CHAPTER – 1

INTRODUCTION

The banking system in India, evolved over several decades, is well established and has been
serving the credit and banking needs of the economy. The major role of banks is to intermediate
resources from the depositor to the lender for their mutual benefit while allocating them in an
efficient manner, thereby contributing to economic growth through enhanced efficiency in usage
of resources. There are multiple layers in today’s banking structure to cater to the specific and
varied requirements of different customers and borrowers. The banking ecosystem is providing
impetus to economic growth and development of the country and catering to the specific and
varied financial requirements of different customers and borrowers.

The structure of the banking system of India can be broadly divided into scheduled banks, non-
scheduled banks and development banks. Banks that are included in the second schedule of the
Reserve Bank of India Act, 1934 are considered to be scheduled banks. Presently, 135 scheduled
commercial banks are providing banking services in India. In addition, co-operative banks and
local area banks are also providing banking services in various segments in different locations of
the country. For the purpose of lending to specific sectors / segments, around 9,306 Non-Banking
Financial Companies (registered with RBI as on 30.6.2024) and 5 All India Financial Institutions
are also catering the needs of the borrowers.

Commercial banks play an important role in a developing economy as it is the backbone of any
financial system. Commercial banks constitute money market of an economy. Commercial banks
contribute to an economy in a variety of ways, these are

A. Promote capital formation

B. Provide short term finance
C. Promote monetization of an economy
D. Implementation of monetary policy
E. Encourage business innovation
F. Provide project consultancy and guidance

1
 G. Development of agriculture
H. Promote regional development
I. Promote industrialization
J. Helps in social development

The main functions of commercial banks are:

A. Accepting deposits
B. Advancing loans
C. Credit creation
D. Perform agency function
E. Helps international trade
F. Acts as a lead bank
G. Helps in implementing development programmer of a government
H. Investment banking

2
1.1 Importance of Banking System in the Economy

The banking sector plays a pivotal role in the economy serving as the backbone of financial
systems worldwide. By providing essential financial services, banks facilitate economic growth,
mobilize savings, and allocate credit to productive sectors. They manage risk, maintain financial
stability, and promote financial inclusion by providing access to banking services for
underserved populations. Moreover, banks support government policies, provide employment
opportunities, and enhance economic efficiency by enabling informed investment decisions and
optimizing resource allocation. As a key intermediary between savers and investors, the banking
sector ensures the smooth flow of funds, thereby fostering economic development and stability.
Overall, the banking sector's significance in the economy cannot be overstated, as it lays the
foundation for economic growth, stability, and prosperity. The banking sector plays a vital role in
the economy, serving as the backbone of the financial system. Banking institutions provide
essential financial services that facilitate economic growth, stability, and development. The
banking system plays a vital role in the economy by facilitating financial transactions, mobilizing
savings, and providing credit to individuals, businesses, and governments. Banks act as
intermediaries, channeling funds from savers to borrowers, and enabling the efficient allocation
of resources. They also provide essential services like payment systems, risk management, and
investment opportunities, which support economic growth, stability, and development. By
offering loans, credit, and other financial products, banks help stimulate economic activity, create
jobs, and improve living standards, making them a crucial component of a country's economic
infrastructure. The banking system is a backbone of the economy, providing critical financial
services that facilitate economic growth, stability, and development. Its role in mobilizing
savings, providing credit, and managing risk is essential for promoting economic activity,
creating jobs, and improving living standards. As such, a well-functioning banking system is
vital for a country's economic prosperity and progress.

3
1.2 History of RBI

The Reserve Bank of India (RBI) is the central bank of India, established on April 1, 1935, under
the Reserve Bank of India Act, 1934. It was initially a privately owned institution with its
headquarters in Kolkata, which was later shifted to Mumbai in 1937 to better serve the financial
hub of the country. After India gained independence, the RBI was nationalized on January 1,
1949, making it a fully government-owned institution. It played a crucial role during the partition
of India by managing the currency and banking operations for both India and Pakistan,
continuing as Pakistan’s central bank until June 30, 1948.Over the years, the RBI has
spearheaded several key reforms to modernize and liberalize India’s financial sector. These
include the deregulation of interest rates, introduction of priority sector lending, establishment of
the Monetary Policy Committee (MPC) in 2016 for inflation targeting, and development of
payment systems like NEFT, RTGS, and UPI.The RBI also focuses on financial inclusion
through initiatives like the Pradhan Manti Jan Dhan Yojana, promoting banking access in rural
areas, and regulating cooperative banks and non-banking financial companies (NBFCs). It issues
the country’s currency notes (except coins, which are issued by the government), and its notes
carry the signature of the RBI Governor. The emblem of the RBI features a tiger standing in front
of a palm tree, symbolizing strength and resilience. As the apex monetary authority, the Reserve
Bank of India stands as the backbone of the country’s financial system, ensuring the safety,
stability, and smooth functioning of India’s banking and economic infrastructure.

4
1.3 Structure of Banks

i.

Scheduled Commercial Banks—

Scheduled Commercial banks includes public sector, private sector, foreign banks, Regional
Rural Banks, Small Finance Banks and Payment Banks.

(a) Public Sector Banks: State Bank of India and 11 Nationalized Banks are established under
the State Bank of India Act, 1955 and Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970/1980, respectively.

(b) Foreign Bank is a bank that has its headquarters outside the India but runs its offices as a
private entity at any other locations in India. Such banks are under an obligation to operate under
the regulations provided by RBI as well as the rule prescribed by the parent organization located
outside India.

(c) Private Sector Banks are banking companies licensed to operate under Banking Regulation
Act, 1949.

(d) Regional Rural Banks (RRB) are the banks established under the Regional Rural Banks Act,
1976 with the aim of ensuring sufficient institutional credit for agriculture and other rural sectors.
The area of operation of RRBs is limited to the area notified by the Central Government. RRBs
are owned jointly by the Government of India, the State Government and Sponsor Banks.

5
(e) Small Finance Banks licensed under Banking Regulation Act, 1949 and created with an
objective of furthering financial inclusion by primarily undertaking basic banking activities to
un-served and underserved sections including small business units, small and marginal farmers,
micro and small enterprises and other underserved sections.

(f) Payment Banks are public limited companies licensed under Banking Regulation Act, 1949,
with specific licensing conditions restricting its activities mainly to acceptance of demand
deposits and provision of payments and remittance services.

ii.

Foreign Direct Investment (FDI) in banking sector—

Within the banking sector, Foreign Direct Investment (FDI) in private sector banks is permitted
up to 49% through automatic route, and beyond that up to 74% though government approval
route. FDI in public sector banks is permitted up to 20% through government approval route.

iii.

Non-Banking Financial Companies (NBFCs)—

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act,
2013 engaged in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by Government or local authority, etc. And
regulated by RBI.

NBFCs is playing an important role in sustaining consumption demand as well as capital

formation in small and medium industrial segment of the country. The reach and last mile
advantages of NBFCs have empowered them with agility and innovation with cutting edge
technology in providing formal financial services to underbanked and unserved sections of the
society.

6
1.4 Function of Banks

Banks in India perform various functions, which can be broadly categorized into primary and
secondary functions.

(i)Primary Functions of Banks

The primary functions of banks in India include:

Accepting Deposits: Banks accept deposits from the public in various forms, such as savings
accounts, current accounts, and fixed deposits. These deposits serve as a source of funds for the
bank, which it can then lend out to borrowers.

Lending Loans and Advances: Banks lend money to individuals, businesses, and other entities in
the form of loans and advances. This is the primary way in which banks generate income.

(ii)Secondary Functions of Banks

In addition to their primary functions, banks in India also perform a number of secondary
functions, including:

Transfer of Funds: Banks facilitate the transfer of funds between individuals and businesses, both
domestically and internationally.

Issue of Notes/Drafts: Banks issue notes and drafts, which can be used to make payments.

Credit Deposits: Banks credit deposits into the accounts of their customers.

Foreign Exchange Services: Banks provide foreign exchange services, such as currency
exchange and remittances

7
1.5 Modernization in Banking Sector

Think about how you manage your money today—chances are, it involves your phone or
computer more than a trip to the bank. That’s the power of banking modernization and
technology—changing how we handle our finances.

Did you know that nearly 90% of people now prefer to do banking tasks online? This is a big
shift, showing how much we rely on digital tools for our financial needs.

But what exactly is banking modernization? It’s about updating everything from how we access
our accounts to how we protect our money. And it’s all powered by technology—mobile apps
and intelligent algorithms making banking more accessible than ever.

Imagine being able to check your balance, send money, or even apply for a loan all from your
phone, anytime, anywhere. Modern banking has brought a whole new level of convenience.

But with these changes come challenges. Cybersecurity threats are rising, and there are concerns
about keeping our information safe. Banks have to find a balance between innovating and
keeping our money secure.

8
1.6Characteristics of Modernization in Banking Sector

Modernization in the banking sector involves updating and improving core systems,
infrastructure, and processes to enhance efficiency, reduce costs, and improve customer
experiences. This is achieved through the integration of innovative technologies like AI, cloud
computing, and digital platforms.

1.Improved Efficiency and Cost Reduction:

Modernization streamlines processes, automates tasks, and reduces manual errors, leading to
significant cost savings.

2.Enhanced Customer Experience:

Banks can deliver personalized and seamless digital experiences, including real-time account
access, personalized product recommendations, and faster transaction processing.

3.Stronger Risk Management:

Modernized systems provide advanced security features and compliance measures to detect and
prevent fraud, cyberattacks, and regulatory violations.

4.Increased Agility and Innovation:

Modernized systems are designed to adapt to changing market demands and business needs,
enabling banks to quickly introduce new products and services.

5.Digital Competitiveness:

Modernization enables banks to support the digital features and capabilities required by today’s
customers, such as online banking, mobile apps, and digital payments.

6.Scalability and Flexibility:

Modern systems can scale up or down to accommodate changing customer needs and business
requirements, while also being flexible to adapt to new technologies and market trends.

7.Data-Driven Insights:

9
Modernization allows banks to collect and analyze vast amounts of data, providing valuable
insights into customer behaviour, risk management, and business performance.

8.Regulatory Compliance:

Modern systems help banks meet regulatory requirements and ensure compliance with evolving
standards.

9.Focus on Customer Value:

Modernization aims to deliver real customer value by offering a better user experience,
innovative services, and personalized solutions.

10
1.7 Advantages of Modernization in Banking Sector

Modernizing the banking sector offers numerous advantages, including enhanced efficiency,
improved customer experience, cost reduction, and greater agility. By embracing digital
technologies and innovative solutions, banks can streamline operations, personalize services, and
adapt to changing market demands, ultimately staying ahead of the competition.

1.Enhanced Efficiency and Operational Improvements:

(a) Streamlined Processes:

Modernization allows banks to automate tasks, reduce manual errors, and accelerate transaction
processing, leading to significant time and cost savings.

(b) Faster Services:

Real-time account updates, faster loan approvals, and quicker transaction processing enhance the
speed and efficiency of banking services, improving customer satisfaction.

(c) Improved Risk Management:

Modern systems can leverage data analytics, AI, and machine learning to better understand
customer behaviours and proactively address potential risks.

(d)Reduced Operational Costs:

Modern, cloud-based solutions can reduce expenses related to maintenance and physical
infrastructure, while also improving scalability and flexibility.

2.Improved Customer Experience:

(a) Personalized Services:

Modern systems enable banks to offer tailored products and services based on individual
customer needs and preferences.

(b) Enhanced Security:

Newer systems incorporate enhanced cybersecurity protocols, like biometric authentication and
real-time monitoring, to protect customer data.

11
(c) Convenient Access:

Digital channels like mobile and online banking provide customers with convenient access to
their accounts and services anytime, anywhere.

(d) Faster On boarding:

Modern systems can facilitate faster and smoother customer on boarding, improving the initial
experience.

3.Regulatory Compliance and Adaptation:

(a) Easier Regulatory Compliance:

Modern systems are designed to handle changes in compliance and reporting, making it easier
for banks to meet regulatory obligations.

(b) Faster Adaptation to Change:

Modern systems are more flexible and adaptable, allowing banks to respond quickly to
regulatory changes and evolving market demands.

4.Innovation and Competitive Edge:

(a) Faster Product Rollout:

Modern systems enable banks to bring new products and services to market faster, gaining a
competitive advantage.

(b) Adaptability to New Technologies:

Modern systems are more likely to integrate with new technologies and services, allowing banks
to innovate and stay ahead of the competition.

(c) Competitive Pricing:

Modernization can also lead to reduced operational costs, allowing banks to offer more
competitive pricing to attract and retain customers.

5.Business Growth and Sustainability:

(a) Increased Market Share:

12
By offering faster, more convenient, and more personalized services, banks can attract and retain
more customers, leading to increased market share.

(b) Improved Efficiency and Productivity:

Modernization can help banks become more efficient and productive, leading to overall business
growth and sustainability.

(c) Resilience and Future-Readiness:

Modernized systems are more resilient and can handle larger transaction volumes, making banks
better prepared for future growth and challenge.

13
1.8 Disadvantages of Modernization in Banking Sector

Modernizing the banking system, while offering many benefits, also presents challenges. These
include initial high costs, integration complexities, potential disruptions during the transition, and
the need for extensive staff training. Furthermore, securing new systems and ensuring
compliance with regulations can be complex.

1.High Initial Costs:

Modernizing banking systems, especially legacy systems, can involve significant upfront
investments in new software, hardware, and infrastructure.

2.Integration Challenges:

Integrating new technologies and systems with existing legacy infrastructure can be complex and
time-consuming.

3.Operational Disruptions:

The transition to a new system may temporarily disrupt banking operations, potentially affecting
customer service and causing inconvenience.

4.Staff Training and Resistance:

Employees may require extensive training to adapt to the new system, and there could be
resistance to change, impacting productivity.

5.Cybersecurity Risks:

While modernization can improve security, it also introduces new vulnerabilities and attack
surfaces that need to be addressed.

6.Regulatory Compliance:

Ensuring the new system complies with all relevant regulations can be complex and require
specialized expertise.

7.Data Migration and Integrity:

14
Moving data from old systems to new ones can be challenging and requires careful planning to
avoid data loss or corruption.

8.Loss of Personal Touch:

Over-reliance on automation and digital channels might lead to a loss of direct customer
relationship

15
1.9 Scope of Modernization in Banking Sector

Modernization in the banking sector encompasses the adoption of new technologies and practices
to enhance operational efficiency, improve customer experiences, and ensure compliance with
regulatory requirements. This modernization effort aims to enable banks to compete effectively
in the digital age and meet evolving customer needs.

1.Technology Adoption:

Modernization involves incorporating new technologies like cloud computing, artificial

intelligence (AI), and blockchain to streamline processes and enhance customer service.

2.Operational Efficiency:

By automating tasks and leveraging data analytics, banks can reduce costs and improve
operational efficiency.

3.Customer Experience:

Modernization allows banks to offer more personalized and seamless customer experiences
through mobile banking apps, online platforms, and personalized recommendations.

4.Compliance and Security:

Modernized systems help banks comply with regulatory standards and enhance security
measures to protect customer data and prevent fraud.

5.Scalability and Agility:

Modernized banking systems are designed to be scalable and agile, allowing banks to quickly
respond to changing market conditions and customer demands.

6.Risk Management:

Modernization enables banks to better manage risks through advanced analytics, real-time
monitoring, and improved reporting.

7.Cost Reduction:

16
By automating processes and leveraging technology, banks can reduce operational costs and
improve profitability.

8.New Product and Service Innovation:

Modernization enables banks to develop and launch new products and services more quickly,
keeping them competitive in the market.

9.Legacy System Modernization:

Many banks are focused on modernizing their legacy systems to make them more compatible
with new technologies and customer expectations.

10.Digital Transformation:

Modernization is closely linked to digital transformation, which involves using digital

technologies to fundamentally change how banks operate and serve customers.

17
 CHAPTER -2

BANK PROFILE

2.1 OVERVIEW OF BANK

IDBI Bank, which stands for Industrial Development Bank of India, was started by the
Government of India in 1964. The main aim of the bank at that time was to provide financial
help to big industries and companies in India. It worked like a development bank, which means it
helped in building factories, setting up new businesses, and growing the country’s economy. For
many years, IDBI only helped industries and did not work like a normal bank where people
could open savings accounts or take personal loans.

But in 2004, IDBI became a commercial bank, which means it started giving banking services to
common people also. After this change, people could open saving accounts, current accounts,
fixed deposits, and apply for home loans, personal loans, and more. The bank also started
modern services like online banking, mobile banking, ATM cards, and money transfer services
like NEFT and RTGS. It follows proper rules like KYC (Know Your Customer) to keep banking
safe and secure for everyone.

Today, IDBI Bank is owned and managed mainly by the Life Insurance Corporation (LIC) of
India and the Government of India. It has many branches and ATMs all over the country. The
bank is working hard to improve customer services by using modern technology and providing
better digital services. IDBI Bank plays an important role in giving financial support to both
people and businesses and helps in the growth of the Indian economy.

18
2.2 HISTORY OF IDBI BANK

IDBI Bank, which stands for Industrial Development Bank of India, was first established in 1964
by the Government of India. At that time, its main purpose was not to serve regular customers
like a typical bank, but to help promote and finance large industries in the country. It played a
major role in India’s economic development by providing long-term financial support to big
infrastructure and industrial projects such as power plants, roads, bridges, and factories. In
simple terms, IDBI started as a bank that helped build India’s industries and supported the
government’s five-year development plans.

For many years, IDBI functioned as a development finance institution and not as a regular bank.
This means it was not offering savings accounts or giving loans to ordinary people like other
commercial banks. Instead, it worked more like a financial helper for industrial growth. It also
helped create and support other major financial institutions in India, such as SIDBI (Small
Industries Development Bank of India), EXIM Bank (Export-Import Bank of India), and NSE
(National Stock Exchange). These efforts made IDBI a backbone for the development of India’s
financial and industrial sectors.

A major change came in 2004, when IDBI was transformed into a commercial bank. This means
that it was now allowed to do regular banking services, like accepting deposits, giving loans,
opening savings accounts, and offering services like debit cards and internet banking. To make
this change successful, IDBI merged with its own subsidiary, IDBI Bank Ltd., which was already
doing commercial banking. After the merger, the combined entity was known as IDBI Bank, and
it started functioning just like other public sector banks in India, but still retained its old role of
supporting industries when needed.

In 2019, a big step was taken when the Life Insurance Corporation of India (LIC) became the
majority shareholder of IDBI Bank. LIC purchased a large portion of the bank's shares from the
government, making IDBI Bank the first bank in India to be majority-owned by an insurance
company. This move was aimed at helping the bank grow stronger, bring in more investment,
and improve its overall functioning and customer services. Since then, IDBI Bank has been
focusing on modernizing its services, using digital tools, and improving its performance to serve
both individual customers and businesses better.

19
2.3 Vision and Mission of IDBI Bank

Vision

To be an efficient, innovative and admired housing finance company, focused on making a

positive impact on the standard of living of our customers through appropriate housing finance
solutions at an affordable cost and personalized service.

Mission

1. Customer-Centric Approach: Providing personalized services to meet diverse customer needs.

2. Innovative Financial Solutions: Offering a wide range of financial products and services.

3. Sustainable Practices: Promoting environmentally and socially responsible banking practices.

4. Technological Advancements: Leveraging technology to enhance customer experience and

operational efficiency.

5. Community Development: Engaging in initiatives that support financial literacy, inclusion,

and community growth.

6. Excellence and Integrity: Striving for excellence in all aspects of banking while maintaining
high standards of integrity and transparency.

7. Stakeholder Value: Delivering value to customers, employees, shareholders, and society as a

whole.

By pursuing this mission, IDBI Bank aims to establish itself as a trusted and preferred bank,
contributing to the economic and social development of the country.

20
2.4 Objective of IDBI Bank

1. Financial Support:

IDBI Bank provides loans, guarantees, and other financial products to industries, particularly
those engaged in manufacturing, processing, or preservation of goods, as well as infrastructure,
technology, and other related sectors.

2. Industrial Development:

The bank aims to foster industrial growth by encouraging new ventures, modernizing existing
industries, and diversifying the industrial landscape.

3. Coordination with Financial Institutions:

IDBI Bank coordinates with other financial institutions to facilitate the flow of credit to the
industrial sector and ensures efficient resource utilization.

4. Technical and Administrative Support:

The bank provides technical and administrative assistance to industries, including consultancy
services and research and development initiatives.

5. Promoting National Priorities:

IDBI Bank’s activities are aligned with national development priorities, including promoting key
industries and ensuring the overall economic growth of the nation.

21
2.5 product and services

IDBI Bank offers a wide range of products and services, including various savings and current
accounts, loans (business, car, education, home, personal, and loan against property), credit and
debit cards, fixed deposits, and treasury services. They also provide corporate banking solutions,
including cash management, trade finance, and digital banking services.

Savings and Current Accounts:

Sabka Basic Savings Account: A basic savings account with complete KYC requirements, as per
the bank.

Umang Business Account: An account designed for business needs, according to IDBI Bank.

Advantage Account: An account offering benefits like faster fund transfers, online bill payments,
and international debit card, according to the bank.

Umang Business Account: A business account with features like multiple banking channels and
fund transfer options.

Corporate Payroll Accounts: Various payroll accounts for different industries, as detailed on the
bank’s website.

Loans:

Business Loan: Financing for businesses and industries.

Car Loan: Loans for purchasing vehicles.

Education Loan: Loans for pursuing higher education.

Home Loan: Loans for buying properties.

Loan Against Property: Loans secured against existing properties.

Personal Loan: Loans for personal needs.

Term Loan: Loans for specific purposes, as mentioned on the bank’s site.

Working Capital (Cash Credit): Financing for business operations, according to the bank.

22
Other Products and Services:

Credit Cards: Various credit cards with different features and benefits.

Debit Cards: Debit cards for transactions at ATMs and retail outlets.

Fixed Deposits (FDs): Investment option for growing money at attractive interest rates, as stated
by the bank.

Treasury Services: Including call money, notice money, term money, commercial papers,
government securities, and more, according to the bank.

Digital Banking: Including Internet Banking and Mobile Banking (Go Mobile+) for various
transactions and account management, as described on the bank’s site.

Cash Management Services (CMS): For corporate clients, according to IDBI Bank.

Trade Finance: Services like letters of credit, bank guarantees, and remittances, as stated by IDBI
Bank.

e-Trade: Online platform for trade-related transactions, according to IDBI Bank.

Safe Deposit Lockers: For storing valuables, as mentioned by the bank.

23
 CHAPTER -3

METHODOLOGY OF STUDY

The methodology of a study refers to the systematic and scientific approach used to conduct
research, gather data, and analyze information to answer research questions or solve problems. It
encompasses the overall plan, procedures, and techniques employed to collect and analyze data,
ensuring that the research is conducted in a rigorous, reliable, and valid manner. A well-defined
methodology provides a clear framework for the study, enabling researchers to collect and
analyze data in a way that is consistent with the research objectives and questions. This section
outlines the methodology of study on Modern Banking Services was undertaken through a
systematic observation of the operational procedures followed at the branch level, along with
informal discussions with banking personnel and customers. The research focused on
understanding the different modern banking services offered by IDBI Bank. It studied the use of
technology in services like mobile banking, internet banking, digital payments, and online
customer support. The study also looked at how easy, fast, and transparent these services are for
customers. By examining the overall process and challenges faced by users, the research gives
useful suggestions to improve the quality, speed, and customer experience of IDBI Bank’s
modern digital banking services.

3.1 Need of Study

The study of modern banking services in IDBI Bank is important to understand how the bank is
using new technologies to improve customer experience. With the growth of online banking,
mobile apps, ATMs, and digital payments, it is necessary to know how IDBI Bank is adapting to
these changes. This study helps in finding out how these modern services make banking faster,
safer, and more convenient for customers. It also shows how the bank is competing with other
banks by offering better and smarter services. Overall, the study helps in improving the quality of
banking and meeting the changing needs of customers.

24
3.2 Objective of Study

(a) To understand the various modern banking services offered by IDBI Bank.

(b) To analyze how these services help customers and improve banking efficiency.

(c) To study the modern banking services provided by IDBI Bank.

(d) To give suggestions on the basis of finding.

3.3 Sources of data

The source of data means from where the data has been collected. Data sources are essential

for gathering information and insights to support research, analysis, and decision-making.

There are various sources of data, including primary and secondary sources. Primary data

sources involve collecting original data through surveys, interviews, focus groups, and

Observations. Secondary data sources, on the other hand, rely on existing data from research

Studies, reports, statistics, and academic journals.

a. Primary data – Conduct surveys through online or offline questionnaires to collect data

from customers about their satisfaction with banking services.

b. Secondary data – Data was collected through the following sources:

(i) Newspaper

(ii) Online websites

(iii) Books

(iv) Review of customers from online websites

25
3.4 Limitations of study

(a) The study covers only one aspect of banking operations i.e Modern Banking services
provided by IDBI bank. Hence it’s scope is narrow.

(b) The study is based mainly on secondary data. The reliability of information is dependent on a
availability of data.

26
 CHAPTER – 4

MODERN BANKING PRACTICES ADOPTED BY IDBI

4.1 Mordern banking services

IDBI Bank offers many modern services to make banking easier, faster, and more secure for
customers. These services help people do banking anytime and from anywhere without visiting
the bank.

1. Internet Banking (Online Banking)

IDBI Bank provides internet banking facilities to both savings and current account holders.
Through this service, customers can access their bank accounts using a computer or laptop with
internet connection. They can check account balance, download account statements, transfer
money, pay utility bills (like electricity, gas, water), recharge mobiles, and even open or close
fixed deposits. The service is available 24/7, which means you can do banking at any time, from
anywhere, without visiting the bank branch.

2. Mobile Banking

IDBI Bank has a user-friendly mobile app known as IDBI Go Mobile+. This app can be
downloaded on smartphones and helps customers do most banking tasks easily. Through the app,
users can transfer funds, pay bills, book tickets, check account balance, locate nearby
ATMs/branches, and more. It is a secure and fast way to handle your banking needs through your
phone. The app is especially helpful for people who are always on the move and want to save
time.

3. ATM Services

IDBI Bank has thousands of ATMs across India. With ATM services, customers can withdraw
cash anytime, check account balance, print mini statements, and change their ATM PIN. These
ATMs are available 24/7 and are very helpful during emergencies or outside banking hours. The

27
bank also provides cash deposit machines (CDMs) in some locations where customers can
deposit cash without going to the counter.

4. NEFT, RTGS, and IMPS – Electronic Fund Transfers

IDBI Bank allows customers to send money to other banks using safe and fast methods:

NEFT (National Electronic Funds Transfer): Used to transfer money to any bank account in
India. The amount is usually credited within a few hours.

RTGS (Real Time Gross Settlement): This is used for transferring large amounts (₹2 lakhs or
more) in real-time. The money is transferred instantly.

IMPS (Immediate Payment Service): This service is available 24/7, even on holidays. It allows
customers to send money instantly using mobile number or bank details.

5. Debit and Credit Cards

IDBI Bank issues debit cards that are linked to your bank account. With a debit card, you can
shop online or offline, pay bills, and withdraw cash from ATMs. The bank also provides credit
cards that can be used to make purchases even if you don’t have cash at the moment, and you can
pay back the amount later. These cards come with features like cashback, reward points, and
offers on shopping or dining.

6. UPI (Unified Payments Interface)

UPI is a modern and simple way to send or receive money instantly using a mobile phone. IDBI
Bank supports UPI transactions through its mobile banking app and also works with other UPI
apps like Google Pay, PhonePay, and Paytm. You don’t need to remember account numbers or
IFSC codes—just a UPI ID or mobile number is enough to send or receive money. It works 24/7,
even on holidays.

7. E-Passbook

IDBI Bank offers a digital or e-passbook facility through its mobile app. This allows customers
to view their transaction history, check balances, and keep a record of all deposits and
withdrawals. The e-passbook is updated in real-time and removes the need to visit the branch to

28
update a physical passbook. It is especially useful for students, professionals, and busy
individuals.

8. SMS and Email Alerts

IDBI Bank provides SMS and email alert services for all types of transactions. Whenever money
is withdrawn, deposited, or transferred, the customer gets an instant message on their phone and
email. This keeps the customer informed and helps detect any suspicious or unauthorized activity
quickly. It also helps in maintaining better control over your spending.

9. Online Loan Services

Now customers can apply for various types of loans (like home loan, personal loan, car loan, or
education loan) through the IDBI Bank website or app. You can fill out the loan application
online, upload documents, and even check the status of your application without visiting the
branch. This saves a lot of time and makes the loan process easier and more transparent.

10. Online KYC and Account Opening

IDBI Bank has made it easier for new customers to open accounts from the comfort of their
homes. With Video KYC and online forms, a person can open a savings account quickly without
physically visiting the branch. This is very helpful for students, working professionals, or people
living in remote areas.

11. E-Statements and Green Banking

Instead of sending paper statements, IDBI Bank sends monthly account statements by email.
This helps in saving paper and supporting environmental protection (green banking). Customers
can also download e-statements from internet banking whenever they need. It’s convenient, fast,
and good for nature.

12. Safe and Secure Banking

All digital services of IDBI Bank are protected with strong security features like OTP (One-Time
Password), MPIN, biometric login, and two-factor authentication. This ensures that your money
and personal data remain safe even while using online or mobile services.

29
4.2 Adoptions of technology by IDBI Bank

1. Step-by-Step Use of Technology:

IDBI Bank has slowly and steadily started using modern technology to improve its banking
services and make them faster and easier for customers.

2. Core Banking System (CBS):

The bank adopted Core Banking, which connects all branches digitally. Now, customers can do
banking from any branch, not just their home branch.

3. Internet and Mobile Banking:

IDBI introduced Net Banking and Mobile Banking App (IDBI Go Mobile+), allowing people to
do most banking tasks like checking balance, transferring money, and paying bills from home.

4. ATM and Debit Card Services:

IDBI provides ATM and debit cards, so customers can withdraw cash anytime and shop easily
without cash.

5. Digital Payment Systems:

With modernization, the bank now supports NEFT, RTGS, IMPS, and UPI – all safe and fast
ways to send and receive money.

6. SMS and Email Alerts:

IDBI Bank sends instant SMS and email alerts for every transaction, helping customers stay
updated and safe from fraud.

7. Online Loan and Account Services:

Customers can now apply for loans, open accounts, or update KYC online, saving time and
effort.

8. Chatbots and AI Services:

30
The bank is using chatbots and artificial intelligence to answer customer questions quickly on the
website and app.

9. Paperless Banking:

To support the environment, IDBI is moving towards paperless banking by providing e-

statements and online passbooks.

10. Gradual Improvement:

Over the years, IDBI Bank has slowly upgraded its systems and services to become a modern
digital bank, while still supporting customers who use traditional methods.

31
4.3 Modernization in banking sector

IDBI Bank is making many changes to become a modern bank. It is using new technology,
creating new products, and helping people who don’t have access to banking.

1. Digital Transformation

(a)IDBI Bank has improved its mobile, internet, and phone banking.

(b)It uses special software to manage risks and understand customer needs.

(c)The bank wants to be known as a tech-friendly bank.

(d)It works with technology companies to offer better services.

2. New Products and More Customers

(a)The bank makes new products and updates old ones for customers.

(b)It is trying to reach more people and grow its business.

(c)IDBI Bank offers special financial products for different needs.

3. Helping Everyone and the Environment

(a)The bank helps poor and rural people get access to banking.

(b)It supports green projects like solar and wind energy.

(c)It also raises money for these projects using green bonds.

4. Other Improvements

(a)The bank is using modern technology to improve services.

(b)It is training its staff to be skilled and ready for the future.

(c)It follows strong rules for safety and good business.

(d)IDBI Bank is also growing by working with other companies.

(e)It supports small businesses by giving easy loan.

32
4.4 Documentation in bank

Documentation means the papers or proofs you need to give to the bank to open an account, take
a loan, or use any service. It helps the bank verify who you are and follow the rules set by the
government.

1.For Opening a Savings or Current Account

(A) Identity Proof (any one):

(i) Aadhaar Card

(ii) PAN Card

(iii) Voter ID

(iv) Passport

(v) Driving Licence

(B) Address Proof (any one):

(i) Aadhaar Card

(i) Electricity Bill

(iii) Rent Agreement

(iv) Bank passbook with address

(v) Passport-size Photos – Usually 1 or 2

(vi) PAN Card – Mandatory for most accounts

If you don’t have a PAN card, you can submit Form 60.

2.For Fixed Deposit (FD)

(i) If you already have a savings account in IDBI Bank, no extra document is needed.

(ii) If you’re a new customer, the same KYC (Know Your Customer) documents as above are
needed.

33
3.For Taking a Loan (like Personal Loan, Home Loan, etc.)

(i) KYC documents (Aadhaar, PAN, etc.)

(ii) Income Proof (Salary slips, bank statement, ITR)

(iii) Job Proof (Offer letter, ID card, etc.)

(iv) Property documents (for home loan)

(v) Photographs

Each loan type may need different documents.

4.For ATM/Debit Card or Credit Card

(i) ID and address proof

(ii) PAN card

(iii) Photo

If you’re applying for a credit card, income proof may also be required.

5.For Updating Details (like mobile number, address)

(i) Aadhaar or any ID proof

(ii) New address proof (if changing address)

6.For KYC Update (done from time to time)

(i) Aadhaar and PAN

(ii) One photo

(iii) Filled KYC update form

34
4.5 Cyber security in IDBI

Cybersecurity means protecting the bank’s computer systems, customer data, and online banking
from fraud, hacking, or any misuse.

1.Firewall Protection

IDBI Bank uses firewalls to block unwanted access from outside. It acts like a digital security
guard for the bank’s computer systems.

2.Data Encryption

Important information like passwords and customer details are turned into secret codes. This
helps protect data even if someone tries to steal it.

3.Two-Step Login (2FA)

When customers use online banking, they have to enter a password and an OTP (One-Time
Password). This double check makes online banking safer.

4.Safe Internet and Mobile Banking

The bank uses secure websites and mobile apps to make sure customers can do banking safely.
Some apps also allow login with fingerprint or face ID.

5.Regular Updates

The bank keeps updating its systems to stop new types of cyber-attacks. Updated systems are
harder to hack.

6. Anti-Virus Software

All bank computers have anti-virus programs. These programs find and remove harmful files
from the systems.

7. Staff Training

Bank staff are trained regularly to stay alert about cyber threats like fake emails or fraud calls.
They learn how to avoid mistakes.

8.24x7 Monitoring

35
IDBI Bank has a special team that keeps an eye on all computer systems day and night. If
anything wrong happens, they act fast.

9.Customer Safety Tips

The bank also teaches customers how to stay safe. It tells them never to share their PIN, OTP, or
passwords with anyone.

10.Backup Systems

The bank keeps a backup of all data. So, if something goes wrong, they can recover the
information easily and continue working.

36
4.6 NRI services

IDBI Bank provides special banking services for NRIs (Non-Resident Indians) who live outside
India but want to manage their money in India. These services help NRIs to send money, save
money, invest, and do banking easily from anywhere in the world.

1. NRI Accounts:

(i) NRE Account (Non-Resident External):

Used to deposit money earned outside India.

Money is kept in Indian Rupees.

No tax on interest.

Both money and interest can be sent back (repatriated) freely.

(ii) NRO Account (Non-Resident Ordinary):

Used to manage income earned in India (like rent, pension, etc.).

Tax is applicable on interest.

Limited money can be sent back abroad (after paying taxes).

(iii) FCNR Account (Foreign Currency Non-Resident):

Fixed deposit in foreign currency (like USD, GBP, etc.).

Protects from currency exchange rate changes.

No tax on interest.

2. Money Transfer Services:

IDBI allows NRIs to send money to India safely and quickly.

Facilities like SWIFT, Remittance services, and Money2India are available.

3. Investment Services:

NRIs can invest in mutual funds, fixed deposits, and Indian stock markets through IDBI.

37
IDBI provides help with portfolio management.

4. Online & Mobile Banking:

NRIs can manage their accounts online from any country.

They can check balance, transfer money, open deposits, and more through mobile and internet
banking.

5. Loan Facilities:

IDBI provides home loans, personal loans, and vehicle loans for NRIs.

Easy EMI options are available for repayment.

6. Customer Support:

IDBI has a special helpline and email support for NRI customers.

Assistance is available for opening accounts, sending money, or solving banking issues.

38
4.7 Insurance

IDBI Bank offers different types of insurance products to protect customers and their families
from unexpected events like accidents, illness, or death. These services are provided through
partnerships with well-known insurance companies.

Types of Insurance Offered:

1. Life Insurance:

Helps your family get money in case something happens to you.

You can also save for your future through some life insurance plans.

IDBI Bank offers life insurance through IDBI Federal Life Insurance (now called Ageas Federal
Life Insurance).

2. Health Insurance:

Covers hospital and medical expenses.

Helps you pay bills in case of illness or surgery.

Protects your savings from high hospital costs.

3. Accident Insurance:

Gives financial help if you are injured or die in an accident.

Can also cover disability due to an accident.

4. Travel Insurance:

Useful for people travelling abroad.

Covers lost luggage, flight delay, medical emergency, etc.

39
5. Vehicle Insurance:

Covers damage to your car or bike.

Also pays for third-party damage or injury.

6. Home Insurance:

Protects your home and belongings against fire, theft, natural disasters, etc.

4.7.1 Features of Insurance in IDBI Bank:

(i)Easy Application: You can apply online or by visiting the branch.

(ii) Affordable Premiums: IDBI offers plans that suit all income levels.

(iii) Multiple Options: You can choose from different plans based on your needs.

(iv) Claim Support: The bank and insurance company help in quick claim settlement.

40
 CHAPTER – 5

FINDING AND SUGGESTIONS

5.1 Finding

(a) IDBI bank has made internet and mobile banking services very easy and accessible for
customers.

(b) 24/7 banking facilities with ATM, mobile apps and online services, customer can do banking
anytime, anywhere.

(c) IDBI Bank offers quick money transfer options like NEFT, RTGS and UPI for smooth
transaction.

(d) IDBI bank uses strong security features like OTPs, encryption and biometric logic to protect
users.

(e) Customer can apply for loan like home loan, personal loan, or car loans through online
platform easily.

(f) Chatbots, helpline number and online help provide fast support for customer queries

(g) IDBI supports digital payment system linked with government benefits subsidier like PMJDY
(Pradhan mantri jan-dhan yojna) and DBT (direct benefit transfer)

(h) IDBI ATM allow withdrawals using OTPs without a debit card.

(i) FDs can be created or renewed through online and mobile banking easily.

(j) IDBI offers services to invest in mutual fund and insurance online.

41
5.2 Suggestion

1. IDBI bank should provide clear and visible instructions about required documents both online
and at branches.

2. Teach bank staff how to use new technology and services to customers.

3. Use better tools to protect customer from fraud and hackers.

4. Make the apps faster, easier to use and add more features like bill payment, investment
options, and real time help.

42