1. Introduction:
A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits
into lending activities, either directly or through capital markets. A bank connects customers that have capital deficits to customers
with capital surpluses.[citation needed]
Due to their critical status within the financial system and the economy[citation needed] generally, banks are highly regulated in most
countries. Most banks operate under a system known as fractional reserve banking where they hold only a small reserve of the
funds deposited and lend out the rest for profit. They are generally subject to minimum capital requirements which are based on an
international set of capital standards, known as the Basel Accords.
The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously
since 1472.[1]
History
Banking in the modern sense of the word can be traced to medieval and early Renaissance Italy, to the rich cities in the north
like Florence, Venice and Genoa. TheBardi and Peruzzi families dominated banking in 14th century Florence, establishing branches
in many other parts of Europe.[2] One of the most famous Italian banks was the Medici Bank, set up by Giovanni di Bicci de' Medici in
1397.[3] The earliest known state deposit bank, Banco di San Giorgio (Bank of St. George), was founded in 1407 at Genoa, Italy.[4]
Origin of the word
The word bank was borrowed in Middle English from Middle French banque, from Old Italian banca, from Old High German banc,
bank "bench, counter". Benches were used as desks or exchange counters during the Renaissance by Florentine bankers, who used
to make their transactions atop desks covered by green tablecloths.[5]
One of the oldest items found showing money-changing activity is a silver Greek drachm coin from ancient Hellenic colony Trapezus
on the Black Sea, modernTrabzon, c. 350–325 BC, presented in the British Museum in London. The coin shows a banker's table
(trapeza) laden with coins, a pun on the name of the city. In fact, even today in Modern Greek the word Trapeza (Τράπεζα) means
both a table and a bank.
Another possible origin of the word is from the Sanskrit words ( ) 'byaya' (expense) and 'onka' (calculation) = byaya-onka.
This word still survives in Bangla, which is one of Sanskrit's child languages. + = . Such expense
calculations were the biggest part of mathmetical treatises written by Indian mathmeticians as early as 500 B.C.
Definition
The definition of a bank varies from country to country. See the relevant country page (below) for more information.
Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:[6]
 conducting current accounts for his customers,
 paying cheques drawn on him, and
 collecting cheques for his customers.
In most common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments,
including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether
incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is
actually functional, because it ensures that the legal basis for bank transactions such as cheques does not depend on how the bank is
organized or regulated.
The business of banking is in many English common law countries not defined by statute but by common law, the definition above.
In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When
looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the
legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry
regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory
definition closely mirrors the common law one. Examples of statutory definitions:
 "banking business" means the business of receiving money on current or deposit account, paying and collecting cheques
drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority
may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).
 "banking business" means the business of either or both of the following:
1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or
within less than [3 months] ... or with a period of call or notice of less than that period;
2. paying or collecting checks drawn by or paid in by customers.[7]
Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque
has lost its primacy in most banking systems as a payment instrument. This has led legal theorists to suggest that the cheque based
definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers
to pay and be paid by third parties, even if they do not pay and collect checks
Economic functions

2. The economic functions of banks include:
1. Issue of money, in the form of banknotes and current accounts subject to check or payment at the customer's order. These
claims on banks can act as money because they are negotiable or repayable on demand, and hence valued at par. They
are effectively transferable by mere delivery, in the case of banknotes, or by drawing a check that the payee may bank or
cash.
2. Netting and settlement of payments – banks act as both collection and paying agents for customers, participating in
interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This
enables banks to economize on reserves held for settlement of payments, since inward and outward payments offset
each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement
between them.
3. Credit intermediation – banks borrow and lend back-to-back on their own account as middle men.
4. Credit quality improvement – banks lend money to ordinary commercial and personal borrowers (ordinary credit
quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital
which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are
generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding it needs to
continue to operate, this puts the note holders and depositors in an economically subordinated position.
5. Maturity transformation – banks borrow more on demand debt and short term debt, but provide more long term loans. In
other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do
this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and
redemption of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted
to cash if needed, and raising replacement funding as needed from various sources (e.g. wholesale cash markets and
securities markets).
6. Money creation – whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of virtual money is
created.
BANKING TECHNOLOGY:
Today banking is known as innovative banking. Information technology has given rise to new innovations in the product designing
and their delivery in the banking and finance industries, customer services and customer satisfaction are their prime work. One of
the most significant areas where IT has had a positive impact so on substitutes for traditional funds movement services. With the
advent of electronic banking electronic funds transfer and other Similar products funds transfer within time frames which would
have appeared impossible a few years age. With networking and inter connection new challenges are arising related to security
privacy and confidentiality to transactions. Finally the banking sector will need to master a new business model by building
management and customer services with a variety of products and controlled cost to stay in the long run.
The traditional functions of banking are limited to accept deposits and to give loans and advances. Today banking is known as
innovative banking. Information technology has given rise to new innovations in the product designing and their delivery in the
banking and finance industries, customer services and customer satisfaction are their prime work. Current banking sector has come
up with a lot of initiatives that oriented to providing a better customer services with the help of new technologies. Banking sector
mirrors the larger economy its linkages to all sectors make it proxy for what is happening in the economy as a whole. Indian banking
sector today has the same sense of excitement and opportunity that is evidence in the Indian Economy. The going developments in
the global markets offers so many opportunities to the banking sector. In the competitive banking word improvement day by day in
customer services is the most useful tool for their better growth. Bank offers so many changes to access their banking and other
services.
Banks plays an important role in the economic development of developing countries. Economic development involves
investment in various sectors of the economy. The banks collects savings for investment in various projects. In normal banking the
banks perform agency services for their customers and helps economic development of the country. The purchase and sales
securities, shares, make payments, receive subscription funds and collect utility bills for the Government department. There for
banks save time and energy of busy peoples. Bank arranges foreign exchange for the business transactions with other countries.
Banking sector are not simply collecting funds but also serve as a guide to the customer about the investment of their money.
Technology has brought about a complete paradigm shift in the functioning of banks and delivery of
banking services. Gone are the days when every banking transaction required a visit to the bank
branch. Today, most of the transactions can be done from the comforts of one’s home and
customers need not visit the bank branch for anything. Technology is no longer an enabler, but a
business driver. The growth of the internet, mobiles and communication technology has added a
different dimension to banking. The information technology (IT) available today is being leveraged in
customer acquisitions, driving automation and process efficiency, delivering ease and efficiency to
customers.
The increased penetration and impact on the scale of business can be judged from metrics such as
deposit and credit per account, which according to the RBI data was INR6, 412 and INR20, 757 in
1992 and INR19, 898 and INR84, 618 in 2000 — these metrics increased to INR59, 217 and INR258,
751 in 2009, respectively, approximately thrice the levels in 2000 and 10 times the levels in 1992.
Many of the IT initiatives of banks started in the late 1990s or early 2000 with an emphasis on the
adoption of core banking solutions (CBS), automation of branches and centralization of operations in
the CBS. Over the last decade, most of the banks completed the transformation to technology-driven
organizations. Moving from a manual, scale-constrained environment to a global presence with
automated systems and processes, it is difficult to envisage the adverse scenario the sector was in
the era before the reforms, when a simple deposit or withdrawal of cash would require a day. ATMs,
mobile banking and online bill payments facilities to vendors and utility service providers have almost
obviated the need for customers to visit a branch. Branches are also transforming from operating as
transaction processing points into relationship management hubs. The change has been very

3. productive for banks bringing in an increase in productivity and operational efficiency to be more
competitive. Better risk management due to centralization of information and real time availability of
critical data for decision making.
With most of the banks being technology-enabled, the focus is shifting to computerizing regional
rural banks (RRBs). In addition, banks are moving toward decision making and business intelligence
software and trying to optimize the IT infrastructure created.
Technology by changing the production techniques
results in improvement in productivity. History has shown
that modern economic growth has been inspired by the rapid
and persistent upgradation of technology and scientific
knowledge. It is estimated that one-third to one-half of the
growth experienced by the industrially advanced countries
has come from technological progress. Thus technology has
emerged as the principal driving force for long term economic
growth. Economic growth results both from slow and steady
improvements in technology as well as from “break through”
innovations. Break through innovations are, however,
unpredictable and such innovations when they come up
change the direction of the entire industrial structure.
Technological innovations of a fundamental nature started
two centuries ago. They began with the revolution in the
textile sector. We are now in the fifth or the sixth wave of
innovations and the current technological innovations have
ushered in the electronic age. Far reaching changes in
computers and communications technology have altered our
way of life. It is this change which has also fundamentally
altered the way in which banking is being performed. The
basic functions of banking have remained the same but the
way in which banking services are provided has altered.
4
India is somewhat of a late comer to the technology
revolution in banking. The process of computerization of the
banking industry in India started in the mid-1980s. It had a
difficult beginning. Unfortunately, the trade unions were
opposed to it. They did not at that stage fully grasp the
potential of technology. In those early days, we had to cripple
the memory of computers and even called them as ‘advanced
ledger posting machines’. Fortunately, there has been a
significant change in attitude and the Indian banking industry
is well on the road to using the full potential of computers and
communications technology.
Development of banking technology:
First, it started off with computerization of a few key
functions and departments in principal branches through
adoption of what I called earlier, advanced ledger posting
machines. These systems were designed to take care of
the
accounts related functions of the banks which were at the
heart of banking operations and which had assumed great
significance in terms of the need for accuracy and control.
6
Second, the next progress was towards branch
automation. This enabled setting up of “Single Window

4. Service” facilities which were focused on the customers.
Third, there was the emergence of network based
operations which were aimed at providing interbank
connectivity.
Fourth, an important stage in the evolution of the user
friendly technology arrived with the deployment of ATMs
and
the adoption of Core Banking Solution which radically
7
transformed the way banking was done in India both by
bankers and customers.
Fifth, with the setting up of IDRBT, three most important
technology infrastructures were created and these were
INFINIT in 1999, the implementation of PKI based
electronic
data transfer and the Structured Financial Messaging
System
(SFMS) which facilitated the development of secured
payment system practice in India.
Sixth, a slew of innovations in newer delivery channels
like internet banking, mobile banking and pre-paid cards
8
issued by non-banking entities emerged. India also
became a
member of the Basle Committee of Payment Settlement
systems.
The introduction of these various technology products
has had a beneficial impact on both banks and customers.
For the customers, the important benefits are Anywhere
banking, Internet banking, ATM banking and Mobile
banking.
It has also facilitated the use of secured debit and credit
cards. For the banks, the major benefits are centralization
of
customer information, centralized transaction process,
9
centralized accounting process, basic MIS reporting and
realtime

5. information availability.
The intermediation cost of the scheduled commercial
banks has come down significantly from 2.59 per cent in
1991-
92 to 1.71 per cent in 2010-11. The cost-income ratio has
declined from 55.3 per cent in 1999-2000 to 45.21 per cent
in
2010-11. The business per employee as well as the
business
per branch have increased several fold. Among the several
factors which have contributed to these changes,
technology
ranks high.
10
IT has had a positive impact on the payment and
settlement systems of the country. With some path-
breaking
initiatives having been implemented in this area, the
“electronification” of payment system has become the hall
mark of the decade that has goneby. Electronics based
payments are superior to paper system in terms of
traceability, efficiency, speed and safety. The introduction
of
the Real Time Gross Settlement (RTGS) system has
resulted
in not only compliance with international standards but
also
paved the way for risk-free fund transfers settled on a real
time basis. The facility for inter-bank funds settlement
through RTGS is today available across more than 88,000
11
branches of banks spanning more than 5,000 centres of
the
country, a coverage that has been perhaps not witnessed
anywhere else in the world. In this context, I must point to
the
significant contributions made by IDRBT to promoting the

6. electronic payment system in our country. As already
noted,
at the heart of IT enabled banking is the existence of a
safe,
reliable and effective communication network and
messaging
system. In India, such a backbone is being provided by
IDRBT through Indian Financial Network-INFINIT-“a one-of-
itskind”
initiative for the banking sector. This network, as
mentioned earlier, was set up in 1999. It has now
incorporated low cost yet reliable technologies in the form
of
12
Multi-Pocket-Label Switch” (MPLS) technology in an effort
to
offer state-of-the-art network. Safety and security are still
challenging problems in this context and I am quite sure
that
the faculty members of IDRBT will continue to focus on
these
issues. I must also refer here to the setting up of the
National
Financial Switch (NFS) for interconnecting ATMS by
IDRBT.
The system which is based on indigenous effort was well
received and the Reserve Bank has decided to spin it off
from
IDRBT and hand it over to the National Payments
Corporation
of India (NPCI) which is continuing to maintain it on the
basis
of the benchmarks set up by IDRBT. Despite the progress
in
electronic payment system, the paper based instruments
are
13
still in vogue, although the total value of the paper based

7. clearing has been steadily declining, 59 per cent in volume
of
transactions and 10 per cent in value terms. This shows
the
progress which we have to make still.
All of us recognize that Indian banks joined the
technology bandwagon rather late in comparison with
other
major countries. This has, however, been beneficial in one
sense, since Indian banks have been able to leap-frog to
latest
versions of technology. Today one can look back with
satisfaction at some of the innovative technology based
products and services which banks offer. Techno-banking
14
has thus come to stay.
1. FASTER REMITTANCE FACILITIES
Electronic Fund Transfer (EFT) has accelerated the movement of funds across the world.E-
cash knows as cyber cash plays a predominant role in business world. SWIFT (Society
for World Wide Interbank Financial Telecommunication) is a classic example of EFT. The
reasonsfor the success of an EFT system are speed, reliability, security and accuracy. It is
an efficientmode of fund transfer across various banks. It significantly reduces the number
of outstationcheques issued by customers. Consequently service load on bank could be
reduced over a periodof time. Further this technique makes reconciliation automatic.
2. AUTOMATIC TELLER MACHINES
ATM called electronic equipment allows card holdings customers to perform
routine banking transactions without interacting with a human teller. It offers a range of
services of modern banking namely deposit taking, cash withdrawal, and account balance
verification etcwith the help of Personal Identification Number (PIN) system. It offers round
the clock bankingservices to customers. It is safe with an electro-mechanical input and
output system which isitself controlled by a fully electronic user interface. It prevents an
unauthorized user of the cardfrom gaining access to the machine’s functions.
3. TELEPHONE BANKING
Of late, this product introduced initially by a few foreign banks has started attracting
thefancy of the urban customer for the sheer convenience of the facility. Any branch
of acommercial bank which has computerized its operations should be able to offer this
facility to itscustomers with the help of suitable software for this purpose. Digitization of
voice has enabledthe introduction of this technological marvel. Elsewhere, organizations
such as Airline,
IndianRailways etc have already implemented voice response system based on this tech
nology.Facilities offered through telephone banking can include a range of services such
as balanceenquiries, enquiries about collections or specific credits / debits, transfer of
funds, request for statements of account or account opening forms etc. telephone banking

8. services by the foreign banks include a wide spectrum of services such as opening accounts,
ordering for demand draftsetc. such services, however, would include a suitable levy
towards service change. Telephone
3
banking is appealing to the urban customers who faces several constrains in day-to-day
livingsuch as transport bottlenecks, traffic jams, non-availability of time to visit the branch,
etc.
4. HOME BANKING
This is an extended and versatile version of telephone banking. The customer is able
toaccess his branch for availing a variety of services through home banking. This facility is
madeavailable through the customer’s personal computer attached to a telephone line and
modem.Online banking facilities including normal transactions can be handled through this
arrangement.Corporate customers can avail benefits through PC terminal and handle their
documentary creditrelated transaction through this arrangement. The application software
used this facility shouldincorporate security features such as encryption to protect the
data over telephone lines.
5. CREDIT CARD FACILITY
All major banks have introduced the credit card facility with a tie-up arrangement
withVisa or Master card. The tie-up is needed to facilitate usage of the credit card at a large
number of establishments. The business credit card is handled by banks through a separate
strategic business unit for better focus. Branches serve as marketing outlets. They act as
collection agentfor credit card dues of the customer.As this is a high volume, low value
business with potential to breakeven only beyondcertain volume of credit card issued,
dependence on technology is inevitable to keep the costs tothe minimum. All services such as
the issue of credit cards, the processing of transactions, issueof statements, calculation and
levy of overdue interest, service charges etc are totally automated.The regional offices of the
credit card unit located at metros and major centers provide on-linevalidation of merchant
transactions. This is helpful in preventing fraudulent transactions. Acombination of Smart
Card technology computers and communication has enabled this kind of on-line validation
possible.
6. PERSONAL LOANS
Loans such as housing loans, car loans etc are offered by private banks to
prospectivecustomers for their personal use. Application packages for handling these
products are available.Since the accounting part is totally automated, more attention can
be paid on services and
4
marketing. Some banks provide the required focus on this segment of business through
their branches set up for this purpose only.
7. INTERNET BANKING
The commercial transaction through internet has increased due to widespread popularityand
cost effectiveness. Banks worldwide have launches their banking sites on the Internet
WorldWide Web (WWW). The main attraction of internet is the cost effectiveness. Ba
nkingtransactions connected through internet has 24 hour availability. Banks can offer
their marketservice from any part of the globe at a fractional of the cost compared to
traditional marketingchannels. The Internet banking services adds more value to NRI’s
who can view their balanceonline and also effect funds transfer just at the click of a mouse.
Moreover, Internet banking
hasno time zones. It is accessible round the clock without restricting it to any geographi
cal boundary.
Computerization in Banks:

9. Technology has charged the face of the Indian
banking sector through computation while new private
sector banks and foreign banks have an edge in this regard.
Among the total number of public sector bank branches, 97.8
percent are fully computerized at end – March 2010 whereas
all branches of SBI are fully computerized.
Automated clearing House (ACH):
In clearing house, computers are employed to
handle cheques. The nature of work involved in clearing
operations in voluminous, repetitive, routine in nature. It is
complex to clear, exchange and settle the transactions among
several banks. Computers are deployed in clearing house to
speed up the process and clearing the operations quickly and
efficiently which is voluminous work. Automated clearing
house (ACH) is an electronic network for financial
transaction. ACH processes large number of debit and credit
transaction in batches.
National Automated clearing house Association
(NACHA):
It helps to debit transfers for point-of-purchase
(POP) check conversion. Both government and the
commercial sectors use ACH payment. Business are also
increasing using ACH to collect payment online from
customers, rather than accepting credit or debit cards. Rules
and regulations governing the ACH network are established
by NACHAand Federal Reserve. The Federal Reserve banks
are collectively the nation's largest automated clearing house
operator. FEDACH is the Federal Reserve's centralized
application software used to process ACH transactions.
Electronic Clearing Services (ECS):
ECS is a mode of electronic funds transfer from one bank
account to another bank account using the services of a
clearing house. This is used for bulk transfers from one
account to many accounts or vice-versa.
Types of ECS:-
There are two types of ECS called ECS (credit) and ECS
(debit).
1. ECS (credit)- is used for affording credit to a large
number of beneficiaries by raising a single debit to an
account, such as dividend, interest, salary payment pension
etc.
2. ECS (Debit)- is used for raising debits to a number
of account of consumers/account holders for crediting a
particular institution e.g. payment to utility companies liketelephone, electricity or charges such as
house tax, water tax
etc. [6][7][8][9][10]
National Electronic fund Transfer (NEFT):
National Electronic Fund Transfer (NEFT) is an online
system for transferring funds of Indian Financial Institution
(especially loans). This facility is used mainly to transfer
funds below Rs. 2,00,000/- The NEFT system in India lives

10. with effect from 21 November 2005. NEFT was sent to cover
all banks which were participating in the special electronic
funds transfer (NEFT) clearing. NEFT was made on the
structured financial messaging solution (SFMS) platform.
Public key infrastructure (PKI) technique used in NEFT for
maintaining security.
Electronic Funds Transfer (EFT):
Electronic Funds Transfer (EFT) is the electronic exchange
or transfer of money from one account to another. The
exchange takes place between a single financial or across
multiple institutions, through computer based systems. RBI
introduced EFT to help banks offering their customers
money transfer service from account to account of any bank
branch to any other bank branch. The EFT system presently
covers all the branches of the 27 public sector banks and 55
scheduled commercial banks at the 15 centers viz:-
Ahmadabad, Bangalore, Bhubaneswar, Kolkata,
Chandigarh, Chennai, Guwahati, Hyderabad, Japura,
Kanpur, Mumbai, Nagpur, new Delhi, Patna, and
Thriuvananthpuram.
Cards Transaction:
Debit card is a plastic card which provides an alternative
payment method for cash when making transaction. Using
debit card cardholder can see balance available on account.
Debit card is mainly used for cash withdraw from ATM, at
point of sale (POS), also on the internet for online purchase,
funds transfer, paying bills, accessing detail account
information, charging PIN etc. Bank provides debit card free
of cost at the time of opening account.
From 1st Jan 2011, RBI declared that for every transaction
with debit card on ATM user has to enter password for every
transaction. This is done for security purpose.
Core Banking:
Presently, a technological development is closely related to
computerization in banks branches for adoption of the core
banking solution (CBS). An important development in the
percentage of branches of public sector banks implementing
CBS. The percentages of such branches increased by 79.4 %
at end March 2009 to 90% at the end of March-2010.
Automated TellerMachine (ATM):
Even through ATM originally developed for cash dispenses,
now it includes many other bank related functions such asCash withdraw, Paying routing bills fees
and taxes., Printing
bank statement., Funds transfer., Purchasing online products,
Train tickets reservations, Products from shopping mall,
Donating to charities, Claque processing module, Adding
pre-paid cell phone/mobile phone credit, Advertising
channels for own or third party products and services, Pay
premium.
ATMs installed In the country at end-March 2009, new
private sector banks had the largest share in off-site ATMs,

11. while nationalised banks has the largest share in on-site
ATMs.
The use of electronic payment has witnessed manifold
increase, partly reflecting increased adoption of technology.
The growth of volume of ATMs indicates that customer most
prefer ATMs for transactions. ATMs provide different kinds
of services per customer.
The volume of ECS credit and more significantly ECS debit
continued to show an increasing trend during 2008-09 in line
with the trend witnessed during past few years.
Magnetic Ink Character Recognition (MICR):
In India, MICR introduced in 1987 in the four metros cities.
The MICR clearing is now in operation in 14 centers viz-
Hyderabad, Bangalore, Ahmadabad, Kanpur, Japura,
Nagpur, Baroda, Pune, Gauhati, Trivandrum. It is proposed
to be extended to a total 22 centers were volume of clearing
transactions in large.
Recently the paper-based system still continue to dominated
in terms of volume, and therefore are categorized as system
wide important payment system(SWIPS), its share has;
Table 2: ECS transaction in Rs. Crores
Item 2005-06 2006-07 2007-08 2008-09 2009-10
ECS Credit 32,324 83,277 7,82,222 97,487 1,17,833
ECS Debit 12,986 25,441 48,937 66,976 69,819
Source: RBI, Annual Report 2009-10
Table 3: EFT/NEFT Transactions in Rs. Crores
Item 2005-06 2006-07 2007-08 2008-09 2009-10
EFT / NEFT 61,288 77,446 1,40,326 2,51,956 4,11,088
Source: RBI, Annual Report 2009-10
Table 4: Card based payment Transaction Value (Rupees Crores)
Item 2005- 06 2006- 07 2007- 08 2008- 09 2009-10
Credit Cards 33,886 41,361 57,985 65,356 62,950
Debit Cards 5,897 8,172 12,521 18,547 26,566
Source: RBI, Annual Report 2009-10
Table 5: Branches under Core Banking (in %)
Name of the Bank Branches under core banking solutions
Public Sector Banks 90%
Nationalised Banks 85.9%
State Bank Group 100
Source: Report on Trend and Progress of Banking in India 2009-10, P-55
Table 6: Growth in ATM Installation (2005 To 2009)
Year Number of ATMs
2005 -06 21110
2006-07 25247
2007-08 34547
2008-09 43651
Source: Cyber Media DQ Estimates Research
Graph1: Report on Trend and Progress of Banking in India 2008-09
0
10000
20000

12. 30000
40000
50000
2005 -06 2006-07 2007-08 2008-09
Number of ATMs Installed
Number
of ATMs
N
o
.
o
f
A
T
M
s
Table7: Branches and ATMs of Scheduled Commercial Banks
Bank Group Rural Semi-Urban Urban Metro-Politian Total On-site Off-site Total
Nationalised 13,381 8,669 8,951 8,375 39,376 10,233 5,705 15,938
State Banks 5,560 4,835 3,043 2,624 16,062 7,146 4,193 11,339
Old Private Banks 842 1,554 1,344 933 4,673 1,830 844 2,674
New Private Banks 271 1,084 1,371 1,478 4,204 5,166 7,480 12,646
Foreign Banks 4 4 52 233 293 270 784 1,054
Total 20,058 16,146 14,761 13,643 64,608 24,624 19,006 43,651
Source: Report on Trend and Progress of Banking in India 2008-09
Graph2: Showing Number of ATMs per Banks
0
2000
4000
6000
8000
10000
12000
On-site
Off-site
Number of ATMs Bank wise
Technological Developments in Indian Banking SectorVol.1,Issue.IX/Sept; 11
Indian Streams Research Journal 3
however, been declining both in volume and value terms in
recent years. Speed clearing, introduced in 2008, operating
on the core banking infrastructure of banks has now been
mode available as a part of MICR. Dearing at all the 66
MICR cheque processing centers(CPCS).
Real time gross settlement (RTGS):
Real time means payment transaction is not subjected to any
waiting period. In RTGS the transaction are settled as they
are processed. Gross settlement means the transaction is
settled on one to one basis without bunching or netting with
any other transaction.
“RTGS is funds transfer system where transfer of money or
securities takes place from one bank to another on a “real

13. time” and on “gross basis”. Once processed, payment are
final and irrevocable.
INFINET:
For working of e-banking, it requires various components
like- communication channels, servers, connecting networks
etc. Reserve Bank of India (RBI) having prime control on ebanking services. RBI monitor, control of
e-banking by
establishing and connecting various service providers in
India. Following are the service some of providers-
INFINET stands for Indian Financial Network. There is a
satellite based wide area network using VSAT (Very Small
Aperture Terminal) technology set up by the RBI in June
1999. The hub and the Network Management System of the
INFINET are located in the Institute for Development and
Research in Banking Technology, (IDRBT) Hyderabad (an
institute set up by the RBI).
Services provided by INFINET:
Among the major applications identified for porting on the
INFINET in the initial phase are e-mail, Electronic Clearing
Service - Credit and Debit, Electronic Funds Transfer and
transmission of Inter-city Cheque Realisation advices. Later,
other payment system related applications as well as
Management Information System (MIS) applications are
proposed to be operationalised.[31]
BANKNET:
BANKNET is a internet based communication network. It
provides speed of financial transaction. BANKNETis set up
in 1991 by the RBI, this backbone is meant to facilitate
transfer of inter-bank (and inter-branch) messages within
India by Public Sector banks who are members of this
network. [31]
Service Centers - At present, service centers are viz.
Mumbai, Delhi, Calcutta, Madras, Nagpur, Bangalore ,
Pune, Ahmedabad, Kanpur, Lucknow, Chandigarh, Kochi,
Jaipur, Bhopal, Patna, Bhubaneshwar, Thiruvananthapuram,
Guwahati, Panaji Jammu.
Society forWorldwide Inter-bank Financial
Telecommunication (S.W.I.F.T):
The S.W.I.F.T provides reliable and expeditious
telecommunication facilities for exchange of financial
message all over the world. The gateway is in Mumbai and
efforts are on to other cities through leased lines/public data
network. The majority of international interbank messages
use the SWIFTnetwork. As of September
Institute for Development and Research in Banking
Technology (IDRBT):
The main purpose of IDRBT is to adopt research and
development as well as consultancy in the application of
technology to the banking and financial sector in the country.
Reserve Bank of India (RBI) established IDRBTin 1996.
Structured Financial Messaging Solution (SFMS):

14. Structured Financial Messaging Solution (SFMS) is helpful
for inter-bank and intra-bank messaging. This messaging is
useful for applications like Electronic Funds Transfer (EFT),
Real Time Gross Settlement (RTGS), Delivery verses
Payment (DVP), Centralised Funds Management System
(CFMS). The SFMS was launched in India on December 14,
2001 by RBI.
National Payment Corporation of India (NPCI) :
NPCI consolidate and integrate the multiple systems with
varying service levels to nation-wide uniform and standard
business process for all retail payment systems. Also it helps
to facilitate an affordable payment mechanism to benefit the
common man across the country and help financial
inclusion.
Mobile Banking:
Mobile banking (also known as M-Banking, mbanking,
SMS Banking etc.) is a term used for performing balance
checks, account transactions, payments, credit applications
etc. via a mobile device such as a or Personal
Digital Assistant (PDA).
Dmat Card:
The demat account has to be treated virtually like a account
with the difference being that instead of actual cash there are
shares in the account. A beneficiary account is an account
opened by the investors or broker with a Depository
Participants (DP) of his choice, to hold shares in
detmaterialised (demat) form and undertake scripless
trading. The investors must open a demat account with a DP.
Opening a demat account
Conclusion:
Use of technology in expanding banking is one of the key
focus areas of banks. The banks in India are using
Information Technology (IT) not only to improve their own
internal processes but also to increase facilities and services
to their customers. Efficient use of technology has facilitated
accurate and timely management of the increased transaction
volume of banks of that comes with larger customer base. By
designing and offering simple, safe and secure technology,
banks reach at doorstep of customer with delight customer
satisfaction..........