Banks are going under rapid transformation in response to the forces of competition,

efficiency in operations, cost reduction, management of assets and liabilities, risk

management, anytime and anywhere banking.

Bankers are increasingly aware of the importance of electronic banking for their

survival, growth and development. The technology has totally transformed the way of

business. The following table depicts a comparison between old and new

competencies. [1]

Table: 4.1 E-Banking: A Comparison Between Old and New Competencies [1]

Old Competencies New Competencies

1. Ability to operate in well-defined

and stable environment.

Ability to operate in ill-defined and

ever changing environment.

2. Capacity to deal with repetitive

straightforward and concrete work

process.

Capacity to deal with routine and

abstract work process.

3. Ability to operate in a supervised

work environment.

Ability to handle decisions and

responsibilities.

4. Isolated work. Group and interactive work.

5. Ability to operate within narrow

Geographical and time horizons.

Ability to operate within expanding

Geographical and time horizons.

Market Components of E-banking

The configuration for a e-banking system depends upon the strategic objectives,

operating system, website, scope, scale, equipment, technology, security requirements

and internal control measures adopted. [2]

4.1 Introduction to Public and Private Sector Banks

For the purpose of this study the public sector bank chosen is State Bank of India and

the private sector bank chosen is HDFC Bank Ltd., both are introduced below:

4.1.1 State Bank of India

The evolution of State Bank of India can be traced back to the first decade of the 19th

century. It began with the establishment of the Bank of Calcutta, in Calcutta, on June

2nd

, 1806. The bank was redesigned as the Bank of Bengal, three years later, on

January 2nd, 1809. It was the first ever joint-stock bank of the British India,

established under the sponsorship of the Government of Bengal. Subsequently, the

Bank of Bombay (established on April 15th, 1840) and the Bank of Madras

(established on July 1st, 1843) followed the Bank of Bengal. These three banks

dominated the modern banking scenario in India, until when they were amalgamated

to form the Imperial Bank of India, on January 27th

, 1921.

An important turning point in the history of State Bank of India is the launch of the

first Five Year Plan of independent India, in 1951. The Plan aimed at serving the

Indian economy in general and the rural sector of the country, in particular. Until the

Plan, the commercial banks of the country, including the Imperial Bank of India,

confined their services to the urban sector. Moreover, they were not equipped to

respond to the growing needs of the economic revival taking shape in the rural areas

of the country. Therefore, in order to serve the economy as a whole and rural sector in

particular, the All India Rural Credit Survey Committee recommended the formation

of a state-partnered and state-sponsored bank.

The All India Rural Credit Survey Committee proposed the takeover of the Imperial

Bank of India, and integrating with it, the former state-owned or state-associate banks.

Subsequently, an Act was passed in the Parliament of India in May 1955. As a result,

the State Bank of India (SBI) was established on July 1st, 1955. This resulted in

making the State Bank of India more powerful, because as much as a quarter of the

resources of the Indian banking system were controlled directly by the State. Later on,

the State Bank of India (Subsidiary Banks) Act was passed in 1959. The Act enabled

the State Bank of India to make the eight former State-associated banks as its

subsidiaries, and now only 6 of them exist.

The State Bank of India emerged as a leader, with its operations carried out by the

480 offices comprising branches, sub-offices and three Local Head Offices, inherited

from the Imperial Bank. Instead of serving as mere repositories of the community's

savings and lending to creditworthy parties, the State Bank of India catered to the

needs of the customers, by banking purposefully. The bank served the heterogeneous

financial needs of the planned economic development.

Vision:

“To be amongst most trusted power utility company of the country by providing

environment friendly power on most cost effective basis, ensuring prosperity for its

stakeholders and growth with human face.”

Mission:

• To ensure most cost effective power for sustained growth of India.

• To provide clean and green power for secured future of countrymen.

• To retain leadership position of the organisation in Hydro Power generation,

while working with dedication and innovation in every project we undertake.

• To maintain continuous pursuit for cost effectiveness enhanced productivity

for ensuring financial health of the organization, to take care of stakeholders

aspirations continuously.

• To be a technology driven, transparent organization, ensuring dignity and

respect for its team members.

• To inculcate value system all cross the organization for ensuring trustworthy

relationship with its constituent associates & stakeholders.

• To continuously upgrade & update knowledge & skill set of its human

resources.

• To be socially responsible through community development by leveraging

resources and knowledge base.

• To achieve excellence in every activity we undertake.

Branches:

The corporate center of SBI is located in Mumbai. In order to cater to different

functions, there are several other establishments in and outside Mumbai, apart from

the corporate center. The bank boasts of having as many as 14 local head offices and

57 Zonal Offices, located at major cities throughout India. It is recorded that SBI has

about 13000 branches, well networked to cater to its customers throughout India.

ATM Services:

SBI provides easy access to bank accounts to its customers through more than 21000

ATMs in India. The Bank also facilitates the free transaction of money at the ATMs

of State Bank Group, which includes the ATMs of State Bank of India as well as the

Associate Banks - State Bank of Bikaner & Jaipur, State Bank of Hyderabad, etc. You

may also transact money through SBI Commercial and International Bank Ltd by

using the State Bank ATM-cum-Debit (Cash Plus) card.

Subsidiaries:

The State Bank Group includes a network of six banking subsidiaries and several non-

banking subsidiaries. Through the establishments, it offers various services including

merchant banking services, fund management, factoring services, primary dealership

in government securities, credit cards and insurance. The six banking subsidiaries are:

1. State Bank of India (SBI)

2. State Bank of Bikaner and Jaipur (SBBJ)

3. State Bank of Hyderabad (SBH)

4. State Bank of Mysore (SBM)

5. State Bank of Patiala (SBP)

6. State Bank of Travancore (SBT)

The State Bank of India, the country’s oldest bank and a premier in terms of balance

sheet size, number of branches, market capitalization and profits is today going

through a significant phase of change and transformation; the two hundred year old

public sector behemoth is today stirring out of its public sector legacy and moving

with an agility to give the private and foreign banks a run for their money.

The bank is entering into many new businesses with strategic tie ups - Pension Funds,

General Insurance, Custodial Services, Private Equity, Mobile Banking, Point of Sale

Merchant Acquisition, Advisory Services, and Structured Products etc. Each one of

these initiatives is having a huge potential for growth.

Chairman : Pratip Chaudhari

Managing Director : Hemant G. Contractor;

Diwakar Gupta and

A. Krishna Kumar

E-banking: www.sbionline.com

Table 4.2: SBI-Capital Structure (FY 2011-2012)

From

Year

To

Year

Class Of

Share

Authorized

Capital

Issued

Capital

Paid Up

Shares

(Numbers)

Paid Up

Face

Value

Paid Up

Capital

2011 2012 Equity

Share

5,000.00 671.13 671044838 10 671.04

2010 2011 Equity

Share

5,000.00 635.08 634998991 10 635.00

2009 2010 Equity

Share

1,000.00 634.97 634882644 10 634.88

2008 2009 Equity

Share

1,000.00 634.97 634880222 10 634.88

2007 2008 Equity

Share

1,000.00 631.56 631470376 10 631.47

2006 2007 Equity

Share

1,000.00 526.30 526298878 10 526.30

2005 2006 Equity

Share

1,000.00 526.30 526298878 10 526.30

2004 2005 Equity

Share

1,000.00 526.30 526298878 10 526.30

Source: www.sbi.co.in

Financial Information

Table 4.3: SBI-Profit and Loss Account (FY 2011-2012)

Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Income

Operating income 1,19,208.98 95,525.58 85,909.36 74,880.76 56,821.55

Expenses

Material consumed - - - - -

Manufacturing expenses - - - - -

Personnel expenses 16,974.04 14,480.17 12,754.65 9,747.31 7,785.87

Selling expenses 206.63 257.88 224.05 251.23 173.23

Adminstrative expenses 19,375.25 15,702.33 11,029.66 7,361.98 5,970.47

Expenses capitalised - - - - -

Cost of sales 36,555.92 30,440.38 24,008.35 17,360.52 13,929.57

Operating profit 19,422.68 16,217.24 14,578.54 14,604.94 10,962.90

Other recurring income 1,024.79 1,065.14 1,051.15 894.26 901.33

Adjusted PBDIT 20,447.47 17,282.39 15,629.69 15,499.20 11,864.23

Financial expenses 63,230.37 48,867.96 47,322.48 42,915.29 31,929.08

Depreciation 1,007.17 990.50 932.66 763.14 679.98

Other write offs - - - - -

Adjusted PBT -43,790.06 -32,576.07 -32,625.45 14,736.06 -20,744.83

Tax charges 6,341.37 5,709.54 6,166.62 6,115.12 3,929.20

Adjusted PAT 11,730.15 8,283.03 9,176.51 9,124.18 6,718.08

Non-recurringitems -44.15 -912.68 -10.46 -2.95 11.04

Other non cash adjustments 21.28 - - - -

Reported net profit 11,707.29 7,370.35 9,166.05 9,121.23 6,729.12

Earnings before

appropriation

11,713.34 7,370.69 9,166.39 9,121.57 6,729.46

Equity dividend 2,348.66 1,905.00 1,904.65 1,841.15 1,357.66

Preference dividend - - - - -

Dividend tax 296.49 246.52 236.76 248.03 165.87

Retained earnings 9,068.19 5,219.17 7,024.99 7,032.38 5,205.94

Source: www.sbi.co.in

Table 4.4: SBI-Balance Sheet (FY 2011-2012)

Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Sources of Funds

Owner's fund

Equity share capital 671.04 635.00 634.88 634.88 631.47

Share application

money

- - - - -

Preference share capital - - - - -

Reserves & surplus 83,280.16 64,351.04 65,314.32 57,312.82 48,401.19

Loan Funds

Secured loans - - - - -

Unsecured loans - 9,33,932.81 8,04,116.23 7,42,073.13 5,37,403.94

Total - 9,98,918.86 8,70,065.43 8,00,020.82 5,86,436.60

Uses of Funds

Fixed assets

Gross block 14,792.33 13,189.28 11,831.63 10,403.06 8,988.35

Less: revaluation

reserve

- - - - -

Less: accumulated

depreciation

9,658.46 8,757.33 7,713.90 6,828.65 5,849.13

Net block 5,133.87 4,431.96 4,117.72 3,574.41 3,139.22

Capital work-in-

progress

332.68 332.23 295.18 263.44 234.26

Investments 3,12,197.61 2,95,600.57 2,85,790.07 2,75,953.96 1,89,501.27

Net Current Assets

Current assets, loans

& advances

53,113.02 43,777.85 35,112.76 37,733.27 44,417.03

Less: current

liabilities &

provisions

80,915.09 1,05,248.39 80,336.70 1,10,697.57 83,362.30

Total net current assets -27,802.08 -61,470.54 -45,223.94 -72,964.30 -38,945.27

Miscellaneous

expenses not written

- - - - -

Total 2,89,862.08 2,38,894.22 2,44,979.03 2,06,827.50 1,53,929.48

Source: www.sbi.co.in

Awards

Awards & recognition received by the Bank during the Year 2011-12:

• State Bank Of India Has Been Adjudged The Best Bank 2009 By Business

India (August-2009).

• SBI ranked as No.1 in the 4Ps B & M & ICMR Survey on India’s Best

Marketed Banks (August-2009). [3]

4.1.2 HDFC Bank Ltd.

HDFC Bank Ltd. is a part of HDFC group which includes 8 companies, i.e., HDFC

Ltd., HDFC Bank Ltd., HDFC Life, HDFC Securities, HDFC Mutual Fund, HDFC

Reality, HDFC ERGO and HDB Financial Services.

The Housing Development Finance Corporation Limited (HDFC Ltd.) was amongst

the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to

set up a bank in the private sector, as part of RBI's liberalisation of the Indian banking

industry in 1994. The bank was incorporated in August, 1994 in the name of 'HDFC

Bank Limited’, with its registered office at Mumbai in India. The bank commenced its

operations as a scheduled commercial bank in January, 1995.

In 2002, HDFC Bank witnessed its merger with Times Bank Limited (a private sector

bank promoted by Bennett, Coleman & Co. / Times Group). With this, HDFC bank

and Times bank became the first two private banks in the New Generation Private

Sector Banks to have gone through a merger. In 2008, RBI approved the

amalgamation of Centurion Bank of Punjab with HDFC Bank. With this, the Deposits

of the merged entity became Rs. 1,22,000 crore, while the Advances were Rs. 89,000

crore and Balance Sheet size was Rs. 1,63,000 crore.

Vision:

“To become a world-class Indian bank.”

Mission:

To be "A World Class Indian Bank", by benchmarking against international standards

and best practices in terms of product offerings, technology, service levels, risk

management and audit & compliance.

The objective is to build sound customer franchises across distinct businesses so as to

be a preferred provider of banking services for target retail and wholesale customer

segments and to achieve a healthy growth in profitability, consistent with the Bank's

risk appetite; by ensuring the highest levels of ethical standards, professional

integrity, corporate governance and regulatory compliance.

Branches & ATM Services:

Today, the bank boasts of as many as 3062 branches and over 10999 ATMs across

India.

Chairman : C. M. Vasudev

Managing Director : Aditya Puri

E-banking: www.hdfcbank.com

Table 4.5 HDFC Bank-Capital Structure (FY 2011-2012)

From

Year

To

Year

Class

Of

Share

Authorized

Capital

Issued

Capital

Paid Up

Shares

(Nos.)

Paid

Up

Face

Value

Paid

Up

Capital

2011 2012 Equity

Share

550.00 469.34 2346688270 2 469.34

2010 2011 Equity

Share

550.00 465.23 465225684 10 465.23

2009 2010 Equity

Share

550.00 457.74 457743272 10 457.74

2008 2009 Equity

Share

550.00 425.38 425384109 10 425.38

2007 2008 Equity

Share

550.00 354.43 354432920 10 354.43

2006 2007 Equity

Share

450.00 319.39 319389608 10 319.39

2005 2006 Equity

Share

450.00 313.14 313142408 10 313.14

Source: www.hdfcbank.com

Financial Information

Table 4.6: HDFC Bank-Profit and Loss Account (FY 2011-2012)

Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Income

Operating income 32,539.11 24,393.60 19,958.76 19,770.72 12,354.41

Expenses

Material consumed - - - - -

Manufacturing expenses - - - - -

Personnel expenses 3,399.91 2,836.04 2,289.18 2,238.20 1,301.35

Selling expenses 152.48 158.95 83.12 108.68 114.73

Adminstrative expenses 5,146.73 4,552.96 4,936.73 4,583.86 2,247.48

Expenses capitalised - - - - -

Cost of sales 8,699.12 7,547.95 7,309.02 6,930.74 3,663.56

Operating profit 8,850.41 7,460.57 4,863.44 3,928.87 3,803.73

Other recurring income -103.98 - 17.72 - 43.04

Adjusted PBDIT 8,746.43 - 4,881.17 - 3,846.77

Financial expenses 14,989.58 9,385.08 7,786.30 8,911.10 4,887.12

Depreciation 542.52 497.41 394.39 359.91 271.72

Other write offs - - - - -

Adjusted PBT -6,785.66 -2,421.92 4,486.77 -5,342.14 -1,312.07

Tax charges 2,606.80 1,892.86 1,340.99 1,054.92 690.90

Adjusted PAT 5,165.58 3,927.22 2,944.68 2,240.75 1,589.48

Non-recurring items 1.51 -0.82 4.02 4.19 0.70

Other non cash adjustments -2.12 -2.65 -0.93 -0.59 -0.06

Reported net profit 5,164.97 3,923.75 2,947.77 2,244.35 1,590.12

Earnings before appropriation 11,339.21 8,456.55 6,403.33 4,818.98 3,522.15

Equity dividend 1,009.08 767.62 549.29 425.38 301.27

Preference dividend - - - - -

Dividend tax 163.70 124.53 91.23 72.29 51.20

Retained earnings 10,166.43 7,564.40 5,762.81 4,321.31 3,169.68

Source: www.hdfcbank.com

Table 4.7: HDFC Bank-Balance Sheet (FY 2011-2012)

Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Sources of Funds

Owner's fund

Equity share capital 469.34 465.23 457.74 425.38 354.43

Share application

money

0.30 - - 400.92 -

Preference share

capital

- - - - -

Reserves & surplus 29,455.04 24,914.04 21,064.75 14,226.43 11,142.80

Loan Funds

Secured loans - - - - -

Unsecured loans 2,46,706.45 2,08,586.41 1,67,404.44 1,42,811.58 1,00,768.60

Total 2,76,631.12 2,33,965.67 1,88,926.93 1,57,864.31 1,12,265.83

Uses of Funds

Fixed assets

Gross block 5,930.24 5,244.21 4,707.97 3,956.63 2,386.99

Less: revaluation

reserve

- - - - -

Less: accumulated

depreciation

3,583.05 3,073.56 2,585.16 2,249.90 1,211.86

Net block 2,347.19 2,170.65 2,122.81 1,706.73 1,175.13

Capital work-in-

progress

- - - - -

Investments 97,482.91 70,929.37 58,607.62 58,817.55 49,393.54

Net Current Assets

Current assets, loans

& advances

21,721.64 14,601.08 5,955.15 6,356.83 4,402.69

Less: current

liabilities &

provisions

37,431.87 28,992.86 20,615.94 22,720.62 16,431.91

Total net current

assets

-15,710.23 -14,391.78 -14,660.79 -16,363.79 -12,029.22

Miscellaneous

expenses not written

- - - - -

Total 84,119.87 58,708.23 46,069.63 44,160.49 38,539.45

Notes:

Book value of

unquoted

investments

- - - - -

Market value of

quoted investments

- - - - -

Contingent liabilities 8,83,985.32 5,88,550.98 4,87,176.37 4,14,533.93 5,99,928.79

Number of equity

shares outstanding

(Lacs)

23466.88 4652.26 4577.43 4253.84 3544.33

Source: www.hdfcbank.com

Awards

Awards & recognition received by the Bank during the Year 2011-12:

• MD received the Asian Banker Best Bank in India Award at a function on March 23rd

,

2012 at Singapore. Mr. Puri is flanked by Mr. Emmanuel Daniel, CEO, The Asian

Banker, on his right and Mr.Philippe Paillart, Chairman, Advisory Council.

• UTI Mutual Fund CNBC TV 18 Financial Advisor Awards 2011 - Best Performing

Bank - Private.

• Asian Banker International Excellence in Retail Financial Services Awards 2012 on

Best Retail Bank in India, Best Bancassurance, Best Risk Management.

• 5th Loyalty Summit award on Customer and Brand Loyalty.

• Skoch foundation 2012, on SHG/JLG linkage programme.

• ICAI Awards 2011on Excellence in Financial Reporting. [4]

4.2 Comparative Study on SBI and HDFC Bank

This research study is focusing on e-banking usage pattern and marketing or

promotional activities of its products to increase bank’s customer database and its

business or income, with special reference to State Bank of India (SBI) and HDFC

Bank. Same has been analysed and studied is given below:

4.2.1 E-Banking Process and Features Comparison

Banks are systematic and a banker is committed towards work. The process, policies,

procedures, everything in a bank is documented, as per the guidelines of various

regulatory bodies, like, RBI, BCSBI, etc.

Also, the standard time taken for processing a loan file or opening a bank account is

also defined, which varies from one bank to another, basis paper formalities or

respective bank’s internal process. This is called as the ‘Turn Around Time’ (TAT) in

banking terms. This TAT is used for two major purposes, firstly, in calculating an

employee’s productivity and secondly, in giving better and faster service to the

customer.

During the research period, SBI and HDFC Bank, leading banks in their respective

sectors, has been studied on various parameters, as shown in the below mentioned

Table 4.8.

Table 4.8: E-Banking Process and Features: Comparison between SBI and

HDFC Bank

S.

No.

Parameter SBI HDFC

1. Customer Service -

Process and TAT

All type of customer

Request, Query,

Complain is raised on the

“Customer Management

System Utility”.

Complains are dealt on a

maximum TAT of 3

days.

For Request and Query,

the TAT is not defined.

All type of customer

Request, Query,

Complain is raised on the

“Customer Relationship

Management Utility”, for

which the TAT is

minimum of 3 days and

maximum of 5 days.

It can also be assigned to

the respective department

authorized person, in

specific cases.

2. TAT for Registration

of Net-Banking

The “Net-Banking Kit”

with User Name and

Password is issued

instantly to the user, but

its activation takes a day

time.

It is immediate, through

“One Time Password

(OTP) Generation”, for

which customer’s mobile

number updation is

necessary.

3. Site Address of Bank

and for Net-Banking

Bank’s site address:

www.sbi.co.in

For Net-Banking:

www.onlinesbi.co.in

For Bank and Net-

Banking the site address

is:

www.hdfcbank.com

For Mobile-Banking,

specifically the site is

designed with same

features of Net-Banking,

which is with less pixels,

therefore quick service.

The site address is:

www.m.hdfcbank.com

Charges for:

Net-Banking

Registration

Zero Zero

Mobile-Banking

Registration**

Zero Zero

Third Party Transfer Zero Rs. 10/- per NEFT

Transaction and Rs, 25/-

per RTGS Transaction,

and

Zero Rupees for Fund

Transfer in Internal

Bank’s Account

Biller Registration Zero 1/- Rupee per biller

E-mail Id

Registration

Not Applicable Zero

Mobile Number

Registration

Not Applicable Not Applicable

Fixed Deposit /

Recurring Deposit

Booking

Zero Zero

Cheque Book

Request

Zero for the 1st time

request in a year, and

after that it is Rs. 2/- per

leaf.

Zero for 1st Fifty (50)

requests for Saving

Account and for 1st

Hundred (100) requests

for Current Account in a

Quarter.

After this it is Re. 1/- per

leaf.*

4

Demand Draft Rs. 1.50/- per 1000 Rs.

And Rs. 10/- extra for

cash handling

Minimum Rs. 20/-, and

then Rs. 5/- addition on

increase of 100 rupees

after Rs. 1000/-

6. Contest Not conducting any such

contest

Conducts contests for

customers to provoke

them for the usage of

“Net-Banking” and

“Mobile-Banking”.

Other Features of Net-Banking:

Account Balance

Availability

Yes Yes

Account Statement From 2005 onwards Last 5 years

Accessibility to the

Existing Loan

Account(s)

Yes Yes

Application for Other

Loans

Yes Yes

Application for

Credit Card

Yes Yes

Application for

Insurance

Yes Yes

Application for

Demat

Yes Yes

7.

Application for

Mutual Funds

Yes Yes

* Depends on the Account Type

** Mobile Banking Registration can also be done through Net-Banking, Tele-

Banking, ATM and Branch visit

It is found that HDFC Bank’s TAT is more defined, short and in detail compared to

that of SBI’s. The customer service process is also well designed by the central team

of HDFC bank and not by SBI. Also, for mobile banking users, separate website is

designed which is quickly and easily accessible on the mobile applications.

But, as far as the charges are concerned, SBI is charging less compared to HDFC

Bank. For example, biller registration in SBI is free of cost, but is chargeable in

HDFC Bank. Similarly, for Demand Draft request and Third Party Transfer

transactions, HDFC Bank is charging higher than SBI. Same was also identified

during survey, when majority of the respondents said that “additional fees, hidden

charges, processing fees and transactional fees are higher in private sector banks as

compared to public sector banks”.

Other product features are same in both the banks, viz; account balance availability,

accessibility to the existing loan accounts and applying for other loans, credit cards,

insurance, demat and mutual funds; Except that HDFC Bank is only providing the

bank statement of last 5 years, whereas, SBI is providing the same from 2005 year

onwards.

4.2.2 HDFC Bank leads in E-Transactions and SBI in Value [5]

The Indian active online audience is growing at the rate of approximately 30 percent

annually. In addition, there has been a consistent rise in the number of visitors on

banking websites in the past twelve months. However, a remarkable fact reveals that

the online banking category has grown more rapidly than the growth of the active

internet users in India. The online banking category has grown by 35 % in 2010 year

over 2009 year. A significant percentage of these users are from the non-metros.

According to Bank Statistics monthly report released by RBI in the FY 2009-10,

HDFC Bank stands at number one position when it comes to number of e-transactions

taking place in India, while SBI is ahead in terms of value of transactions.

One reason can be HDFC bank’s e-banking experience is pleasant, especially while

carrying out e-transactions. Also, less transaction value per transaction also shows

that HDFC banking is used more by individuals rather than corporate customers.

Table 4.9: SBI and HDFC Bank: E-Transaction and Value Comparison

Bank Name July 2010 Transaction

(Nos.)

July 2010 Value

(in Crore Rupees)

HDFC Bank 27,09,766 18,252

SBI 26,07,379 22,330

Source: www.trak.in ; Posted by Arun Prabhudesai on September 3rd

, 2010

India’s leading online audience and ad measurement platform has released a custom

research report on Online Banking in India. It has been studied that the user activity

on the websites of both public and private sector banks. The online properties of

HDFC Bank marginally dominated State Bank of India.

HDFC Bank also sees the highest incidence of repeat visits by a user in a month (7

visits) and also sees the maximum average time spent by a user followed by the State

Bank of India (5 visits).

It has also been analysed that while users spend maximum time on HDFC Bank's

sites, they spend comparatively much lower time on SBI's site; this could also mean

“ease of site navigation”, that is, the quick download speeds or ease of transactions

facilitated by the SBI site.

Users with income more than 5 lakhs drive 33% usage on “User activity”, peak is

around noon time, online banking websites indicating the growing adoption during the

course of the day by salaried class and professionals.

According to Amit Bhartiya, GM - ViziSense, “Given reduced transactional costs and

higher reach through online banking, banks have been highly successful in getting a

significant chunk of their urban user base to engage with their online properties.

Higher adoption of online banking would fuel rapid growth of ecommerce and online

payments in India”.

4.2.3 Mobile-Banking: Most Popular Bank and Service

Mobile banking in India is set to explode approximately millions of urban Indians,

who use their mobile phones to access banking services. The number of transactions

using mobile banking in India has gone up by 68.86% while the amount has increased

by 102.65% taking into consideration the period from August 2011 to May 2012.

As of May 2012, the total number of mobile banking transactions stood at 33,46,743

while the amount transacted was at Rs 28654.54 lakhs. The amount transacted saw a

minor slump of 3.7% in January 2012 from December 2012, while the number of

transactions increased by 6.13% in the same period. Similarly, the number of

transaction declined by 1.6% in February 2012 from January 2012, while the amount

transacted grew by 2.62% in the same period.

There was a significant jump in March 2012 from February 2012, with respect to both

the number of transactions and the amount transacted. August 2011 saw Rs 13646.43

lakhs being transacted, the lowest amount transacted during this period, while May

2012 saw Rs 28654.54 lakhs being transacted, the maximum amount being transacted

during this period. [6]

Table: 4.10 Mobile Banking Transactions in India

Chart: 4.1: Mobile Banking Transactions in India

Table 4.11: Usage of E-Banking Services

Usage Unique Users (in Millions)

Used mobile banking 43.70

Account balance availability 39.97

Transaction History 28.15

Cheque book Request 21.06

Payment reminders 20.92

Status of Cheque book 19.11

Mobile banking is popular among the Rs. 1 to 5 lakhs per annum income group with

almost 60% of mobile banking users falling in this income bracket and majorly

preferred by younger generation.

Most Popular Bank:

ICICI bank maintains its position as country’s biggest private lender on mobile screen

with 17.75 million users. HDFC bank accounts for second with 9.1 million

subscribers followed by State Bank of India with 6.13 million.

4.3 RBI’s Role in Facilitating E-Commerce and Online

Transactions in India

Internet Businesses are sustainable in India only when the volumes of online

transactions in India go up, which in turn happens only when Internet Banking, Debit

Card usage and proliferation of Credit Cards happen. It is important as it not just

directs e-commerce websites, but also Internet Industry would grow along with that,

as both are inter-dependent.

The volume of online transactions determines how mature the Internet user base is of

the country. And therefore the fate of Internet Industry lies in the hands of Reserve

Bank of India by ensuring facilitation of usage credit/debit cards and internet banking

facilities by all scheduled banks in India.

Banking Websites Attract Users to Internet:

Major banking websites in India (SBI, HDFC Bank, ICICI Bank and Axis Bank)

attract over 16.25 million unique visitors each month. That probably would be a small

percentage of total bank’s user base, but going by that number means:

• If India has 35 million Internet users in country, a whopping 46% of internet

users frequent bank websites;

• It would be still 27% if internet user base is considered to be 60 million and

yet it is a significant number.

• Every 4th user of Internet is a someway related to bank. This is just

considering the top banks in India.

Conclusion

Banking happens to be an industry with highest data handling content. Rapid

development of e-banking capabilities carries risk as well as benefits. The major

challenge faced by the banks is to protect the falling margins due to the impact of

competition. Falling in profit requires increase in the volume of transaction which

could be increased only by exploiting the advantages of technology and by providing

sound customer based services.

SBI and HDFC Bank are compared on their e-banking product and service features

and internal processes. It is found that HDFC Bank’s TAT is more defined, short and

in detail. Also, for mobile banking users, separate website is designed which is

quickly and easily accessible on the mobile applications. But, as far as the charges are

concern, SBI is charging less compared to HDFC Bank, for biller registration, SBI is

not charging, but HDFC Bank is, similarly for Demand Draft request and Third Party

Transfer transaction, HDFC Bank is charging higher than SBI. Rest all features are

same, except that HDFC Bank is only providing the bank statement of last 5 years,

whereas, SBI is providing the same from 2005 year onward.

The online banking category has grown more rapidly than the growth of the active

internet users in India. The online banking category has grown by 35 % in 2010 year

over 2009 year. According to Bank Statistics monthly report released by RBI in the

FY 2009-10, HDFC Bank stands at number one position when it comes to number of

e-transactions taking place in India, while SBI is ahead in terms of value of

transactions. It has also been analysed that while users spend maximum time on

HDFC Bank's sites, they spend comparatively much lower time on SBI's site; this

could also mean “ease of site navigation”, that is, the quick download speeds or ease

of transactions facilitated by the SBI site.

The most recent mode of banking through internet is mobile banking, which is also

gaining the popularity with time. The number of transactions using mobile banking in

India has gone up by 68.86% while the amount has increased by 102.65% taking into

consideration the period from August 2011 to May 2012. The most popular banking

service availed through mobile banking is “Account Balance Availability”, followed

by “Transaction History” and “Cheque Book Request”. ICICI bank maintains its

position as country’s biggest private lender on mobile screen with 17.75 million users.

HDFC bank accounts for second with 9.1 million subscribers followed by State Bank

of India with 6.13 million.

Internet Businesses would be sustainable in India only when the volumes of online

transactions in India go up, which in turn happens only when Internet Banking, Debit

Card usage and proliferation of Credit Cards happen. It is important as it not just

would direct e-commerce websites, but also Internet Industry would grow along with

that, as both are inter-dependent.

Online travel, Matrimony services, etc. many other industries’ growth is also

dependent on the banking industry. When the volumes of Online Transactions are

higher, there would be more Online Travel Bookings, Movie Tickets, e-commerce

websites sell products and consumers opt for Paid accounts on Matrimony Services.

The volume of online transactions determines how mature the Internet user base in

country is. And therefore the fate of Internet Industry lies in the hands of Reserve

Bank of India by ensuring facilitation of usage credit / debit cards & internet banking

facilities by all scheduled banks in India.

Reference:

1. Kaushal, R., (2012), Chapter 7: Impact of E-Banking on Operational

Performance of Banks, Impact of e-banking on operational performance and

service quality of banking sector in India, pp 198-199, Punjabi University,

Patiala

2. Retrieved on November 25th

, 2012 from http://ithandbook.ffiec.gov/it-

booklets/e-banking/introduction/e-banking-components.aspx

3. Retrieved on May 4th, 2011 from http://www.sbi.co.in/

4. Retrieved on June 22nd, 2011 from http://www.hdfcbank.com/

5. Retrieved on January 13th

, 2013 from

http://www.globalmoneyportal.com/hdfc-bank-laads-in-a-transactions-sbi-in-

valua-a60116.html

6. Retrieved on December 13th, 2012 from http://times-of-india-

4u.blogspot.in/2012/12/times-of-india-4u_13.html