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RTGS & NEFT

By Pravah Shukla
PGDM I
@ IISE
RTGS
RTGS
 RTGS stands for Real Time Gross Settlement.
 Transfer of money from one bank to another
on a ‘real time’ basis and on ‘gross’ basis.
 Real time means payment transaction is not
subjected to any waiting period
 Gross settlement means the transaction is
settled on one to one basis without
bunching with any other transaction.
 Once processed, payments are final and
irrevocable .
MINIMUM / MAXIMUM AMOUNT
STIPULATION FOR 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
TIME TAKEN FOR EFFECTING FUNDS
TRANSFER FROM ONE ACCOUNT TO
ANOTHER 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.
ACKNOWLEDGMENT OF MONEY
CREDITED
 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.
NON – PAYMENT
 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 2 hours.
 Once the money is received back by the
remitting bank, the original debit entry in
the customer's account is reversed.
AVAILABILITY OF RTGS SERVICE
WINDOW
 The RTGS service window for customer's
transactions is available from 9.00 hours to
16.30 hours on week days and from 9.00
hours to 12.30 noon on Saturdays for
settlement at the RBI end.
 However, the timings that the banks follow
may vary depending on the customer timings
of the bank branches.
PROCESSING CHARGES/SERVICE
CHARGES FOR RTGS
 Inward transactions – Free, no charge to be
levied
 Outward transactions –

 Rs. 1 lakh to Rs. 5 lakh -  not exceeding Rs.


25 per transaction.
Rs. 5 lakh and above – not exceeding Rs. 50
per transaction.
ESSENTIAL INFORMATION FOR
REMITTANCE
 Amount to be remitted
 His account number which is to be debited

 Name of the beneficiary bank

 Name of the beneficiary customer

 Account number of the beneficiary customer 

 Sender to receiver information, if any

 The IFSC Number of the receiving branch


HOW TO KNOW IFSC CODE OF
RECEIVING BRANCH
 The beneficiary customer can obtain the IFSC
code from his branch
 The IFSC code is also available in the cheque
leaf. 
 This code number and bank branch details
can be communicated by the beneficiary to
the remitting customer.
DO ALL BANK BRANCHES IN INDIA
PROVIDE RTGS SERVICE?
 No, all the bank branches in India are not
RTGS enabled. As on December 31, 2008
more than 52,000 bank branches are RTGS
enabled.
 The list of such branches is available on RBI
website  
www.rbi.org.in/Scripts/Bs_viewRTGS.aspx
CAN REMITTING CUSTOMER
TRACK THE REMITTANCE
TRANSACTION
 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.
VOLUME & VALUE OF
TRANSACTIONS ON A TYPICAL DAY
 On a typical day, RTGS handles about 60,000
transactions a day for an approximate value
of Rs.2,700 billion.
CAN A REMITTING CUSTOMER KNOW
WHETHER THE BANK BRANCH OF THE
BENEFICIARY ACCEPTS REMITTANCE
THROUGH RTGS?
 For a funds transfer to go through RTGS,
both the sending bank branch and the
receiving bank branch would have to be
RTGS enabled.
 The lists are readily available at all RTGS
enabled branches. Besides, the information
is available at RBI website (
www.rbi.org.in/Scripts/Bs_viewRTGS.aspx).
Considering that more than 52,000 branches
at more than 10,000 cities/ towns and taluka
places are covered under the RTGS system,
getting this information would not be
difficult.
NEFT
NEFT
 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.
As on December 31, 52427 branches of 89
banks are participating. Steps are being
taken to widen the coverage both in terms of
banks and branches.
ANY GEOGRAPHICAL RESTRICTION?
 No, there is no restriction of centers or of
any geographical area inside the country.
 The system uses the concept of centralized
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 (list provided on RBI site
http://rbi.org.in)
HOW DOES NEFT OPERATE?
 The remitter fills in the NEFT Application form
giving the particulars of the beneficiary
(bank-branch, beneficiary's name, account
type and account number) and authorises
the branch to remit the specified amount to
the beneficiary by raising a debit to the
remitter's account. (This can also be done by
using net banking services offered by some
of the banks.)
HOW DOES NEFT OPERATE?(CONTD…)
 The remitting branch prepares a Structured
Financial Messaging Solution (SFMS)
message and sends it to its Service Centre
for NEFT. 
 The Service Centre forwards the same to the
local RBI (National Clearing Cell, Mumbai) to
be included for the next available
settlement. Presently, NEFT is settled in six
batches at 0900, 1100, 1200, 1300, 1500
and 1700 hours on weekdays and 0900,
1100 and 1200 hours on Saturdays
HOW DOES NEFT OPERATE?(CONTD…)
 The RBI at the clearing centre sorts the
transactions bank-wise and prepares
accounting entries of net debit or credit for
passing on to the banks participating in the
system. Thereafter, bank-wise remittance
messages are transmitted to banks.
 The receiving banks process the remittance
messages received from RBI and effect the
credit to the beneficiaries' accounts.
NEFT-AN IMPROVEMENT OVER EFT
 The RBI-EFT system is confined to the 15
centers where RBI is providing the facility,
where as there is no such restriction in NEFT
as it is based on the centralized concept.
 The system also uses the state-of-the-art
technology for the communication, security
etc, and thereby offers better customer
service
FUNDS AVAILABILITY SCHEDULE
FOR THE BENEFICIARY AND LIMIT
ON THE AMOUNT OF INDIVIDUAL
TRANSACTION

 The beneficiary gets the credit on the same


Day or the next Day depending on the time of
settlement.
 There is no value limit for individual
transactions.
PROCESSING CHARGES/SERVICE
CHARGES
 While RBI has waived the processing charges
till March 31, 2009.
 With a view to rationalize the service charges
levied by banks for offering various electronic
products, a broad framework has been
mandated as under: –
 a) Inward transactions – Free, no charge to
be levied
b) Outward transactions –
Upto Rs. 1 lakh -  not exceeding Rs.5 per
transaction.
Rs. 1 lakh and above – not exceeding Rs. 25
per transaction.
IFSC CODE AND MICR CODE
 Indian Financial System Code (IFSC) is an
alpha numeric code designed to uniquely
identify the bank-branches in India.
 This is 11 digit code with first 4 characters
representing the banks code, the next
character reserved as control character
(Presently 0 appears in the fifth position)
and remaining 6 characters to identify the
branch.
 The MICR code has 9 digits to identify the
bank-branch.
HOW TO KNOW IFSC CODE OF YOUR
BANK BRANCH?
 RBI had since advised all the banks to print
IFSC on cheques leaves issued to their
customers. You may also contact your bank-
branch and get the IFS Code of that branch.
TIME OF NEFT SERVICE WINDOW
 There are six settlements at 0900, 1100,
1200, 1300, 1500 and 1700 hours on
weekdays and 0900, 1100 and 1200 hours on
Saturdays.
ESSENTIAL INFORMATION REQUIRED
FOR REMITTANCE
 Beneficiary details such as beneficiary name
and account number
 Name and IFSC of the beneficiary bank
branch.
RTGS AND NEFT

RTGS NEFT

 RTGS, transactions are  EFT and NEFT are


processed electronic fund transfer
modes that operate on a
continuously deferred net settlement
throughout the RTGS (DNS) basis which settles
business hours. transactions in batches.
In DNS, the settlement
takes place at a particular
point of time. All
transactions are held up
till that time
RTGS AND NEFT
RTGS NEFT

 Minimum  No Minimum value


transaction value is
Rs. 1,00,000  Works on Net
 Works on Gross
Settlement
Settlement
Thank You