BANKING SYSTEM IN INDIA

Presented by

VINOD SOLANKI

STD = X

ROLL = 43

DUNNES INSTITUTE

IntroductionOld banking systemNew banking systemConclusionReferences

Contents

“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 market. A bank connects customers with capital deficits to customers with capital surpluses.”

INTRODUCTION

OLD BANKING SYSTEMPHASE 1 Early phase from 1786 to 1969 of

Indian banks.

PHASE 2 Nationalization of Indian Banks

and up to 1991 prior to Indian banking sector Reforms.

PHASE 3 New phase of Indian Banking

system with the advent of Indian Financial & Banking Sector Reforms after 1991.

FUNCTIONING OF OLD BANKS ACCEPTING DEPOSITS ISSUAL OF DEMAND

DRAFTS GRANTING LOANS &

ADVANCES UNDERTAKING SAFE

CUSTODY OF VALUABLES,IMPORTANT DOCUMENTS & SECURITIES BY PROVIDING SAFE DEPOSIT VAULTS OR LOCKERS

DOCUMENTATION IS MAINTAINED THROUGH LEDGERS ONLY.

MINIMUM BALANCE FOR OPENING AN ACCOUNT WAS MORE DURING THIS PERIOD.

CREDITS WERE GRANTED AT VERY HIGH RATE OF INTEREST.

TOKEN SYSTEM FOR WITHDRAWAL OF CASH FROM THE ACCOUNT.

POSSIBILITY OF HUMAN ERRORS .TIME CONSTRAINT.CUSTOMER RELATIONSHIP WAS LIMITED.OVER DRAFT WAS NOT AVAILABLE.PROCESSING FEES WAS CHARGED FOR ALL

THE TRANSACTIONS .PASSING OF CHEQUES WAS DELAYED.LIMITED USE OF TECHNOLOGY.

DISADVANTAGES

WHY TECHNOLOGY IN BANKS ?

TO TRANSFORM FINANCIAL SERVICES INDUSTRY IN THE NET-WORKED WORLD:

-INCREASED OPERATION EFFICIENCY,PROFITABILITY & PRODUCTIVITY

- SUPERIOR CUSTOMER SERVICE

- PROVIDE SERVICES / PRODUCTS ACROSS A RANGE OF CHANNELS

- TO BE FUTURISTIC AND HAVE “TIME” VALUE IN ALL ITS DEALINGS WITH CUSTOMERS

-IMPROVED MANAGEMENT/ACCOUNTABILITY

-BETTER CROSS SELLING ABILITY

-MINIMAL TRANSACTION COST

-IMPROVED FINANCIAL ANALYSIS CAPABILITIES.

New Banking System

Pre-requisites for Technology

Planning for

Disasters

Business process Re-Engineering

Human Resource

empowerment

Focus aspects of New Banking SystemsCORE BANKING

SOLUTIONS(CBS)

“Pooling data at central server”

CUSTOMER RELATIONSHIP MANAGEMENT(CRM)

ELECTRONIC FUND TRANSFER(EFT)ELECTRONIC CLEARING

SYSTEM(ECS)ANY BRANCH BANKINGRISK MANAGEMENTATM’SCARD MANAGEMENTMOBILE BANKING

Focus aspects of New Banking Systems