Types of Money Transfer in India | Bank Exam Awareness

Money can be transferred from one bank account to another in several ways. With the progress of technology, online money transfers have become the most convenient way to transfer money from one bank to another. In India, there are various ways to transfer money in India. NEFT (National Electronic Funds Transfer), RTGS (Real Time Gross Settlement), and IMPS (Immediate Payment Service) are the ways to transfer money. While all three methods allow you to transfer money within the banking system, the best option will depend on your demands and the transaction’s urgency. In this article, we will share with you, Types of Money Transfer in India.

So, if you want to understand how to pick the best option for your needs, stay with us to learn everything you need to know about NEFT, RTGS, and IMPS transfers.

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National Electronic Funds Transfer (NEFT):

The Reserve Bank of India (RBI) owns and operates the National Electronic Funds Transfer System, popularly known as NEFT. It simplifies the process of transferring money from one bank to another. You can transfer money electronically to other bank accounts using NEFT. Before money is credited to the receiver’s account, the transaction takes around two hours to complete.

Before money is credited to the receiver’s account, the transaction takes around two hours to complete. The NEFT system is available 24 hours a day, 7 days a week, without disruption every day of the year regardless of holidays. The quantity of money that can be transmitted is unrestricted. If both banks are users of the NEFT network, you can start a money transfer from one bank account to another anywhere in the country.

Follow these steps to make an NEFT money transfer:

Select ‘Transfer to the other bank’ from the Fund Transfer tab (NEFT)
Choose the recipient account and fill in the required information.
Accept the Terms and Conditions
Check the details again, then confirm and finish the procedure.

Advantages of NEFT transfers:

Some of the major advantages of the NEFT system are:
Availability all year
A safe and secure
Funds transfer in near-real time
There is no requirement for a check or a demand draft.
Customers with savings bank accounts are not charged extra for NEFT transactions.
RBI does not apply any extra charges.
It’s available for various transactions.

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Real-Time Gross Settlement (RTGS):

Real-Time Gross Settlement (RTGS) is a payment system that allows for continuous real-time settlement of fund transfers. This covers the RTG’s ‘Real Time’ and ‘Gross Settlement’ features. Payments made using RTGS are irrevocable. The real-time aspect of the transaction is one of the most significant advantages that differentiate RTGS from other money transfer modes.

While RTGS transactions have no upper limit, the minimum amount that may be transmitted is Rs. 2 lakhs. RTGS transfers can be done by going to the nearest bank branch, via the internet, or through mobile banking. However, there are fees associated with RTGS transactions, which are set by the Reserve Bank of India at Rs. 24.50 for transfers between Rs. 2 and 5 lakhs. You can be charged around Rupees 49.50 for transfers of Rupees 5 lakh and above. The Reserve Bank of India released RTGS 24x7x 365, with effect from 14 December 2020. It is allowing banks to use this fund transfer system around the clock all year.

The following are the steps for transferring money using RTGS:

Select ‘Transfer to other banks’ from the Fund Transfer tab (RTGS)
Select the recipient account and fill in the required information.
Accept the Terms and Conditions
Recheck the details, if everything is correct, then confirm and finish the process.

Advantages of RTGS transfers:

There is no maximum amount (although there is a minimum limit of Rupees 2 Lakh)
Secure and safe
Real-time fund transfers
A check or a demand draught are not required.
The receiver will not need to go to a bank or deposit any documents.
The Reserve Bank of India establishes a charge limit.

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Immediate Payment Service (IMPS):

IMPS (Immediate Payment Service) is a real-time payment service. It is accessible 24×7. The National Payments Corporation of India (NPCI) offers IMPS, which allows for instant money transfers. Customers can also use the NPCI to send money via banks and PPIs (Prepaid Payment Instruments), such as smart cards, stripe cards, and digital wallets. People without a bank account can take advantage of electronic funds transfers by using PPI payment options.

IMPS is open 24 hours a day, seven days a week, including even bank holidays. The minimum money transfer limit is unrestricted; however, the maximum limit is Rupees 2 lakh. In this way, IMPS is a fund transfer technique that combines the advantages of NEFT and RTGS.

To make an IMPS money transfer, follow these steps:

Log in to Net Banking/Mobile Banking using your Customer ID and Password.
Pick the Funds Transfer option (Other Bank Account)
Choose a debit or credit account, an IMPS transfer mode, and a beneficiary account.
Put in the amount to be transferred and press the Submit button.
Click the “Confirm” button.
Double-check all of the information and confirm the transaction using an OTP (one-time-password) sent to your registered mobile phone.
Finally, click the submit button to confirm.

Advantages of IMPS transfers:

Instant money transfers
Safe and secure
Even on national holidays, we are available 24×7.
All you need is mobile banking enabled on your account to use it.
There are no fees involved, so it’s a good deal.
If you don’t have a bank account, you can use PPI (Prepaid Payment Instrument) services.

You can transfer money 24 hours a day using IMPS, however, RTGS and NEFT can only be done during working hours on weekdays + a few hours on Saturdays. Aside from NEFT, RTGS, and IMPS, you may also send money using UPI and cheque.

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Unified Payments Interface (UPI):

A Unified Payments Interface (UPI) is a real-time payment system that allows transactions to be completed using any smartphone that supports VPA (Virtual Payment Address).

Money transfer using UPI does not require any bank account information. Only a mobile number or a name is required, and transactions can be completed at any time. A bank account’s daily limit for UPI transactions is Rs. 1 lakh. Within the Rs.1,00,000/- limit, you can perform a maximum of 10 transactions in 24 hours. So now you know how much money you may send and receive using UPI Apps.

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Cheque:

Cheques are a type of payment that may be used to transfer money from one account to another. Simply write your name as the payee, the account number to which you wish to transfer the money, along with your signature.

It can be completed instantly at a branch If the transfer is within your bank.

If you want to transfer money from your account to another bank account, there are no limits, but if you want to withdraw a certain amount, there are restrictions.

You may only withdraw Rs 50,000 from a non-home branch using a cheque.

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Conclusion:

Using online money transfer services such as NEFT, RTGS, and IMPS has a variety of advantages. These systems are quick to respond, reliable, and accessible from any place. You may transfer money or make payments using these online banking services without having to go to the bank and wait in long queues. You may pick which transfer method is suitable based on the amount and the required urgency of your transfer, taking into account aspects such as transaction speed, additional fees, and, most importantly, timing.

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