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What is net banking? Meaning of net banking
Netbanking, also known as Internet banking, is a digital method of conducting banking transactions over the Internet. It is an electronic system that anyone with a bank account can activate and use for their financial procedures.
Most of the means and uses of banking done physically can be done through Internet banking.
This is what you need to know to start using netbanking.
Reasons why you should use Net Banking
Most of the banks in India have adopted technology, or are in the process of adopting technology, to meet the banking needs of consumers. While traditional banking, also known as physical banking, is still the most widely used and accessible form of banking in India, online banking is slowly becoming an essential aspect of banking.
Netbanking makes banking easier for consumers. That’s how:
Net banking saves time
A bank customer can access online banking from any Internet-enabled device, such as a laptop, desktop computer or mobile phone. They do not necessarily need to visit the bank to transfer money from one account to another, to verify your transaction statement, or to resolve banking-related inquiries.
Netbanking helps to open accounts and carry out digital transactions
A netbanking account allows customers to do all their new account openings digitally. This is possible with the help of pre-submitted Know Your Customer (KYC) details that consumers submit to their banks at the time of netbanking account opening.
Consumers can open and transact on all six types of bank accounts in India without actually visiting the bank.
Net Banking guarantees the security of the bank account
For netbanking, all the information about your bank details, transactions and requests is exchanged electronically without any human intervention. This reduces the possibility of any kind of slip-up by customers, in terms of revealing their private banking information to a third party, and prevents the misuse of any information. With netbanking, your information remains completely confidential and you are in charge of all banking decisions based on your knowledge.
Net Bank Aid Financial Empowerment
When a customer uses online banking, it allows them to know the essential details associated with their bank accounts and the processes behind the transactions. It is often the case with brick-and-mortar banking that customers miss out on learning and understanding important information that affects their banking because a brick-and-mortar bank associate helps them.
When a customer accesses netbanking, all steps in a process require the customer to know why the step is necessary and make an informed decision. In the long run, this brings financial empowerment.
How to open a Netbanking account easily?
A netbanking account is a digital extension of your bank account. However, opening a netbanking account requires you to generate specific digital passwords that allow you to make transactions over the Internet.
To open a netbanking account, you must follow these four steps:
1. Approach your bank to obtain a Netbanking account
Your first step in starting a netbanking account is to approach your bank to enable an online banking service for your existing bank account. Unless you ask your bank to start your online banking services, you cannot start using these services, given the high security maintained to allow you to carry out digital transactions.
You must inform your bank of your intention to start online banking for your account. Once the bank receives your application, it provides you with two key codes that help you log into your account online.
2. Collect your user ID and password
For online banking to work, you must know your user ID and password to log into your online banking account. This User ID is separate from your bank account number, which serves as the primary identity for your bank account.
You must ask your bank to generate a user ID and password. In the case of a new account, the documents with a user ID and password are delivered at the time of opening the account.
3. Generate new user ID and password
To generate your User ID, the bank initially provides you with a unique set of numbers that have been generated from their end, and a password is given to you in a hidden document. This password is used for one-time login, and in most cases, the bank requires consumers to change this password after the first login to maintain a high level of account security.
It is also a good idea to change your User ID after authenticating your first login to ensure that you have a new set of User ID and password.
The method to change both the user ID and the password is simple:
- Log in to your bank’s website.
- Enter the user ID and password provided by the bank.
- Then log out.
- When you sign out, you will see a tab on the bank’s website that says “generate new user ID.”
- Use that tab to generate a new User ID.
- When you apply for a new user ID, you will be asked for details such as your date of birth, your mobile phone number, and other details that the bank has already provided to you through your KYC documents.
- By entering all your details, a one-time password will be sent to your mobile phone. This is the second stage of security and often instills the client’s faith in online banking.
- Enter this one-time password to create the new user ID.
- Then follow the same steps to generate a new password.
4. Start transactions online
You have now logged into your online banking account and generated a new user ID and password. Now you can start your transactions online.
Uses of net banking in 2023
Once you start using a netbanking account, it shifts your perspective towards using simple banking services, which you would otherwise have kept holding off, waiting for a scheduled visit to the bank.
Netbanking is most often used for seven banking processes:
1. Use of Netbanking to transfer funds
With your active netbanking, you can move funds within your own internal bank accounts, from one bank account to another, from your own account at one bank to another account at another bank, or from your own bank account to someone else’s bank account.
You can use the “Standing Instruction” provision to repeat transfers periodically.
2. Use of Netbanking to generate and track account statements
You don’t have to visit your bank or your bank’s ATM to keep track of debits and credits to your bank account. With a simple click, you can view transactions made during specific time periods and request statements to be delivered to your email inbox when needed.
3. Use of Netbanking to pay bills
To make your busy everyday life easier, you can use netbanking to pay your bills such as phone bills, electricity bills, water utility bills and other bills that have an online network.
Most of the large corporations that offer everyday services have a well-established digital infrastructure that allows consumers to avoid physical visits and enjoy the convenience of paying for the use of their services online.
4. Use of Netbanking to request loans
Loans can be easily applied for online using netbanking. The process of obtaining personal loans in India and business loans is complicated. Your online banking activation allows you to be KYC compliant, so the time it takes for loan companies to verify you and your credit score to make a loan is much shorter and less hassle for both parties.
5. Use of Netbanking to pay insurance premiums
Payment of insurance premiums is one of the financial transactions that requires clients to adhere to strict deadlines to avoid penalties. With netbanking, customers can opt for “Standing Instructions” for specific future dates without worrying about missing a date or incurring a penalty.
6. Use of Netbanking to pay EMI
You can pay your electronic monthly installments, or EMIs, through netbanking. One of the frequently used netbanking facilities of the younger generation who have used internet banking ever since they started trading is EMI payment.
There is no limit to the types of EMI you can pay through online banking. From your credit card EMI to your rental EMI to your purchase EMI, everything can be paid digitally and securely using netbanking.
7. Use of Netbanking to request a new debit card and check stubs
With netbanking, you can request a new debit card and checkbooks whenever you need them without having to visit a bank. This is one of the easiest ways to request a new physical copy of a financial product from the bank you have been using.
In the digital age we now find ourselves in, banking as a service is evolving faster than ever and it is in the best interest of consumers to learn how to transact and take advantage of the service digitally. It’s especially important to adopt online banking in a densely populated country like India, where precious hours are wasted in long traffic jams and lines at brick-and-mortar banks are often longer than expected.
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