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Cowrie Shells to Virtual Currency
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Cowrie Shells to Virtual Currency


 Somewhere in the remote corners of Madhya Pradesh, traders in the local tribal market places accept cowrie shells as a valid currency. Tribals in this area still barter a cow for four pigs and paper currency is precious. On the other hand, here we are at a stage where stock traders in metros are logging online on the net to transact their business. Rapid advances in technology and communication will see a drastic change in the position of paper currency too. Now if you are a customer of ICICI Bank or HDFC Bank or Global Trust Bank, your bank will pay your electricity bills, insurance, cell phone bills and also transfer funds to your business client online. In fact, on the newly launched service www.icicidirect.com, you can even trade stocks and shares online. Net banking or e-banking has been prevalent in the developed world for quite some time. The number of online banks in Western Europe has grown from 863 internet-enabled banks in 1998 to 1845 by the end of 1999. In the US the number of people banking online is 6.3 million and 6.1 million trade online.

In India, only newly established banks have taken up this concept because only these banks have been fully computerized. Considering the fact that these services are offered free of charge, the effort is commendable. Both HDFC and ICICI have free demonstrations on their respective websites, which are self-explanatory and can guide a first time user on how to use the facility. Another bank offering this facility is Global Trust Bank. While the sites of old public sector banks like Canara Bank, Vijaya Bank are quite static with just application forms and information on services available, the sites of ICICI and HDFC can do online fund transfers.

These two new private sector banks have adopted the net wholeheartedly and unleashed a host of initiatives to harness its full power. At one end, they offer small, value added services like utility bill paying facility, buying of shares and selling of mutual funds. At the other, they are venturing into Business to Business spaces to allow big corporations and their vendors to conduct all their transactions online. This is taking place on secure foolproof payment gateways which will pacify anxious retail online traders.

With this concept, the net will offer one-stop financial services to the average banking customer. This will increase the total revenues per customer while reducing transaction costs via the net. ICICI Bank's major drive began in March 1999 when it managed to get 4,000 registrations for its retail banking Internet initiative. Today it claims to have nearly 100,000 internet registrations and is planning to set up kiosks so that people can walk in, conduct transactions and walk away. HDFC Bank claims more than 45% of its transactions are actually done on the telephone, or the ATM, or the internet. It is quite obvious that this is due to lesser costs and also convenience. So as time passes, it is natural that many more banks will follow suit.

The advantages are clear and hard hitting.



  • Banks can now process transactions much faster.
  • Transaction timings won't be confined to 10 to 2 pm.
  • It will be truly Anytime, Anywhere, Any bank facility.
  • The transaction cost is reduced from Rs 45-50 to just Rs 1-4.
  • The ability to connect banking services to payments makes it a seamless transaction.
For example, HDFC Bank has a tie up with utility companies to pay phone bills from a customer's account directly to the company over the phone or the net. (Read more about it in the Net Banking article in our Trade and Commerce page) ICICI being the first bank to introduce this feature with its www.billjunction.com, has now launched Online Trading on its www.icicidirect.com So after all is said and done, with this large potential, the only hurdle now ironically is the customer. Of the HDFC Bank's 650,000 customers only a 100,000 are using the net banking facility. Despite the huge assurances of the transaction being secure, the Indian customer is still wary of the net.

At present, the convenience of the net is most optimally utilized by Non Resident Indians. NRIs can now open and operate an account from any country and also transfer funds to their relatives here with a click of a mouse. So eventually will paper currency vanish one day? Just ask the cowrie shell trader in Madhya Pradesh!



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