As technology continues to evolve, we’re more reliant on digital means than ever. The onset of digital revolution in India began with the ‘Digital India’ programme, launched in July 2015. With an aim to transform India into a digitally-enabled economy, the programme focused on making technology accessible and affordable for each and every citizen of the country. 

Under this programme, on April 11, 2016, the National Payments Corporation of India (NPCI) launched the Unified Payments Interface (UPI) system. With an aim to enable seamless and faster financial transactions for all, UPI has emerged as the ambassador of financial revolution in the country. As the economy continues to recover from the effect of COVID-19 pandemic, UPI transactions have flourished. Nearly 6.28 billion UPI transactions worth Rs 10.63 trillion were recorded in July 2022 across 338 active Indian banks. Amazing, right? 

As the popularity of UPI continues to grow at a faster pace than ever, older money transfer options like National Electronics Funds Transfer (NEFT) are having a hard time retaining users. Though NEFT has gone under significant improvements over the period of time, the convenience and ease of transacting via UPI still outweigh NEFT. However, there are some areas where NEFT excels. 

What is UPI? 

UPI, or Unified Payments Interface, is a real-time payment system developed by NPCI that allows users to transfer money instantly between bank accounts using a mobile device. It works 24×7 and requires only a UPI ID or QR code—no need to remember account numbers or IFSC codes. 

UPI is widely used for peer-to-peer transfers, merchant payments, bill payments, and even investments. It’s integrated into popular apps like Google Pay, PhonePe, Paytm, and most banking apps, making it one of the most convenient ways to transact digitally. 

What is NEFT? 

NEFT, or National Electronic Funds Transfer, is a payment system that enables one-to-one transfers between bank accounts across India. It’s regulated by the Reserve Bank of India and operates in half-hourly batches throughout the day. 

Unlike UPI, NEFT is ideal for transferring larger sums and is commonly used for business transactions, salary payments, and scheduled transfers. While it’s not instant like UPI, NEFT is secure, reliable, and now available 24×7, including weekends and holidays. 

UPI vs NEFT — Detailed Comparision 

Benefits of UPI 

UPI has revolutionized digital payments in India. Here are some of its key advantages:  

• Instant transfers—money moves in real time 

• Available 24×7, including holidays 

• No need for bank details—just a UPI ID or mobile number 

• Free or minimal charges for most transactions 

• Supports small and large payments 

• Secure and encrypted transactions 

• Easy integration with mobile apps and wallets 

• Auto-pay options for recurring bills 

• Wide acceptance across merchants and platforms 

• Multiple bank accounts can be linked to one UPI ID 

Benefits of NEFT 

NEFT remains a trusted method for transferring funds, especially for larger or scheduled payments. Its benefits include: 

• Safe and regulated by RBI 

• Works across all banks in India 

• Supports high-value transactions 

• Available 24×7, including weekends 

• No need for physical cheques or demand drafts 

• Ideal for business payments and salaries 

• Can be scheduled for future dates 

• Minimal transaction charges 

• Confirmation via SMS/email 

• Widely accepted for government and institutional payments

Now, let’s learn how you can make your UPI ID and activate NEFT. 

How to Create a UPI Account? 

• Download the UPI app of your choice from Android Play store or Apple App store. 
• Sign up using the mobile number registered with your bank. 
• Link your bank account(s) by verifying the required details. 
• A unique virtual ID will be created using your mobile number which can be shared to collect money directly into your bank account. 
• You can also share your unique QR code with friends, family, or anyone to accept payments. 
• Use the scan QR feature to pay at a store/shop or to any other recipient. 
• You can also enter the recipient’s virtual ID or fetch the same by entering the recipient’s mobile number to transfer money. 
• If you are a merchant or business owner then you can also use UPI as a mode for receiving business payments. Check out the IndusInd Bank Soundbox for more details. 

Interesting Tip: A UPI transaction can be as small as Rs. 0.1 

How to Transfer Funds via NEFT? 

• Visit your bank branch to enable online banking facilities (if not activated already). 
• Once activated, log in to internet banking or mobile banking. 
• Under the ‘Fund Transfer’ tab, select NEFT option. 
• Choose a beneficiary or add new beneficiary details, including Bank Account Number, Account Holder Name, and IFSC Code. 
• Enter the amount you wish to transfer and click on ‘Submit’. 
• Complete OTP verification to complete the transaction. 

Interesting Tip: You will get a reference number upon completing the transaction. This becomes extremely useful while raising a dispute with the bank in case of delay or payment failure. 

Summing up 

Comparing UPI and NEFT side-by-side gives a clear view of why UPI system has an edge over NEFT. For most purposes, UPI transactions are quite convenient, easy, and quick. However, if you are transferring a big amount (>=Rs. 1 lakh), NEFT option is the one to go with.

Did you ever try applying for a loan or a credit card? Do you know what is the first thing that any bank or lender checks about you? Yeah, you guessed it right – it’s the Credit Score. A credit Score is a 3-digit number that ranges from 300 to 900 and reflects your creditworthiness. In other words, your credit score enables the lender to gauge the credit risk involved. A credit score above 700 is considered good. However, the higher the credit score, the higher is the lender’s trust in you and hence more favourable the credit terms.  

Here’s the general categorization of credit score ranges and what they signify. 

Now, if you have a low credit score, how can you fix it? Well, just read through this article to know all about credit score—what’s affecting it and how to make it better. 

Factors Affecting Credit Score 

• Repayment History: Your repayment history is what largely makes up your credit score. If your past records show timely repayment of dues/EMIs, the same would reflect in your credit score. Similarly, any defaults or delays in the payment of dues/EMIs adversely affect your credit score. Therefore, it is highly critical to clear your outstandings on time to improve your credit score. 
   
• Credit Utilisation: Another big factor impacting your credit score is the debt you owe. Out of all the credit limits available to you, including credit cards, loans, buy now pay later (BNPL), etc., the degree of utilisation of each credit option plays a key role in determining your credit score. Ideally, it is advised to utilise only up to 30% of the credit limit available to you during a statement cycle. More the credit utilisation, lesser the financial stability it signifies.  

• Age of Credit History: The length of your credit history is another factor that adds weight to your creditworthiness. Your credit score is calculated while taking into account how long you have been using the credit options for. For instance, a longer credit history with timely repayment record is highly beneficial in boosting your credit score. However, a short credit history is also fine if repayments have been made on time. Some financial experts suggest to leave the credit card accounts open even when not in use as the longer the account ages, the better the impact it creates on the credit score. 
   
• New Credit Inquiries: Even though it is hard to believe that your credit score is also affected by the number of new loan/credit inquiries you make with any financial institution, it is true. This is because, every time you make an inquiry for new credit option, the financial institution runs a hard check on your credit information which might temporarily affects your credit score. The more the number of inquiries, the more the credit hungry your credit profile appears. In addition, a higher number of credit inquires also signifies that you are in need of a lot of credit and consequently pose a greater risk of default.  
   
• Mix of Credit: The final and the least-affecting factor that impacts your credit score is the mix of credit options you are using. Ideally, a credit history with a mix of secured and unsecured loans like credit card, BNPL, home loan, car loan, etc. and on-time repayment record typically has a better credit score than the one with only type of credit instrument in use. Nevertheless, as this factor contributes to only around 10% of your credit score composition, it is not advised to start inquiring or applying for new credit instruments available to you, unless required. 

Pro Tips to Boost your Credit Score 

As you now know about the factors that impact your credit score, here are some points you must bear in mind to build a healthy credit profile. 

• Keep a check on your credit card utilization. Never use more than 30% of the credit limit available to you. Ideally, it is advised to maintain your credit card balance utilisation between 15 to 25%. 
• Track your credit score regularly. Read the credit report carefully and make sure it is free from any errors. Report any irregularities (if found) immediately. 
• If you require a big-ticket loan, it is advised to check your credit score at least six months prior to it. This will provide you with some time to strengthen your score and boost your chances of loan approval. 
• It is highly critical to not open too many credit accounts at-a-go or within a particular year. Because the more the number of credit inquiries, the greater the impact on your credit score. 
• Make sure you always repay your loan EMIs and clear your credit card dues on time. If you’re late, it is advised to not push these for more than 30 days beyond the due date. 

And no matter what is your financial need, we at IndusInd bank are always there for you with best offers across personal loans & business loans. Summing up, though you need to be mindful of the facts and factors presented in this article, you don’t need to obsess over them. Managing your credit responsibly and maintaining healthy financial habits would ultimately result in a good credit score. 

Loved what you read? Share it with your friends and enlighten them, too. 

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision.  IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. 

As per RBI, the banking sector in India is well regulated with 12 public sector banks, 22 private banks, 46 foreign banks, 56 regional rural banks, 1485 urban cooperative banks and 96,000 rural cooperative banks. This signifies that as an Indian citizen, you will definitely come across multiple banking terminologies that are difficult to comprehend. 

So here are some of the top banking terms that you should know before visiting any bank:   

1. KYC (Know your customer): KYC is a key principle process for identification of an individual/corporate opening a bank account. The customer identification entails verification through an introductory reference from an existing account holder/a person known to the bank or on the basis of documents provided by the customer. This establishes the correct identity of customers and ensures that no fraudulent activity is taking place.  

2. MICR (Magnetic Ink Character Recognition): MICR is a 9-digit code printed on cheques that uniquely identifies the bank & branch participating in Electronic Clearing System (ECS). It comprises of 3 parts: 
   i. First 3 digits represents the city code. 
   ii. Middle 3 digits represents the bank code. 
   Iii. Last 3 digits represents the branch code  

3. IFSC (Indian Financial System Code): IFSC is used as an electronic payment system for National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS). IFSC is an 11-character code where the first 4 alphabetic character presents the bank name, and the last 6 characters (can be numeric or alphabetic) represent the bank branch. The 5^th character is zero (0) and is currently reserved for future use.  

4. NEFT (National Electronic Fund transfer): NEFT is an electronic fund transfer system that was introduced & managed by the Reserve Bank of India (RBI). It allows quick electronic transfer of money between banks throughout India. Earlier, RBI had fixed timings for processing  NEFT but from 2020, NEFT transactions can be processed 24×7. There is no limit on NEFT transactions but a fee is applicable depending on the amount being transferred.  

5. RTGS (Real Time Gross Settlement): RTGS allows transfer of money and/or securities instantaneously across the banking system in India. It is safe, secure, reliable & maintained by Reserve Bank of India (RBI). RTGS is used for high value transactions with minimum RTGS limit of Rs 2 lakh. A nominal fee or charges are applicable depending on the transaction amount.  

6. IMPS (Immediate Payment Service): IMPS is an immediate payment service for inter-bank electronic fund transfer which is available 24/7/365 in India. With IMPS you can send money via your mobile number, MMID or bank account number & IFSC.  

7. Savings account: It is an interest-bearing bank account that keeps your money safe and allows you to earn interest on your funds. A savings account comes with add on benefits like debit card facility, low balance requirement, internet banking, mobile banking & attractive interest rates.  

8. Current account: It is a non-interest-bearing bank account for businesses that have a high number of transactions. A current account comes with no restriction on the number of transactions (amount deposited or withdrawn) with add-on benefits of chequebook, debit card, mobile & internet banking. Here are the key features & benefit of a current account.   

9. NPA (Non-Performing Assets): NPA is any advance or loan that is overdue for more than 90 days. As per RBI, “An asset becomes non-performing when it ceases to generate income for the bank”. For a bank or lender, the interest is the earning or main source of income therefore when the borrower starts defaulting on his payment it becomes a problem for the lender.  

10. Overdraft: When a bank allows the execution of a transaction even when the customer bank account lacks funds is termed as overdraft. It helps customers to pay bills even when there  are insufficient funds.  

11. Credit History: It is a record of debt repayments such as credit card & loan. A credit history shows whether you paid your bills or EMI on time, with delayed fees or defaulted.   

12. Fixed-rate interest: It is a kind of an interest rate on a loan or borrowing that does not fluctuate during a fixed period of time.  

13. Floating rate interest: It is also known as variable or adjustable interest rate in which debt instruments like loan or borrowing does not have a fixed rate of interest.    

14. Collateral: When an asset is pledged as security for the repayment of a loan or borrowing then it is termed as collateral. This can be forfeited by the lender in case of default.   

15. Liquidity: In financial markets when an asset can be sold without impacting its fair price is termed as liquidity.  

16. Capital Gain: Any profit or gain realized by the sale of an asset like stock, bond or real estate is known as capital gain.   

17. ATM (Automatic Teller Machines): A specialized computer that smoothens banking transactions like withdrawal or deposit of funds, printing account statements and checking account balance is known as ATM (automatic teller machines).  

18. Debit card: When a payment card is allowed to deduct money for the purchase of goods or services directly through your bank account then it is termed as debit card. A debit card eases the need for carrying cash & can be used for cash withdrawal from ATM.  

19. Credit card: It is a financial instrument for payment that is issued by commercial bank through which the card holder can borrow funds to pay for goods or services. This credit card comes with a condition for card holders to pay back the borrowed money at the time of billing date or over time with interest on principle borrowing.  

20. Repo rate: Rate at which Reserve Bank of India lends money to commercial banks in the event of any shortfall of funds is termed as repo rate.  

21. Reverse repo rate: When commercial banks have surplus of funds then they can lend it to Reserve Bank of India to earn interest on it. This interest rate is termed as reverse repo rate.  

22. Basis point: In finance domain the standard measure of interest rates is basis point where one basis point is equal to 1/100^th  of 1% or 0.01%.  

23. Solvency: The ability of a company to fulfill its liabilities and other financial obligations in order to carry the business is termed solvency. It is a representation on of the financial health of the company. When a company is unable to generate enough cash from its business operations to fulfill the debt obligations then it is at risk of insolvency.  

24. Bank ombudsman: Reserve Bank of India has created a body named Bank ombudsman an to address and resolve the grievances and complaints of the bank customers. An ombudsman is usually a senior official appointed by the Reserve Bank of India who addresses the complaints & grievances of customers. You can submit your grievances related to IndusInd bank here.  

25. Processing fees: A preset fee charged by the financial service provider for execution of any financial transaction is termed as processing fees. It may be fixed flat fee or a % of transaction value. 
     
    Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision.  IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.