Electronic Banking Functions of Commercial Banks

Electronic Banking Functions of Commercial Banks

This reduces cost and time and makes banking service convenient to the customers. It is operated through internet. This service is a substitute for drafts, cheques and other paper based transfer of funds.

1. NEFT - National Electronic Funds Transfer

This was launched by the RBI in 2005. Under this electronic funds transfer system, bulk transfer of transactions are settled in batches during specific timings across India. Individuals and institutions which maintain accounts with a NEFT enabled bank branch are eligible  for using NEFT. Transactions do not occur under real time basis. Once  in  every  half hour from 8.00 am to 7.30 pm. 23 settlements are allowed in a day.NEFT transfers are not allowed on Sundays and bank holidays. Both NEFT and RTGS use IFSC (Indian Financial System Code) - a 11 digit alphanumeric code, to identify a bank branch. IFSC is provided by IDRBT (Institute for Development & Research on Banking Technology), Hyderabad.

2. RTGS - Real Time Gross Settlement Systems

It was launched by the RBI in 2013. The transactions are settled on real time basis. Gross settlement means the transaction is settled between one bank and another bank without adding any other transactions. RTGS facility is available between 9.00 am to 4.30 pm on weekdays and up to 2.00 pm on Saturdays. In one day the RTGS routes about 60,000 transactions worth about Rs. 2,700 billion and covers over 52,000 bank branches located in 10,000 cities and towns. RTGS transfers are not allowed on Sundays and bank holidays. Minimum limit for RTGS transaction is 2 lakhs.

3. Electronic Clearing Services (ECS)

ECS was launched by the RBI in 1995. It is an electronic method of fund transfer from a bank to another bank. ECS credit can be used to credit salary, dividend, interest, pension etc. and ECS debit is used to debit monthly telephone bills, electricity bills, equated monthly installments (EMI) payments. For this purpose the account holding individuals and institutions concerned should fill up certain forms and submit to the banks. ECS transactions between banks are settled in the current account maintained in the clearing house.

4. CORE Banking Solutions

‘CORE’ stands for ‘Centralized Online Real time Exchange’. In the centralized server of the bank, all the details of all the accounts of all the branches of the bank are available. A customer can withdraw money  through  cheque  at  any  branch  of that bank throughout the world. Similarly anyone can deposit money into the account. Entry of the transactions is recorded in the centralized server of the bank in real time and can be seen in all the branches of the bank. This facility is called core banking solutions.

5. Internet Banking or Virtual Banking

Internet banking refers to performing banking operations through internet, using computers and mobile phone. This can be done by a customer from home or office or any part of the world and all 24 hours of 7 days.

6. Mobile Banking

Most of the commercial banks have designed computer programs called apps which can be downloaded in smartphones. With this app in the smartphone a customer can operate his account transactions from anywhere. This service is known as mobile banking.

7. Automated Teller Machine (ATM) and CDM Facilities

A customer can withdraw money anytime, anywhere in India from the ATM machine using the ATM card given by  his/her  bank. The machine also shows the balance available in the customers’ account, provides statement print of the few past transactions, etc. Withdrawal of money in other bank ATMs is restricted and will be charged beyond the specified number of usage. Cash Deposit Machine Facility is useful to the public as well as customers to deposit cash into the account anytime. Similarly there are cheque deposit machines which receive cheques at any time.

8. IMPS - Immediate Payment Service

IMPS was launched by the National Payments Corporation of India in November 2010. IMPS allows funds transfer through mobile phone or internet banking by banking customers and approved non- banking partners. Its transactions are on real time basis. The current maximum limit is `. 2 lakhs. It made India a leading country in the world in real time payments in retail sector.

9. Funds Transfer Through SMS

*99# is the number for the funds transfer from any mobile phone. It  was launched  in 2014. Every common man in India can transact banking transactions from any corner of India.

10. Debit Cards

ATM card is also called debit card. This card is more useful in purchase of goods and services anywhere in India, if the shop maintains a swiping machine facility. VISA card and Maestro card services are offered by Visa Corporation and Mastercard both from the USA. RuPay cards services were launched in March 2012 by the National Payments Corporation of India.

11. Credit Cards

Banks issue credit cards to customers and other eligible persons. With this card, the holder can purchase goods and services on credit at any shop in India. If the dues are paid within the stipulated time no interest is charged. The credit limit is fixed by the issuing bank based on the income of the cardholder.