What are innovations in commercial banking in India
Answers
The term “INNOVATION” means to make something new. Banks now no longer restricted to traditional banking activities but explored newer avenues to increase business and capture new market.
Following are the types of innovative banking:
1) Internet Banking
Internet banking is also known as online banking, Virtual Banking and web banking. Internet Banking allows its user to execute transactions with the help of internet. Internet Banking provides all the functions which are provided traditionally at a local bank branch such as deposit of money, bill payment.
ICICI is the first bank to introduce internet banking.
2) Mobile Banking
Mobile Banking is a system that allows customers to perform a number of financial transactions through a mobile device. It may include:
Bill Payment Alert
Utility Bill Payment
ATM location
Interbank Mobile Payment Service
3) Wholesale and Retail Banking
Retail Banking refers to banking in which banking institutions execute transactions directly with consumers rather than corporate or other banks.
It includes following services:
Saving and checking accounts
Personal loans
Debit cards
Credit cards
Wholesale Banking refers to conducting banking business with industrial and business entities. This includes corporate, trading houses, multinational companies and domestic companies.
It includes following:
Fund based services
Non-fund based services
Value added services
Internet banking services
4) Universal and Narrow Banking
Universal Banking is a combination of commercial banking, investment banking, development banking, insurance and many other financial activities. It is a place where all products are available. Narrow Banking involves mobilizing the larger part of the deposits in risk free assets such as government securities. In India narrow banking is implemented partially. It basically helps the banks to reduce NPAs (non performing assets)
5) Offshore and Multinational Banking
Offshore Banking- Offshore banking is a term used to describe banking activity in currencies other than the currency of the country in which the bank accounts are held. Countries conducting such business are called offshore financial centre.
Multinational Banking - Multinational banks are those banks that physically operated in more than one country. It is also known as international bank.
Indian Bank is the first bank to open its branch outside India in 1946.
Bank of Baroda has maximum number of overseas branches.
Answer:
There are a number of innovations in the commercial banking sector in India. For instance, ATMs, net banking, credit and debit cards, mobile banking, Check truncation system, electronic clearing system etc.
Explanation:
Innovation can be defined as a new product, or a new product design, or a new method of production.
Since last two decades, a number of innovations has taken place in the Indian commercial banking sector.
ATMs were initiated in the 1990s by some foreign banks. Since, then public sector banks have also joined the race of expansion of ATM networks.
1. Internet banking has also developed recently, though, it involves a number of security and legal risks.
2. Mobile banking is a recent development in the commercial banking scene in India.
3. Branch networking refers to the process of connecting geographically scattered branches through WAN or wide area network and EN or enterprise network.
4. Electronic clearing house are similar to automated clearing house in other countries. ECS is used by utility services for electricity bill payments, telephone bills and other charges. ECS debit clearing works on the one credit multiple debits principle.
5. With the expanding ATM network and point of sale terminals, the card delivery system in India has been very successful.