Banking Basic Banking Terms & Definitions - NEFT/RTGS/IMPS/IFSC/MICR/SWIFT

Basic Banking Terms & Definitions - NEFT/RTGS/IMPS/IFSC/MICR/SWIFT

Glossary of Common Banking Terms & Phrases

NEFT

• NEFT stands for National Electronic Fund Transfer.
• This electronic payment system was introduced by Reserve Bank of India in 2005.
• The transactions under NEFT are carried out in batches.
• On Weekdays, the funds are settled from 8:00 AM to 7:00 PM in half hourly batches. On Saturdays, funds are again settled in half hourly batches from 8:00 AM to 1:00 PM.
• There is no minimum or maximum limit for a number of funds that can be transferred under NEFT. 
• The transferred amount is credit within 2 business hours in the account of the beneficiary after the transaction.
• NEFT cannot be used for abroad transactions, however, under the Indo-Nepal Remittance Facility Scheme, one can transfer funds to Nepal.
• Service/ Processing charge is applicable for all outward NEFT transactions and this facility can also be used by individuals who do not have a bank account with the branch.

RTGS

• RTGS stands for Real Time Gross Settlement.
• As the name suggests, under RTGS, funds are transferred in real time unlike the batch transaction of NEFT.
• The minimum amount that can be transferred under RTGS is Rs. 2 lakhs. There is no upper limit for the maximum amount that can be transferred to this payment system.
• On weekdays, transactions under RTGS can be made from 9:00 AM to 4:30 PM. For Saturdays, RTGS settlements can be made from 9:00 AM to 2:00 PM. This timing may, however, vary as per the timing of the branch.
• Under RTGS, the bank branch of the beneficiary has to credit his/ her account within 30 minutes of receiving the message for fund transfer.

IMPS

• IMPS stands for Immediate Payment Service.
• National Payments Corporation of India (NPCI) introduced IMPS facility in November 2010 under the NFS (National Financial Switch) Network.
• Under IMPS, funds can be transferred instantly and unlike NEFT and RTGS, transaction through IMPS are available 24*7 (even on holidays).
• The Mobile Banking Service of the bank should be approved by RBI in order for them to be eligible for IMPS.

IFSC

• IFSC stands for Indian Financial System Code.
• This alphanumeric code is essential for transfer of funds electronically in India.
• IFSC code consists of 11 characters. Here, the first 4 characters are alphabets which represent the name of the bank. The fifth character is 0. The last 6 characters, which may be alphabet or numeric represent the bank branch.
• NEFT and RTGS transactions use these IFSC codes in order to route the transaction messages to the concerned banks.
• The IFSC code acts as a unique identifier of different bank branches in India since this system is applicable only for domestic transactions.

MICR

• MICR stands for Magnetic Ink Character Recognition.
• This character recognition technology is especially used in cheque clearing.
• This characters of MICR code are printed with the help of magnetic ink or toner, which are printed at the bottom of the cheque.
• MICR consists of a 9 digit numeric code. The first 3 digits of MICR code represent the code of the city. Bank code is represented by the next 3 digits. The last three digit represents the code of the bank branch.

SWIFT

• SWIFT stands for Society for Worldwide Interbank Financial Telecommunication.
• This is used especially for international transfer of funds between banks or transfer of messages.
• SWIFT code usually consists of 8 or 11 characters.  The first 4 characters of the SWIFT code represent the code of the bank. The next two characters represent the country code. The next two characters, which may be alphabet or numeric represent the code of the location. The last three characters represent the code of the branch.