Frequently Asked Questions (FAQ) on Electronic Funds Transfer (EFT) System

Q.1. What is RBI-EFT System?

Ans RBI EFT is a Scheme introduced by Reserve Bank of India (RBI) to help banks offering their customers money transfer service from account to account of any bank branch to any other bank branch in places where EFT services are offered.

Q.2. At how many centres and bank branches is the EFT facility available?

Ans The EFT system presently covers all the branches of the 27 public sector banks and 55 scheduled commercial banks at the 15 centres (viz., Ahmedabad, Bangalore, Bhubneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthpuram). Funds transfer is possible from any branch of these banks at these centres to other branch of any bank at these centres both inter-city and intra-city.

Q.3. What is the funds availability schedule for the beneficiary?

Ans The remitting bank transmits the funds transfer message to RBI so as to reach NCC, before the cut off time for the settlement, the receiving bank’s account is credited by RBI at the destination centre and beneficiary gets credit on the same day.

Q.4. How does the RBI EFT system operate?

Ans Step-1: The remitter fills in the EFT Application form giving the particulars of the beneficiary (city, bank, branch, beneficiary’s name, account type and account number) and authorises the branch to remit a specified amount to the beneficiary by raising a debit to the remitter’s account.

Step-2: The remitting branch prepares a schedule and sends the duplicate of the EFT application form to its Service branch for EFT data preparation. If the branch is equipped with a computer system, data preparation can be done at the branch level in the specified format.

Step-3: The Service branch prepares the EFT data file by using a software package supplied by RBI and transmits the same to the local RBI (National Clearing Cell) to be included for the settlement.

Step-4: The RBI at the remitting centre consolidates the files received from all banks, sorts the transactions city-wise and prepares vouchers for debiting the remitting banks on Day-1 itself. City-wise files are transmitted to the RBI offices at the respective destination centres.

Step-5: RBI at the destination centre receives the files from the originating centres, consolidates them and sorts them bank-wise. Thereafter, bank-wise remittance data files are transmitted to banks on Day 1 itself. Bank-wise vouchers are prepared for crediting the receiving banks’ accounts the same day or next day.

Frequently Asked Questions (FAQ) on Electronic Clearing Service-(ECS)

Q.1. What is Electronic Clearing Service (ECS)?

Ans It is a mode of electronic funds transfer from one bank account to another bank account using the services of a Clearing House. This is normally for bulk transfers from one account to many accounts or vice-versa. This can be used both for making payments like distribution of dividend, interest, salary, pension, etc. by institutions or for collection of amounts for purposes such as payments to utility companies like telephone, electricity, or charges such as house tax, water tax, etc or for loan installments of financial institutions/banks or regular investments of persons.

Q.2. What are the types of ECS? In what way they are different from each other?

Ans There are two types of ECS called ECS (Credit) and ECS (Debit).

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.

ECS (Debit) is used for raising debits to a number of accounts of consumers/ account holders for crediting a particular institution.

ECS Credit System

Q.3. Who can initiate an ECS (Credit) transaction?

Ans. ECS payments can be initiated by any institution (called ECS user) who have to make bulk or repetitive payments to a number of beneficiaries. They can initiate the transactions after registering themselves with an approved clearing house. ECS users have also to obtain the consent as also the account particulars of the beneficiary for participating the ECS clearings.

Frequently Asked Questions (FAQ) on National Electronic Funds Transfer (NEFT) System

Q.1. What is NEFT System?

Ans National Electronic Funds Transfer (NEFT) system is a nation wide funds transfer system to facilitate transfer of funds from any bank branch to any other bank branch.

Q. 2. Are all bank branches in the system part of the funds transfer network?

Ans No. As on January 31, 2007, 18500 branches of 53 banks are participating. Steps are being taken to widen the coverage both in terms of banks and branches.

Q.3. Whether the system is centre specific or has any geographical restriction?

Ans No, there is no restriction in the number of centres or of any geographical area. The system uses the concept of centralised accounting system and the bank's account that are sending or receiving the funds transfer instructions, gets operated at one centre, viz, Mumbai only. The individual branches participating in NEFT could be located anywhere across the country, as detailed in the list provided on RBI website.

Q.4. What is the funds availability schedule for the beneficiary?

Ans The beneficiary gets the credit on the same Day or the next Day depending on the time of settlement.

Frequently Asked Questions (FAQ) on Real Time Gross Settlement (RTGS) System

Q.1 What is RTGS System?

Ans. The acronym “RTGS” stands for Real Time Gross Settlement. RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a “real time” and 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.

Q.2 How RTGS is different from Electronic Fund Transfer System (EFT) or National Electronics Funds Transfer System (NEFT)?

Ans 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. For example, NEFT settlement takes place 6 times a day during the week days (9.30 am, 10.30 am, 12.00 noon. 1.00 pm, 3.00 pm and 4.00 pm) and 3 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.

Q .3 Is there any minimum / maximum amount stipulation for RTGS transactions?

eAns. 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.

Q4. What is the time taken for effecting funds transfer from one account to another under RTGS?

Ans. 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.

Q.5 Would the remitting customer receive an acknowledgement of money credited to the beneficiary's account?

Ans 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.

(IFSC Code) Bank of Ceylon