The term 'Core Banking Solutions' is sometimes seen in the news. Which of the following statements best describes/describe this term?
- 1.It is a networking of a bank's branches which enables customers to operate their accounts from any branch of the bank on its network regardless of where they open their accounts.
- 2.It is an effort to increase RBI's control over commercial banks through computerization.
- 3.It is a detailed procedure by which a bank with huge non-performing assets is taken over by another bank.
Select the correct answer using the code given below.
Answer & explanation
Answer: (a) 1 only
Core Banking Solutions (CBS) is a bank's centralised IT platform: all branches work on one common database, so an account-holder is a customer of the whole bank and can transact at any networked branch, not only the one where the account was opened. It is neither an RBI control device nor a merger procedure.
- ✓ 1. This is what CBS does; the RBI expects banks on CBS to serve their customers uniformly at every branch and not to penalise transactions at 'non-home' branches.
- ✗ 2. CBS is each bank's own operating platform for serving customers; RBI's supervisory powers come from the Banking Regulation Act, 1949, not from branch networking.
- ✗ 3. Rescuing a weak bank by merging it with another is amalgamation (for example, under Section 45 of the Banking Regulation Act); it has nothing to do with CBS.
Remember · Core Banking Solutions: centralised, networked branch operations; the customer belongs to the bank, not the branch, enabling 'anywhere banking', ATMs, internet and mobile banking.
Sources
- RBI: Master Circular on Customer Service in Banks (para 6.6, Uniformity in Intersol Charges) ↗ “With the introduction of Core Banking Solution (CBS), it is expected that customers of banks would be treated uniformly at any sales or service delivery point. … Banks are advised to follow a uniform, fair and transparent pricing policy and not discriminate between their customers at home branch and non-home branches.”
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