mbfi unit 2 and 3

7/28/2019 Mbfi Unit 2 and 3

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Unit-2 & 3

ELECTRONIC PAYMENT SYSTEM(EPS)

An electronic payment system is used for thepayment for getting information, goods and

services offered through the internet likeaccessing copy based materials data basedsearches or as a convenient mode for payingfor external goods and services bought fromthe normal market and also for paying fortransactions related to interest dividends etc


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It helps in automating sales activities

increasing the prospective number of

cutomers and reducing the amount of paper

work.


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ELECTRONIC CLEARING SERVICE

(DEBIT SCHEME)

It is a scheme which facilitates the payment of

charges of utility services like telephone bill

electricity insurance premium and loan

instalments etc. by customers.


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ELECTRONIC FUNDS TRANSFER

(EFT)

It helps an account holder of a bank in

transferring funds to another person having

an account with any of the participating

commercial banks, without any physical

movement of instruments from one centre to

another centre.


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RISKS AND SECURITY PROBLEM

Stolen

Dishonesty

Dispute


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TELLER MACHINES

This facility is available for quick withdrawal of

cash from bank.

As per this method account holders need not

wait in long queues for receiving cash.

Instead they can wait at a place in the bank

and go to the counter for receiving cash when

his or her number is displayed or announced.


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CASH DISPENSERS

They are computerised telecommunicationsdevices that offer the customers of a financialinstitution a secure method of receiving cash

in a retail location without cashiersassistance.

The customer using the PIN number would getthe scrip printed which the customer shouldtake to the sales clerk, who will exchange it forcash from the cash drawer of the cash register.


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Automated teller machine(ATM)

It was first introduced in 1967 by Barclays Bankin Enfield Town in North London.

The functions and use of ATMs are as follows

1. Cash withdrawal and balance enquiry2. Bill payment

3. Sale of paper based products

4. Kiosks5. Third party advertising

6. Money transfer


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HOME BANKING

Home banking means getting the service of

the bank sitting at home and there is no

requirement to visit the bank for a number of

routine transactions.


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NET BANKING

Net banking means conducting ones banking

or accessing ones bank account online

through a computer and an internet

connection.

Services provided by Net banking

1. Check balance

2. Bank statement

3. Ask for a statement


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Ask for a cheque book

FD

TDS details

TRANSACTIONS are

Stop a cheque

Pay bills

Ask for a DD

Shop online


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PERSONAL IDENTIFICATION NUMBER

(PIN)

A PIN is a secret numeric password that is

shared between the user and the system that

is used for authenticating the user to the

system.


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SIGNATURE STORAGE AND DISPLAY

A digital signature is a technique by which it ispossible to secure electronic information in sucha way that the originator of the information aswell as the integrity of the information can be

verified. Digital certificate- it is a technique that can be

used for different authentication purposes mainlyhandwritten signatures.

MICR Cheques-it facilitates automatic settling ofinterbank transaction at the clearing house of theRBI. They are issued by banks. Eg. Saving cheque,DD cheque Dividend warrant etc.


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INTERNET BANKING- also known as I-Banking.

It is a platform for electronic delivery of bankingservices to customers.

The customer of a bank can have access to his bankswebsite and perform various banking functions.

Internet banking provides 24 hour access to an accountallowing payment of bills, electronic transfer of fundsfrom one account to another, opening an onlineaccount, availing of bankers cheque and DD facilitiesaccount balance and statement enquiry and fixeddeposit enquiry. Eg ICICI, SBI, Canara Bank


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ELECTRONIC FUNDS TRANSFER

SYSTEM

24 hour banking and other services to customers. performing financial transactions electronically using computer based

systems is known as electronic funds transfer.

The transactions performed are:

1. Sale

2. Refund

3. Withdrawal

4. Deposit

5. Cash back

6. Inter account transfer7. Payment

8. Enquiry

9. E top-up

10. Mini statement

11. Administrative


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ELECTRONIC FUND TRANSFER AT

POINT OF SALE(EFTPOS)

It allows users of the system to withdraw cash at

the time of purchasing a product or servicing

through the merchants EFTPOS terminal.

The services of the electronic funds transfer

system are Credit Authorisation (enough credit),

Cheque Verification(enough balance in the

account), Cheque Guarantee (bank will pay), FileLook up(customers financial records).


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PLAIN MESSAGES AND STRUCTURED

MESSAGES

Messages are used for transferring funds as well

as for communicating any other changes relating

to the amount due date, bank charges etc.

Plain messages also known as unstructured

messages are prepared based on the purpose of

the communicator according to his own

convenience either in words or in the form ofdata or in both and communicated either by post

or by a messager or by telex or even by e-mail.


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Structured messages-are more suitable inglobal trading particularly in the bankingsector.

They are text composed of paragraphsordered in a particular sequence, with eachparagraph characterized by an identifier andcontaining information in free forms.

These are used as issue of LOC, issue of bankor guarantees transfer of funds etc.


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SFMS (STRUCTURED FINANCIAL

MESSAGES) IN INDIA

SFMS provides a solution for the communication of financial

messages across the Indian Financial Network (INFINET)

The system enables exchange of messages in a highly secured

environment.

With this the banks will carry out inter bank and intra bank

transactions.

It is a software application which works on the networking

platform INFINET of IDBRT, (INSTITUTE FOR DEVELOPMENT

AND RESEARCH IN BANKING TECHNOLOGY) Hyderabad.

It is a measure of ensuring greater security while performing

EFT.

It provides security in various EFT services introduced by RBI

such as clearing EFT and prevents unauthorized usage.


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Correspondent bank accounts

Correspondent account is an account established by adomestic bank to receive deposits from or to makepayments on behalf of or handle other foreignexchange financial transactions for a foreign financial

institution or bank. Such arrangements with domesticbanks or financial institutions allow foreign banks toconduct business and provide services to their clientswithout their physical presence. This system eliminatesthe need to have branches in various locations across

the world. It is not possible for international banks toobtain permissions to have branches in all countries ofthe world.


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Nostro account and vostro account

Accounts with correspondent banks are called

nostro, vostro and loro accounts.

Nostro account means our account with you

Vostro account means your account with us

Loro account refer to accounts of other banks

which may be engaged in correspondent

banking activities.( IF ANY OTHER BANK FOR THE PURPOSE OF ATRANSACTION REFER TO AN ACCOUNT MAINTAINED BY YET ANOTHER BANK

IN SOME OTHER COUNTRIES IT IS KNOWN AS LORO ACCOUNT)


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ELECTRONIC DATA INTERCHANGE (EDI)

EDI is the computer to computer exchange of standardbusiness documents or structured messages in anelectronic format between two companies.

There are two important elements in basic EDI.

Electronic documents replaced by paper documents

Documents containing messages are exchanged in astandardized format.

This include ACH( AUTOMATED CLEARING HOUSE)system, CHAPS,CHIPS, FEDWIRE and SWIFT.


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SWIFT (SOCIETY FOR WORLDWIDE

INTERBANK FINANCIAL

TELECOMMUNICATION) SWIFT operates a global financial messaging network which

exchanges messages between banks and other financialinstitutions.

SWIFT also markets software and services to financialinstitutions much of it for use on the SWIFT Net network.

ISO 9362 Bank Identifier Codes (BICs) are popularly knownas SWIFT codes.

SWIFT is an easy and fast way to transfer money fromabroad.

It is a direct bank to bank transaction.


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CHIPS ( CLEARING HOUSE INTERBANK

PAYMENT SYSTEM)

It is the main privately held clearing house for

large value transactions in the US.

Together with FEDWIRE, CHIPS forms the

primary US network for large valued domestic

and international USD payments.

CHIPS is owned by financial institutions

They are less expensive.


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CHAPS (CLEARING HOUSE

AUTOMATED PAYMENTS SYSTEM)

It is a British company established in London

in 1984 which offers same day sterling and

euro fund transfers.

A CHAPS transfer is initiated by the sender to

move money to the recipients account where

the funds need to be available the same

working day.

CHAPS transfer are relatively expensive.


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FEDWIRE (FEDERAL RESERVE WIRE

NETWORK)

It is a high speed electronic communicationnetwork.

it links the Federal Reserve Board of Governors,

the US treasury Department, the twelve FederalReserve Banks and their 24 branches and otherfederal agencies.

It is operated by the Federal Reserve Banks and is

a Real Time gross Settlement (RTGS) FundsTransfer System.

It is owned and operated by the Reserve Banks.


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REAL TIME GROSS SETTLEMENT

SYSTEM (RTGS)

It is a mechanism of fund transfer where the transfer ofmoney takes place in the real time and on gross basisfrom one bank to another.

Real time settlement of payment means that there is

no waiting time and the payment transaction is settledimmediately as soon as the transaction is processed.

Gross settlement means the payment transaction isnot bunched with any other transaction and is settled

on a one to one basis.

Once the transaction is processed it is irrevocable andfinal.