Net Banking

Net Banking is conducting ones banking or bank account online through a computer and a net connection. The system is updated immediately after every transaction automatically. In other words it is said that it is updated 'on-line, real time'. Through netbanking one can check the status of his/her account, place queries and also can be facilitated with a wide range of transactions simultaneously.

In India, the regulatory body has not yet sanctioned virtual bank, in abroad there are banks like EGG Bank or NET Bank, which only have a virtual presence without any physical branches.

Net Banking has three basic features. They are as follows:

• The banks offer only relevant informations about their products and services to the mass.
  
  
• Few banks provide interaction facility between the banks and its customers.
  
  
• Banks are coming up with arrangements of utility payments, like telephone bills, electricity bills, etc.
  
  

The current statistics show that hardly 10 per cent of Indian customers uses the internet for banking. Among all the facilities provided, the maximum of them uses only for checking balance or requesting for a cheque book. Very few customers uses the advance interactive services provided by the banks.

According to HDFC and ICICI Bank, 17 per cent of ICICI customers use the Internet for banking and 10 per cent of HDFC customers prefer it.

Cost of installation of services

For basic features, the cost for providing such services to the banks come around Rs 40 lakh to Rs 50 lakh. For the third level service or sophisticated services, the investments mount to the tune of Rs 4 crore to Rs 5 crore. These investments is just a fraction if compared to the operations of the bank using physical infrastructure.

Services provided by Net Banking

Queries

• Check Balance
• See Statement
• Inquire about cheque status
• Ask for a Statement
• Ask for a Cheque Book
• Inquire about Fixed Deposit
• Inquire about TDS details
• See Demat Account
• Update profile

Transactions

• Stop a Cheque
• Pay Bills
• Ask for a Demand Draft
• Transfer funds between your accounts
• Transfer funds to a third party
• Request for a new Fixed Deposit
• Shop Online
• Pay Bank Credit Card Dues

Advantages of Net Banking

• It removes the traditional geographical barriers as it could reach out to customers of different countries/legal jurisdiction. This has raised the question of jurisdiction of law/supervisory system to which such transactions should be subjected.
• It has added a new dimension to different kinds of risks traditionally associated with banking, heightening some of them and throwing new risk control challenges.
• Security of banking transactions, validity of electronic contract, customers' privacy, etc., which have all along been concerns of both bankers and supervisors have assumed different dimensions given that Internet is a public domain, not subject to control by any single authority or group of users.
• It poses a strategic risk of loss of business to those banks who do not respond in time to this new technology, being the efficient and cost effective delivery.