Due to the bank’s Annual Closing activities, the State Bank of India (SBI) has notified its clients that some financial services will be momentarily unavailable on April 1, 2025. The bank made the announcement through a post on X. For banks to complete financial records, reconcile accounts, and guarantee a smooth transition into the new fiscal year, this planned downtime is crucial. In its message, SBI recommended customers arrange their transactions appropriately to prevent any disruption.
Reports of SBI mobile banking failures increased, with a peak occurring between 11:00 AM and 11:30 AM IST, according to data from Downdetector. Mobile banking accounted for 64% of the reported problems, with fund transfers coming in second at 33% and ATM troubles at 3%. Consumers vented on social media about unsuccessful transactions and trouble logging into their accounts.
Official Statements of SBI and NPCI
The services of Internet Banking, Retail, Merchant, Yono Lite, CINB, Yono Business Web & Mobile App, YONO, and UPI would not be available tentatively between 13:00 and 16:00 IST on April 1, 2025, owing to Annual Closing activity, according to SBI’s official website. ATM and UPI Lite services will be accessible during this time. Through its official X handle, ‘@TheOfficialSBI’, the bank has posted the same on its social media platform.
The National Payments Corporation of India (NPCI) announced that several banks are experiencing sporadic decreases in transactions as a result of the end of the fiscal year. The UPI system is operating smoothly, and we are collaborating with the relevant banks to address any issues that may arise. Via its official X handle, @npci_npci, NPCI also posted this information on its social media platform.
Services Available Vs Non Available Services
•UPI Lite
•ATM services
•Internet Banking (Retail
& Merchant Services)
•Corporate Internet Banking
(CINB)
•YONO Lite (Mobile Banking
App)
•YONO Business (Web &
Mobile App)
•YONO (SBI’s Digital Banking
Platform)
•Unified Payments Interface
(UPI) Transactions
For more seamless transactions, SBI users might try using other bank accounts to make payments. Small transactions can be made using UPI light without a UPI PIN if it is available. Payments can also be made with ATM-cum-debit cards.
Why Banks are Closed on 1 April 2025?
On April 1, 2025, India’s next fiscal year officially begins. On this day, banks prepare financial reports and audit records, close and reconcile their books for the previous fiscal year, and update loan balances and interest rates for the upcoming one. This closure is observed by banks in both the public and private sectors. Bank workers perform account reconciliation and audits in the background, while consumers are unable to transact at physical branches. Various states have planned a number of bank holidays for April 2025, including celebrations of Akshaya Tritiya, Mahavir Jayanti, Ambedkar Jayanti, Good Friday, Bohag Bihu, and Basava Jayanti.
According to the Reserve Bank of India (RBI), Kotak Mahindra Bank is now free to continue issuing new credit cards and onboarding new clients online after restrictions were removed. This follows the RBI’s decision in April of last year to stop Kotak Mahindra Bank from accepting new clients via its mobile and online banking platforms. Additionally, it was prohibited from issuing new credit cards by the central bank. The RBI observed that the bank has submitted compliance and taken action to resolve the previously raised supervisory concerns.
The RBI further emphasised that an external audit was conducted on the bank to confirm these compliances. The central bank stated in a statement released on February 12 that in order to confirm the compliance, the bank also hired an outside auditor with RBI’s prior consent. The Reserve Bank has now chosen to remove the aforementioned restrictions imposed on Kotak Mahindra Bank Limited after being satisfied with the bank’s representations and corrective actions.
Why RBI Barred Kotak Mahindra Bank?
It is important to remember that the RBI subsequently banned the bank, stating that it had concerns after conducting an IT investigation of the bank and that the bank had “continued” to fail to adequately and promptly resolve these concerns. The RBI went on to state that significant shortcomings and non-compliances were found in the following areas: vendor risk management, business continuity, disaster recovery rigour and practice, patch and change management, user access management, IT inventory management, and data security and data leak prevention strategy.
Over the years, the RBI has been examining banks and other financial organisations more closely. The country has also witnessed the central bank crack down on Paytm last year, which resulted in the closure of Paytm Payments Bank on March 15. Persistent compliance problems and supervisory worries, including infractions of customer due diligence regulations, were among the reasons given. Similar limits were imposed on HDFC Bank by the RBI in 2020, which prevented the bank from obtaining new credit card clients and from commencing its upcoming digital business-generating initiatives. But nearly two years later, in 2022, HDFC Bank was freed from this restriction.
RBI Enhancing Security Features of India’s Banking Services
The central bank has made a number of steps to better oversee the rapidly expanding digital banking and lending industry, even as its grip on surveillance is clear. In an effort to fight financial fraud, the central bank most recently announced during its monetary policy meeting on February 7 that it would launch an exclusive domain name for Indian banks, “bank.in.”
The RBI released digital lending rules in 2023 with the goals of protecting consumers, safeguarding data, and monitoring unlicensed technology partners engaged in lending. It released a framework for fintech self-regulatory organisations (SROs) in September 2024 with the goal of advancing accountability, transparency, and consumer protection.
Archaeological evidence from the era of 2000 BCE shows the beginning of the banking system with the first prototype that engaged in giving grain loans to farmers and traders. It also proves that money-lending was also an activity carried out in India and China as well. The historical roots of modern banking can be traced to medieval and renaissance Italy.
“Banking is defined as the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to conduct economic activities such as making a profit or simply covering operating expenses.”
The primary role of a bank is to take in money, called deposits, pool them, and lend them to those who need funds. In essence, banks are intermediaries between depositors and borrowers.
A Short History
At the time, India won independence, and the major banks of the country were privately run. This created a potential problem as people from rural areas were dependent on money lenders for financial assistance.
With an aim to resolve this issue, the government decided to nationalize these banks. Between 1969 and 1991, twenty banks, whose national deposits were more than Rs. 50 crores, were nationalized. The banks that were nationalized include the Bank of Baroda, Bank of India, Central Bank of India, Punjab National Bank, Oriental Bank of Commerce, UCO Bank, Union Bank of India, and many others. Also, the State Bank of India was formed in 1955.
The Impact of Nationalization
There were many other reasons and considerations behind the government’s decision to nationalize banks.
It led to an increase in funds and helped raise the economy of the country.
It increased the efficiency of the banks.
It helped boost the rural and agricultural sectors of the country.
It helped boost employment.
The profit of the banks was used by the government for the betterment of the citizens.
Competition decreased leading to increased efficiency.
Liberalization – 1991 Till Date
This was one of the biggest developments in the Banking sector. RBI gave licenses to 10 private sector banks to establish themselves in the country. These include ICICI Bank, HDFC Bank, Axis Bank, and IDBI Bank.
This introduced a new era of the Banking model. As technology advanced so did the banking model evolve.
Evolution of the Banking Model – A comparison
Indian Banking Growth
Until the 1990s, the banking sector in India had adopted the traditional means of banking and maintaining records manually. However, with the financial reforms since 1993, the Indian banking sector had to accept computerization in order to cope with the increasing overload and incompatibility of the manual system to sustain further growth.
In 1993, the employees’ association of the Indian banks (IBA) contracted an agreement with the bank manager about the introduction of computerized applications in banks. This agreement was the major breakthrough in the introduction of computerized applications and the development of communication networks in banks.
Once the technology was introduced into the banking sector, it saw unprecedented growth and advancement. Traditional means of banking were rapidly replaced by e-banking options –
ATMs (Automated Teller Machines)
Automated Teller Machines (ATMs) or 24-hour Tellers are electronic terminals that allow banking activities almost anytime. To withdraw cash, make deposits, or transfer funds between accounts, an ATM card / Debit card is utilized. It offers a host of functions –
Cash Withdrawals
Balance inquiry
Mini Statements for accounts
Cheque or Cash Deposit facility
Funds Transfer
Payments
Telephone Banking
Telephone banking is a service provided by a bank or a financial institution, enabling customers to perform various financial transactions without the need to visit a bank branch or ATM. These transactions do not involve cash or financial instruments such as cheques. Banks have upgraded their phone banking services enabling customers to avail of a whole host of services with the help of a Voice Response System (VRS)
Check account balance and statement information.
Transfer funds between accounts.
Payment of bills like utility, credit cards, mobile, etc.
Request cheque book or account statements.
Demand Draft request.
Mobile Banking
Mobile Banking refers to the provision and availability of banking and financial services with the help of mobile telecommunication devices. Mobile banking facility is offered by most major banks in India. This has made banking transactions easy and hassle-free. Customers can use mobile banking to view their account balance, make instant fund transfers and pay bills, etc. There are various types of mobile banking services i.e., SMS, USSD, and mobile apps. Some of the banks have incorporated services like loan approval and linking of insurance policy in their mobile banking apps.
Access to Account Information.
e-statement of account.
Loan statements.
Card statements.
Third-Party Money Transfers.
Payments via NEFT/IMPS/RETG/UPI/MMID.
Investments in various financial tools.
Opening fixed deposit/recurring deposits.
Portfolio management services.
Online Banking
Also known as Internet banking or web banking allows a user to conduct financial transactions via the Internet. It offers customers almost every service traditionally available through a local branch including deposits, transfers, and online bill payments. The most prominent advantages of online banking are:
24/7 access and account service.
Speed and efficiency.
Online bill payments.
Cost-effective for banks.
Other services
The nature of banking services has evolved in the last 5 decades. Banks have also expanded their services to include various other peripheral services apart from traditional banking services.
– Investment Options:
Banks offer their own investment plans with a SIP option or one-time investment options which are, typically, stock market-related options.
– Insurance Options:
Banks have added a whole host of insurance options that they offer. Some options they offer are car insurance, house insurance, travel insurance, unit-linked life insurance policies, etc.
The Risks Attached
With advancements also come risks. The digitization of banks carries the same risks associated with the online internet world. There are security threats, privacy invasions, virus attacks, phishing scams, technological issues, money laundering risks, and many others.
Of course, there are actions that can be taken by both the customer and the bank itself to minimize the threats but they can never be completely eliminated. Banks, in particular, must adopt a robust security plan and keep it upgraded at all times to protect the confidentiality of data.
What Does The Future Hold
The mobile and the wireless market has been one of the fastest-growing markets in the world. The arrival of technology and the escalating use of mobile and smartphone devices have given the banking industry a new platform. Connecting a customer anytime and anywhere to their money and needs is a must-have service that has become an unstoppable necessity. This worldwide communication is leading a new generation of solid banking relationships.
At the pace at which technology is evolving, there is no way to know how the banking system will further evolve. The only certainty is that it will become more accessible and friendlier. It will grow to encompass other options and services for the benefit of its customers.
FAQs
What are the recent changes in the banking system?
A recent change in the banking sector is the emergence of e-banking, which is crucial in offering better services to clients.
What is the difference between traditional and modern banking?
Traditional banking requires you to go to a physical bank branch in order to access your account. However modern banking, allows you to conduct transactions from anywhere with an internet connection.
What was the aim behind the nationalization of banks?
The aim was to encourage businesses in order to serve better the needs of the country’s economy.
Which was the first nationalized bank?
The first bank in India to be nationalized was the Reserve Bank of India.
