TYBBI

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INTRODUCTION
The inter-bank funds transfer in India can be classified into the Batch

Mode

(net) & real time (gross) system. In a Batch Mode, the transmission, processing
& settlement is done for set of transactions (say clearing or sale or purchase of
securities) at a particular point of time & the settlement on a pre-fixed interval of
time(say at the end of the day). In the real time gross system on the other hand,
the transmission, processing and settlement of instructions is done on a
continuous basis. world over ,it is used for high-value clearing involving interbank fund transfers and treasury related transactions, helping in reducing
settlement and systemic risk. Financial institutions and their customers are
recognizing a growing need to manage cash resources more efficiently.
Economic and financial factors, together with improved data communications
and computer technology, have increased demand for electronic funds transfer
(EFT) services from the financial industry.
Additionally, other funds transfer services, such as Automated Clearing Houses
(ACH), Automated Teller Machines (ATM), Point-of-Sale (POS) systems,
telephone bill paying, home banking systems, debit cards, and smart cards are
gaining wide spread customer use. Many of these transactions are initiated by
customers rather than financial institutions. These are normally considered retail
funds transfer systems. Financial institutions and regulatory authorities should be
concerned with the quality of internal controls and managements awareness of
the inherent risks associated with the various systems.

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OBJECTIVES

1) To study the system of Fund transfer

"Funds Transfer" means the series of transactions beginning with the issue of
originator's payment instruction to the sending bank and completed by
acceptance of payment instruction by the beneficiary's bank for the purpose
of making payment to the beneficiary of the instruction.
2) To analyses current trends and scope for Fund Transfer System.
3) To find out opportunities for growth of Fund Transfer System.
4) To settle financial transactions and to transfer funds between bank.
5) "Notified" means communicated electronically or in writing.
6) "NEFT Clearing Centre" means any office designated by the Nodal
Department for receiving, processing and sending the NEFT SFMS message
and the debiting and crediting of accounts of the participating banks and
institutions for settlement of payment obligations or one or more of these
functions. The National Clearing Cell, Reserve Bank of India, Airman Point,
and Mumbai has been designated as the NEFT Clearing Centre (NCC) for
purposes of the NEFT System.
7) "Originator / Sender" means the person who issues a payment instruction to
the sending bank companies (Acquisition and Transfer of Undertakings) Act,
1970 and a corresponding new bank constituted under the Banking
Companies
8) "NEFT SFMS message" means an electronic Structured Financial Messaging
Solution (SFMS) message containing a batch of NEFT payment instructions
for funds transfer, processed and consolidated in the manner specified for

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transmission of payment instructions from NEFT Service Centre to the NEFT

Clearing Centre.
9) "NEFT Service Centre" means an office or branch of a bank in a centre
designated by that bank to be responsible for processing, sending or receiving
NEFT SFMS message on behalf of that bank in that Centre and to do all
other functions entrusted to a NEFT Service Centre by or under these
guidelines. NEFT Service Centre is referred to as "Sending NEFT Service
Centre" when it originates an NEFT SFMS message for funds transfer. NEFT
Service Centre is referred to as "Receiving NEFT Service Centre" when it
receives a NEFT SFMS message from the NEFT Clearing Centre.
10) "Beneficiary / Destination Bank / Branch" means the branch of the bank /
branch identified in a payment instruction which is maintaining the account
of the beneficiary.

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FUND TRANSFER

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Trend Past

Fund transfers are used by individuals, banks, companies, governments, etc.

to make payments to one another. In other words, anybody who has to make
a payment to anyone else can use one or the other form of Fund transfer to
make such a payment.
A payment is usually made in exchange for the provision of goods, services,
or both, or to fulfill a legal obligation. The simplest and oldest form of
payment is barter, the exchange of one good or service for another.
Barter usually replaces money as the method of exchange in times of
monetary crisis, when the currency is unstable and devalued by
hyperinflation.
In modern age a payment system is a set of procedures and associated
computer networks used to institutions.
Banks settle financial transactions and to transfer funds between financial.
The entity that pays and receive for and on behalf of the clients. This is
because customers maintain an account with the banks. Customers may be
paying by s or demand draft or any of the payment mechanisms like
Bankers , Payment order ,clean payment, Documentary bill on D/A terms,
letter of credit , export factoring, forfeiting
Banks perform this task by either passing credit debit messages to its own
branch. This is done when the bank has branches in both (paying and
receiving) locations. If the bank does not have branches then, corresponding
banks help in completing the transaction.

Trend Present

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There are diverse payment systems functioning in the country, ranging from
the paper based systems where the instruments are physically exchanged and
settlements worked out manually to the most sophisticated electronic fund
transfer system which are fully secured and settle transactions on a gross, real
time basis.
They cater to both low value retail payments and large value payments
relating to the settlement of inter- bank money market, government securities
and force transactions.
The retail payment systems in the country comprise of both paper based as
well as electronic based systems. These systems typically handle transactions
which are low in value, but very large in number, relating to individuals firms
and corporate.
In India there are about 1050 s clearing houses. These clearing houses clear
and settle transactions relating to various types of paper based instruments
like s, drafts, payment orders, interest/ dividend warrants etc. In 39 of these
clearing houses, processing centers (CPCs) using MICR technology have
been set up.
In the coming months in 5 more clearing houses MICR processing systems
are scheduled to be set up. The clearing houses at 16 places including the 4
metros are managed by the Reserve Bank which also functions as the
settlement banker at these places.
The Reserve Bank has issued the Uniform Regulations and Rules for
Bankers Clearing Houses (URRBCH) which has been adopted by all the
clearing houses. These regulations and rules relate to the criteria for
membership/sub-membership,

withdrawal/removal/suspension

from

membership and the Procedures for conducting of clearing as well as

settlement of claims between members.
There are various types of electronic clearing systems functioning in the
retail payments area in the country. Electronic Clearing System (ECS), both
for Credit and Debit operations, functions from 45 places (15 managed by
Reserve Bank and the rest by the State Bank of India).
The ECS is the Indian version of the Automated Clearing Houses (ACH) for
catering to bulk payments. The Electronic Funds Transfer (EFT) System is

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operated by the Reserve Bank at 15 places. This is typically for

individual/single payments.
These systems are governed by their own respective rules. A variant of the
EFT, called the Special Electronic Funds Transfer (SEFT) System is also
operated by the Reserve Bank to provide nation-wide coverage for EFT. All
these electronic fund transfer systems settle on deferred net settlement basis.
There are a few large value payment systems functioning in the country.
They are the Inter-Banks Clearing Systems (the Inter-bank Clearing), the
High Value s Clearing System (the High Value Clearing), the Government
Securities Clearing System (the G-Sec Clearing), the Foreign Exchange
Clearing System (the Force Clearing) and the Real Time Gross Settlement
(RTGS) System.
All these systems except the High Value Clearings are electronic based
systems. These mostly relate to inter-bank / inter-financial institutional
transactions except the High Value Clearing where high value customer s are
cleared. The Inter-bank clearing functions in 7 places and the High Value
Clearing in 13 places. Both are managed by the Reserve Bank or the State
Bank of India. The G-Sec
Clearing and the Fore Clearing are managed by the Clearing Corporation of
India Limited (CCIL).
The RTGS System is operated by the Reserve Bank. All these are deemed to
be Systemically Important Payment Systems (SIPS) and therefore the
Reserve Bank has, in line with international trends, moved them (except the
Inter-bank Clearings at other than Mumbai and the High Value Clearings) to
either secure and guaranteed systems or the real time gross settlement
system.
The National Electronic Funds Transfer System established by these
Regulations for carrying out interbank funds transfers within India, and
providing for settlement of payment obligations arising out of such funds
transfers, among the participating bank.
Technology helped the banks to innovate in terms of developing new
products and services such as phone banking and internet banking. IT also
helped in handling large transactional volumes and adapting according to the

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changing customer expectations, apart from providing almost real time

information processing capabilities for both the banks and the customers.

Trend Future
Technology ensured a rapid transformation of the banking sector by
ushering in competition, productivity and efficiency of operations, and

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better asset/liability management, among others. Effective funds movements

through the RTGS platform also greatly helped the cash management by
banks.
Technology also posed some challenges. The possibility of making online
transactions through internet made the banks susceptible to misuse of this
facility. These issues were addressed by banks by putting in place
appropriate safeguards and mechanisms to establish the identity of
customers based on guidelines issued by the Reserve Bank.
As part of its public policy objective of promoting a safe, secure, sound and
efficient payment system, the Reserve Bank has taken
Several initiatives to develop an electronic payments infrastructure.
The Reserve Bank is considering provision of financial incentive to the
banks for adopting this technology. Under the proposal, the RBI would be
bearing a part of the leased rentals for the satellite connectivity, provided the
banks use it for connecting their branches in the North Eastern States and in
the under-banked districts in the rest of the country. A discussion paper on
this scheme was placed on RBI website in June 2008 for public comments.
o RBI also doing project on mobile money transfer services in
association with Nokia. There is a pilot project in Pune which
is doing well and it is expected to end in couple of months
and then the result of this will provide input to RBI in order
to regulate the services in India

ELECTRONIC
CLEARING
SYSTEM (ECS)

ELECTRONIC
FUND
FUND TRANSFER SERVICES
TRANSFER
(EFT)
PAPER BASED

SYSTEM
CHEQUE
DRAFT

C
PAYMENT

ORDER
INTEREST/DI

VIDENT

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ELECTRONIC
NATIONAL
BASED
SYSTEM
ELECTRONIC
FUND
TRANSFER
(NEFT)
REAL
TIME
GROSS
SETTLEMENT
(RTGS)
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Paper based systems

A written, dated and signed instrument that contains an

unconditional order from the drawer that directs a bank
to pay a definite sum of money to a payee.

PROCESS
The process of payment starts when a payer gives his personal to the beneficiary.
In order to get the actual payment of funds, the receiver of the has to deposit the
in his bank account. If the beneficiary has an account in the same bank in the

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same city then the funds are credited into his account through internal
arrangement of the bank. If the beneficiary has an account with any other bank in
the same or in any other city, then his banker would ensure that funds are
collected from the payers banker through the means of a clearing house. A
clearing house is an association of banks that facilitates payments through s
between different bank branches within a city / place. It acts as a central meeting
place for bankers to exchange the s drawn on one another and claim funds for the
same. Such operations are called as clearing operations. Generally one bank is
appointed as in-charge of the clearing operations. In the four metros and a few
other major cities, the Reserve Bank of India is looking after the operations of
the clearing house. Each clearing house has uniform regulations and rules for the
conduct of its operations as prescribed by RBI. There are more than 1000
clearing houses managed by the RBI, State Bank of India and other public sector
banks.

CLEARING PROCESS AND TIME

Generally, if A is to be paid within the same city ( local ), it would take 2-3 days.
In some large cities, there is a system called High Value Clearing which
facilitates completion of clearing cycle on the same day and the customer
depositing the is permitted to utilize the proceeds next day morning. However,
coverage of this High Value Clearing is very limited and usually available at the
branches in the main business area; say Fort and Norman Point area in Mumbai
and Connaught Place in New Delhi.

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In the case of outstation s, the time taken would vary from three to ten days. RBI
has advised all the banks to publicize their collection policy so that customers
have an idea as to when the proceeds would be available for utilization by the
customer. For delay beyond the normal period, the banks are required to
compensate the customer (even without customer asking for the same)
CHARGES
The person receiving payment by means of s would incur some charges to realize
the funds through this bank. In case of local s, no charges are levied. In case of
outstation s, the bank would take some processing / collection charges depending
upon the amount of the and the place from where it has to be realized. The
charges levied by the banks are generally decided by the Indian Banks
Association or the bank themselves. Banks are also required to publicize the
schedule of service charges.

DEMAND DRAFT
The Demand draft is a prepaid negotiable instrument, wherein the drawer bank
undertakes to make payment in full when the instrument is presented by the
payee for payment. The demand draft is made payable on a specified branch of
bank of bank at a specified center. In order to obtained payment, the beneficiary
has to either present the instrument directly to the branch concerned or have it
collected by his/her bank through the clearing mechanism.. The major difference
between demand drafts and normal Cheek is that demand drafts do not require a
signature in order to be cashed. Also known as "remotely created Cheek".

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PROCESS AND TIME

Once you open the Rupee Checking Account, you can issue a Demand Draft/Pay
Order by using our Internet Banking facility. All demand drafts ordered are
absolutely free of cost. The drafts will be issued in India and couriered directly to
the beneficiary within 2 banking days. Your beneficiary would receive the same
within 5 banking days from the date of receipt of your instructions.

BANKERS
Bankers is another payment instrument which is used by banks to settle payment
obligations on behalf of their customers. This instrument is guaranteed by banks
for its full value and is similar to demand draft. In practice, these instrument are
payable at branch of issue and are used for payment within the local clearing
jurisdiction.

PAYMENT ORDER
Payment orders are issued by banks for payment made on behalf of the bank.
These instruments are signed by a banker and carry the guarantee of the bank on
availability of the funds. These instrument are payable at the branch of issue.

ELECTRONIC BASED SYSTEM

ELETRONIC CLEARING SERVICES

With a view to upgrading our payment system to the
international standards, the Reserve Bank took the initiative
and set up Electronic Clearing Service in India, in the mid
1990s, which is the counterpart of the automated clearing
house (ACH) system in certain other countries. It has two
variants ECS - Credit Clearing and ECS - Debit Clearing.

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ECS
CRED
IT

ELECTRON
IC
TRENDS IN FUND
CLEARING
SERVICE(E
CS)

ECS DEBIT
ORIGIN
The scheme has been introduced at Chennai and Mumbai for collection of
telephone bills by Madras Telephones and MTNL, Mumbai respectively in 1996.
In 1997, Calcutta Telephones also joined the ECS Debit scheme. Electronic
Clearing Service - Debit, is a scheme which facilitates payment of charges to
utility services such as electricity, telephone companies, payment of insurance
premium and loan installments etc. by customers.
PROCESS
A blanket permission to debit the account could result in excess payment to the
utility company in the event of any wrong billing. Thereafter the consumer has to
arrange for recovering the excess paid amount from the utility company. To
obviate this difficulty, a variant of ECS Debit called 'ECS Utility Bills Payment
RAPID has been introduced on a trial basis for the benefit of BEST consumers in
two suburbs of Mumbai. The acronym RAPID stands for Receipt and Payment
Instruments/Documents.
RAPID is a post verification debit scheme. The consumer verifies the bill and
has the option to pay the bill either in cash or can authorize the bank branch to
debit his account. In this scheme the utility company prepares its bills in three
parts. The first part serves as a receipt to the customer, the second serves as a
voucher for the collecting branch and the third part which contains a MICR band
is sent to the service branch. The first part of the receipt is returned to the
customer by the collecting branch duly affixing the paid stamp.
The collecting bank's service branches need to be equipped with a

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Personal Computer (PC) attached to a small MICR Reader/Encoder enable them

to capture the data in the third part of the bill which
has the MICR read band. The service branches transmit data to the
NCC. At NCC, accounts of the various collecting banks are debited and the
account of the Sponsor Bank is credited. The necessary reports containing details
of all bills paid are generated by NCC and delivered to the Sponsor Bank.
The scheme is beneficial to corporate as they get the amounts due to them on the
stipulated date and is useful to customers as they are now in a position to verify
the accuracy of the billed amounts, before effecting payment.

CHARGES
All precautions with regard to data validation and integrity as
Followed under ECS Credit is observed in full under ECS Debit as well. The
individual transaction limit under the scheme has been fixed at Rs.25, 000/which is proposed to be raised shortly to Rs.50, 000.
PRESENT
ECS Debit envisages a large number of debits resulting in a single credit
simultaneously. ECS Debit works on the principle of pre-authorized debitsystem
under which the account holders' account is debited on the appointeddate and the
amounts are passed on to the utility companies. The scheme thus facilitates:

faster collection of bills by companies;

better cash flow management; and

Eliminates the need to go to collection centers/designated

banks

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ECS CREDIT
ORIGIN
ECS Credit service is available as on 1.09.98 at all the 16 offices of the RBI viz.,
Mumbai, Calcutta, Chennai, New Delhi, Ahmadabad, Bangalore, Hyderabad,
Kanpur, Nagpur, Jaipur, Patna, Guwahati, Bhubaneswar, Thiruvananthapuram,
Chandigarh and Pune (SBI). Plans are on the anvil to progressively increase the
number of centers with large volume of business covered under the scheme.
PROCESS
In ECS Credit a series of electronic payment instructions are generated to
replace paper instruments. It is medium of payment whereby an organization
wanting to pay interest, dividend, salary, pension etc. to a large no. of
beneficiaries. The system works on the basis of one single debit transaction
triggering a large number of credit entries. These credits or electronic payment
instructions which possess details of the beneficiary's account number, amount
and bank branch, are then communicated to the bank branches through their
respective service branches for crediting the accounts of the beneficiaries either
through magnetic media duly encrypted or through hard copy.
User institutions, usually corporate bodies/government departments which have
to effect payments to large number of beneficiaries submit details of payments in
magnetic media to the bank managing the clearing house, through a Sponsor
Bank.
The user Institutions are required to obtain mandates from beneficiaries, for
crediting their accounts under ECS. The corporate bodies too should on their
own, advice the beneficiaries about the due date of credit under ECS.

CHARGES

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The minimum number of transactions per user institution is 2,500, with upper
limit in value of any single item being restricted to Rs. 1,00,000/-. A very low
service charge has been prescribed under the scheme to promote ECS.

PRESET
There are forty-four user institutions which are using ECS Credit scheme
presently. Under the existing scheme a user institution has to make different
submissions of data when it has to make payments to beneficiaries spread across
the various cities, where ECS is currently operative. In future it is a distinct
possibility that a corporate body can furnish the ECS Credit meant for different
Centre sat one Centre. The NCC / Clearing agency would sort the records on the
basis of city code and transmit the file to the relevant destination.

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ELECTRONIC FUNDS TRANSFER

An

electronic

funds

transfer

(also

known as EFT) is a system

for

transferring money from one

bank to another without using paper money. Its use has become widespread with
the arrival of personal computers, cheap networks, improved cryptography and
the Internet. Since it is affected by financial fraud, the electronic funds transfer
act was implemented.
EFT is defined as any transfer of funds which is initiated through an Electronic
terminal, telephonic instrument, computer, or magnetic tape so as to order,
instruct, or authorize a financial institution to debit or credit an account.

How Does It Work

Electronic funds transfer consists of a group of technologies that allow financial
transactions to be carried out electronically. Messages sent by several forms of
telecommunication cause funds to be transferred from one financial account to
another. The messages substitute for an exchange of currency or for a signed
check that would bring about the same transfer. The term EFT has also come to
include transfer of information critical to such transactions without an immediate
transfer of funds; for example, authorization of credit or validation of Cheek by
telecommunication. Although most EFT technologies are at most 15 years old,
they are already having a significant impact on payment systems and on banks
and other financial institutions. It is possible that within the next two decades
EFT will transform the way Americans carry out their day-to-day commercial
activities and personal monetary transactions.

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From Where Did It Come?

The history electronic funds transfer originated from the common funds transfer
of the past. Since the 19th century, and with the help of telegraphs, funds transfers
were a usual thing in commercial transactions. Finally, it migrated itself to
computers and thing in commercial transactions. Finally, it migrated itself to
computers and become the electronic money transfers of today.
Where Do I Find EFTS?
One of the most common EFTs is Directed Deposit. It is used by
employs for depositing their employees salary in a bank account.
Other kind of EFT is the automatic charge to your check or savings
account. For example, when you are paying a mortgage, the bank will
discharge the monthly payment from a pre-accorded bank account. The
benefit is that you wont have to go the bank to do it. Its automatic
Another kind of EFT is a cash card. With this type of card you can spend
a prepaid amount of money until the balance is zero. So, if you wish to
make a gift certificate without tying up your beneficiary with one store,
you can buy a cash card from your favorite bank.
ATMs are also used for EFTs. Since an automatic teller machine is
much cheaper than a group of bank tellers, it has helped to bring costs
down and beneficiate the costumer
Points of sale (also known as POS) are also part of this group. Those little
blue or dark blue machines in which you pass your card are doing an
electric fund transfer from your account to the retail account. Imagine
how the world without them was. Slow, wasnt it?

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ADVANTAGES OF FUND TRANSFER:

The main advantage of an electronic funds transfer is time. Since all the
transaction is done automatically and electronically, the bank doesnt
need to pay a person to do it, a person to drive the loans to the other
bank, the cost of the transport, the cost of the maintenance of the
transport, online auto insurance and the gas of the transport. EFTs have
revolutionized modern banking.
Other benefit is immediate payment, which brings up to date cash flow.
You wont hear either about lost Cheek causes by the inefficiency of
normal mail (nowadays known as snail mail for its velocity compared to
emails) and up to date bookkeeping.
The good thing is that a lot of merchants and consumers have found these
advantages and have migrated to EFTs. So it isnt 1995 when only some
companies offered this service and only
Some people used it for buying things and paying their bills. And, as the
consumer base increased, also did the type of services and the reductions
of transfer prices. EFTs are a good example of the wonders of an open
market economy.
The services is trusted and tested daily by the foreign currency exchange
specialists who deliver millions of pounds worldwide.

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DISADVANTAGES OF FUND TRANSFER

The main problems with electronic funds transfer is security. Since the
popularization of the Internet, a series of scams have appeared, trying to
lure consumers to give away bank accounts, personal identification
numbers or paying for goods or services they never received.
The companies that give an EFT service have always stated that they are
not responsible of fraud, but they know that their customer base will
depend on how secure they are. For these reasons, almost all financial
institution has implemented processes for validating the security of an
operation.
Another measure that may have caused some inconveniences to consumer
is the establishment of top limits for money transfers. The reasons, EFTs
were used by illegal organizations for laundering money and for tax
evasion by some companies And, since the attacks to the World Trade
Center in September 11 of 2001, the US government has imposed a series
of measure to control any activity related to terrorist funding.
Unfortunately, even with all of those security measures, its common to
hear in the news crimes related to EFTS. Although security has tightened
and financial cryptography has improved a lot in the last five years, there
isnt such thing as unbreakable systems or 100% secure transaction

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TRANCATION
Conventionally are returned to the writer by the bank and often represent the
only receipt for a payment. Writers frequently are careless about filling out
stubs, and rely on returned Cheek for a record of their transactions to support tax
returns and for other purposes. But check handling and return are a costly burden
for financial institutions, especially with the rising cost of postage. With EFT,
can be *truncated when deposited or at the clearinghouse; i.e., they can be
recorded on magnetic tape. Cheek may also be retained by the institution holding
the account against which they are drawn.
The accountholder then gets back only a periodic statement. Since the Bank
Security Act requires that all Cheek over $100 be recorded, * no additional data
would have to be recorded by banks other than a check reference number for
easy location of the cancelled check. The account holder, however, has to
maintain accurate records so that a copy of a check may be requested in case
proof of payment is required. Payee information could be automated and added
to the statement if there were public demand for it. However, this would require
additional encoding equipment, thus increasing the cost. This information would
also be added to the automated information file, which might raise further
concerns about privacy.

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REAL TIME GROSS SETTLEMENT SYSTEM (RTGS)

And
NATIONAL ELECTRONIC FUND TRANSFER (NEFT)

REAL TIME GROSS SETTLEMENT SYSTEM

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What is RTGS? : RTGS is a

centralized payment system in which,
inter-bank payment instructions are
processed and settled, transaction by
transaction ( one by one) and
continuously (online) throughout the
day, as and when the instructions are
received and finally accepted by the system.
Need for RTGS: under the existing system, the settlement of the all individual
payment takes place on a net basis (i.e. difference of payment to be received &
payment to be made) and that too at a designated time this causes the system
participants to be exposed to financial risks for the period which settlement is
deferred. Due to such delays in settlement, a no. of capital market and money
market frauds have taken place in India in the recent years. Further, the existing
payment system is capable to meet the requirement of the 80s or 90 when the no.
and volume of financial transactions was limited. But, due to change in the
economic perspective, its linkage with global economics and the role of
information technology, need has been felt for a more accurate, risk free,
efficient and effective system. RTGS is an internationally compatible full
advantage of the existing client base without dispensing with the benefits already
available to customers.
Process of RTGS
In India, RTGS has been implemented by
RBI. It has decided to use y shaped structure
out of the four message flow of instructions (it
is not actual and is only for understanding the
process) take place:

1. Sending of payment instruction/authority by the issuing/paying bank to

technical operator of the central processor.

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2. On receipt of such message, stripping of the message by the central

processor and sending of sub- set of instructions (by retaining the original
message with itself) to the central bank along with relevant information
(which may include amount, identify of issuing and receiving bank etc.)
for settlement of the transaction.
3. Irrevocable settlement of the transactions by the central bank in its
records i.e. debit of issuing banks account and credit to receiving banks
account and passing this confirmation to central processor
4. Re-building of payment message by adding the stripped information (say
details of beneficiary) by the central processor and sending the message
with proper details to the receiving bank.
Charges
A minimum threshold of rupees one lakh has been prescribed for customer
transactions to ensure that RTGS system is used only for large value transactions
and retail transactions take an alternate channel of electronic funds transfer. The
daily average of transactions is over 34,000 by volume and over Rs.2 lakh crore
by value.

NATIONAL ELECTRONIC FUND TRANSFER (NEFT)

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NEFT established by these Regulations for carrying out interbank

funds transfers with in India, and providing for settlement of
payment obligations arising out of such fund transfers, among the
participating banks. The funds transfer takes place within the same day if it is
within the cut-off time and the next working day if it is beyond the cut-off time
prescribed. It is a Batch settlement mode.
Request for NEFT by bank customer
A bank customer (i.e. sender or originator) desirous of remitting funds under the
system shall submit an "NEFT Application Form" (to be designed by the
participating bank) authorizing the sending bank to debit the sender's account
and transfer funds to the beneficiary as specified in the NEFT Application Form.
The application could be submitted either in physical form or electronically. The
payment instruction given by the customer shall be in compliance with the
provisions contained in Chapter 6 of these guidelines. Banks shall ensure that the
customers are made aware of the rights and obligations of participants in NEFT
system.

A transaction within the NEFT system will be said to have been initiated
when the sending bank accepts a payment instruction issued by the

sender.
If in a single payment instruction, the sender directs payments to several
beneficiaries, each payment direction shall be treated as a separate

payment instruction.
A bank branch may reject a customer's request for funds transfer when,
in the opinion of the sending branch,

I) The customer has not placed funds at the disposal of the

Sending bank; or

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ii) Funds placed is not adequate to cover the sum to be remitted and the service
charge; or
Iii) The beneficiary details given in the NEFT Application
Form is not proper.

Past, present& future (comparison)

During the last decade, payment system services offered by banks to the common
persons as well as the corporate bodies have improved substantially. It is partly
due to increased use of technology in service delivery and partly due to
procedural changes necessitated in the wake of competition amongst the banks.
Changes visible are the following:
Firstly, clearing system has vastly improved. Time taken for collecting a local
has now reduced to two or three days. It used to take 4 or 5 days earlier. At 42
large cities automated processing centers have been set up where s received by
all bank branches in the city is processed at night. Time taken for collection of
outstation s has also been reduced. Now it takes 4 to 10 days depending on
location of the paying centers. It used to take 10 days to one month earlier.
Secondly, during the 90s, a few variants of electronic payment products were
introduced. Electronic Clearing Service (ECS) helped large corporate bodies to
pay their dividend, interest and refunds electronically on the due date. Not only
the investing public could get the payment on the due date, but also the corporate
could save substantially by not having to print paper instruments. One can
imagine the extent of savings from the fact that 36 million of such transactions
were routed through ECS Similarly, the utility bodies are now in a position to
collect their bills through ECS right on the due date. Cash flow management is
getting easier.

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Thirdly, extension of electronic funds transfer (EFT) facility by the banks has
altered the money transfer scenario. Using the EFT infrastructure laid by the
Reserve Bank, commercial banks have started offering same-day funds transfer
facility to their customers. Bank customers at 15 major centers can transfer
funds to one another using this facility. A variant of EFT called Special-EFT has
been designed especially for the networked branches which facilitates funds
transfer on the same day within the closed group of computerized and networked
branches located anywhere in the country. Banks with internet banking
infrastructure are receiving requests from their customers for EFT and executing
the requests in a straight-through manner.
Fourthly, launching of Real-Time Gross settlement (RTGS) system by RBI has
added a new dimension to EFT scenario. Corporate bodies and other bank
customers have now the option to transfer funds to designated branches (around
9600 at present) instantaneously. As per the RTGS operating rules, if the credit
cannot be applied, it should be returned within 2 hours- meaning thereby that the
maximum delay can be 2 hours.
Fifthly, there has been a rapid growth in installation of ATMs in the country.
Bank customers can now access their accounts for withdrawal of cash, deposit of
cash, balance enquiry, requisition of books, issue of stop-instruction etc. on 24X
7 bases. ATM population is around 16,000 in the country at present and in
increasing by a few hundred each month.
Sixthly, In the last three or four years there has been a phenomenal growth in use
of payment cards (debit and credit cards) as a payment medium in the country.
The increasing use of cards is not only due to the safety and convenience aspect
but on account of retail consumer boom which has taken place in the country.

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Types of EFT Crime

Breaches of security can be accidental

as well as deliberate. They may affect

individual

accounts

or

threaten

institutions or networks. EFT crimes

may be aimed at theft of funds; at use,
disclosure,

alteration,

theft,

or

destruction of data; or at disruption or destruction of the EFT system.

Funds (or data) can be stolen by embezzlement within the financial
institution, by intruders from outside of the institution, or by customer
fraud.
Employees of the institution are frequently the source of EFT crime. They
are likely to have access to the systems and often can mask criminal
actions behind legitimate activities. They may hide unauthorized
procedures within programs (the Trojan horse strategy) by building in
instructions to abort or divert authorized transactions, and then remove
this procedure from the computers memory bank. Unauthorized copying
of either programs or data, such as account numbers and personal
identification numbers (PINs), usually cannot be detected or traced.
However, most reported cases of EFT crime are not sophisticated.
Most of these criminal tactics can also be used by intruders from outside
of the EFT payments systems. For example, in the hands of a computer
expert, a home terminal can successfully impersonate a POS terminal
and send perverse instructions over the EFT communication line.
However, this is difficult to do at present.
EFT communication links can be tapped or used for eavesdropping under
some circumstances. False information can be entered or legitimate
information altered or destroyed. The lines themselves are also
vulnerable.

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Customers often abuse EFT systems by unauthorized overdrafts. Some

ATM devices are not online; that is, they do not have access to customer
accounts, instead they limit the amount of money that may be withdrawn
by a customer with proper identification (usually $100 per 24 hours),
some offline ATM devices cannot lock out stolen cards. Most ATMs, of
course, require both an authorized card and a PIN for access. However,
some require only a card, and users often carelessly discard receipts
bearing their account number right at the site. Against all advice, some
users insist on writing their PIN on the access card or on something that
they keep with the card.
Access cards can also be forged; they may be stolen from the bank or
from the mail reroute to the customer. (Sometimes they are sent to
potential customers without having been requested, although an
additional validation step is usually required before they can be used.)
Account numbers and PINs can be lifted from the cards magnetic strip
and transferred to blank cards.
ATMs and POS terminals were not in use during the height of political
activism and protest demonstrations of the late 1960s and early 1970s,
With any new wave of protest, however, they would be vulnerable to
politically inspired vandalism. Spray paint, gum, glue, or objectionable
substances would easily render a machine inoperable, at least temporarily.
Normal failures of EFT components or communication links also make
EFT devices temporarily inoperable. ATMs currently have an outage rate
of about 3 percent, which is frustrating to customers who depend on the
machines to complete transactions outside of normal banking hours. As
more and more customers come to depend on EFT, downtime will be
even more unacceptable. Failure of system components can also cause
loss of data matter,

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Security in Electronic Funds Transfer

Security means the protection of the integrity of
electronic funds transfer (EFT) systems and their
information from illegal or unauthorized access and
use. Although the loss per theft appears to be
greater than for paper-based payment systems,
there is no real evidence that EFT systems to date
have resulted in a higher than average crime rate. Why, then, is the security of
EFT systems an important public concern and potentially a major policy issue?
In comparison with other payment systems.
A high degree of security is especially important to the future development and
use of EFT because this is a relatively new technology that is challenging much
older and well established payment systems. Therefore, it is particularly
dependent on the confidence of the public. The failure to gain and maintain the
confidence of individual and organizational users during this period of rapid
development could ultimately undermine the stability of financial institutions
that have already heavily committed themselves to EFT systems and practices.
Some believe that both effective technology and sound management procedures
exist for adequately assuring EFT security, though even present technology and
procedures are not all widely used. There is as yet no clear and consistent set of
industry wide security standards for
Protection of computer systems. The use of security technology and procedures
varies among institutions. The cost of providing a reasonable degree of security
equal at least to that provided for paper-based payment systems is probably not
excessively high, but information on this point is scanty. Better information
about EFT security would allow Congress and State legislatures to assess more
effectively the possible need for new or modified legislation and/or regulations.

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Security in Payment Systems

An important issue with regard to EFT is the level of security that will be
required and its cost. Will new legislation be needed for prosecution of EFTrelated crime? Will public discussion of EFT security problems exacerbate those
problems, and if so, is some mechanism needed for sharing information about
security problems and appropriate defense strategies?
Any payment system and any financial institution must be able to
guarantee, at least to some reasonable degree, the safety of assets
entrusted to it. It must be able to protect both funds and data against theft,
loss, and misuse. Users must be assured that transactions will be carried
out according to their instructions. The ability to guarantee the integrity
of the payment system and the safety of both funds and information is
what is meant by security.
Any medium of exchange, whether currency, Cheek, bills of credit, or
recorded electronic signals, ultimately relies on public confidence that it
will retain its value and continue to be acceptable to others in exchange
for goods and services. Similarly, the continued viability of financial
institutions depends on the confidence of their customers. Thus, the
adequacy of EFT security systems is important, not only because
individuals are entitled to protection of their accounts and to the
confidentiality of the information that they provide, but also because an
unacceptable number of security failures could undermine public
confidence in financial institutions, thus weakening the national economy
and ultimately the national security.
Wherever monetary value exists, and in whatever form, it becomes an
object of greed and a target for criminal activity. Funds have been
embezzled and banks robbed for as long as banks have existed. EFT
offers some valuable opportunities for protecting individuals and
organizations against loss of assets. The availability of automated teller

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machines (ATMs) and point-of-sale (POS) terminals enables individuals

to carry less cash on their persons. Automatic deposit of payrolls and
social security Cheek would reduce the volume of thefts from mailboxes.
Merchants will suffer fewer losses from bad Cheque and credit card
fraud. Financial institutions can reduce employee error, improve audit
trails, and reduce overdrafts.
However, EFT also has some vulnerability that paper-based payment
systems do not have, and it creates the opportunity for new kinds of
white-collar crime. Most funds have always existed only as data in
account ledgers or files. Before EFT, however, the customer was kept at a
distance from all but the first and last steps of transactions, and financial
institutions could control and guard most of the processing so that risks
were at least limited to those internal to the financial institution (with the
exception of bank robbers and check passers). Sometime had to elapse
before funds could actually be removed in the form of currency and could
no longer be returned simply by reversing the paper transaction.
With some EFT procedures, however, customer involvement with the
system is facilitated and funds are quickly removed, often without
another human having overseen the process. Other EFT systems involve
many third parties in encoding, transmitting, or storing data, thus
providing many vulnerable points where security could be breached.
Communication links are vulnerable to electronic eavesdropping and
provide entry into the system at several points. The data needed for EFT
systems are easily aggregated and accessed, thus creating a value apart
from and in addition to the value of the funds. This also creates concern
over security in relation to EFT systems. Security also may be breached
accidentally. EFT technologies can lose data through failure of hardware
components or communication links, or deterioration of storage media.
Where there is no backup documentation such data loss can seriously
compromise the system.

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Another difference between EFT and traditional security risks related to

banking and payment systems is the sporting element. Armed bank
robbers are almost always professional criminals. Embezzlers, while they
may never before have committed a crime, are motivated just as clearly
by greed for financial gain. But it appears that computer criminals are
sometimes motivated, at least initially, by the sheer fun of beating the
system. This kind of gamesmanship, for a lark as much as for funds,
seems to provide the motivation for bright college students and even
younger children breaking into institutional computers to discover,
modify, or steal information or merely to play tricks on the system. In the
case of EFT systems, however, the sporting behavior is apt to be lavishly
rewarded and the fun amplified by substantial financial gains at minimum
risk. Some experts assert that most EFT crime is never detected, or if
detected is not reported.
Financial institutions are reluctant to publicize EFT losses for several
reasons. That public confidence will be compromised and the institution
weakened; that their insurance premiums will be increased; and that other
computer buffs, or more professional criminals, will learn the systems
vulnerabilities or will be challenged to surpass the achievement.
Losses from individual accounts may go on detected by the account
owners because they are so small; one strategy is to instruct the computer
to deduct a cent or two from each transaction handled, and deposit it in
fraudulent account.
A sufficiently high volume of transactions could make such amounts
accumulate rapidly. Since information, unlike money, can be owned and
used by many people at the same time, data can be stolen without
anyone being the wiser.

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By the time stolen information is actually used for unauthorized purposes

it may be impossible to trace its origin. Often managers and law
enforcement officials are not qualified to detect computer-based crimes
and frauds, and are unlikely to challenge either the machine or the
computer experts on the workings of the system.
Typical computer criminals are said to be young, intelligent, enthusiastic
computer buffs with no prior criminal record and probably no previous
criminal activity .If detected, they may be either hired or maintained as
employees by the financial institution they victimized to help protect it
against similar violators. In any case, they are unlikely to be severely
punished. One estimates that only about 3 percent of computer criminals
who are apprehended ever go total. Many States do not have legislation
for prosecuting computer-based crimes; and even Federal law is unclear
in some aspects. In one case, a Federal judge ruled that movement of a
stolen program over telephone wires did not legally constitute theft of
trade secrets, since the relevant statute required the stolen article to be
tangible. The act of copying the program and taking it to the thiefs
office, however, was judged to be criminal.

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Company Profile
State bank of India:State bank of India is the nations largest and oldest bank. Tracing its roots back
some 200 years to the British East India Company (and initially established as
the Bank of Calcutta in 1806), the bank operates more than 15,000 branches
within India, where it also owns majority stakes in six associate banks. State
Bank of India (SBI) has more than 80 offices in nearly 35 other countries,
including multiple locations in the US, Canada, and Nigeria. The bank has other
units devoted to capital markets, fund management, factoring and commercial
services, credit cards, and brokerage services. The Reserve Bank of India owns
about 60% of State bank of India.
History of State bank of India:State Bank of India (SBI) is that country's largest commercial bank. The
government-controlled bank--the Indian government maintains a stake of nearly
60 percent in SBI through the central Reserve Bank of India--also operates the
world's largest branch network, with more than 13,500 branch offices throughout
India, staffed by nearly 220,000 employees. SBI is also present worldwide, with
seven international subsidiaries in the United States, Canada, Nepal, Bhutan,
Nigeria, Mauritius, and the United Kingdom, and more than 50 branch offices in
30 countries. Long an arm of the Indian government's infrastructure, agricultural,
and industrial development policies, SBI has been forced to revamp its
operations since competition was introduced into the country's commercial
banking system. As part of that effort, SBI has been rolling out its own network
of automated teller machines, as well as developing anytime-anywhere banking
services through Internet and other technologies. SBI also has taken advantage of
the deregulation of the Indian banking sector to enter the, assets management,
and securities brokering sectors. In addition, SBI has been working on reigning
in its branch network, reducing its payroll, and strengthening its loan portfolio.

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Changes brought in Information Technology by SBI:

In the next decade fund transfer facility was provided for individuals

All SBI branches were connected and ATMS were launch

2001 - KMPG appointed consultant for preparing IT Plan for the Bank.

Later on Core banking proposed by the IT consultancy company.

2002 All branches computerized but on decentralized systems, there the

initiative of core banking took place

2008- more than 6500 branches (95% of business)

Fund transfer facility for corporate customers was also launched.

More Interfaces developed with e-Commerce & other sites through

alternate channels like ATM, ECS, and CTS& RTGS/NEFT.

Large network is playing the role of backbone for connectivity across the
country

SBI fund transfer facility:State Bank of India is Indias largest bank with a branch network of over 11000
branches and 6 associate banks located even in the remotest parts of India. State
Bank of India (SBI) offers a wide range of banking products and services to
corporate and retail customers.
Online fund transfer is the Internet banking portal for State Bank of India. The
portal provides anywhere, anytime, online access to accounts for State Banks
Retail and Corporate customers. The application is developed using the latest
cutting edge technology and tools. The infrastructure supports unified, secure
access to banking services for accounts in over 11,000 branches across India.
PRODUCTS AND SERVICES:
Bill Payment
RTGS/NEFT
Mobile transfer
Fund Transfer

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Third Party Transfer

Demand Draft
1)Bill Payment:A simple and convenient service for viewing and paying your bills online.
No more late payments
No more queues
No more hassles of depositing s
Using the bill payment you can 'view and Pay various bills online, directly from
your SBI account. You can pay telephone, electricity, insurance, credit cards and
other bills from the comfort of your house or office, 24 hours a day, 365 days a
year. Simply logon to http://www.onlinesbi.com/ with your credentials and
register the biller to which you want to pay, with all the bill details. Once the bill
is uploaded by the biller, you can make payment online. You can see you can see
'how do i' to learn the steps for using the facility.
You can also set up Auto Pay instructions with an upper limit to ensure that your
bills are paid automatically whenever they are due. The upper limit ensures that
only bills within the specified limit are paid automatically, thereby providing you
complete control over payments. The e-PAY service is available in various cities
across the country and you can now make payments to several billers in your
region.
2)RTGS/NEFT:You can transfer money from your State Bank account to accounts in other banks
using the RTGS/NEFT service. The RTGS system facilitates transfer of funds
from accounts in one bank to another on a "real time" and on "gross settlement"
basis. This system is the fastest possible interbank money transfer facility
available through secure banking channels in India. RTGS transaction requests
will be sent to RBI immediately during working hours post working hours
requests are registered and sent to RBI on next working day. You can also

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schedule a transaction for a future date. You can transfer an amount of Rs.1lac
and above using RTGS system. National Electronic Funds Transfer (NEFT)
facilitates transfer of funds to the credit account with the other participating
bank. RBI acts as the service provider and transfers the credit to the other bank's
account. NEFT transactions are settled in batches based on the following timings
1.6 settlements on weekdays - at 09:00, 11:00, 12:00, 13:00, 15:00 and
17:00 hrs.
2.3 settlements on Saturdays - at 09:00, 11:00 and 12:00 hrs.
Please note that all the above timings are based on Indian Standard Time (IST)
only. In order to transfer the funds to an account with other bank, kindly ensure
that the bank branch of the beneficiary is covered under the RGTS/NEFT
payment system. It is recommended that you choose the Bank/ Branch from the
drop down option provided under the link "Add Interbank beneficiary. Please
exercise care to provide the correct account number and name of the beneficiary.

3) Mobile transfer
Away from home, bills can be paid or money sent to the loved ones or balance
enquiries done anytime 24x7!!! That is what State Bank Freedom offers
-convenience, simple, secure, anytime and anywhere banking. Mobile Banking
Service over Application/ Wireless Application Protocol (WAP).The service is
available on java enabled mobile phones over SMS/ GPRS where the user is
required to download the application on to the mobile handset. The service can
also be availed via WAP on both java and non-java phones with GPRS
connection.

The following functionalities are available in the application based service/

WAP:

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Funds transfer (within and outside the bank using NEFT)

Enquiry services (Balance enquiry/ Mini statement)

Bill Payment (Utility bills, credit cards, Insurance premium payments)

Donations, Subscriptions

Business Rules governing Mobile Banking Service over Application / WAP.

The Mobile Banking Service will be available to all the customers

having Current/ Savings Bank Account (Personal segment). The
customers will have to register for the services.

Daily transaction limits for fund transfer/ bill/ merchant payment

is Rs.50,000/- per customer with an overall calendar month limit
of Rs.2,50,000.00

The service will be carrier-agnostic i.e. all customers can avail the
mobile banking service with the Bank irrespective of the service
provider for their mobiles.

The service is free of charge. However, the cost of SMS / GPRS

connectivity will have to be borne by the customer.

4) Fund Transfer:The Funds Transfer facility enables you to transfer funds within your accounts in
the same branch or other branches. You can transfer aggregating Rs.1 lakh per
day to own accounts in the same branch and other branches. To make a funds
transfer, you should be an active Internet Banking user with transaction rights.
Funds transfer to PPF account is restricted to the same Just log on to retail
section of the Internet Banking site with your Credentials and select the Funds
Transfer link under Payments/Transfers tab. You can see all your online debit and
credit accounts. Select the debit account from which you wish to transfer funds
and the credit account into which the amount is to be credited. Enter the amount
and remarks. The remarks will be displayed in your accounts statement for this
transaction. You will be displayed the last five funds transfer operations on your
accounts. On confirming the transaction, you will be displayed a confirmation

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page with the details of the transaction and the option to submit
or cancel the funds transfer request. A reference number will be
generated for your record.
5) Third Party Transfer:You can transfer funds to your trusted third parties by adding them as third party
accounts. The beneficiary account should be any branch SBI. Transfer is instant.
You can do any number of Transactions in aday for amount aggregating
Rs.1lakh.
To transfer funds to third party having account in SBI, you need to add and
approve a third party, you need to register your mobile number in personal
details link under profile section. You will receive a One Time SMS password on
your mobile phone to approve a third party. If you do not have a mobile number,
third party approval will be handled by your branch. Only after approval of third
party, you will be able to transfer funds to the third party. You can set limits for
third party transactions made from your accounts or even set limits for individual
third parties.
6) Demand Draft:The Internet Banking application enables you to register demand drafts requests
online. You can get a demand draft from any of your Accounts (Savings Bank,
Current Account, Cash Credit or Overdraft). You can set limits for demand drafts
issued from your accounts or use the bank specified limit for demand drafts.
You can opt to collect the draft in person at your branch, quoting a reference to
the transaction. A printed advice can also be obtained from the site for your
record.
Online Demand Draft Issue a DD in five simple steps:
1. Select any of your transaction accounts as the Debit account for the DD
amount.

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2. Enter the amount and beneficiary name.

3. Select the branch at which the DD is payable.
4. Choose a delivery mode collect in person or courier.
5. Generate and print the counterfoil instantly!
6. The charges for Retail Banking customers are:

Amount (in Rs.)

Commission

Up to 10,000

No Commission

10,001 to 1, 00,000

Rs. 50/-

1, 00,001 to 5, 00,000

Rs. 100/-

Alternatively, you may request the branch to courier it to your registered address,
and
the
courier
charges
will
be
recovered
from
you.

SWOC analysis of SBIs fund transfer facility

Strengths:

Greater reach to customers

Quicker time to market

Ability to introduce new products and services quickly and successfully

Ability to understand its customers needs

Customers are given access to information easily across any location

Greater customer loyalty

Easy online application for all accounts

24 hours account access

Quality customer service with personal attention

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Weaknesses:

Lack of awareness among the existing customers regarding

Fund transfer facility

Obsolesce of technology take place very soon specially in terms of

security on internet.

Procedure for applying for id and password for using services related to
fund transfer takes time.

Lack of knowledge is found regarding fund transfer in employees of SBI

Implementation of newer technology is little bit complicated

Employees needs training to obtain knowledge regarding fund transfer

facility provided by SBI

Opportunities:

Approximately 95% of customers are not using fund transfer facility.

Core competency can be achieved in terms of banking if focus is made on

awareness of fund transfer facility

Concentration of various services should be made using fund transfer

Challenges:

Maintaining Business Edge over competitors in the context of sameness

in IT infrastructure

Multiple vendor support is necessary for working of highly complex

technology

Maintaining secured IT infrastructure for business operations

Alternative must be there in case of failure of system

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Primary Data
1. DD / Pay Order cancellation/ Revaluation and duplicate issuance?
Ans: i) cancellation Rs 50 pares instrument instruments Rs 100 per
instruments.
2. Cheek issue / deposited & returned unpaid?
Ans: i) cheek issued & returned financial reasons Rs 250 per cheek.
ii) Cheek deposited &returns Rs 50 per local and Rs 150 per
outstation per cheek.
3. Cheek collection?
Ans: i) Cheek collection at bank location Rs 50 per cheek.
ii) Cheek collection at non-bank collection locations Rs 50 per
instruments (plus other bank charges).
4. Debit card charges?
Ans: i) debit card annual fees free
ii) Limit of debit card Rs 50,000 per day.
iii) ATM interchange (National / International)- Free.

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iv) Charge for per add on card Rs 100

v)Mobile Banking/SMS banking-Free.

5. Statement of Accounts?
Ans: i) E-mail monthly/ quarterly Free.
6. Bill Discounting?
Ans: The Bank Bill Discounted amount is 80 to 85% charged.

7. What does u mean by RTGS?

Ans: RTGS is a funds transfer to one bank to another bank more thanRs 2,
00,000& above.
8. Uses of RTGS?
Ans: RTGS uses in 15 min & 24 hrs.
9. RTGS Transactions Terms & Conditions?
Ans: Account refers to customer Bank account maintained operations
through RTGS as specified in the Dhanma@ Realtime application.
10. Business a day for the concerned branch of Dhanlaxmi bank
limited?

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Ans: i) weekly offers, and any public holiday.

ii) A day on which RBI does not provide RTGS.
11. RTGS business guidelines?
Ans: RTGS (membership) business operating guidelines shall mean the
real time gross settlement system business operating giddiness, 2004
issued by RBI.

Recommendations and Suggestions

Training and awareness among employees:It is recommended that State Bank of India should conduct various training
programs for the employees, so that they will get aware with the terms of
fund transfer facility. After such programs they can create awareness amongst
the consumers.

Exchange of information on threats and vulnerabilities at appropriate

forums:There should be an open end discussion on the threats and vulnerabilities
coming across the functioning of fund transfer facilities work by the
employees in the various official forums and meets.

Build an optimal operating model by understanding which activities to

retain collaborate and outsource:There should be clear sight of operations which needs to outsource to other
companies, this will lead to ease in work for employees. Outsourcing
operations like, cyber security department, building IT structure on internet.

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Bank should Create and sustain customer and regulator confidence by

adopting international accounting standards :
Adopting international standards adds some more stars to the glory of any
company, SBI should impose such standards,and this will enhance the
goodwill of SBI among regulator, customers.

Bank should anticipate and get prepared for regulatory changes:Laws regarding IT or cyber laws get change as per the need. SBI should
anticipate such kind of changes and get loaded with various plans and
actions.

Increasing usage of mobile phones is going to revolutionize the banking

culture in near future:Mobile banking is also getting popular in the segment of fund transfer facility
thus this can add some more steps to progress for SBI. Bank is into the
mobile banking but it is providing limited features.

More stress should be given on security concern on internet:There are some people who are into unethical practices of hacking of
accounts of customers. This is nothing but the breach in the security of the
SBI on internet. There should be some measures in order to prevent such
practices. IT structure should be unbreakable.

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CONCLUSION
Studying the project we came to know that Electronic fund transfer is clearly the
way forward for the banking system. It provides comfort to customers at the
same time it provides cost cutting to banks by eliminating physical
documentation. Electronic fund transfer saves time of bank as well as those of
customers.

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Study states that fund transfer provides greater reach to customers. Feedback can
be obtained easily as internet is virtual in nature. Customer loyalty can be gain.
Personal attention can be given by bank to customer also quality service can be
served.
One of the main challenges in the fund transfer system area is to promote largescale use of the electronic modes of payment across the country and requires
addressing the constraints that impede the adoption of this mechanism. To my
mind, the primary reason for slow pace of adoption of the electronic modes of
funds transfer, particularly in the retail segment, is the lack of education
particularly on the part of the bank staff at the branch level that have interface
with the public. As per the survey conducted we can see that there were several
bank branches in the State which were not even aware of the National Electronic
Fund Transfer system. The banks, therefore, need to make concerted efforts to
increase the degree of awareness at the level of the branch staff so that the
electronic fund transfer services percolate down to the level of the public in a
significant manner.

BIBLIOGRAPHY

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HANDBOOK
(20TH EDITION).
ABARAZHEVICH, D (2002) DAIRY ON INTERNET PAYMENT SYSTEM.
E-BANKING: THE GLOBAL PERSPECTIVE GUPTAVIVEK.
BANKING AND FINANCE C.M.CHAUDHARY.
IT IN BANKS - KATURYNAGESHWARARAO.
BANKING INFORMATION

WEBLIOGRAPHY

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www.statebankofindia.com
www.onlinesbi.com
www.weikipedia.com

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