(1) Electronic Payment Services - E Cheques Nowadays we are hearing about e-governance, e-mail, e-commerce, e-tail etc.

In the same manner, a new technology is being developed in US for introduction of e-cheque, which will eventually replace the conventional paper cheque. India, as harbinger to the introduction of e-cheque, the Negotiable Instruments Act has already been amended to include; Truncated cheque and E-cheque instruments. (2) Electronic Funds Transfer (EFT) Electronic funds transfer or EFT refers to the computer-based systems used to perform financial transactions electronically. Electronic Funds Transfer (EFT) is a system whereby anyone who wants to make payment to another person/company etc. can approach his bank and make cash payment or give instructions/authorization to transfer funds directly from his own account to the bank account of the receiver/beneficiary. Complete details such as the receiver's name, bank account number, account type (savings or current account), bank name, city, branch name etc. should be furnished to the bank at the time of requesting for such transfers so that the amount reaches the beneficiaries' account correctly and faster. RBI is the service provider of EFT. The term is used for a number of different concepts: Cardholder-initiated transactions, where a cardholder makes use of a payment card Direct deposit payroll payments for a business to its employees, possibly via a payroll services company Direct debit payments from customer to business, where the transaction is initiated by the business with customer permission Electronic bill payment in online banking, which may be delivered by EFT or paper check Transactions involving stored value of electronic money, possibly in a private currency Wire transfer via an international banking network (generally carries a higher fee) Electronic Benefit Transfer

(3) Electronic Clearing Service (ECS) Electronic Clearing Service is a retail payment system that can be used to make bulk payments/receipts of a similar nature especially where each individual payment is of a repetitive nature and of relatively smaller amount. This facility is meant for companies and government departments to make/receive large volumes of payments rather than for funds transfers by individuals.

(4) Automatic Teller Machine (ATM)

Automatic Teller Machine is the most popular devise in India, which enables the customers to withdraw their money 24 hours a day 7 days a week. It is a devise that allows customer who has an ATM card to perform routine banking transactions without interacting with a human teller. In addition to cash withdrawal, ATMs can be used for payment of utility billsfunds transfer between accounts, deposit of cheques and cash into accounts, balance enquiry etc (5) Electronic Funds Transfer at Point of Sale (EFTPOS) Point of Sale Terminal is a computer terminal that is linked online to the computerized customer information files in a bank and magnetically encoded plastic transaction card that identifies the customer to the computer. EFTPOS (short for Electronic Funds Transfer at Point of Sale) is an Australian and New Zealand electronic processing system for credit cards, debit cards and charge cards. European banks and card companies also sometimes reference "EFTPOS" as the system used for processing card transactions through terminals on points of sale, though the system is not the trademarked Australian/New Zealand variant. During a transaction, the customer's account is debited and the retailer's account is credited by the computer for the amount of purchase. A number of transaction types may be performed, including the following: Sale: where the cardholder pays for goods or service Refund: where a merchant refunds an earlier payment made by a cardholder Withdrawal: the cardholder withdraws funds from their account, e.g. from an ATM. The term Cash Advance may also be used, typically when the funds are advanced by a merchant rather than at an ATM Deposit: where a cardholder deposits funds to their own account (typically at an ATM) Cashback: where a cardholder withdraws funds from their own account at the same time as making a purchase Inter-account transfer: transferring funds between linked accounts belonging to the same cardholder Payment: transferring funds to a third party account Enquiry: a transaction without financial impact, for instance balance enquiry, available funds enquiry, linked accounts enquiry, or request for a statement of recent transactions on the account E top-up: where a cardholder can use a device (typically POS or ATM) to add funds (top-up) their pre-pay mobile phone Mini-statement: where a cardholder uses a device (typically an ATM) to obtain details of recent transactions on their account

Administrative: this covers a variety of non-financial transactions including PIN change The transaction types offered depend on the terminal. An ATM would offer different transactions from a POS terminal, for instance.

(6) Tele Banking Tele Banking facilitates the customer to do entire non-cash related banking on telephone. Under this devise Automatic Voice Recorder is used for simpler queries and transactions. For complicated queries and transactions, manned phone terminals are used. (7) Role of Information Technology (IT) and Customer Relationship Management (CRM) in Banking IT plays an important role in the banking sector as it would not only ensure smooth passage of interrelated transactions over the electric medium but will also facilitate complex financial product innovation and product development. The application of IT and e-banking is becoming the order of the day with the banking system heading towards virtual banking. Banks, who strongly rely on the merits of relationship was banking as a time tested way of targeting & servicing clients, have readily embraced CRM, with sharp focus on customer centricity, facilitated by the availability of superior technology. CRM, therefore, has become a new mantra in service management, both relationship & information wise. (8) Electronic Data Interchange (EDI) Electronic Data Interchange is the electronic exchange of business documents like purchase order, invoices, shipping notices, receiving advices etc. in a standard, computer processed, universally accepted format between trading partners. EDI can also be used to transmit financial information and payments in electronic form.

(9) Telephone banking and /or IVRS Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. Most telephone banking use an automated phone answering system with phone keypad response or voice recognition capability. To guarantee security, the customer must first authenticate through a numeric or verbal password or through security questions asked by a live representative With the obvious exception of cash withdrawals and deposits, it offers virtually all the features of an automated 75teller machine: account balance information and list of latest transactions, electronic bill payments, funds transfers between a customer's accounts, etc.

Usually, customers can also speak to a live representative located in a call centre or a branch, although this feature is not guaranteed to be offered 24/7. In addition to the selfservice transactions listed earlier, telephone banking representatives are usually trained to do what was traditionally available only at the branch: loan applications, investment purchases and redemptions, chequebook orders, debit card replacements, change of address, etc. Banks which operate mostly or exclusively by telephone are known as phone banks

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Mobile banking Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone. Mobile banking today (2007) is most often performed via SMS or the Mobile Internet but can also use special programs called clients downloaded to the mobile devices. Fig 3.11 explains the architecture of mobile banking. Mobile banking can offer services such as the following: Account Information Mini-statements and checking of account history Alerts on account activity or passing of set thresholds Monitoring of term deposits Access to loan statements Access to card statements Mutual funds / equity statements Insurance policy management Pension plan management Status on cheque, stop payment on cheque 73 Ordering check books Balance checking in the account Recent transactions Due date of payment (functionality for stop, change and deleting of payments) PIN provision, Change of PIN and reminder over the Internet Blocking of (lost, stolen) cards Payments, Deposits, Withdrawals, and Transfers Domestic and international fund transfers Micro-payment handling Mobile recharging Commercial payment processing Bill payment processing Peer to Peer payments Withdrawal at banking agent

 Deposit at banking agent Investments Portfolio management services Real-time stock quotes Personalized alerts and notifications on security prices Support Status of requests for credit, including mortgage approval, and insurance coverage Check (cheque) book and card requests Exchange of data messages and email, including complaint submission and tracking ATM Location Content Services General information such as weather updates, news Loyalty-related offers Location-based services 74 Based on a survey conducted by Forrester, mobile banking will be attractive mainly to the younger, more "tech-savvy" customer segment. A third of mobile phone users say that they may consider performing some kind of financial transaction through their mobile phone. But most of the users are interested in performing basic transactions such as querying for account balance and making bill payment.

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Foreign Direct Investment (FDI) in India

Definition of FDI: Investment made to acquire lasting interest in enterprises operating outside of the economy of the investor. Maximum FDI permitted in Indian private sector banks 74 percent, under the automatic route which includes Portfolio Investment i.e. FIIs and NRIs, Initial Public Issue (IPO), Private Placements, ADR/GDRs; and Acquisition of shares from existing shareholders; Maximum FDI permitted in Indian public / nationalized banks 20 percent; Automatic route is not applicable to transfer of existing shares in a banking company from residents to non-residents. This category of investors require approval of FIPB, followed by in principle approval by Exchange Control Department of the RBI. The fair price for transfer of existing shares is determined by RBI, broadly on the basis of the Securities and Exchange Board of India guidelines for listed shares and erstwhile CCI guidelines for unlisted shares. After receipt of in principle approval, the resident seller can receive funds and apply to RBI, for obtaining final permission for transfer of shares. A foreign bank or its wholly owned subsidiary regulated by a financial sector regulator in the host country can now invest up

to 100% in an Indian private sector bank. This option of 100% FDI will be only available to a regulated wholly owned subsidiary of a foreign bank and not any investment companies. Benefits of FDI: Transfer of technology from overseas countries to the domestic market

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Voting Rights of Foreign Investors

Private Sector Banks Not more than 10% of the total voting rights of all the shareholders Nationalized Banks Not more than 1% of the total voting rights of all the shareholders of the nationalized bank.