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Payment System In India
According to BIS ―A payment system consist of instruments, banking procedures and typically interbank funds transfer that ensures and facilitate the circulation of money. In essence, it facilitates corporation, businesses and consumers to transfer funds to one other‖.
The Reserve Bank of India‘s publication on Payment Systems in India (2009–12). India has multiple payments and settlement systems.
RBI Still continues to evolve new payment methods and slowly revamping the payments and settlement capability in India.
India supports a variety of electronic payments and settlement system,
A. Gross Settlement System:
Real Time Gross Settlement(RTGS)
Net Settlement System:
ECS - Credit
ECS – debit
Credit cards and Debit cards
National Electronic Funds Transfer (NEFT)
Indo-Nepal Remittance Facility Scheme
1 Real Time Gross Settlement(RTGS)
The Reserve Bank of India (India's Central Bank) maintains this payment network.
RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a 'real time' and on 'gross' basis. This is the fastest possible money transfer system through the banking channel.
Settlement in 'real time' means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed.
'Gross settlement' means the transaction is settled on one to one basis without bunching with any other transaction.
Fees for RTGS vary from bank to bank.
RTGS is a large value . Minimum value of transaction should be 2,00,000.
Customers can access the RTGS facility between 9 am to 4:30 pm on weekdays and 9 am to 2:00 pm on Saturdays.
The RTGS service window for customer's transactions is available from 9:00 hours to 16:30 hours on week days and from 9:00 hours to 14:00 hours on Saturdays.
No Transaction on weekly holidays and public holidays.
Service Charge for RTGS
a) Inward transactions :
1%, no charge to be levied. b) Outward transactions :
For transactions of 2 lakhs to 5 lakhs - not exceeding 30 per transaction, (+ Service Tax).
Above 5 lakhs -Not exceeding 55 per transaction, (+ Service Tax).
National Electronic Fund Transfer(NEFT)
The national electronic fund transfer (NEFT) system is a nation-wide system that facilitates individuals, firms and corporates to electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country.
For being part of the NEFT funds transfer network, a bank branch has to be NEFT-enabled.
As at end-January 2011, 74,680 branches / offices of 101 banks in the country (out of around 82,400 bank branches) are NEFT-enabled.
Service Charges for NEFT
For transactions up to 10,000:
Not exceeding 2.50 (+ Service Tax)
For transactions above 10,000 up to 1 lakh:
Not exceeding 5 (+ Service Tax)
For transactions above 1 lakh and up to 2 lakhs:
Not exceeding 15 (+ Service Tax)
For transactions above 2 lakhs:
Not exceeding 25 (+ Service Tax)
Indo-Nepal Remittance Facility Scheme
Indo-Nepal Remittance Facility is a cross-border remittance scheme to transfer funds from India to Nepal, enabled under the NEFT Scheme.
The scheme was launched to provide a safe and cost-efficient avenue to migrant Nepalese workers in India to remit money back to their families in Nepal
A remitter can transfer funds up to 50,000 (maximum permissible amount) from any of the NEFT-enabled branches in India.The beneficiary would receive funds in Nepalese Rupees.
Inter Mobile Payment system (IMPS)
Immediate Payment Service (IMPS) is an initiative of National Payments Corporation of India (NPCI). It is a service through which money can be transferred immediately from one account to the other account, within the same bank or accounts across other banks.
Upon registration, both the individuals are issued an MMID(Mobile Money Identifier) Code from their respective banks.
This is a 7 digit numeric code.
To initiate the transaction, the sender in his mobile banking application need to enter the registered mobile number of the receiver, MMID of the receiver and amount to be transferred.
Upon successful transaction, the money gets credited in the account of the receiver instantly.
This facility is available 24X7 and can be used through mobile banking application.
Electronic Clearing Service (ECS Credit)
Known as ―Credit-push‖ facility or one-to-many facility this method is used mainly for large-value or bulk payments where the receiver‘s account is credited with the payment from the institution making the payment.
Such payments are made on a timely-basis like a year, half a year, etc. and used to pay salaries, dividends or commissions.
Over time it has become one of the most convenient methods of making large payments.
Electronic Clearing Services (ECS Debit)
Known as many-to-one or ―debit-pull‖ facility this method is used mainly for small value payments from consumers/ individuals to big organizations or companies.
It eliminates the need for paper and instead makes the payment through banks/corporate or government departments.
It facilitates individual payments like telephone bills, electricity bills, online and card payments and insurance payments.
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