Monday, 19 December 2016

Types of electronic funds transfer: NEFT,RTGS and IMPS

MODES OF ELECTRONIC FUND TRANSFERS (NEFT,RTGS and IMPS )

difference between neft imps and rtgs
Inter-Bank Transfer enables electronic transfer of funds from the account of the remitter in one Bank to the account of the beneficiary maintained with any other Bank branch. There are three systems of Inter Bank Transfer – RTGS,NEFT and IMPS. Both these systems are maintained by Reserve Bank of India.

NEFT- National Electronic Fund Transfer


The National Electronic Funds Transfer is a nation-wide money transfer system which allows customers with the facility to electronically transfer funds from their respective bank accounts to any other account of the same bank or of any other bank network.Funds transfer through NEFT requires a transferring bank and a destination bank. With the RBI organizing the records of all the bank branches at a centralized database, almost all the banks are enabled to carry out an NEFT transaction.Any sum of money can be transferred using the NEFT system.
This system of fund transfer operates on a Deferred Net Settlement basis. Fund transfer transactions are settled in batches as opposed to the continuous, individual settlement in RTGS. Presently, NEFT operates in hourly batches from 9 am to 7 pm on week days and Working Saturdays.

Neft Process Flow

  1. Request for NEFT by Bank Customer / Any Person
  2. Data Entry at the Sending Bank Branch
  3. Processing / Data Upload at Sending NEFT Service Centre
  4. Transmission / Submission of NEFT Message to the NEFT Clearing Centre
  5. Processing and Transmission of NEFT Message to the Beneficiary Banks
  6. Data Validation at the Receiving NEFT Service Centre
  7. Payment to Beneficiary
  8. Revocation of Payment Instruction
  9. Acknowledgement / Positive Confirmation by the Beneficiary Bank and Return in Case of Non-Credit
  10. Sender to be Advised in Case of Returns
  11. Beneficiary to be Advised of the Receipt of Funds
If you like to know more about NEFT process visit official RBI website link given below.

Processing Charges / Service Charges for NEFT

a) Inward transactions at destination bank branches (for credit to beneficiary accounts)

– Free, no charges to be levied from beneficiaries
b) Outward transactions at originating bank branches – charges applicable for the remitter
-  For transactions up to Rs 10,000: not exceeding Rs 2.50 (+ Service Tax)
- For transactions above Rs 10,000 up to Rs 1 lakh: not exceeding Rs 5 (+ Service Tax)
-  For transactions above Rs 1 lakh and up to Rs 2 lakhs: not exceeding Rs 15 (+ Service Tax)
-  For transactions above Rs 2 lakhs: not exceeding Rs 25 (+ Service Tax)

RTGS- Real Time Gross Settlement

Real Time Gross Settlement as the name suggests is a real time funds transfer system which facilitates you to transfer funds from one bank to another in real time or on a gross basis.This is a system where the processing of funds transfer instructions takes place at the time they are received (real time). Also the settlement of funds transfer instructions occurs individually on an instruction by instruction basis (gross settlement). RTGS is the fastest possible interbank money transfer facility available through secure banking channels in India. The minimum value that can be transferred using RTGS is Rs. 2 Lakhs and above. However there is no upper cap on the amount that can be transacted.

Processing Charges / Service Charges for RTGS transactions

With a view to rationalize the service charges levied by banks for offering funds transfer through RTGS system, a broad framework has been mandated as under: 
a) Inward transactions – Free, no charge to be levied.
b) Outward transactions – ` 2 lakh to ` 5 lakh - not exceeding ` 30.00 per transaction; Above ` 5 lakh – not exceeding ` 55.00 per transaction.

IMPS-Immediate Payment Service 

The National Payments Corporation of India introduced a pilot mobile payment project also known as the Immediate Payment Service (IMPS). Immediate Payment Service (IMPS) is an instant interbank electronic fund transferservice available 24x7, throughout the year including Sundays and any bank holiday. Customers can transfer and receive funds via IMPS using their registered Mobile number and Mobile Money Identifier (MMID) or Account number and IFSC code.To be able to transfer money via IMPS route you must first register for the immediate payment services with your bank. On obtaining the Mobile Money Identifier (MMID) and MPIN from the bank you can login or make a request via SMS to transfer a certain amount to a beneficiary. Now bank branches are also directly providing IMPS fund transfers up to a maximum of Rs.50000.

Difference between NEFT,RTGS and IMPS

  • There is no cap on the minimum value that can be transacted via NEFT. RTGS system however only process transactions of a value starting from Rs. 2 Lakhs and above as it caters to gross settlements.Upper cieling for IMPS is Rs.50000.
  • While the NEFT system settles transactions in batches, RTGS option transfer funds in real time. Using NEFT if a transfer order is received after the defined cut-off time, the transaction will have to wait until the next clearance to be fulfilled whereas RTGS transactions are processed continuously throughout the RTGS business hours.
  • IMPS stands out as the most convenient and instant mode of money transfer, allowing transfer of money across various accounts and banks on the go using a mobile device.

Charges for IMPS

For transactions up to Rs 10,000: not exceeding Rs 2.50 (+ Service Tax)
- For transactions above Rs 10,000 up to Rs 1 lakh: not exceeding Rs 5 (+ Service Tax)
- For transactions above Rs 1 lakh and up to Rs 2 lakhs: not exceeding Rs 15 (+ Service Tax)

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