Digital Banking: Anytime, Anywhere – Part I

Digitization (or moving online) of all the traditional banking activities and services that were available to customers by visiting bank branch is known as Digital Banking. It includes activities like Money Deposits, Withdrawals, and Transfers, etc.

Understanding Digital Banking 

• Digital banking's objective: Provide a standard as well as comfortable online and mobile banking services by integrating their digital technologies.
• 360 degree benefits: Through digital banking, all the activities like balance update, fund transfer, deposition or withdrawal of cash, passbook update, bank account opening is made easier at single click without the need of visiting the bank branch.
• Banker friendly as well: Digital banking benefits the customers as well as bankers. Banks are using CSM (cash sorting machine) for cash-counting, Digital lamps for cheque verification, enhanced software’s for calculations and data storage, software’s to update their all inventories of bank-like cheque books, account-opening kit, debit-credit cards, locker details etc.
• Examples of digital banking: Internet banking, Mobile banking, Wallet banking, Customer Service, Digital Cash, ATM, SMS Services and IVR calling, etc

Internet Banking

Internet banking is a facility offered by banks and financial institutions that allow customers to use banking services over the internet. If one wants to use internet banking services, one must register for this facility while opening the account or later. Customers availing Internet Banking must use their registered customer ID and password to log into your internet banking account.

Mobile Banking

It is just like an internet banking. Customer can perform all banking activities through a mobile phone with the help of bank mobile app like iMobile of ICICI, YONO of SBI. These apps can perform wide variety of activities like fund transfer, bill payment, online shopping, etc

Core Banking System (CBS)

• Core Banking Solutions (CBS) is a type of solution that enables banks to offer a multitude of customer-centric services on a 24×7 basis from a single location, supporting retail as well as corporate banking activities.
• It is a centralized system developed by bank which allows its customers to conduct banking activities from anywhere and any branch of the bank.
• A customer can avail banking services from any branch of the bank which is on CBS network irrespective of a branch in which account has been opened.
• It is basically banking software with web-platform for centralized data management and branchless banking.
• Example: E-Kuber is the CBS of RBI, Finacle (Infosys) and BanCS (TCS)

National Electronic Fund Transfer (NEFT)

• National Electronic Funds Transfer (NEFT) is basically an electronic fund transfer system that works on Deferred Net Settlement (DNS) basis which resolves transactions in batches.
• It is a payment system which facilitates one-to-one funds transfer.
• Under this facility, any customer can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country. 
• NEFT is made available for 24*7 by RBI now.
• Minimum Transaction Limit: NIL
• Maximum limit: Rs 10 Lakh
• There are no charges for transfer of funds in NEFT

Note: For cash-based remittance and remittance to Nepal – the maximum amount per transaction is limited to Rs 50,000.

Real Time Gross Settlement (RTGS)

• Real Time Gross Settlement (RTGS) is defined as the continuous (real-time) settlement of funds individually on an order by order basis (without netting).
• Under this facility, the transfer of funds is done individually on an order by order basis (without any delay).
• It is primarily meant for large value transactions.
• This system is available on all days. 
• The transactions under RTGS has legal backing
• Minimum Transaction Limit: Rs 2 Lakh
• Maximum limit: 2000 crore
• It is generally used for corporate transactions.

Indian Financial System Code (IFSC)

• It is an 11-digit alpha-numeric code which identifies a bank-branch participating in the NEFT & RTGS system.
• IFSC is used by the NEFT system to identify the originating / destination banks/branches and also to route the messages appropriately to the concerned banks/branches.
• IFSC code represent:
  • First 4 alpha characters indicate – bank name
  • Fifth characters is – 0
  • Last 6 characters indicate – bank branch.

National Payments Corporation of India (NPCI)

• Established: 2008 under Section 8 of Companies Act
• National Payments Corporation of India (NPCI) is an umbrella organization for all retail payments system in India.
• It was set up with the guidance and support of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA).
• Headquarter: Mumbai, Maharashtra
• It aims to allow Indian citizens to have unrestricted access to ‘e-payment’ services.
• The organization is owned by a consortium of major banks and has been promoted by the country’s central bank, the Reserve Bank of India (RBI).
• Its recent work of developing Unified Payments Interface (UPI) 2.0 aims to move India to a cashless society with only digital transactions.

Here are few products of NPCI:

Unified Payments Interface (UPI)

• Launched: 11th April 2016 
• This single mobile application helps users in accessing different bank accounts.
• It is an instant payment system to transfer money between two parties bank accounts.
• It is a similar to NEFT or RTGS transfers in that way.
• It is developed by the National Payments Corporation of India (NPCI).
• Immediate money transfer through mobile device round the clock 24*7 and 365 days.
• The different channels for transferring funds using UPI are:
  • Transfer through Virtual ID
  • Account Number + IFSC
  • Mobile Number + MMID
  • Aadhaar Number
  • Collect / Pull money basis Virtual ID
  • Immediate payment service (IMPS)

 

Immediate payment service (IMPS)

• Launched: 22nd November 2010.
• It offers an instant, 24X7, interbank electronic fund transfer service through mobile phones.
• It was built upon NFS network.
• It is an instant real-time payment service which help customer to transfer money anytime and anywhere in India.
• It is similar to NEFT & RTGS and available 24/7 throughout the year including bank holidays.
• Transaction limit – There is a maximum limit of Rs. 2 lakhs.
• To transfer fund, account number & IFSC code of Payee is needed.
• This facility is available in internet banking of every bank.

Interbank Mobile Payment Service

• It is an instant interbank fund transfer service in which mobile phones are used as a channel through which transaction happens with the use of Mobile Money Identifier(MMID).
• For each account, MMID is generated by the bank and it is linked to the registered mobile number. Now, account details are fetched from MMID and via registered mobile number transaction occurs.
• IMPS is functional through the National Financial Switch (NFS) of NPCI, which is also used for routing ATM transactions.
• Benefits of IMPS:
  • Instant money transfer.
  • Available 24 x7 (functional even on holidays)
  • *99# Service
  • It is a mobile banking facility which is based on Unstructured Supplementary Service Data (USSD). With the help of this service a bank customer can perform financial activities by just dialing *99# from his/her mobile registered with the bank. *99# is a common number across all Telecom Service Providers (TSPs). The service works across all GSM service providers and handsets.

Aadhaar Payments Bridge System (APBS)

• Launched: 2013
• Under this system, online interoperable financial inclusion transaction can be performed at PoS (Point of Sale – Micro ATM) through the Business correspondent of any bank using the Aadhaar authentication
• It is a payment gateway platform used for Aadhaar schemes.
• Under this facility, Aadhaar number used as a central key for electronically channelizing the Government subsidies and benefits in Aadhaar Enabled Bank Accounts (AEBA) of the intended beneficiaries.
• Note: Various schemes include social security pensions, payments under the employment guarantee scheme, public distribution system, and Janani Suraksha Yojana, and scholarships will be covered under the Aadhaar Enabled Payment System, etc.

Aadhar Enabled Payment System (AEPS)

• It is an Indian payment system which is based on unique identification number, the AADHAAR.
• The system allows a person holding an Aadhaar number to carry out financial transaction on a Micro-ATM provided by the Banking correspondent.
• It is developed by National Payments Corporation of India.

BHIM APP

• Bharat Interface for Money (BHIM) is an instant payment application which allows users to transfer fund with the help of mobile phone.
• It is based on the Unified Payment Interface (UPI) and is developed by National Payments Corporation of India (NPCI).
• Prime Minister Narendra Modi launched BHIM app for Android as well as iOS devices at the Digi Dhan Mela event in New Delhi in 2016.
• Transaction limit: You can't pay more than Rs. 20,000 in a transaction in a day. If you want to pay more than Rs. 20 thousand than you have to pay twice.
• Maximum limit: The daily limit for BHIM app transaction is ₹40,000. If you want to transfer more than ₹40 thousand, wait for the date change.
• Number of Transaction: There is also a limit to the number of transactions through the BHIM app. The UPI prohibits more than 20 transactions by a user. Therefore, you can pay more than 20 times using Tez. This limit of 20 transactions is applicable across the UPI apps. So, the total UPI transaction should not cross 20, irrespective of the UPI app.
• Transaction Charges: There is no transaction charges.
• You can transfer money to any bank account.
• You can transfer money to a person using his mobile number.
• Note
  • UPI PIN – It is a four or six digit number which is set by the users itself on BHIM after the registration process. UPI PIN is used for authenticating all transactions done on UPI platform (BHIM or *99# or UPI apps).
  • VPA – Virtual Payment Address (VPA) is a unique identifier which you can use to send and receive money on UPI.
• Note: You can use two VPA’s. First one is the default VPA (mobile number@upi). The second one, you can create on “My Profile” page.

All the best for the exam!

The Most Comprehensive Exam Prep App!