BY

SAKTHI UMA MAHESWARI

ELECTRONIC FUND TRANSFER
 EFT was launched by the Reserve Bank of India in 1995 and it acts as
the intermediary between the sending bank and receiving bank and
effects interbank funds transfer.

 Instantaneous transfer of funds between banks and among banks

through electronic mode.

 Maximum limit is Rs. 5 lakhs per transaction.

 PRIMARY MODE OF FUND TRANSFER

Demand draft, pay orders, telegraphic transfer
STEPS IN EFT
 Making applications
 Data preparation
 Data transmission
 Debiting remitting banks
 Crediting receiving banks
 Credit beneficiary
 Task at service branch
 Task at beneficiary branch
BENEFITS
 Efficient mode
This enables banks to provide interbank TT service. Also
this system makes reconciliation automatic.
 Innovative products
used as a launching pad with which banks can introduce
new payment or cash payment systems.
 Less workload
reduces the number of out station cheques issued by the
customer. Service load on banks can be reduced.
DISADVANTAGES
 Restrictions
on maximum amount in the account, number of transactions per
day and number of output.
• The risk of being hacked
The system of processing company can be broken, which leads to
the leak of personal data on cards and it’s owners.
 Lack of anonymity
The information about all the transactions are stored in the
database of the payment system
 The necessity of internet access
If the internet connection fails, the online cannot be reached
ELECTRONIC CLEARING SYSTEM
 Is a mode of electronic transfer from one bank to another bank account using
the service of a clearing house.
 This is normally bulk transfers from one account to many accounts or vice versa
 This can be used for both making payments like dividend distribution, interest,
salary.
 ECS (Credit) – is used for affording credit to a large number of beneficiaries by
raising a single debit to an account.
 ECS (Debit) – is used for raising debts to a number of accounts holders for
crediting a particular institution.
 Maximum limit – 5 lakhs- ECS credit
 Maximum limit – 1 lakhs – ECS debit
 No minimum limit
ADVANTAGES
 Cost savings
 No transit loss
 Automatic reconciliation
 Efficient cash management
 Better customer services
 Convenient mode
 CHEQUE CLEARANCE...???

 Is the process of moving cash on which a cheque is

drawn to the bank in which it was deposited.

 In a traditional physical paper form or digitally.

CHEQUE TRUNCATION SYSTEM
 CTS – it makes cheque clearance more efficient and reduce the
clearance time.

 Introduced by RBI on 1st April 2013.

 Electronic image of the cheque is transferred.

 Beneficiary for the bank like time and cost savings, cost effectiveness.

 It takes max of 30 days and min of one second.

ADVANTAGES
 Clearing related frauds become less plausible

 Probability of cheques misplaced in transit is eliminated

 CTS is more advanced and more secure.

 It provides quicker clearance of cheques

 Reduces operational risk and risks related to paper clearing

 There are no extra charges levied for the collection of cheques

drawn on a bank located within the grid, further providing no
geographical restrictions
DISADVANTAGES
 Costly to implement:

Implementing a Cheque Truncation system in a country requires the

participation of all regional banks. The cost of implementing such a
system can be significant.

 Investing in a declining payment mechanism: Cheque volumes

have been decreasing at a slow but steady rate, and banks are therefore
hesitant to invest too much time and effort.
NEFT- National Electronic Fund
Transfer
 Electronic fund transfer system that operates on a deferred net
settlement, which settles transactions in batches.

 Started in november 2005.

 Fund transfers in half-hourly batches with 12 settlements occurring

between 8am to 7pm

 Process of NEFT
RTGS- REAL TIME GROSS
SETTLEMENT
 Fund transfer happen in real time.

 Instructions are processed at the time they are received

 No reversal of funds happen.

 A cheque is mandatory to effect any NEFT OR RTGS

 It can be done in any branches of the home bank.

How much time will it take for electronic fund transfer to
process?
a) 5-7 days
b) Seconds – 3 days
c) 10-14 days
d) None of these
What type of payment system is NEFT?
What does IFSC stands for and how long is the
IFSC code?
What is the full form of MICR ?
a) Magnetic ink counting recognition
b) Money ink character recognition
c) Magnetic ink code for recognition
d) Magnetic ink character recognition
What Happens if a cheque is post dated?
a) Bank on whom it is drawn will not honour the cheque
before the date of the cheque.
b) Bank on whom it is drawn has to honour the cheque before
the date of the cheque.
c) Bank on whom it is drawn has to refer to RBI to honour the
cheque before the date of the cheque.
d) Bank on whom it is drawn has to refer to court to honour
the cheque before the date of the cheque