1 Notes - BT.pdf - UNIT u2013 I(BASIC NOTES u2013 MUST BE...

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Page 1 of 11 Compiled Base Notes For Students. Note: Student must refer the examples and class observation notes for class tests/final examination. Recommended Book: Indian Institute of Banking and Finance, Banking Technology- Macmillan, Mumbai UNIT I (BASIC NOTES MUST BE READ ALONG WITH CLASS OBSERVATION NOTES) Introduction. The concept of Bank Automation/mechanization/Computerisation (Presently) in India practically started after 1980-81 and more precisely gained pace in the year 1983-84, after setting up a committee in the year 1983 under the chairmanship of the then Deputy Governor of RBI, Dr C. Rangarajan. Need for Computerisation. The five major objectives of computerization in banking are to improve: (a) Customer Service. (b) Maintenance. (c) Decision-making. (d) Productivity and (e) Profitability. Initiatives of RBI, CVC, GOI towards Mechanization / Computerization. For General Knowledge related to Automation and computerization (Past Scenario- Article 1 for practical knowledge building). A Bird’s Eye View. How computerization was pushed in Indian Banking?
Page 2 of 11 Compiled Base Notes For Students. Note: Student must refer the examples and class observation notes for class tests/final examination. Recommended Book: Indian Institute of Banking and Finance, Banking Technology- Macmillan, Mumbai Well, obviously there is a lot of excitement these days around technology in Indian banking space. However, how did this process actually start ? (Refer to the below article). A nice article which looks at this history of introducing computers in banking. It was a process that started around 1982, contrarian to most who would think it started post-1991 (LPG Period). Actually, much of changes in Indian economy started around the 1980s (some say 1970 s around Emergency) and 1991 is just that time when all these things came together and became more reinforced due to LPG move by the GOI. Article: A few months after Manmohan Singh took over as RBI Governor in September 1982 , in a reshuffle of portfolios, one of his deputy governors, C Rangarajan, who had joined a little earlier during the previous governor IG Patel’s tenure , was assigned the responsibility of some of the major operational departments within the central bank, including monetary policy and exchange rate management. Rangarajan, who had taught at IIM Ahmedabad for long, had virtually little to do during the Patel days , with no core functional responsibilities in the first half of 1982 , but that changed when Singh took over. One of the primary issues Singh took up was the computerization of banking operations . He knew that there would be resistance to the change from unions and staff and so, told them that given the pace of global growth and technological advancement, mechanization was inevitable. Those were the days of enormous delays in cheque clearances , with money taking weeks to get credited to the accounts of customers, defeating the objective of moving away from currency to paper-based transactions. Worryingly, there were lots of issues relating to reconciliation or

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