Page 235 - DCOM208_BANKING_THEORY_AND_PRACTICE

Banking Theory and Practice

Notes Self Assessment

Fill in the blanks:
3. RTGS stands for .......................................
4. RTGS has been made possible because of an initiative of RBI which is known as
.......................................
5. The minimum amount to be remitted through RTGS is .......................................

14.3 National Electronic Funds Transfer (NEFT)

The full form of NEFT is National Electronic Funds Transfer. According to RBI, “NEFT is a
country-wide payment system providing one-to-one funds transfer.” In this system, individuals,
firms and corporates can transfer funds electronically 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. There is no limit- either minimum or maximum- on the amount of funds that could
be transferred using NEFT. However, maximum amount per transaction is limited to ` 50,000
for cash-based remittances and remittances to Nepal. It was launched in November 2005.

NEFT has many advantages over the other modes of funds transfer:
The remitter need not send the physical cheque or Demand Draft to the beneficiary.
The beneficiary does not need to visit his/her bank for depositing the papers.

The beneficiary need not be worried regarding loss/theft of physical instruments or the
likelihood of deceitful encashment.
Cost effective.

Credit verification of the remittances sent via texts or email.
Almost real time transfer of the funds to the beneficiary account in a secure manner.
Self Assessment

Fill in the blanks:
6. NEFT stands for ................................................
7. The limit on the amount of fund transfer is ...................................

14.4 Electronic Funds Transfer (EFT)

EFT or Electronic funds transfer refers to the computer-based systems used to perform financial
transactions electronically. It is a system of transferring money from one bank account directly
to another without any paper money changing hands. Direct deposit is one of the most widely
used EFT programs, in which payroll is deposited straight into an employee’s bank account.
It is used for both credit transfers (e.g. payroll payments) and for debit transfers (e.g. mortgage
payments).
The term EFT is used for a number of different concepts

Cardholder-initiated transactions, where a cardholder makes use of a payment card.
Electronic cheque clearing.
Electronic payments by businesses, including salary payments.

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