HISTORY OF BANKS

The banking sector is the lifeline of any modern economy. It is one of the important
financial pillars of the financial system, which plays a vital role in the success/failure
of an economy. Banks are one of the oldest financial intermediaries in the financial
system. They play an important role in the mobilization of deposits and disbursement
of credit to various sectors of the economy. The banking system is the fuel injection
system which spurs economic efficiency by the mobilizing saving and allocating them
to high return investment. Research confirms that countries with a well develop
banking system grow faster than those with a weaker one. The banking system
reflects the economic health of country. The strength of economy of any country
basically hinges on the strength and efficiency of the financial system which in turn
depends on a sound and solvent banking system. A sound banking system efficiently
deploys mobilized saving in productive sectors and a solvent banking system ensures
that the bank is capable of meetings its obligation to the depositors. The banking
sector is dominant in India as it accounts for more than one half the assets of the
financial sectors.

The essential characteristics of the banking business are defined in section 5 (b) of the
banking regulation act are:

1. Acceptance of deposit from the public.

2. For the purpose of lending or investment.
3. Repayable on demand or otherwise.
4. Withdrawal by mean of any instrument whether a cheque or otherwise.

From the definition two important functions of commercial banks emerge acceptance
of deposit and lending of funds. For centuries, banks have borrowed and lent money
to business, trade, and people, charging interest on loans and paying interest on
deposit. These two functions are the core activities of banking.
 E–BUSINESS

It is any business process that is empowered by an information system. Today, this is

mostly done with web-based technology. The term E-business was coined by LOU
GERSTNER (CEO of IBM).

E-business methods enable company to link their internal and external processes more
efficiently & flexibility, work more closely with suppliers and partners to better
satisfy the needs and expectations of their customer.

E-business transactions are done by the computers and telecommunication network,

without using paper document. Traditionally, its definition has focused on EDI
(Electronic Data Interchange) as the primary means of conducting business
electronically between entities having a pre-established contractual relationship. More
recently, however, the definition has broadened to encompasses business conducted
over the internet and included entities not previously known to each other.

E-business is a composite of technologies process and business strategies that foster

the instant exchange of information within and between organization.

Examples of these technologies include EDI, bar coding, scanning, E-mail, fax and so
on.

E-BUSINESS INCLUDES:-

Application can be divided into three categories:

1) Internal business systems:

1) Customer relationship management

2) Enterprise resource planning
3) Employee information portals
4) Knowledge management
5) Workflow management
6) Document management system
7) Human resource management
8) Process control
9) Internal transaction processing
10) Content management system

2) Enterprise communication and collaboration:

1) Content management system
2) E-mail
 3) Voice mail
4) Discussion forums
5) Chat system
6) Data conferencing
7) Collaborative work system

3) E-commerce:
(Business to business e-commerce or business to customer e- commerce)

1) EFT (Electronic Fund Transfer)

2) Supply chain management
3) E-marketing
4) On-line marketing
5) On-line transaction processing.

ADVANTAGE OF E-BUSINESS
1. Removes Location and Availability Restrictions: -
Users need not be in the same physical location as an e-
business and the exchange of information and transactions may take place at any
given time, twenty-four hours a day, seven days a week and from any location in the
world with Internet access. A physical location is restricted by size and limited to only
those customers that can get there, while an online store has a global marketplace with
customers and information seekers already waiting in line.

2. Reduces Time and Money Spent: -

In e-business, there is often a reduction in costs required to
complete traditional business procedures. Many of those same traditional business
approaches can be eliminated and replaced with electronic means, which are often
easier to carry out as well as easier on the pocketbook. For example, compare the cost
of sending out 100 direct mailings (paper, postage, staff and all), to sending out a bulk
e-mail. Also think about the cost of paying rent at a physical location opposed to the
cost of maintaining an online site.

3. Heightens Customer Service: -

With e-business customers receive highly customizable service,
and communication is often more effective. There is far more flexibility, availability
and faster response times with online support. For example, think about the speed of
e-mail inquiries and live chat as opposed to getting on the phone, especially when that
business is closed for the day. There is also a faster delivery cycle with online sales,
helping strengthen the customer/business relationship. The internet is a powerful
channel for reaching new markets and communicating information to customers and
partners. Having a better understanding of your customers will help to improve
customer satisfaction.

4. Gives a Competitive Advantage: -

The internet opens up a brand new marketplace to businesses
moving online. Competition via the internet is growing as the internet itself grows and
waiting too long to move online may cause you to lose your place in line entirely.
Easy access to real time information is a primary benefit of the internet, enabling a
company to give more efficient and valid information and helping to gain the
competitive advantage over those that are not online.

Although there are risks associating with e-business, as with most business decisions,
there is also the risk associated with the inability to adapt to the changing times.
Change is inevitable in today’s marketplace and should be embraced with open arms
and open sites.

RESOURCES REQUIRED FOR

THE SUCCESSFUL E-BUSINESS
 IMPLEMENTATION

E-business is the business through computer and internet facility. It is online facility
for transaction. We require having the following resources for the successful
implementation of e-business:

1 Computer system:
In today's business world corporate applications of e-business
have focused on computer to computer programmer becomes another input. We
should have a well established computer system.

2 Internet connection and website:

The next thing, we require is an internet connection from any
internet service provider (ISP) and a comprehensive website. Website giving full
detail about the co. its product range, prices, discount offered, stockiest and so on.

3 Technically trained and qualified workforce:

The enterprise must have well-trained workforces who are
familiar with computer networks and internet to handle the sales inquire, processing
the orders and ensuring prompt delivery.

4 System of receiving payments:

The enterprise need to have a full proof system of receiving
payment for the goods sold to the customers. They must make arrangements with
bank, credit card agencies, etc. to facilitate receipts and payment electronically.

5 Adequate telecommunication system:

The presence and growth of e-commerce presupposes the
existence of an effective telecommunication system. Proper reach of
telecommunication lines, optic fiber cables and internet technology capable of
handling the traffic on the internet are essential pre-requisite.

SECURITY AND SAFETY OF

BUSINESS TRANSACTION ON
 E-BUSINESS

E-business on the internet is at the cross roads of explosion and many business and
consumer want to exploit the technology but have reservations about the security and
reliability of transaction. Auditors and security personnel, as a result will play a
crucial role in helping org. design and review security and control standard to make e-
business on the internet safe and secure.

With an oversight body establishing security std. or ensuring the continued

availability of internet services inherent risk are associated with using the internet as a
primary means of conducting business transaction and those risks must be addressed
and corrected.

Because computers are more accessible and their hackers more numerous, the
computer security problem can no longer be ignored by the corporate executives who
have for years, been in state of denial about the importance pouf computer security.

Several tools are now available to protect information and system against
compromise, instruction or misuse:

1.) Firewalls are system that a control the flow of traffic between the internet and the
firm's internal LANs and system.

2.) Encryption allows information to transmit the internet while being protected from
interception by eavesdroppers.

3.) Message authentication makes sure that a message is really from whom it purpose
to be and that has not been tampered with.

4.) Site blocking is a software based approach that prohibits access to certain web
sites that deemed inappropriate by management.

DISADVANTAGES OF E-BUSINESS
 1.) Loss of paper audit trail paper is the source of a certifiable audit trail. Without
paper certification, the issue of the reliability of electronic certification becomes a
management concern.

2.) Business continuity as increased dependence is placed on an electronic means of

conducting business the e-commerce system has the potential to cripple an org.

3.) Exposure of data to third parties: as the data is shared and org. becomes connected
to the outside world the possibility the data exposure to vendor, devices providers and
the data trading partners is significantly increased.

4.) Potential legal liability: the inability to complete transactions or meet deadlines or
the risk of inadvertently exposing information of trading partners poses significantly
legal risks.

5.) Records retention and irretrievability: electronic information has the same legal
and statutory requirements as paper information. Organizations are responsible for the
safe storage, retention and retrieval of the organization.

6.) Segration of duties in an electronic environment, the potential for a significant

volume is increased therefore duties for those involved e-business must be
appropriately segregated and reviewed.

In spite of the varied concerns corporations understand that the internet is clearly the most
promising infrastructure for "anywhere, anytime" e-communication between business,
customer and suppliers and progress is being made as co. further realize and respond to
these concerns.

PROCESS OF E-BUSINESS TRANSACTION

1.) A buyer uses his internet browser to browse item of departmental store on its web
pages. If he is interested in any item, he can add it to his virtual shopping cards. The
departmental store's store web sites provide mechanisms for keeping track of the
order position.

2.) The buyer can remove any of the items he has placed in his shopping cards.

3.) The buyer is presented with on invoice containing the list of items of their price.
He has decided to buy. He pays via the departmental store's website by clicking on a
"pay now" button. He is then presented with a sales order electronically on his
computer.

4.) The buyer decided which of the credit cards in his wallet he wishes to use for the
purchase.

5.) The order and payment instructions are highly signed by buyer and are then sent to
the departmental store.

6.) The departmental store sends an authorization request to it's acquire via its
payment gateway. In turn the acquirer responses to departmental store with
acceptance.

7.) The departmental store gives buyer his items and sends him on his way.

HISTORY
OF
ELECTRONIC BANKING
BOB DRENNAN has been fortunate enough (and old enough) to have participated in
the both first and second renaissance of electronic banking. The first renaissance
began in 1969 when chemical bank placed a cash dispenser at a branch in queens.
What followed was the proliferation of ATMs, plastic cards, PINs (Personal
Identification Numbers) and a totally revised customers system. The first renaissance
was profound but took about 20 years to fully take hold. The second renaissance is
driven by the internet and is now in now early stages.

The most striking difference between two periods is the financial customers. In the
‘70s and ‘80s, financial customers were being led by the financial industry. Today
financial customers are waiting for the industry to catch up their expectations levels.

The motive for documenting the history in this “unofficial, unedited, unaudited”
format is to capture the spirit of the time as well as recount the incidents that made
this period lot of fun.

What follows the series of anecdotes that represents the time during which the
financial industry was gearing up for remote banking? He was Midwestern regional
sales manager for Douctel Corp. when he joined the company in 1971; there were 35
banks in the U.S that had more hard cash dispenser. Most banks are colleagues and he
visited were hearing the ATM story of the first time. There were mixed reactions to
say the least. His favorites response from the bank president who summarized his
brilliant presentations.

WHAT IS ELECTRONIC BANKING

1) Electronic banking is a form of banking in which funds are transferred through

 an exchange of electronic signals between financial institutions
rather than exchange of cash, cheques or other negotiable instruments.

2) It involves both the use of automatic teller machines (ATMs) and the instant
processing of retail purchase.

3) Electronic banking or internet banking or online banking is a term used for

performing transactions; payment etc. over the internet through a bank’s
securing website. This can be very useful, especially for banking outside bank
hours (which tend to be very short) and banking from anywhere where internet
access is available. In most cases a web browser such as internet explorer or
MOZILLA FIREFOX is utilize and any other normal internet connection is
suitable. No special software or hardware is usually needed.

4) Electronic banking defined as the automated delivery of new and traditional

bank of products and services directly to customers through electronic,
interactive communications channels. E-banking includes the system that
available financial institutions customers, financial, business, to access
accounts, transacts business, or obtain information on financial products and
services through public and private network, including the internet. Customers
access e-banking services using an intelligent electronic device such as
personal computers (PC), personal digital assistant (PDA), automated teller
machines (ATM), kiosk or Touch Tone Telephone. While the risk and controls
are similar for the various e-banking access channels.

TRADITIONAL BANKING
VS
ELECTRONIC-BANKING
In traditional banking, the customer has to visit the branch of the bank in person to
perform the basic banking operations viz., account enquiry, funds transfer, cash
withdrawal, etc. The brick and mortar of a bank is essential the banking functions.

On the other hand, E-banking enables the customer to perform the basic banking
transactions by sitting at their offices or at homes through PC or LAPTOP. The
customer can access the banks website for viewing their account details and perform
the transaction on account as per their requirements. With E-banking, the brick and
mortar structure of the traditional banking gets converted into a click and portal mode
thereby giving a concept of virtual banking a real shape. Thus, today’s banking is no
longer confined to branches. Customers are being provided with additional delivery
channels which are more convenient to customers and are cost effective to the banks.
These delivery channels include ATM, Tele-Banking, Mobile Banking, Home-
Banking etc. Thus, E-banking facilitates banking transaction by customers round the
clock globally.

Conventional banking is an art. But, E-banking is more of a science than art. E-

banking is knowledge-based and mostly scientific in using the electronic devices of
the computer revolution. When most corporate tend to become internet working
organizations, banking has to be E-banking in the new century.

FACETS OF E-BANKING

E-banking means the conduct of banking electronically. It calls from elimination of

paper based transactions and radical change in the banking operations. E-banking will
operate through internet, extranet and intranet. E-banking is therefore banking on the
information superhighways on the frontier of the internet. E-banking must have at
least the following dimensions:

(i) Customer-to-bank E-Banking:

E-banking is basically internet based. Banking products and services
such as deposits, remittances, credit cards etc. as well as important banking
information can be made available with easy access to customers on internet.
Customers can make use of these services with no restricted office hours, no queues,
no tellers and no waiting. Several Network Innovations for E-banking can be
visualized such as smart card, Electronic data interchange etc. Of course, the banking
operations have to be guarded against unauthorized access by
intruders.

(ii) Bank to Bank E-banking:

This form of Electronic-banking is for transacting inter-bank
transactions such as money-at-call etc. This type of E-banking is driving extranets,
which is restricted to banks only. Hence, it is well secured and unauthorized access is
less.

(iii) Electronic Central Banking:

Under this E-central banking all banks within the purview of a central
bank are interconnected on extranet facilitate clearing of cheques, management o f
cash reserves, open market operations, discounting of bills etc. In fact, the central
bank has to connect with the government treasury on extranet to carryout its
functions as an agent of the government. Again the central banks of all countries can
be inter-linked with the I.M.F. World bank and other international financial
institutions through extranets.
.

(iv) Intranet procurement:

For the transactions that are internal to a bank, between the bank and
its branches and subsidiaries, intranet procurements of banking are required. On the
other hand, extranet permits a bank to have full control over the users of intranet and
the information to be transmitted. The extranet-internet-intranet relationship that
exists in the process of E-banking is presented in the following figure:

Figure showing Micro Model of E-Banking

Extensive work is required to integrate internal and external communication of
banking-related information through banking internet and intranet for the
development of the financial sector.

E-BANKING TRANSACTION
Though any type transactions can be handled through E-banking, in the initial
phase most of the basic banking transaction can be performed conveniently
though internet banking. The following are of some basic functions:

1.) Bill payment service: -

You can facilitate payment of electricity and telephone bills,
mobile phone, credit card and insurance premium bills as each bank has tie-ups with
various utility companies, service providers and insurance companies, across the
country. To pay your bills, all you need to do is complete a simple one-time
registration for each biller. You can also set up standing instructions online to pay
your recurring bills, automatically. Generally, the bank does not charge customers for
online bill payment.

2.) Fund transfer: -

You can transfer any amount from one account to another of the
same or any another bank. Customers can send money anywhere in India. Once you
login to your account, you need to mention the payees's account number, his bank and
the branch. The transfer will take place in a day or so, whereas in a traditional method,
it takes about three working days. According to some banks online bill payment
service and fund transfer facility have been their most popular online services.

3.) Credit card customers: -

With Internet banking, customers can not only pay their credit
card bills online but also get a loan on their cards. If you lose your credit card, you
can report lost card online.

4.) Railway Pass: -

This is something that would interest all the aam janta. Indian
Railways has tied up with ICICI bank and you can now make your railway pass for
local trains online. The pass will be delivered to you at your doorstep. But the facility
is limited to Mumbai, Thane, Nashik, Surat and Pune.

5.) Investing through Internet banking: -

A person can now open an FD online through funds transfer.
Now investors with interlinked demat account and bank account can easily trade in
the stock market and the amount will be automatically debited from their respective
bank accounts and the shares will be credited in their demat account. Moreover, some
banks even give you the facility to purchase mutual funds directly from the online
banking system. Nowadays, most leading banks offer both online banking and demat
account. However if he have his demat account with independent share brokers, then
he need to sign a special form, which will link his two accounts.

6.) Recharging your prepaid phone: -

Now just top-up your prepaid mobile cards by logging in to
Internet banking. By just selecting your operator's name, entering your mobile number
and the amount for recharge, your phone is again back in action within few minutes.

7.) Shopping: -
With a range of all kind of products, you can shop online and
the payment is also made conveniently through your account. You can also buy
railway and air tickets through Internet banking.

8.) Other transaction: -

 Bank to bank payments.
 Request for issuance of Cheque book, draft etc.
 Statement of account.
 Access of Latest schemes.
 Access of rates of interest and other service charges.
 Employee benefits and pension administration.
 Small business loan applications, approval and advances.
 Loan application and approval.

ADVANTAGES OF E-BANKING

E-banking has the following advantages:-

1.) Round the clock Banking: -
E-banking facilitates performing of basic banking transactions by
customer round the clock globally. World-wide 24 hours and 7 days a week banking
services are made possible. In fact, there are no restricted office hours for E-banking.

2.) Convenient Banking: -

E-banking increases the customers’ convenience. No personal visit to
the branch required. Customers can perform basic banking transactions by sitting at
their offices or at homes through PC or LAPTOP. Customers can get draft at their
door steps through e-mail call. Thus, E-banking facilitates home banking.

3.) Low cost Banking: -

The operational costs have come down due to technology adoption.
The cost of transactions through internet banking is much less than any other
traditional mode.

4.) Profitable Banking: -

The increased speed of response to customers’ requirements under E-
banking vis-à-vis branch banking can enhance customer satisfaction and consequently
can lead to higher profit via handling a large number of customer accounts. Banks can
also offer many cash management products for the existing customers without any
additional cost.

5.) Low cost Banking: -

Brick and mortar structure of banking gets converted into click and
portal banking. Banks can have access to a greater number of potential customers
without the commitment costs of physically opening branches. Hence, there is much
saving on the cost of infrastructure. Moreover, requirements of staff at the banks get
reduced to a greater extent.

6.) Quality Banking: -

E-Banking opens new vistas for providing efficient, economic and
quality service to the customers. E-Banking allows the possibility if improved quality
and an enlarged range of services being made available to customer.

7.) Speed Banking: -

The increased speed of response to customer requirement under E-
Banking will lead to greater customer satisfaction and handling a larger number of
transactions at a lesser time. Thus, it increases the customer convenience to a greater
extent and facilitates better customer retention.

8.) Service Banking: -

E-Banking creates strong basic infrastructure for the banks top embark
upon many cash management products and to venture in the new fields like E-
commerce, EDI etc. Instant credit, one day credit, immediate payment of utility bills,
instant transfer of funds etc. would be made possible under E-Banking. In brief it adds
conveniences t o the entire banking services apart from widening the range of
services.

CONSTRAINTS IN E-BANKING

With the obvious benefits emerging out of E-Banking mentioned above, the following
factors contribute as major impediments in the smooth implementation of E-
Banking :-
1.) Start-up cost: -
Many banks have expressed their concern about the huge initial start-
up cost for venturing into E-Banking. The start-up cost includes:

a) The connection cost to the internet or any other mode of E-communication.

The network should b e robust, secured, efficient and scalable with inbuilt
redundancy.

b) The cost of sophisticates hardware, software and other related components

including modem, routers, bridges, Networks Management Systems etc.

c) The cost of maintenance of all equipments, websites, skill level of employees

etc.

For a successful E-Banking, bankers need to develop a coherent perspective of the

role of network technologies and advancement of their EFT departments with a
competitive introspection of their banking business.

2.) Training and Maintenance: -

The introduction o f E-Banking involves 24 hours support
environment, quality service to end user and other partners which would necessitates
a well qualified and robust group of skilled people to meet external and internal
commitments. Hence the bank has to spend a lot of training. What is more important
is their retention in the organization after necessary training. Moreover the bank has to
outsource certain functions and services to maintain the level of standards and state of
readiness. The training and retained of skilled manpower is a major cause of concern.

3.) Lack of skilled personnel: -

It is a well known fact that there are an acute scarcity o f web
developers, content providers and knowledgeable professionals to route banking
transactions through internet. In a fast changing technological scenario, the
obsolescence of technology is fast and hence there is always shortage of skilled
personnel.

4.) Security: -
In paperless banking transaction, many problems of security are
involved. A security threat is defined as a circumstansive decision or event with
potential to cause economic hardship to data or network resources in the form of
destruction, disclosure, modification of data, denial of services, fraud waste and
abuse. There are chances that documents such as cheque, passbook etc. can be
modified without leaving any visible trace. Distortions of information are also
possible. Providing appropriate security may require a major initial investment in the
form of application encryption techniques, implementation of firewalls etc. In spite of
implementation of several security measures, the possibility of a security breach
cannot be ruled out.

5.) Legal issues: -

Legal framework for recognising the validity of banking transactions
conducted through the ‘Net’ is still being in place. Though initial legal framework has
been devised for E-banking activities, it is uncertain as to what possible legal issues
may pop up in future as banking on internet progress. What may hap pen if a
customer’s sensitive data falls into the hands of stranger or if his account shows a ‘nil’
balance all in a sudden without his knowledge? The legal issue should cover
unauthorized access, and unauthorized modification of data, wrongful communication
punishment to be meted out to combat computer crime. To prevent computer crimes,
the country’s banking legislation needs to make suitable provisions with a thorough
consultation and discussion among the legal as well as technical experts.

6.) Restricted clientele and technical problems: -

The user of E-Banking needs a computer and time to log on to the site.
It means that the target clientele is restricted to those who have a home PC or can
access the ‘Net’ through their office or cybercafés. Moreover, phone connection often
breaks off, requiring another teditious log-on. Navigating around websites on home
computers is often slow and frustrating. Moreover, local calls are not free generally
and so the customer has to pay every time he checks his balance.

7.) Restricted Business: -

Not all transactions can be carried out electronically. Many deposits
and some withdrawals require the use of postal services. Some banks have automated
their front-end process for the customers, but still largely depend upon manual
processes ta the back-end. For-example, the internet customers receive their
statements online, but paper statements ate also sent by mail. Mail and distribution
costs are still necessary as the statements, cheque etc. are still mailed.

8.) Destruction of pricing mechanism: -

The internet may also destroy the basic business pricing models. The
internet creates perfect market conditions where prospective consumers have access to
more information and can more readily compare rates and financial product offerings
now players in the field haprices and provide stiff competitions to established .

SECURITY MEASURES
Most of the problems mentioned above are in the nature of teething problems and they
can be eliminated over a period of time. However, for venturing into E-banking, the
following major controls must be ensured:-

 Authentication Control : to verify identity to individuals

like
password, PIN etc.

 Accuracy Controls : to ensure the correctness of the

data
flowing across the network.

 Completeness Controls : to make sure that no data is

missing.

 Redundancy Controls : to see that data is traveled and

proce-
ssed only once and there is no
repetitive sending of data.

 Privacy Control : to protect the data from

inadvertant
or unauthorized access.

 Audit Trial Controls : to ensure keeping chronological

role
of events that are occurred in the
system.

 Existence Controls : to make sure that on going

availabili-
ty all the system resources with
the same throughout.

 Efficient Controls : to ensure that the system uses

mini-
mum resources to achieve the
desired goal.

 Fire wall Controls : to prevent an unauthorized users

acc-
essing the private network which
are connected to internet.
:

E-Banking is becoming immensely popular globally and India is no exception to it.

The declining internet rates, falling PC prices, broadband with access through cable
and digital subscriber lines, accessing the NET through cable TV etc. would definitely
encourage the boon in E-banking in India. With the globalization of business and
service, our country can not lag behind in the niche areas of E-banking. In the new
global era of multicurrency, multi-legal and multiple regulatory systems, with the
freedom of E-commerce, banks have to operate like multinational corporations to
grow and survive by adopting E-banking.

ELECTRONIC BANKING RISKS

There are six types of E-Banking risks:

1. Transactions/operations risk
2. Credit risk
3. Liquidity, interest rate, price/market risk
4. Legal risk
5. Strategic risk
6. Reputations risk.

1.) TRANSACTIONS/OPERATIONS RISK: -

Transactions/operations risk is arises from fraud, processing errors,
system disruptions or any other unanticipated events resulting in the institution’s
inability to deliver of products and service. This risk exists in each products and
services offered. This level of transactions risk is affected by the structure of the
institution’s processing environment, including the type of services offered and the
complexity of the processes and supporting technology.

In most instances, e- banking activities will increase the complexity of institution’s

activities and quantity of its transactions risk, especially if the institution is offering
innovative services that have been not standardized. Since customers expect e-
banking services to be available 24 hours a day, 7days a week financial institutions
should insure their e-banking infrastructure contain sufficient capacity and
redundancy to ensure reliable services availability. Even institutions that do not
consider e-banking a critical financial service due to the availability of alternate
processing channels, should careful consider customer expectations and the potential
impact of service disruptions on customer satisfactions and loyalty.

The key to controlling transactions risk lays in adapting effective policies, procedures
and controls to meet the new risk exposure introduced by e-banking. Basic internal
controls include segrations of duties, dual controls, and reconcilements remain
important. Information system controls, in particular, become more significant,
requiring additional processes, tools, expertise, and testing. Institutions should
determine the appropriate level of security control based on their assessment of the
sensitivity of the information of the customers and to the institutions and on the
institution’s risk tolerance level.

2.) CREDIT RISK: -

Generally the financial institution’s credit risk is not increased by the
mere fact that loan is originated through an e-banking channel. However, management
should consider additional precautions when originated and approving loans
electronically, including assuring management information system effectively track
the performance of portfolios originated through e-banking channels. The following
aspects of on-line loan originated and approval tend to make risk management of
lending process more challenging. If not properly managed, these aspects can
significantly increase credit risk.

a) Verifying the customer’s identity for on-line credit application and executing an
enforceable contract;

b) Monitoring and controlling the growth, pricing, underwriting standards and

ongoing credit quality of loans originated through e-banking channels;

c) Monitoring and oversight the third parties doing business as an agents or on behalf
of financial institutions;

d) Valuing collateral and perfecting liens over a potentially wider geography area;

e) Collecting loans from individual over a potentially wider geography area;

f) Monitoring any increased volume of and possible considerations in out of area

lending.

3.) LIQUIDTY, INTEREST RATE, PRICE/MARKET RATE: -

Funding and investing related risk could increase with an institution’s
e-banking initiatives depending on the volatility and pricing of the acquired deposits.
The internet provides institutions with the ability to the market their products and
services globally. Internet based advertising programs can effectively match yield-
focused investors with potentially high-yielding deposits. The internet originated
deposits have the potential to attract customers who focus exclusively on rate and may
provide a funding source with risk characteristics similar to brokered deposits. An
institution can control this potentially votality and expanded geographic reach through
its deposits contract and account opening practices, which involve face to face
meeting or exchange of papers correspondence. The institution must modify its policy
as necessary to address the following e-banking funding issues:
a.) Potential increased in dependence on brokered funds or other high rate sensitive
deposits.

b.) potential acquisition of funds from market where the institutions is not licensed to
engage in banking, particularly if the institutions does not established, disclose, and
enforce geography restriction.

c.) Potential impact of loan or deposits growth from an expanded internet market,
including the impact of such growth on capital and ratio.

d.) Potential increase in votality of fund should e-banking security problems

negatively impact customer confident or the markets’ perception.
4.) COMPLIANCE/ LEGAL RISK: -
Compliance/legal issues are arising out of the rapid growth in
usage of e-banking and the differences between electronic and paper based processes.
E-banking is a new delivery channel where the law and rules governing electronic
delivery of certain financial institution products and services may be ambiguous or
still evolving. Specific regulatory and legal challenges include:

a.) Uncertainty over legal juridisication and which state’s or country’s law govern a
specific e-banking institution.

b.) Delivery of credit and deposits related disclosures/notices required by law or

regulation.

c.) Retention of required compliance documentation for on-line advertisement,

application, statement, disclosures and notices and

d.) Establishment of legally binding electronic agreements.

Institutions that offer e-banking services, both transactional and informational,

assume a higher level of compliance risk because of the changing nature of
technology, the speed at which error can be replicated, and the frequency of
regulatory changes to address e-banking issue. The potential for violation is further
heightened by the need to ensure consistency between paper and electronic
advertisement, disclosure and notices. Additional information on compliance
requirements on e-banking can be found on the agency’s website.

5.) STRATEGIC RISK: -

A financial institutions’ board and management should
understand the risk associated with e-banking services and evaluate the resulting risk
management against the potential return on investment prior to offering e-banking
services. Poor e-banking planning and investment decision can increase a financial
institution strategic risk. Early adopters of new e-banking services can establishes
themselves as innovator who anticipate the needs of their customers, but may do so by
incurring higher cost and increased complexity in their operations. In managing the
strategic risk associated with e-banking services, financial institutions develop clearly
defined e-banking objectives by which the institutions can evaluate the success of its
e-banking strategy. In particular, financial institutions should pay attention to the
following:

1.) Adequacy of management information system (MIS) to track e-banking usage and
profitability.

2.) Costs involved in monitoring e-banking activity or cost involved in overseeing e-

banking vendors and technology service providers.

3.) Design, delivery and pricing of service adequate to generate sufficient customer
demand.
4.) Retention of electronic loan agreements and other electronic contracts in a format
that will be admissible and enforceable in litigation.

5.) Costs and availability of staff to provide technical support for interchanges
involving multiple operating systems, web browsers, and communication devices.

6.) Competition from other e-banking services providers.

7.) Adequacy of technical, operational, compliance or marketing support of e-banking

products and services.

6.) REPUTATION RISK: -

Institution decisions to offer e-banking services, specially the
more complex transactional services, significantly increase its level of reputation risk.
Some of the ways in which e-banking can influence an institution’s reputation
include:

1.) Loss of trust due to unauthorized activity on customer accounts.

2.) Disclosure of thefts of confidential customer information to unauthorized parties.

3.) Failure to deliver o marketing claims.

4.) Failure to provide reliable services due to the frequency or duration of services
disruptions.

5.) Customer complaints about the difficulty in using e-banking services and the
inability of the institution’s help desk to resolve problems, and

6.) Confusion between services provided by the financial institutions and services
provided by other business linked from the website.

COMPANY PROFILE
A Brief Profile of the CANARA BANK:-
Widely known for its customer centricity, Canara Bank was founded by Shri
Ammembal Subba Rao Pai, a great visionary and philanthropist, in July 1906, at a
small port in Mangalore, Karnataka. The Bank has undergone various phases in its
growth path over hundred years of its existence. The growth of Canara Bank was
phenomenal, especially after nationalization in the year 1969, attaining the status of a
national level player in terms of geographical reach and clientele segments. Eighties
was characterized by business diversification for the Bank. In June 2006, the Bank
completed a century of operation in the Indian banking industry. The eventful journey
of the Bank was strewn with many memorable milestones. Today, Canara Bank
occupies a premier position in the comity of Indian banks, emerging as the largest
nationalized bank in India in terms of aggregate business volume for 2006-07. With
an unbroken record of profits since its inception, Canara Bank has several firsts to its
credit. These include:

 Launching of Inter-City ATM Network

 Obtaining ISO Certification for a Branch

 Articulation of ‘Good Banking’ – Bank’s Citizen Charter

 Commissioning of Exclusive Mahila Banking Branch

 Launching of Exclusive Subsidiary for IT Consultancy

 First Bank in India to issue credit card for farmers

 First Bank in India to provide Agricultural Consultancy Services

Canara Bank in India has a history of nine decades and is the largest public sector
banks in India. Canara Bank India has a deposit advance base of Rs.640 bn and Rs
332 bn.

Canara Bank of India has a total of 47,843 employees and is spread with 2409
branches throughout the country. Canara Bank India has an exposure to petroleum,
engineering, infrastructure, factoring, investment management, venture capital, home
finance and securities.

Canara Bank entered Forex arena in 1953 with the opening of its first Foreign
Exchange Department in Mumbai. The Bank has 5 forex dealing rooms located in
Mumbai, New Delhi, Kolkata, Chennai and Bangalore in India and one in London
branch. Canbank provides a wide range of services and products like sale and
purchase of 7 world currencies, swap currency and forward bookings.
Over the years, the Bank has been scaling up its market position to emerge as a major
'Financial Conglomerate' with as many as nine subsidiaries/sponsored
institutions/joint ventures in India and abroad. As at December 2007, the Bank has
further expanded its domestic presence, with 2641 branches spread across all
geographical segments. In view of the centrality of customer convenience, the Bank
provides a wide array of alternative delivery channels that include over 1900 ATMs-
covering 680 centres, 1157 branches providing Internet and Mobile Banking (IMB)
services and 1833 branches offering 'Anywhere Banking' services. Under advanced
payment and settlement system, 1693 branches of the Bank offer Real Time Gross
Settlement (RTGS) and National Electronic Funds Transfer (NEFT).

Canara Bank has made a distinctive mark in various corporate social responsibilities,
namely, serving national priorities, promoting rural development, enhancing rural
self-employment through several training institutes, spearheading financial inclusion
objective etc. Promoting an inclusive growth strategy, which forms the basic plank of
national policy agenda today, is in fact deeply rooted in the Bank's founding
principles. "A good bank is not only the financial heart of the community, but also one
with an obligation of helping in every possible manner to improve the economic
conditions of the common people". These insightful words of our founder continue to
resonate even today in serving the society with a purpose.

The growth story of Canara Bank in its first century was due, among others, to the
continued patronage of its valued customers, stakeholders, committed staff and
uncanny leadership ability demonstrated by its leaders at the helm of affairs. We
strongly believe that the next century is going to be equally rewarding and eventful
not only in service of the nation but also in helping the Bank emerge as a "Global
Bank with Best Practices". This justifiable belief is founded on strong fundamentals,
customer centricity, enlightened leadership and a family like work culture.

ORGANISATION AND MANAGEMENT

Mandavilli Bhaskara Nageshwara Rao Executive Chairman & Managing
(MR.) Director, Nominee Director, Nominated
U/S 9(3)(A) By GOI
Sunil Gupta (DR.) Nominee Director Of GOI U/S 9(3)(H)
Of Bank Nationalisation

Satish Kumar Kohli (MR.) Non- Executive Director, Nominee

Director, Nominated U/S 9(3)(A) By
GOI
ParampallyVasudeva Maiya (MR.) Non- Executive Director, Elected U/S
9(3)(I) Of Bank Nationalisation

Ajay Mathur (MR.) Non- Executive Director, Nominee

Director, Nominated U/S 9(3)(G) By
GOI

S.Shabbeer Pasha (MR.) Non- Executive Director, Nominee

Director, Nominated U/S 9(3)(H) By
GOI
Dariyai al Rawal (MR.) Executive Director , Nominated By GOI
U/S 9(3)(I) Of Bank Nationalisation

Vani Jayarama Sharma (MS.) Non- Executive Director, Nominee

Director, Nominated U/S 9(3)(C) By
GOI
Brij Behari Tandon (MR.) Nominee Director Of GOI U/S 9(3)(H)
Of Bank Nationalisation

Pankaj Gopalji Thakker (MR.) Non-Executive Director, Nominee

Director, Nominated U/S 9(3)(C) By
GOI

Yogendra Pati Tripathi (DR.) Nominee Director Of GOI U/S 9(3)(H)

Of Bank Nationalisation

FOUNDING PRINCIPLES
  To remove Superstition and ignorance.

 To spread education among all to sub-serve the first principle.

 To inculcate the habit of thrift and savings.

 To transform the financial institution not only as the financial heart of the
community but the social heart as well.

 To assist the needy.

 To work with sense of service and dedication.

 To develop a concern for fellow human being and sensitivity to the

surroundings with a view to make changes/remove hardships and sufferings.

Sound founding principles, enlightened leadership, unique work culture and

remarkable adaptability to changing banking environment have enabled Canara
Bank to be a frontline banking institution of global standards.

RECENT AWARDS & ACCOLADES

 Adjudged the 'Best Public Sector Bank' in India under the 'Best Banks
 Survey' conducted by 'Financial Express-Ernst and Young' for 2005-06.
Awarded the "First National Award" instituted by the Ministry of Micro,
Small & Medium Enterprises, Government of India, for excellence in 'Micro
& Small Enterprises (MSE) Lending' for 2006-07.

 Conferred with 'Employer Branding Awards 2007' by Indiatimes Mindscape

and ITM Business School, for excellence in human resources. Canara Bank
was the first Public sector Bank to bag this award.
 Won the maiden award of 'Best Performing Bank' under solar water heater
finance for the year 2005-06, instituted by the Ministry of New and
Renewable Energy, Government of India.

 Received Niryat Bandhu Gold Trophy for outstanding performance under

export finance.

 Bagged the prestigious ‘Golden Peacock National Training Award-2007’ for

excellence in Training.

 Conferred with 'Golden Peacock Award for Corporate Social

Responsibility for the year 2007' . The Award was handed over at a glittering
function at Vilamoura, Portugal by HE Ola Ullsten, Former Prime Minister of
Sweden

 Bagged the national award for best performing branch for financing solar
water heaters for the year 2006-07. The Bank’s Vidyanagar, Shimoga Branch
bagged the 'Best Branch Award' instituted by Ministry of New and
Renewable Energy, Government of India.

 Awarded for excellence in the field of Khadi & Village Industries in South
Zone for the year 2006-07, instituted by Khadi & Village Industries
Commission, Ministry of Micro, Small & Medium Enterprises, Government of
India.

GOALS FOR 2008-09

  The Bank targets to take the global business well above the Rs.3,00,000 crore
mark, comprising global deposits of Rs.1,75,000 crore and global advances of
Rs.125000 crore.

 The Bank will continue to focus on rebalancing its assets and liabilities
portfolio, with the objective of augmenting profits and profitability.

 While the Bank will further rebalance its advances portfolio, the focus areas of
credit growth will be from productive segments like Agriculture, SMEs,
Education, Infrastructure and other growth segments.

 The Bank has set a target for CBS coverage of 1000 branches by May 2008
and all branches by March 2009.

CANARA BANK LOAN

Canara Bank provides provides loans to almost every section of the society.
Some of the loans are mentioned as under:

 Agriculture & Rural Credit

 Kisan Credit
 Loans for AgriClinic
 Minor Irrigation Loans
 Farm Machinery Loans
 Farm Development Loans
 Vehicle Loan for Agriculturists
 Loan for Plantation Crops
 Loan for Marine Fisheries
 Loan for Inland Fisheries
 Loan for Sericulture
 Loan for Purchasing Agricultural Land
 Loan for Poultry
 Export Credit for Agro Products
 Other Agricultural Loans
 Loans to SSIs
 Charter for SSIs

CANARA BANK FOR WOMEN

The Centre for Entrepreneurship Development for Women was established by Canara
Bank in India at the Bank's Corporate Office, Bangalore during the year 1988 with an
objective of assisting the potential women entrepreneurs to select income generating
activities and starting ventures of their own.

Subsequently 9 such CEDs were opened and are functioning at Circle Offices situated
at various State Capitals. The CED at corporate office brings out a newsletter VIKAS
every bi-monthly.

MAHILA BANKING BRANCH

An exclusive branch for women and Mahila banking division - an exclusive division
for women within a branch opened, which is the 1st of kind in the banking industry.

Details are enlisted below:

 Mahila Banking Branch, Jayanagar , Bangalore, Karnataka

 Mahila Banking Division, Mandipet Branch, Davangere, Karnataka
 Mahila Banking Division, M G Road Branch, Agra, UP
 Mahila Banking Division, N V Street Branch, Madurai, Tamilnadu
 Mahila Banking Division, West Palace Road, Thrissur, Kerala
 Mahila Banking Division, West Hill, Kozhikode, Kerala
 Mahila Banking Division, Shimoga Main Branch, Karnataka

These specialised branch and divisions offer all banking services to women.

Objectives:-
 To identify, select and train women Entrepreneurs.
 To conduct EDPs and Skill development programmes (EDPs) for different
target groups.
 To assist potential Women Entrepreneurs to start/establish/run an Enterprise
professionally.
 To guide existing entrepreneurs to improve the working and modernisation of
an existing unit.
 To co-ordinate with Government/Voluntary organisations engaged in
promoting entrepreneurship among women.
 To offer counselling services to the Entrepreneurs existing as well as new.
 To assist in the formation of self-help groups.

Canara Bank Shares

Canara Bank Shares are listed at Bangalore, Mumbai and National Stock exchanges.
Interms of SEBI guidelines, the Registrar and Transfer agent of the Bank is extending
the facility of simultaneous transfer -cum dematerialisation of shares to the investors.
On transfer of shares in the name of the transferee , they are being apprised to submit
letters to their depository participants for dematerialisation of shares. On receipt of
Demat request forms, the shares are dematerialised and confirmation through
electronic mode is sent. If the demat request number is not received within a period of
30 days, the duly transfered share certificate is despatched to the transferee.

COMMON AREAS OF CUSTOMER BANKER

 RELATIONSHIP

1 For opening an account with bank.

2 Satisfy about our identity, including verification of address in order to protect

you and ourselves against fraud and other misuse of the banking system by
unscrupulous system.

3 Provide introduction through a person acceptable by bank.

4 Submit two recent passport size photos.

5 Inform your Permanent Account Number (PAN) or General Index Number

(GIR) or alternatively submit necessary declaration in form number 60 or 61
as per the income tax act.

The bank will provide to the prospective customer details of the documents required
for identification of the person(s) opening the account in addition to a satisfactory
introduction. Documents normally accepted are the current gas/telephone/electricity
bill or ration card, voter ID card, driving license etc.

FUNCTIONS OF CANARA BANK

1.) SAVINGS BANK ACCOUNT
These accounts are designed to help the individual to inculcate the
habit of saving money and meet their future requirements. The amounts can be
deposit or withdrawal from these accounts by way of cheques/withdrawal form. It
helps the customer to keep minimum cash in home besides earning interest.
Saving bank accounts are very popular. Beside individual, these accounts can be
opened by certain organization/agency.

The account holder is required to maintain certain minimum balance in account as

specifies the bank from time to time, separately for computerized or non
computerized branches and also depending on, account holders want to avail the
cheque book facility or not. Non compliance of this would attract services charges.

Cheques, dividend warrant drawn in the name of accounts holders will only be
collected through this account. Cheques/drafts etc. endorsed in the favour of the
accounts holders will not be collected through saving bank account.
Services charges are levied for issuance of cheque-books, duplicate statement of
account/ pass book, cheques dishonored and for more withdrawals for stipulated.

2.) CURRENT ACCOUNT

Current account can be opened by individual, partnership firm, private
and public companies, HUFs/specified association, societies, trust etc.

Minimum balance as stipulated from time to time is required to be maintained.

Services charges are levied for not maintaining the same.

No interest pay on credit balance kept in current account.

Services charges are levied for:

1 Ledger folio used.
2 Cheque book issued.
3 Return of cheque also.

For opening special type of current accounts like for executers, administrator, trustee,
liquidator etc, branch manager may be contacted to whom will help in opening these
types of accounts.
The applicant is require to be declared in the account opening form or separately that
he is not enjoying any credit facility from any bank and if he does so, he should
declare full particulars therefore thereof indicating the name of the bank/branch
wherefrom he avail the facility.
A number of branches are connected from CBS and as such the bank issue multicity
cheque book for use of any of these branches. Special type of accounts like smart
roamer, prudent sweep and premium saving/current account can also be opened by
virtue of which certain special facility can be enjoyed by these account holders.

3.) TERM DEPOSIT ACCOUNTS

Bank has tailored various deposit schemes to suit the needs and
expectation of investing people in every walk of life.

Branch staff will welcome you to provide more details and shall also be glad to assist
in the area of investment in various deposit scheme vis-à-vis your requirement.

Terms deposit accounts can be opened by individual, partnership firms, private or

public companies, HUFs/specified associations etc.

Premature withdrawal is allowed at the rate of interest applicable for the period for
which the deposit has run. No interest will paid on premature withdrawals of deposit
which has remained with the bank for less than 15 days. Part payments are allowed
for spectrum fix deposit.

Loans/overdraft against deposit is allowed expect on certificate of deposit (CD).

Interests are charged on such loans at the rates prevailing from time to time.

Deposit are renewed by bank on due date are request. The bank may, on the
specific request, intimate the depositor in advance.

Interests on deposit are payable either on discounted value or quarterly or

compounded quarterly or on the date of maturity at the option of depositor as
applicable under a particular deposit scheme.

Interest on overdue deposit is paid as per prevailing rules if it is renewed for a

minimum prescribed period.
The depositor may furnish declaration in the form, no.15h preferably at the
commencement of the financial year for receiving interest on term deposit without
deduction of the tax.

The bank will issue a certificate for the tax deducted at source. As per prevailing
income tax rules payment of term deposit with maturity value of Rs.20000/- or more
will only be made through account and not in cash.

4.) PAYMENT OF BALANCE IN ACCOUNTS OF THE

DECEASED CUSTOMER TO SURVIVOR/LEGAL HEIRS
The bank may not insist on succession certificate from legal heirs
irrespective of amount involved. However, the bank may adopt such safeguards in
considering settling of claims as appropriate including accepting an indemnity bond.

5.) STANDING INSTRUCTIONS

Standing instructions can be given to the bank for transfer/remittance
of funds from one account to another accounts maintained in the same branch of the
bank or any other bank.

6.) SAFE DEPOSIT LOCKERS

The facility of the safe deposit lockers is an ancillary services offered
by the bank. Bank’s branches offer this facility will indicate/ display the information.

Major aspects governing the services are:

1 A locker may be hired by individual (not minor), a firm, a limited company,

specified association, societies etc.

2 Loss of key should be immediately informed to the branch. Break opening of

the locker entails charges.

3 Lockers are available in different sizes.

4 Lockers are rented out for a minimum one year. Rent is payable in advance. In
case of overdue rent, the bank will charge penalty as decided from time to
time.

5 On the basis of standing instruction, the rent may be paid from the deposit
account of the hirer.

6 The bank will hire locker to the people who are properly introduced.

7 The bank reserved its right to break open the locker if the rent is not paid
inspite of giving notices as per the bank rules and recover charges thereof.

A specified amount is required to be deposited in the fixed deposit so that annual

interest earned thereon is sufficient for effecting recovery of locker rent. Certain
amount of discount is allowed if the rent is paid in advance for a period more than one
year.

7.) ARTICLES IN SAFE CUSTODY

 Articles like shares, securities etc. can be kept in safe custody with the
bank on payment of prescribed charges wherever such facility is offered. Large/small
boxes must be locked by the customer and particulars must be written/ painted
thereon. The locked should be covered by stout clothes and seal with the customer
sealed. Relationship of banker and customer shall be that of bailer and bailee.

8.) NOMINATION FACILITY

Nomination facility is available for deposit accounts, articles in the
safe custody and safe deposit locker. It facilitates payment of the outstanding balance
in the accounts of the safe deposit locker held in safe custody to the nominee in the
event of death of the account holder.

Nomination is available in the accounts opened in individual capacity only i.e. not for
accounts opened in representative capacity. Nomination is also available in the
account of pensioners also.

Nomination can be made in favor of one person only. However, nomination in the
favors of more than one person is permissible in jointly operated locker accounts with
common consent of the locker holder.

Nomination can be made or cancelled or varied by the accounts holders anytime

during the currency of the accounts and request should be signed by all account(s)
holders.

Nomination can be made in favor of minor also.

For the existing account holder where nomination can not be made, the accounts
holders can do so by filling up prescribed from available with the branch.
9.) PENSION PAYMENT
Pensioners of state and central government can open a separate pension
accounts singly only in any of our branches.

Pensioners are requested to produce life/ un-employment certificates in person once in

a year & marriage and remarriage certificates in the month of may and November to
enable the branches to pay pension without interruption or delay.

Pension will be credit by the branch to the pensioner’s account during the last four
working days of the month. However, pension for the month of March every year will
be credited on or after 1st working day of April.

10.) REMITTANCE SERVICES

 Customer may remit their funds from one center to another by a
demand draft or telegraphic transfer, mail transfer etc. by paying specific charges as
per the bank rule.

The customer can also utilize the facility of electronic fund transfer system operated
through RBI for transferring funds to and from Calcutta, Chennai, Delhi and Mumbai
up to Rs 5 lakh.

Special facility is available for army personnel for encashing demand draft up to Rs
25000/- against their Identity-card.

11.) ISSUENCE OF DUPLICATE DEMAND DRAFT WITHOUT

RECIEPT OF NON-PAYMENT ADVICE
CANARA BANK issue duplicate demand draft against indemnity after
obtaining non-payment advice from the drawee branch. However, the bank will issue
duplicate demand draft up to Rs 5000/-on the basis of adequate indemnity and without
obtaining non payment advice from the drawee branch.

12.) TIME FRAME FOR ISSUE OF DUPLICATE DRAFT

The bank will issue a duplicate demand draft to a customer within a
fortnight from the date of receipt of his request. For issuing duplicate draft beyond the
above stipulated period, the bank will pay interest at the rate applicable for fixed
deposit of correspondence maturity in order to compensate the customer for such
delay.

13.) CASH ORDER

Cash order is issued for making payment locally. Issue/payment of
cash order Rs 50000\- and above is to be made only through the bank account.

Validity period of cash order is 6 month. This can be revalidating by the issuing
branch on a written request of the purchaser.

14.) COLLECTION SERVICE

All individual customers who are maintain a satisfactory account will
get immediate credit of cheques upto Rs 15000\- deposited by them which are drawn
on up country/local centers. However the customer will have to bear the usual
collection charges and out of pocket expenses. In the event of such cheques being
returned unpaid, the customer will have to pay interest for the period for which banks
funds will utilize.

15.) HIGH VALUE CLEARING

 This facility is available for the clients of selected branches at the
designated centers. Cheques of high value are cleared on the same day /2nd day
depending upon the time of deposit.

16.) LOCAL CLEARING

Cheques are normally cleared on 3rd working day depending on the
centers and subject to the time at which cheques/ instruments are deposited.

17.) NATIONAL CLEARING

Cheques are drawn on metropolitans centers listed in national clearing
are cleared in 7 days.

All cheques are drawn on other centers are cleared 10/14 days as under.

The bank will credit the proceeds of an out station cheque within the following time
norms:-

1 State capital other than north eastern states & Sikkim -10 working days.

2 Other center includes north eastern states -14 working days.

If banks fail to do so, interest will paid at the rate applicable for appropriate tenure of
fixed deposit for the period of delay beyond the stipulated period. Further, it delays its
abnormal, additional interest at the rate of 2% above fixed deposit rate applicable will
also be paid. For cash credit, overdraft and loan accounts the interest is paid at the rate
equivalent to prime lending rate prevalent from time to time.

Customers are requested to deposit their cheque well within the validity period of the
cheques as printed thereon.

18.) EXCHANGE OF SOILED/MUTILATED CURRENCY NOTES

As a part of clean note policy of the RBI all the branches of bank will
exchange freely soiled/slightly mutilated currency notes and certain other types of
mutilated currency notes of all denomination. The banks currency chest branches also
exchange all categories of mutilated soiled currency notes. Currency exchange facility
is offered to the banks and other customer. The bank follows RBI guidelines in this
respect. RBI has permitted the banks to exchange mutilated currency notes which are
genuine and where mutilation are such as not to cause suspicion fraud.

19.) INTEREST ON DEPOSIT

Banks pays interest on deposit as per various deposit schemes. Interest
rate are revised from time to time and made known to public.

Revised interest rates are applicable only to the renewals and fresh deposits while
existing deposit continue to get interest at the contracted rate.

20.) SERVICES CHARGES

Bank provides various service to customer for which services charges
are levied. These charges are revised from time to time.

Services charger are levied for collection and remittance of fund, processing for loan
proposals, issue of guarantee, safe custody, issue of duplicate instruments, ledger folio
charges etc. detail of services charges is made available by the branches on request.

COMMON PRACTICES
FOLLOWED BY
BRANCHES

1 Display business hours.

2 Rendered courteous services.

3 Attend to all customers present in the banking hall at the close of banking
hours.

4 May be deleted, since it is a service offered by the bank and not a practice.

5 Display prevailing interest rates for various deposit schemes.

6 Notify change in interest rate in advance.

7 Provide details of various deposit schemes/service of the bank.

8 Issue of demand drafts, pay orders etc.

9 Display time norms for various banking transaction.

10 Pay interest for delays credit of outstation cheques as advised by RBI from
time to time.

11 Afford immediate credit in respect of outstation and local cheques up to a

specified limit subject to certain conditions, as advised by RBI from time to
time.

12 Provide complaints/ suggestion box in the branch premises.

13 Display address of the concerned zonal/regional office as well as of bank’s

nodal officer for dealing with customers’ grievances/complaints.

14 Display the main feature of banking ombudsman scheme for redressal of

customer grievance and address of the concerned banking ombudsman.

ELECTRONIC BANKING
 TRANSACTIONS IN
CANARA BANK

Electronic banking includes ATM cum debit card, smart cards, e-cash, electronic fund
transfer, electronic clearing services, depository schemes, online tax accounting
system, online bill payments, online shopping, e-commerce etc.

ATM-CUM-DEBIT CARD: -
1. Facilities Available: -

 Transactions through Canara Bank ATMs and Other Bank ATMs.

 Purchase of Goods and Services at POS Merchant Establishments.

 Mobile top-up.

 VISA Money Transfer.

 E-Ticketing.

2. Types of Accounts: -
Saving Bank/Current Account/Over Draft accounts in the name of
individuals as well as joint accounts (operated severally)

3. Eligibility: -
All SB, Current and OD account holders including NRIs,
employees and ex-employees.

4. Ineligible Accounts: -
 Joint Accounts where operation condition is ‘Jointly’
 Accounts of illiterate persons / blind persons/minors
 Accounts under Garnishee / attachment orders or which are under
litigation/dispute.
 Encumbered accounts
5. Application: -
Account holders desirous of having an ATM-CUM-DEBIT card
are required to submit an application in the prescribed format to the branch manager
of the branch where the account is being maintained.

6. Operations: -
The card can be linked to a maximum of 4 accounts. However,
one account as indicated by customer will be designated as Primary Account. All
transactions done at POS merchant locations and at other Bank ATMs will be debited
to Primary account to which the card is linked. Therefore transactions at other Bank
ATM and POS are restricted to the balance available in the primary account.

7. Per Day Transaction Limit: -

Per day transaction at
 POS Merchant Establishments: Rs 20,000/-
 Cash withdrawal at our ATM/ Other Bank ATM: Rs 20,000/-

8. Validity: -
5 years from date of issue of the card

TYPES OF DEBIT CARDS

THERE ARE TWO TYPES OF DEBIT CARDS:

1. ONLINE DEBIT CARDS

2. OFFLINE DEBIT CARDS

1) ONLINE DEBIT CARDS:

In online debit cards, such as an ATM, the money is transferred
from our account to the merchant's account immediately. This pin is required to access
the debit cards.

2) OFFLINE DEBIT CARDS:

In offline credit cards, the merchant's account debit cards
reading device stores our debit cards and instead of using the PIN, you can physically
sign the4 receipt given by the merchant to you. In offline debit cards the processing
takes approximately two or three days.

List of the other Bank ATMs where our customers can make
transactions:
1. Allahabad Bank 15. The Jammu & Kashmir Bank Ltd
2. Andhra Bank 16. The Karnataka Bank Ltd.
3. Bank of Baroda 17. The Karur Vysya Bank Ltd.
4. City Union Bank 18. The South Indian Bank Ltd.
5. Corporation Bank 19. Yes Bank Ltd.
6. Dena Bank 20. State Bank of India
7. Development Credit Bank 21. State Bank of Mysore
8. ICICI Bank 22. State Bank of Indore
9. IDBI Bank 23. State Bank of Patiala
10. Indus Ind Bank Ltd 24. State Bank of Bikaner & Jaipur
11. Oriental Commerce of Bank 25. State Bank of Hyderabad
12. Punjab National Bank 26. State Bank of Travancore
13. Tamilnad Mercantile Bank 27. State Bank of Saurastra
14. The Dhanalaksmi Bank Ltd.

The following facilities are available at our ATMs.Customers can avail these services
by following the menu driven options.

1. At Merchant Establishments

2. Mobile Recharge

3. Mobile Top ups

4. Airline Ticket Booking

5. VISA Money Transfer

6. Deposit of Collection Cheques

7. Funds Transfer Facility (For CBS Branch Customers)

CREDIT CARDS: -

Canara Bank Credit Cards are better known by the name of Cancard. Get the
convenience of coverage of more than 2600 branches and a nationwide ATM network
with your Canara Bank credit card. It is acceptable at all international VISA and
MasterCard accepting merchant establishments. Besides the international and national
coverage, Cancard has 24 service centres in all major cities in the country. Canara
Bank is the only institution carrying an ISO 9001:2000 certification for the card
services.

Canara Bank Credit Card is available to everyone with the basic requirement being
only Rs. 60, 000 per annum gross incomes.

The features of Canara Bank Credit Cards include:

 The easy and quick documentation and application procedures have made it a
popular product among all credit card users.
 The credit limit can vary between 30% of the gross annual income upto a
maximum of Rs. 3 lakh.
 The free-credit period is pre-decided by Canara Bank that can be between 20 -
50 days.
 Cash withdrawals of upto 50% of the credit limit are allowed at a service
charge of Rs. 30 per thousand at over 450 branches and all Canara Bank ATMs
spread across India.
 No interest rate is charged on the cash withdrawn if the dues are duly filled
within the set date.
 Revolving payments system can be chosen that offers payment of only 5 % of
the due bill amount and carrying over the balance at nominal interest rates.
 Lost card liability restricted to just Rs. 1,000 only from the reporting time.
 Free lost card replacement.
 Complementary insurance cover.
 You become eligible for Loyalty or bonus points if you spend Rs. 100 or
above through your Cancard. The accumulated bonus points are awarded to
the customer through a gift Cheque that amounts to Re. 0.50 per bonus point
and can be redeemed and encashed at any Canara Bank branch.
 Free demand drafts and cash remittances on repayments of entire card dues.
 Discounts on Cancard mediclaim policy provided by Canara Bank in
association with United India Insurance Company Limited.
The most basic advantages of a credit card are cashless shopping and bill
payments that cover your hotels or dining bills, travel tickets, telephone bills,
utility bills, shopping and services charges. The inconvenience and risk of
carrying cash has been reduced by the quick and easy features of Cancard.
Keeping in mind the requirements of different individuals, Canara Bank brings
exclusive credit cards like:

 Cancard VISA Classic:

Serviceable only in India and Nepal, it is acceptable in over 1,10,000
 Merchant Establishments in both countries.
 Cancard VISA Corporate:
This is mainly designed for the corporate organizations with
acceptance in India and Nepal only.
 Cancard MasterCard:
This Cancard is brought to you in association with MasterCard
International and incorporates all usual features of a domestic Canara Bank
credit card with an additional feature of free credit period of 20 to 50 days.
 Cancard VISA International Gold:
This is a truly international Cancard acceptable at all merchant outlets
having VISA acceptance. The bills can be paid in INR. Cash withdrawals are
allowed from all VISA ATMs. Extended Card Limit, Global Emergency
Services and complementary personal insurance cover add a cherry to the
cake.

SMART CARDS: -

Smart card looks similar to debit card. It has a plastic body & a microprocessor chip
embedded in it. A smart card chip has the capacity to store data. Thus, users also use it
as a mini database for storing their personal and work related information,
identification details, and medical details and address book. Smart cards keep track of
the money spent by the users and prevent duplicate transactions. A special device
called a smart card reader is required for accessing a smart card. Thus a smart can be
used for several purposes. Smart cards can be accessed only with the unique PIN of
an individual. Smart cards are secure because they are in an encrypted form and a
user can personally encrypt or decrypt the4 data stored in the chip of a card. With the
growth of E-COMMERCE transactions smart card definitely will play a major role in
the success of electronic payment. As compared to credit cards and debit cards smart
cards are less expensive and provide faster transaction processing. Making a payment
with a smart card saves a lot of time because the smart card chip contain details about
the owner in a non-encrypted form and the user doesn't have to explicitly provide
details for verification. Thus, processing is faster.

E-CASH: -

Dr. DAVID CHAUM developed the concept of E-CASH. It is widely used for micro
(small) payments on the internet. When we pay online via E-CASH, the amount is
directly transferred from our bank account to the merchant's account without any
medium in between. In order to use e-cash, the users and the merchant both have to
sign up with the bank or company issuing E-CASH.

COMPONENTS OF E-CASH

E-CASH involve four major components:

1. E-cash issuing company- this could be either a bank or another non-banking

institutions.

2. Users-users are the people who use e-cash for electronic payment.

3. Merchants-they receive the e-cash payments.

4. Regulators-they are the govt. bodies that regulate the flow of e-cash.

WORK FLOW OF E-CASH

The diagram shows how e-cash works for online transactions. The chances of theft of
e-cash are nil because the owner doesn't physically own it. But, there is a possibility
of a hardware and software failure in a personal computer on which the e-cash is
stored. Rules are being developed for situations. The most important advantages of e-
cash are that it can be used for online transactions between a customer and a website
or between two individuals.
This is also known electronic payment mechanism.

MERCHANT AND MERCHANT'S ACCOUNT: -

An individual or group or a co. that runs e-business for profit is the merchant.
Merchants sell products, goods & service through the web-site. To realize payment
through internet merchant accounts are required.

Accepting payments through credit card & debit card makes business dynamic &
provide choices to the customer. A merchant account is required because it identifies
the seller to the credit card co. or the clearing house and realizes the payment of that
product.

An internet merchant account is an account designated for processing credit card

payments. A merchant account is available with all the banks, the prerequisite and
requirements differ across banks. The merchant or the web-site can acquire a
merchant bank account by applying & completing the requirement of the bank. The
decision to authorize a merchant account to exist generally depends on the risk
analyze performed by the bank by which the account is being sought.

ELECTRONIC FUND TRANSFER: -

From long time remittance of fund within the banks i.e. from one branch to other was
completed through transfer payment orders, telegraphic transfer or by the drafts,
which takes considerable time to reach destination.

To avoid this delay, CANARA BANK introduced a new system called “The Inter
Bank Electronic Fund Transfer System” which may be referred as “EFT System”
under the guidance of Reserve Bank of India.

In this system remittance can easily be made from any of the branches of participating
bank at the designated center to any other branch of the same and any other
participating bank at the same or other designated centers which would facilitates
remittance to reach destination on the very next working day itself through the system
of computer and communication centers.

This scheme is currently operational in Metros only; other centers will be added
shortly. Limit for individual transaction has been increased from current limit of Rs
5lac to 2crores.

ELECTRONIC CLEARING SERVICES: -

Electronic Clearing Services is a method of quick movements of funds in a paperless

modes introduced by Reserve Bank of India.

There are two types of ECS i.e. ECS (credit) and ECS (debit).

CANARA Bank is properly equipped to provide ECS (credit and debit clearing)
facility for the benefit of the customer.

MAIN FEATURES OF ECS (CREDIT):

This is a method of payment whereby an institutions which has to make large number
of payments (such as interest/dividend/salary etc.), can directly deposit the amount
electronically into the bank accounts of the beneficiary without issuing any paper
instrument. ECS (credit) envisages single debit and multiple credits.

Benefits to Institutions/ Govt. deptt/Corporate Client etc. (user clients):

1. Saving administrative cost presently being incurred for printing of paper

 instruments in MICR format and dispatching them by registered post.

2. Loss of instrument in transit or fraudulent encashment thereof is totally

eliminated.

3. Reconciliation of transaction is an automatic process.

4. Correct and immediate credit in the account of beneficiary.

5. Fund management becomes easier, as arrangement for funds is required to be

made only on the specified date.

Benefits to beneficiary customers:

1. Immediate credit on the due date.

2. No delay which nominally associated with the clearance of instrument in

clearing.
3. Effortless receipt-no need for visiting bank for depositing the instrument.

4. Loss of instrument and fraudulent encashment thereof and consequent

correspondence with the company are totally eliminated

MAIN FEATURES OF ECS (DEBIT):

1. Faster collection of bills and better fund management.

2. Eliminates the need for customer to go to the collection centers/banks by the

customer and no need to stand in long cues for payment.

3. Automating debiting to the accounts once the mandates are given.

Utility services providers like MTNL, telephone/mobiles companies, state electricity

boards, banks (for collection of debit cards dues and loan installments) LIC, housing
finance companies, intermediaries and clubs etc. can gainfully make use of this
facility.

There is no value limit on the amount of individual debit/credit transactions.

The only requirements of user clients i.e. corporate/institutions etc. is to collect to

mandate from its beneficiary customers.

How to avail the ECS services

1 Application to be submitted on form no E-1 for registration by the user clients

 with the branch where it is maintaining the accounts.

2 Bank will provide S/W to be installed at the users’ clients’ site.

3 The user client will submit the ECS data i.e. detail of transaction in a floppy to
the branch where it is maintains the accounts.

Service Charges for ECS

ECS (Credit) Nil

ECS (Debit) Re 1/- per transaction

TAX INFORMATION NETWORK: -

INTRODUCTION:
Tax information network (TIN), a repository of nationwide tax related information
has been established by securities depository limited on behalf of income tax
departments of India (ITD). TIN is an initiative by ITD for the modernization for the
current system for collection, processing, monitoring, and accounting of direct taxes
using information technology.

SERVICES THROUGH TIN-FC: Through its network of TIN facilitation

centers all over the country, TIN offers the following services:

1. Acceptance of electronic and physical TDS (Term Deposit Scheme)/TCS

returns .

2. Processing of new PAN (Permanent Account Number) & PAN change request
application.

3. Processing of new TAN (Tax deduction Account Number) & TAN change
request application.

4. Acceptance of AIR.

5. Registration of PAN holder for viewing its annual tax statements.

6. Quarterly statement status.

ADVANTAGE OF PAYING TAXES ONLINE:

1. Customer can pay taxes from any location at any time through his/her net-
banking account.

2. Instant transfer of funds from customer’s account.

3. What customer writes on the e-challan will be directly sent to Income Tax
Department. Banks will not do any data entry.

4. Customer can save/print the challan copy and the receipt copy.

5. As soon as customer’s Bank authorizes payment of the amount, he/she will

receive a clear, legible receipt/counterfoil from the Bank.

6. Transaction ID of the e-payment transaction will be available to customer in

his/her bank statement.
 7. Customer can check online if his/her money has actually reached the I-T
Department. For this he/she have to go to Tax Information Network Website:
https://tin.tin.nsdl.com/oltas/index.html and click the box
CIN Based View.

REAL TIME GROSS SETTLEMENT (RTGS): -

An RTGS (real time gross settlement system) payment system is one in which
payment instructions between banks are processed and settled individually as per
following time schedule.

 Customer transaction can be sent through the RTGS system at any time from
the start of the RTGS business day 9 am to 3 pm on weekdays and 12 noon on
Saturday.

 The attraction of RTGS system is that payee bank and the customer receive
funds with certainty, or say finality during the day enabling them to use the
funds immediately without exposing themselves to risk.

 NEFT is an application developed by RBI to facilitate customer to transfer

funds from one bank account to another bank account in India.

 It is an efficient, secure, economical, and reliable and expeditors systems of

funds transfer between bank using SFMS messaging backbone.

 It will replace EFT shortly.

 After netting all the transaction at every settlement time, RBI passes RTGS
entry debit and credit, in respect of all NEFT.

1) Eligibility of RTGS system:

The service will be made available to corporate customer for transfer of funds.

2) Applicability of RTGS system:

At authorized CBS branches

3) Scope of services offer of RTGS:

Bank is full of RTGS member and is therefore eligible for sending payments
from its settlement accounts to other member of RTGS system.

4) Minimum amount of funds:

Minimum amount of funds transfer under RTGS is Rs.1,00,000/-.

5) Coverage of services:
The service is offered to applicants’ from authorized CBS branches.
 6) Cancellation of request:
Cancellation of request can be accepted from customer for only those
transactions that are pending for settlement. The status of such transaction can
be known from the RTGS system.

7) Deadline for receipt of remittance instruction:

The remittance instruction for transfer of funds on the same day shall be
received only till 3 pm. For instruction received beyond 3 pm, the settlement
would occur on the next day. On Saturday, the instruction will be received
only up to 12 noon.

NATIONAL ELECTRNIC FUNDS TRANSFER (NEFT): -

National Electronic Fund Transfer (NEFT) is also an electronic payment system in

which payment instructions between banks are settled at fixed intervals.
  National Electronic Fund Transfer System (NEFT) is efficient, secure,
economical, reliable system of funds transfer from Bank to Bank.

 Now fund transfer can be made to more than 36000 Bank branches across
India. These facilities are available in more than 1650 branches of Canara
Bank as of now.

 NEFT system works on all days except Sundays and national holidays.

 Customer should furnish details of payees name, bank account number and
type, receiver bank name, branch name and IFSC code of the receiver
Bank branch.

NEFT has 3settlement cycles during a day at following times:

 10.30 mornings

 12 noon

 16 noon

1. Eligibility of NEFT system:

The service will be made available to corporate customer for transfer of funds.

2. Applicability of NEFT system:

At authorized CBS branches

3. Minimum amount of funds:

There is no minimum / maximum limit for transactions under NEFT.

ONLINE BILL PAYMENT SYSTEM:

1 CANARA BANK brings to customer’s convenience of paying all their bills

 from Canara bank desktop. Customers can pay now their electricity, telephone,
mobile, insurance bills online electronically and also subscribe to magazines
and make contributors to various charity –all of them online, using the
CANARA BANK online utility bill payment service.

2 Customer’s bank account will be debited online. Payments made before 5 pm

on working days will be processed by next working day.

3 To use the CANARA BANK online utility bill payment services, customer
need to be CANARA BANK internet banking customer. In case if anybody is
not registered for Canara bank internet banking services then, he/she cannot
made transaction on online.

PAYMENT GATEWAY:

A payment gateway is a means to realize payments online. E-commerce enabled web-

sites buy the services of a payment gateway and route all online payment through it. A
payment gateway uses a server that guarantees secure transactions between the web-
site and the banking infrastructures. Many company offer payment gateway solutions
to small and large e-commerce web-sites.

An e-commerce web-site enables customer to browse, select and unselect any number
of products that he/she wish to purchase are said to be 'in his/her shopping card'. Once
we decided what products to purchase according to the buying formalities by clicking
the buy button.

The following steps explain the process that occurs after you click the buy
button:
1 A web page displays, asking your personal details, such as name, shipping
address, credit cards number and expiry date.

2 Credit cards numbers are verified for validity using client side scripting.

3 After it has been assured that the credit cards number entered appears valid,
the web-site encrypts the credit cards details and sends it to the bank issuing
the credit cards.

4 The bank issuing card authorizes or denies the transaction and sends its
approval to the web-site.
5 The web-site sends an e-mail confirmation on receipt or order not processed
receipt to the customer.

6 The order is sent to the processing department for the products to be packed
and send to the customer.

PROCESS OF ONLINE PAYMENT

Fig. shows online payment process

SECURITY PROVIDED BY
CANARA BANK IN
E-BANKING
 1.) Cryption:
Customer’s data and messages travel in a 128 Bit SSL mode
encryption technique provided by IDRBT (Institution for Development and
Research in Banking Technology), which is a subsidiary of The Reserve Bank
of India.

2.) Change Password Option:

Customer is provided with an option to change his/her
passwords any number of times through the application. He/she can change the
passwords whenever he/she feel that his/her passwords have been compromised.

3.) Data Confidentiality:

Customer’s data and other Information is kept highly
confidential. This will not be disclosed to anybody unless legally warranted.

4.) Password Confidentiality:

Customer’s Passwords are known only to him/her. The
Passwords are randomly generated by the system and will not be known to any
person in the Bank.

5.) Number of Attempts to Login:

Since Customer’s security is of foremost importance to Canara
bank, they only allow three attempts for Customers to login. This will minimize
brute force attacks. After the three attempts Customers` User id will be
automatically gets locked. Customer will have to request his/her branch to unlock
the same, by way of a letter.

6.) Validity of Passwords:

Customer’s passwords are valid for 90 days. System will
prompt him/her to change his/her passwords from 10 days before expiry of 90
days from the date of previous change.

7.) Expiry of Passwords:

Customer’s
passwords will expire after 90 days of generation if Customer have not logged in.
Customer will have to request for fresh set of passwords thereafter.

Do and Don’ts for Customer

Customer are requested for

 1 Ensure safe custody of their cheque book and pass book.

2 Use preferably a reverse carbon while writing a cheque.

3 Issued crossed and/ or account payee cheque as far as possible.

4 Send cheque and other financial instrument by registered post or by courier.

5 Bring pass book while withdrawing cash from saving account through
withdrawal slip and get passbook updated from time to time.

6 Avail nomination facility.

7 Note down account numbers, details of FDRs, locker number etc separately
for your personal record.

8 Inform immediately change in your address, telephone number etc to the

branch.

9 Inform loss of demand draft, fixed deposit receipts, cheque(s) leave book, key
of locker etc to the branch immediately in writing.

10 Pay interest, installments, locker rent and other dues to the bank.

11 Avail services of ATMs, ECS, EFT internet etc offered by bank.

12 Provide feed back on our services.

Customer are requested not to

1 Sign blank cheques/ and not to record their specimen signature either on pass
 book or cheque book.

2 Introduce any person to bank for the purpose of opening an account unless
personally unknown to him.

3 Issue a cheque without sufficient balance in the relative account and maintain
minimum balance therein as specified by the bank from time to time.

ADDITIONAL AREAS
1.) FOREIGN EXCHANGE TRANSACTION:
Bank has presently 126 authorized branches to handle foreign exchange
business independently including 9 ‘A’ category offices which maintain foreign
currency Nostro accounts in various currency to facilitate transaction of our clients.
Bank is having arrangements with over 500 banks worldwide to facilitate speedy and
timely settlement of foreign exchange transaction of our exporter/importer clients.
Further 142 branches have been provided SWIFT connectivity which is the fastest
mode available for exchanging message with foreign banks worldwide.

2.) INTERNATIONAL BANKING BRANCHES:

Bank has specialized international banking branches (IBB) at Delhi, Kolkata,
Ahemdabad, Jalandhar, Agra, Muradabad, Amritsar, Panipat, Mumbai and Jaipur to
cater exclusively to export/import client.

3.) NON RESIDENT ACCOUNT:

Non resident Indian can open rupee account under various schemes, such as
non resident ordinary and non resident external with all branches of PNB. Besides,
they can also keep foreign currency deposit in US dollar, pound sterling, and euro
with selected branches of our bank under foreign currency.

4.) ATM FACILITY:

With a view to, provide an alternate delivery channel of their services to the
customer and for providing extend of services, bank is aggressively pursuing
installation of ATMs. More than 465 ATMs have already been installs as on
23.09.2004 and this figure is likely to rise to 700 by March 2005. These ATM are
providing facility for instant cash withdrawal, balance enquiry and mini statement to
the customer round the clock subject to prescribed a limit day.

5.) CREDIT CARD FACILITY:

CANARA BANK international credit card is available in four variants viz. Cancard
VISA Classic; Cancard VISA Corporate; Cancard MasterCard; Cancard VISA
International Gold will be offered to individual having a minimum salary of Rs
175000 and Rs 72000 per annum respectively.

6.) DEBIT CARD FACILITY:

It is a Visa Debit Card. Issued to SB/Current Account/OD account holders of

our ATM network branches. Joint accounts with operation condition “jointly”,
accounts of illiterate persons/blind/minors and attached/ encumbered accounts are not
eligible. It issued free of cost. It issued with a validity period of 5 years. It Can be
used at Canara bank’s ATMs as well as other Bank ATMs and Merchant outlets, at
hotels/shops/restaurants/travel agencies.

7.) RETAIL LOAN SCHEME:

Housing loan, consumer durable loan, car loan, personal loan etc are made
available to general public on easy terms. Details of these are available on free of cost
from the branch.

RESEARCH METHODOLOGY

Methodology is defined as
  The analysis of the principles of methods, rules and postulates employed by a
discipline or,

 The development of methods to be applied within a discipline

 A particular procedure or set of procedures.

It should be noted that methodology is frequently used when method would be more
accurate. For example, “since students were not available to complete the survey
about academic success, we changed our methodology and gathered data from
instructors instead”. In this instance the methodology (gathering data via surveys, and
the assumption that this produces accurate results) did not change, but the method
(asking teachers instead of students) did.

Methodology includes the following concepts as they relate to a particular

discipline or field of inquiry:

1 A collection of theories, concepts or ideas

2 Comparative study of different approaches and

3 Critique of the individual methods.

Methodology refers to more than a simple set of methods rather it refers to the
rationale and the philosophical assumptions that underlie a particular study. This is
why scholarly literature often includes a section on the methodology of the
researches. This section does more than outline the researches’ methods. It might
explain what the researchers’ ontological or epistemological views are.

Another key, although arguably imprecise, usage for methodology does not refer to
the specific analysis techniques. This often refers to anything and everything can be
encapsulated for a discipline or a series of processes, activities and tasks. Examples of
this are found in software development, project mgt. and business process fields. This
use of the term is typified by the outline who, what, where, when & why. In the
documentation of the processes that make up the discipline i.e. being supported by
“this” methodology, that is where we would find the “methods” or processes. The
processes themselves are only part of the methodology along with the identification
and usage of the standards, policies, rules etc.

Methodology can properly refer to the theoretical analysis of the methods appropriate
to a field of study or to the body of methods and principles particular to a branch of
knowledge. In this sense, one may speak of objections to the methodology of a
geographic survey or of the methodology of modern cognitive psychology. In recent
years, however, methodology has been increasingly used as a pretentious substitute
for a method in scientific and technical contexts. Methodological may have acquired
this meaning because people had already been using the more ordinary adjective
methodical to mean orderly, systematic. But the misuse of methodology obscures an
important conceptual distinction between the tools of scientific investigation and the
principles that determine how such tools are deployed and interpreted.

DATA ANALYSIS

(1) Are you availing banking from Canara bank?

 YES 90%
NO 10%

(2) Which type of account do you have in Canara bank?

SAVING ACCOUNT 40%

CURRENT ACCOUNT 35%
TERM DEPOSITS 15%
OTHERS 10%

(3)What is the normal time taken for completing the following

transactions in the bank branch?

3-5 5-10 10-15 more than

min min min 15 min
Cash Deposits 60% 25% 10% 5%

Cash withdrawal 65% 25% 10% 5%

Updation of Pass Book 70% 20% 5% 5%

Issue of Term Deposit

Receipt 50% 20% 20% 10%
(4) Please rate your satisfaction levels with the amount of time taken.

Extremely Satisfied 25%

Satisfied 50%

Somewhat Satisfied 10%

Dissatisfied 10%

Extremely Dissatisfied 5%

(5) Are you using any of the following services?

YES NO
ATM Services 80% 20%
Anywhere Banking 75% 25%
E-Banking 75% 25%
(6) Please rate your satisfaction level.

Extremely Satisfied Somewhat Dissatisfieed Extremely

Satisfied Satisfied Satisfied

ATM Services 40% 40% 10% 5% 5%

Anywhere 45% 25% 10% 10% 10%

Banking

E-Banking 40% 35% 15% 5% 5%

 CONCLUSION

Canara Bank in India has a history of nine decades and is the largest public sector
banks in India. Canara Bank India has a deposit advance base of Rs.640 bn and Rs
332 bn.

Canara Bank of India has a total of 47,843 employees and is spread with 2409
branches throughout the country. Canara Bank India has an exposure to petroleum,
engineering, infrastructure, factoring, investment management, venture capital, home
finance and securities.

Canara Bank entered Forex arena in 1953 with the opening of its first Foreign
Exchange Department in Mumbai. The Bank has 5 forex dealing rooms located in
Mumbai, New Delhi, Kolkata, Chennai and Bangalore in India and one in London
branch. Canbank provides a wide range of services and products like sale and
purchase of 7 world currencies, swap currency and forward bookings.

Net Banking is the Internet Banking Service provided by Canara Bank for the
customers of its Core Banking (CBS) Branches. Net-Banking is offered to both Retail
as well as Corporate customers. While Net-Banking Retail services the Retail
Customers, Net-Banking Corporate is tailored to suit the needs of Corporate
Customers. Net-Banking is the most comfortable channel for you to experience round
the clock banking from any part of the world.

It is worth note that in ATMs counter where variability is high, it can lead to either a
cash-out situation or an idle cash situation if such wide variability is observed over a
considered period of time, then such changes in the demand pattern has to be
immediately incorporated in the forecasting system.

Maximum value withdrawn in the weekend is 1.5 to 2 times the normal withdrawal.

If there is an increase in the number of transaction it implies grater volume of

transaction. On the contrary an increase in the cash transaction implies a higher value
of transaction. The cause of variability is either rotted in a higher value. The
forecasting strategy of the bank can take this vital information into account to put in
their judgment part in the forecast. If, e.g. there is a higher volume of transaction
noticed for a significant period in any ATM it could be necessary inferred that there
has been an upsurge in number of customer operating the ATM. The local addresses
and the office address of the account holder can be looked into to verify whether the
upsurge in demand is because of any significant change in the catchments area. The
chances should be noted as an endogenous variable in the regression model has to be
carried out in future so that such changes once noticed can be factored into the model
to avoid cash out situation.

Banks are highly over enthusiastic in setting relation limits of the each of the counters
and so while setting up limits they have used a factor of 3, which arises due to an
element of judgment. The intention is always to avoid any cash-out situation but at
times it may lead to idle cash in the counters. No sophisticated forecasting tools are
being used in any of the ATMs and retail branches. Rather banks take 2 or 3 months to
arrive at a figure for retention limit.

The forecast horizon that is considered by few banks is for a period of 1 month. This
can be further sub divided into weekly forecast so that better tracing of fluctuations is
done leading to sound forecasting.

The bankable customer population in India is 300 million and the number of ATMs
required for this population is supposedly more than 2 lakh. An ATM will have to be
installed for every 1489 cards issued. This seems to be an uphill task for private banks
considering the expansion spree banks are in.
 APPENDIX

QUESTIONNAIRE
E-Banking

Dear Sir/Madam

I am a student of Bachelor of business administration (Banking and Insurance) from BLS Institute of
Management, Ghaziabad, carrying out my summer training from Canara bank , which is part of
my course curriculum. Please fill in the questions given below, as this will assist in my project study. I
assure you that the respondents will be kept confidential.

NAME-
Phone Number-
E-mail Id-
1. You are doing banking with CANARA BANK since

Years months

2. Your type of account is

Saving Current Term Deposits Others(Please
Specify)

3. Your occupation
Service Professional Business Selfemployed

Housewife Student Other

4. Your Annual Income is

Below 1 Lakh 1 to 3 Lakhs 3 to 6 Lakhs 6 to 10
Above 10 Lakhs
 5. What is the normal time taken for completing the following transactions in
the bank branch? Also, please rate your satisfaction levels with the amount of
time taken.

Transactions *
TIME TAKEN SATISFACTION LEVEL
3-5 5-10 10- More Extre Satisfied Some Dis Extremely
mins mins 15 than mely what Satisfied Dissatisfied
mins 15mins Satisfied Satisfied
Cash Deposits
Cash
withdrawal
Updation of
Pass Book
Issue of Term
Deposit
Receipt

6. Are you using any of the following services?

ATM Services Yes No

Anywhere Banking Yes No

E-Banking Yes No

7. If yes, please rate your satisfaction level

Extremely Somewhat Extremely

Services Satisfied Dissatisfied
Satisfied Satisfied Dissatisfied
ATM Serrvices
Anywhere Banking
E-Banking
8. Please rate your satisfaction levels on the following:

Exteremely Somewhat Exteremely

Satisfied Dissatisfied
Satisfied Satisfied Dissatisfied
1. Speed of transactions
at counters
2. Correctness/Accuracy
of transactions at
counters
3. Behavior /attitude of
bank staff
4. Presence of staff at
counters
5. Knowledge of Bank
staff
6. Punctuality in
commencing business in
the branch
7. Availability and
display of information at
branch
8. Facilities (like seating
arrangement, drinking
water, stationary etc.)
offered at branch
 BIBLIOGRAPHY
Reference book : Banking Law & Practice
“Sundharam & Varshney”
Sultan Chand & Sons.

E. F. Turban.

Annual Report : CANARA BANK (Profile of Canara bank).

Websites : www.canarabank.com
www.canarabank.in
www.firstdata.com
www.wickiepedia.com.
www.rbi.com