Page 36 - Banking Finance December 2024

ARTICLE

All those who were hesitating to go for online shopping to access their bank accounts and conduct other
in the name of privacy and security, were brought financial transactions without leaving their homes.
online during COVID 19 pandemic. For buying or selling Moreover, as per the Boston Consulting Group report,
online one has to use digital payment or receipts. So, digital payments are going to reach $10 trillion by 2025,
there is a need for digital banking.
with much of this growth being driven by rural areas.
9. Saves Time and Money: People are buying online due Rural communities in the network of digital banking
to lack of time, convenience of buying online and digital nned to bring in to encourage individuals to save, invest,
banking. Due to lack of time to visit bank for financial borrow, buy insurance products and manage finances
services like depositing, drawing money; placing request efficiently. Furthermore, digital connectivity stimulates
for chequebook, passbook entry, taking a statement of entrepreneurship, access to education to access to online
account, buying Demand Draft etc. Using digital banking educational resources and healthcare services for
services a customer can get the work done without consulting doctors through online and pay. India was
visiting bank and save precious time. successful to some extent in providing access of
Across the world, banks can charge customer for any banking services in rural, this was further increased by
service for which they incur and it is practiced by Indian COVID 19.
banks too. If no cost is incurred for providing a service, 11. COVID 19: The digital revolution began long back and
then banks refrain from the charging customer. In fact, various industries tried to convince stakeholders to go
the RBI does not restrict banks from charging a fee for for digital banking, but people were hesitating to do so
transactions, but restricts unreasonable charges. No due to no felt need for digital banking, lack of required
banking service is free. Every banking service involves internet speed, loss of privacy, security issue, lack of
cost and the cost may be borne by the bank or the familiarity to digital business, unable to identify the use
customer. According to experts from banking industry, of digital business etc. However, societies, industries
normally a bank spends on an average Rs.40 per and entrepreneurs were taken various steps to digitise
transaction done at bank. For example, if a customer their daily operations and lives. COVID19 pandemic
deposits a physical cheque from another bank for acted as an accelerator for digital revolution around the
collection, it involves cost for the both banks, and this world and forced societies, industries and people adopt
can be avoided or reduced in the transaction is done by digital banking to do their business.
digital banking. In future, banks need to be recovering Prior to COVID 19 pandemic, retail banking services
banking transaction costs from customers to sustain
offered through online mode. But, during Covid
themselves.
pandemic due to lockdown and restrictions in
10. Reach Remote Areas: Two decade back India was a movement, the customers were forced to go digital
country of disparities with both the busy metropolises way, which earlier people were reluctant. The
where we can find everything and rural areas with no momentum continues even today and online banking
or very limited access to modern technology. With the is now here to stay. During COVID-19 digital banking
launch of National Optical Fibre Network (NOFN) in services were need of the hour. Government of India's
October 2011, rural areas have received significant motive behind Demonitisation, to prevent corruption.
attention. NOFN was renamed as Bharat Net Project
12. Prevention of Corruption: India has the highest bribery
(BharatNet) in 2015. BharatNet was the ambitious rate in Asia according to the Global Corruption
project of central government. It is playing a pivotal role
Barometer published by Transparency International.
in bringing digital banking services and connectivity to India's score is 40 with 85 rank in Corruption Perception
rural India. Another programme, Digital India aimed to Index (CPI) as per Transparency International Report
pull together many existing schemes.
2022. The score remain same at 40 for the year 2020,
The sudden shift from traditional to digital banking is 2021, and 2022. Cash is the main mode of paying and
because of Digital infrastructure in India 'Digital India'. receiving bribe, and unaccounted money can be used
Digital banking transformed the way people do their for bribing. Withdrawal of higher denominated notes
bank business, and manage finances by allowing them Rs. 2000 and Rs.500 from circulation, daily withdrawal

32 | 2024 | DECEMBER | BANKING FINANCE