The payment landscape in India has undergone a significant transformation, evolving from traditional methods like physical cheque deposits to the Unified Payments Interface (UPI). This technology facilitates real-time digital payments using UPI-enabled smartphone applications. This marks a substantial advancement in the industry. Now, sending and receiving money, bill payments, and authorising transactions are all a click away. However, many payments are still made via cheques.  

What is a Cheque? 

A cheque is a paper instrument with the name and details of the account holder printed on it. When you open a bank account, the bank issues a booklet containing these cheque leaves. Savings accounts are an example where the bank issues a cheque book at the time of account opening.   

What is a Bank Cheque Book, and Where Can You Get It? 

When you open a bank account, online or offline, the bank issues a cheque book. While this cheque book contains a limited number of cheque leaves, you can reapply for a fresh cheque book once you exhaust them. You can request a cheque book by visiting a branch in person or via online banking or mobile banking application. Upon receiving a request, the bank processes it and mails the cheque book to the customer or makes it available for pickup at the branch. Verification of identity or account ownership may be required before issuance.  

What are the Contents of a Cheque Leaf? 

As a cheque book holder, you must know about the information printed on your cheque leaf. Let’s have a look: 

• Bank’s Information: The cheque carries the name of the bank and its address. 

• IFSC: A distinctive 11-digit code comprising numbers and letters denoting the bank branch. 

• Payee Information: Ensure accurate inclusion of the payee’s name in this section. 

• Date: Fields available for filling include date, month, and year. As per the RBI rules, cheques are valid for three months from the date they are issued. Hence, this field is important. 

• Rupees: The drawer must express the amount in words in this section.  

• Account Number: The account number is printed to facilitate payment processing.  

• Signature: The drawer must appropriately sign the cheque in the assigned space. As of today, cheques are printed with the account holder’s name, above which their signature is mandatory. The signature must match the signature in the bank records. 

• Cheque Number: Every cheque is assigned a distinct cheque number and a MICR code. 

• Amount: This is the designated space where the drawer must write the amount to be transferred in numerical form. 

Also Read: How to effectively manage your savings account 

Parties Involved in a Cheque-Based Transaction 

The following parties are involved when transacting using cheques: 

• Drawer: The person who is signing/writing the cheque. 

• Drawee: The institution bridging the issuer and recipient. 

• Payee: The individual or entity receiving the specified amount on the cheque. 

Besides the usual parties, there could be more parties involved, as detailed below: 

• Cheque endorser: If any of the parties mentioned above transfers its payment acceptance rights to another entity, the latter assumes the role of a cheque endorser. 

• Cheque endorsee: The party in whose favour the right to accept the payment is transferred is called the cheque endorsee. 

Also Read: The Different Types Of Savings Accounts: Which One Is Right For You  

What are Cheque Book Charges? 

Banks offer the first cheque book for free. Subsequently, customers need to pay a fee for reissuing a cheque book. This fee varies among banks. 

Conclusion 

The bank cheque book remains a valuable tool for facilitating secure and convenient financial transactions. Despite the increasing adoption of electronic payment systems, cheque books are still relevant for they are a reliable method for transferring funds.  

Key features such as account details, built-in security measures, and clear payment instructions ensure the integrity and trustworthiness of cheque-based transactions, making them an essential component of financial record keeping.  

Click here to apply for a savings account today! 

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 author’s views 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. 

The need for a secure and efficient payment settlement mechanism in India led to the introduction of real-time settlement – RTGS. This fund transfer option has become a cornerstone of modern banking over time. RTGS system helps to facilitate time-sensitive, large-value payments instantaneously. 

RTGS Definition: Meaning and Full Form

The full form of RTGS is Real-Time Gross Settlement. It is a system that settles transactions individually on a real-time basis. In the full form of RTGS, ‘Real-Time’ refers to the instant processing of instruction at the time it is received, and ‘Gross Settlement’ refers to the processing and settlement of transfer transactions individually. RTGS transactions are irrevocable and irreversible (final) in nature. 

What are the Key Features of the RTGS System? 

1. Security: The RTGS system ensures the confidentiality of financial information by employing robust safety measures. It protects the transaction from unauthorised access and financial fraud.  

2. Real-time settlement: Instant settlement ensures speedy and real-time funds settlement on a transaction-to-transaction basis.  

3. Certainty: RTGS transactions are final and irrevocable, which provides certainty to both the remitter and the beneficiary.  

4. Large-value transactions: The RTGS system enables large-value fund transfers. There is no maximum ceiling on the transfer amount. 

5.  Minimised counterparty risk: RTGS minimises the risk of default by counterparties by settling transactions on a gross basis instantly.  

6. Nominal fees: No processing fee is levied on the RTGS transactions by the Reserve Bank of India. However, there is only a nominal service fee levied on outward RTGS transactions, depending on the transfer amount.  

7. Legal backing: The RTGS system has strong legal backing as it is owned and operated by the Reserve Bank of India. The RBI ensures safety, efficiency, and stability in the financial system by subjecting every RTGS transaction to comply with regulatory standards.  

How Does RTGS Work: Process Explained 

The RTGS in India contributes to the smooth functioning of the financial system with a secure, reliable, and efficient settlement of transactions. Its working involves: 

Initiation of Transaction: 

RTGS gets triggered when the sender initiates the transactions by instructing the bank to transfer funds to the beneficiary account with another bank. The transaction can be initiated through various modes – using the Bank’s mobile application, internet banking, or through branches.  

Verification of Availability of Funds: 

The originating customer’s bank verifies the availability of funds for transfer to the beneficiary’s bank account. 

1. Transaction authorisation:  
   If the mentioned amount of funds is available in the sender’s bank account, the originating customer’s bank authorises the transaction. The bank transmits the payment instructions to the RTGS system. 

2. Notification to the beneficiary bank:  
   The beneficiary customer’s bank receives the notification of funds credit by the RBI. 

3. Credit to the beneficiary account:  
   The beneficiary customer’s bank credits the funds to the beneficiary/receiver’s bank account for use.  

Once the RTGS transaction is completed, both the sender and the beneficiary receive confirmation from their respective banks. Banks also maintain a record of the transactions.

What are the benefits of using RTGS for fund transfers? 

Here are some crucial benefits of using RTGS for fund transfer: 

• Speed and security. 
• Accommodates large value transactions efficiently with no upper limit. 
• Availability of RTGS facility on a 24X7X365 basis improves efficiency. 
• Minimises counterparties risk 
• Legal backing. 

How does RTGS differ from other payment systems? 

Real-Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT), and Immediate Payment Service (IMPS) are the three predominant payment systems in India. Here are the key differences: 

RTGS Charges: Are there any fees associated?

There are nominal fees associated with RTGS transfers. Though RBI has waived the processing charges levied on the RTGS transaction, it has also rationalised the service charges levied by the banks for the same. Here are the details: 

The RTGS service fees may differ depending on the type of your IndusInd Bank Savings account/IndusInd Bank Current account.

Information Needed to Initiate RTGS Transfers

You need to furnish the following important information to initiate RTGS transfer: 

• Amount to be transferred 

• Debit account number  

• Details of the beneficiary bank (Bank name, branch, and IFSC code of the branch) 

• Details of beneficiary (Name and account number) 

• Sender to receiver information, if any 

• Sender to beneficiary legal entity identifier (for eligible transactions). 

• Sometimes the source of funds might also need to be declared. 

Frequently Asked Questions about RTGS

Is there a minimum or maximum transfer limit for RTGS transactions? 

Yes. RTGS transactions can be initiated for a minimum value of ₹ 2 lakhs but no upper ceiling.  

How long does it take for an RTGS transaction to be processed? 

Typically, RTGS transactions are processed on a real-time basis and the beneficiary bank receives the funds as soon as the remitting bank initiates the transfer of funds. The beneficiary bank must credit the transferred funds to the beneficiary account within 30 minutes of its receipt.  

Also read: Real Time Gross Settlement (RTGS) 

Can individuals use RTGS for fund transfers, or is it only for businesses? 

Both individuals and businesses can use RTGS for fund transfer, provided the sending and receiving bank branch is RTGS enabled.  

How secure is the RTGS system? 

RTGS system is highly secure as it is regulated and operated by the RBI, ensuring strong encryption, authentication, and data protection.  

Are there any specific operating hours for RTGS transactions? 

RTGS system operates on a 24/7 basis throughout the year.  

Can I cancel or reverse an RTGS transaction once it has been initiated? 

No. You cannot cancel or reverse an RTGS transaction once it has been initiated. Real-time gross settlement transactions are irrevocable and final.  

Are there any restrictions on the types of accounts that can initiate RTGS transfers? 

Typically, RTGS transactions can be initiated using IndusInd Bank accounts or IndusInd Bank current accounts of individuals or businesses. However, funds held in IndusInd Bank fixed deposits cannot be directly transferred using the RTGS system. Time-bound investments like IndusInd Bank fixed deposit accounts cannot initiate real-time gross settlement of funds.  

Also read: Payment NEFT/RTGS/IMPS Facility  

What happens if there’s an error in an RTGS transfer? 

In such a case, the RTGS member bank returns the funds received by it to the originating bank within an hour of receipt. The originating bank intern credits the sender’s account. Customers can also contact their bank or approach RTGS help desks at the RBI.  

Are there any specific requirements for banks or financial institutions to participate in the RTGS system? 

Banks or financial institutions must adhere to the RBI’s eligibility criteria to participate in the RTGS system. This includes maintaining a settlement account with the RBI and being a member of RBI’s payment system. 

Is RTGS available internationally, or is it limited to domestic transfers? 

No. RTGS in India is limited to domestic transfers only. 

In summary, RTGS is a faster, more secure, reliable, and efficient system for transferring funds in India. It plays a crucial role in the ever-evolving Indian financial landscape by offering various benefits to businesses, individuals, and financial institutions. RTGS is an efficient payment system that contributes to financial inclusion, and economic development of the country.  

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 making any financial decisions based on the contents and information. 

Imagine this: you are on your way to the office on the train, and you realise that you must pay the maintenance bill by the end of the day. Instead of panicking, you can take out your phone and pay with the help of online banking. Mobile banking apps provide the same services as regular banking services, including opening a savings account and various payment options. One of the numerous online payment options is NEFT. 

What Is NEFT? 

NEFT is one of the many fund transfer options banks across India offer. The national electronic funds transfer (the full form of NEFT in banking) is an online money transfer mode that ensures safe and fast transactions between bank accounts. Online NEFT money transfers are quicker than regular offline means like challans, withdrawal/deposit forms, and cheques. You can transfer money from your savings account to another account within a day from your home rather than visiting the bank.  

How Does NEFT Work? 

Thanks to persistent regulations credited to the RBI, NEFT nowadays have a faster clearance cycle, and the service is available 24×7. Here is how NEFT works: 

Commencement of Transfer: 

People initiate fund transfers for a reason. Whether you are lending money to a loved one or paying a credit card bill, the NEFT transfer option can help. All you need to do is provide the necessary details, such as the beneficiary’s savings account number, the bank branch’s IFSC code, and the transfer amount. You can initiate an NEFT funds transfer through different channels, such as visiting the bank or using online banking modes (Internet and mobile banking). 

Adding the Beneficiary: 

Add the receiver’s details, such as the savings or current account number and the bank branch’s IFSC code. You don’t need to add the same beneficiary again the next time you initiate funds transfer online. This is a simple, one-time process. 

The Transaction is Processed: 

After you initiate the NEFT transaction, your bank will notify the details of the transaction to the NEFT clearing centre. The clearing centre is responsible for sorting and grouping the transactions from different banks. 

Settlement in the Group: 

Usually, the clearing centre settles NEFT transactions on hourly batches. It will process the NEFT transaction and then send the settlement file to the banks involved. 

Completion of Fund Transfer: 

The funds will be deposited into the beneficiary’s account once their bank receives the settlement files. The amount is usually deposited into the beneficiary bank account the same day or on the next working day. The time taken depends on the initiation time of the transaction. 

Confirmation of the Transaction: 

After the deposit, banks notify both the beneficiary and you about the transaction status. You can also track the status of the NEFT transaction through the net banking website or the banking app. This assures complete transparency from the bank. 

Also Read: UPI vs NEFT – What’s best for you? 

Why Opt for NEFT Transactions? 

Even if the bank will offer you quicker money transfer options, here’s why it might be prudent to choose the national electronic funds transfer option: 

Flexibility: 

The NEFT money transfer option is suitable for substantial transactions, particularly money transfers over ₹2 lakh. Unlike other fund transfer options, NEFT has fewer constraints for sizable transactions. The lack of a lower or upper limit makes NEFT an easily accessible money transfer option. 

Cost-efficient: 

NEFT outperforms numerous other electronic transfer options when it comes to cost. The NEFT money transfer option is economical for companies that spend a lot of money regularly. Banks levy an affordable fee of ₹2.50 on transactions up to ₹10,000. For transfers over ₹2 lakhs, the bank will charge you just ₹25.  

Speedy Processing: 

NEFT has evolved in terms of clearing time from approximately a day to hourly. This speeding up of the clearing time makes NEFT as fast as other payment options. This makes the NEFT a reliable payment option for paying your credit card bills. 

What are the timings for NEFT transactions? 

You can start an NEFT transaction round-the-clock, and the beneficiary will receive the amount within 30 minutes. You can also opt to pay a small charge if you need instant transfer.

What is the minimum and maximum amount for NEFT transactions? 

There is no maximum or minimum cap on the amount that can be transferred with the help of NEFT. 

Is There a Limit on NEFT Transactions Per Day? 

The Reserve Bank of India (RBI) regulations do not impose any limit on NEFT transactions. However, that does not mean that there are no limits on transfers. Certain banks may have a cap on the number of NEFT money transfers in a day. 

Are there Any Charges on NEFT Transactions? 

By initiating a National Electronic Funds Transfer (the full form of NEFT in banking), you can be sure of prompt and safe money transfers. With Internet banking evolving continuously, NEFT has emerged as a seamless synthesis of contemporary virtual convenience and traditional banking systems. 

What information do I need to provide to initiate a NEFT transfer? 

Enter information like the beneficiary’s name, bank account number, and IFSC code of the branch for starting an NEFT transfer. 

Frequently Asked Questions About NEFT

Is NEFT available 24×7? 

Answer: The NEFT option is accessible 24×7 on all days yearly. This transaction is processed in batches every half an hour. 

How long does it take for a NEFT transfer to be completed?

Answer: Two hours is usually the standard time for the completion of an NEFT transfer. You can also track the status of the transfer easily. 

Can I initiate a NEFT transfer online? 

Answer: Yes. It is possible to start an NEFT transaction online. You can learn how to begin this transfer online with the help of a Google search. 

Can I cancel an NEFT transaction? 

Answer: No, it is impossible to cancel an NEFT transfer. So, if you transfer money by mistake or submit the wrong IFSC code, notify the bank immediately. 

Can I schedule NEFT transactions for future dates? 

Answer: Yes, it is possible to schedule the NEFT transfer for a future date through mobile or internet banking. Just specify the date and time for the transfer, and it will be done. 

Is NEFT available internationally? 

Answer: No, NEFT transfers are only allowed for transfers in India. It cannot be used for international transfers (except for Nepal, as it has a specific type of remittance facility). 

Are NEFT transactions secure? 

Answer: Yes, it is a secure way to transfer money. 

What is the difference between NEFT and RTGS? 

Answer: RTGS settles money transfers individually, while NEFT does the same in batches. 

Can I transfer funds from one bank account to another using NEFT? 

Answer: You can use NEFT to transfer funds from one bank account to another. 

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.