ONE of the ways in which Indians have benefitted in the financial services field is by using an efficient banking system that allows for an easy transfer of funds. Two of the ways in which this is done is through real time gross settlement (RTGS) and national electronic funds transfer (NEFT).
Initially, these were meant for high value transactions, but their scope has been increasing and a recent change seeks to ensure that more people use the system.
Change: There are a couple of major changes that have been introduced recently that will impact the manner in which individuals deal with funds transfer. One of them is that the basic amount that will be eligible for RTGS has been increased to Rs 200,000.
Use: Many just look at the figures that are mentioned for the facilities and think they will not be using them.
The charges for NEFT have also been brought down to get more people to use it. There will now be a lower cost element and this should encourage quicker and faster completion of electronic funds transfer.
Nature: NEFT is a method whereby money is transferred from one bank account to another bank account without the use of cheque or paper money.
This is an advanced, quick and efficient way of dealing in money transfer. There are multiple settlements during the day, which processes the payments faster.
The RTGS is a system whereby money is transferred in real time basis, and hence, the transfer process is completed quickly. This is available only for high value amounts, so there is some restriction about when the system can be used.
However, NEFT can be used for amounts that are smaller than Rs 1 lakh. An individual can experience the use of these systems when they have a bond or other investment that is maturing.
RTGS impact: The base amount for RTGS has been raised to Rs 2 lakh. Earlier the figure was Rs 1 lakh. The charges above this for the RTGS system remains the same as they were before. So, now the cost will be Rs 25 for the transfer of a sum be tween Rs 2 lakh and Rs 5 lakh and Rs 50 for a figure that is higher than Rs 5 lakh.
This does not change the cost aspect, but it draws a clear distinction between the use of the different systems.
NEFT impact: There has been a spill over impact that is very important for the individual to consider. The NEFT transfer has been impacted due to the change in the RTGS base amount.
When it comes to a transfer of upto Rs 1 lakh, the cost remains the same at Rs 5. The cost for a transfer between Rs 1 lakh and Rs 2 lakh has been brought down to Rs 15 from Rs 25 and this is the real amount of savings that will actually be visible.
On the other hand, the charge for the transfer of a sum higher than Rs 2 lakh continues to be Rs 25.
This shows that the real benefit is for people transferring amounts between Rs 12 lakh and this becomes an easier and cheaper route to complete this process.
