Question 1. What Is Neft?
National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. Under this Scheme, individuals, firms and corporate can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme.
Question 2. What Is Rtgs System?
The acronym ‘RTGS’ stands for Real Time Gross Settlement, which can be defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). ‘Real Time’ means the processing of instructions at the time they are received rather than at some later time.
Question 3. How Rtgs Is Different From National Electronics Funds Transfer System (neft)?
NEFT is an electronic fund transfer system that operates on a Deferred Net Settlement (DNS) basis which settles transactions in batches. In DNS, the settlement takes place with all transactions received till the particular cut-off time. These transactions are netted (payable and receivables) in NEFT whereas in RTGS the transactions are settled individually.
For example: currently, NEFT operates in hourly batches – there are eleven settlements from 9 am to 7 pm on week days and five settlements from 9 am to 1 pm on Saturdays. Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time. Contrary to this, in the RTGS transactions are processed continuously throughout the RTGS business hours.
Question 4. What Is The Essential Information Required To Be Furnished To Transfer Funds Through Neft/ Rtgs?
It is essential to furnish the IFSC Number of the receiving branch apart from providing details of the beneficiary account.
Question 5. What Is Ifsc?
IFSC or Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system. This is an 11 digit code with the first 4 alpha characters representing the bank, and the last 6 characters representing the branch. The 5th character is 0 (zero). IFSC is used by the NEFT system to identify the originating / destination banks / branches and also to route the messages appropriately to the concerned banks / branches.
Question 6. What Is The Ifsc Code?
The IFSC code is a unique identifier that is assigned to all major bank branches in India. IFSC is an acronym for Indian Financial System Code. The IFSC code is made up of 11 characters. An example of an IFSC code is SBIN0RRAPGB.
First four characters: The first four characters are used to identify the bank. In the example above ‘SBIN’ is an identifier for the State Bank of India.
Fifth character: The fifth character is always zero and is reserved for future use.
Last six characters: The last 6 characters are used to identify the branch. ‘APGVB’ is the ‘ANDHRA PRADESH GRAMEEN VIKAS BANK’ of the State Bank of India.
Question 7. What Is The Micr Code?
The MICR code is an older code that was introduced by the Reserve Bank of India (RBI) in the early 1980’s to simplify fund transfer via checks or Demand Drafts (DD). MICR stands for Magnetic Ink Character Recognition and is a 9 digit numeric code that can be found on all checks. The MICR code is printed on the bottom of the check or DD using a special magnetic ink. It is possible to extract the information in the MICR code using a special machine even if there is some writing or stamping on top of the MICR code.
First three digits: The first three digits of a MICR code determine the city in which the bank account is held.
Next three digits: The next three digits of the MICR code is used to determine the bank.
Last three digits: The last three digits of the MICR code is used to identify the bank branch.
Question 8. Why Is The Ifsc Code Needed?
The IFSC code is used to perform electronic fund transfers across various banks in India. Most major bank branches involved in bank-to-bank electronic payments have a unique IFSC number. The IFSC code is used by banks to identify the source and target bank branches for fund transfer. It is also used to exchange messages and information across the banks.
Question 9. How Can I Find The Ifsc Code For A Particular Bank Account?
The IFSC code can be found from the sources below if you know the bank branch name and location.
Check leaf: The apex bank of India, Reserve Bank of India (RBI), has advised all banks to print the IFSC code on the check leaf. You can find the IFSC code printed on the check book and check leaves.
Contact bank branch: If you are unable to find the IFSC code on the check leaf, you can contact the bank branch directly and ask them for the IFSC code.
Question 10. How Is The Micr Code Used?
The MICR code is used extensively in a manual fund transfer process. Once a check is issued, it must be deposited by the recipient in his or her bank. The recipient’s bank processes the check and sends a request for transfer of funds to the source bank. The check is also sent along with the fund transfer request to the source bank. After the source bank validates the information received, the fund is credited to the recipient’s bank.
The purpose of the MICR code is to automate the check clearance process which results in a faster fund transfer. Since the MICR code can be read by a special check reading machine, the check clearance step is fast and not subject to human errors. It also serves as a protection against fraud. For instance, a check or DD that does not have a machine readable code can be identified as a fake check.
Question 11. What Is The Advantage Of An Electronic Fund Transfer Over The Manual Fund Transfer?
The process of manual fund transfer takes time as there are multiple manual steps involved. The Reserve Bank of India (RBI) is the apex bank in India and has stipulated the maximum time for a fund transfer by check. All local checks must be cleared within 3 working days. Outstation checks can take a maximum of 7,10 or 14 days depending on the location of the bank.
This means that the time to en-cash an outstation check in a remote location can be a maximum of 14 days. Also, there is a possibility that the check can be lost in transit from one bank to another, in which case the check must be re-issued. Further, some banks charge a service fee for outstation checks to cover incidental expenses to manually transfer the check.
Question 12. What Are The Forms Of Electronic Fund Transfer?
There are three major forms of electronic fund transfer – the NEFT (National Electronic Funds Transfer), the RTGS (Real Time Gross Settlement) and IMPS (Immediate Payment Service) transactions.
- NEFT: The NEFT is similar to an electronic check. The bank processes NEFT requests in batches, usually once an hour. After a request for a NEFT transaction is placed, you will have to wait for the next NEFT batch in order to process the transfer. If the NEFT request is placed after the cut-off time for the last batch in a day, the execution happens only on the subsequent day.
- RTGS: The RTGS is intended for high value transfers where the fund transfer is required immediately. Once a RTGS request is placed, the funds are instantaneously received by the recipients bank. The RBI has advised all banks to credit the recipient’s account within 30 minutes. Since the RTGS transaction happens in real time, it is possible to make these transactions only during bank working hours. Some banks may have a specific time for RTGS transactions.
- IMPS: The IMPS is a new electronic fund transfer option used for transferring funds 24-by-7 on all days, including Sundays and bank holidays.
The NEFT and RTGS transactions are governed by the RBI (Reserve Bank of India) while the IMPS transactions are governed by the NPCI (National Payments Corporation of India).
Question 13. How Can I Initiate An Electronic Fund Transfer?
The popular and convenient way to initiate an electronic fund transfer is via an online bank account. Some banks require a written authorization from the user to enable electronic fund transfer online.
Other means are available to initiate an electronic fund transfer. Most major banks have branches that are NEFT and RTGS enabled. It is possible to place a request at these banks for electronic fund transfer. You can make a fund transfer at these branches even if you do not have a bank account with the branch. Some banks have enabled the option of making a NEFT transaction at their ATM machines.
Question 14. How Can I Use The Ifsc Code To Make A Payment Using Online Banking?
An online account that is enabled for electronic fund transfer, sometimes called third party transfers, is necessary to perform a NEFT, RTGS or IMPS transaction to any other bank account in India. The first step is to add a ‘payee’ to whom you would like to transfer funds. The process of payee addition is easy if you have the IFSC code. The steps needed to add a payee into an online bank account is shown below. The actual steps might vary slightly from bank to bank.
The steps to add a payee are:
- Click on ‘Transfer Funds’ to initiate the fund transfer process.
- Click on “To Other Bank Accounts” to initiate a NEFT, RTGS or IMPS transaction.
- Click on “Add New Payee” to add a new recipient.
Question 15. How Does Ifsc Code Work?
Electronic funds transfer in India is facilitated by an alpha-numeric code called the Indian Financial System Code (IFS Code or IFSC). This code exclusively recognizes each bank branch which participates in the two main settlement and payment systems in India, namely, National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS).
IFSC code is an eleven-character code that is assigned by the Reserve Bank of India (RBI). The first portion of the code is composed of four letters representing the bank. Next character is zero that is reserved for future use. The last 6 characters are the identification code of the branch.
Let’s take an example:
IFSC Code of State Bank of India (SBI) starts with letters ‘SBI’. As there are a lot of banks with several branches, the IFSC code is used to identify the branch involved in the transaction.
IFSC codes are vital while carrying out payment transactions including RTGS, NEFT transfers. Like, for SBI, the IFSC Code will be SBIN0011569 for the branch located in Sector 31, Gurugram.
Question 16. How Can Ifsc Code Help You Transfer Your Money Through Neft?
National Electronic Fund Transfer (NEFT) is one of the most widespread online methods of transferring funds from one bank to another. NEFT is based on a deferred arrangement which actually means that the money is transferred in different sets (batches).
Currently, there are 12 payment settlements sets arranged between the time slab of 8 am and 7 pm for weekdays (Monday to Friday) and six payment settlements between 8 am and 1 pm for Saturdays.
Although there isn’t any cap on the amount that one can transfer through NEFT, however, a few banks have put a limit. For instance, SBI (State Bank of India) has put a cap of Rs 10 lakhs for NEFT transfer amount under their retail banking option.
Step-by-step procedure to transfer money via NEFT:
- To start with, your bank branch should be NEFT-enabled. You can visit RBI’s (Reserve Bank of India) website to check and confirm so.
- Complete the registration process for your net banking account by creating a username and password. However, your mobile number should be registered with your bank to complete the net banking registration.
- Afterwards, you need to add the beneficiary to your account to whom you want to transfer the money. To do this, you will need the beneficiary’s name, her/his bank account number and the IFSC (Indian Financial System Code) of her/his bank branch. IFSC can be either found on the bank statement or on the cheque leaf.
- Once you have successfully added the beneficiary, there might be a waiting time (assigned by the bank) before you can transfer funds to the added beneficiary. Again, for instance, SBI has a waiting time of 4 hours.
- Once logged into your net banking account, go to the option of ‘Transfer Funds’, select the name of the particular beneficiary you want to transfer funds to and complete the transfer with the help of an OTP (One Time Password) sent to your registered mobile number.
- The amount will be transferred to the beneficiary as per the next settlement’s schedule.
- The NEFT costs between Rs 2.50 to Rs 25 (+ service tax), depending on the amount transferred to the beneficiary.
- There are also certain limitations of NEFT transactions like you cannot transfer funds at any time you feel doing so. This service is available only on working days and within the working hours of your bank. You won’t be able to avail this service on weekends and bank holidays.
Question 17. How To Know The Ifsc Code?
It is simple. If you have an account with any branch of any bank, you will automatically get to know its IFSC code as it is printed on the passbook.
However, if you want to know the code without creating an account, you can do so via the internet. There is an official website of IFSC code where you can know all about this code.
Question 18. How Can One Transfer Money With Ifsc Code Of The Bank?
With IFSC Code, online money transfer has become easier and hassle-free. RBI has assigned these codes to the bank branches to perform NEFT, RTGS and IMPS fund transfer in a smooth way. To know how IFSC Code works while transferring money, let’s take an example here. The IFSC code of HDFC Saket, New Delhi branch is HDFC0000043.
- Here, the first four digits identify the bank, which is HDFC Bank.
- The 5th digit is always ‘Zero’.
- The remaining 6 characters 000043, helps Reserve Banks of India (RBI) identify the branch of the bank.
Let’s know how IFSC Code works during a transaction. When a fund transfer is initiated, one has to provide the bank account number and the IFSC code of the payee. Once the remitter provides all the necessary information, the fund is transferred to the account of the beneficiary with the help of IFSC Code in a smooth way. Fund transfer with IFSC code takes only a few minutes from the time of initiation.
IFSC Code also can be used at the time of purchasing mutual funds or insurance through Net Banking. As the National Clearing Cell of Reserve Bank of India monitors all transactions, IFSC Code helps RBI to keep a track of various transactions and execute fund transfer without any hassle.
Question 19. What Is Upi?
An RBI regulated entity, National Payment Corporation of India (NPCI), has developed an instant payment system known as the Unified Payment Interface (UPI). UPI operates over IMPS infrastructure and allows instant transfer of money between any two bank accounts. In case you are registering with the service for the first time, you’ll need to create a 4 to 6-digit UPI Pin (Personal Identification Number). You will have to enter the UPI PIN to perform all UPI transactions. UPI payment method allows fund transfer offline and online. Moreover, irrespective of the bank’s working hours, an individual can instantly transfer funds anytime.
Question 20. What Is Rtgs Code?
The IFSC code is often referred to as RTGS code or NEFT code, since it is used to transfer money using RTGS.
Question 21. Is Ifsc Code Branch Code?
IFSC code is not the same as branch code. IFSC (Indian Financial System Code) consists of eleven characters and is used to identify the bank and its branch. While the branch code is a part of the IFSC code, it is not the same.
Question 22. What Is The Meaning Of Rtgs In Banking?
RTGS stands for Real Time Gross Settlement. RTGS is one of the main payment and settlement systems in India. To make a payment using RTGS, one requires details like name of the account holder, account number and the IFSC code of the bank. Money can be transferred from one bank account to another safely using RTGS. IFSC code is often referred to as RTGS code or NEFT code for the same reason.
Question 23. Is Ifsc Code And Rtgs The Same?
IFSC stands for Indian Financial System Code. The IFSC code comprises eleven characters and is used to identify the bank and its branch. RTGS stands for Real Time Gross Settlement. It is one of two main payment and settlement systems in India. To conduct any such EFT, IFSC is required.
Question 24. What Is The Branch Code Of A Bank?
The branch code of a bank branch helps in distinguishing one branch from another. It is available on the bank’s website, printed on cheque books and pass-books. The last 6 characters of any given IFSC code is the branch code.
Question 25. Is Cheque Required For Neft?
No, a cheque is not required for NEFT.
Question 26. Is Imps Faster Than Neft?
Yes, IMPS is faster than NEFT as the money gets transferred immediately using IMPS while NEFT is settled in time-regulated batches.
Question 27. How Much Time Will It Take To Settle A Neft?
A NEFT is finished immediately. It can sometimes take up to 30 minutes, but it does not take longer than that.
Question 28. Can We Stop Neft Payment?
Once initiated, a NEFT payment cannot be stopped. In case any of the details (account number/ IFSC code) are incorrect, the funds get reversed to the account the payment was initiated from.
Question 29. Can Neft Transfer Be Reversed?
A NEFT payment cannot be reversed. However, in case any of the details required (account number/ IFSC code) are entered incorrectly, the funds get reversed to the account the payment was initiated from.
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