Technological Developments in Indian Banking Sector
Dr. B.S. Sawant,
Director, K.B.P. Institute of Management Studies and Research, Satara, Research Guide
Abstract: Banking sector plays a significant role in development of Indian economy. So banks need to optionally leverage technology to increase penetration, improve their productivity and efficiency, deliver cost-effective products and services, provide faster, efficient and convenient customer service and thereby, contribute to the overall growth and development of the country. Technology enables increased penetration of the banking system, increases cost ...view middle of the document...
RTGS for real time gross settlement. Keyboards: Technology, Effective, MICR, EFT, RTGS, Technological Development in Banks: Developments in the field of information technology (IT) strongly supports the growth and inclusiveness of the banking sector by facilitating inclusive economic growth .IT improves the front end operations with back end and helps in bringing down the transaction costs for the customers. Important Events in India · Arrival of card-based payments- Debit, Credit card late 1980s and 1990s · Introduction of Electronic Clearing Services (ECS) in late 1990s · Introduction of Electronic Fund Transfer (EFT) in early 2000s · Introduction of RTGS in March 2004 · Introduction of National Electronic Fund Transfer(NEFT) as a replacement to Electronic Fund Transfer/Special Electronic Fund Transfer in 2005/2006 · CTS in 2007 Computerization in Banks: Technology has charged the face of the Indian banking sector through computation while new private sector banks and foreign banks have an edge in this regard. Among the total number of public sector bank branches, 97.8 percent are fully computerized at end – March 2010 whereas all branches of SBI are fully computerized.
Table 1: Computerization in Public Sector banks:
Category Fully computerized Branches (%) 2007 85.6 2008 93.7 2009 95.0 2010 97.8
Source: RBI, Annual Report 2009-10
Automated clearing House (ACH): In clearing house, computers are employed to handle cheques. The nature of work involved in clearing operations in voluminous, repetitive, routine in nature. It is complex to clear, exchange and settle the transactions among several banks. Computers are deployed in clearing house to speed up the process and clearing the operations quickly and efficiently which is voluminous work. Automated clearing house (ACH) is an electronic network for financial transaction. ACH processes large number of debit and credit transaction in batches. National Automated clearing house Association (NACHA): It helps to debit transfers for point-of-purchase (POP) check conversion. Both government and the commercial sectors use ACH payment. Business are also increasing using ACH to collect payment online from customers, rather than accepting credit or debit cards. Rules and regulations governing the ACH network are established by NACHA and Federal Reserve. The Federal Reserve banks are collectively the nation's largest automated clearing house operator. FEDACH is the Federal Reserve's centralized application software used to process ACH transactions. Electronic Clearing Services (ECS): ECS is a mode of electronic funds transfer from one bank account to another bank account using the services of a clearing house. This is used for bulk transfers from one account to many accounts or vice-versa. Types of ECS:There are two types of ECS called ECS (credit) and ECS (debit). 1. ECS (credit)- is used for affording credit to a large number of beneficiaries by raising a single debit to an account, such as...