CHAPTER-2 : BANKING SECTOR REFORMS
Q.1: Explain the banking structure in India since Independence. OR
Discuss the scheduled banking structure in India with reference to public, private and foreign bank.
Ans. A) INTRODUCTION :-
In India, commercial banks are the oldest, largest and fastest growing financial intermediaries. They have been playing a very important role in the process of development. In 1949 RBI was nationalized followed by nationalization of Imperal Bank Of India (New State Bank Of India) in 1995. In July 1969, 14 major commercial banks were nationalized and in April 1980, 6 more were nationalized. Reforms in banking sector have led to the setting up of new private sector banks as well as entry of more foreign banks.
B) STRUCTURE OF BANKING IN INDIA :-
Banking system in India is classified in to scheduled and Non-scheduled banks. Scheduled banks consist of State co-operative banks and Commercial banks. Non-scheduled consist of Central Co-operative Banks and primary credit society and Commercial Banks.
STRUCTURE OF BANKING IN INDIA
Scheduled Non – Scheduled
State co-op bank Commercial bank Central Co-op Banks Commercial
and Primary credit society. Bank
1. Scheduled Banks :-
Under RBI Act of 1934, banks were classified as scheduled and non-scheduled banks. The scheduled banks are those which are entered in second schedule of RBI Act of 1934. They are eligible for certain facilities. All commercial banks (India and foreign, regional rural banks) and state co-operatives are scheduled banks.
A scheduled must have a paid up capital and reserves of not less than Rs. 5 lakhs. It must also satisfy RBI that it affairs are not conducted in a manner detrimental to the interest of its depositors.
2. Non-Scheduled Banks :-
Non-scheduled Banks are those which have not been included in the second Schedule of RBI Act. The number of non-scheduled banks is declining as many of them are attaining the status of scheduled banks in 2008.
STRUCTURE OF SCHEDULED COMMERCIAL BANKS
Public Sector Private Sector Foreign
Banks (27) Bank (22) Banks (31)
- State Bank Group (08) - Old Private Sector Banks (15)
- Nationalised banks (19) - New Private Sector Banks (07)
- Regional Rural Banks (86)
The scheduled commercial banks consist of public sector banks, private sector Banks and Foreign Banks.
As on march 2009, there are 27 public sector banks consisting of SBI and its 8 associated banks, 19 nationalised banks and IDBI Ltd. There are 7 new private sector banks, 15 old private sector banks in India. Besides there are 86 RRBs in 2008-09.
I. Public Sector Banks :-
Public sector Banks have a dominant position in terms of business. They accounted for 71.9% of assets, 76.6% of deposits, 75.3% of advances and 69.9% of investments of all scheduled commercial banks as at end of March 2009.
Among the public sector banks, the state Bank of India and associates had 16,294 branches and nationalized banks had 39,703 branches as on June 30, 2009.
a) State Bank Of India And Its Associate Banks :-
On 1st July, 1955, on the recommendation of Rural Credit Survey Committee, the Imperial Bank of India was converted in to State Bank of India. RBI acquired its 92% shares, thus SBI had the distinction of becoming the first state owned commercial bank in the country.
The State Bank of India (Associate banks) Act was passed in 1959 and this paved the way for creating State Bank Group. Besides functioning as a commercial bank, SBI ushered a new era of mixed banking system in the country. It proved that financing to agriculture and other priority sectors could be a viable commercial activity.
On 19th July, 1969, 14 major commercial banks were nationalized and 6 more were nationalized in 1980. Over the years SBI and its associates have expanded their business. On June 30, 2009, they accounted for 20% of total branches of all commercial banks. The share of banking business with them was roughly 30%. In 1993, SBI Act was amended to enable it to have access to capital market.
b) Other Nationalised Banks :-
The second category of public sector is 19 commercial banks, of which 14 were natioalised on July 19, 1969. This changed the banking structure. Each one of these 14 banks had deposits of Rs. 50 crore or more. The nationalization was justified by government because major banks have a larger social purpose. In December 1969, Lead bank Scheme was formulated which played an important role in transforming these profit maximizing institutions in to catalysts of local development.
On April 15, 1980 six more private owned commercial were nationalized. The purpose was to promote the welfare of the people in conformity with the policy of the state. With natioalisation, The share of private sector in the entire banking declined to just 9%. In 1993 New Bank of India merged with Punjab National Bank. As a result, the no. of public sector banks (other than state Bank and its associates) declined to 19. As on June 30, 2009, the total number of branches of 19 nationalised banks was 39,661.
c) Regional Rural Banks (RRBs) :-
The RRBs came to be set up under the act of 1976. They were set up to save the poor rural people from the grip of money lenders and traders. The Working Group on Rural Banks recommended the setting up of RRBs as part of multi-agency approach to rural credit. A RRB is sponsored by a public sector bank which also subscribes to its share capital. As on June 30, 2006, there were 196 RRBs with a network of 14,500 branches.
The RRBs meet the credit requirements of weaker sections, small and marginal farmers , landless labourers, artisians and small entrepreneurs. RRBs have been excellent in meeting the credit needs of rural poor. RRBs 95% of total direct advances goes to weaker sections. RRBs are facting organizational and management problems. In 1995-96 they incurred losses of Rs. 426 crore. As a result of Amalgamation the number of RRBs have come down to 86 and their branches were 15,144 as on June 30, 2009. In 2009-10 their number still declined to 82.
II. Private Sector Banks :-
In Private sector small scheduled commercial banks and seven newly established banks with a network of 8,965 branches are operating. To encourage competitive efficiency, the setting up of new private bank is now encouraged. Presently, the total number of banks in private sector is 22 (15 old and 7 new). In 2008-09 new private sector banks accounted for 19.6% of total banking assets.
III. Foreign Banks :-
For a long time a majority of foreign banks have been operating in India. On 30th June 2009, the country had 32 foreign banks with 295 branches located mainly in big cities. Apart from financing of foreign trade, these banks have performed all functions of commercial banks and they have an advantage over Indian banks because of their vast resources and superior management. In 2008-09, foreign banks accounted for 8.5% of total banking assets. At the end of September, 2010, 34 foreign banks were operating in India.
In India, foreign banks practices have been held in suspicion. The unfair competition with Indian banks, their practice of drawing funds from London Money Market for financing India’s foreign trade and their gross irregularities in securities scam have been a cause of concern. With growing strength of Indian banks have improved their practices and have stopped discriminatory policies.
Q.2: Explain the measures taken during the first phase of banking sector
reforms in India. OR
Explain the recommendations of Narasimham Committee report of
1991 and the measures adopted by Government to implement them. OR
Write note on first phase of banking sector reforms.
Ans. A) BANKING SECTOR REFORMS :-
Since nationalisation of banks in 1969, the banking sector had been dominated by the public sector. There was financial repression, role of technology was limited, no risk management etc. This resulted in low profitability and poor asset quality. The country was caught in deep economic crises. The Government decided to introduce comprehensive economic reforms. Banking sector reforms were part of this package. In august 1991, the Government appointed a committee on financial system under the chairmanship of M. Narasimhan.
B) FIRST PHASE OF BANKING SECTOR REFORMS / NARASIMHAN COMMITTEE REPORT – 1991 :-
To promote healthy development of financial sector, the Narasimhan committee made recommendations.
I) RECOMMENDATIONS OF NARASIMHAN COMMITTEE :-
1. Establishment of 4 tier hierarchy for banking structure with 3 to 4 large banks (including SBI) at top and at bottom rural banks engaged in agricultural activities.
2. The supervisory functions over banks and financial institutions can be assigned to a quasi-autonomous body sponsored by RBI.
3. Phased reduction in statutory liquidity ratio.
4. Phased achievement of 8% capital adequacy ratio.
5. Abolition of branch licensing policy.
6. Proper classification of assets and full disclosure of accounts of banks and financial institutions.
7. Deregulation of Interest rates.
8. Delegation of direct lending activity of IDBI to a separate corporate body.
9. Competition among financial institutions on participating approach.
10. Setting up asset Reconstruction fund to take over a portion of loan portfolio of banks whose recovery has become difficult.
II) Banking Reform Measures Of Government :-
On the recommendations of Narasimhan Committee, following measures were undertaken by government since 1991 :-
1. Lowering SLR And CRR
The high SLR and CRR reduced the profits of the banks. The SLR has been reduced from 38.5% in 1991 to 25% in 1997. This has left more funds with banks for allocation to agriculture, industry, trade etc.
The Cash Reserve Ratio (CRR) is the cash ratio of a banks total deposits to be maintained with RBI. The CRR has been brought down from 15% in 1991 to 4.1% in June 2003. The purpose is to release the funds locked up with RBI.
2. Prudential Norms :-
Prudential norms have been started by RBI in order to impart professionalism in commercial banks. The purpose of prudential norms include proper disclosure of income, classification of assets and provision for Bad debts so as to ensure hat the books of commercial banks reflect the accurate and correct picture of financial position.
Prudential norms required banks to make 100% provision for all Non-performing Assets (NPAs). Funding for this purpose was placed at Rs. 10,000 crores phased
over 2 years.
3. Capital Adequacy Norms (CAN) :-
Capital Adequacy ratio is the ratio of minimum capital to risk asset ratio. In April 1992 RBI fixed CAN at 8%. By March 1996, all public sector banks had attained the ratio of 8%. It was also attained by foreign banks.
4. Deregulation Of Interest Rates :-
The Narasimhan Committee advocated that interest rates should be allowed to be determined by market forces. Since 1992, interest rates has become much simpler and freer.
a) Scheduled Commercial banks have now the freedom to set interest rates on their deposits subject to minimum floor rates and maximum ceiling rates.
b) Interest rate on domestic term deposits has been decontrolled.
c) The prime lending rate of SBI and other banks on general advances of over Rs. 2 lakhs has been reduced.
d) Rate of Interest on bank loans above Rs. 2 lakhs has been fully decontrolled.
e) The interest rates on deposits and advances of all Co-operative banks have been deregulated subject to a minimum lending rate of 13%.
5. Recovery Of Debts :-
The Government of India passed the “Recovery of debts due to Banks and Financial Institutions Act 1993” in order to facilitate and speed up the recovery of debts due to banks and financial institutions. Six Special Recovery Tribunals have been set up. An Appellate Tribunal has also been set up in Mumbai.
6. Competition From New Private Sector Banks :-
Now banking is open to private sector. New private sector banks have already started functioning. These new private sector banks are allowed to raise capital contribution from foreign institutional investors up to 20% and from NRIs up to 40%. This has led to increased competition.
7. Phasing Out Of Directed Credit :-
The committee suggested phasing out of the directed credit programme. It suggested that credit target for priority sector should be reduced to 10% from 40%. It would not be easy for government as farmers, small industrialists and transporters have powerful lobbies.
8. Access To Capital Market :-
The Banking Companies (Acquisation and Transfer of Undertakings) Act was amended to enable the banks to raise capital through public issues. This is subject to provision that the holding of Central Government would not fall below 51% of paid-up-capital. SBI has already raised substantial amount of funds through equity and bonds.
9. Freedom Of Operation :-
Scheduled Commercial Banks are given freedom to open new branches and upgrade extension counters, after attaining capital adequacy ratio and prudental accounting norms. The banks are also permitted to close non-viable branches other than in rural areas.
10. Local Area banks (LABs) :-
In 1996, RBI issued guidelines for setting up of Local Area Banks and it gave Its approval for setting up of 7 LABs in private sector. LABs will help in mobilizing rural savings and in channeling them in to investment in local areas.
11. Supervision Of Commercial Banks :-
The RBI has set up a Board of financial Supervision with an advisory Council to strengthen the supervision of banks and financial institutions. In 1993, RBI established a new department known as Department of Supervision as an independent unit for supervision of commercial banks.
Q.3 : Discuss the recommendations of Narasimhan Committee Report of
1988 on banking sector reforms. OR
Write note on Narasimhan Committee Report of 1998. OR
Discuss the measures taken during the second phase of banking sector reforms in India.
Ans. A) SECOND PHASE OF REFORMS OF BANKING SECTOR (1998) / NARASIMHAN COMMITTEE REPORT 1988 :-
To make banking sector stronger the government appointed Committee on banking sector Reforms under the Chairmanship of M. Narasimhan. It submitted its report in April 1998. The Committee placed greater importance on structural measures and improvement in standards of disclosure and levels of transparency. Following are the recommendations of Narasimhan Committee :-
1) Committee suggested a strong banking system especially in the context of capital Account Convertibility (CAC). The committee cautioned the merger of strong banks with weak ones as this may have negative effect on stronger banks.
2) It suggested that 2 or 3 large banks should be given international orientation and global character.
3) There should be 8 to10 national banks and large number of local banks.
4) It suggested new and higher norms for capital adequacy.
5) To take over the baddebts of banks committee suggested setting up of Asset Reconstruction Fund.
6) A board for Financial Regulation and supervision (BFRS) can be set up to supervise the activities of banks and financial institutions.
7) There is urgent need to review and amend the provisions of RBI Act, Banking Regulation Act, etc. to bring them in line with current needs of industry.
8) Net Non-performing Assets for all banks was to be brought down to 3% by 2002.
9) Rationalization of bank branches and staff was emphasized. Licensing policy for new private banks can be continued.
10) Foreign banks may be allowed to set up subsidiaries and joint ventures.
On the recommendations of committee following reforms have been taken :-
1) New Areas :-
New areas for bank financing have been opened up, such as :- Insurance, credit cards, asset management, leasing, gold banking, investment banking etc.
2) New Instruments :-
For greater flexibility and better risk management new instruments have been introduced such as :- Interest rate swaps, cross currency forward contracts, forward rate agreements, liquidity adjustment facility for meeting day-to-day liquidity mismatch.
3) Risk Management :-
Banks have started specialized committees to measure and monitor various risks. They are regularly upgrading their skills and systems.
4) Strengthening Technology :-
For payment and settlement system technology infrastructure has been strengthened with electronic funds transfer, centralized fund management system, etc.
5) Increase Inflow Of Credit :-
Measures are taken to increase the flow of credit to priority sector through focus on Micro Credit and Self Help Groups.
6) Increase in FDI Limit :-
In private banks the limit for FDI has been increased from 49% to 74%.
7) Universal banking :-
Universal banking refers to combination of commercial banking and investment banking. For evolution of universal banking guidelines have been given.
8) Adoption Of Global Standards :-
RBI has introduced Risk Based Supervision of banks. Best international practices in accounting systems, corporate governance, payment and settlement systems etc. are being adopted.
9) Information Technology :-
Banks have introduced online banking, E-banking, internet banking, telephone banking etc. Measures have been taken facilitate delivery of banking services through electronic channels.
10) Management Of NPAs:-
RBI and central government have taken measures for management of non-performing assets (NPAs), such as corporate Debt Restructuring (CDR), Debt Recovery Tribunals (DRTs) and Lok Adalts.
11) Mergers And Amalgamation :-
In May 2005, RBI has issued guidelines for merger and Amalgamation of private sector banks.
12) Guidelines For Anti-Money Laundering :-
In recent times, prevention of money laundering has been given importance in international financial relationships. In 2004, RBI revised the guidelines on know your customer (KYC) principles.
13) Managerial Autonomy :-
In February. 2005, the Government of India has issued a managerial autonomy package for public sector banks to provide them a level playing field with private sector banks in India.
14) Customer Service:-
In recent years, to improve customer service, RBI has taken many steps such as :- Credit Card Facilities, banking ombudsman, settlement off claims of deceased depositors etc.
15) Base Rate System Of Interest Rates:-
In 2003 the system of Benchmark Prime Lending Rate (BPLR) was introduced to serve as a benchmark rate for banks pricing of their loan products so as to ensure that it truly reflected the actual cost. However the BPLR system tell short of its objective. RBi introduced the system of Base Rate since 1st July, 2010. The base rate is the minimum rate for all loans. For banking system as a whole, the base rates were in the range of 5.50% - 9.00% as on 13th October, 2010.
B) CONCLUSION :-
To satisfy the growing demands from customers for high quality service, commercial banks will have to find out new ways and method to face new challenges.
Q.4 : Explain the comparative performance of public sector banks, new
private sector banks and foreign banks in India after Introduction of reforms. OR
Write note on performance of commercial banks in India.
Ans. A) PERFORMANCE OF PUBLIC SECTOR BANKS, NEW PRIVATE SECTOR BANKS AND FOREIGN BANKS IN INDIA :-
After the introduction of reforms the performance of all banks in India have improved. The comparative performance of public sector banks, new private sector banks and foreign banks is given below :-
1) Productivity Of commercial Banks :-
Productivity is related to profitability. Productivity is analysed in terms of business per employee, profit per employee and business per branch. Let us Explain :-
A. Business Per Employee :-
In public sector banks the business per Employee has increased from Rs. 324.1 lakh in 2005-06. The business per employee in the new private sector banks was Rs. 728.9 lakhs in 2005-06 and it was Rs. 1012.8 lakh in foreign banks in 2005-06.
BUSINESS PER EMPLOYEE (` IN LAKH)
YEAR
|
PUBLIC SECTOR BANKS
|
NEW PRIVATE SECTOR BANKS
|
FOREIGN BANKS
|
1997-98
|
88.5
|
785.9
|
529.4
|
2005-06
|
324.1
|
728.9
|
1012.8
|
Source :- New Century Publications, 2008
From above we can see that as compared to new private sector banks and foreign banks the performance of public sector banks is very low.
B. Profit Per Employee :-
In public sector banks the business per employee has increased from Rs. 88.5 lakh in 1997-98 to 2.9 lakh in 2005-06. In new private sector banks it was rs. 6.3 lakhs and in foreign banks profit was rs. 26.5 lakh in 2005-06. The profits per employee is the highest in foreign banks followed by new private sector banks.
PROFITS PER EMPLOYEE (RS. IN LAKH)
Year
|
Public sector banks
|
New Private Sector banks
|
Foreign Banks
|
1997-98
2005-06
|
0.7
2.9
|
11.4
6.3
|
4.5
26.5
|
Source :- New Century Publications , 2008
C. Business per Branch :-
In India, business per branch has been increasing. In 2004-05 per branch business was Rs. 4,242 lakh in nationalized banks, Rs. 7,454 lakh in SBI and its associates, Rs. 21,656 lakh in new private sector banks and Rs.1,14,768 lakh in foreign banks.
BUSINESS PER BRANCH (RS. IN LAKH)
Year
|
Nationalized banks
|
SBI and its Associates
|
New Sector Pvt. Banks
|
Foreign Banks
|
1999-2000
2004-05
|
2,152
4,242
|
2,860
7,454
|
14,989
21,656
|
54,800
1,14,768
|
Source :- New Century Publications, 2008
The per branch business is lower in public sector banks as compared to new private sector banks and foreign banks. After the introduction of reforms the productivity of public sector Banks have started to rise.
2) Profitability Of Commercial Banks :-
Profitability of commercial Banks has been shown by following indicators:-
a) Interest Income Ratio :-
Interest Income Ratio (as percentage of total assets) of public sector banks has fallen from 8.8% in 2000-01 to 6.90% in 2009-10 and of foreign banks from 9.3%, in 2000-01 to 6.09% in 2009-10. New private banks has fallen marginally from 8.2% in 2000-01 to 7.07% in 2009-10.
b) Interest Expanded Ratio :-
Interest expanded Ratio (as percentage of total assets) has fallen for all groups. It has fallen for foreign banks from 5.6% in 2000-01 to 2.06% in 2009-10. For Public sector banks it has fallen from 6% to 4.77% and new private sector banks from 6% to 4.21% during same period.
c) Intermediation Cost To Asset Ratio (ICAR) :-
The ICAR of public sector banks hs fallen from 2.7% in 2000-01 to 1.49% in 2009-10. For new private sector banks it has risen from 1.7%to 2.04% and for foreign banks again it has fallen from 3% to 2.56% for same period.
d) Return On Assets :-
It is rate of net profit to total assets. The ROA of all banks has risen. For public sector banks it has risen from 0.4% in 2000-01 to 0.88 in 2009-10. For new private sector banks it has risen from 0.8% to 1.22%, and foreign banks from 0.9% to 1.09% for the same period.
e) Net / Spread interest Margin :-
Spread is an Important indicator of efficiency. In 2000-01 the spread interest margin of public sector banks was 2.9%, New private sector Banks was 2.1% and foreign banks was 3.6%. In the year 2009-10the public sector banks spread is of 2.13%, new private sector banks is 2.86% and the highest spread is of foreign banks 4.035.
3) Asset Quality :-
Asset quality of banks is shown by the level of non-performing assets (NPAs).
GROSS AND NET NPAS OF COMMERCAIL BANKS
(As at end of March)
Banks
|
Total NPAs as % to total advances
|
Net NPAs as % to Net Advances
| ||
2009
|
2010
|
2009
|
2010
| |
Public Sector
New private Sector
Foreign Banks
|
1.97
|
2.19
|
.94
|
1.10
|
3.05
|
2.87
|
1.40
|
1.09
| |
3.80
|
4.29
|
1.81
|
1.82
| |
Source: - RBI Website
The gross NPAs as percent of total advances and net NPAs as percent of net advances of public sector banks have declined marginally in 2010 and that of new private banks and foreign banks have increased. In case of public sector banks the gross NPA ratio was 2.19% and net NPA ratio was 1.10% in 2010. For new private sector banks the gross NPA ratio decreased from 3.05% to 2.87% and net NPA ratio decreased from 1.40% to 1.09% during 2009 and 2010. The gross NPA ratio of foreign banks rose to 4.29% in 2010 and net NPAs rose to 1.82% in 2010.
4) Financial Soundness :-
The Capital Adequacy ratio (CAR) is the most important indicator of financial soundness of banks. As on 31st March, 2009, all commercial banks in India have become Basel II complaint. Under Basel II Indian Banks have to maintain a stipulated minimum capital to Risk Weighted Assets Ratio (CRAR) of 9%. The CRAR of Indian banks has risen from 14% at end March 2009 to 14.5% at end March 2010.
5) Customer services :-
Indian banks have began to offer many financial services to clients / customers. Core banking Solutions (CBS) is increasing very fast. Under CBS, a number of services are provided like :- anywhere banking, ‘everywhere access’ and quick transfer of funds in an efficient manner and at reasonable cost. The no. of branches of PSBs that have implemented CBS increased from 79.4% in march 2009 to 90% at the end of March 2010.
Q.5: Explain the important new technologies introduced in banking in India.
OR
Write note on: - performance of commercial Banks in India. (Mar.’11)
Ans. A) NEW TECHNOLOGY IN BANKING :-
The IT (Information Technology) has changed the Indian structure of Indian Banking. Technology has been identified by banks as an important element in their strategy to improve productivity and render sufficient customer service. In banking computerization has taken place all over the world. The purpose is to bring technology to the counter and to enable Employees to have information at their fingertips. The New technologies that are being used in banks are :-
1. Electronic Fund Transfer (EFT) :-
It is easy transfer of funds from one place to another. It enables the beneficiary to receive money on same day or next day. The customer can transfer money instantly from one bank to another, from one bank account to another or from one branch to other or a different bank not only within the country but also anywhere else in t5hre world through electronic message.
2. Credit Card :-
Credit Card (post Card) is a convenient medium of exchange. With the help of credit card a customer can purchase goods and services from authorized outlets without making immediate cash payments but, within the prescribed limit.
3. Debit Card :-
Debit Card is a prepaid card and it allows customers anytime anywhere access to his saving or current account. For using debit card a PIN (Personal Identification Number) is issued to customers. Any transaction taking place is directly debited to the customers bank account.
4. Phone banking :-
In phone banking a customer can do entire non-cash related banking services on telephone, anywhere at any time. He can talk to a phone banking officer for transacting a banking business.
5. Telebanking :-
Telebanking is a 24 hour banking facility based on the voice processing facility available on bank computers. Here banking services or products are rendered through telephone to its customers.
6. Internet Banking :-
Internet banking is on-line banking. It is a product of E–commerce. Internet banking enables customers to open accounts, paybills, know account balances, view and print copies of cheques, stop payments etc.
7. Mobile Banking :-
Everybody with a mobile phone can access banking services, irrespective of their location. It is an extension of Internet banking. It provides services like account balance, mobile alerts about credit card or debit card transactions, mini account statement etc.
8. Door Step Banking :-
Here, there is no need for customer to visit the branch for getting services or products from the bank. This means banking services and products are made available to a customer at his place of residence or work.
9. Point Of Sale (POS) :-
In an online environment the POS terminal is a machine that facilities transactions through swipe of a card.
10. ATMs:-
ATMs are emerging as the most useful tool to ensure ‘any time banking’ and ‘anywhere banking’ or ‘anytime money’. ATMs are self service vendor machines that help the banks to provide round the clock banking services to their customers at convenient places without visiting bank premises. The customers are provided with ATM card.
11. Virtual Banking:-
It means rendering banking and its related services through use of IT. Some of the most important types of virtual banking are :-ATMs, electronic fund transfer phone – banking, credit card, debit card, internet banking etc.
12. Electronic Clearing Services (ECS) :-
It is non – paper based movement of funds. It consists of Electronic Credit Clearing and Electronic Debit Clearing.
B) CONCLUSION :-
As banks are expanding in to virtual banking, supervision and audit will have to be strengthened. Banks will have to pay greater attention to fool proof security arrangements and systems to safeguard against frauds.
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