1. finance
2. bank

ISSN-2349-1841(Online)
Volume 1, Issue 2, March 2015
International Journal of Research Development
& Innovation (IJRDI)
Research Paper
Available online at: www.ijrdi.com
A Case Study of the Impact of E-Banking
in Remote Area
Naveen Singh Gill (naveengill31@gmail.com)
Aman Kumar Sharma (sharmaas1@gmail.com)
Abstract: In the present era rapid development
in the area of technology has affected all other
areas. Especially where the computer technology
is concerned one can say that there is no other
field that remains unaffected with the growth of
computer technology. This need has inspired
banking sector to add new technologies which
also influence customer services, including ebanking.
E-banking is the major task or field in today
banking sector. Today banking is very easy in
metro areas and urban areas but this study
mainly concerns the case study of e-banking in
remote areas. The literature survey is done for
Reserve bank of India and impact of
liberalization on banking system, IT in Indian
Banking Sector, Competition In Banking Sector,
Customer Services or Facilities. The main
objective in this is to study the facilities of ebanking in remote area of Kinnaur district of
Himachal Pradesh where road connectivity,
electricity problem, transportation problem,
altitude problem and many more.
To study best e-banking facilities the different
banks SBI, PNB, UCO, HPSCB of Kinnaur
district of Himachal Pradesh are compared. An
attempt is made to know the reason behind the
success or failure of the banks in the remote
region of Kinnaur district. The data was
collected, organized and analyzed.
1. INTRODUCTION
Bank is a lawful organization, which accepts
deposits that can be withdrawn on demand. It
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also lends money to individuals and business
houses that need it. A bank is a financial
intermediary and money creator that creates
money by lending money to a borrower, thereby
creating a corresponding deposit on the bank's
balance sheet. Due to their importance in the
financial system and influence on national
economies, banks are highly regulated in most
countries. Most nations have institutionalized a
system known as fractional reserve banking,
central banking, under which banks hold liquid
assets equal to only a portion of their current
liabilities. Banks give two assurances to the
depositors –
a. Safety of deposit, and
b. Withdrawal of deposit, whenever needed.
I. Bank
“An establishment for custody of money,
which it pays out on customer's order.”
Banks provide funds for business as well as
personal needs of individuals. They play a
significant role in the economy of a nation. Let us
know about the role of banking: [7]


It encourages savings habit amongst
people and thereby makes funds
available for productive use.
It acts as an intermediary between people
having surplus money and those
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International Journal of Research Development & Innovation (IJRDI)
Volume 1, Issue 2, March 2015, Pg. 77-82
requiring money for various business
activities.
It facilitates business transactions
through receipts and payments by
cheques instead of currency.
It provides loans and advances to
businessmen for short term and longterm purposes.
It also facilitates import export
transactions.
It helps in national development by
providing credit to farmers, small-scale
industries and self-employed people as
well as to large business houses which
lead to balanced economic development
in the country.
It helps in raising the standard of living
of people in general by providing loans
for purchase of consumer durable goods,
houses, automobiles, etc.
II. Banking Features
1.
Dealing in Money: Bank is a financial
institution which deals with other people's
money.
2.
Individual/Firm/Company: A bank
may be a person, firm or a company. A banking
company means
a company which is in the
business of banking.
3.
Acceptance of Deposit: A bank accepts
money from the people in the form of deposits
which are usually repayable on demand or after
the expiry of a fixed period. It gives safety to the
deposits of its customers.
4.
Giving Advances: A bank lends out
money in the form of loans to those who require
it for different purposes.
5.
Payment and Withdrawal: A bank
provides easy payment and withdrawal facility to
its customers in the form of cheques and drafts, it
also brings bank money in circulation. This
money is in the form of chequesn drafts, etc.
6.
Agency and Utility Services: A bank
provides various banking facilities to its
customers. They include general utility services
and agency services.
7.
Profit and Service Orientation: A bank
is a profit seeking institution having service
oriented approach.
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8.
Ever increasing functions: Banking is
an evolutionary concept. There is continuous
expansion and diversification as regards the
functions, services and activities of bank.
9.
Connecting Link: Abank acts as a
connecting link between borrowers and lenders
of money. Banks collect money from those who
have surplus money and give the same to those
who are in need of money.
10.
Banking Business: A bank's main
activity should be to do business of banking
which should not be subsidary to any other
business.
11.
Name Identity: A bank should always
add the word “bank” to its name to enable people
to know that it is a bank and that it is dealing in
money.
2. E-BANKING (ELECTRONIC BANKING)
With advancement in information and
communication technology, banking services are
also made available through computer. Now, in
most of the branches you see computers being
used to record banking transactions. Information
about the balance in your deposit account can be
known through computers.
“E-banking is defined as the automated delivery
of new and traditional banking products and
services directly to customers through electronic,
interactive communication channels. E-banking
includes the systems that enable financial
institution customers, individuals or businesses,
to access accounts, transact business, or obtain
information on financial products and services
through a public or private network, including the
Internet.” [25]
• Automated Teller Machine
Banks have now installed their own Automated
Teller Machine (ATM) throughout the country at
convenient locations. By using this, customers
can deposit or withdraw money from their own
account any time.
 Transfer of amounts.
 Balance enquiry.
• Debit Card
Banks are now providing Debit Cards to their
customers having saving or current account in the
banks. The customers can use this card for
purchasing goods and services at different places
in lieu of cash. The amount paid through debit
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International Journal of Research Development & Innovation (IJRDI)
Volume 1, Issue 2, March 2015, Pg. 77-82
card is automatically debited (deducted) from the
customers’ account.
• Credit Card
Credit cards are issued by the bank to persons
who may or may not have an account in the bank.
Just like debit cards, credit cards are used to
make payments for purchase, so that the
individual does not have to carry cash. Banks
allow certain credit period to the credit
cardholder to make payment of the credit
amount. Interest is charged if a cardholder is not
able to pay back the credit extended to him
within a stipulated period. This interest rate is
generally quite high.
• Net Banking
With the extensive use of computer and Internet,
banks have now started transactions over
Internet. The customer having an account in the
bank can log into the bank’s website and access
his bank account. He can make payments for
bills, give instructions for money transfers, fixed
deposits and collection of bill, etc.
• Phone Banking
In case of phone banking, a customer of the bank
having an account can get information of his
account, make banking transactions like, fixed
deposits, money transfers, demand draft,
collection and payment of bills, etc. by using
telephone . As more and more people are now
using mobile phones, phone banking is possible
through mobile phones. In mobile phone a
customer can receive and send messages (SMS)
from and to the bank in addition to all the
functions possible through phone banking.
 Balance enquiry.
 Automatic/computerized transactions.
 Transfer of funds.
3. REGION
Kinnaur District: Kinnaur is one of twelve
administrative districts in the Indian state of
Himachal Pradesh, India. The district is divided
into three administrative areas – Pooh, Kalpa, and
Nichar – and has five tehsils . The administrative
headquarters of Kinnaur district is at Reckong
Peo. From here Kinnaur Kailash, considered to
be the abode of Lord Shiva, can be viewed. As of
2011 it is the second least populous district of
Himachal Pradesh (out of 12), after Lahaul and
Spiti, but there are nine vital languages are
spoken in the district.
Location of Kinnaur District
Kinnaur, surrounded by the Tibet to the east, is in
the northeast corner of Himachal Pradesh, about
235 km (146 mi) from the state capital, Shimla. It
has three high mountains ranges, namely,
Zanskar, Himalayas and Dhauldhar that enclose
valleys of Sutlej, Spiti, Baspa and their
tributaries. The slopes are covered with thick
wood, orchards, fields and picturesque hamlets.
In 2011, Kinnaur had population of 84,121 of
which male and female were 46,249 and 37,872
respectively. In 2001 census, Kinnaur had a
population of 78,334 of which males were 42,173
and remaining 36,161 were females. Kinnaur
District population constituted 1.23 percent of
total Maharashtra population.[28]
Altitude: A mountainous area, ranging in altitude
from 2,320 to 6,816 metres (7,612 to 22,362 ft),
Kinnaur is one of the smallest districts in India by
population. It is famous for the Kinner Kailash, a
mountain sacred to Hindus, close to the Tibetan
border. Total area of Kinnaur: 6401 sq km.[29]
Climate
Most of Kinnaur enjoys a temperate climate due
to its high elevation, with long winters from
October to May, and short summers from June to
September. The lower parts of the Sutlej Valley
and the Baspa Valley receive monsoon rains. The
upper areas of the valleys fall mainly in the rainshadow area. These areas are considered to be
arid regions, similar to the climate of Tibet.
Central Asian landscape are common.[29]
Road Connectivity
In view of the high potential in agricultural and
horticulture activity road connectivity is the main
issue in Kinnaur district. There is huge increase
in road network, but the conditions of road are
not good. The geography of Kinnaur presents
considerable challenge to the development of
transport infrastructure. Nevertheless, the district
has made significant progress in road
connectivity in the last few decades.
Transportation takes place by roads only. There
is no direct flight or rail service to Kinnaur and
the nearest Airport is Shimla which can be
reached from Delhi.
Financial Status of Kinnaur
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International Journal of Research Development & Innovation (IJRDI)
Volume 1, Issue 2, March 2015, Pg. 77-82
The financial status of Kinnaur district depends
upon Agriculture and Horticulture. In Kinnaur
district, it is observed that per captia is very high
as compare to other districts of Himachal
Pradesh. The economy of Kinnaur mainly
depends on its fruits production. The climate of
Kinnaur is cold and dry and is ideally suited for
the production of temperate fruits and fruits that
can be dried. Apple is an important fruit crop of
Kinnaur with regards to average production,
economic value and above all popularity. It will
be useful to analyses the trend of
apple production of Kinnaur district. The people
of district are rich but there is lack of facilities in
banking sector for people of rural areas. The
banks are not at every village and people are still
far away from banking services due to lack of
facilities given below:
 Banking facilities.
 ATM facilities.
 Internet connectivity.
 Road connectivity.
 Electricity problem.
 Lack of hospitals.
 Economic exchange.
 E-banking.
4. PROBLEMS FACED IN REMOTE
AREAS

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



Low recovery of loans in rural areas.
A transaction in remote areas due to poor
internet connectivity.
In remote, hilly and sparsely populated
areas with poor infrastructure.
ATM penetration is low and other
channels such as Phone and Internet
Banking are non-existent.
Increase in reservoir or of rivers flooding
their banks because of heavy rains.
The state of Himachal has been facing
flood problem.
Due to poor connectivity and power cuts
during peak hours in the remote areas.
5. ANALYSIS
In order to evaluate the bans of the region, the
various facilities provided by the bank are
evaluated. The ban customers are always
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interested in the facilities provided by the bank.
Bank having better facilities would be more
liked by the customers. The common features
which were checked were number of branches,
number of ATMs, total amounts deposited and
many more. Such data is presented in the table.
Further the figures presented in the table are
updated up to 31st December,2014.
Sr Particulas SBI
No
PNB
UCO
HPSCB
1
Number of 9
Branches
4
9
16
2
Number
of ATMs
9
4
4
2
3
Number
of
Accounts
16245
24600
29473
71399
4
Deposit
371
Amounts(
Rs
in
Crore)
114
127
350
5
Ratio of 238378
deposit
amount
per
customer(i
n Rs)
46341
43090
49020
6
Advances
Accounts
2081
3177
7373
7
Advances 162
Amounts(
Rs
in
Crore)
44
48
133
8
Ratio of 245566
advance
amount
per
customer(i
n Rs)
211436 151086
6597
180363
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9
First branch 19th
opened
in
year
December
,1977
10 Oldest
branch
Pooh
International Journal of Research Development & Innovation (IJRDI)
Volume 1, Issue 2, March 2015, Pg. 77-82
15th
22nd
June,197 July,1976
9
10th
November,
1960
23 Bill
payments
Recko- Sangla
ngpeo
Kalpa
Table 7.1 Features of different banks in Kinnaur
district
Yes
No
No
No
(Chinni
6. CONCLUSION
11 Number of 52
employees
46
12 Saving
interest
rates
4.00%
4.00% 4.00%
4.00%
13 Internet
banking
Yes
Yes
Yes
No
14 Mobile
banking
Yes
No
No
No
15 e-tax
payments
Yes
Yes
No
No
16 SMS
Alerts
Yes
Yes
Yes
Yes
17 Website
Yes
advertisem
ent
Yes
Yes
No
18 e-mail
Yes
advertisem
ent
Yes
Yes
No
19 Share
Trading
Yes
Yes
20 Customer
satisfactio
n
Max
21 Money
transfer
Yes
38
108
In the case study of the four prominent banks
(SBI, PNB, UCO, HPSCB) of the remote region
of Kinnaur district, It is concluded that in spite of
being the oldest bank in Kinnaur district and
having more branches than other banks, HPSCB
still lacks behind in term of all over ratio of
deposit amount per customer. SBI having less
customers but deposit is maximum due to internet
banking, SMS banking, online fund transfer
facilities and many more. The customer of that
area wants bank services at their homes because
of lack of transportation and road connectivity is
the major problem. Due to this factor customer is
preferring SBI rather than other banks. From the
analyses of four banks SBI is giving best service
of E-Banking in Kinnaur district. PNB has very
less branches in district, UCO bank has nine
branches but has less ATMs and E-Banking
facilities. So people of Kinnaur district are
following SBI bank more and deposit their
money because of more ATMs and E-banking
facilities.
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