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By Rajkamal Rao
Go back to Finance: Core Banking in India
In the US, Chase, in 2011, introduced its Person to Person QuickPay service using which a Chase customer could electronically transfer funds to another recipient who has an account with another bank. This was hailed as a first. Bank of America, Wells Fargo and Citibank introduced a person to person transfer product only in the summer of 2012, but transactions are limited to account holders of these banks.
Most Indian banks offer an array of electronic funds transfer mechanisms that are superior to products in western banks. Indian banks are far more advanced and have been using the National Electronic Funds Transfer (NEFT) payment system since 2009. With NEFT, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporation having an account with any other bank branch in the country as long as both banks participate in NEFT. Funds are settled within 1-2 business days and most bank fund limits are generous allowing up to INR 5 Lakhs to be transacted each day (although the Reserve Bank of India does not impose any limits). Fees are nominal costing 10 INR flat for transactions up to 1 Lakh.
For quicker transactions, an RTGS (Real Time Gross Settlement) transaction can credit your beneficiary's account on the same day (usually within 4 hours), provided your transaction is posted before the bank specified business hours. The minimum amount for an RTGS transaction is generally INR 2 Lakhs.
NEFT has taken Indian banking and e-commerce by storm. The concept of sending a check by mail or sending a Demand Draft or Money Order is considered so old-fashioned. When you owe companies or individuals money, they expect that you pay them via Netbanking and NEFT. Companies and individuals freely pass out their account numbers and the IFSC (Indian Financial System Code) code for their bank branch. The IFSC code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system. Using this information, you can log in to your bank account and set up a beneficiary. After validation (this generally takes one business day and a couple of additional security steps such as keying in a one-time password), you are free to forever make payments to the beneficiary, all online.
Go back to Finance: Core Banking in India
In the US, Chase, in 2011, introduced its Person to Person QuickPay service using which a Chase customer could electronically transfer funds to another recipient who has an account with another bank. This was hailed as a first. Bank of America, Wells Fargo and Citibank introduced a person to person transfer product only in the summer of 2012, but transactions are limited to account holders of these banks.
Most Indian banks offer an array of electronic funds transfer mechanisms that are superior to products in western banks. Indian banks are far more advanced and have been using the National Electronic Funds Transfer (NEFT) payment system since 2009. With NEFT, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporation having an account with any other bank branch in the country as long as both banks participate in NEFT. Funds are settled within 1-2 business days and most bank fund limits are generous allowing up to INR 5 Lakhs to be transacted each day (although the Reserve Bank of India does not impose any limits). Fees are nominal costing 10 INR flat for transactions up to 1 Lakh.
For quicker transactions, an RTGS (Real Time Gross Settlement) transaction can credit your beneficiary's account on the same day (usually within 4 hours), provided your transaction is posted before the bank specified business hours. The minimum amount for an RTGS transaction is generally INR 2 Lakhs.
NEFT has taken Indian banking and e-commerce by storm. The concept of sending a check by mail or sending a Demand Draft or Money Order is considered so old-fashioned. When you owe companies or individuals money, they expect that you pay them via Netbanking and NEFT. Companies and individuals freely pass out their account numbers and the IFSC (Indian Financial System Code) code for their bank branch. The IFSC code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system. Using this information, you can log in to your bank account and set up a beneficiary. After validation (this generally takes one business day and a couple of additional security steps such as keying in a one-time password), you are free to forever make payments to the beneficiary, all online.
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