Banks can transfer money from one account to someone’s account. This can be electronic or physical. The primary methods of doing this can be through cheques, cash, money orders and bank drafts. However, it is now easier with net banking that makes use of online transfer facilities to transfer to third party accounts.
In India, NEFT transfer or RTGS transfer can be used in interbank transfer. People prefer electronic fund transfer because it is faster, safe and cheaper for people. The speed of transfer is what makes it better to have made real-time gross settlement or RTGS and national electronic fund transfer or NEFT popular.
How to register the beneficiary’s account online?
One needs to register third party account details
- Name of the beneficiary
- Account number of the beneficiary
- The IFSC Code of the beneficiary branch (IFSC Code is unique code allotted by RBI for each Bank/Branch participating in NEFT) or you can find bank – ifsc code from railrani
For example adding beneficiary in HDFC bank account
Difference between RTGS and NEFT
How does NEFT Operates?
Step 1: filling of information is required when it is been used
Step-2 : Message is sent from the originating bank to the NEFT Service Centre called the pooling center.
Step-3 : Message from the pooling center is sent to the NEFT Clearing Centre that is operated by National Clearing Cell and the Reserve Bank of India, Mumbai
Step-4 : The Clearing Centre have to take care of the funds transferred and makes it easier for transaction to take place.
Step-5 : The destination bank can them get the inward remittance messages directly from the Clearing Centre and then the funds goes to beneficiary customers’ accounts.
How does RTGS Operate?
Real Time Gross Settlement (RTGS) does not have a waiting time. Transfer of funds is swift and does not have to go through any long process.
1. The remitting bank sends the RTGS instruction slip to its central processing system immediately.
2. The processing system sends a subset of the instruction to RBI, the central coordinating bank with all the relevant details.
3. The central bank does all the settlement of the transaction.
4. RBI records an irrevocable settlement of the transaction and passes the confirmation to the central processing system of the sending bank.
5. There is a generation of a unique transaction number (UTN) at the end of the transaction that is sent to sending bank by the apex bank.
6. it is only a subset of the transaction instruction is sent to the RBI and the sending bank’s central processor quickly rebuilds the payment message that would include the entire details of the transaction and sends it to the receiving bank.
7. The receiving bank’s central processing system can then transfer the requisite amount to the account of the beneficiary.
8. The process ends when The UTN acts as an acknowledgement of the transfer of funds.