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NEFT and RTGS in India
By Barunkumar Bhowmick
In the above advertisement, one point is given as - Fund Transfer (RTGS/NEFT). In my cheque book of ICICI Bank, RTGS/NEFT IFSC code is printed on cheques. Naturally, it gives curiosity to know about RTGS and NEFT. I have compiled these two things as follows in a simple manner and hope it will be useful to readers. NEFT:
It stands for National Electronic Fund Transfer System introduced by Reserve Bank of India. It is a nation wide funds transfer system to facilitate transfer of funds from any bank branch to any other bank branch. This fund transfer takes place among the member banks and financial institutions throughout India. Most of the banks are members of NEFT. RBI publishes the list of bank branches participating in the NEFT on its website http://www.rbi.org.in/scripts/neft.aspx Main advantages are as under.
1. Transfers funds from one account to other bank accounts across India.
2. DDs/ cheques are not needed in case of Net Banking.
3. It is faster, safer, efficient, economical, easier and reliable system.
4. Can get confirmation of fund transfer through e-mail or SMS. You should have account in a bank to avail this facility. Or if you do not have account in a bank still you can avail this facility for cash transaction up to Rs. 50,000/-. But, beneficiary must have an account at the destination bank branch, as basically NEFT is an account to account funds transfer system. At least, following items will be required.
Beneficiary’s Name, Beneficiary branch and bank name, Beneficiary’s Account type and Account no. , Beneficiary’s Branch IFSC. Here, beneficiary means a person to whom the payment is directed. IFSC is short form of Indian Financial System Code. It is an alpha numeric code designed to uniquely identify the bank branches in India. Unlike MICR code which has 9 digits to identify the bank-branch, IFSC is 11 digit code with first 4 characters representing the banks code, the next character reserved as control character (Presently 0 appears in the fifth position) and remaining 6 characters to identify the branch. There are two ways to do NEFT.
1. Fill the application form along with details of cheques/Debit instruction, name and account number to whom the money is to be transferred, IFSC code of bank/branch where funds are to be remitted.
2. NEFT ONLINE. Through Net banking facility, you can transfer funds to other bank accounts across India. You have to register to avail this facility. Some banks allow this even without registration. In NEFT, settlement takes place at a particular point of time. For example, it takes place 6 times a day during the week days (9.00 hours , 11.00 hours, 12.00 hours, 13.00 hours, 15.00 hours and 17.00 hours) and 3 times during Saturdays (9.00 hours, 11.00 hours and 12.00 hours). Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time, i.e., if the transaction initiated later during the day, money would be transferred next day. RTGS:
It stands for Real Time Gross Settlement. It is also used to transfer money from one bank to another but on a ‘Real Time’ and on ‘Gross’ basis. This is the fastest possible money transfer system through the banking channel. ‘Real Time’ settlement means payment transaction is not subjected to any waiting period and money can be transferred to other bank account within 2 hours. The transactions are settled as soon as they are processed. ‘Gross’ settlement means the transaction is settled on one to one basis without bunching with any other transaction. Transactions are processed continuously throughout the RTGS business hours. Considering that money transfer takes place in the books of the Reserve Bank of India the payment is taken as final and irrevocable. RTGS is mainly used for high value clearing. In this system minimum transfer money required is Rs. 1 Lakh. There is no upper ceiling limit for RTGS. In NEFT, there is no minimum or maximum amount of transfer money. There is no charge for inward transactions. For outward transactions for Rs. 1 Lakh to Rs. 5 Lakh – charge is not exceeding Rs. 25 per transaction and for Rs. 5 Lakh and above – charge is not exceeding Rs. 50 per transaction. Following is the list of different countries and their RTGS systems: Albania AECH, RTGS
Australia RITS
Bulgaria RINGS
Canada LVTS (Final settlement by evening)
Chile LBTR/CAS
Croatia HSVP
Czech Republic CERTIS
Hong Kong CHATS
Iran SANTA
Israel Zahav
Kuwait KASSIP
Macedonia MIPS
Poland SORB
Russia BESP
Saudi Arabia SARIE
Singapore MEPS+
South Africa SAMOS
Switzerland SIC
Turkey EFT
UK CHAPS
US Fedwire
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