According to statistics by IBEF (India Brand Equity Foundation)*, India currently has an astounding 96,068 banks, which include public and private sector banks, foreign banks, rural regional banks as well as urban and rural cooperative banks. Apart from the immense number of banks, India reportedly has over 221,700 ATMs active across the length and breadth of the country. The banking sector is set to increase the number of ATMs to over 407,000 by 2021. These remarkable figures showcase the strong banking infrastructure of the country. With the improved banking structure, there has been a resultant rise in online banking in the country, especially after the demonetization move by the Central Government in November 2016. The increasing focus on promoting online banking by the banks and government has shown incredible results. According to a report in the Financial Express, currently, there are over 45 million active online banking users in the country. This number of online banking users is expected to be as much as 150 million, by 2020 in India.
Best Ways for Banking in India
With an increase in smartphones and online shopping, larger numbers of customers are now choosing to make payments using online banking methods. Online banking offers incomparable efficiency and convenience to customers. Today, Indian banks provide various options for online banking to their customers. The top five ways for online money transfers in India are:
NEFT (National Electronic Fund Transfer)RTGS (Real Time Gross Settlement)IMPS (Immediate Payment Service)UPI (Unified Payment Interface) Cheque
Choosing the Best Money Transferring Method in India
Before jumping to select one of the five methods, it is important to know the factors that can help decide the best-suited money transferring method for you. These are the factors that outline the aim and result of any online money transferring methods:
Value of Fund – The amount you wish to send online to the receiver is an essential factor to decide the best money transferring method. The money transferring methods normally have restrictions on the minimum or maximum amount of money that can be transacted at one time. Transfer Timing – Although certain banking methods allow online money transfers round-the-clock, there are others that are restricted by working schedules. Some of these money transaction methods do not work on public holidays and weekends while others can be used at any time. Speed of Settlement – Another important factor that helps choose the best-suited money transfer method is the speed at which the transaction gets completed. Different fund transfer methods take different durations of time to successfully complete an online fund transfer. However, normally faster transaction speeds often come with additional charges. Transaction Charges – The official RBI directive dictates the amount for online banking transfer that banks can charge to customers. Mostly, online banking transaction charges are decided by the fund value, speed of settlement and the flexibility offered by the particular money transferring method. Check the specific online banking charges with your local bank branch. Limit of Transaction – Last, but not the least, the limit of funds that can be transferred through individual money transferring methods also helps to determine the best-suited online banking and transaction method for you.
Details of Money Transfer Methods in India
Now, let’s check the details and benefits of each money-transferring method which is used in India today:
NEFT
Highlights of NEFT
Minimum Fund Transfer –INR 1.00Maximum Fund Transfer – (No Limit)Transaction Type – Online & OfflineSettlement in – BatchesSettlement Speed – 2 hours (depending on cut-off timings/batches)Service Availability – Monday through Friday between 8:00 AM to 6:30 PM (12 Batches), Saturday between 8:00 AM to 1 PM (6 Batches) – Unavailable on Sunday and Bank HolidaysTransaction Fees – From INR 1 to INR 10,000 = INR 2.50 only, from INR 10,001 to INR 1,00,000 – INR 5 only, from INR 1,00,001 to INR 2,00,000 – INR 15 only, from INR 2,00,001 to INR 5,00,000 = INR 25 only and from INR 5,00,001 to INR 10,00,000 = INR 50 only.
The National Electronic Fund Transfer (NEFT) method is by far the most popular money transfer technique used in India today. NEFT uses the DNS (Deferred Net Settlement) system to settle a transaction in batches at a specified time period during working hours. You will require an IFSC (Indian Financial System Code) of the recipient’s bank to complete the transaction successful. This is a unique 11-digit code that is assigned to every RBI-recognized banking institution. It identifies the individual bank as well as the bank branch with which the account is held with.
Steps for Fund Transfer Using NEFT
Follow these simple steps to initiate fund transfer using NEFT:
Benefits of NEFT for Fund Transfer
Some of the top benefits of using NEFT for fund transfer are:
Secure and safeCost-efficient Reliable Organized settlement according to batchesPaperless transaction
RTGS
Highlights of RTGS
Minimum Fund Transfer – INR 2,00,000Maximum Fund Transfer – (No Limit)Transaction Type – Online & Offline Settlement In – One-on-one settlementSettlement Speed – Instantly Service Availability – Business hours, between 7:00 AM and 6:00 PM Transaction Fees – From INR 2,00,000 to INR 5,00,000 = INR 30 only, from INR 5,00,001 to INR 10,00,000 = INR 55 only / Timely charges (per Outgoing Transaction) between 8:00 AM and 11:00 AM = NIL, between 11:00 AM and 1:00 PM = INR 2 only, between 1:00 PM and 6:00 PM = INR 5 only, after 6:00 PM = INR 10 only.
The Real-Time Gross Settlement (RTGS) method of money transfer is the next most popular money transaction method used in India, especially for transferring large sums of money quickly with online banking. As it facilitates transferring funds of INR 2,00,000 and over immediately in real-time, small and large business owners find it extremely convenient. You will need the IFSC code of the recipient account holder for successful RTGS money transfers. In addition, the sender’s and recipient’s bank accounts need to be RTGS-enabled for completing the monetary transaction successfully.
Steps for Fund Transfer Using RTGS
These are the simple steps that help to complete an RTGS money transfer successfully:
Benefits of RTGS Fund Transfer
These are the top benefits of using RTGS for fund transfer:
Instant online money transferThe safe and secure monetary transactionExcellent for large-value fund transferRBI-approved online money transferring method Immediate fund clearance One-on-one fund creditingIndividual and gross transaction options
IMPS
Highlights of IMPS
Minimum Fund Transfer – INR 1.00 Maximum Fund Transfer – INR 2,00,000 Transaction Type – OnlineSettlement In – One-on-one settlement Settlement Speed – Instantly Service Availability – 24/7 (Round-the-clock)Transaction Fees – From INR 1 to INR 10,000 = INR 2.5 only, from INR 10,001 to INR 1,00,000 = INR 5 only, from INR 1,00,001 to INR 2,00,000 = INR 15 only.
The Immediate Payment Service (IMPS) is another excellent and top choice for users as a reliable and secure method of online money transactions. In contrast to other online banking methods that are dependent on the bank’s working hours to get completed, IMPS is a fund transfer service that works 24 hours a day, 7 days a week, irrespective of Sundays, public holidays and bank holidays. Although it is designed to handle low-value fund transfers, it does the online transaction instantly. Today, most banks provide IMPS as an SMS-based service, making it excellent and efficient for mobile phone users to transfer money immediately through online banking.
Steps for Fund Transfer Using IMPS
These are the simple steps to follow and successfully complete an IMPS transaction:
Benefits of IMPS Fund Transfer
These are the express benefits of using IMPS for online fund transfers:
Ease of fund transfersSecure and Safe online transactionQuicker fund transferring and receivingMobile friendly banking transactions Round-the-clock fund transfers
UPI
Unified Payment Interface (UPI) is any real-time online payment app that allows fund transfer from your bank account to the recipient’s bank account using Virtual Payment Address) VPA on smartphones. These are excellent apps for easy and immediate fund transfers that are growing in popularity immensely. Using UPI does not require you to divulge your bank account details, instead only the recipient’s mobile number and name are sufficient to send them funds over the internet. UPI apps work 24/7 and can easily allow fund transfers of up to INR 1,00,000 at a time.
Cheque
Cheques have been the conventional mode of payment, besides cash, for a long time now. You simply need to draw a cheque with the recipient’s name, account number and bank details and sign at the mentioned place. Once you draw the cheque, you can choose to make a cheque deposit directly into the recipient’s account. Using cheque to transfer funds is secure but may take around 2-3 working days for the transferred amount to get reflected in the recipient’s bank account. It is highly recommended to check the specific terms and conditions of the above-stated fund transferring methods with your bank before choosing the best-suited money transaction method.
