Over the last decade, the banks across the country have consistently used technology to change their operational landscape and presently the Indian Banking system is undergoing a crucial phase of digitization, observes Priyanka Sharma of Elets News Network (ENN)
With the banking sector experimenting the most with technology, the core banking platforms have rendered banks a strong launch pad to offer digital channel capabilities.
Almost all banks today are feverishly building their online and mobile channel offerings. New technologies and functions are being added to the banking system to enhance customers’ experience.
Observing the success of private banks, the central government appears to be determined to ensure the same even in smaller cooperative banks. It is being felt that digitalisation holds the potential to take control of your customer-experience ecosystem by managing your entire business from customers’ perspective and rethinking the legacy business model.
Sensing opportunities with the IT development in the banking sector, Bihar Chief Minister Nitish Kumar has directed for digitising all Primary Agriculture Credit Societies and cooperative banks in the state.
The directive was intended to make day-to-day banking system transparent so as to help in the implementation of various schemes related to agriculture – the core economic sector in Bihar and ensure that the farmers get fertilisers and seeds in a transparent manner.
In India, the concept of e-banking is of recent origin. The traditional model for growth has been through branch banking. Only in the early 1990s, there has been a start in the non-branch banking services.
In the context of the cooperative banks, a large part of this sector has been computerised. Whether it is the major loan accounts, the investment operations or the clearing systems, they all have been computerised at the head office level.
The Cosmos Cooperative Bank, Pune, in Maharsahtra and The Kerela State Cooperative Bank have moved for core banking solution and many Urban Cooperative banks are in the process of shifting to core banking.
The Cooperative Banks of all levels — State , District and Cooperative Urban banks — therefore have to also ensure that technologies are at par with the private banks.
It wouldn’t be erroneous if one observes that slowly but steadily, India’s cooperative banks are emerging out of technological dark ages.
Large parts of the sector now tick with a Core Banking System developed by the National Informatics Centre (NIC), the government’s web services organisation, which has brought them into the technology mainstream.
The software runs from a remote central server, which individual banks access for their purposes via Internet. NIC hosts the service, besides providing implementation support.
For any core banking project, the major cost heads are application development, data centre, disaster recovery site/ information security, data capture, hardware and helpdesk.
In Co-operative Core Banking Solution (CCBS), NIC takes care of all aspects, except hardware and manpower. As the access is role-based, there are many security layers to make sure data is kept safe. Role-based access is an approach by which system access is restricted to only authorised users. Users are charged as per requirement during the implementation phase.
NIC had developed the system in 2004 for the Bihar State Cooperative Bank (SCB), which was looking for total branch automation. Other cooperative banks started showing interest in 2010.
As of now, the CCBS is implemented at more than 100 cooperative banking locations across Meghalaya and Chhattisgarh. The system operates at the levels of State Cooperative Banks, District Cooperative Bank (DCB), Primary Agriculture Co-operative Society (PACS) land development bank and Primary Agriculture Development Bank (PADB).
CCBS is operating at the Jila Sahakari Kendriya Bank, a district cooperative bank, in Chhattisgarh. In Meghalaya, 46 SCB branches have been brought under CCBS.
Pilot projects are underway at many more locations. Six thousand PACS in Rajasthan, 89 PADBs in Punjab, one Chandigarh SCB, three branches of Delhi Financial Corporation and 315 locations of Treasury Saving Banks in Kerala are using Co-operative Core Banking Solution.
The solution can be customised depending on local requirements. Meghalaya SCB still follows old Reserve Bank of India (RBI) clearing guidelines but wanted similar features in their version.
Banks have records dating back decades, mostly handwritten. NIC had to make sure that every detail of every account closed or operating was migrated to the servers. For this special training was imparted to the employees.
Bihar’s Chief Minister Nitish Kumar has directed for the digitising of all Primary Agriculture Credit Societies and Cooperative banks in the state.
During the implementation stage, training is given at three levels: nodal officers, PACS managers and direct users. There are various checkpoints to ensure the data entered is correct and complete.
For the smooth functioning of the digitised banks, generators had to be installed in many places which had little or no electricity supply. Since the software is web-based, Internet connection is also essential.
Most rural areas have connectivity issues; so, the NIC either requests for a leased line from the telecom operator or uses very small aperture terminal (VSAT) technology to connect to servers.
NIC is working on adding more features like Internet banking and asset liability management, and is also working to integrate new schemes like Jan Dhan Yojana.
All this makes one understand that even the rural banking system is evolving in a big way. Technology has helped the banks in impacting facilities to rural masses in getting the same facilities which people are enjoying living in urban India in the present times.
IT Journey Into small Co-operative Banks
Samruddhi Cooperative Bank, Nagpur
Taking the IT revolution ahead, Samruddhi Cooperative Bank based in Maharashtra launched the lender’s firstever RuPay Card. With India adopting its own bank card, it turned the world’s sixth country to have its own card after China, Japan, and others.
The National Payments Corporation of India (NPCI) in a short span facilitated the launch of RuPay Card and it has reached to small co-operative bank like Samruddhi. The Government plans to make this co-operative Bank a 100-crore venture.
Technology has helped the banks in impacting facilities to rural masses which people are enjoying living in urban India.
Mahesh Co-operative Urban Bank , Hyderabad
Telengana’s AP Mahesh Co-operative Urban Bank based in Hyderabad has various tehno-enabled initiatives and services this year. It is the first co-operative urban bank in the cooperative sector in South India that is extending tech-savvy services to its customers on a par with the private sector banks. Presently the bank is functioning with a network of 42 branches covering four States viz., Telangana, Andhra, Maharashtra and Rajasthan. After seeing the IT based success in the bank, the RBI has permitted the bank to extend its network to Gujarat State as well.
Amreli Jilla Madhyastha Sahakari Bank
Taking the IT dream of Prime Minister Narendra Modi forward, Amreli Jilla Madhyastha Sahakari Bank is using information technology in the cooperative model to deliver goods to farmers and poor sections of society. It is one of the foremost banks to introduce Kisan Credit Card.
Rajkot Nagrik Sahakari Bank
The bank has ventured into mobile apps and has made an RNSB Gift application for distribution of gifts to the shareholders of the bank. Through this app, close to three lakh members can take appointment online for collecting gifts.
The Co-operative Bank of Rajkot
The Co-operative Bank of Rajkot is equipped with high technology using Enterprise Banking Solution and Any Branch Banking at all branches for its customers. The bank has also installed Core Banking Solutions and its 11 branches are equipped with onsite ATMs.
The bank also provides facilities such as locker at 26 branches, RTGS, NIFT and Online tax payment through HDFC in Rajkot city. Due to its new IT initiatives, this cooperative bank has earned a profit of Rs 32 crore this year.
Tiruchi’s Co-operative Banks on digital path
Even the small co-operative banks of Tamil Nadu are implementing Core Banking Solution. These banks wants to be a part of e-governance, hence slowly but steadily they are marching towards cutting edge services.
The Tiruchi District Central Cooperative Bank (TDCCB) has effectively brought all 52 branches in Tiruchi, Karur, Ariyalur and Perambalur districts under the CBS. With the help of CBS, the bank facilitates the transfer of funds through National Electronic Fund Transfer (NEFT), Real Time Gross Settlement (RTGS) and Direct Benefit Transfers (DBT).
Kerela Explores IT Revolution In Co-Operative Banks
The Kerala government also wants to revive cooperative banks in the state by providing technological push to them. The government is exploring possibilities of tie-ups between these banks and technology companies to provide technology.