Acknowledgement

I would like to thank the respected Branch Manager of Federal Bank, for their
cooperation and assistance in conducting the survey over their Branch. I would also like
to thank the customers of the respective branch to share their views, opinions and
feedback on Online Banking.
I would like to thank my principal Dr.Aditi Dey for encouraging the students in doing the
project work and providing all the necessary help.
I would also like to express my gratitude to my H.O.D Dr. Kajal Gandhi for allotting
various supervisors to help us out with the project work and to make our work more easy.
Further, I would like to thank my supervisor, Mrs. Sutapa Roy, who motivated me to take
up this challenging topic.
I would be failing in my duty if I fail to acknowledge the moral support I received from
my family members and friends.

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Introduction
Online banking (or Internet banking or E-banking) allows customers of a financial
institution to conduct financial transactions on a secure website operated by the
institution, which can be a retail or virtual bank, credit union or building society. It may
include of any transactions related to online usage.
The main purpose that banks have been serving since their inception is keeping our
money safe for us. While keeping our money safe, they also let us earn a certain amount
of interest on the money deposited with them. Traditional banks have been doing this, and
internet banks continue the same function. The only difference is in the way the
transactions are made.
To access a financial institution's online banking facility, a customer having personal
Internet access must register with the institution for the service, and set up some
password (under various names) for customer verification. The password for online
banking is normally not the same as for telephone banking. Financial institutions now
routinely allocate customer numbers (also under various names), whether or not
customers intend to access their online banking facility. Customer numbers are normally
not the same as account numbers, because a number of accounts can be linked to the one
customer number. The customer will link to the customer number any of those accounts
which the customer controls, which may be cheque, savings, loan, credit card and other
accounts. To access online banking, the customer would go to the financial institution's
website, and enter the online banking facility using the customer number and password.
Some financial institutions have set up additional security steps for access, but there is no
consistency to the approach adopted.

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Since bills are paid online, the need to writing checks, affix postage, and post the
payment in the mail is eliminated. Once the amount is entered and the payee is checked
off, the funds are automatically deducted from the payer's choice of account.

Background
Banking in India originated in the last decades of the 18th century. The IT revolution
influenced the Indian banking system a lot. The use of computers had led to existence of
online banking in India. The use of modern innovation and computerization of the
banking sector of India has increased many folds after the economic liberalization of
1991 as the country's banking sector has been exposed to the world's market. The Indian
banks were finding it hard to compete with the international banks in terms of the
customer service without the use of the information technology and computers. Internet
banking as a medium of delivery of banking services and as a strategic tool for business
development, has gained wide acceptance internationally and is fast catching up in India
with more and more banks entering the fray. In the light of this background, the objective
of this paper is to study the perceived usefulness of Internet Banking. This paper tries to
know the level of awareness among customers. This paper also tries to check the
perception of risks closely connected with Internet Banking and study the scope of
Internet Banking, so that companies can fulfill their duty in an appropriate and suitable
manner.

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Literature Review
Divya Singhal & V.Padhmanabhan (2008) this study has successfully examined the
major factors responsible for IB based on respondents perception on various internet
applications. This study also examined whether there is any relation with the
demographic variable (gender) & respondents perception about IB; whether the users &
non-users perceptions are different.

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Neha Dixit & Dr. Saroj K.Datta (2010) investigated the factors which are affecting the
acceptance of i-banking services among adult customers and also indicate level of
concern regarding security and privacy issues in Indian context. The finding depicts many
factors like security &privacy, trust, innovativeness, familiarity, awareness level increase
the acceptance of i-banking services among Indian customers. The finding shows that in
spite of their security and privacy concern, adult customers are willing to adopt online
banking if banks provide him necessary guidance.
Rahmath Safeena, Abdulla & Hema Date (2010) concluded that perceived usefulness,
perceived ease of use, consumer awareness and perceived risk are the important
determinants of online banking adoption. They concludes that majority of customers are
accepting online banking because of many favorable factors. Analysis concluded that
usefulness, ease of use of the system awareness about online banking and risks related to
it are the main perusing factors to accept online banking system. These factors have a
strong and positive effect on customers to accept online banking system.
David D. VanHoose (2009) this paper reviews what economists have learned about
internet banking. The paper begins by surveying evidence regarding the fundamental
motivations for banks to offer services via the internet and for their customers to utilize
the services. The paper next evaluates the current evidence on how internet banking has
affected the performances of traditional banking institutions. Furthermore, it examines
recent concerns about the possibility that deposits raised through internet channels are
potentially more susceptible to sudden withdrawals that could result in runs on banks.
The paper concludes by summarizing the main points and considering future directions
for research on this topic.
Balachandher (2001) concluded that the specific things that delight the customer vary
from industry to industry and from product to product. But most customers want the same
things.
1. Customers are interested in quality
2. They desire good and effective service delivery

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3. They want flexibility so that the specific product or service be obtained

4. They covet value by not wanting to pay a price that exceeds the value received
from the product.

The objective of the study

The objectives of this report are the following:-

1. To analyze the usefulness of Online Banking.

2. To know the level of awareness among customers.

3. To

examine the reach of Online Banking.

4. To analyze the risk involved in Online Banking

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Research Methodology
Area of the study :- The scope of the study is restricted to the various districts of West
Bengal. For the collection of the primary data the study is confined to Kolkata region of
West Bengal state only.
Sampling Unit :- In this study, the sampling unit was the people of West Bengal.
Sample Size :- The sample size was so selected that it could be adequate enough to
represent the fair number of population, and also give the true picture. The total sample
size was restricted to 30.
Data Type :- In the present study the primary data has been collected through
questionnaire. Information available on web-portals have also been used.
Questionnaire Method :- The primary data was collected by administering structured
questionnaire to the people who have a bank account.
Nature of the Study :- The Descriptive Research Study has been used. The basic aim
is to gain familiarity and to achieve new insights along with describing the existing facts.
Statistical Tools and Techniques :- Statistical tool of percentage analysis has been used
for the analysis of the data and to draw a meaningful conclusion there from.
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-8-

CHAPTER PLANNING
Henceforth, a brief history about Online Banking is going to be provided, its types and
their advantages and disadvantages
After this step, the data analysis and interpretation would be presented which came from
primary and secondary data collection.
After the completion of data analysis , there would be simple conclusions and
recommendations best on the given topic as far as my knowledge.
And in the completion of the project I have included the references and the questionare
prepared by me for the manager of The Federal Bank.
The design is as such:

Chapter1- Conceptual framework.

Chapter 2-Analysis and findings.

Chapter 3-Conclusion and Recommendation.

Chapter 4-Bibliography & Annexure

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CHAPTER-1

Online Banking Indian

Scenario
Compared to banks abroad, Indian banks offering online services still have a long way to
go. For online banking to reach a critical mass, there has to be sufficient number of users
and the sufficient infrastructure in place. The 'Infinity' product of ICICI Bank Ltd. gets
only about 30,000 hits per month, with around 3,000 transactions taking place on the Net
per month through this service. Though various security options like line encryption,
branch connection encryption, firewalls, digital certificates, automatic signoffs, random
pop-ups and disaster recovery sites are in place or are being looked at, there is as yet no
Certification Authority in India offering Public Key Infrastructure which is absolutely
necessary for online banking. The customer can only be assured of a secured conduit for
its online activities if an authority certifying digital signatures is in place. Users of
Internet Banking Services are required to fill up the application forms online and send a
copy of the same by mail or fax to the bank. A contractual agreement is entered into by
the customer with the bank for using the Internet banking services. In this way, personal
data in the applications forms is being held by the bank providing the service. The
contract details are often one-sided, with the bank having the absolute discretion to
amend or supplement any of the terms at any time. For these reasons domestic customers
for whom other access points such as ATMs, tele-banking, personal contact, etc. are
available, are often hesitant to use the Internet banking services offered by Indian banks.
Internet Banking, as an additional delivery channel, may, therefore, be attractive /
appealing as a value added service to domestic customers. Non-resident Indians for
whom it is expensive and time consuming to access their bank accounts maintained in
India find net banking very convenient and useful. The Internet is in the public domain
whereby geographical boundaries are eliminated. Cyber crimes are therefore difficult to
be identified and controlled. In order to promote Internet banking services, it is necessary
that the proper legal infrastructure is in place. Government has introduced the

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Information Technology Bill, which has already been notified in October 2000. Section
72 of the Information Technology Act, 2000 casts an obligation of confidentiality against
disclosure of any electronic record, register, correspondence and information, except for
certain purposes and violation of this provision is a criminal offence.

The Department of Telecommunications (DoT) is moving fast to make available

additional bandwidth, with the result that Internet access will become much faster in the
future. This is expected to give a fillip to Internet banking in India. The proposed setting
up of a Credit Information Bureau for collecting and sharing credit information on
borrowers of lending institutions online would give a fillip to electronic banking. The
recommendations of the Vasudevan Committee on Technological Upgradation of Banks
in India have also been circulated to banks for implementation. In this background, banks
are moving in for technological upgradation on a large scale. Internet banking is expected
to get a boost from such developments. Reserve Bank of India has taken the initiative for
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facilitating real time funds transfer through the Real Time Gross Settlement (RTGS)
System. Under the RTGS system, transmission, processing and settlements of the
instructions will be done on a continuous basis. Gross settlement in a real time mode
eliminates credit and liquidity risks. Any member of the system will be able to access it
through only one specified gateway in order to ensure rigorous access control measures at
the user level. Generic Architecture both domestic and cross border, aimed at providing
interconnectivity across banks has been accepted for implementation by RBI. Following a
reference made this year, in the Monetary and Credit Policy statement of the Governor,
banks have been advised to develop domestic generic model in their computerization
plans to ensure seamless integration. The above mentioned efforts would enable online
banking to become more secure and efficient. With the process of dematerialization of
shares having gained considerable ground in recent years, banks have assumed the role of
depository participants. In addition to customers' deposit accounts, they also maintain
demat accounts of their clients. Online trading in equities is being allowed by SEBI. This
is another area which banks are keen to get into. HDFC Bank Ltd., has tied up with about
25 equity brokerages for enabling third party transfer of funds and securities through its
business-to-business (B2B) portal, 'eNet'. Demat account holders with the bank can
receive securities directly from the brokers' accounts. The bank has extended its web
interface to the software vendors of National Stock Exchange through a tie-up with NSE.
IT the InfoTech arm of the exchange. The bank functions as the payment bank for
enabling funds transfer.

- 12 -

Advantages

Very convenient. Online banking is very convenient and comfortable. In the

comfort of ones home or offices, one can do whatever monetary transactions one
wishes to do with his bank.

Unlimited service day and night. The services and various features of banks are
always available seven days a week and 24 hours daily. The most interesting thing
here is that, everything can happen at just one click of mouse.

No time constraint. Online banking is also stress free because it never closes
unlike the traditional banking that has cut-off time.

Easy to access via PC. Using personal computer, one can easily do various
transactions with bank in view of business or any other personal or financial matters.

Easy way of payment. Bill payments can also be handled properly and smartly.
Instead of waiting in queues, one can easily pay all the transactions at a click of a
button.

Smart. Online banking is also ubiquitous or simply put smart. This enables to do
troubleshooting regarding any problem that may arise in business.

Lower banking cost. With online banking facility one can reduce its bank
charges like cheque book charges etc.

Easy transaction. Another advantage is the speed of every transaction. Online

transactions, compared to ATM or traditional banking, works faster. Thus business
matters could benefit so much from this speed feature.

Banking online is both efficient and effective. With just one secure site, all
financial transactions can be managed orderly.

- 13 -

Disadvantages

First is the slow processing from the moment you entered a financial transaction
with your bank via the computer. Usually the bank will require you to submit certain
documents like an identification card, signature and the like. Not only will the bank
online require you to submit documents but also to provide special power of attorney
in cases where you want to do transactions together with your spouse. A concrete
example is when you want to manage all your wealth and resources together as a
couple and you wish to view it online. Certain technical procedures regarding online
banking may be taxing too and complicated.

Another disadvantage is the so-called learning curve. This means, banking

online especially in locating the sites may be complicated and hard to find.

Another disadvantage is bank site changes. If this occurs, the bank will require
you to re-enter all your information again and other related data.

Finally is the trust aspect. Online banking should be entered very carefully if
you wish to enjoy your financial life.

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Indian Banking Industry - A

Brief Profile
A large chunk of the Indian banking industry still belongs to the public sector banks
having the most extensive network of physical branches. These are followed by large
private banks and lastly by multinational banks (MNC) who have the smallest physical
network and therefore their online banking needs to be the most developed and able to
address user needs without requiring human intervention. The fact that most government
organisations have their payroll accounts with public sector banks contributes
significantly to the large customer bases of these banks. Traditional public sector banks
have existed for many years and have serviced diverse income groups. This has resulted
in their customer base being huge as well as belonging to a wider demographic
representation, given Indias heterogenous population as well. However, most of the
traditional customers prefer to bank with a bank with a human touch and prefer public
sector banks as they form an emotional relationship with their bank personnel, which is
not really encouraged by private sector or multi-national banks.

- 15 -

Indian Banking Scenario

Indian Internet Banking

Landscape

The new generation which has been banking for less than a decade prefers faster
transactions and more professional relationships as compared to the traditional customer.
For them, opening a bank account is incidental and connected to their direct deposit
salary accounts. The private sector bank has captured the corporates and IT sector as
compared to the public sector bank. As a result, banks in the public sector tend to have a
huge user base, but very few of their customers have the technology orientation or the
inclination to use electronic media for banking. Therefore, the awareness of customers of
public sector banks about online banking as an active banking tool is relatively lower. To
tap this type of user base that has an inherent barrier to and not an obvious need for
internet usage, just adding an internet banking channel to a banks lists of services may
not be enough of an incentive. A streamlined, simple and customer satisfaction oriented
approach to service novice users only can help banks achieve better internet banking
penetration.

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CHAPTER-2

Analysis and Discussion

This chapter deals with the results which came from analysis of primary and secondary
data.
OBJECTIVE_-To Analyze the Purpose of using Internet
The various Customers have used internet for different purposes the following graph
represents the statistics about those purposes. Majority of the peoples (44%) are using
internet for entertainment, 13% are use for banking 12% for shopping 11% for research
and 18% for combination of all.

Purpose
Banking
Shopping
Entertainment
Research
Combination
Others

No of Persons
4

Percentage%
13

3
13

12
44

3
5
2

11
18
2

Total

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Purpose of using Internet

Objective-To analyze the time since Internet is being used

The various Customers have used internet from different span of times and the following
chart represents the statistics about those time intervals.74% customers are using internet
from less than 3 years and 5% are using from 5-10 years.

Years
< 3 years

No of Persons
22

Percentage %
74

3<5 years

21

5<10 years

>10years
Total

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Time since using Internet

Objective- Analyze the Gender of respondents:The following graph represents that the majority of respondents are male (77%) and
females are 23%.
Particulars
Male
Female
Total

No of Persons
23
7

Gender of respondents

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Percentage%
77
23

Objective-To analyze the age group of respondents:The following graph represents that the majority of respondents are of age range 25-35
(i.e. 45%) and lower range is above 60.

Age Group
16-25 years
25-35 years
35-50 years
50-60 years
Above 60

No of Persons
11
13
3
2
1

Percentage%
37
45
11
6
1

years
Total

Age range of respondents

Objective-To analyze the awareness about e-banking:The following graph represents that the majority of respondents are not aware about ebanking (59%) on the other hand 41% respondents know about e-banking.

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Awareness about
e-banking
Yes
No

No of Persons
12
18

Percentage%
41
59

Total

Awareness about e-banking

E-banking saves time:The following graph represents that 100% respondent said e-banking saves the time.

E-banking saves time

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E-banking has increased the pace of transactions:The following graph represents that 92% respondent said e-banking saves the time while
other 8% said no.

E-banking has increased the pace of transactions

E-banking has makes your life easy:The following graph represents that 100% respondent said e-banking made the life very
easy.

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E-banking has makes your life easy

Objective- To analyze the Satisfaction from E-banking facilities from their banks:The following graph represents that 87% respondent said they are satisfied from their
banks regarding e-banking facilities while other 13% said not satisfied.
Particulars
Satisfied
Dissatisfied
Total

No of persons
26
4

Percentage
87
13

Satisfaction from E-banking facilities from their banks

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CHAPTER-3

Summary of the Observations

While investigating all the variables and the responses by consumers, this study reveals
that the perception of the consumers can be changed and can be made positive by
awareness program, friendly usage, fewer charges, proper security, and the best response
to the services offered.
In case of the consumers who dont use Internet banking services, having all facilities at
their disposal, technology was not the biggest issue. The first thing that all bankers should
concern about is the requirement of awareness. Even though these people are inclined
towards the manual banking, these can be turned to potential customers, it is well proven
thing, which says the surrounding influences the individuals behaviour or in our region
only environment that surrounds the public determines the behaviour and decisions of the
individuals. So if a consumer sees most of his colleagues or friends who surround
him/her using Internet banking then it may influence his/her decision to follow Internet
banking option.

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Limitations of Study
1. The present study is based on the data collected from sample areas of Kolkata only and
the result may vary from other states or the national average.
2. The result of this study shows that perceived ease of usefulness, reach of Online
Banking, risks associated with this and customers attitude are the important determinants
of online banking adoption.
3. The replication of this study on a wider scale with more Online Banking customers and
with different national cultures is essential for the further generalization of the findings.
4. The time limit is also an important factor which acts as a barrier in the whole research
process. The shortage of time period forces to do research on small size of sample.
5. Most of the respondents due to lack of awareness and security factor fear to use Online
Banking, so fair conclusion is not done as per the responses of few ones only. So there is
scope for further investigation at larger scale & by taking more respondents who use
Online Banking.

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Suggestions
This study confirmed that one way to shift people from non users segment to users
segment can be educating them and making them aware about the services provided and
benefits of using these services. If banks arrange workshops in Financial Institutions and
other places, where knowledge about the benefits of Online Banking and training is
imparted to use Online Banking and also open Internet Bank Accounts simultaneously
then this will act as boon for Banks. By making Online Banking operations more easy,
the Banks can enhance the level of users & can also give more satisfaction to existing
ones as they face numerous problems while using Online Banking. The security for their
funds is the main factor due to which people fear to open an Internet Bank Account.
Thus, by giving them assurance that their funds are secured even if they resort to Online
Banking could assist Banks to increase their customers percentage. The Government can
also play a vital role in the promotion of Online Banking by making strict rules &
regulations in case any fraud arises. No doubt IT Act plays an important role but there is
need of more Government enrolment because it is good for Indian economy to accelerate
their growth rate.
If people associate themselves with technology & its upcoming features, they can avail
lots of benefits from new technology and it can play significant role in the promotion of
Online Banking. It is well proved that activities in which people show keen interest, they
use those activities at their best as compared to those where pumping is done to do so.
The instructions to use Online Banking services should be made available in different
languages so that it will be more convenient for the customers to use Online Banking
services.

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CHAPTER-4

Bibliography
To complete this project report I have taken help of the following : Rajesh Kumar Srivastava; Customers Perception on Usage of Internet
Banking Innovative Marketing, volume 3; issue 4, 2007.
Dr.A Vinaya Gamoorthy & K. Senthilumar; Role of reach of Internet
Banking in India Journal of Business Research. 2008.
Srivastava, Dr. Saurabh Internet Banking - A Global Way to Bank !
Divya Singhal & V.Padhmanabhan (2008), The Journal of Nepalese
Business Studies Vol. V, No. 1, 2008, December Page: 101-111
Neha Dixit & Dr. Saroj K.Datta (2010) Acceptance of E-banking among
Adult Customers: An Empirical Investigation in India, Journal of Internet
Banking and Commerce, Vol. 15 no. 2.
Rahmath Safeena, Hema Date & Abdullah Kammani; Internet Banking
adoption in an emerging economy International Arab Journal of ETechnology, volume 2; no.1, January 2011.
David D. VanHoose (2009) Two-sided markets, bank card payment
networks, and public policy, Networks Financial Institute Policy Brief No.
2008-PB-06, Indianapolis.
Balachandher (2001) Electronic Banking in Malaysia: A Note on Evolution of
Services and Consumer Reactions, Multimedia University, Malaysia
www.indianmba.com/Faculty_Column/FC908/fc908.html
www.banknetindia.com
www.google.com
www.federal-bank.com

- 27 -

Annexure

Questionnaire
The following questionnaire is prepared by me for the Manger of Federal bank of C R
Avenue.
1. In which year your bank started online services ?
__________________
2. Does Your Competitiors also provides similar services with respect to you ?
Yes

No

3. Does your bank sell a product or service that is time-constrained? For example, do you work for a
financial firm offering online trading or payment services, or a travel or entertainment business offering
online booking ?
Yes

No

4. Are your customers prone to use the latest gadgets, such as PDAs, two-way pagers and
mobile phones ?
Yes

No

5. Does online banking provide more revenue than traditional banking ?

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 Yes

No

6. What percentage of your customers using online banking services provided by you ?
0-20%_____

21-40%_____

41-60%_____

61-80%_____

81-100%_____

7. Does online banking provides more reach and frequency than traditional banking?
Yes

No

8. Does online banking helps you to retain your customer and helps in to discover new
customers ?
Yes

No

9. Does the revenue coming from the online banking crosses the expenses made on online
banking ?
Yes

No

10. Do you provide and kind of training programme to your employees so they promote more online
banking?
Yes

No

11. What kind of services are you providing in online banking ?

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 Online bill payment

Online fund/money transfer

Online payroll direct deposit

Mobile Recharge

Online Bookings
International Payments

Online Purchase

12. Do you advertise your bank on other websites ?

Yes

No

if yes which _______________________

13. How does your bank connected to internet ?
DSL

Dial-up

BroadBand

Cable

14. Is the security always updated to protect any theft or fraudulent ?

Yes

No

15. Did online banking done well according to you expectations?

Yes

No

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