Sushil S Mundada

AgendaBasics of Banking and Banking ApplicationsSaving Bank Account Transactions – Deposit,  WithdrawalChequesATM ApplicationE-BankingBiometric Devices and its scope in

ApplicationsImportant Questions

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Basics of BankingWhat is a Bank: Accepting deposits of

money from the public for purpose of lending or investment, repayable on demand and withdrawal by cash, cheque, draft, order, etc.

Customer Segments:Personal bankingSME/Commercial bankingCorporate & Investment bankingPrivate banking

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Relationship- Bank & CustomerDebtor & Creditor: Customer deposits money with bank

hence he becomes a Lender or Creditor of the bank. Bank has accepted deposit from customer hence bank becomes a Debtor.

Pledger and Pledgee: When customer pledges (promises) certain assets or security with the bank in order to get a loan, the customer becomes the Pledger and the bank becomes the Pledgee.

Bailor & Bailee: Banks acts as a caretaker for valuables & securities in the safe custody, in this case, customer becomes the Bailor and the bank becomes the Bailee.

Trustee & Beneficiary: When the Bank holds property for the beneficiary, it becomes Trustee for the Beneficiary.

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Relationship- Bank & CustomerAgent & Principal: Bank acts as Agent of customer,

provides agency services to customer and is responsible for carrying out customer’s instruction.

Lessee and Lessor: Bank acts as a Lessor when it rents out space (e.g. locker) to customer who is a Lessee.

Advisor and Client: When a customer invests in securities, on advice from the bank, the banker acts as an Advisor and the customer as a Client.

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Bank Products

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Bank Services

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Savings Bank AccountsHabit of saving among the citizens while allowing them to use

their funds when requiredHigh liquidity and safetyOpening an account - Who Can Open

An individual or in joint names of the depositorsMinors provided they have completed ten years of ageHindu Undivided Families (HUF)

Closing of Account - If a depositor closes the account within 12 months of opening it, a small charge will generally be made. All remaining cheque books and passbooks should be submitted with a letter of closing

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Opening a Savings AccountTwo passport size photographsProof of residence An introduction of the person from an existing

account holder.PAN number / Declaration in form no.60 or 61 as

per the Income Tax Act 1961.Account Transfer - Savings accounts may be

transferred from one office of the bank to another office in India, free of charge on a written request from the depositor and on return of the unused cheque leaves, if any, along with the pass book.

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TransactionsDeposits

Amounts received for the credit of a savings account

Cheques and Dividend WarrantsWithdrawals

Drawings from savings bank account will be by withdrawal forms or cheques supplied by the bank

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ChequesWritten instruction you give to your banker to make

payment by debit to your account on demandCheque is a valid payment instrument from the date

shown on the face of it. Three months - normal validity Bearer cheque is payable to the holder. An Order

cheque is payable to the person on whose favour it is drawn or subsequent endorsees

Banks verify the signature on the cheque Report loss of cheque to the issuing bank immediately

and give Stop Payment instruction to themCheques should not be issued without adequate

balance in the account or arrangements to pay11

Automated teller machine Computerised telecommunications device provides

the clients access to financial transactions without the need of bank teller

Customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card

Authentication by entering a personal identification number

If the currency being withdrawn from the ATM is different from that which the bank account is denominated in the money will be converted at a wholesale exchange rate

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ConstructionCPU (control user interface and transaction devices)Magnetic and/or Chip card readerPIN Pad (similar in layout to a Touch tone or Calculator

keypad)Secure cryptoprocessor, generally within a secure enclosureDisplay (used by customer for transaction)Function key buttons (usually close to the display) or a

Touchscreen (to select various aspects of transaction)Record Printer (to provide the customer with a record of their

transaction) Vault (to store the parts of the machinery requiring restricted

access)Housing (for aesthetics and to attach signage to)

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Mechanisms found inside vaultDispensing mechanism (to provide cash or other

items of value)Deposit mechanism including a Check Processing

Module and Bulk Note Acceptor (to allow the customer to make deposits)

Security sensors (Magnetic, Thermal, Seismic, gas)Locks (ensure controlled access to contents of vault)Journaling systems; many are electronic (a sealed

flash memory device) or a solid-state device (an actual printer) which accrues all records of activity including access timestamps, number of bills dispensed, etc.

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AdvantagesUsage:

Easy to use and Available 24X7Quick and efficient, Anywhere bankingCross banking facilityNo need to carry cash always or depend on

bank timingsLow cost

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Alternative usesDeposit currency recognition, acceptance, and

recyclingPaying routine bills, fees, and taxes (utilities,

phone bills, social security, legal fees, taxes, etc.)Printing bank statements and Updating

passbooksLoading monetary value into stored value cards Purchasing Postage stamps, Lottery and Train

tickets Cheque Processing ModuleAdding pre-paid cell phone / mobile phone credit

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E-Banking -Online (Or Internet Banking)Conduct financial transactions on a secure website.

Advantages:Transactional

Electronic bill presentment and payment – EBPPFunds transferInvestment purchase or saleLoan applications and transactions

Non-transactional (e.g. online statements, check links, chat)Financial Institution Administration

Support of multiple users having varying levels of authority

Low cost

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Types of Internet Banking Products (Services)Information Only SystemElectronic Information Transfer SystemFully Electronic Transactional System

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Security methodsThe PIN/TAN system where the PIN represents a

password, used for the login and TANs representing one-time passwords to authenticate transactions

Digital certificates are used against phishing and pharming, the use of class-3 card readers is a measure to avoid manipulation of transactions by the software in signature based online banking variants

To protect their systems against Trojan horses, users should use virus scanners and be careful with downloaded software or e-mail attachments

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Biometric DevicesWidely known as “the science of measuring physical

characteristics, to verify a person’s identity”. Divided into:

Physiological are related to the shape of the body.FingerprintFace recognitionDNAPalm print and Hand geometry Iris recognitionOdour/scent

Behavioral are related to the behavior of a personTyping rhythmGait and Voice

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Types of Biometric DevicesFingerprint biometrics: Widely accepted, convenient

and reliable than other forms of physical identificationHand Geometry: Measure the geometry of the hand

rather than the fine skin patterns as found in finger tip

Retina/Iris Scanners: Retina and iris have more characteristics to identify and match than on the hand

Facial Scan: An image is examined for overall facial structure which works well over short distances

Voice recognition: Voice biometrics perfect for telecommunication applications

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Usage MethodologyThe first time an individual uses a biometric system is

called an enrollment - biometric information from an individual is stored

The first block (sensor) is the interface between the real world and the system; it has to acquire all necessary data

The second block performs all the necessary pre-processing: it has to remove artifacts from the sensor, to enhance the input (e.g. removing background noise), to use some kind of normalization, etc

In the third block necessary features are extracted. A vector of numbers or an image with particular properties is used to create a template

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AdvantagesA card-based access system will control the access of

authorized pieces of plastic, but not who is in possession of the card

Systems using PINs require an individual only know a specific number to gain entry; but who actually entered the code cannot be determined.

On the contrary, biometric devices verify who people are by what they are, whether by hand, eye, or voice recognition

Contrary to using badges, sign-ins or other ways of tracking employees, a biometric time clock assures that no employee can punch in for another, eliminating time fraud and reducing payroll costs

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Important QuestionsWhat is saving account. List the steps of open

saving account. What are the documents required to open Saving Accounts in the bank?

What are the advantages of ATM to customer?

What are the merits and demerits of Ebanking?

Why is the need of Biometric? Which devices are used for Biometric? State any 2 types of Biometrics.

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