Advantages

Faster and efficient in processing of information; Automatic generation of accounting documents like invoices, cheques and statement of account; With the larger reductions in the cost of hardware and software and availability of user-friendly accounting software package, it is relatively cheaper like maintaining a manual accounting system; More timely information can be produced; No more manual processing of the data- all automatically been posted to the various ledgers/accounts and Many types of useful reports can be generated for management to make decisions

Disadvantages

Power failure, computer viruses and hackers are the inherent problems of using computerized systems; Once data been input into the system, automatically the output are obtained hence the data being input needs to be validated for accuracy and completeness, we should not forget concept of GIGO (Garbage In(Input) Garbage out ( Output) and Accounting system not properly set up to meet the requirement of the business due to badly programmed or inappropriate software or hardware or personnel problems can caused more havoc and Danger of computer fraud if proper level of control and security whether internal and external are not properly been instituted.

year 1980 a few batch-mates of IIT Delhi pioneered the effort to start a major education centre in India to impart training inInformation Technology and their efforts resulted in the setting upof NIIT in 1981. Aptech Computer Education was established in1986 following the experiment of NIIT.B e f o r e l a r g e s c a l e computerisation, computer education became p o p u l a r i n I n d i a a n d c o v e t e d b y b r i g h t s t u d e n t s , w h e n s e v e r a l Engineering Colleges and Technical Institutes introducing PostGraduate Degree courses in Computer Engineering. The boominghardware and software industry in the West attracted Indian studentsand many of them migrated for better opportunities to the U.S.A.and settled there. We have today the paradox of India being one of the major powers possessing diverse talents in fi elds of softwaredevelopment, but at the same time, we are still a decade back to theusing computerised service extensively in the country and bringingthe facility to the realms of the common man.Rapid development of business and industry brought manualoperations of data, a saturation point. This acted as a overload on thegrowing banking operations. Government owned banks in generalfound the "house-keeping" unmanageable. Several heads of accountsin particular inter-bank clearing and inter-branch reconciliation of accounts went totally out of control.Low productivity pushed cost of wages high and employees realisedthat unless they agreed for computerisation further improvement in their wage structure was not possible.I n t h e y e a r 1 9 9 3 , t h e E m p l o y e e s ' U n i o n s o f B a n k s s i g n e d a n agreement with Bank Managements under the auspices of IndianB a n k s ' A s s o c i a t i o n ( I B A ) . T h i s a g r e e m e n t w a s a m a j o r b r e a k through in the introduction of computerised applications anddevelopment of communication networks in Banks. 48 The first initiatives in the area of bank computerisation, however,stemmed out of the landmark report of the two committees headedby the former Governor of the Reserve Bank of India and currentlyG o v e r n o r o f A n d h r a P r a d e s h , H i s Ex cellenc y, Dr.C .R angarajan.Both the r eports had strongl y recommended computerisation of banking operations at various levels a n d s u g g e s t e d a p p r o p r i a t e architecture.In the 'seventies, there was a four -fold increase in the number of branches, five-fold increase in advances and a six fold increase indeposits'. Mechanisation was seen as the best solution to the"problems inherent in the manual system of operations, their adverseimpact on customer services and the grave dangers to banks in the context of increasing incidence of frauds.The first of these Committees, viz. the Committee on theMechanization of the Banking Industry (1984) was set up for thefirst time to suggest a model for mechanisation of bank branches,regional / controlling offices and Head Office necessitated by theexplosive growth in the geographical spread of banking followingnationalization of banks in 1969.In the first phase of computerisation spanning the five years ending1989, banks in India had installed 4776 ALPMs at the branch level,233 mini computers at the Regional /Controlling office levels andtrained over 2000 programmers/systems personnel and over 12000 Data Entry Terminal

Operators. The Reserve Bank too hadembarked upon an ambitious program to bring about state-of-the-arttechnology in the clearing process and had introduced MICR c l e a r i n g a t 4 c e n t r e s a n d c o m p u t e r i z e d c l e a r i n g s e t t l e m e n t a t 9 centres.Against this backdrop, the Committee on Computerisation in Bankswas set up once again under Dr.Rangarajan's Chairmanship to draw 49 up a perspective plan for computer isation in banks. In its r e p o r t submitted in 1989, the Committee acknowledged the gains of the i n i t i a l e f f o r t s a n d s o u g h t t o m o v e a w a y f r o m t h e s t a n d - a l o n e dedicated systems to an on-line transaction processing environmentin branch banking. It recommended that the thrust of bank computerisation for the following 5 years should be to fullycomputerise the operations at both the front and back offices of largebranches then numbering around 2500.

It is being increasingly felt that the banking industry will have to mechanise and computerise its services in order to keep pace with technical advancements and innovations. Such computerisation has to be undertaken at three stages simultaneously : 1. Head Office Level ; 2. Zonal and Regional Level; and 3. Branch Level. However, in spite of all efforts, as discussed later, mechanisation and computerisation has not been adopted by the commercial banks to the desired extent. It is, therefore, necessary to know about the advantages and limitations of computerisation besides the difficulties faced by the Indian banks in effective implementation of computerisation. Advantages The computerisation offers the following advantages : Speedy and Better Service. Computerisation helps in carrying out various banking operations smoothly and precisely, and thus providing a better and speedy service to the customers. Change in work culture. Computerisation makes banking work more methodical and systematic. Customers gain by proper encashment of their cheques, statement of accounts and other services. Computers process voluminous data with accuracy and speed, which in turn relieves the banks staff of this tedicious job.

This enables banks to utilise the energies of their staff towards productive, innovative and development areas. All this put together brings a complete change in the work culture. Up-to-date accounts. Computerization helps the banks in keeping their house keeping functions up-to-date. Balancing of books and reconciliation of inter-branch accounts, clearance of cheques, preparation of statistical returns etc. are all done with precision and speed. Thus, the banks records remain always up-to-date. Effective management information system. Computerisation helps in developing an effective management information system through supply of timely

and adequate information required by top management for decision making and control purposes. Facing competition. Computerization helps in facing competition by the local banks with international banks both in and outside the country.As a matter of fact without computerization these days it will become almost impossible to keep pace in the international banking world. Limitations Computerization suffers from the following limitations : Opposition from employees unions. The unions representing bank employees from time to time have been raising their voice against introduction of computerisation on the plea that besides blocking fresh employment opportunities in banks computerisation may even render the existing staff surplus To a great extent this fear of the employees has been removed through mutual consultations between the management and the staff and making them understand the vast employment opportunities otherwise offered by the computerization. Lack of personal touch. It is feared that introduction of mechanisation/computerisation in banking operations will make the banking services impersonal. This fear is also unfounded since the customer is more interested in getting prompt and efficient service than anything else. Heavy capital expenditure. Computerization, of course, needs heavy expenditure in terms of equipments, cool and dust-free atmosphere etc. However, keeping in mind the long-term advantages of computerisation and better banking services, the initial investment in computerisation cannot be considered as an unprofitable investment.

Lack of qualified staff. Computerization requires sincere, educated and qualified personnel to handle expensive and sophisticated equipments. In case the staff lacks any of the above basic qualities, the customer service would be adversely affected. However, this problem can be sorted out over a period of time if concerted efforts are made by all concerned persons to ensure efficient working of the equipments.

Characterstics
A Computer is better than human being. It possesses some characteristics. These are as follows: Speed It can access and process data millions times faster than humans can. It can store data and information in its memory, process them and produce the desired results. It is used essentially as a data processor. All the computer operations are caused by electrical pulses and travels at the speed of light. Most of the modern computers are capable of performing 100 million calculations per second. Storage Computers have very large storage capacity. They have the capability of storing vast amount of data or information. Computers have huge capacity to store data in a very small physical space. Apart from storing information, todays computers are also capable of storing pictures and sound in digital form. Accuracy The accuracy of computer is very high and every calculation is performed with the same accuracy. Errors occur because of human beings rather than technological weakness; main sources of errors are wrong program by the user or inaccurate data. Diligence A computer is free from tiredness and lack of concentration. Even if it has to do 10 million calculations, it will do even the last one with the same accuracy and speed as the first.

Versatility Computer can perform wide range of jobs with speed, accuracy, and diligence. In any organisation, often it is the same computer that is used for diverse purposes such as accounting, playing games, preparing electric bills, sending e-mail and so on. Communication Computers are being used as powerful communication tools. All the computers within an office are connected by cable and it is possible to communicate with others in the office through the network of computer. Processing Power Computer has come a long way today. They began as mere prototypes at research laboratories and went on to help the business organisations, and today, their reach is so extensive that they are used almost everywhere. In the course of this evolution, they have become faster, smaller, cheaper, more reliable and user friendly.

Computerization in Banks
Almost a decade ago, automation was introduced into the Indian Banks. During this time, personal computers and servers have been installed and are being continuously installed along with banking software packages at various branches. This has automatised many of the bank branches activities. But this has still to be met as per the banks expectations and help deliver enhanced customer service. We have to enter into new markets and deploy new products quickly to get the best out of this automatisation. But the point to be seen is, whether all these products are friendly with the customers and profitable to the banks. Is this network enough to move both information and money efficiently. Is the top management of the banks getting the right information on time to enable them take better and faster decisions. Whether the technology which we are using today is open enough to integrate seamlessly with emerging technologies. Such type of questions are arising increasingly in the present liberalized and highly competitive environment. Many nationalized banks are not ready to accept the same. All the issues associated with the above automation stem from two main things. Firstly, the drawbacks of the existing branch banking software and secondly the lack of networking infrastructure are the main constraints. Both combine to create islands of information which do not help effective decision making. Existing branch banking applications do not afford some very important facilities such as the bank cannot deploy new retail products and new delivery methods quickly and economically. And then the bank branch cannot have an enterprise wide view of its assets, liabilities and profitability. Further the banks cannot integrate corporate and treasury operations to gain synergies. Only a centralized banking solution can enable the provision of facilities which are critical to the efficient and effective functioning of a bank. A centralized banking solution does not mean a main frame. In fact, the latest advanced solutions run on powerful saleable, secure and cost effective systems. With such centralized solutions, the bank can retain or simply upgrade its existing software and hardware. These solutions give the

bank the flexibility to start computerization at a lower scale with few branches and scale upwards afterwards and connect hundreds of branches in a multi tier manner. In the present Indian scenario, there is a preponderance of brick and mortar branches and any solution which does not provide for a minimum data base at a branch for operations purposes will not work when the number of branches multiply to higher numbers. Actually, the banks buy only when they need to expand services or add new facilities. Contrary to this, solutions available on proprietary mainframe technology do not enable the banks to start small and also have very high incremental costs. These solutions were designed in an older era and are hence rigid when it comes to customizing especially for Indian conditions. The proprietary mainframe based solutions do not provide for a smaller backup database at the branch level. The risk of having all customer data residing only at the head office is well known. A more realistic approach is provided by the open UNIX and Windows NT based solutions. In addition to the central database the head office, there are lean branch databases which allow customers to avail of banking services even during communication link failures which is not at all an uncommon phenomenon in India. And because of the cost effectiveness of the open technology, this combination of the central server and small branch servers alongwith their databases is far more economical than the expensive proprietary mainframe and proprietary database and cost effective to maintain and upgrade in the longer run. It is imperative that Indian banks start to seriously consider migrating to a centralized banking approach which is flexible and based on open technology. It is the most cost effective way to increase back office efficiency which would enhance front office effectiveness. With this centralized banking customers get more varied and faster services. The customer will have access to anywhere banking wherein anybody can transact against his account from any of the banks designated retail outlets/branches. The customer can have banking as per his convenient timings. Customers will be able to have comprehensive account sweep and on-line funds transfer facility which will enable better funds management for large corporate customers. This will remove time consuming inter branch reconciliation and transactions between branches is sorted and stored at the head office system and resolved before

being posted. A relationship banking practice is possible with centralized information of the customers. The customers are treated in a more holistic manner rather than as a set of accounts. With centralized banking, it is easily possible for the customers to avail custom made & innovative products more quickly. Centralized solutions are usually highly parameterized softwares and changing combinations of various parameters give rise to new banking products. Hence defining and implementing new banking products becomes much faster and easier for everybody. Further, a centralized system on open and latest technology insulates the bank from any type of obsolescence by providing a standard based architecture using client server, Web technologies and distributed objects. The bank also has the option of individually implementing forex, securities operations and money markets in day to day operations.
Speedy and Better Service. Computerisation helps in carrying out various banking operations smoothly and precisely, and thus providing a better and speedy service to the customers. Change in work culture. Computerisation makes banking work more methodical and systematic. Customers gain by proper encashment of their cheques, statement of accounts and other services. Computers process voluminous data with accuracy and speed, which in turn relieves the banks staff of this tedicious job. This enables banks to utilise the energies of their staff towards productive, innovative and development areas. All this put together brings a complete change in the work culture. Up-to-date accounts. Computerization helps the banks in keeping their house keeping functions up-to-date. Balancing of books and reconciliation of inter-branch accounts, clearance of cheques, preparation of statistical returns etc. are all done with precision and speed. Thus, the banks records remain always up-to-date. Effective management information system. Computerisation helps in developing an effective management information system through supply of timely and adequate information required by top management for decision making and control purposes. Facing competition. Computerization helps in facing competition by the local banks with international banks both in and outside the country.As a matter of fact without computerization these days it will become almost impossible to keep pace in the international banking world.