Fenil's Library

Khyati Dharamsi. Mumbai

People still using banks to transact cash might have found that banks have been charging higher than earlier on cash transactions at bank branches.

So, if you are looking to transfer funds to your father in your native place, handing over cash to the lady sitting at the bank counter and waiting for the transfer to happen might not be all that cheap. Bankers have made it clear that they want to eliminate cash in the system and hence charges for those making cash transactions are bound to go higher.

Of course, one can always use a cheque book, on which the charges might be lower or none at all. However, remember there are cheque-collection charges levied on outstation cheques.

Also, If you are not dealing in a large amount, or are based out of the National Capital Region, your money would reach your father’s account only after three days later, excluding public and weekly holidays.

The cheque truncation system, whereby an image of the cheque would just be sent to the bank from which money is to be deducted and cheques would be cleared within a day, will go live soon. Till then, there are other electronic options that banks offer. After perseverance from the Reserve Bank of India (RBI), banks have even lowered the charges that ran quite high during the initial days and deterred customers from using the facility.

Apart from phone and Internet banking, which are becoming popular, there are three other ways of transferring money at lower costs either to a bank account within your own city or outside, which help you save charges:

Electronic Clearing Service (ECS): If you wish to avoid issuing multiple cheques for transferring funds to your father at regular intervals like every month or year, you can use the ECS facility. There are no charges on this facility once a mandate is submitted, but incase there is not enough balance, there will be heavy charges.

This can also be used for other regular payments such as life insurance premium or mutual fund contributions. This saves you the trouble of remembering each month by what date a particular cheque is to be submitted. Some firms also penalise you for not using ECS for some services. For instance, ICICI Prudential Life Insurance’s Hospital Care policy charges 5% extra if monthly premium is not paid by the ECS route. In ECS, you can state the number of payments in advance and even discontinue the facility when you want. Similarly, an ECS application can be given for receiving funds, such as dividends.

Real-time Gross Settlement (RTGS): Here, the money is transferred on a real-time basis. The amount would be deposited to your father’s account as and when your bank processes and transfers the request. This has to be done between 9 am and 3 pm on regular days and 9 am and 12 pm on Saturdays.

Individual banks may have other deadlines so as to process the application before the RBI deadline. RTGS applications are settled on an individual basis and are the fastest way to transfer money. Banks will not wait for all applications to come in and then processed with transactions. If any transfer request does not materialise due to any complication, the bank is required to return the money to the customer within two hours. However, there is a minimum requirement of Rs 1 lakh for using RTGS facility. To transfer funds lower than Rs 1 lakh, one can use the National Electronic Funds Transfer (NEFT).

National Electronic Funds Transfer (NEFT): Under this facility, the amount is transferred within three hours of transacting. This happens as the funds are transferred electronically six times a day — at 9.30 am, 10.30 am, 12 noon, 1 pm, 3 pm and 4 pm and up to the first three batches on Saturdays. So, if you submit a request to transfer funds to your father via NEFT at 11 pm, the electronic message to transfer your money would be sent during the 12 pm cycle. RBI then segregates the requests bank-wise and tells each bank to either withdraw or deposit cash according to the request and the money will be transferred to your father’s account with the respective bank.

Things to remember

To transfer fund through either RTGS or NEFT you will need a few accurate details. These include the account number and bank name of the person sending the money, the account number, bank name, branch name, account type (savings/ current etc) of the person receiving the money.

While transferring money, you would also need something called as the IFS code, which is a number to identify a bank branch. If you know the bank name, branch and the city name, the bank official can help you with the IFS code. The system can also automatically update details when you provide other details.

The newly-issued cheque books of some banks contain the 11-digit IFS code on cheque leaves.

The above facilities are available at around 50,000 branches of around 98 banks, which have major banks and most of their branches in its ambit. A list of these banks and branches is available on the RBI’s website

http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=112 and

www.rbi.org.in/Scripts/Bs_viewRTGS.aspx.

In case your bank doesn’t offer the NEFT facility, you can transfer up to Rs 50,000 using a bank which offers the same.

The RBI website and some bank websites also provide application forms for NEFT and RTGS to be submitted at your bank branch. The application can also be submitted electronically by netbanking customers of some banks such as State Bank of India, Axis Bank, HDFC Bank, etc.

There is no acknowledgement given to the person who will receive funds (in this example, your father). The only way to check whether the funds have been transferred is to see the passbook or the account statement. In case your father hasn’t received the funds, you can contact the bank branch or the RBI general manager.