RTGS & NEFTBy Pravah Shukla PGDM I@ IISE

RTGS

RTGS

RTGS stands for Real Time Gross Settlement. Transfer of money from one bank to another

on a ‘real time’ basis and on ‘gross’ basis. Real time means payment transaction is not

subjected to any waiting period Gross settlement means the transaction is

settled on one to one basis without bunching with any other transaction.

Once processed, payments are final and irrevocable .

MINIMUM / MAXIMUM AMOUNT STIPULATION FOR RTGS TRANSACTIONS

 The RTGS system is primarily for large value transactions.

The minimum amount to be remitted through RTGS is Rs.1 lakh

There is no upper ceiling for RTGS transactions

TIME TAKEN FOR EFFECTING FUNDS TRANSFER FROM ONE ACCOUNT TO ANOTHER UNDER RTGS

Under normal circumstances the beneficiary branches are expected to receive the funds in real time as soon as funds are transferred by the remitting bank.

The beneficiary bank has to credit the beneficiary's account within two hours of receiving the funds transfer message.

ACKNOWLEDGMENT OF MONEY CREDITED

The remitting bank receives a message from the Reserve Bank that money has been credited to the receiving bank

Based on this the remitting bank can advise the remitting customer that money has been delivered to the receiving bank.

NON – PAYMENT

It is expected that the receiving bank will credit the account of the beneficiary instantly.

If the money cannot be credited for any reason, the receiving bank would have to return the money to the remitting bank within 2 hours.

Once the money is received back by the remitting bank, the original debit entry in the customer's account is reversed.

AVAILABILITY OF RTGS SERVICE WINDOW

The RTGS service window for customer's transactions is available from 9.00 hours to 16.30 hours on week days and from 9.00 hours to 12.30 noon on Saturdays for settlement at the RBI end.

However, the timings that the banks follow may vary depending on the customer timings of the bank branches.

PROCESSING CHARGES/SERVICE CHARGES FOR RTGS

Inward transactions – Free, no charge to be levied

Outward transactions – Rs. 1 lakh to Rs. 5 lakh -  not exceeding Rs.

25 per transaction.Rs. 5 lakh and above – not exceeding Rs. 50 per transaction.

ESSENTIAL INFORMATION FOR REMITTANCE

Amount to be remitted His account number which is to be debited Name of the beneficiary bank Name of the beneficiary customer Account number of the beneficiary customer  Sender to receiver information, if any The IFSC Number of the receiving branch

HOW TO KNOW IFSC CODE OF RECEIVING BRANCH

The beneficiary customer can obtain the IFSC code from his branch

The IFSC code is also available in the cheque leaf. 

This code number and bank branch details can be communicated by the beneficiary to the remitting customer.

DO ALL BANK BRANCHES IN INDIA PROVIDE RTGS SERVICE?

No, all the bank branches in India are not RTGS enabled. As on December 31, 2008 more than 52,000 bank branches are RTGS enabled.

The list of such branches is available on RBI website  www.rbi.org.in/Scripts/Bs_viewRTGS.aspx

CAN REMITTING CUSTOMER TRACK THE REMITTANCE TRANSACTION

It would depend on the arrangement between the remitting customer and the remitting bank

Some banks with internet banking facility provide this service.

Once the funds are credited to the account of the beneficiary bank, the remitting customer gets a confirmation from his bank either by an e-mail or by a short message on the mobile.

VOLUME & VALUE OF TRANSACTIONS ON A TYPICAL DAY On a typical day, RTGS handles about 60,000

transactions a day for an approximate value of Rs.2,700 billion.

CAN A REMITTING CUSTOMER KNOW WHETHER THE BANK BRANCH OF THE BENEFICIARY ACCEPTS REMITTANCE THROUGH RTGS?

For a funds transfer to go through RTGS, both the sending bank branch and the receiving bank branch would have to be RTGS enabled.

The lists are readily available at all RTGS enabled branches. Besides, the information is available at RBI website (www.rbi.org.in/Scripts/Bs_viewRTGS.aspx). Considering that more than 52,000 branches at more than 10,000 cities/ towns and taluka places are covered under the RTGS system, getting this information would not be difficult.

NEFT

NEFT

National Electronic Funds Transfer (NEFT) system is a nation wide funds transfer system to facilitate transfer of funds from any bank branch to any other bank branch. As on December 31, 52427 branches of 89 banks are participating. Steps are being taken to widen the coverage both in terms of banks and branches.

ANY GEOGRAPHICAL RESTRICTION?

No, there is no restriction of centers or of any geographical area inside the country.

The system uses the concept of centralized accounting system and the bank's account, that are sending or receiving the funds transfer instructions, gets operated at one centre, viz, Mumbai only.

The individual branches participating in NEFT could be located anywhere across the country (list provided on RBI site http://rbi.org.in)

HOW DOES NEFT OPERATE?

The remitter fills in the NEFT Application form giving the particulars of the beneficiary (bank-branch, beneficiary's name, account type and account number) and authorises the branch to remit the specified amount to the beneficiary by raising a debit to the remitter's account. (This can also be done by using net banking services offered by some of the banks.)

HOW DOES NEFT OPERATE?(CONTD…)

The remitting branch prepares a Structured Financial Messaging Solution (SFMS) message and sends it to its Service Centre for NEFT. 

The Service Centre forwards the same to the local RBI (National Clearing Cell, Mumbai) to be included for the next available settlement. Presently, NEFT is settled in six batches at 0900, 1100, 1200, 1300, 1500 and 1700 hours on weekdays and 0900, 1100 and 1200 hours on Saturdays

HOW DOES NEFT OPERATE?(CONTD…)

The RBI at the clearing centre sorts the transactions bank-wise and prepares accounting entries of net debit or credit for passing on to the banks participating in the system. Thereafter, bank-wise remittance messages are transmitted to banks.

The receiving banks process the remittance messages received from RBI and effect the credit to the beneficiaries' accounts.

NEFT-AN IMPROVEMENT OVER EFT

The RBI-EFT system is confined to the 15 centers where RBI is providing the facility, where as there is no such restriction in NEFT as it is based on the centralized concept.

The system also uses the state-of-the-art technology for the communication, security etc, and thereby offers better customer service

FUNDS AVAILABILITY SCHEDULE FOR THE BENEFICIARY AND LIMIT ON THE AMOUNT OF INDIVIDUAL TRANSACTION

The beneficiary gets the credit on the same Day or the next Day depending on the time of settlement.

There is no value limit for individual transactions.

PROCESSING CHARGES/SERVICE CHARGES While RBI has waived the processing

charges till March 31, 2009. With a view to rationalize the service

charges levied by banks for offering various electronic products, a broad framework has been mandated as under: –

a) Inward transactions – Free, no charge to be leviedb) Outward transactions –Upto Rs. 1 lakh -  not exceeding Rs.5 per transaction.Rs. 1 lakh and above – not exceeding Rs. 25 per transaction.

IFSC CODE AND MICR CODE

Indian Financial System Code (IFSC) is an alpha numeric code designed to uniquely identify the bank-branches in India.

This 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.

The MICR code has 9 digits to identify the bank-branch.

HOW TO KNOW IFSC CODE OF YOUR BANK BRANCH?

RBI had since advised all the banks to print IFSC on cheques leaves issued to their customers. You may also contact your bank-branch and get the IFS Code of that branch.

TIME OF NEFT SERVICE WINDOW

There are six settlements at 0900, 1100, 1200, 1300, 1500 and 1700 hours on weekdays and 0900, 1100 and 1200 hours on Saturdays.

ESSENTIAL INFORMATION REQUIRED FOR REMITTANCE

Beneficiary details such as beneficiary name and account number

Name and IFSC of the beneficiary bank branch.

RTGS AND NEFT

RTGS, transactions are processed continuously throughout the RTGS business hours.

EFT and NEFT are electronic fund transfer modes that operate on a deferred net settlement (DNS) basis which settles transactions in batches. In DNS, the settlement takes place at a particular point of time. All transactions are held up till that time

RTGS NEFT

RTGS AND NEFT

Minimum transaction value is Rs. 1,00,000

Works on Gross Settlement

No Minimum value

Works on Net Settlement

RTGS NEFT

Thank You