ELECTRONIC TRANSFER

BY APARNA A

MEANING OF ELECTRONIC TRANSFER:

Electronic fund transfer is the electronic exchange, transfer of money from one account to another, within a single financial institution

or, across multiple institutions, through computer based system.

 

METHODS OF ELECTRONIC TRANSFER1. NATIONAL ELECTRONIC FUND

TRANSFER SYSTEM.2. ELECTRONIC CLEARING SYSTEM.3. REAL TIME GROSS SETTLEMENT

SYSTEM.4. INTERNET BANKING.

1. NATIONAL ELECTR0NIC FUND TRANSFER: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. Each individual who transfers from one account to another account is not settled or processed at that same moment, it’s done in batches.  Any amount of money can be transferred using NEFT. Customers with Internet banking accounts can use the NEFT facility to transfer funds nationwide on their own.

PROCEDURE INVOLVED IN THIS SCHEME IS,The sender of funds fills an EFT Application form giving the

details of the beneficiary i.e., his name, account no, bank name, branch city. The sender will authorize the bank to remit a certain amount to the recipient by debiting the amount in his account.

The bank prepares a schedule and dispatches the duplicate form to its service branch for data preparation.

The service branch of the bank prepares EFT data file by using software package supplied by RBI and send the name to the local office of RBI, which is effected 3 times in a day, at 12noon, 2pm and 4pm.

Now the RBI will consolidate the files received from all banks, sorts the transactions according to location of banks and prepares vouchers for debiting the banks remitted on the same day.

Vouchers for crediting the receiving bank’s accounts are prepared on the same day.

The receiving bank will process the remittance files sent by RBI and forward credit reports to various branches.

After the above process, the receiving branch will acknowledge every transaction to the remitting branch . The transfer of funds is thus completed.

EFT is very safe, reliable, quick and economical means of transfer of funds.

2. ELECTRONIC CLEARING SYSTEM (ECS)ECS is an electronic mode of funds transfer from one bank account to another. It can be used by institutions for making payments such as distribution of dividend interest, salary, and pension, among others. It can also be used to pay bills and other charges such as telephone, electricity, water or for making equated monthly installments payments on loans as well as SIP investments. ECS can be used for both credit and debit purposes.

TYPES OF ECSThere are two types of ECS called ECS (Credit) and ECS (Debit). It is available at different centers within the country and operated by RBI or by SBI and its subsidiary banks.ECS (Credit) is used for affording credit to a large

number of beneficiaries by raising a single debit to an account, such as dividend, interest or salary payment. Payment is received by the beneficiary promptly without any loss of the instrument. The company also saves lot of administrative costs, efforts and inconvenience which are involved in sending the payment instrument. Payments are received on the due date without the investors visiting their bank.

ECS (Debit) is used for raising debits to a number of accounts of consumers/ account holders for crediting a particular institution. This system ensures direct payment of various charges, fees, etc. from the payers` account to the recipient`s accounts electronically. For example, payment of electricity bills, telephone bills, school fees, insurance premium, etc. can be made under this system directly from the account of the customer to the account of the beneficiary.

3. REAL TIME GROSS SETTLEMENT SYSTEM(RTGS)RTGS is a funds transfer mechanism where transfer of money takes place from one bank account to another bank account in real time. In this system, transactions are processed continuously throughout the RTGS business hours. Under this system, electronic instructions are given by bank to transfer funds from this account to the accounts of another bank.

It is available in India only. The account holder who wants to send money has to give information of his account which is to be debited, account of other party which is to be credited, the name of beneficiary bank and its customer and IFSC number which is obtained from sender’s branch. Funds can be transferred through RTGS using internet banking facility provided by bank. The

minimum amount to be remitted through RTGS is RS 1LAKH. Thus they facilitate large value inter-bank payments and settlements in real time.

4. INTERNET BANKINGBanks also provide internet facility to their customers. With internet banking customers can avail of almost all services at the click of button. Internet banking is a way to access the bank account without stepping into the bank. The facilities are,

Customer can check his balance in various accountsHe can view his account statement and can download the statementHe can transfer funds from 1 account to anotherHe can pay utility bills onlineHe can request for cheque book.

Online services include fund transfer, stop payment, balance enquiry. For opening internet account an application form duly filled in, is submitted to the bank. Bank supplies user ID , operating guidelines within 7days. 

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