TransferAct 1978, USA and Data Protection Act 1984, UK.

- Introduction of ‘Clearing Bank’ concept for decentralised cheque processing.

- Large scale induction of computers and communication technology in service branches

- Promotion of a card culture, as well as enhanced training facilities.

vi) Committee for proposing Legislation on Electronic Funds Transfer and other Electronic Payments (1995)

Chairperson: Smt. K. S. Shere, Principal Legal Adviser, Reserve Bank of India.

EFT system could be introduced immediately by framing regulations under Section 58 of the RBI Act.

- As a long term measure, a new legislation needed for regulating, defining and determining the rights and obligations of the system providers and user

The other committees include

Table 1

Subsequently, some of the major landmarks Banking Technology and Transformation in India are,

Theintroduction of MICR based cheque processing – a first for the region, during the years 1986-88;
Computerisationof branches of banks – an activity which commenced from the late eighties with the introduction of ledger posting machines (LPMs), advanced ledger posting machines (ALPMs), followed by stand alone computer systems which metamorphosed into network based systems and the latest development pertaining to the installation of Core Banking solutions;

Facilitatingcomputerisation of Government business
– from the late nineties which has now resulted in all branches handling Government business perform their functions using technology;

Thesetting up of the Institute for Development and Research in Banking Technology (IDRBT), Hyderabad in the mid nineties, as a research and technology centre for the Banking sector;
Thecommissioning in 1999, of the Indian Financial Network as a Closed User Group based network for the exclusive use of the Banking sector with state-of-the- art safety and The network supports applications having features such as Public Key Infrastructure (PKI) which international networks such as S.W.I.F.T. are now planning to implement
Commencementof Certification Authority (CA) functions of the IDRBT for ensuring that electronic banking transactions get the requisite legal protection under the Information Technology Act, 2000;
EnsuringInformation Systems Audit (IS Audit) in the banks for which detailed guidelines relating to IS Audit were formulated and circulated;
EnablingIT based delivery channels which enhance customer service at banks, in areas such as cash delivery through shared Automated Teller Machines (ATMs), card based transaction settlements ;
ProvidingGuidelines for Internet Banking, which facilitated the banks to ensure that common minimum requirements relating to Internet Banking offerings were provided for;
Providingdetailed specifications to banks on the configuration of systems relating to critical inter-bank payment system applications such as Real Time Gross Settlement (RTGS) System, Negotiated Dealing System (NDS), and Centralised Funds Management System (CFMS)
Implementationof the National Financial Switch (NFS) to ensure interconnectivity of shared ATMs and to provide for funds settlement across various
Establishmentof e-payment gateways for the benefit of customers (such as the gateways for funds transfers and other account related transactions) and for facilitating e-commerce.
Sharingof information through the secured internet website for the Centralised Data Based Management System-Internet (CDBMSI)
Providinga platform for transmission of electronic messages across banks using common standards, for facilitating ‘Straight Through Processing’ (STP) in the form of the Structured Financial Messaging System (SFMS), which will be similar to the SWIFT messaging pattern;
Settingup connectivity of all clearing houses of the country so as to enable the introduction of the National Settlement System (NSS)
Introducinga secured web site for internet based data transfer to Central and State Government Departments may populate the data from the secured web site to their own systems based on their requirements.
Progress of IT in the Indian Banking
Technology evolution and application in Indian banking can be termed as an era from Mechanization to Mobile banking

It can be classified into the following phases Mechanisation (1980s), Automation (1990s), Computerisation of Nationalised banks, Tech savvy Foreign and New Indian Private Banks, Introduction of new technology applications across the Indian Banking sector.

Due to these factors, some of the emerging Trends in Banking Technology in India are as follows

ITImplementation and Management
ITfor Internal Effectiveness
ManagingIT Risk
Indian banking industry thus adopted various technology applications in banking. They are classified in to:

ElectronicData Interchange
CorporateWeb Sites
ManagementInformation System
To advance from a more basic utility/protector function to a transformer/performer IT should better understand the needs of the leadership team, continuously work on

Role of technology in development of Urban Cooperative Banks

Automated Teller Machines (ATMs), net banking and mobile banking etc and are also becoming gradually more an integral part of the services provided by the UCBs. In addition, IT has enabled the efficient, accurate and timely management of the increased transaction volume that comes with a larger customer base.

Another important aspect with regard to technology implementation for internal purpose in UCBs is the Management Information System (MIS). The MIS reports generated help the top management as an effective risk management and a strategic decision making tool.

The Cooperative banks have also been directed by the RBI to become CBS enabled by 31st March 2013.

Status of computerization of UCB’s:
The urban cooperative banking sector is highly heterogeneous with concentration in a few states like Maharashtra and Gujarat. The technology solution to be proposed is expected to help these banks to improve efficiency of their transaction processing capabilities, housekeeping and customer service as a means to meet the competitive pressure on these banks. In other words, the solution to be provided needs to provide a level playing field to these banks in terms of access to IT solutions. Maharashtra is at the top in implementing CBS in urban cooperative bank. As on March 2012, in Maharashtra state124 UCBs out of 523 UCBs have implemented CORE banking solution.

RBI initiative for IT implementation: The usage of Information Technology (IT) is critical for the survival and growth of banking Institutions as Information Technology usage not only helps banks to reduce their cost of operations, but also enables them to offer products and services at competitive rates to their customers. The Government of India has observed that UCBs without CORE banking solution (CBS) do not integrate well with the banking system and hence there is a need to quickly adopt this model. CBS is a necessity in today’s banking scenario. UCBs are, therefore, advised in their own interest, as also in the interest of their customers, to adopt CBS at the earliest.

There is a wide variance among urban cooperative banks with regard to the usage of Information Technology. In their report, the committee by Shri. R. Gandhi (2008) mentioned that till March 31, 2007, 16 out of 1853 banks had implemented core banking solution, with some of them even offering to set up/share data centers with smaller UCBs, while over 50 banks did not even have computers. The remaining banks existed somewhere in between. But over a period of time there has been a good progress of IT in Cooperative banks.

In the context of the cooperative banks, a large part of this sector has been computerised. Whether it is the major loan accounts, the investment operations or the clearing systems, they all have been computerised at the head office level. Many Urban Cooperative banks are in the process of shifting to core banking. Large parts of the cooperative sector now tick with a Core Banking System developed by the National Informatics Centre (NIC), the government’s web services organisation, which has brought them into the technology mainstream. Six thousand PACS in Rajasthan, 89 PADBs in Punjab, one Chandigarh SCB, three branches of Delhi Financial Corporation and 315 locations of Treasury Saving Banks in Kerala are using Co-operative Core Banking Solution.

Taking the IT revolution ahead, Samruddhi Cooperative Bank based in Maharashtra launched the lender’s first ever RuPay Card. With India adopting its own bank card, it turned the world’s sixth country to have its own card after China, Japan, and others. Telengana’s AP Mahesh Co-operative Urban Bank based in Hyderabad has various techno- enabled initiatives and services this year. It is the first co- operative urban bank in the cooperative sector in South India that is extending tech-savvy services to its customers on a par with the private sector banks. Presently the bank is functioning with a network of 42 branches covering four States viz., Telangana, Andhra, Maharashtra and Rajasthan. After seeing the IT based success in the bank, the RBI has permitted the bank to extend its network to Gujarat State as well.

The Co-operative Bank of Rajkot is equipped with high technology using Enterprise Banking Solution and Any Branch Banking at all branches for its customers. The bank has also installed Core Banking Solutions and its 11 branches are equipped with onsite ATMs. The bank also provides facilities such as locker at 26 branches, RTGS, NIFT and Online tax payment through HDFC in Rajkot city. The Tiruchi District Central Cooperative Bank (TDCCB) has effectively brought all 52 branches in Tiruchi, Karur, Ariyalur and Perambalur districts under the CBS. With the help of CBS, the bank facilitates the transfer of funds through National Electronic Fund Transfer (NEFT), Real Time Gross Settlement (RTGS) and Direct Benefit Transfers (DBT). CCBS is implemented at more than 100 cooperative banking locations across Meghalaya and Chhattisgarh.

Reserve Bank of India has played an important role in implementation of information technology in banking sector. Reserve Bank of India constituted a working group to look into the different issues relating to e-banking and recommend technology, security, legal standards and operational standards keeping in view the international best practices. The group has made a number of recommendations on information security in e-banking. The most important note was that security infrastructure should be properly tested before using the systems and applications for normal operations. RBI had appointed various committees to work in this area. The government of Maharashtra and the Reserve Bank of India has signed a Memorandum of Understanding (MoU) to facilitate the development of the urban co- operative bank sector in the state of Maharashtra. Based upon this MoU, a State Level Task Force for Co-operative Urban Banks (TAFCUB) has been constituted for Maharashtra. As part of its developmental role, the Reserve Bank would also be assessing the training and computerization needs of the urban cooperative banks in the State of Maharashtra with the objectives of upgrading their human resource skills and technological infrastructure so that they improve their operational efficiency and quality of management information systems.

In the context of the cooperative banks, a large part of this sector has been computerised. Whether it is the major loan accounts, the investment operations or the clearing systems, they all have been computerised at the head office level.

The Cosmos Cooperative Bank, Pune, in Maharashtra and The Kerela State Cooperative Bank have moved for core banking solution and many Urban Cooperative banks are in the process of shifting to core banking.

The Cooperative Banks of all levels — State, District and Cooperative Urban banks — therefore have to also ensure that technologies are at par with the private banks. Slowly but steadily, India’s cooperative banks are emerging out of technological weakness. Large parts of the sector now tick with a Core Banking System developed by the National Informatics Centre (NIC), the government’s web services organisation, which has brought them into the technology mainstream.

The Indian banking sector has been adapting innovations in technology especially the information technology to achieve efficiency in providing wide range of products and services to the customers. The reforms in the 1990s, which led to expansion, consolidation and liberalization of the banking and financial sector in India, brought in many changes and challenges. A number of private and foreign players entered the Indian market with superior technologies that helped them service their customers efficiently through multiple channels such as ATMs and online banking.The Technological infrastructure has become an indispensable part of the reforms process in the banking system. The Banks are trying to satisfy their customers wherever they are.For this banks are exploring new financial products and service options that would help them grow without losing existing customers. And any new financial product or service that a bank offers will be intrinsically related to technology. Automation is the basic thing that banks need to have in place. It involves a combination of centralized networks, operations, and a core banking application. Automation enables banks to offer 24x7x365 service using lesser manpower. But to be really competitive, banks need to think beyond just basic automation since every bank is competing with technology. According to experts, the Future of technology applications in Banking include Mobile Wallets, Banking on the drive, Bank on your wrist, Smart Branches, Robotics, Video Banking.

IT is central to banking. It has moved from being just a business enabler to being a business driver. In a manner the banking and financial services sector—being the early adopters of any new technology—defines the roadmap for

future technology adoption. Banks are focused on three areas: meet customer’s service expectations, cut costs, and manage competition.

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