Not long ago, a customer had to wait for hours at the bank counters for withdrawing money. Today, he has so many options. In the last few years, the entire banking structure has undergone drastic change with introduction of value added and customized products- credit cards, ATMs, internet banking, electronic clearing services, tele-banking, quick collections facilities for outstation cheques etc. Increased competition, customer expectations and emerging technology reflects banks operation to be well tuned with global practices.
But, in reality, a large segment of population, do not have access to such sophisticated products. The Internet banking certainly a major phenomenon in India hasnt till now explored its full potential. According to recently survey reports from the Internet and Mobile Association of India (IAMAI-IMRB), the Internet population currently stands at 38.5 million of which only 4.6 million are banking online. Though Indians go online for a number of activities only 32 per cent use it for banking transaction (figure).
For credit cards, only 22 million Indian’s hold a card and the actual number of users might be even less as many have multiple cards access. The value of credit card transaction doubled between 2003-04 and 2005-06 and still there is lot of potential for its growth further.
Level of penetration of banking services in urban and rural India, a report by Leeladhar (2006) elucidate that only 59 per cent of adult population have access to a bank account. This implies 41 per cent of adult population is unbanked. Also the share of rural unbanked is comparatively high (70 per cent). This shows that the use of new financial product is mainly confined to the urban population.
To summarize, although access to current electronic financial products are increasing at a fast rate, but still they are more or less confined to only a part of the population and mainly in urban area; and even here, these facilities are seen to be a subject of luxury. Electronic banking can be an efficient mode for financial inclusion as e-banking is cost efficient. Therefore we should look towards to e-banking as a means of financial inclusion. Active policy initiatives are needed for financial inclusion as well as for penetration of e-banking.