Professional Documents
Culture Documents
I hereby declare that this project work entitled “Net banking at HDFC
Bank Bhubaneswar” is my original work, carried out under the guidance
of my faculty guide Prof. (Dr.) S.Mahapatra and has not been submitted
to any other institute/ university or any organization apart from IMIS –
Bhubaneswar ( INSTITUTE OF MANAGEMENT AND INFORMATION
SCIENCE – BHUBA
BHUBANESWAR ).
Signature
Vivek kumar
ACKNOWLEDGEMENT
It gives me immense pleasure to express my deep sense of gratitude to
IMIS Bhubaneswar for providing me an opportunity to work on topic “Net
banking at HDFC Bank Bhubaneswar”,
Certificate
Declaration
Acknowledgement
List of Illustrations/Tables
Abstract
Chapter 1
1.1 Objectives,
1.2 Research Methodology
Chapter 2
Chapter 3
Chapter 4
Conclusions
4.1 Findings
4.2 Conclusion
References
OBJECTIVE OF THE STUDY
Sources of Data: The data was collected from both primary and
secondary sources.
Primary Data: The primary data collection was done through the
survey method. The survey was conducted using the questionnaire
method.
Ø Overdraft
Ø Demand Loan
Ø Term Loan
Ø Cash Credit
Overdraft:
Demand Loan:
Ø Basically an advance payable on demand.
Ø Payment in installments also generally allowed.
Ø Given against Bank deposits, NSCs, Insurance policies
Ø Gold loans and Pension Loans are given as Demand loans
Ø Only one Debit allowed for disbursement. Cannot be operated by
cheque & ATM.
Term Loan:
Ø Loan payable as per pre-determined installments over a fixed term.
Ø Extended for acquisition of assets like house, car, land, building, Plant
& Machinery etc.
Ø Installments are to be paid out of the income of the person in case of
Personal Segment loans
Ø Installments are to be paid out of the income of the activity financed
in case of non-personal segment loans.
Cash Credit:
Ø An advance facility for financing the working capital needs of
commercial activities.
Ø A running account on the lines of Overdraft.
Ø An account where all the receipts and payments of the activity on
account of day-to-day operations are expected to be reflected.
Ø Extended against the stocks and receivables of the unit. (Stocks: raw
materials, semi finished goods, finished goods etc, Receivable means
money to be received towards sales).
Ø The physical or financial asset for / against which the advance is made
is referred as security. A car is a security for which a car loan is given.
Ø Assets acquired out of bank finance is called primary security. Any
additional security offered by the borrower is called collateral.
However, in CBS parlance all securities are referred as collaterals.
Ø The amount contributed by the borrower to the project cost / the
percentage value of the assets owned by him is referred as margin.
Charge:
Transaction:
Strategic Risk
Strategic risk is the risk of unexpected negative developments in
results stemming from previous or future fundamental business
policy decisions. The flaws in the decision making lead to risks of
this kind.
E- Banking service is purely a long term strategic decision. So,
the bank’s management must consider the risk associated with it
and the cost involved for controlling and managing these risks
against the potential return from e-banking services. If the planning
is poor, it can adversely affect the bank’s profitability. So, before
offering e-banking services the bank’s management must consider
the following points:
Transactional/Operational Risk
Operational risks refer to those risks that arise during the process
of a transaction. They can be the result of errors in processing and
system disruptions. The errors may be committed either by the
customers or by the bank employee. The risk that arises from the
fraud is also known as transactional risks. These kinds of risks are
a part of every organization that offers products and services.
Most financial institutions outsource there Internet banking
function, & thus do not have full control over their vendors, adding
to transaction risk. However, the level of risk depends on the
structure of the institution’s processing environment, types of
services that are offered, complexity of the processes and the
supporting technology. It has been observed in most cases that
whenever a non-standardized innovative service is offered,
operational /transaction risk increases. Since e-banking is a 24*7
facility, banks must ensure that the infrastructure required is totally
foolproof.
To control these risks, a bank must adopt effective policies, install
proper procedures and have controls to handle the risks involved in
e-banking.
Credit Risk
According to Wikipedia, an online encyclopedia, the ‘credit risk’ is
the risk of loss to a debtor’s non-payment of a loan or other line of
credit. Credit risk generally does not increase due to the origination
of loans through e-banking. However, since any indi8vidual or
company having inadequate credit worthiness can originate a loan
electronically and the same proposal may be approved resulting in
more NPA for the Bank. So, management should take all
precautions before and during the process of approving loans
through e-banking. The management should take measures, such as
the following, to avoid credit risks:
Liquidity Risk
This risk is caused due to bank’s inability to meet its obligations.
Interest banking has huge potential to increase deposits and at the
same time it increases volatility of asset too. This volatility is
caused, especially when a customer merely maintains an account
only to avail himself of the better interest rate. The moment they
get better rate elsewhere, they move out and terminate their
relationship with the bank. This immediate termination can cause
mismatch in bank’s assets and liabilities – pushing the bank into
liquidity risks.
In order to check the liquidity risk, the bank should take the
following measures:
v It should be vigilant enough to timely recognize and address
the changes in the market condition which may affect the
bank’s ability to liquidate the assets.
v Liquidity position of the bank should be properly reviewed
for ascertaining the matching pattern of asset and liabilities of
the bank.
Foreign Exchange Risk
This risk is caused when a cross border transaction takes place.
With the availability of internet, banking across countries has
become possible. As a result, the residents of other countries carry
out transactions in their domestic currencies. Due to easy and low
transaction costs, customer may take speculative positions in
various currencies, which may result in this kind of risk.
To minimize foreign exchanges risk, the following
steps should be taken:
v Those dealing with foreign exchange business
must be trained properly.
v The bank should circulate the information
regarding the latest developments among its
employees who are involved in foreign exchange
business.
v Workshops should be conducted periodically to
upgrade the knowledge of the employees dealing
with forex business.
Price Risk
The risk arises due to change in the value of traded portfolio or
financial instruments. Banks may be exposed to price risks if they
create or expand deposit brokering loan sales or securitization
programs as a result of Internet banking activities. The bank must
see to it that adequate policy, procedure and management system is
in order to monitor measure and manage the price risk as a
preventive measure.
Security Risk
E-Banking is associated with security risks and a breach of security
can cause huge losses to the bank concerned. Internet is a public
network which can be accessed by any body from anywhere. So,
data and information which flows through it can easily be accessed
even by an unauthorized person with little effort. Programs like
Sniffer can be installed at the web server or other critical location
to collect any confidential data electronically from the Internet.
Fraudsters can get access to any kind of vital information, such as
customer’s account number, password, credit and debit card
number. With this information, they can hack the victim’s account
and cause great loss to the customer as well as bank.
Reputation Risks
Reputation risk is the risk of getting negative publicity for the
banks. Reputation risk may be cause loss of funds or customers. A
bank’s reputation can be damaged by Internet banking services that
are poor executed. Once a bank starts losing its reputation,
customers begin to lose their confidence in the bank. Customers
are less tolerant of any issues in connection with the customer care
and thus there is more performance expectation from the Internet
channel. This will certainly impact the bank-customer relationship.
If the e-banking system is not up to the customer’s expectation or
system fails, the bank’s credibility is lost. Reputation risks may
also crop up because of other bank or financial institution’s faulty
e-banking system or products. To avoid reputational risk, the bank
must:
v Check the entire Internet banking thoroughly before
implementation.
v Have enough backup facilities to overcome any system
failure.
v Have contingency plans to fix problems in case of
system failure.
v Have its own group of expert hackers to find the
loopholes of the system.
Legal Risk
Legal risks are those that crop up when government guidelines,
regulations or prescribed practices are violated. It also arises when
the legal right and obligation of a party to his transaction is not
well-established. In Internet banking, sometimes, right and
obligation are uncertain and no fixed cable to them. These lead to
legal risks. The contracts, which are raised electronically, at times,
not be informed about the precautionary measures to be taken
when using Internet banking, which can lead to disputes and
sometime legal suits against the bank. To provide better services, a
bank’s site may contain a hyperlink to another site and this may
lead to legal risks. Hacker may use such links to gather customer
information legally.
Cross-border Risks
It refers to the volatility of returns on international investments
caused by events associated with a particular country as opposed to
events associated solely with a particular economic or financial
agent. Since Internet banking operates with the help of World
Wide Web, it may be accessed by anyone irrespective of time and
place. Rules and regulations vary from country to country and if
they are ignored, they may push the bank into legal risks. There is
always credit risk for various cross-border transactions as it is very
difficult to appraise a loan application from a customer residing in
an other country. Cross-border transaction of a bank also increases
the foreign exchange risk and the exchange rate always fluctuates.
To avoid cross-border risks, the bank should take the following
steps:
v It should provide the customer with sufficient
disclosure on its website so that a customer can
ascertain its identity, the country where the bank is
established and the regulatory licenses etc.
v The rules and regulations of different countries should
internally be circulated throughout its branches and
offices.
Budgeting for E-banking:
Many banks have started offering Internet banking as a part of their wide
range of services. More banks are in various stages of launching their Net
banking services. It is important to learn from the experience of others to
launch one’s own service in a shortest possible time in a cost-effective
manner. While deciding on net banking budgets.
• Technology
- Hardware
- System Software
- Application Software
- Scalability(desirable but optional)
- Web Designing.
• Security
- Firewalls
- Certification (Server Level, Client Level)
- Intrusion Detection System
- Advisories.
• Networking
• Hosting
• Operations
• Business Costs
- Advertising
- Promotions
- Ties-ups with other sites for payments
- Staff Training
- Producer Brochures
- Legal Expenses.
Having said this, it is important that cost of each individual IT project needs
to be put under microscope; holistic view should never be lost sight of.
There is an increased need for both the technology persons and business
owners to understand each other’s work.
Successful Computerization in Banks
Today the customers are more demanding than ever before. Customers
expect to contact the bank, the way they want and when they want. If the
bank can not provide the information and services to the customers that
they need, the bank may loss the customers. To meet these demands,
banks have gone for computerization to be ‘reliable’, ‘maintainable’, and
‘available’ for all type of customers and its staff.
Acceptance Requirements:
In the coming days, a great change in the banking system is foreseen and
Information Technology will act as a catalyst of change. The method of
traditional banking would be more affected by integrating the
implementation of innovative computerized systems. No doubt that
Information Technology has to serve the banks in enhancing the business
and infrastructural developments in coming days, but the burden of
computerization is that bank must choose carefully how to apply it.
Internet Banking – Benefits and Threats
Benefits:
- Product differentiation.
- Customer-centric models
- Core banking applications shifting from ‘branch’ banking to
‘bank’ banking.
- Customer satisfaction.
- Better transaction experience under common roof.
- Customer retention.
Threats:
• Speed of operations
• Does not require presence of customer
• Automated operations; high transparency levels
• Control in the hands of the customer
• Lower costs
• Conveniences:
- Online statements
- Online funds transfer
- Online applications
- Online product information and research.
Analysis of data collected through the questionnaire
TABLE 1
The users have used the ATM facility of the following banks:
30
25 25
25
20
15 15
15
10 10
10
5
0
0
ICICI BANK
NATIONAL
NOT USED
THE BANK
SBI
HDFC
BANK OF
BANK
BARODA
NAME OF
FACILITY
PUNJAB
Table 2
The satisfaction level experienced by the ATM users
HIGHLY STAISFIED 20
SATISFIED 70
INDIFFERENT 0
DISSATISFIED 0
HIGHLY DISSAISFIED 0
HIGHLY STAISFIED
0 10 20
SATISFIED
INDIFFERENT
DISSATISFIED
70
HIGHLY DISSAISFIED
NOT AVAILING THE FACILITY
TABLE 3
Flowing number of times in a week the users has use the ATM .
10, 10% 0, 0%
NUMBER OF TIME ATM USED
5, 5%
IN A WEEK
5, 5%
1
NO.OF
BENEFIT OF ATM USER
TIME - SAVING 20
BENEFICIAL IN
EMERGENCY 60
CONVINIENT 20
20% 0% 20%
BENEFIT OF ATM
60% TIME - SAVING
BENEFICIAL IN EMERGENCY
CONVINIENT
TABLE 5
Weather the users of ATM card has faced any problem while using the ATM card .
0, 0%
40, 40%
60, 60%
12 0 NATURE OF PROBLEM
25
0 15 NATURE OF SERVICE
5 CREDIT CARD
TRANSFERING OF MONEY
OPENING FIXED ACCOUNT
10 INQUIRE ABOUT BALANCE
0
65 5 TAX DEDUCTED
NONE OF THE ABOVE
TABLE 8 Respondent’s opinion of the weakness of Internet banking:
26
30
44
0
0 10 20 30 40 50
LACK OF EXPERIENCE
SECURITY OF FLAWLESS
ONE WAY COMMUNICATION
TABLE 9 Respondent’s view of security of the Internet Banking Services:
0, 0%
45, 45%
IT IS SECURE
IT IS NOT SECURE
55, 55%
FINDINGS EXTRACTED OUT OF THE
INFORMATION COLLECTED THROUGH A
QUESTIONNAIRE
5. Most of the respondents feel that the benefit of the ATM card
is that it comes handy when cash is needed urgently.
6. 60% of the respondent faced the ATM faced no problem in
using the ATM while 40% of the respondents faced a
problem while using ATM.
7. A major problem faced by the respondents while availing
ATM card facility was that the ATM was not working and
the second common problem was that card got withheld in
the machine.
8. Most of the respondents used very less Internet Banking
facilities other than ATM. Out of the other facilities; credit
card was the most commonly used service and the second
service used was opening a fixed deposit account via
internet.
9. Most of the respondents felt that weakness of internet
banking is that it is one way communication and the second
most commonly held weakness was that it is not secure.
10 55% of the respondents felt that Internet Banking is
not secure and the reason behind this is that hackers may
hack the password of one’s account and this may result
in huge losses to user of Internet Banking.
CONCLUSION
1. Name:
2. Age:
3. Occupation:
a) Yes b) No
(If yes, then proceed to Q.5 otherwise move to Q.10)
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
6. What is the satisfaction level experienced by you with the
ATM facility being used by you?
a) Highly satisfied
b) Satisfied
c) Indifferent
d) Dissatisfied
e) Highly Dissatisfied
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
a. It is time-saving
b. It is beneficial when cash is needed urgently
c. It is convenient
9. Have you ever faced any problem while using ATM card?
a) Yes
b) No
a) Credit card
b) Transferring one’s money from one city to any
other branch in a city
c) Open Fixed Deposit account via the internet
d) Inquire about balance in one’s saving, current and
FD account and also on tax Deducted at source on
one’s FD account for the current and financial year
e) Giving instructions over the internet for stopping
payment on cheques
f) Request for a cheque book via internet
g) View all transactions on an account for a specified
period and get a copy via e-mail
h) None of the above
11. Did you ever have any grievances against the bank
providing you Internet banking service provided by it?
a) Yes
b) No
(If yes then answer the next question, if no then move to Q 13)
a) Highly Satisfied
b) Satisfied
c) Indifferent
d) Dissatisfied
e) Highly Dissatisfied
13. What is your opinion the weakness of Internet Banking?
a) Yes
b) No
15. Do you think that all public sector banks in India should
start providing Internet Banking service to survive in the
market?
a) Yes
b) No
If Yes, why?
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
THANK YOU
References:
www.hdfc.co.in
Banking Law and Practices (S.N.Maheswari)
The Economic Times