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Online Banking Internet banking, also known as online banking, e-banking or virtual banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website. Features of Online Banking        

Check the account statement online. Open a fixed deposit account. Pay utility bills such as water bill and electricity bill. Make merchant payments. Transfer funds. Order for a cheque book. Buy general insurance. Recharge prepaid mobile/DTH.

Advantages of Internet Banking The advantages of internet banking are as follows:     

Availability: You can avail the banking services round the clock throughout the year. Most of the services offered are not time-restricted; you can check your account balance at any time and transfer funds without having to wait for the bank to open. Easy to Operate: Using the services offered by online banking is simple and easy. Many find transacting online a lot easier than visiting the branch for the same. Convenience: You need not leave your chores behind and go stand in a queue at the bank branch. You can complete your transactions from wherever you are. Pay utility bills, recurring deposit account instalments, and others using online banking. Time Efficient: You can complete any transaction in a matter of a few minutes via internet banking. Funds can be transferred to any account within the country or open a fixed deposit account within no time on netbanking. Activity Tracking: When you make a transaction at the bank branch, you will receive an acknowledgement receipt. There are possibilities of you losing it. In contrast, all the transactions you perform on a bank’s internet banking portal will be recorded. You can show this as proof of the transaction if need be. Details such as the payee’s name, bank account number, the amount paid, the date and time of payment, and remarks if any will be recorded as well.

Disadvantages of Internet/Online Banking The disadvantages of internet banking are as follows: 

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Internet Requirement: An uninterrupted internet connection is a foremost requirement to use internet banking services. If you do not have access to the internet, you cannot make use of any facilities offered online. Similarly, if the bank servers are down due to any technical issues on their part, you cannot access net banking services. Transaction Security: No matter how much precautions banks take to provide a secure network, online banking transactions are still susceptible to hackers. Irrespective of the advanced encryption methods used to keep user data safe, there have been cases where the transaction data is compromised. This may cause a major threat such as using the data illegally for the hacker’s benefit. Difficult for Beginners: There are people in India who have been living lives far away from the web of the internet. It might seem a whole new deal for them to understand how internet banking works. Worse still, if there is nobody who can explain them on how internet banking works and the process

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flow of how to go about it. It will be very difficult for inexperienced beginners to figure it out for themselves. Securing Password: Every internet banking account requires the password to be entered in order to access the services. Therefore, the password plays a key role in maintaining integrity. If the password is revealed to others, they may utilise the information to devise some fraud. Also, the chosen password must comply with the rules stated by the banks. Individuals must change the password frequently to avoid password theft which can be a hassle to remember by the account holder himself.

Importance of e-banking We will look at the importance of electronic banking for banks, individual customers, and businesses separately. Banks 1. 2.

Lesser transaction costs – electronic transactions are the cheapest modes of transaction A reduced margin for human error – since the information is relayed electronically, there is no room for human error 3. Lesser paperwork – digital records reduce paperwork and make the process easier to handle. Also, it is environment-friendly. 4. Reduced fixed costs – A lesser need for branches which translates into a lower fixed cost. 5. More loyal customers – since e-banking services are customer-friendly, banks experience higher loyalty from its customers. Customers 1. 2.

Convenience – a customer can access his account and transact from anywhere 24x7x365. Lower cost per transaction – since the customer does not have to visit the branch for every transaction, it saves him both time and money. 3. No geographical barriers – In traditional banking systems, geographical distances could hamper certain banking transactions. However, with e-banking, geographical barriers are reduced. Businesses 1.

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Account reviews – Business owners and designated staff members can access the accounts quickly using an online banking interface. This allows them to review the account activity and also ensure the smooth functioning of the account. Better productivity – Electronic banking improves productivity. It allows the automation of regular monthly payments and a host of other features to enhance the productivity of the business. Lower costs – Usually, costs in banking relationships are based on the resources utilized. If a certain business requires more assistance with wire transfers, deposits, etc., then the bank charges it higher fees. With online banking, these expenses are minimized. Lesser errors – Electronic banking helps reduce errors in regular banking transactions. Bad handwriting, mistaken information, etc. can cause errors which can prove costly. Also, easy review of the account activity enhances the accuracy of financial transactions. Reduced fraud – Electronic banking provides a digital footprint for all employees who have the right to modify banking activities. Therefore, the business has better visibility into its transactions making it difficult for any fraudsters to play mischief.

Electronic Fund Transfer Types of EFT in India 1. NEFT (National Electronic Fund Transfer) The National Electronic Fund Transfer or NEFT is the simplest and most liked form of money transfer from one bank to bank. To make any NEFT transaction, you just need two important pieces of information -firstly, account number and secondly, the IFSC Code of the destination account. In NEFT, there is no cap on the amount of money that can be transferred. However, individual banks may set a limit. Steps for a NEFT money transfer Step 1: Go to Fund Transfer tab, and select 'Transfer to other bank' (NEFT) Step 2: Select the recipient account and enter the relevant details Step 3: Accept the (Terms and Conditions) Step 4: Recheck the details, if all and complete the process 2. RTGS (Real Time Gross Settlement A Real Time Gross Settlement or RTGS is almost similar to NEFT but the minimum payment and how it credits to the destination account differs. If you want to transfer more than 2 then you can use this. There is no upper cap on the amount. An RTGS money transfer happens on a real-time basis. The bank of the person to whom the money is transferred gets 30 minutes to credit it to his/her account. Steps to make RTGS funds transfer: Step 1: Go to Fund Transfer tab, and select 'Transfer to other bank' (RTGS) Step 2: Select the recipient account and enter the relevant details Step 3: Accept the (Terms and Conditions) Step 4: Recheck the details, if all are correct, then confirm and complete the process. 3. IMPS (Immediate Payment Service) Immediate Payment Service or IMPs an instant fund transfer service and it can be used anytime. IMPS can be simply defined as NEFT+RTGS. In order to avoid fraud complaints, the cap on transaction limit is set very low. For IMPS transfer, you just need to know the destination account holder's IMPS id (MMID) and his/her mobile number. Steps to make IMPS money transfer: Step 1:Using your Customer ID and Password into Net Banking/Mobile Banking Step 2: Go to Funds Transfer tab (Other Bank Account) Step 3: Select Debit / Credit Account, mode of transfer as IMPS and beneficiary account Step 4: Enter the amount to be transferred and click on Submit Step 5: Click on the confirm button Step 6: Recheck all the information and approve the transaction using OTP (one time

password) received on your registered mobile number Step 7: And at last, confirm by clicking on the submit button. Through IMPS, you can transfer money 24/7, But RTGS & NEFT can be done only in working hours on weekdays + a few hours on Saturdays only. Other than NEFT, RTGS and IMPS, you can also transfer your money through UPI and cheque. 1. UPI (Unified Payments Interface): A Unified Payments Interface is a real-time payment system that allows transactions to be done through any smartphone using VPA (Virtual Payment Address). No bank account detail is needed for the money transfer through UPI. Only mobile number or name is sufficient and the transactions can be done 24/7. UPI-enabled apps allow the transfers up to Rs 1 lakh. 2. Cheque: You can transfer money from your one account to another account by cheque. You have to simply draw a stating payee as your name along with the account number wherein you want to transfer the amount along with your signature. It's done immediately at a branch if the transfer is within your bank. There is no limit if you want to transfer money from your a/c to another bank a/c, but if you want to withdraw a certain amount, there are restrictions. Through a cheque, you cannot withdraw more than Rs 50,000 from a non-home branch.

Automated Clearing House (ACH) In banking, ACH stands for Automated Clearing House, which is a network that coordinates electronic payments and automated money transfers. ACH is a way to move money between banks without using paper checks, wire transfers, credit card networks, or cash. References to ACH can mean several things, depending on where you see it. On Sank Statements: On statements or in your transaction history, ACH means that an electronic payment has been made to or from your account using your checking account information.2 Common examples of ACH transfers appear below. For any ACH transfer to move funds to or from your account, you must authorize those transfers and provide your bank account and routing numbers. On Your Bills When viewing a bill, ACH means you have the option to pay your bills electronically. Other terms include eChecks, EFT, or AutoPay. Instead of writing a check or entering a credit card number every time you pay, you can provide your checking account details and pay directly from your account. In some cases, you control when payment takes place (the funds only move when you request a payment). In other cases, your biller automatically pulls funds from your account when your bill is due, so you need to be sure you have funds available in your account What Does ACH Mean? What, exactly, does Automated Clearing House refer to? A definition of the terms might help:

Automated The ACH system consists of computers working together to process payments automatically. There’s no need to manually handle payments (on your part or the biller’s). ACH is a “batch” processing system that handles millions of payments at the end of the day. Clearing House The network uses two central “clearing houses.” All requests run through either The Federal Reserve or The Clearing House. This allows for efficient matching and processing among numerous financial institutions.4 Examples of ACH Transactions You probably have more experience with ACH than you realize. Individuals and businesses use ACH for everyday transactions such as:  Direct deposit of your wages (from your employer to your bank account)  Automatic payment of recurring bills such as energy bills, insurance premiums, and Homeowners Association (HOA) dues. When you provide a voided check to your biller, you’re setting up ACH.  Payments from businesses to vendors and suppliers  Transferring money from your brick-and-mortar bank to your online bank As with any technology, using ACH means embracing the pros and cons. Let’s review those below. Pros FOR CUSTOMERS:  Get paid faster with an automated payment, and without waiting for a check to clear  Automating bill payments to avoid late fees and missed payments  Making online purchases without having to use a credit card or check  Minimize paper records that carry sensitive banking information FOR BUSINESSES:  Makes money transfers easy with minimal labor and cost  Allows employee payments without printing checks, stuffing envelopes or paying for postage  Facilitates regular customer payments without having to transport actual paper checks to the bank  Has lower fees than credit card payments  Electronic process makes vendor and supplier payments easier and faster, while keeping electronic records of all transactions  Automated transactions may be less prone to error than a manual monthly task Cons FOR CUSTOMERS:  Companies have direct access to your bank account  Auto payments are deducted whether or not you have the funds in your account, which can trigger overdraft fees FOR BUSINESSES:  Allows other companies to have a direct link to your bank account  Customers can reverse their payments, although not as easily as with a credit card  Must monitor the transactions for fraud, as business accounts have fewer protections than consumer accounts  Companies may need to buy software and invest in training to process ACH payments What Does ACH Do for Consumers? If you’re an individual, you may enjoy:  Getting paid by your employer quickly, safely, and reliably. You avoid the hassle of waiting for your paycheck to arrive or depositing the check at your bank.

Automating your payments, so you never forget to pay (and your payments arrive on time) Making purchases online without using a check or credit card. You pay quickly and avoid credit card processing fees.  Minimizing the number of pieces of paper floating around with your bank account information. This helps reduce the chances of fraud in your accounts. The main drawback for consumers is that setting up ACH provides businesses with direct access to your checking account.1 They take the money to pay your bills whether you’re ready to pay or not. If you’re short on funds, you might prefer to pay a different way. Alternatively, you might want to prioritize certain payments when you have limited funds, paying only the most urgent bills first. For more details on how consumers use ACH, read about setting up ACH debit. What Does ACH Do for Businesses? If you run a business, you benefit from:  A low-cost, non-labor-intensive way to transfer money  Paying employees without the need to print checks or pay postage  Receiving customer payments easily, quickly, and regularly—no more cash-flow crunches dependent on when you can get to the bank  Processing fees that are lower than credit card swipe fees  Getting paid by vendors—or paying suppliers—in a way that’s safe and easy to track (there’s an instant electronic record of every transaction) Businesses face the same problem as consumers: There’s a direct link to your checking account, and any errors or unexpected withdrawals can cause problems. What’s more, businesses can face the issue of customers reversing charges and taking back payment. That being said, it’s harder to reverse an ACH payment than it is to reverse a credit card payment. Businesses need to be especially vigilant about monitoring for fraud. Consumers enjoy a high degree of protection against errors and fraud in their checking accounts, but business accounts do not receive the same level of protection. If funds leave your account, it may be your responsibility to recover the funds (or take the loss). Finally, businesses may need to purchase software or invest time and resources into transitioning to ACH transfers.7 However, they’ll most likely recoup those costs easily over the long run. For more details on how businesses use ACH, read about ACH processing. Computers That Talk The ACH system is a network of computers that communicate with each other to make payments happen. Two sets of computers are at work for each payment:  The side that creates a request  The side that satisfies the request (assuming all goes well, which it usually does) ODFI Using direct deposit as an example, an employer (through the employer’s bank) creates a request to send money to an employee’s account. The employer is known as the Originator, and the employer’s bank is the Originating Depository Financial Institution (ODFI). That request goes to an ACH Operator, which is a clearinghouse that gets numerous requests throughout the day, and then routes the request to its destination. RDFI The receiving financial institution is the Receiving Depository Financial Institution (RDFI), which adjusts the account of the final account holder—the employee receiving pay in this case—who is known as the Receiver. Types of Transactions  

ACH transactions occur in two forms:  Direct deposits are payments to a receiver, such as wages from your employer or Social Security benefits paid into your checking account. 1. Direct Payments are requests to pull funds from an account. For example, direct payments take place when billers deduct utility bills automatically from your checking account.

Automated Ledger Posting Th i si n v e n t i o nr e l a t e st oaut o ma t e dr e c o r d k e e p i n ga nda c c o u n t i n gs y s t e msa n di np a r t i c u l a rt os u c has y s t e m t h a t p r o v i d e sc u r r e ntb a l a nc e so fa l ll e dg e ra c c o un t so far e c o r dk e e p i n ge n t i t ywh e n e v e rd a t ar e l a t i n gt oa n a c c o u n t a b l et r a n s a c t i o ni se n t e r e da n dp o s t e db yt hes y s t e m. Wi t ha u t o ma t e dg e ne r a ll e d g e rp o s t i n g , t r a n s a c t i o n sa r ep o s t e dt ot h ea p p r o p r i a t eg e n e r a ll e d g e ra c c o un t wh e n e v e ry o us a v eat r a n s a c t i o n . Th i sme a n sy o urg e n e r a ll e d g e rs t a y su pt od a t ei nr e a lt i me , a n di t e l i mi n a t e st h ene e dt oma n u a l l yp o s t b a t c he st ot heg e ne r a ll e dg e r . Asp e rt h er e p o r t sofRBIt h efir s twa v ei nb a nki n gt e c h n o l o g ybe g a nwi t ht h eu s eofAd v a n c e dLe dg e r Po s t i ngMac hi ne s( ALP M)i nt h e1 9 8 0s . Th eRBIa d v i s e da l lt h eb a n k st og oi nf o rh u g ec o mp u t e r i z a t i o na t t h eb r a n c hl e v e l . Th e r ewe r et woo p t i o n s :Aut o ma t et h ef r o n to ffic eo rt h eb a c ko ffic e Ho wa ut o ma t e dpo s t i ngwo r ks Wh e nat r a n s a c t i o ni sc o mp l e t e d, t h es o f t wa r ec h e c kst h et r a n s a c t i ond a t e( i nt h ec a s eo fa ni n v o i c e , f o r e x a mp l e , t h i si st heI n v o i c eDa t e )a n dp o s t st h et r a n s a c t i o nt ot h eg e n e r a ll e d g e rp e r i o dt h a t i n c l u d e st ha td a t e . Tod e t e r mi n ewhe r et op o s tt hed e t a i l s–wh i c hGLSe t sa n dc os tc e n t r e s–t h es of t wa r eu s e st h es a mel o gi ca s f o rma n u a lpo s t i n g . Wi t hma nua lpos t i ng, t r a n s a c t i ond e t a i l sa r eh e l di nt h eOt h e rMo d u l ePo s t i n g sfil eu n t i ly o uma n ua l l yp o s t t h e m. Wi t ha ut o ma t e dpo s t i ng, wh e ny ouAc c e p tt h et r a n s a c t i o n , t h es o f t wa r ec h e c k sf o rp os t i n ge r r o r s . I f no n ea r ef o u n d, t h epo s t i n g sa r ema d ei mme d i a t e l yt ot h ep e r i o dd i c t a t e db yt h et r a n s a c t i o nd a t e .I ft he r ea r e po s t i n ge r r o r s , t h et r a n s a c t i o ndo e sno tp o s tu n t i ly o uc o r r e c tt h ee r r o r . Be ne fit so fa ut o ma t e dpo s t i ng Th eg e n e r a ll e d g e ri sar e c o r do fa l lt h efin a n c i a lt r a n s a c t i o n so fab us i ne s s ,s oi tma k e ss e n s et h a t a l l t r a n s a c t i o n ss h o u l de n du pi nt h eGe n e r a lLe d g e ra sf a s ta sp o s s i b l e .  

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