The term ‘Core Banking Solution’ 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 codes given below:

Statement 1 is the correct description. Core Banking Solution (CBS) is a centralised database and networking arrangement that links all branches of a bank, so a customer can deposit or withdraw from any branch of that bank, not only the branch where the account was opened. The question is really testing whether you know that CBS is about technology and customer convenience, not regulation or takeovers.

• Statement 2 is wrong. CBS is a bank's internal technology upgrade. RBI does not use it as a tool to control commercial banks. RBI supervision works through inspections, prudential norms and returns, not through a bank's branch software.
• Statement 3 is wrong. Takeover or amalgamation of a weak bank is governed by the Banking Regulation Act, 1949 (Section 45 deals with reconstruction and amalgamation) and RBI's schemes. CBS has nothing to do with it.

Core concept: CBS formed part of the push for digital banking and financial inclusion. It made anywhere-banking possible and supported later payment systems. For Mains, it is a good example of how technology improved banking efficiency while also raising cyber-security and data-protection concerns.

Answer: A.

Trap: Aspirants see RBI control and computerization together and pick the option that sounds like regulation. Remember that CBS is an internal system for the bank's own customers.