Page 123 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes on "gross" basis. This is the fastest possible money transfer system through the banking channel.
Settlement in "real time" means payment transaction is not subjected to any waiting period. The
transactions are settled as soon as they are processed. "Gross settlement" means the transaction
is settled on one to one basis without bunching with any other transaction. Considering that
money transfer takes place in the books of the Reserve Bank of India, the payment is taken as
final and irrevocable.

6.2 RTGS vs Electronic Fund Transfer System (EFT) or National
Electronics Funds Transfer System (NEFT)

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.

Example: NEFT settlement takes place 6 times a day during the week days (9.30 am, 10.30
am, 12.00 noon, 1.00 p.m, 3.00 p.m and 4.00 p.m) and three times during Saturdays (9.30 am, 10.30
am and 12.00 noon). Any transaction initiated after a designated settlement time would have to
wait till the next designated settlement time.

Contrary to this, in RTGS, transactions are processed continuously throughout the RTGS business
hours.

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. No minimum or
maximum stipulation has been fixed for EFT and NEFT transactions.
Time Consumed for Funds Transfer 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.

Acknowledgement of Funds Transfer

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.
Refund of Money in Case of non-credit to the Beneficiary

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 lacking of Remittance Transaction under RTGS by the Remitter.

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.

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