India

Why Indians Prefer Banking Sector Jobs

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The economy of India has evolved a lot over the last couple of years. There are a lot of foreign companies who have set up their business units in the country and are already doing brisk business. The employment opportunities offered by these companies are very much lucrative, but that does not stop the Indians from admiring government more than private jobs.

The biggest factor that usually plays in the mind is job security. The population of India is growing like anything and so are the living costs. Under such circumstances, one cannot risk being kicked out of a job for not being able to perform according to the expectations of the employers. All of us want to have a steady income to meet our family needs without having to worry much about job security. The working culture in most private companies is very competitive and they don’t hesitate to replace a candidate with someone else whom they think would bring them more profits. This is a fairly common practice and they do this without giving enough time to the candidate to find himself a new job.

The compensation offered to the candidate while firing him is also very little. Under such circumstances it becomes very difficult for a conservative Indian to find himself a new job without losing his dignity. No wonder, the Indians prefer the security of government jobs over the huge compensation and growth opportunities offered by the private companies.

There is one more problem also. The cost of establishing a business unit in India is very low and within the reach of all kinds of private investors. This makes it very easy for the private companies to shut doors whenever they run into losses and stop functioning entirely. Whenever this happens, it is the employees who are left running from pillar to post looking for a new job to sustain their families. Such things have happened in India quite a number of times in the recent years and people seem to have learnt their lessons.

In private companies, people are expected to work for long hours. This is something that Indians find difficult to live with. Indians not only love to spend a lot of time with their families, but also spent some time pursuing their personal interests and hobbies. In this country family comes first; money and carrier growth are actually secondary. No wonder, most people in this country prefer low-paying jobs with low working hours compared to high paying jobs with high working hours. The government jobs just fit the bill!

E-Banking Impact of Information Technology in India

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E-Banking: Impact of Information Technology in India Mr. Vijay Kumbhar [Assit. Professor in Economics, Abasaheb Marathe College, Rajapur Dist- Ratnagiri (Maharashtra)]

Introduction With the advancement of information technology and to derive the inherent advantages of its implementation, there was a long felt need to give recognition to the electronic mean as an alternative to paper based banking practice in India. The evolution of banking technology has been mainly driven by changes in distribution channels as automated teller-machine (ATM), phone-banking, tele-banking, pc-banking and most recently internet banking etc. In the traditional banking system a person had to go to a bank branch to deposit or withdraw money and get a bank statement book manually updated by a teller over the counter. With the introduction of computer networks, a networked printing machine started replacing the manual update of statements. Then automated teller machines (ATMs) were introduced to facilitate withdrawals, deposits and even transfers accommodating mobility in much wider geographical areas. Phone banking was a revolutionary concept in banking since it made banking accessible from anywhere as long as phones were available. With the successful diffusion of mobile phones, phone banking is moving into a next phase of development. However, one of the most substantial changes in banking technology is the recent introduction of internet banking.

1.0 Definition of E-Banking E-banking is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. E-banking includes the systems that enable financial institution customers, individuals or businesses, to access accounts, transact business, or obtain information on financial products and services through a public or private network, including the Internet. Customers access e-banking services using an intelligent electronic device, such as a personal computer (PC), personal digital assistant (PDA), automated teller machine (ATM), kiosk, or Touch Tone telephone. While the risks and controls are similar for the various e-banking access channels, this booklet focuses specifically on Internet-based services due to the Internet’s widely accessible public network.

1.2 Origin of E-banking In India The Indian banking system has undergone significant technological transformation since the 1980s.The Rangarajan Committee report in 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. The private banks provided huge budgets to the adoption of technology to provide a whole new range of financial products and services at minimal costs.

1.3 E-Banking in India Most of Indian commercial banks are providing non-conventional and innovative banking services. Product innovation is tied to internet banking; increasing competition amongst the leading banks also promotes product and service differentiation. For example, despite the Internet Banking System developed in 1990 by the reserve bank of India with the help of department of telecommunication of India. Moreover, Indian banks offer innovative technology based banking products and service to their customers. Information technology revolution affect on traditional banking practice in following manner in India.

1.3.01Computerization of Banks in India Computerization is general trend in all sector, banks also trying to Computerization, as per recommendation of Rangarajan Committee (II), the progress in implementation of the directive of the Central Vigilance Commission (CVC) on the need to computerize 70 per cent of the banking business by public sector banks before January 1, 2006, 13 banks had achieved the desired level. Figures as at end of March 2008 indicated that 23 banks have achieved the target, while two banks have computerisations levels ranging between 70 per cent and 79 per cent and two others were at a level below 65per cent and 29 percent banks having a core banking solution. At present there are 67.7% of branches are under Core Banking Solutions, 94.6% are fully computerized and 6.4% are partially computerized branches of public sector banks in India. Other than public sector banks, all private and foreign banks are mostly computerized recently.

1.3.02Wireless Banking, Online Banking or Internet Banking Wireless banking/ online banking is a delivery channel that can extend the reach and enhance the convenience of Internet banking products and services. Wireless banking occurs when customers access a financial institution’s network using cellular phones, pagers, and personal digital assistants through telecommunication companies’ wireless networks. It uses the Internet as the delivery channel by which to conduct banking activity, e.g. transferring funds, paying bills, viewing checking and savings account balances, paying mortgages, and purchasing financial instruments and certificates of deposit. Online banking usually offers such features as: Bank statements, with the possibility to import data in a personal finance program such as Quicken or Microsoft Money Electronic bill payment Electronic funds transfer between a customer’s own checking and savings accounts, or to another customer’s account Electronically investment purchase or sale of securities by D-Mat Account Loan applications and transactions, such as repayments 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.etc.

1.3.03Core Banking or Centralized Banking Core banking is a term used to describe a service provided by a group of networked bank branches. Bank customers may access their funds from any of the member branch offices. Core banking consists of a networking process by which the servers of different branches of a bank are joined to a common server and henceforth an account holder may access, deposit, and withdraw money from his/her account from any of the branches of the bank. In 21st United States, core banking has become common place. Today 67.7 % of public sector bank branches are all branches of private and foreign banks are under core banking solution in India.

1.3.04Electronic Authentication and Electronic Signature Banks are now using technology for the proper identification of customers’ identity. In the era of technology based banking operation verifying the identities of customers and authorizing e-banking activities are integral parts of e-banking services. Since traditional paper-based and in-person identity authentication methods reduce the speed and efficiency of electronic transactions, financial institutions have adopted alternative authentication methods. The latest option digital (electronic) signatures for generating and identification of customers signature is best option within the electronic banking platform.

1.3.05BANKNET BANKNET is a internet based communication network backbone. It provides speed of financial transaction. At present, seven centers viz. Mumbai, Delhi, Calcutta, Madras, Nagpur, Bangalore and Hyderabad. Set up in 1991 by the RBI, this backbone is meant to facilitate transfer of inter-bank (and inter-branch) messages within India by Public Sector banks who are members of this network. More centres (like Pune, Ahmedabad, Kanpur, Lucknow, Chandigarh, Kochi, Jaipur, Bhopal, Patna, Bhubaneshwar, Thiruvananthapuram, Guwahati, Panaji Jammu etc) are being brought on the network.

1.3.06INFINET-Indian Financial Network The ‘INFINET’ Indian Financial Network is a satellite based wide area network using VSAT (Very Small Aperture Terminal) technology set up by the RBI in June 1999. The hub and the Network Management System of the INFINET are located in the Institute for Development and Research in Banking Technology, (IDRBT) Hyderabad. Among the major applications identified for porting on the INFINET in the initial phase are e-mail, Electronic Clearing Service – Credit and Debit, Electronic Funds Transfer and transmission of Inter-city Cheque Realization advices. Later, other payment system related applications as well as Management Information System (MIS) applications are proposed to be operationalized.

1.3.07Indian Banks and S.W.I.F.T All Indian public sector banks are part of the international financial messages communication network, namely, Society for Worldwide Inter-bank Financial Telecommunication (S.W.I.F.T). The S.W.I.F.T provides reliable and expeditious telecommunication facilities for exchange of financial message all over the world. The gateway is in Mumbai and efforts are on to other cities through leased lines/public data network.

1.3.08Electronic Data Interchange (EDI) EDI is a computer-to-computer transfer of details of commercial or administrative transactions using an agreed protocol and standard data structure. EDI standards have been developed in respect of specific messages for transmission of business transactions which are electronic equivalents of commercial invoices, purchase orders, transport bookings and payment instructions etc.

1.3.09Telephone banking, Mobile Banking and SMS Banking Telephone banking is specific provision of banking services over the telephone. It allows customers to perform transactions over the telephone. Most telephone banking use an interactive voice response (IVR). Mobile Banking is the hottest area of development in the banking sector and is expected to replace the credit/debit card system in future. Most of banks are providing SMS alert facility to their customers. Facility of SMS services SMS banking is becomes very much safe and useful in recent days.

1.3.10MICR Clearing MICR (Magnetic Ink Character Recognition) is a character recognition technology adopted mainly by the banking industry to facilitate the processing of cheque. The process was demonstrated to the American Bankers Association in July 1956, and it was almost universally employed by 1963. MICR characters are printed with a magnetic ink or toner. Magnetic printing is used so that the characters can be reliably read into a system, In India MICAR Introduced in 1987 in the four Metros, the MICR Clearing is now in operation in 14 centers (HYDERABAD, BANGLORE, AHMEDABAD, KANPUR, JAIPUR, NAGPUR, BARODA, PUNE, GAUHATI, TRIVANDRUM) and is proposed to be extended to a total of 22 centers where volume of clearing transactions is large. 1.3.11Automated Clearing House The Automated Clearing House (ACH) is an electronic banking network operating system. ACH processes large volumes of both credit and debit transactions which are originated in batches. Within the Rules and regulations governing the ACH network are established by the Reserve Bank of India by the help of the State Bank of India. 1.3.12Credit card and Debit Cards A credit card system is a type of retail transaction settlement and credit system, named after the small plastic card issued to users of the system. In the case of credit cards, the issuer lends money to the consumer. Credit cards are become very popular in India with the introduction of foreign banks in the country. A debit card is a plastic card which provides an alternative payment method to cash when making purchases. Debit cards are accepted at many locations, including grocery stores, retail stores, gasoline stations, and restaurants. It’s an alternative to carrying a checkbook or cash. There are currently two ways that debit card transactions are processed: online debit cards and offline debit cards. Online debit cards require electronic authorization of every transaction and the debits are reflected in the user’s account immediately. Offline debit cards have the logos of major credit cards (e.g. Visa or MasterCard) or major debit cards (e.g. Maestro) and are used at point of sale like a credit card. This type of debit card may be subject to a daily limit, as well as a maximum limit equal to the amount currently deposited in the current/checking account from which it draws funds.

1.3.13RTGS (Real Time Gross Settlement System) Real Time Gross Settlement (RTGS) is a comprehensive secured on line settlement solution, set up, operated and maintained by Reserve Bank of India to enable funds settlement across banks in the country on real time basis to minimize costs and maximize benefits, increase velocity of funds-flow both inter- city and interbank, reduce credit risk, increase transparency of payments and better liquidity management. RTGS is managed by RBI. In India RTGS System has been implemented since March 26, 2004. 1.3.14Electronic Clearing Services (ECS) ECS Scheme operated by the RBI since 1996-97, it helps to make payment from a single account at a bank branch to any number of accounts maintained with the branches of the same or other banks. This is the most useful mode of payment of dividend / interest/ pension/refund etc. The clearing and settlement activities are dispersed through 1,047 clearing houses managed by RBI, the State Bank of India and its associates, public sector banks and other institutions. 1.3.15Electronic Funds Transfer (EFT) & Special Electronic Funds Transfer EFT System hosted and operated by the RBI, permits transfer of funds, unto Rs. 5 lacs from any account at any branch of any member bank in any city to any other account at any branch of any member bank in any other city. This system utilizes the Service Branches of the member banks and the nodal offices of RBI. RBINET is the conduit for the flow of funds. The Reserve Bank of India acts as the service provider as well as regulator. A special EFT (SEFT) was introduced in April 2003 covering about 3000 branches in 500 cities. This has facilitated same day transfer of funds across accounts of constituents at all these branches. 1.3.16Automated Teller Machine (ATM) The first bank to introduce the ATM concept in India was the Hong Kong and Shanghai Banking Corporation (HSBC) in the year 1987. Now, almost every commercial bank gives ATM facilities to its customers. SBI is following the concept of ‘ATMs in Quantity’. The Corporation Bank has the second largest network of ATMs amongst the Public Sector Banks in India. Today’s all Public Sector Banks are taking the installation of ATMs seriously for Indian market. They are either setting up their own ATM centers or entering into tie-ups with other banks. Since April 2009 access in any ATM machine is free of charge it is the great opportunity to any ware banking in India. 1.3.17Electronic Bill Payment EBP can attract customers due to the faster and efficient bill payment mechanism of the banking in India. Customers can access their financial information more easily and create a more intimate relationship with the customer and promote and deliver other online products and services. Most of Indian banks are trying setups an EBP portal. ICICI has already started a portal called BillJunction.com. Banks are planning to use the Net for payment of utility bills. They are entering into tie-ups with utilities like MTNL, AirTel, Orange, and BPL Mobile etc. Right now, a customer who’s received a bill in the physical form logs into the network in order to make an online payment. In the future, these bills will be sent to customers through the Net.

Conclusion All these developments in Indian banking are shows that, the Indian banks are marching towards modern banking and changing their traditional look. It is grate change of banking industry because of information technology development. They are trying to installation of information technology for banking business and they trying to provide technology based banking products and services to their customers. Indian banks also trying to Univerlisation of banking products and services to one stop banking shop for customer delight, but comparatively private and foreign banks existing in Indian economy are having a higher level of modernization and those providing numbers of modern services to their customers. References:- 1)Davis whitely (2000) : Strategy Technologies, and Applications MCGRAW- Hill company. 2)Dr. M.Mahmaoudi Maymand (2005) E-commerce Deep & Deep publications pvt.Ltd. 3)Gordon, Natarasan (2006) Financial Markets & services Himalaya publication House Delhi. 4)P.R.Shukla, S.K.Rovchoudhary, (1992), Banking System, credit and Developments, Akashdeep publishing House, New Delhi. 5)N.Vinaykam (1993); A peep In To The Private sector Banks, kanishka publishers Delhi. 6)Khan Masood Ahamad (1992) Banking In India, Anmol Publications, New Delhi. 7)S.S.Hugar (1993), Trends And challeges To Indian Banking, Deep & Deep publications, New Delhi. 8)Vasant C.Joshi, Vinay V.Joshi (1998) Managing Indian Banks : The Challenges Ahead, Sage publications, New Delhi. 9)Frederic S. Mishkin (1998), The Economics of Money Banking and Financial Markets 5th edition an important of addition wesly Longman. 10)Report on Trends and progress of Banking in India – 2005-06 11)R.B.I. Annual Report 2004-05 and 2005-06. 12)Banking Industry – Vision 2010 13)Professional BANKER – July 2007.

MBA Education for Banking and Non-Banking Managerial Jobs

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Business schools in many countries offer management courses tailored to full time, part-time, executive and distance learning MBA programs. Since MBA degree from any well-known institute not only offers recognition, but also a high salary package, a wide range of MBA programs are tailored with specialized concentrations like finance, marketing, accounting, information technology, human resource management and many other fields. In India, some MBA colleges offer post graduation diploma courses called PGDM programs which are approved by All India Council for Technical Education (AICTE). AITCE is an apex Indian government undertaking with a view to improve the qualitative technical education system throughout the country and regulate the norms and standards for planning the quantitative growth and matters connected therewith. Since the strength of any country’s economy lies in finance and banking sectors, the importance of MBAs in these sectors cannot be understated.

In India, all types of commercial banks, public sector banks, rural banks, foreign banks, private banks and urban co-operative banking institutions play a significant role in boosting the economy and financial position of the country. MBA degree is considered to be the foremost qualification which is required by these banking and financial institutions for their managerial level positions. MBA education in finance provides important knowledge about the financial skills and solutions for the issues relating to the domestic and international banking and services. Market analysis and cash management skills are two important areas which every MBA student must know how to handle. MBA with specialization in finance offers to learn a variety of subjects like costing, budgeting, corporate finance, international finance, investments, working capital finance and securities etc. MBAs pursuing their courses in finance can start their career in any investment firm or any banking institute as an associate manager. MBA in finance from top MBA colleges offers lucrative job placements from big companies and financial institutes. An MBA in finance has options to work with leading banks and non-banking institutions. He or she might have an option to work as a securities analyst or working with brokerage firms dealing in buying and selling of securities.

Degree of MBA in India from any reputed college is considered to be one of the most sought after degree aimed at providing high class management studies. Since the studies of marketing teaches about the art of selling products and services, MBAs has to analyze and assess the feasibility of products and services according to the market demand. They are required to introduce marketing strategies for marketing new products. They have to set marketing goals and have to work on branding, planning and adoption of promotional campaigns. In other words, marketing MBAs have to bring out new ideas and concepts which can help the companies and organizations to grow and prosper. Marketing MBA courses are designed to help inculcate good reasoning and problem solving skills which can help the individual to sell and market the products in difficult situations. MBA in marketing offers good pay-scale packages and jobs in this area are always in demand for all commercial, industrial and corporate sectors.

About Author: ISBF has been established to impart quality education with international recognition in the area of Economics, CFP, Management and MBA Education courses in India.

Visit us at: http://www.isbf.edu.in/ for more info on MBA and MBA Colleges and Finance courses.

IT Support Services to Banking Sector

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With the other industries the banking industry is also growing at a significant good rate today. The main reason behind this is the use of the latest technology tools. In the olden days banking was done on paper but now it is done electronically with the help of computers. Many IT Support Company are giving their IT services to the banking sector.

It has been observed during the last few decades that IT infrastructure services have been taken by the banks and other financial institutions. In the early 80s the banks started to make their branches computerized and were purchasing the software packages. In the early 90s replacement of the computer systems with the inexpensive and latest technology powered PCs began. Information technology opened up the way for the banks to make their products sophisticated, diversified and adopting new techniques and make better market infrastructure. The internet has become the remote channel of communication between banks and its customers.

The E-Banking came to the United States of America and the United Kingdom in between 1020 to 1030 and now India is also following it. Most of the banks have made their services based on these technologies and equipments which are offered by many IT support companies. Now the customers can view their account summary, status, receipts, transaction records, can make online funds transfer and many more online options like these. Undoubtedly today banking has become more fast and easy and the customers expectations are also increased. Now the customer needs not to have its account summary on registers because everything is now online with the advent of the internet technology which is providing many benefits to the customers as well as the banks.

A customer can take his cash fast and easy with the use of an ATM machine. He can use his debit or credit card for purchasing purposes. He can use e-cheques, mobile banking, telephone banking and internet banking for remote transactions. He can also make payment transfers when the bank is closed. Easy to keep an eye or monitor the account status. It is cost effective for the bank because thousands of customers can be handled at a time and no need to use so many clerks.

We can say that technology has always played an important role in the growth of financial organizations and banks. It has shortened the paths of long transactions to smaller ones. It is giving proper service quality and satisfaction to the customers.

The Challenges of Banking Outsourcing

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Banking has been a very traditional and conservative sector in any country. For ages, generations after generations, have been loyal to a particular bank that their families have been associated with. Whether it is the Royal Bank of Scotland and Lloyds TSB in the UK or American Express and Capital One in the US, people stay loyal to their banking partners.

The banking industry in the west took a huge risk in the last decade by using countries like India, China and the Philippines to outsource their banking and financial services. For banks, it was a step in the right direction to reduce the number of customers walking into their branches, the number of calls taken by banking executives at the branch and reduce the work load on their existing call centres.

They wanted to reduce costs of employing more people to cater to their ever increasing base of customers and provide better services to their customers besides gaining a competitive edge. For customers who have been used to traditional methods of banking such as visiting their nearest branch, were exposed to new and state of the art technologies. IT and IT enabled banking services were the new age success mantra for most banks in Europe and the Americas.

The focus of banks that outsourced parts of their business to other countries was to reduce costs and increase profits. Though their approach was cautious, there were loop holes in their strategy. AMEX was one of the first banks to set shop in India in the late 90s. Theirs was a captive centre. However over the years, more and more BPOs have shown their capability in handling banking and financial services with greater efficiency and effectiveness.

For customers of these banks, the challenge was conquering their fears of a stranger in a distant country having access to their account information and the mistrust in their ability to provide solutions. Besides, there were language and accent issues.

Some customers generally called their banks and surpassed the IVR to speak to an agent as they were not very comfortable dealing with a machine and others demanded speaking to their branch in their own country. Such issues lead to delays in service. This led to dissatisfaction amongst customers and forced many to choose banks that hadnt outsourced their work and catered to their needs from within the country.

Data security was also one the major concerns for banks. More than customers, banks have found themselves living on the edge with account details made accessible to BPOs in other countries. With data theft being a reality in countries like India, China and Japan, it was a proven fact that banking outsourcing wasnt foolproof.

For banks it may result in large law suits and a decrease in their customer base. Banks also had their reputation at stake. The third party vendors may follow practices that may be inconsistent with the policies and practices of the bank. Besides the political, social, legal and physical climate of the outsourcing country may impact banking services.