1.Introduction to Banking1.1 INTRODUCTIONModern commercial banking, in its present form, is of recent origin. Though bank is considered to be an ancient institution just like money. Its evolution can be traced in the functions of money lender, the goldsmiths and the merchants.A bank has been often described as an institution engaged in accepting of deposits and granting loans. It can also be described as an institution which borrows idle resources, makes funds available to. It does not refer only to a place of tending and depositing money, but looks after the financial problems of its consumers.This era is the age of specialization with the changing situation in the world economy, banking functions have broadened. Financial institutions which are shaped by the general economic structures of the country concerned vary from one country to another. Hence, a rigid classification of banks is bound to the unrealistic.

1.2 ORIGIN AND DEVELOPMENT OF BANKINGThere seem so be no uniformity amongst the economist about the origin of the word Bank. It has been believed that the word Bank has been derived from the German word Bank which means joint stock of firm or from the Italian word Banco which means a heap or mound.In India the ancient Hindu scriptures refers to the money - lending activities in vedic period. They performed most of those functions which banks perform in modern times. During Ramayana and Mahabharata eras also banking had become a full-fledged business activity. In other words the development of commercial banking in ancient times was closely associated with the business of money changing.In simple words, bank refers to an institution that deals in money. This institution accepts deposits from the people and gives loans to those who are in need. Besides dealing in money, bank these days perform various other functions, such as credit creation, agency job and general service. Bank, therefore is such an institution which accepts deposits from the people, gives loans, creates credit and undertakes agency work.

1.3 MEANING AND DEFINITION OF BANKINGMeaning of BankingYou know people earn money to meet their day to day expenses on food, clothing, education of children, having etc. They also need money to meet future expenses on marriage, higher education of children housing building and social functions. These are heavy expenses, which can be met if some money is saved out of the present income. With this practice, savings were available for use whenever needed, but it also involved the risk of loss by theft, robbery and other accidents.Thus, people were in need of a place where money could be saved safely and would be available when required. Banks are such places where people can deposit their savings with the assurance that they will be able to with draw money from the deposits whenever required.Bank is a lawful organization which accepts deposits that can be withdrawn on demand. It also tends money to individuals and business houses that need it.Definitions of Bank1. Indian Banking Companies Act - Banking Company is one which transacts the business of banking which means the accepting for the purpose of lending or investment of deposits money from the public repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise.2. Dictionary Meaning of the Word Bank -The oxford dictionary defines a bank as an establishment for custody of money received from or on behalf of its customers. Its essential duty is to pay their drafts on it. Its profits arises from the use of the money left employed by them.3. The Websters Dictionary Defines a bank as an institution which trades in money, establishment for the deposit, custody and issue of money, as also for making loans and discounts and facilitating the transmission of remittances from one place to another.4. According to Prof. Kinley, A bank is an establishment which makes to individuals such advances of money as may be required and safely made, and to which individuals entrust money when it required by them for use.The above definitions of bank reveal that bank is an Business institution which deal in money and use of money. Thus a proper and scientific definition of the bank should include various functions performed by a bank in a proper manner. We can say that any person, institution, company or enterprise can be a bank.

1.4 TYPES OF BANKSThere are various types of banks which operate in our country to meet the financial requirements of different categories of people engaged in agriculture, business, profession etc. on the basis of functions, the banking institution may be divided into following types:

1. Central BankA central bank functions as the apex controlling institution in the banking and financial system of the country.It functions as the controller of credit, bankers bank and also enjoys the monopoly of issuing currency on behalf of the government. A central bank is usually control and quite often owned, by the government of a country. The Reserve Bank of India (RBI) is such a bank within an India.2. Commercial BanksCommercial Banks are banking institutions that accept deposits and grant short-term loans and advances to their customers. In addition to giving short-term loans, commercial banks also give medium-term and long-term loan to business enterprises. Now-a-days some of the commercial banks are also providing housing loan on a long-term basis to individuals. There are also many other functions of commercial banks, which are discussed later in this lesson.

Types of Commercial banks: Commercial banks are of three types i.e., Public sector banks, Private sector banks and Foreign banks.(i) Public Sector Banks: These are banks where majority stake is held by the Government of India or Reserve Bank of India. Examples of public sector banks are: State Bank of India, Corporation Bank, Bank of Baroda and Dena Bank, etc. (ii) Private Sectors Banks: In case of private sector banks majority of share capital of the bank is held by private individuals. These banks are registered as companies with limited liability. For example: The Jammu and Kashmir Bank Ltd., Bank of Rajasthan Ltd., Development Credit Bank Ltd, Lord Krishna Bank Ltd., Bharat Overseas Bank Ltd., Global Trust Bank, Vysya Bank, etc.(iii) Foreign Banks: These banks are registered and have their headquarters in a foreign country but operate their branches in our country. Some of the foreign banks operating in our country are Hong Kong and Shanghai Banking Corporation (HSBC), Citibank, American Express Bank, Standard & Chartered Bank, Grindlays Bank, etc. The number of foreign banks operating in our country has increased since the financial sector reforms of 1991.3. Development BanksIt is considered as a hybrid institution which combines in itself the functions of a finance corporation and a development corporation. They also act as a catalytic agent in promoting balanced and viable development by assuming promotional role of discovering project ideas, undertaking feasibility studies and also provide technical, financial and managerial assistance for the implementation of project.In India Industrial Development Bank on India (IDBI) is the unique example of development bank. It has been designated as the principal institution of the country for co-ordinating the working of the institutions engaged in financing, promoting or development of industry.4. Co-operative BanksThe main business of co-operative banks is to provide finance to agriculture. They aim at developing a system of credit. Agriculture finance is a special field. The co-operative banks play a useful role in providing cheap exit facilities to the farmers. There are three types of co-operative banks operating in our country. They are primary credit societies, central co-operative banks and state co-operative banks. These banks are organized at three levels, village or town level, district level and state level.Types of Co-operative Banks (i) Primary Credit Societies: These are formed at the village or town level with borrower and non-borrower members residing in one locality. The operations of each society are restricted to a small area so that the members know each other and are able to watch over the activities of all members to prevent frauds.(ii) Central Co-operative Banks: These banks operate at the district level having some of the primary credit societies belonging to the same district as their members. These banks provide loans to their members (i.e., primary credit societies) and function as a link between the primary credit societies and state co-operative banks.(iii) State Co-operative Banks: These are the apex (highest level) co-operative banks in all the states of the country. They mobilise funds and help in its proper channelization among various sectors. The money reaches the individual borrowers from the state co-operative banks through the central co-operative banks and the primary credit societies.At the base of the pyramid there are primary agricultural societies at the village level. The long term exit is provided by the central land development Bank established at the state level. Initially, these banks used to advance loans on mortgage of land for the purpose of securing repayment of loans.

5. Specialised BanksThese banks are established and controlled under the special act of parliament. These banks have got the special status. One of the major bank is National Bank for Agricultural and Rural development (NABARD) established in 1982, as an apex institution in the field of agricultural and other economic activities in rural areas. In 1990 a special bank named small industries development Bank of India (SIDBI) was established. It was the subsidiary of Industrial development Bank of India. This bank was established for providing loan facilities, discounting and rediscounting of bills, direct assistance and leasing facility.(i) Small Industries Development Bank of India (SIDBI): If you want to establish a small-scale business unit or industry, loan on easy terms can be available through SIDBI. It also finances modernisation of small-scale industrial units, use of new technology and market activities. The aim and focus of SIDBI is to promote, finance and develop small-scale industries.(ii) National Bank for Agricultural and Rural Development (NABARD): It is a central or apex institution for financing agricultural and rural sectors. If a person is engaged in agriculture or other activities like handloom weaving, fishing, etc. NABARD can provide credit, both short-term and long-term, through regional rural banks. It provides financial assistance, especially, to co-operative credit, in the field of agriculture, small-scale industries, cottage and village industries handicrafts and allied economic activities in rural areas.6. Indigenous BankersThat unorganised unit which provides productive, unproductive, long term, medium term and short term loan at the higher interest rate are known as indigenous bankers. These banks can be found everywhere in cities, towns, mandis and villages.7. Rural BankingA set of financial institution engaged in financing of rural sector is termed as Rural Banking. The polices of financing of these banks have been designed in such a way so that these institution can play catalyst role in the process of rural development.8. Saving BanksThese banks perform the useful services of collecting small savings commercial banks also run saving bank to mobilise the savings of men of small means. Different countries have different types of savings bank viz. Mutual savings bank, Post office saving, commercial saving banks etc.9. Export - Import BankThese banks have been established for the purpose of financing foreign trade. They concentrate their working on medium and long-term financing. The Export-Import Bank of India (EXIM Bank) was established on January 1, 1982 as a statutory corporation wholly owned by the central government.

10. Foreign Exchange BanksThese banks finance mostly to the foreign trade of a country. Their main function is to discount, accept and collect foreign bulls of exchange. They also buy and self foreign currencies and help businessmen to convert their money into any foreign currency they need. Over a dozen foreign exchange banks branches are working in India have their head offices in foreign countries.

1.5 FUNCTIONS OF BANKSThe functions of commercial banks are of two types.(A) Primary functions; and(B) Secondary functions. (i) Primary functionsThe primary functions of a commercial bank include:a) Accepting deposits; andb) Granting loans and advances.a) Accepting depositsThe most important activity of a commercial bank is to mobilise deposits from the public. People who have surplus income and savings find it convenient to deposit the amounts with banks. Depending upon the nature of deposits, funds deposited with bank also earn interest. Thus, deposits with the bank grow along with the interest earned. If the rate of interest is higher, public are motivated to deposit more funds with the bank. There is also safety of funds deposited with the bank.b) Grant of loans and advancesThe second important function of a commercial bank is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts. The rate of interest charged on loans and advances varies according to the purpose and period of loan and also the mode of repayment.i) LoansA loan is granted for a specific time period. Generally commercial banks provide short-term loans. But term loans, i.e., loans for more than a year may also be granted. The borrower may be given the entire amount in lump sum or in instalments. Loans are generally granted against the security of certain assets. A loan is normally repaid in instalments. However, it may also be repaid in lump sum.

ii) AdvancesAn advance is a credit facility provided by the bank to its customers. It differs from loan in the sense that loans may be granted for longer period, but advances are normally granted for a short period of time. Further the purpose of granting advances is to meet the day-to-day requirements of business. The rate of interest charged on advances varies from bank to bank.Types of AdvancesBanks grant short-term financial assistance by way of cash credit, overdraft and bill discounting. Let us learn about these.a) Cash CreditCash credit is an arrangement whereby the bank allows the borrower to draw amount upto a specified limit. The amount is credited to the account of the customer. The customer can withdraw this amount as and when he requires. Interest is charged on the amount actually withdrawn. Cash Credit is granted as per terms and conditions agreed with the customers. b) OverdraftOverdraft is also a credit facility granted by bank. A customer who has a current account with the bank is allowed to withdraw more than the amount of credit balance in his account. It is a temporary arrangement. Overdraft facility with a specified limit may be allowed either on the security of assets, or on personal security, or both.

c) Discounting of BillsBanks provide short-term finance by discounting bills, that is, making payment of the amount before the due date of the bills after deducting a certain rate of discount. The party gets the funds without waiting for the date of maturity of the bills. In case any bill is dishonoured on the due date, the bank can recover the amount from the customer.ii) Secondary functionsIn addition to the primary functions of accepting deposits and lending money, banks perform a number of other functions, which are called secondary functions. These are as follows.a. Issuing letters of credit, travellers cheque, etc.b. Undertaking safe custody of valuables, important document and securities by providing safe deposit vaults or lockers.c. Providing customers with facilities of foreign exchange dealings.d. Transferring money from one account to another; and from one branch to another branch of the bank through cheque, pay order, demand draft.e. Standing guarantee on behalf of its customers, for making payment for purchase of goods, machinery, vehicles etc.f. Collecting and supplying business information.g. Providing reports on the credit worthiness of customers.i. Providing consumer finance for individuals by way of loans on easy terms for purchase of consumer durables like televisions, refrigerators, etc.j. Educational loans to students at reasonable rate of interest for higher studies, especially for professional courses.

1.6 SCOPE OF BANKING ACTIVITIESBanking activities are considered to be the life blood of the national economy. Without banking services, trading and business activities cannot be carried on smoothly. Banks are the distributors and protectors of liquid capital which is of vital significance to a developing country.Efficient administration of the banking system helps in the economic growth of the nation. Banking is useful to trade and commerce.Banking activities are useful to trade and industry in the following ways.a) Money deposited in a bank remains safe. Precious articles too can be kept in the safe custody of banks in lockers.b) Banks provide credit facilities to their customers. Customers with bank accounts also enjoy better credit in the business world.c) Banks encourage the habit of saving and thrift among people.They mobilise savings and invest them in productive activities. Thus, they help in increasing the rate of savings and investment in the country.d) Banks provide a convenient and safe means of transferring money from one place to another and facilitate business dealings/ transactions.e) Banks collect and realise bills, cheques, interest and dividend warrants etc. on behalf of their customers.f) Foreign trade is facilitated considerably with the help of banks which receive and make payments, provide credit and deal in foreign exchange. They protect importers from the risk of losson account of exchange rate fluctuations. They issue letter of credit and provide information on the credit worthiness of importers. They also act as referees of their customers.g) Banks meet the financial needs of small-scale business units which are located in economically backward areas.h) Farmers and artisans in rural areas can also avail of bank credit for financing their activities.i) Commercial banks provide many other services to the general public which include locker facility, issue of travellers cheques and gift cheques, payment of insurance premium, etc.Service activities of banksService activities of banks may be categorised as follows:i) Agency servicesii) General servicesAgency servicesBanks undertake/various agency services for their customers. These are outlined below.a) Collection of cheques, drafts, and bills of exchange on behalf of customers.b) Collection of dividend and interest warrants of customers.c) Collection of pension of government employees.d) Purchase and sale of securities on the instructions of customers.e) Executing standing orders for payment of rent, electricity bill, insurance premium etc.f) Acting as correspondent or representative of customers in dealing with other banks.g) Acting as trustee or executor when so nominated. General ServicesA commercial bank also performs the following services of generalutility to the public:a) Issue of letters of credit, travellers cheques and circular notes.b) Safe custody of valuables like gold, jewellery and important documents in safe deposit vaults (lockers) available on hire.c) Supply of trade information.d) Acting as a referee as regards financial status of customers.e) Acceptance of bills of exchange on behalf of customers.f) Underwriting loans floated by government and public bodies

1.7 BANKING IN INDIAStructure of the organised banking sector in India. Number of banks are in brackets.Pre Independence Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India which started in 1786, and the Bank of Hindustan, both of which are now defunct.The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India.Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and stillfunctioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that issues stock and requires shareholders to be held liable for the company's debt) It was not the first though. That honour belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Simla.When the American Civil War stopped the supply of cotton to Lancashire from the Confederate States, promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period failed.The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century.Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoired Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Puducherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking centre.The Bank of Bengal, which later merged with the Bank of Bombay and the Bank of Madras to form the Imperial Bank of India in 1921.The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958.The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India.Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities.The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of theeconomy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments."The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi movement. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara ( South Kanara ) district. Four nationalised banks started in this district and also a leading private sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking".

During the First World War (1914-1918) through the end of the Second World War (1939-1945), and two years thereafter until the independence of India were challenging for Indian banking. The years of the First World War were turbulent, and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related economic activities. At least 94 banks in India failed between 1913 and 1918Post IndependenceThe partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months.India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.However, despite these provisions, control and regulations, banks in India except the State Bank of India, continued to be owned and operated by private persons. This changed with the nationalisation of major banks in India on 19 July 1969

Indian Bankis an Indian state-ownedfinancial servicescompany headquartered inChennai, India. It has 19000 employees, 2100 branches and is one of the big public sector banks of India. It has overseas branches inColombo,Jaffna, Sri Lanka,Singapore, and 229correspondent banksin 69 countries. Since 1969 theGovernment of Indiahas owned the bank, which celebrated its centenary in 2007.INDIAN BANKTypePublic

Traded asBSE: 523465NSE: INDIANB

IndustryFinancial services

Founded1907

HeadquarterChennai, India

IndustryFinancial services

HeadquartersChennai, India

Key peopleT.M.Bhasin (Chairman & MD)

RevenueIncreaseINR2119.88 billion (US$35 billion) (2012)

Net incomeIncrease INR135 billion (US$2.2 billion) (2012)

Total assetsINR11218 billion (US$190 billion) (2011)

Employees18782

Websitewww.indianbank.in

2.1 EARLY FORMATION AND EXPANSIONIn the last quarter of 1906,Madras(now Chennai) was hit by the worst financial crisis the city was ever to suffer.Of the three best-known British commercial names in 19th century Madras, one crashed; a second had to be resurrected by a distress sale; and the third had to be bailed out by a benevolent benefactor.Arbuthnot & Co, which failed, was considered the soundest of the three. Parry's (nowEID Parry), may have been the earliest of them andBinny & Co.'s founders may have had the oldest associations with Madras, but it was Arbuthnot, established in 1810, that was the city's strongest commercial organisation in the 19th Century. A key figure in the bankruptcy case for Arbuthnot's was the Madras lawyer,V. Krishnaswamy Iyer; he went on to organise a group ofChettiarsthat founded Indian Bank. Annamalai and Ramaswami Chettiar founded Indian Bank (IB) on 5 March 1907, and it commenced operations 15 August 1907 with its head office in Parry's Building, Parry Corner, Madras.

2.2 POST INDEPENDENCE OF INDIAAfter the war, in 1948, it reopened its branch inColombo. Indian Bank also reopened its branches in Burma, Malayan and Singapore, the last in 1962. The Burmese government nationalised all foreign banks, including Indian Bank's branch, in 1963.The 1960s saw IB expand domestically as it acquired Rayalaseema Bank (est. 1939),MannargudiBank (est. 1932), Bank of Alagapuri,SalemBank (est. 1925), and Trichy United Bank. (Trichy United was the result of the 1965 merger of Woraiyur Commercial Bank, the Palakkarai Bank and the Tennur Bank.) These were all small banks with the result that all the acquisitions added only about 38 branches to IB's network. Trichy United had five branches and its acquisition in 1967 brought the number of IB branches up to 210.Then on 19 July 1969 the Government of India nationalised 14 top banks, including Indian Bank. One consequence of the nationalisation was that the Malaysian branches of nationalised Indian banks were forbidden to continue to operate as branches of the parent. At the time, Indian Bank had three branches, andIndian Overseas Bank, andUnited Commercial Bankhad eight between them. In 1973 the three establishedUnited Asian BankBerhad to amalgamate and take over their Malaysian operations.International expansion continued in 1978 with IB becoming a technical adviser to PT Bank Rama in Indonesia, the result of the merger of PT Bank Masyarakat and PT Bank Ramayana. Two years later, IB,Bank of Baroda, andUnion Bank of Indiaestablished IUB International Finance, a licensed deposit taker in Hong Kong. Each of the three banks took an equal share in the joint venture.

2.3 POST NATIONALISATIONIn 1969 the Government of India nationalised Indian Bank, and thirteen other banks.In 1990, Indian Bank rescued Bank ofTanjore(Bank of Thanjavur; est. 1901), with its 157 branches, based inTamil Nadu.A multi-crore scam was exposed in 1992, when then chairman M. Gopalakrishnan lent 13billion to small corporates and exporters from the south, which the borrowers never repaid.Bank of Barodabought out its partners in IUB International Finance in Hong Kong in 1998. Apparently this was a response to regulatory changes following Hong Kong's reversion to Chinese control. IUB became Bank of Baroda (Hong Kong), a restricted licence bank.

1. Ind Net banking- Customers can use the internet to do their banking at the convenience of their home. Through Website : https://www.indianbank.net.in.2. Ind Mobile banking- Customers can use their mobile phones to do their banking. SMS to 9444394443 from your mobile.3. Ind Phone banking- Customers can call for enquiries anytime, anywhere through telephone. Call telephone toll free 1800-425-3425.4. e Payment of Indirect Taxes- Customers can pay taxes like excise duty and service tax through internet. This service is available both online and offline.5. MCA Payment- Payments for MCA can be made online through internet bankingservice.6. Ind-Jet Remit (RTGS)- Transfer offundsto any account in any bank branch enabled for RTGS in a fastest way. For remittance of Rs.2 lakh and above7. N E F T- Transfer offundsto any account in any bank branch enabled for NEFT within the same day.8. CMS Plus- A bundle of collection and paymentServices offered for clients.9. Multicity Cheque Facility- Cheques can be issued to beneficiaries all over India.10. IB Swarna Mudra- IB-Swarna Mudra, It is aschemeforsellinggold coins.11. Credit Cards-VISA cards available in three variants : Gold, Classic and Bharat cards12. ATM/Debit Cards-Our 24 hour Hi-powered, value-added ATM cum Debit card, just the size of a visiting card, is the passport to the facilities available with ATM and forshoppingat Merchant establishment. It brilliantly complements customer's ambitions,offeringmore value, more excitement, more service, more extras.13. Arogya Raksha Group Health Insurance Policy -(By arrangement with M/s. United India Insurance Co. Ltd) 14. e Payment of Direct Taxes-Customers can pay income tax through internet15. New IB Jeevan Vidya16. Money Gram17. Janashree Bhima Yojan (Launched in association with LIC)18. Universal Health Care (Launched in Association with UIIC Ltd)19. IB Griha Jeevan Group Insurance Scheme for Mortgage Borrowers (launched in Association with LIC)20. IB Home Suraksha-Group Insurance Scheme for mortgage Borrowers (launched in Association with Kotak Mahindra Old Mutual Life Insurance Ltd)21. Xpress Money Inward Remittance Money Transfer Service Scheme22. IB Yatra Suraksha (launched in Association with UIICO Ltd)23. IB Vidyarthi Suraksha (launched in Association with PNB-Metlife)13. IB Jeevan Kalyan14. IB Varishtha15. IB Chhatra16. Arogya Raksha

3.- THE MODERN APPROACH OF BANKINGThe IT revolution has had a great impact on the Indian banking system. The use of computers has led to the introduction ofonline bankingin India. The use of computers in the banking sector in India has increased many fold after the economic liberalisation of 1991 as the country's banking sector has been exposed to the world's market. Indian banks were finding it difficult to compete with the international banks in terms of customer service, without the use of information technology.The RBI set up a number of committees to define and co-ordinate banking technology. These have included: In 1984 was formed the Committee on Mechanisation in the Banking Industry (1984) whose chairman was Dr. C Rangarajan, Deputy Governor, Reserve Bank of India. The major recommendations of this committee were introducingMICRtechnology in all the banks in the metropolises in India. This provided for the use of standardized cheque forms and encoders. In 1988, the RBI set up the Committee on Computerisation in Banks (1988) headed by Dr. C Rangarajan. It emphasized that settlement operation must be computerized in theclearing housesof RBI inBhubaneswar,Guwahati,Jaipur,PatnaandThiruvan-anthapuram. It further stated that there should be National Clearing of inter-citychequesat Kolkata,Mumbai,Delhi,Chennaiand MICR should be made operational. It also focused on computerisation of branches and increasing connectivity among branches through computers. It also suggested modalities for implementing on-line banking. The committee submitted its reports in 1989 and computerisation began from 1993 with the settlement between IBA and bank employees' associations. In 1994, the Committee on Technology Issues relating toPayment systems,Cheque ClearingandSecurities Settlementin the Banking Industry (1994) was set up under Chairman W S Saraf. It emphasizedElectronic Funds Transfer(EFT) system, with the BANKNET communications network as its carrier. It also said that MICR clearing should be set up in all branches of all those banks with more than 100 branches. In 1995, the Committee for proposing Legislation on Electronic Funds Transfer and other Electronic Payments (1995)again emphasized EFT system.The total number ofautomated teller machines(ATMs) installed in India by various banks as of end June 2012 is 99,218.The new private sector banks in India have the most ATMs, followed by off-site ATMs belonging to SBI and its subsidiaries and then by nationalised banks and foreign banks, while on-site is highest for the nationalised banks of India.EVOLUTION OF E-BANKINGThe Rangarajan Committee report in early 1980s was the first step towards computerization of banks. Banks started exploring the idea of 'Total Bank Automation (TBA)'. Although titled 'Total Bank Automation,' TBA was in most cases confined to branch automation.It was only in the early 1990s that banks started thinking about tying up disparate branches together to facilitate information sharing. At the same time, private banks entered the banking arena with radically different strategies. Given the huge IT budgets at their disposal and with almost no legacy IT equipment to worry about; private banks hastened the adoption of technology. The philosophy for private banks was very clear: to provide a whole new range of financial products and services at minimal costs. And technology made this possible.Says K.N.C. Nair, Head (IT), Federal Bank, The new generation banks showed the way and others had no option but to follow the tech infusion to retain and attract profitable customers."The improved connectivity and falling costs offered by leased lines and VSATs provided a booster to inter-branch automation. Confirms Naresh Wadhwa, Vice President-West, Cisco Systems (India), "With the improved services and lowered costs of service providers such as Dot and VSNL, it became more feasible for banks to network their branches. This gave banks an impetus to network all the branches and set up centralized databases. With these developments it became possible for operations such as MIS to be truly automated and centralized." With centralized infrastructure and numerous connectivity options, banks started exploring multiple delivery channels like ATM, Net-banking, mobile banking, and Telebanking thus driving down cost per transaction.In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks.The next stage for the Indian banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 74% with some restrictions.The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more.Currently, banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true.With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales.In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them.In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connection with housing, vehicle and personal loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide.NEW FINANCIAL PRODUCTS IN BANKING ONLINE BANKING ATM ELECTRONIC FUND TRANSFER ELECTRONIC CLEARING SERVICE CREDIT CARDS MOBILE BANKING DEBIT CARDS ELECTRONIC COMMERCE TELE BANKING

ONLINE BANKINGOnline banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society.FeaturesOnline banking solutions have many features and capabilities in common, but traditionally also have some that are application specific.The common features fall broadly into several categories Transactional (e.g., performing a financial transaction such as an account to account transfer, paying a bill, wire transfer... and applications... apply for a loan, new account, etc.) Electronic bill presentment and payment - EBPP Funds transfer between a customer's own checking and savings accounts, or to another customer's account Investment purchase or sale Loan applications and transactions, such as repayments Non-transactional (e.g., online statements, check links, cobrowsing, chat) Bank statements Financial Institution Administration - features allowing the financial institution to manage the online experience of their end users ASP/Hosting Administration - features allowing the hosting company to administer the solution across financial institutionsFeatures commonly unique to business banking include Support of multiple users having varying levels of authority Transaction approval process Wire transfer

Features commonly unique to Internet banking include Personal financial management support, such as importing data into personal accounting software. Some online banking platforms support account aggregation to allow the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions.

AUTOMATED TELLER MACHINE (ATM)Smaller indoor ATMs dispense money inside conveniencestores and other busy areas, such as this off-premise Wincor Nixdorfmono-function ATM in Sweden.An automated teller machine (ATM) is a computerizedtelecommunications device that provides the customers of a financialinstitution with access to financial transactions in a public spacewithout the need for a human clerk or bank teller. On most modernATMs, the customer is identified by inserting a plastic ATM card witha magnetic stripe or a plastic smartcard with a chip, that contains aunique card number and some security information, such as anexpiration date or CVC (CVV). Security is provided by the customerentering a personal identification number (PIN).Using an ATM, customers can access their bank accounts inorder to make cash withdrawals (or credit card cash advances) andcheck their account balances as well as purchasing mobile cell phoneprepaid credit. ATMs are known by various other names includingautomated transaction machine, automated banking machine, moneymachine, bank machine, cash machine, hole-in-the-wall, cashpoint,Bancomat (in various countries in Europe and Russia), Multibanco(after a registered trade mark, in Portugal), and Any Time Money (inIndia).