CHAPTER-1

INTRODUCTION OF THE PROJECT

INTRODUCTION TO BANKING SECTOR

The Indian banking can be broadly categorized into nationalized (government owned), private banks and specialized banking institutions. The Reserve Bank of India acts a centralized body monitoring any discrepancies and shortcoming in the system. Since the nationalization of banks in 1969, the public sector banks or the nationalized banks have acquired a place of prominence and has since then seen tremendous progress. The need to become highly customer focused has forced the slow-moving public sector banks to adopt a fast track approach. The unleashing of products and services through the net has galvanized players at all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering. Conservative banking practices allowed Indian banks to be insulated partially from the Asian currency crisis. Indian banks are now quoting al higher valuation when compared to banks in other Asian countries (viz. Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge Non Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed in approach and armed with efficient branch networks focus primarily on the high revenue niche retail segments. The Indian banking has finally worked up to the competitive dynamics of the new Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ IT solutions are perceived to be futuristic and proactive players capable of meeting the multifarious requirements of the large customers base. Private Banks have been fast on the uptake and are reorienting their strategies using the internet as a medium The Internet has emerged as the new and challenging frontier of marketing with the conventional physical world tenets being just as applicable like in any other marketing medium. The Indian banking has come from a long way from being a sleepy business institution to a highly proactive and dynamic entity. This transformation has been largely brought about by the large dose of liberalization and economic reforms that allowed banks to explore new business opportunities rather than generating revenues from conventional streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances. Indian nationalized banks (banks

owned by the government) continue to be the major lenders in the economy due to their sheer size and penetrative networks which assures them high deposit mobilization. The Indian banking can be broadly categorized into nationalized, private banks and specialized banking institutions. The Reserve Bank of India acts as a centralized body monitoring any discrepancies and shortcoming in the system. It is the foremost monitoring body in the Indian financial sector. The nationalized banks (i.e. government-owned banks) continue to dominate the Indian banking arena. Industry estimates indicate that out of 274 commercial banks operating in India, 223 banks are in the public sector and 51 are in the private sector. The private sector bank grid also includes 24 foreign banks that have started their operations here. Under the ambit of the nationalized banks come the specialized banking institutions. These co-operatives, rural banks focus on areas of agriculture, rural development etc. The banking section will navigate through all the aspects of the Banking System in India. It will discuss upon the matters with the birth of the banking concept in the country to new players adding their names in the industry in coming few year. The banker of all banks, Reserve Bank of India (RBI), the Indian Banks Association (IBA) and top 20 banks like IDBI, HSBC, ICICI, ABN AMRO.

HISTORY OF BANKING IN PUNJAB

For the past three decades Punjab's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank transferred money from one branch to other in two days. Now The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms. New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and Phase III. Phase-I

The General Bank of India was set up in the year 1786.Next came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935. During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came

up with the Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority. During those days public has lesser confidence in the banks. As an aftermath deposit mobilization was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer.

Phase-II Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural and semi-urban areas. It formed State Bank of India to act as the principal agent of RBI and to handle banking transactions of the Union and State Governments all over the country. Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th July, 1969, major process of nationalization was carried out. It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership.

The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country:

1949: Enactment of Banking Regulation Act. 1955: Nationalization of State Bank of India. 1959: Nationalization of SBI subsidiaries. 1961: Insurance cover extended to deposits. 1969: Nationalization of 14 major banks. 1971: Creation of credit guarantee corporation. 1975: Creation of regional rural banks. 1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank India rose to approximately 800% in deposits and advances took a huge jump by 11,000%.

Phase III This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalization of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. money. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign exchange exposure. Time is given more importance than

BANKING SERVICES IN PUNJAB

The Indian banking industry is passing through a phase of customers market. The customers have more choices in choosing their banks. A competition has been established within the banks operating in India. With stiff competition and advancement of technology, the services provided by banks have become more easy and convenient. The past days are witness to an hour wait before withdrawing cash from accounts or a cheque from north of the country being cleared in one month in the south. This section of banking deals with the latest discovery in the banking instruments along with the polished version of their old systems.

Bank Account Open bank account - the most common and first service of the banking sector. There are different types of bank account in Indian banking sector. The bank accounts are as follows:

Bank Savings Account - Bank Savings Account can be opened for eligible person / persons and certain organizations / agencies (as advised by Reserve Bank of India (RBI) from time to time)

Bank Current Account - Bank Current Account can be opened by individuals / partnership firms / Private and Public Limited Companies / HUFs / Specified Associates / Societies / Trusts, etc.

Bank Term Deposits Account - Bank Term Deposits Account can be opened by individuals / partnership firms / Private and Public Limited Companies / HUFs/ Specified Associates / Societies / Trusts, etc.

Bank Account Online - With the advancement of technology, the major banks in the public and private sector has facilitated their customer to open bank account online. Bank account online is registered through a PC with an internet connection.

Credit card Credit cards in India are gaining ground. A number of banks in India are encouraging people to use credit card. The concept of credit card was used in 1950 with the launch of charge cards in USA by Diners Club and American Express. Credit card however became more popular with use of magnetic strip in 1970. Credit card in India became popular with the introduction of foreign banks in the country. Credit cards are financial instruments, which can be used more than once to borrow money or buy products and services on credit. Basically banks, retail stores and other businesses issue these.

Major Banks issuing Credit Card in Punjab

State Bank of India credit card (SBI credit card) Bank of Baroda credit card or Bob credit card ICICI credit card HDFC credit card IDBI credit card ABN AMRO credit card Standard Chartered credit card HSBC credit card Citibank Credit Card

Loans Banks in Punjab with the way of development have become easy to apply in loan market. The following loans are given by almost all the banks in the country:

Personal Loan Car Loan or Auto Loan Loan against Shares Home Loan Education Loan or Student Loan

In Personal Loan, one can get a sanctioned loan amount between Rs 25,000 to 10, 00,000 depending upon the profile of person applying for the loan. SBI, ICICI, HDFC, HSBC are some of the leading banks which deals in Personal Loan. Almost all the banks have jumped into the market of car loan which is also sometimes termed as auto loan. It is one of the fast moving financial products of banks. Car loan / auto loan are sanctioned to the extent of 85% upon the ex-showroom price of the car with some simple paper works and a small amount of processing fee. Loan against shares is very easy to get because liquid guarantee is involved in it. Home loan is the latest craze in the banking sector with the development of the infrastructure. Now people are moving to township outside the city. More number of townships is coming up to meet the demand of 'house for all'. The RBI has also liberalized the interest rates of home loan in order to match the repayment capability of even middle class people. Almost all banks are dealing in home loan. Again SBI, ICICI, HDFC, HSBC are leading. The educational loan, rather to be termed as student loan, is a good banking product for the mass. Students with certain academic brilliance, studying at recognized colleges/universities in India and abroad are generally given education loan / student loan so as to meet the expenses on tuition fee/ maintenance cost/books and other equipment. Money Transfer Besides lending and depositing money, banks also carry money from one corner of the globe to another. This act of banks is known as transfer of money. This activity is termed as remittance business. Banks generally issue Demand Drafts, Banker's Cheques, Money Orders or other such instruments for transferring the money. This is a type of Telegraphic Transfer or Tele Cash Orders. It has been only a couple of years that banks have jumped into the money transfer businesses in India. The international money transfer market grew 9.3% from 2003 to 2004 i.e. from US$213 bn. to US$233 bn. in 2004. Economists say that the market of money transfer will further grow at With the use of high technology and varieties of product it seems that "Free" money transfers will become commonplace. We will see more bundling of tailored money services by banks and non-traditional entrants that will include "free" money transfers. Many banks will even use money transfer services as loss-leaders in order to generate account openings and cross-sell opportunities. The price evolution of money transfer products for banks will be

similar to that of consumer bill pay-the product is worth giving away as an account acquisition tool to win overall. ATM money transfer card products have had terrible bank adoption rates since being introduced in the last three to four years. Remitters who are highly educated and have been already been exposed to ATM technology in receiving countries tend to have an interest in this product. Money transfer to India is one of the most important parts played by the banks. This service provides peace of mind to either the NRIs or to the visitors to India. Many Indian banks have ATM'S (automatic teller machine), enable to draw foreign currency in India. By 2007, we will see a good percent of all foreign-born households doing some level of online banking. First-mover banks will start having a window of opportunity to include online transfer functionality within the next couple of years, which currently frequents traditional money transmitters such as Western Union. There is a terrific opportunity for banks and non-banks to offer more robust global inter-institutional funds transfer services online. More than half of Western Union's customers today are already banked, and most do not have an alternative product marketed by their bank that is painless, quick, and cost-effective. That will change as banks offer transfer services through their online channel. Visa Money Transfer Visa has recently introduced the 'Visa Money Transfer' option for its savings and current account holder of any bank with a visa debit card. This facility helps its customer to transfer funds from his bank account to any visa card, either debit or credit within India. A Visa Money Transfer is of similar kind, in many respects, to the third-party fund transfer option given by some banks to its account holders through e-cheque, but this is restricted to only visa cardholders.

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How to transfer money?

Log on to your bank account through your respective bank websites. Fill the beneficiary details like visa card numbers, name, and address and then specify the amount that needs to be transferred. For bank account specify the visa card number and credit card number for paying credit card bill.

Click on to VISA Transfer Payments button. Transfer immediately or on schedule date. Your account will be debited according to the date mentioned.

Notable points of Visa Money Transfer

The time taken for money transfers could be the same or even more than that of a demand draft i.e. two or three days or even more.

Currently there are no charges but limits have been set by certain banks on the current transfers.

It is available in 150 cities across the country now. The transferred amount can neither be changed nor stopped once it is initiated. Top of Form.

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INTRODUCTION OF THE INTERNET BANKING

INTRODUCTION With cyber cafs and kiosks springing up in different cities access to the Net is going to be easy. Internet banking (also referred as e banking) is the latest in this series of technological wonders in the recent past involving use of Internet for delivery of banking products & services. Internet banking is changing the banking industry and is having the major effects on banking relationships. Banking is now no longer confined to the branches were one has to approach the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. In true Internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. Providing Internet banking is increasingly becoming a "need to have" than a "nice to have" service. 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. What is E-Banking?

Electronic banking is one of the truly widespread avatars of E-commerce the world over. Various authors define E-Banking differently but the most definition depicting The meaning and features of E-Banking are as follows: 1. Banking is a combination of two, Electronic technology and Banking. 2. Electronic Banking is a process by which a customer performs banking Transactions electronically without visiting a brick-and-mortar institutions.

3. E-Banking

denotes

the

provision

of

banking

and

related

service

through

Extensive use of information technology without direct recourse to the bank by the customer.

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Bank Information technology

Customer

EVOLUTION OF INTERNET BANKING

The story of technology in banking started with the use of punched card machines like Accounting Machines or Ledger Posting Machines. The use of technology, at that time, was limited to keeping books of the bank. It further developed with the birth of online real time system and vast improvement in telecommunications during late 1970s and 1980s.it resulted in a revolution in the field of banking with convenience banking as a buzzword. Through Convenience banking, the bank is carried to the doorstep of the customer. The 1990s saw the birth of distributed computing technologies and Relational Data Base Management System. The banking industry was simply waiting for these technologies. Now with distribution technologies, one could configure dedicated machines called front-end machines for

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customer service and risk control while communication in the batch mode without hampering the response time on the front-end machine.

Traditional banking Gunpowder Personalized services, time consuming, limited access

Virtual or E-banking Nuclear charged Real time transactions, integrated platform, all time access

Intense competition has forced banks to rethink the way they operated their business. They had to reinvent and improve their products and services to make them more beneficial and cost effective. Technology in the form of E-banking has made it possible to find alternate banking practices at lower costs.

More and more people are using electronic banking products and services because large section of the banks future customer base will be made up of computer literate customer, the banks must be able to offer these customer products and services that allow them to do their banking by electronic means. If they fail to do this will, simply, not survive. New products and services are emerging that are set to change the way we look at money and the monetary system.

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INTERNET BANKING PRODUCTS

Automated Teller Machine (ATM)

These are cash dispensing machine, which are frequently seen at banks and other locations such as shopping centers and building societies. Their main purpose is to allow customer to draw cash at any time and to provide banking services where it would not have been viable to open another branch e.g. on university campus.

An automated teller machine or automatic teller machine (ATM) is a computerized telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller. On most modern ATMs, the customer identifies him or herself by inserting a plastic ATM card with a magnetic stripe or a plastic smartcard with a chip, which contains his or her card number and some security information, such as an expiration date or CVC (CVV). Security is provided by the customer entering a personal identification number (PIN).

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Using an ATM, customers can access their bank accounts in order to make cash withdrawals (or credit card cash advances) and check their account balances. Many ATMs also allow people to deposit cash or checks, transfer money between their bank accounts, pay bills, or purchase goods and services. ATMs are known by various casual terms including cash machine, hole-in-the-wall, cash point or Banc mat (in Europe and Russia). The occasionally-used ATM Machine is an example of RAS syndrome.

Tele-banking or Phone Banking Telephone banking is relatively new Electronic Banking Product. However it is fastly becoming one of the most popular products. Customer can perform a number of transactions from the convenience of their own home or office; in fact from anywhere they have access to phone. Customers can do following

Check balances and statement information Transfer funds from one account to another Pay certain bills Order statements or cheque books Demand draft request

This facility is available with the help of Voice Response System (VRS). This system basically, accepts only TONE dialed input. Like the ATM customer has to follow particular process, initially account number and telephone PIN are fed for the process to start. Also the VRS system provides the users within additional facilities such as changing existing password with the new desired, information about new products, current interest rates etc.

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Mobile Banking

Mobile banking comes in as a part of the banks initiative to offer multiple channels banking providing convenience for its customer. A versatile multifunctional, free service that is accessible and viewable on the monitor of mobile phone. Mobile phones are playing great role in Indian banking- both directly and indirectly. They are being used both as banking and other channels.

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INTERNET BANKING
The advent of the Internet and the popularity of personal computers presented both an opportunity and a challenge for the banking industry. For years, financial institutions have used powerful computer networks to automate million of daily transactions; today, often the only paper record is the customers receipt at the point of sale. Now that their customers are connected to the Internet via personal computers, banks envision similar advantages by adopting those same internal electronic processes to home use. Banks view online banking as a powerful value added tool to attract and retain new customers while helping to eliminate costly paper handling and teller interactions in an increasingly competitive banking environment. In India first one to move into this area was ICICI Bank. They started web based banking as early as august 1997.

INTERNET BANKING SERVICES

1. Bill payment service Each bank has tie-ups with various utility companies, service providers and insurance companies, across the country. It facilitates the payment of electricity and telephone bills, mobile phone, credit card and insurance premium bills. To pay bills, a simple one-time registration for each biller is to be completed. Standing

instructions can be set, online to pay recurring bills, automatically. One-time standing instruction will ensure that bill payments do not get delayed due to lack of time. Most interestingly, the bank does not charge customers for online bill payment.

2. Fund transfer Any amount can be transferred from one account to another of the same or any another bank. Customers can send money anywhere in India. Payees account number, his bank and the branch is needed to be mentioned after logging in the account. The transfer will take place in a day or

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so, whereas in a traditional method, it takes about three working days. ICICI Bank says that online bill payment service and fund transfer facility have been their most popular online services. 3. Credit card customers Credit card users have a lot in store. With Internet banking, customers can not only pay their credit card bills online but also get a loan on their cards. Not just this, they can also apply for an additional card, request a credit line increase and God forbid if you lose your credit card, you can report lost card online. 4. Railway pass This is something that would interest all the aam janta. Indian Railways has tied up with ICICI bank and you can now make your railway pass for local trains online. The pass will be delivered to you at your doorstep. But the facility is limited to Mumbai, Thane, Nasik, Surat and Pune. The bank would just charge Rs 10 + 12.24 percent of service tax. 5. Investing through Internet banking Opening a fixed deposit account cannot get easier than this. An FD can be opened online through funds transfer. Online banking can also be a great friend for lazy investors. Now investors with interlinked demat account and bank account can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited in their demat account. Moreover, some banks even give the facility to purchase mutual funds directly from the online banking system. So it removes the worry about filling those big forms for mutual funds, they will now be just a few clicks away. Nowadays, most leading banks offer both online banking and demat account. However if the customer have there demat account with independent share brokers, then need to sign a special form, which will link your two accounts.

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6. Recharging your prepaid phone Now there is no need to rush to the vendor to recharge the prepaid phone, every time the talk time runs out. Just top-up the prepaid mobile cards by logging in to Internet banking. By just selecting the operator's name, entering the mobile number and the amount for recharge, the phone is again back in action within few minutes.

Problems for growth in internet banking in Punjab

Time constraint:

Generally now a days there is one another problem of time. People generally giving their views that they have no time to use the services on the internet banking. People those visit the bank regularly also dont using these facilities properly. Knowledge:

There is one another problem of the knowledge amongst the customers about the services of internet banking. They are not aware about the security concept but them still believing that the internet banking use is not secure. Security risk

That may arise due to the unauthorized access to a bank's key information like accounting system, risk management system and portfolio management system. A breach of security could result in direct financial loss to the bank. In addition to external attacks, banks are exposed to security risk from internal sources e.g. employee fraud.

Operational risks

That may arise due to inaccurate processing of transactions, non-enforceability of contracts, compromises in data integrity, data privacy and confidentiality, unauthorized access/intrusion to bank's systems and transactions, etc. These risks may arise due to weaknesses in design, implementation and monitoring of banks information system, inadequate technology, negligence by customers and employees, fraudulent activity by employees and hackers.

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Legal risk

Arises when violation of laws, rules and regulations or prescribed practices takes place, or when the legal rights and obligations of parties to a transaction are not well established. These risks may also arise due to uncertainty about the validity of some agreements formed via electronic media and law, regarding customer disclosures and privacy protection. Reputational risk

It is the risk of getting significant negative public opinion, which may result in loss of funding or customers. The main reasons for this risk may be system or product not working to the expectations of the customers, system deficiencies, and security breach, inadequate information to customers about product use and problem resolution procedures, problems with communication networks that impair customers' access to their funds, or account information. This may cause the customer to discontinue the use of product/service.

List of some banks operating Internet Banking in India

Bank Name ABN AMRO Bank Abu Dhabi Commercial Bank Bank of India Centurion Bank Citibank Corporation Bank Deutsche Bank Federal Bank Global Trust Bank HDFC Bank HSBC ICICI Bank IDBI Bank IndusInd Bank Punjab National Bank Standard Chartered Bank State Bank of India UTI Bank Bank of Punjab Technology Vendor Infosys (Bank Away) Infosys (Bank Away) I-flex Logica Orbitech (now Polaris) I-flex Sanchez Infosys (BankAway) i-flex/ Satyam Infosys, ICICI Infotech Infosys (Bank Away) CR2 Infosys (Bank Away) In-House Satyam/Broadvision Infosys (Bank Away) Service offering NetBanking ADCB NetLink BOIonline MyCBOL Citibank Online CorpNet db direct FedNet ibank@gtb NetBanking Online@hsbc Infinity i-net banking IndusNet Internet Banking Me Standard Chartered Online onlinesbi.com Iconnect Online ebanking

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CHAPTER-2 REVIEW OF LITERATURE

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REVIEW OF LITERATURE Several studies and researches have drawn attention to the role and adoption of technology in banking sector, E-Banking, its adaptation and experiences of private sector banks with EBanking. Some of the important studies during the recent years are being discussed in this section: Product and Technology group, ICICI Bank, in its paper Corporate banking using technology in transactions it was inferred that Information Technology has revolutionized the services and mode of services offered by the banks to their corporate clients. The emergence of E-Banking has enabled the banks to offer real-time transactions and integrate all customers related functions. Indian Banks are utilizing the new technology to provide better technology and convenient access to its customers and India is thus poised to for a huge growth in the world of electronic banking. Chandana R, Unnithan, Paula M.C., Swatman in their research paper titled E-Banking Adaptions and Dot.Com viability: A comparison of Australian and Indian experiences in the Banking sector a comparative study of Australian and Indian experiences in eBusiness was done, which seeks to identify the effectiveness of dot.coms as indicators of business uptake and success on a sector-by-sector basis was undertaken. It was concluded that the banking industry is now a very mature one and banks are being forced to change rapidly as a result of open-market forces such as the threat of competition, customer demand, and technological innovations such as the growth of the Internet. E-Banking is a successful strategic weapon for banks to remain profitable in a volatile and competitive market place of today in both Indian and Australian Economies despite the differences of IT usage.

G. Kannabiran and P.C. Narayan discusses in their article the experiences of a private-sector bank in deploying Internet banking and ecommerce in India. Strategic alignment of business and IT strategies, planning and implementation of e-banking initiatives, and management of benefits have been captured, along with key contributions to development.

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Huggins points to the fact that traditional boundaries in banking are disappearing. Using business methods, major retailers and telecom providers are starting to offer financial services to their clients. Extending the value chain and offering versatile services seems to be the key to retaining competitiveness in the sector. Attitudes are also shifting from direct transactions to savings and investments, as the baby boomers reach their forties and fifties, and prepare for retirement. Mario Martinez Guerreroin his paper titled Profiling the adoption of Online banking Services in the European Union offers an empirical investigation on the adoption of online banking services among European citizen. The use of e-banking services is explained on the basis of socio-demographic and Internet specific behavioral indicators. The performed analyses provide support for the influence of country, age, profession and several Internet behaviors on the use of E-banking. The above survey indicates that although a number of research studies relating to different aspects of E-banking, its adoption, different experiences with e-banking, its viability and ethics involved in e-banking, but no study has been conducted which is class specific. As it is evident, that service class people dont have sufficient time and access to banks during the traditional banking hours, so their e-banking adoption and usage should be more. Hence, this study aims to cover.

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CHAPTER-3 RESEARCH METHODOLOGY

25

OBJECTIVES OF THE STUDY

To study the awareness level of customers regarding internet Banking. To study the Problems for growth in internet banking in India. To study the demographic factors affecting internet banking.

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PRIMARY AND SECONDARY DATA COLLECTED Primary data was collected with the help of questionnaires provided. The questionnaire consisted of multiple choice questions, close ended questions, open ended question, so as to gain the information from the respondent. The secondary data was collected through some banks websites, other websites, encyclopedias and newspapers etc.

SAMPLE DESIGN, SIZE AND METHOD USED Sampling is an effective step of collection of primary data and has a great influence on the quality of results. The sampling plan includes the population, sampling size and sampling design. Population The study aimed to include the area of Jalandhar city and Phagwara. Sample size Sample size for the research was 100.

Sample Technique Descriptive and exploratory sampling technique was used.

Time The research was conducted in the month of February and March 2012.

LIMITATIONS OF THE PROJECT Though every care has been taken to make this report authentic in every sense, yet there were a few uncomfortable factors, which might have their influence on the final report. Some are: The respondents did not have their serious attitude towards the questionnaires Limited area for the study Time constraints No full disclosure of information on the websites

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CHAPTER-4 ANALYSIS AND FINDINGS

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PROJECT ANALYSIS WITH THE HELP OF DATA COLLECTED To study the awareness level of customers regarding Internet Banking.
The time you are using internet? 1 to 6 months 20 6 to 12 months 52 More than a year 18

Less than a month 10

TABLE NO. 4.1 (showing the use of internet)

Use of internet Banking

60 50 40 30 20 10 0

use of internet

less than month 1 to 6 months

6 to 12 months more than a year

Figure 1 (showing the use of internet by the customers) The above graph shows that the customers are using internet more in the period of 6 to 12 months. It is even less than a year. It means the customers havent using the internet for important activities like internet banking or they are not aware about this.

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 What type of internet service are you used?

Seeking product and rate information Calculate loan payment information Download loan applications Check balances online Apply for consumer loans and credit cards online Inter account transfers Online bill payments 30 24 12 22 3 4 5

TABLE 4.2 (showing the use of internet bank service of different types)

Bank services
product and rate info calculate loan payment info download loan applications check balance online apply for consumer loans & credit cards inter accont transfers online bill payments

Figure 2 (showing the use of internet bank service of different types) The above graph is showing that the customers are using the internet banking service more for the product and rate information, calculate loan payment information and check balance online.

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 To study the Problems for growth in internet banking in India. Do you have time for use the internet banking or not?
Have time 28 No time 72

TABLE NO. 4.3 (showing the time constraint in use of internet banking)

Time
80 70 60 50 40 30 20 10 0

Time

Have time

no time

Figure 3 (showing the time constraint in use of internet banking)

The above graph is showing the two aspects in which more of the customers have no time to use the facility of internet banking. There may be some reasons for this. This factor also shows that customers are not want to use this facility due to shortage of time.

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 Is internet banking is secure or not?

Safe 25 Not safe 35 TABLE NO. 4.4 (Showing the behavior regarding the security) Cant say 40

Security
45 40 35 30 25 20 15 10 5 0

Security

safe

not safe

can't say

Figure 4(showing the behavior regarding the security)

The above graph showing that the consumers are concerned about the security of the internet banking and they are not aware about the internet banking security position, because they are not aware about that whether internet banking is safe or not. Some are saying that it is safe because they are using the service or they havent heard about the non safety of the internet banking.

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 How many times you visit for bank in a month?

Less than 1 0 1 to 3 times 15 3 to 8 times 40 8 to 12 times 35 Over 12 times 10

TABLE NO. 4.5 (shows the frequency of visit)

Frequency of visit
40 35 30 25 20 15 10 5 0

frequency of visit

less than 1

1 to 3 times

3 to 8 times 8 to 12 times

Figure 5 (showing the frequency of visit to the bank of customers) The above graph is showing the frequency of visits of the customers to their banks. The highest frequency lies in the 3 to 8 times and the visit for 8 to 12 times is also nearest. This shows that customers are visiting more and they do not use the internet banking more due to more visits to the banks.

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 Are you aware about the internet banking?

Aware but not using 75 Not aware 25

TABLE NO. 4.6 (showing the awareness level of customers regarding internet banking)

Awareness

aware but not using

not aware

Figure 6 (showing the awareness level of customers regarding the internet banking)

The above graph is showing that more people are aware about the internet banking facility but they are not using this service due to some factors like time, security etc. and some people are even dont know about this facility mainly the group of people like housewives, old age customers.

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To study the demographic factors affecting the growth of internet banking.

Age 18-25 26-35 36-45 46-60 61-+

ON THE BASIS OF AGE How many times you visit the bank in a month? Less than 1 9 3 2 2 4 1 to 3 12 1 3 5 0 3 to 8 8 3 2 2 1 8 to 12 3 7 3 2 0 Over 12 1 21 5 1 0

TABLE 4.7 (showing the frequency of visit on the basis of age)

25

20

15

18-25 26-35 36-45

10

46-60 60-+

less than 1

1 to 3

3 to 8

8 to 12

over 12

Figure 7 (showing the frequency of visit of different age groups) The above graph shows that age group of 26 to 35 frequently visit to the banks.

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 What type of internet banking service are you used?

Age 18-25 26-35 36-45 46-60 60-+ ATM 10 12 9 7 3 online 4 8 2 3 0 telephone 0 3 1 2 1 mobile 2 9 5 2 1 SMS 3 7 3 3 0

TABLE 4.8 (showing the use of banking facilities amongst different age groups)

14 12 10

18-25
8 6 4 2 0 ATM Online telephone mobile SMS

26-35 36-45 46-60 60-+

Figure 8 (showing the use of banking facilities amongst different age groups) The above graph is showing that age group of 26 -35 is more using the banking facilities. ATM facility is using more by all the age groups.

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ON THE BASIS OF GENDER

For what purpose you visit the bank?

Gender/service Deposit Male Female 22 13 Advice 15 2 Balance 8 7 Withdrawal 19 11 Others 2 1

TABLE 4.9 (showing the reason for male and female to visit the bank)

25

20

15 male 10 female

0 deposit advice balance withdrawal others Figure 9 (showing the reasons for visit t bank by male and female) The above graph is representing the reasons for visiting the bank by male and female. Male and female are using the deposit and withdrawal more than other activities. Male are also visiting for the advice for the investments.

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FINDINGS

Now a days banks are providing many internet banking facilities to the customers.

These services are useful for the customers because it has special advantages like cost, time saving, communication with bank etc. The customers are not much aware about the services which they are getting from the banks. Mainly the age group of 26 to 35 is using the internet banking facilities more. Customers have less time to use the services and they are also concerned for the securities. More visit to the banks by the customers results into the less use of the internet banking services.

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CHAPTER-5 SUGGESTION, RECOMMENDATIONS AND CONCLUSION

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SUGGESTIONS AND RECOMMENDATIONS

Banks are providing free internet banking services also so that the customers can be attracted. By asking the bank employs we came to know that maximum numbers of internet bank account holders are youth, business man and HNIs. If proper training should be given to customer by the bank employs to open an account will be beneficial secondly the website should be made friendlier from where the first time customers can directly make and access their accounts. Some of the suggestions are:

Create a trust in mind of customers towards security of their accounts. Provide a platform from where the customers can access different accounts at single time without extra charge. Make their sites more users friendly.

Customers should be motivated to use modern banking facilities more.

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CONCLUSION

Going through the survey the main problem lies that still customer have a fear of hacking of accounts and thus do not go on for internet banking. Banks are trying their level best by providing the best security options to the customers but then to there is lot of factors which betrays a customer from opening an internet bank account. We can see the time is changing and we the passage of time people are accepting technology there is still a lot of perceptual blocking which hampers the growth its the normal tendency of a human not to have changes work on the old track, thats also one of the reason for the slow acceptance of internet banking accounts. There is still a lot needed for the banking system to make reforms and train their customers for using internet for their banking account.

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BIBLIOGRAPHY

BOOKS Malhotra T. D., Electronic Banking and Information Technology in Banks Sultan Chand and Sons, New Delhi, 2002. S.S Kaptan & N.S. Choubey. Indian Banking in Electronic Era

WEBSITES en.wikipedia.org/wiki/Bank en.wikipedia.org/wiki/virtual_bank en.wikipedia.org/wiki/online_banking#History perspectives www.bankrate.com/brm/olbstep2.asp www.moneybuddy.com.au/advantages-and-disadvantages-of-debit-cards www.creditcards for beginners.com/credit-card-advantages.html Mrp.ase.ro/no34/f1.pdf

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QUESTIONNAIRE

1. Do you own an internet? (a) Yes (b) no 2. The time you are using internet (a) Less than a month (b) 1 to 6 months (c) 6 to 12 months (d) More than a year 3. Frequency of visiting your bank branch per month (a) Less than 1 (b) 1 to 3 times (c) 3 to 8 times (d) 8 to 12 times (e) Over 12 times 4. The main reason that you typically visit your bank branch (please choose a single important reason)? To make a deposit To get advice for investment options To inquire about balance To withdraw cash Other 5. The internet banking facilities provided by your bank? ATM Online banking Telephone banking Mobile banking SMS banking 6. How frequently do you use an Automated Teller Machine (ATM) per month? Less than 1 1 to 3 times 3 to 8 times 8 to 12 times Over 12 times

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For those who use the internet banking service:

7. What are the most important reasons you opened an internet bank account? ( please prioritize the following list in the order of importance: (1: the most important reason, 6: the least important reason) Convenience (24 hours service, anywhere connectivity) Curiosity Better rates Safe and secure Low service charge Easy to maintain my bank transaction activity Online shopping

8. What banking services do you use which your internet bank offers? Seeking product and rate information Calculate loan payment information Download loan applications Check balances online Apply for consumer loans and credit cards online Inter account transfers Online bill payments Others

9. What was the single most important reason that you choose a particular bank as your internet bank? ( please choose one ) I have the traditional bank account with the same bank The brand name of the bank The excellent service offered by this bank

10. In addition to the internet bank account, do you have a traditional bank account? Yes No

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For those who dont use internet banking 11. The main reasons that you have not opened an internet bank account? Never heard of internet banking Concerned about security Have no time to open an account Dont see any real value in having this type of account Not available through my bank

12. Is internet banking is safe?

Yes No Cant say

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