Core Banking Solutions or Centralised Banking Solutions (CBS)

Core Banking Solutions (CBS) or Centralized Banking Solutions is the process which is completed in a centralized environment i.e. under which the information relating to the customer’s account (i.e. financial dealings, profession, income, family members etc.) is stored in the Central Server of the bank (that is available to all the networked branches) instead of the branch server. Depending upon the size and needs of a bank, it could be for the all the operations or for limited operations. This task is carried through advanced software by making use of the services provided by specialized agencies. Due to its benefits, a no. of banks in India in recent years have taken steps to implement the Core Banking Solutions with a view to build relationship with the customer based on the information captured and offering to the customer, the customized financial products according to their need.

Advantages for Customer:

  • Transaction of business from any branch,
  • Lower incidence of errors. Hence accuracy in transactions.
  • Better funds management due to immediate availability of funds.

For Banks:

  • Standardization of process within the bank.
  • Better customer service leading to retention of customer and increased customer traffic.
  • Availability of accurate data & Better use of available infrastructure.

Following are some of the Core Banking Services provided by Indian public and private sector banks.

1. Internet Banking

The total number of registered users for Internet banking in India is over two million. But this figure needs to be adjusted for dormant users and multiple accounts (a user having accounts with more than one bank). India has a little less than a million active Internet banking users. Thus indicating that, the concept of Internet banking is surely catching on. India lags behind other countries in Internet banking. In the US, the number of commercial banks with transactional websites is 1,275 or 12 percent of the total number of banks. Of these, seven could be called ‘virtual banks.’ From the Asian market experience, it is clear that Internet banking is here to stay and will be a major channel to acquire and service customers. Markets like Korea and Singapore have nearly 10 percent of their population banking over the Internet.

Indian banks have an insignificant Internet banking record. ICICI Bank kicked off online banking way back in 1996 and a host of other banks soon followed suit. But even for the Internet as a whole, 1996 to 1998 marked the adoption phase, while usage increased only in 1999 due to lower ISP online charges, increased PC penetration and a tech-friendly atmosphere. Concept of Internet banking is more like an add-on service which the customers should gradually adopt. In line with this strategy, initially the Net banking facility was provided in order to meet the information requirements of the customers and gradually it ventured into fund transfers and third party transfers.

2. Automatic Teller Machine

The introduction of ATM’s has given the customers the facility of round the clock banking. The ATM’s are used by banks for making the customers dealing easier. ATM card is a device that allows customer who has an ATM card to perform routine banking transaction at any time without interacting with human teller. It provides exchange services. This service helps the customer to withdraw money even when the banks are closed. This can be done by inserting the card in the ATM and entering the Personal Identification Number and secret Password. ATM’s are currently becoming popular in India that enables the customer to withdraw their money 24 hours a day and 365 days. It provides the customers with the ability to withdraw or deposit funds, check account balances, transfer funds and check statement information. The advantages of ATM’s are many. It increases existing business and generates new business.

It allows the customers:

  • To transfer money to and from accounts.
  • To view account information.
  • To receive cash.

Advantages of ATM’s:

To the Customers

  • ATM’s provide 24 hrs. 7 days and 365 days a year service.
  • Service is quick and efficient
  • Privacy in transaction
  • Wider flexibility in place and time of withdrawals.
  • The transaction is completely secure — you need to key in Personal Identification Number (Unique number for every customer).

To Banks

  • Alternative to extend banking hours.
  • Crowding at bank counters considerably reduced.
  • Alternative to new branches and to reduce operating expenses.
  • Relieves bank employees to focus on more analytical and innovative work.
  • Increased market penetration.

ATM’s can be installed anywhere like Airports, Railway Stations, Petrol Pumps, Big Business arcades, markets, etc. Hence, it gives easy access to the customers, for obtaining cash. The ATM services was provided first by the foreign banks like Citibank, Grind lays bank and now by many private and public sector banks in India like ICICI Bank, HDFC Bank, SBI, UTI Bank etc. The ICICI has launched ATM Services to its customers in all the Metropolitan Cities in India. By the end of 1990 Indian Private Banks and public sector banks have come up with their own ATM Network in the form of “SWADHAN”, a system of shared payments networks, introduced by the Indian Bank Association (IBA).

3. Mobile Banking

Mobile Banking (also known as M-Banking or SMS Banking) is a term used for performing balance checks, account transactions, payments, etc., via a mobile device such as a mobile phone. It was Internet Banking, which ushered in a new era in banking convenience by bringing the entire operations to the computer, and now mobile banking promises to take it to the next level.

Mobile Banking addresses this fundamental limitation of Internet Banking, as it reduces the customer requirement to just a mobile phone. Mobile usage has seen an explosive growth in most of the Asian economies like India, China and Korea. The main reason that Mobile Banking scores over Internet Banking is that it enables ‘Anywhere Anytime Banking’.

Reserve Bank of India has set-up the Mobile Payments Forum of India (MPFI), a ‘Working Group on Mobile Banking’ to examine different aspects of Mobile Banking (M-banking). The Group had focused on three major areas of M-banking, i.e.

  1. Technology and security issues,
  2. Business issues and
  3. Regulatory and supervisory issues.

Various Mobile Banking Services to the Consumers

Banks offering mobile access are mostly supporting some or all of the following services:

Account Information

  • Mini-statements and checking of account history
  • Alerts on account activity or passing of set thresholds
  • Monitoring of term deposits
  • Access to loan statements
  • Access to card statements
  • Mutual funds / equity statements
  • Insurance policy management
  • Pension plan management

Payments & Transfers

  • Domestic and international fund transfers
  • Mobile re-charging
  • Commercial payment processing
  • Bill payment processing


  • Portfolio management services
  • Real-time stock quotes
  • Personalized alerts and notifications on security prices


  • Status of requests for credit, including mortgage approval, and insurance coverage
  • Check (cheque) book and card requests
  • Exchange of data messages and e-mail, including complaint submission and tracking

Content Services

  • General information such as weather updates, news
  • Loyalty-related offers
  • Location-based services

4. Telebanking

Telebanking refers to banking on phone services. A customer can access information about his/her account through a telephone call and by giving the coded Personal Identification Number (PIN) to the bank. Telebanking is extensively user friendly and effective in nature.

Telebanking offers the following services to its customers:

  • To get a particular work done through the bank, the users may leave his instructions in the form of message with bank.
  • Facility to stop payment on request. One can easily know about the cheque status.
  • Information on the current interest rates.
  • Information with regard to foreign exchange rates.
  • Request for a DD or pay order.
  • Demat Account related services.
  • And other similar services.

5. Multi City Cheques

“Multi City Cheques” or MCC is a facility wherein the customer can issue cheques drawn at the base branch and payable at any branch at remote center. These cheques will be treated as local cheques at the remote branch. There will be no collection charges and the credit will be given on the same day, as applicable to local cheques. Even if the cheque is dropped at any other bank other than the base bank, there will not be any collection charges. For example, if Mr. A is paid a Multi city cheque by Mr. B at SBI branch in Delhi, Mr. A can drop the same at any bank in Mumbai where he holds an account, and there will not be any collection charges.

6. Credit Cards

The credit card can be defined as a small plastic card that allows its holder to buy goods and services on credit and to pay at fixed intervals through card issuing agency. The credit card releases the customers form botheration of carrying cash and ensures safety.

7. Debit Cards

Debit cards will offer direct withdrawal of funds from a customer’s bank account. The spending limit is determined by the user’s bank depending upon available balance in the account of the user. It is a special plastic card connected with electromagnetic identification that one can use to pay for things purchased directly from its bank account. Under the system, cardholder’s accounts are immediately debited against purchase or service to the computer network. Hence, under debit card the card holder must have adequate balance in his account. The system is intended to replace cheque system of payment. These can be maintained only for customers maintaining satisfactory accounts and for a minimum period of 6 months.

8. Demat Accounts

In India, a demat account, the abbreviation for dematerialised account, is a type of banking account which dematerializes paper-based physical stock shares. The dematerialised account is used to avoid holding physical shares: the shares are bought and sold through a stock broker.

This account is popular in India. The Securities and Exchange Board of India (SEBI) mandates a demat account for share trading above 500 shares. As of April 2006, it became mandatory that any person holding a demat account should possess a Permanent Account Number (PAN),

  • Fill demat request form (DRF) (obtained from a depository participant or DP with the customer’s depository account is opened).
  • Deface the share certificate(s) customer wants to dematerialise by writing across Surrendered for dematerialisation.
  • Submit the DRF & share certificate(s) to DP. DP would forward them to the issuer / their R&T Agent.
  • After dematerialisation, customer’s depository account with DP would be credited with the dematerialised securities.


  • A safe and convenient way to hold securities;
  • Immediate transfer of securities;
  • No stamp duty on transfer of securities;
  • Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.;
  • Reduction in paperwork involved in transfer of securities;
  • Reduction in transaction cost;
  • Nomination facility.

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