recommendations & Suggestions:-

• Training and awareness among employees:-

It is recommended that State Bank of India should conduct
various training programmes for the employees, so that they
will get aware with the terms of internet banking. After such
programmes they can create awareness amongst the
consumers.

• Exchange of information on threats and vulnerabilities at
appropriate forums:-

There should be an open end discussion on the threats and
vulnerabilities coming across the functioning of internet
banking work by the employees in the various official forums
and meets.

• Build an optimal operating model by understanding which
activities to retain collaborate and outsource:-

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There should be clear sight of operations which needs to
outsource to other companies, this will lead to ease in work
for employees. Outsourcing operations like, cyber security
department, building IT structure on internet.

• Bank should Create and sustain customer, investor and
regulator confidence by adopting international accounting
standards :-

Adopting international standards adds some more star to the
glory of any company, SBI should impose such standards
when it comes to internet banking or virtual banking, this will
enhance the goodwill of SBI among regulator, customers and
invertors.

• Bank should anticipate and get prepared for regulatory
changes:-
Laws regarding IT or cyber laws get change as per the need.
SBI should anticipate such kind of changes and get loaded
with various plans and actions.

• Focus on identifying core competence:-

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SBI possess some unique characteristics or positive points in
it and with the help of them it can become a leader in market.
Bank should identify such points and concentrate to flourish
them more. This can be done with the help of internet
banking, as internet banking of SBI is getting largely accepted
by customers.
• Increasing usage of mobile phones is going to revolutionize
the banking culture in near future:-

Mobile banking is also getting popular in the segment of
internet banking thus this can add some more steps to
progress for SBI. Bank is into the mobile banking but it is
providing limited features.

• More stress should be given on security concern on
internet:-
There are some people who are into unethical practices of
hacking of accounts of customers. This is nothing but the
breach in the security of the SBI on internet. There should be
some measures in order to prevent such practices. IT structure
should be unbreakable.
Chapter 8
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Conclusion

The chapter gives conclusion for the project

Conclusion:-

Studying the project we came to know that Internet banking is
clearly the way forward for the State Bank of India. It provides
comfort to customers at the same time it provides cost cutting to
SBI by eliminating physical documentation. Internet banking
saves time of bank as well as those of customers.
Study states that internet banking provides greater reach to
customers. Feedback can be obtained easily as internet is virtual
in nature. Customer loyalty can be gain. Personal attention can
be given by bank to customer also quality service can be served.
Bank should know that No system is perfect, however a system
of such a type will need to be very secure. This is a system
which holds account details and customers wealth. If such a
system was not trusted and not reliable, then SBI would face
serious laws and would lose business.
After studying the SWOC analysis, we came to know various
strengths of SBI such as quality customer service, greater reach,
customer loyalty, easy access to information, 24 hours access,
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easy online applications etc. SBI should put efforts to multiply
the number of strengths. In terms of weakness I come to know
some of the major weaknesses they are lack of awareness of
internet banking among the customers, obsolesce of technology
related to security, complicated procedures of availing internet
banking facilities, lack of knowledge among the employees of
SBI. SBI should concentrate on the weaknesses and reduce them
to zero.
In the third segment of SWOC analysis of internet banking we
dealt with opportunities like 95 % market of internet market is
untapped, SBI’s path to become first virtual bank. By encashing
such opportunities bank can become the leader in banking sector
of India. In the last segment I come to know about various
challenges which are in front of SBI, like sameness in IT
infrastructure within various banks, need of various vendor
supports for complex technology, maintaining secured IT
infrastructure, alternative mechanism in case of failure of present
security system.
The company can take the advantage of the reputation it has
created in the market for itself and become more competitive
The recommendations and suggestions given, if adopted will
improve the position of the company substantially and optimal
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profitability coupled with better service and satisfactions for
investors may be achieved.

Bibliography

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Books :-
• SBI Training guide for internet banking

Websites:-

• www.statebankofindia.com
• www.onlinesbi.com
• www.weikipedia.com
• www.google.com

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