Bank in India has reached every nook and corner in the country. With the Government launching special programs such as the Jan Dhan Yojana for the economically weaker sections, more or less every individual in the country now has an account. As the popularity of using banking services keeps growing, there are more and more job opportunities in the banking sector. For any individual who has an account of is aspiring to try their luck in the banking sector, terms such as NEFT, RTGS, IFSC, MICR, SWIFT CODE, and many others should be known. Here, we tell you about NEFT, RTGS, IFSC and MICR, terms that are used more and more every day in the banking sector.
Full form of NEFT
The NEFT or the National Electronic Fund Transfer, as the name suggests, is used for fund transfers. Using NEFT any individual can transfer money into another account in the same bank and branch or to another account in a different bank or branch. This is an electronic process and hence easily accessible through internet banking or mobile banking. NEFT is ideal for one-to-one fund transfers.
The major benefit of using NEFT as a mode of money transfer is that it eliminates the need to go to a bank and manually go through the process of transferring money. NEFT is majorly used in banks that are situated in India. If needed, NEFT can be used for a cross border transfer to Nepal.
Following are the steps to make a transaction using NEFT:
- Log in to the net banking account.
- Select Transfer à NEFT à Select beneficiary and enter amount à
The prerequisite for NEFT is that the beneficiary should be added before making the transaction. Majorly, a maximum amount of ₹1,000,000 can be transferred using NEFT. Once the transaction is done, depending on when the transaction is performed and the bank through which the transfer is made, the successful completion of an NEFT transfer can take up to 24 hours. Each transaction is charged a certain amount decided by each individual bank in accordance with the RBI guidelines.
Full form of RTGS
The RTGS or Real Time Gross Settlement is used for real-time money transfer. This means that the beneficiary account will be credited with the transfer amount almost instantly. The Gross Settlement indicates that the transaction is performed on an instruction basis mechanism rather than a batch clearing mechanism where the payments are made in batches. As the Reserve Bank Of India keeps a close check on RTGS transfers, once successfully completed, they are irreversible.
Following are the steps to make a transaction using RTGS:
- Login to the net banking account.
- Select Transfer à RTGS à Select beneficiary and enter amount à
Similar to NEFT, the beneficiary should be added to the account before making the RTGS transaction. Based on the regulation of the RBI, the minimum amount that can be transferred using the RTGS mode is ₹200,000. There is no upper limit to RTGS based transfers.
For any RTGS money transfer, the person transferring the money has to pay certain charges depending on the amount being transferred. For amounts between ₹200,000 to ₹500,000, the charges are bout ₹30 and for an amount above ₹500,000, the charges are about ₹50 per transaction.
Full Form of IFSC
The IFSC or the Indian Financial System Code is a unique 11 digit alphanumeric code that identifies each bank and its branches individually. An IFSC code is essential for any type of online money transfer transactions being carried out. The purpose of an IFSC code is to monitor the online money transfers performed by various banks. This helps the RBI to keep individual records of each such transfer.
Using IFSC code for fund transfer does the following:
- Enable smooth and hassle free money transfer to any bank or branch. It eases transfer to the specified beneficiary through NEFT, RTGS or IMPS.
- IFSC code is essential for RBI to keep a check on the money transfer transactions taking place in a bank.
- It gives a unique identification to each bank and its respective branches.
- Using the correct IFSC code ensures that the transfers are done correctly.
The IFSC code is designed using a specific combination of the following components:
- First 4 letters of the bank code
- 5th character is common for all IFSC codes, ‘0’
- A unique set of numbers for each branch
You can easily access the internet and find the list of IFSC codes for all the banks and their respective branches in India. You can find the IFSC code for your bank and branch on your checkbooks and passbooks.
Full Form of MICR
The Magnetic Ink Character Recognition (MICR) is used by banks to ease the process of cheque clearance and other important documents. It is a unique 9 digit code specific to a bank and its respective branch and is placed at the bottom of a cheque. A MIRC code, just like the IFSC code, helps to identify the bank and its branch that are involved in the transaction.
The purpose of using the MICR code is as follows:
- MICR code eases the processing of cheques and other documents.
- It determines the authenticity of a cheque or document.
- It smoothes the process of fund transfer using any of the fund transfer modes.
- MICR code helps the RBI to keep a track of all the transactions being carried out by a bank.
A MICR code is determined by using the following 3 components:
- The first 3 digits are the city code
- The middle 3 digits is a unique bank code
- The last 3 digits are a unique branch code
MICR code for any bank and branch can be found on the internet. You can check your checkbook as well. The set of 9 digits in the middle on the lower part of the cheque is the MICR for your branch.