Unit V: Different modes of (11 Hours) Different means of remittances demand draft, Mail transfer, Telegraphic and Telephonic transfer -A.T.M. () -Home Banking- Inter linked branches banking –Online banking-computerization in banking field.

Remittance Business Apart from accepting deposits and lending money, also carry out, on behalf of their customers the act of transfer of money - both domestic and foreign.- from one place to another. This activity is known as "remittance business" . Banks issue Demand Drafts, Banker's , Money Orders etc. for transferring the money. Banks also have the facility of quick transfer of money also know as Telegraphic Transfer or Tele Cash Orders.

In Remittance business, 'A' at a place 'a' accepts money from customer 'C' and makes arrangement for payment of the same amount of money to either the customer 'C' or his "order" i.e. a person or entity, designated by 'C' as the recipient, through either a Branch of Bank 'A' or any other entity at place 'b'. In return for having rendered this service, the Banks charge a pre-decided sum known as exchange or commission or service charge. This sum can differ from bank to bank. This also differs depending upon the mode of transfer and the time available for effecting the transfer of money. Faster the mode of transfer, higher the charges.

Demand Draft

A demand draft or "DD" is an instrument most banks in India use for effecting transfer of money. It is a Negotiable Instrument. To buy a "DD" from a Bank, you are required to fill an application form which asks the following information :

Type of instrument needed Name of the recipient Name of the sender Amount to be transferred Place where the transferred money is to be paid Mode in which money is to be paid i.e. in cash or through a Bank Account Mode in which you will pay money to the Bank i.e. in cash or by debit to your account

The application form along with the on your account or cash is deposited with the counter clerk who gives you a Demand Draft (which looks like a cheque) for the amount.

Tips:

Check the particulars like name of the beneficiary, amount, place where payable etc. filled in the DD, match these with what you had filled in the application form.

Spellings of the beneficiary's name should be exactly the same.

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Get the DD "crossed" for security.

Your PAN number will be necessary if the amount of DD exceeds Rs.10,000/=

Charges for issuing drafts differ from Bank to Bank. So if your requirements are large, do shop around for best bargain.

Mail Transfers or Mail Orders

This is the mode used when you wish to transfer money from your account in Center 'A' to either your own account in Center 'B' or to somebody else's account. In this mode of transfer, you are required to fill in an application form similar to the one for DD, sign a charge slip or give a cheque for the amount to be transferred plus exchange and collect a receipt. The Bank will, on its own, send an order to its branch at center 'B' to deposit the said amount in the account number designated by you.This is, however, a dying product and many banks like State Bank of India have since withdrawn this.

Telegraphic Transfers or Tele Orders

This is similar to the Mail Transfer except that the message is sent to center 'B' by way of a telegram and the money is deposited the next day. The mode of instructions nowadays is increasingly the fax.

Electronic Mode

More and more banks are now offering electronic mode of transfer of funds like Electronic Transfer System, Cash Management product etc. The remittance of funds through these modes is much quicker and the time is reduced to hours and in some cases even minutes.

Banking Options When was the last time you paid a visit to the inside of a bank to make a withdrawal or a deposit? As technology evolves over time, the answer to this question likely becomes less and less, thanks to ATMs and online and mobile banking. ATM is an abbreviation for Automated Teller Machine, and it is a terminal that performs some of the functions of an actual bank teller, such as allowing the user to make withdrawals and deposits. Although there are still physical tellers inside banks to assist customers with daily transactions, the use of ATMs has become widespread. Online banking refers to banking transactions that can be performed with the use of a computer, and requires an internet connection to work. Another convenient form is mobile banking, which allows users to make bank transactions through the use of their smartphone or tablet. Mobile banking is the newest incarnation of banking transactions.

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How are each of these relevant to you, and which is best for you? To answer those questions, let's take a closer look at each.

Automated Teller Machine (ATM) Contrary to popular belief, the ATM has been around for quite some time now. ATMs are useful because they are available 24/7, so customers do not have to wait until bank hours to access their money. You also don't have to leave the convenience of your vehicle to withdraw or deposit money. Similar to fast-food drive-thru windows, the ATM has provided relief for individuals who are constantly on the move. ATM locations are another added benefit, because many shopping plazas and malls make it a point to include ATMs inside or nearby to give customers the opportunity to have access to their money for shopping. Many ATMs are now also inside convenience stores, restaurants, and other high-traffic areas, which makes it convenient for customers to access their money. Customers can even use their ATM card at stores where they are accepted, so they do not have to carry cash. And unlike with cash, if for some reason your ATM card is stolen or misplaced, your money cannot be accessed if the person does not know the four-digit PIN security code Automated Telling Machine Block Diagram:

The automated teller machine consists of mainly two input devices and four output devices that are;

Input Devices:

 Card reader  Keypad Output Devices:

 Speaker  Display Screen  Receipt Printer  Cash Depositor

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Automatic Teller Machine Block Diagram

Input Devices:

 Card Reader: The card reader is an input device that reads data from a card .The card reader is part of the identification of your particular account number and the magnetic strip on the back side of the ATM card is used for connection with the card reader. The card is swiped or pressed on the card reader which captures your account information i.e. the data from the card is passed on the host processor (server). The host processor thus uses this data to get the information from the card holders.

Automated Teller Machine Card Reader  Keypad: The card is recognized after the machine asks further details like your personal identification number, withdrawal and your balance enquiry Each card has a unique PIN number so that there is little chance for some else to withdraw money from your account. There are separate

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laws to protect the PIN code while sending it to host processor. The PIN number is mostly sent in encrypted from. The key board contains 48 keys and is interfaced to the processor.

Automated Teller Machine keypad Output Devices:

 Speaker: The speaker provides the audio feedback when the particular key is pressed.

 Display Screen: The display screen displays the transaction information. Each steps of withdrawal is shown by the display screen. A CRT screen or LCD screen is used by most of ATMs.

Automated Teller Machine LCD Display  Receipt Printer: The receipt printer print all the details recording your withdrawal, date and time and the amount of withdrawn and also shows balance of your account in the receipt.

 Cash Dispenser: The cash dispenser is a heart of the ATM. This is a central system of the ATM machine from where the required money is obtained. From this portion the user can collect the money. The

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duty of the cash dispenser is to count each bill and give the required amount. If in some cases the money is folded, it will be moved another section and becomes the reject bit. All these actions are carried out by high precision sensors. A complete record of each transaction is kept by the ATM machine with help of an RTC device.

ATM Networking:

The internet service provider (ISP) also plays an important role in the ATMs. This provides communication between ATM and host processors. When the transaction is made, the details are input by the card holder. This information is passed on to the host processor by the ATM machine. The host processor checks these details with authorized bank. If the details are matched, the host processor sends the approval code to the ATM machine so that the cash can be transferred.

Automated Teller Machine Networking

2 Types of ATM Machines

Most of the host processors can support either leased line or dial up machines

 Leased line ATM machines  Dial up ATM machines Leased Line ATM Machines:

The leased line machines connect direct to the host processor through a four wire point to point dedicated telephone line. These types of machines are preferred in place. The operating cost of these machines is very high.

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Dial Up ATM Machines:

The dial up ATMs connects to the host processor through a normal phone line using a modem. These require a normal connections their and their initial installation cost is very less. The operating cost of these machines is low compared with leased line machines.

ATM Security:

The ATM card is secured with PIN number which is kept secret. There is no way to get the PIN number from your card. It is encrypted by the strong software like Triple data Slandered.

Automated Teller Machine Working Principle:

Automated Teller Machine Circuit Diagram

The automated teller machine is simply a data terminal with two input and four output devices. These devices are interfaced to the processor. The processor is heart of the ATM machine. All the ATM machines working around the world are based on centralized database system. The ATM has to connect and communicate with the host processor (server). The

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host processor is communicating with the internet service provider (ISP). It is the gateway through all the ATM networks available to the card holder.

Automated Teller Machine Architecture

When a card holder wants does an ATM transaction, user provides necessary information through card reader and keypad. The ATM forwards this information to the host processor. The host processor enters the transaction request to the cardholder bank. If the card holder requests the cash, the host processor takes the cash from the card holder account. Once the funds are transferred from the customer account to host processor bank account, the processor sends approval code to the ATM and the authorized machine to dispense the cash. This is the way to get the amount on ATMs. The ATM network is fully based on centralized database environment. This will make life easer and secured the cash.

Advantages of Automated Teller Machine:

 The ATM provides 24 hours service  The ATM provides privacy in banking communications  The ATMs reduce the work load banks staff  The ATM may give customer new currency notes  The ATMs are convenient to banks customers  The ATM is very beneficial for travelers  The ATM provide services without any error

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Features of Automated Teller Machine:

 Transfer funds between linked bank accounts  Receive account balance  Prints recent transactions list  Change your pin  Deposit your cash  Prepaid mobile recharge  Bill payments  Cash withdrawal  Perform a range of feature in your foreign language. Now you have got an idea about the how ATM works so if any queries on this topic or on the electrical and electronic projects leave the comments below. Photo Credit

 Automatic Teller Machine by Renome  Automatic Teller Machine Block Diagram by st  Automatic Teller Machine Card Reader by kicteam  Automatic Teller Machine LCD Display by zesty  Automatic Teller Machine Cash Dispenser by 4.bp.blogspot  Automatic Teller Machine Networking by media.developeriq

Mobile Banking

Ever since the internet has taken over the world, the banking industry has undergone a major shift. Before the internet was so popular for carrying out banking transactions, people had to go the bank, stand in long queues and then wait for their turns even if they only wanted to check their account balance, withdraw cash or transfer money. But now they no longer need to visit a bank to carry out different kinds of banking transactions since they can use internet banking or mobile banking facilities.

Mobile banking has simplified the lives of many people and given them the option to send money, receive money, check account balance, pay bills, etc. using their mobile phones. And the best part is that banks offer mobile banking services for free.

Types of Mobile Banking Services

Banks provide mobile banking services to their clients in the ways listed here:

 Mobile Banking over Wireless Application Protocol (WAP)  Mobile Banking over SMS (also known as SMS Banking)  Mobile Banking over Unstructured Supplementary Service Data (USSD)

These mobile banking services have been discussed in detail here:

Mobile Banking over WAP

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The customers can download the mobile application of the concerned bank on their smartphones and then use it to avail various services provided by the bank. They need to register for mobile banking separately and receive their login credentials to use mobile banking applications, simply known as mobile apps. Most banks provide mobile apps for iOS and Android devices.

Different banks offer mobile apps to their customers to help them carry out common banking transactions conveniently. Some banks offer different mobile apps for different banking services. For instance, the bank may offer an e-Passbook app that only serves the purpose of account balance check since the app acts like a digital passbook and there is another mobile app for other services such as funds transfer, bill payment, and more in addition to balance check. The customers can choose to download one or more apps provided by the bank to avail mobile banking services. Some of the major mobile banking services have been mentioned here:

 Account Access: Customers can easily access their bank account using their smartphones by downloading the mobile banking All they need is to use their User ID and password to access their accounts. They can then carry out different banking transactions instantly.  Balance Enquiry: One of the main reasons why people used to visit the bank was to keep their passbooks updated so that they always knew their current balance. When the balance enquiry service was offered through ATM, people started using it instead of visiting the bank. Now, it is even more convenient to check account balance using the mobile banking  e-Passbook: Some banks offer a separate digital passbook mobile app that customers can download to check their previous transactions and the latest account balance while others just have this service as a part of their main mobile banking There is no need to visit a bank or ATM for balance enquiry or account statement.  Account Statement: If you want to check your bank account statement, you no longer need to go to the bank or ATM since you can get the statement on the mobile app of your bank. Since there are only a few free ATM transactions available to everyone these days, it is better to avail them only for cash withdrawal; account balance or account statement should be checked using the mobile app. You can also download your account statement in PDF format and save it on your phone.  Fund Transfer: If internet banking and mobile banking have made the lives of people any easier, it is mainly because of this service. People can now transfer money from their bank account to an account in their own bank or another bank easily. They may have to pay a nominal charge to carry out interbank transfers but intra-bank transfers are usually free. IMPS, NEFT or RTGS transactions can also be carried out easily using mobile apps.  Bill Payment: Mobile banking has made it easy to pay your mobile, credit card or utility bills. You can even schedule payments on a certain day of the month so that you do not have to worry about the payments. There is no need to stand in long queues to pay your phone bills, credit card bills, etc.  Branch Locator: If you are in a new city or area, you may need to find a branch of your bank then you can easily use the mobile banking app to find it. Most banks have a ‘Branch Locator’ that you can use to find the nearest branch.  ATM Locator: When you are in a new city or area, you might want to withdraw cash from an ATM. The easiest way to find an ATM of your bank is to open your mobile

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banking app and go to the “ATM Locator.” You will be able to find the address and exact location of the ATM within your vicinity.  Requests: There is no need to visit the bank to request a cheque book, new , credit card, duplicate debit card, etc. since you can do so easily using the mobile app. Most banks also offer the service to hotlist or block a debit or credit card in the case of loss or theft.

Mobile Banking over SMS

Most banks offer mobile banking services over SMS. The customers need to sign up for this service, known as SMS Banking, by registering their mobile number. Then, they can send SMS to the bank to inquire about their account balance, check the mini account statement, etc. The bank then replies with an SMS that contains the information requested by the customer.

The customers do not need to own a smartphone or internet access to avail SMS banking services. Banks have a specific phone number registered and an SMS format that the customers need to follow to avail of this service.

For instance, to check the available balance in their account, they may have to send an SMS in the format: AVAIL BAL XXXX where XXXX is the last 4 digits of the account number. The bank replies with an SMS with the current available balance in the account.

It is important to note here that the mobile number registered with the bank and the one you use to send the SMS needs to be same to avail this service.

Mobile Banking over USSD

Banks offer mobile banking over USSD service to people who do not own a smartphone or have access to the internet. They can simply use USSD codes provided by the banks to avail banking services. The customers dial a prefix code and click send. Then, they receive a menu containing the banking services such as balance enquiry, mini account statement, etc. that they can avail using their phone. This service is quite popular in rural areas where most people do not own smartphones and do not have access to the internet.

Mobile Banking Features & Benefits

There are plenty of reasons why mobile banking has gained so much popularity ever since it was introduced in India. Here are a few features and benefits of mobile banking:

 One of the main benefits of mobile banking is the convenience of having banking services at your fingertips. There is no need to go to a bank or ATM and wait for the bank to open in order to check your account balance, transfer money, pay your bills or even see your account statement. You can do it all using your . Fund transfer transactions may complete when the banks are open but you can check your account balance or get account statement irrespective of the time or day.  Banks know that everyone does not have access to the internet and that is why they offer mobile banking services to their customers over SMS and USSD. People who own smartphones and have access to the internet can download and use the bank’s mobile apps while others can use the mobile banking SMS and USSD services. The

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customers only need to use the right SMS format to avail SMS banking services and right prefix for USSD services.  Your bank account and your personal details are totally safe if you use mobile banking The bank will give you a set of login credentials which you can use to sign into your account and carry out the transactions. These login credentials are passed on to you securely and since you are the only one who knows your login ID and password, your account is always safe. Most banks allow you to enable two-step verification where you can only carry out banking transactions if you enter the One- Time Password (OTP) sent to your registered mobile number.  Most people want to avail mobile banking services but think that it will cost them a lot. However, they will be delighted to find out that banks offer these services for free. You do not need to pay any extra charges to register for mobile banking Unlike ATM transactions where you get a limited number of free transactions, you can check your account statements, balance or pay your bills as many times as you want without paying any charges. After the implementation of GST, you only have to pay a nominal charge to transfer funds or pay your bills.

HOME BANKING Home banking is the practice of conducting banking transactions from home rather than at branch locations. Home banking generally refers to either banking over the telephone or on the internet (i.e. online banking). The first experiments with internet banking started in the early 1980s, but it did not become popular until the mid-1990s when home internet access was widespread. Today, a variety of internet banks exist which maintain few, if any, physical branches.

Home Banking Explained The increasing popularity of home banking has fundamentally changed the character of the banking industry. Many people are able to arrange their affairs so that they seldom have need of a physical branch. Online-only banks have profited from this shift in the industry. The absence of brick and mortar locations allows many online banks to offer favorable interest rates, lower service charges, and many other incentives for those willing to bank online.

Home Banking Versus Online Banking Online banking has become nearly synonymous with home banking as most prefer to bank via the internet instead of over the telephone. Online banks (or banks with online options) allow access for the majority of daily, traditional transactions, including deposits, checking account services, and some basic financial products like savings accounts. Online banking is generally available for both individuals and small businesses.

Additional services, such as certificates of deposit (CDs), and business, personal and mortgage loans, often still occur at physical branch locations. A certificate of deposit (CD) is a savings certificate with a fixed maturity date and specified fixed interest rate. CDs are generally issued by commercial banks and are insured by the FDIC up to $250,000 per individual.

Mortgages may come in many forms, including fixed rate mortgages and adjustable rate mortgages (ARMs). All mortgages are debt instruments, which collateral of specified real estate property secures. A borrower is obliged to pay back a mortgage with a predetermined set of payments over a set time period.

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Home Banking and Cybersecurity Concerns With the increased shift to online banking, new security threats have arisen. All information, such as customer account information, balances, recent transactions, and more, which is stored on a computer, other electronic device, or in the cloud, is vulnerable to hackers and theft. Many commercial banks with online arms have put into place cybersecurity measures to prevent such dangerous theft from occurring. Cybersecurity has become essential as the world is more reliant on computers than ever before.

THREE MAJOR WAYS THAT CYBER THIEVES OBTAIN SENSITIVE CONSUMER FINANCIAL DATA ARE: BACKDOOR ATTACKS, IN WHICH CRIMINALS EXPLOIT ALTERNATE METHODS OF ACCESSING A SYSTEM (OR DON'T REQUIRE USUAL AUTHENTICATION METHODS); DENIAL-OF- SERVICE ATTACKS, WHICH BLOCK A RIGHTFUL USER FROM ENTERING A SYSTEM; AND DIRECT-ACCESS ATTACKS, INCLUDING MORE COMMONLY KNOWN BUGS AND VIRUSES. BUGS AND VIRUSES GAIN ACCESS TO A SYSTEM AND COPY ITS INFORMATION AND/OR MODIFY PARTS OR ALL OF IT.

COMPUTERIZATION IN BANKS As the Indian banking and financial system develops and gets integrated with the international financial markets, it has to be technically ready to meet the challenges. The banks in India are gearing to shed their age-old style of functioning and to adopt the computer-aided modern system and procedure on the lines of what has been done in other parts of the world.

Employee involvement in technology up gradation

For successful implementation of computerization/mechanization programme and technology up gradation, cooperation of the indispensable and equally, their apprehensions in this regard need to be removed. The bipartite negotiations between IBA representing bank management and the bank employees’ unions constitute a mechanism for resolving various issues about the use of higher technologies in bank and in working out acceptable levels of Computerization.

Way back in 1966, the IBA, alone with the exchange banks association signed the first wage settlement with the unions, which inter alia provide for using IBM or ICT accounting machines for inter branch reconciliation, agency accounts, salary and provident fund accounts, etc.

In 1983, for the first time a comprehensive settlement exclusively for computerization/mechanization was signed, providing for installation of Advanced Electronic Ledger Posting Machines (AELPMs) at branches, mini computers at Zonal/Regional Offices and one mainframe computer for each bank. The second computerization settlement of 1987 defined the scope of AELPMs, their configuration and also fixed the parameters for branches where the machines could be installed.

BANKNET

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Banknet is a payment network established by RBI which functions with in India and was launched during 1991. The system makes use of inter-city trunk voice grade data circuits. The user bank can access BANKNET from their premises through lease or dial-up lines at the local centres using ports on PADS and UNIX machines with popular data communication softwares. The message of banking transactions can be transferred in coded form for settlement of transaction and advices. It enables transfer of data and other statement to RBI. Access to SWIFT is also possible through this system.

RBINET

It is a communication system operating over the BANKNET. RBINET client running a personal computer is called RBINET Dos client and he can communicate with its server over a dedicated leased line or dial up line.

I-net

I-net owned by Deptt of Telecommunications (DoT) is a packet switching public data network (PSPDN) which was opened in 1983 for slow speed data communication. I-net uses telephone connection and satellite for communication through which communication is possible across major metropolis and other international network. The subscribers can also from a private network within I-net.

NICNET

National Informatic Centre Network (NICNET), a part of internet services was set up in 1975 to promote information culture which is a govt organization. It provides multiple services to user department which include finance, agriculture, industry, commerce by making use of various applications. The host computer in NICNET is stationed in New Delhi. Currency chest operations in banks are performed through NICNET.

INFINET

Indian financial Network, the satellite based VSAT network developed by institute for development and research on banking technology (IDRBT Hyderabad, an RBI sponsored organization) is fast and secure intra-bank and inter-bank communication system.

Details of the applications on INFINET:

Intra bank

Funds transfer and payment messages bank owned ATM/credit card, debit care and other applications on corporate network

 Inter-branch reconciliation  Quick disposal of loan/investment proposal  Forex information from branches  Fund information from clearing centres  Cash and treasury management  Any branch banking  Asset liability management

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 Auditing and inspecting computerized branches using the network  Organizational bulletin boards  Timely information to the top management  Help in developing new products

Inter -bank

 Electronic fund transfer  Clearing and settlement system for security delivery vs payment  Transferring balances from net settlement system of real time gross settlement server at periodical intervals  Exchange of defaulting borrowers’ list among RBI and banks  Currency chest accounting  Asset liability management for reporting to RBI  Intranet in RBI to enable banks to get circulars and press releases  Reporting of section 42 data to RBI  Returns to the submitted by banks to Deptt of banking supervision for onsite supervision and monitoring.

Shared payment network system (SPNS)

 The Shared payment network system (SPNS) in Mumbai has been conceived by IBA.  It will provide round-the-clock banking convenience since a customer of a bank can perform basic banking functions like cash withdrawals, balance enquiry etc at any ATM belonging to any one of the banks.

IBA Swadhan Network

 Swadhan IS IBA floated Shared payment network system (SPNS) in existence for the last five years. Over 56 banks are in the network and 43 have so far gone live.  More than 1000 ATMs nationwide are Swadhan enabled, connecting over 67 cities to service about 2.6 million Swadhan-enable careholders.  The Swadhan member banks include cooperative banks, private sector banks. Foreign banks etc. India Switch Company runs this network for a fee of Rs 5 per transaction.

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