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5 FAQs on online money transfer

RTGS (real-time gross settlement system) and NEFT (national electronic funds transfer) enable instant fund transfer with security.

Sushmita Choudhury | Print Edition: October 16, 2008

What do RTGS and NEFT stand for and how do they differ?
RTGS or real-time gross settlement system is the fastest way to transfer funds from one bank to another because, as the name suggests, all settlements take place instantly. The RTGS service window is open to customers from 9 a.m. to 3 p.m. on weekdays and from 9 a.m. to noon on Saturdays.

On the other hand, the national electronic funds transfer (NEFT) mechanism operates on a deferred net settlement basis. This means that all the transactions are carried out in batches and in fixed time slots. During the week, NEFT settlement takes place six times a day (9.30 a.m., 10.30 a.m., 12 noon, 1 p.m., 3 p.m. and 4 p.m.), but the service is only available till noon on Saturdays. Any transaction initiated after a designated settlement time has to wait till the next time slot. Both RTGS and NEFT are faster alternatives to writing a cheque or making a demand draft.

Who can use this facility?
Both individuals and corporates or banks can use the facility. However, the amount of money you want to move will dictate whether you use RTGS or NEFT. The RTGS system has a lower ceiling of Rs 1 lakh and can go as high as you want, so it is mainly used by large firms for high-value transactions. Since there is no minimum or maximum stipulation for NEFT transactions, this system is used for smaller remittances, mostly by individuals.

But this is not a free service — you have to pay for speed, security and convenience. This charge varies from bank to bank and can range from Rs 50 to Rs 2,000 per transaction depending on the amount and the mechanism used. A full schedule of the charges is available at http://www.rbi.org.in/SCRIPTs/ServiceCharges.aspx. The good news is that RBI has waived the processing charges till 31 March 2009.

What is the mandatory information that a customer needs to provide?
The prerequisites for availing of the NEFT/RTGS facilities are:

• Name and IFSC (Indian Financial System Code) of the beneficiary bank branch. This information is printed on cheque leaves, so you can get it from the beneficiary directly, but your bank too can give you this information.

• The account number and the name of the beneficiary. The good news is that many banks also provide this service through Internet banking.

Do all banks in India offer these facilities?
No, not yet. But with over 87 banks, which cover nearly 50,000 branches across the country, providing both the services, you will be able to avail of the facility easily.

Can one remit money abroad?
Currently, both the systems can be used only for remitting the Indian rupee among the participating banks within the country.

However, you can receive and send remittances from NRI accounts, subject to the applicability of the FEMA provisions.

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