Indian Public Banks Move Online Slowly

["Irfan Khan" <KhanIA@super.net.pk>]

Indian Public Banks Move Online Slowly 

By Uday Lal Pai
InternetNews India Correspondent 

[July 19, 1999--MUMBAI] While many Indian private sector banks are 
moving into the Internet medium, the large public sector banks have 
been slow to adopt online solutions for banking. 

In Indian banking circles, Net banking is the new buzzword. With the 
decision of two more major private sector banks, HDFC Bank and UTI 
Bank, to get into Net banking very soon, the number of online Indian 
banks has been increased to seven. 

Already in the fray are ICICI Bank, Citibank, IndusInd Bank and 
Timesbank. At present online banking is the only true avatar of e-
commerce in India. 

Citi bank has recently come up with a bundle of innovative services. 
A large number of banking exercises can be performed by account 
holders. The bank, last week, has decided to extend the facility of 
debit cards to account holders in Delhi and Mumbai. The facility is 
now available in Bangalore. 

"Through internet banking, customers can not only get account balance 
and see statements of account online but they can also transfer funds 
across Citibank accounts, order demand drafts, pay utility bills, pay 
Citibank card bills, stop payment on checks and order check books and 
deposit slips." says a bank official. 

In fact, it was ICICI Bank that initiated the electronic banking 
revolution in India when they introduced Internet banking as early as 
1997. ICICI won the CSI National Award for the best IT usage in 1998. 
Their web site was adjudged as the highly commended business site of 
1997 and 1998 by the Financial Times, UK. ICICI won the prestigious 
Cyber-Corporate of the year award at India Internet World 1998. 
According to sources at HDFC Bank and UTI Bank, these banks are all 
set to enter Net banking soon. HDFC sources confirmed that the bank 
is launching its online banking in a couple of weeks time. UTI bank 
may take some more weeks. However, as far as Indian banking industry 
is concerned, the private sector has a minuscule market share 
compared to large public sector banks. 

The PSBs are still shying away from Internet. A number of PS banks 
have web sites, State Bank of India, Union Bank Of India, Bank of 
Baroda , Denabank, but none of those sites offers e-commerce 
services. According to industry analysts, the reasons are a 
combination of government restrictions, lack of awareness and 
ambivalence. 

The rate of Internet penetration is a factor. With the low number of 
Internet users in India compared to its size and population, banks 
aren't too sure whether the investments they put into Net banking 
will have any takers. 

Moreover, the drafting and implementation of an e-commerce legal 
framework is slow in India. Many of the large banks don't want to 
burn their fingers by offering something which does not have legal 
sanction. 

According to V K Ramani, GM-IT, UTI Bank, "In India there's no 
protection for a transaction done through a Personal Identification 
Number, unlike the signature on a check which is protected under the 
Negotiable Instruments Act." So, the banks are waiting for the 
government to wave the green flag before they can offer full-feature 
Net banking. 

Some observers believe that if and when the government ensures the 
passage of the cyber-laws legislation, Indian consumers should gain 
access to real Net banking. But this will only occur after the new 
government is formed in October. 

Nevertheless, some of PSBs seem to be finally seeing the light. The 
first off the blocks is the Chennai-based Indian Bank which is 
expanding its ATM network across the country and is also connecting 
100 branches to a TANDEM BASE24 switch over a VSAT and leased-line 
network. According to sources in Indian Bank, its pioneering move 
will see a number of other nationalized banks following suit in 
setting up their own ATM and branch networks. 

http://asia.internet.com/1999/7/1903-india.html