Page 247 - DCOM208_BANKING_THEORY_AND_PRACTICE

Banking Theory and Practice

Notes E-banking is the automated delivery of new and traditional banking products and services
directly to customers through electronic and interactive communication channels.

E-cheques or electronic cheques are designed to accommodate the many individuals and
entities that might prefer to pay on credit or through some mechanism other than cash.
Cheque Truncation System means that instead of sending the cheque in physical form, an
electronic image of the cheque is sent to the drawee branch for payment through the
clearing house
Merger is defined as combination of two or more companies into a single company where
one survives and the others lose their corporate existence."
Mergers and acquisitions in banking sector are controlled or regulated by the apex financial
authority of a particular country. For example, the mergers and acquisitions in the banking
sector of India are overseen by the Reserve Bank of India (RBI).

14.13 Keywords

Acquisition: An act of purchase of one company by another.
Anti Money Laundering (AML): It is a set of procedures, laws or regulations designed to stop the
practice of generating income through illegal actions.

Asset Liability Management (ALM): It is a technique companies employ in coordinating the
management of assets and liabilities so that an adequate return may be earned.
E-cash: Electronic money refers to money or scrip which is only exchanged electronically.

Electronic Funds Transfer (EFT): Electronic funds transfer is the electronic exchange, transfer of
money from one account to another, either within a single financial institution or across multiple
institutions, through computer-based systems.

Merger: Combination of two or more companies into a single company where one survives and
the others lose their corporate existence.
National Electronic Funds Transfer (NEFT): National Electronic Funds Transfer is electronic
funds transfer system, which facilitates transfer of funds to other bank accounts electronically.
Real Time Gross Settlement (RTGS): Real Time Gross Settlement systems are funds transfer
systems where transfer of money or securities takes place from one bank to another on a “real
time” and on “gross” basis.

14.14 Review Questions

1. Explain core banking solutions. What are its advantages to the banks and the customers?
2. "Core banking is the nerve centre of any banking operation". Elaborate.
3. What do you mean by RTGS? Discuss in detail.
4. Discuss the salient features of RTGS.
5. What are the advantages of NEFT over other electronic transfer systems?

6. Why do you think is ALM necessary in banks?
7. Explain E-banking. What are its advantages and disadvantages?
8. What do you understand by E-cheques? Also discuss its advantages and disadvantages.

9. What is cheque truncation system? How are they beneficial to the bank customers?

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