Prof. (Dr.) V.

Balakista Reddy Professor of International Law & Head, Centre for Air & Space Law NALSAR University of Law, Hyderabad E-mail: balakistareddy@yahoo.com Web: www.nalsar.ac.in

Introduction
Internet banking refers to systems that enable bank

customers to access accounts and general information on bank products and services through a personal computer (PC).
Today, websites, electronic mail, and electronic bill

payment systems are an important way for banks to reach their customers

Role of Financial system

a number of entities that work together to permit the transfer of

value of financial claims by means of systematic procedures.

entities known as financial intermediaries participate.
The financial system lubricate the wheels of commerce, modern

commerce would grind to a halt without the payment systems are regarded as an exciting and strategically crucial feature of electronic commerce.
the newer systems for electronic payment has introduced new

roles for example. The processing, communicating and storing of digital data as value. Thus entities such as digital service provides and certification authorities now participate directly in these payment system.

Meaning of E- Banking
e-banking implies provision of banking products and

services through electronic delivery channels. Some time in the form of automatic teller machines (ATMs) and telephone transactions. recent times, it has been transformed by the internet - a new delivery channel that has facilitated banking transactions for both customers and banks. For customers, the internet offers faster access, is more convenient and available around the clock irrespective of customers location.

Need of E- Banking
widespread growth of the internet customers may use this technology anywhere in the world to

access a banks network. The internet- enabling technology-has made banking products and services available to more customers by eliminating geographic and proprietary systems barriers. opportunities to expand or change their product and service offerings. internet for delivery of banking products and services no longer confined to the branches In true internet banking, any inquiry or transaction is processed online without any reference to the branch at any time. Providing internet banking is increasingly becoming a need to have than a nice to have service.

New opportunities offered by ebanking -Business Strategies

to scale borders, change strategic behaviour and thus bring

about new possibilities. moved real banking behavior closer to neo- classical economic theories of market functioning. absolute transparency of the market, clients (both business as well as retail) can compare the services of various banks more easily. the internet has significantly reduced the physical costs of banking operations. internet has facilitated its transmission electronic banking services, whether delivered online or through other mechanisms

The Payment Systems

Money The term money is a generic one that can be applies to a wide array of objects depending on the context. Characteristics of money Acts as a medium of exchange Act as a unit of exchange a measure of what is owed, by whom and to whom. Act as a means of final payment

Paying for goods and Services in the traditional way

A service is provided or a product is manufactured
The service or product is brought and paid for with cash or by card Product or service

Payment (Cash or Card)

Bank

Paying for goods and services using Electronic technology

Providing a service or manufacturing a product
Sellers Computer Buyers Computer

Electronic transfer of value

Product or service received

BANK

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Automated Teller Machines Electronic Fund Transfer at the Point of Sale (EFTPOS) These transactions incorporate from point of sale, typically at a payment terminal within the premises of merchants. Online Payment Process Who are the participants involved in an online transaction? What are the various payment modes? How the online transaction process works?

Participants

The participants involved in an online transaction are: Customer Merchant Card issuer/ customers bank Merchants bank Acquirer Payment gateways

Payment Modes Cash Cheque Credit

Electronic Payment System Risks

Credit risk:
Liquidity risk: Transaction risk

Strategic risks
Reputation Risk: Compliance risk Foreign exchange risk

ADVANTAGES OF E-BANKING
Benefits to Customers Anytime Banking Anywhere Banking Quick Service Saving in Time Customer Satisfaction. Benefits to Banks Minimise cost Global Coverage Central Data Base Customer-Bank Relationship. Reduces paper work Minimise Frauds High Productivity Advertising Tool

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Benefits to Government
Global Market Cash less Banking Transparency.

Benefits to Merchants Traders Minimise Risk Instant Settlement Promotions of business enterprises Increased purchasing

LIMITATION OF E-BANKING
Banking System not Ready Laws of Land Not Ready Lack of Infrastructure Facilities adequate steps have not yet been taken (facilities ) Security Issue Costly Low level of Awareness Hesitation on the part of Customers Lack of Initiative Insignificant Role of Govt

Thank You