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    How To Transfer Money In India (Complete Guide)

    Banking is one of the oldest public facilities in our society. For hundreds of years we are used to making monetary transactions using the currency. In recent years, banking has become increasingly popular as thousands of new account holders are connecting themselves with the various nationalized and private banks in India. To keep up with the growing customer base, banks have also been taking measures to ensure that customers get the safest and most efficient banking experience too.

    Booming Online Banking in India

    According to statistics by IBEF (India Brand Equity Foundation)*, India currently has an astounding 96,068 banks, which include public and private sector banks, foreign banks, rural regional banks as well as urban and rural cooperative banks. Apart from the immense number of banks, India reportedly has over 221,700 ATMs active across the length and breadth of the country. The banking sector is set to increase the number of ATMs to over 407,000 by 2021. 

    These remarkable figures showcase the strong banking infrastructure of the country. With the improved banking structure, there has been a resultant rise in online banking in the country, especially after the demonetization move by the Central Government in November 2016. 

    The increasing focus on promoting online banking by the banks and government has shown incredible results. According to a report in the Financial Express, currently, there are over 45 million active online banking users in the country. This number of online banking users is expected to be as much as 150 million, by 2020 in India. 

    Best Ways for Banking in India

    With an increase in smartphones and online shopping, larger numbers of customers are now choosing to make payments using online banking methods. Online banking offers incomparable efficiency and convenience to customers. Today, Indian banks provide various options for online banking to their customers. 

    The top five ways for online money transfers in India are:

    • NEFT (National Electronic Fund Transfer)
    • RTGS (Real Time Gross Settlement)
    • IMPS (Immediate Payment Service)
    • UPI (Unified Payment Interface) 
    • Cheque 

    Choosing the Best Money Transferring Method in India 

    Before jumping to select one of the five methods, it is important to know the factors that can help decide the best-suited money transferring method for you.

    These are the factors that outline the aim and result of any online money transferring methods:

    • Value of Fund – The amount you wish to send online to the receiver is an essential factor to decide the best money transferring method. The money transferring methods normally have restrictions on the minimum or maximum amount of money that can be transacted at one time. 
    • Transfer Timing – Although certain banking methods allow online money transfers round-the-clock, there are others that are restricted by working schedules. Some of these money transaction methods do not work on public holidays and weekends while others can be used at any time. 
    • Speed of Settlement – Another important factor that helps choose the best-suited money transfer method is the speed at which the transaction gets completed. Different fund transfer methods take different durations of time to successfully complete an online fund transfer. However, normally faster transaction speeds often come with additional charges. 
    • Transaction Charges – The official RBI directive dictates the amount for online banking transfer that banks can charge to customers. Mostly, online banking transaction charges are decided by the fund value, speed of settlement and the flexibility offered by the particular money transferring method. Check the specific online banking charges with your local bank branch. 
    • Limit of Transaction – Last, but not the least, the limit of funds that can be transferred through individual money transferring methods also helps to determine the best-suited online banking and transaction method for you. 

    Details of Money Transfer Methods in India

    Now, let’s check the details and benefits of each money-transferring method which is used in India today:

    NEFT 

    Highlights of NEFT

    • Minimum Fund Transfer –INR 1.00
    • Maximum Fund Transfer – (No Limit)
    • Transaction Type – Online & Offline
    • Settlement in – Batches
    • Settlement Speed – 2 hours (depending on cut-off timings/batches)
    • Service Availability – Monday through Friday between 8:00 AM to 6:30 PM (12 Batches), Saturday between 8:00 AM to 1 PM (6 Batches) – Unavailable on Sunday and Bank Holidays
    • Transaction Fees – From INR 1 to INR 10,000 = INR 2.50 only, from INR 10,001 to INR 1,00,000 – INR 5 only, from INR 1,00,001 to INR 2,00,000 – INR 15 only, from INR 2,00,001 to INR 5,00,000 = INR 25 only and from INR 5,00,001 to INR 10,00,000 = INR 50 only. 

    The National Electronic Fund Transfer (NEFT) method is by far the most popular money transfer technique used in India today. 

    NEFT uses the DNS (Deferred Net Settlement) system to settle a transaction in batches at a specified time period during working hours. You will require an IFSC (Indian Financial System Code) of the recipient’s bank to complete the transaction successful. This is a unique 11-digit code that is assigned to every RBI-recognized banking institution. It identifies the individual bank as well as the bank branch with which the account is held with. 

    Steps for Fund Transfer Using NEFT

    Follow these simple steps to initiate fund transfer using NEFT:

    1. On your Online Banking portal, go to “Transfer” tab and select “Transfer to another bank (NEFT)” from the list of options
    2. Enter the details of recipient account, including account holder’s name, account number, their IFSC code, etc in the relevant places
    3. Approve and accept the Terms & Conditions of NEFT transaction
    4. Re-check the details to ensure that the transaction has been successfully initiated

    Benefits of NEFT for Fund Transfer

    Some of the top benefits of using NEFT for fund transfer are:

    • Secure and safe
    • Cost-efficient 
    • Reliable 
    • Organized settlement according to batches
    • Paperless transaction 

    RTGS

    Highlights of RTGS

    • Minimum Fund Transfer – INR 2,00,000
    • Maximum Fund Transfer – (No Limit)
    • Transaction Type – Online & Offline 
    • Settlement In – One-on-one settlement
    • Settlement Speed – Instantly 
    • Service Availability – Business hours, between 7:00 AM and 6:00 PM 
    • Transaction Fees – From INR 2,00,000 to INR 5,00,000 = INR 30 only, from INR 5,00,001 to INR 10,00,000 = INR 55 only / Timely charges (per Outgoing Transaction) between 8:00 AM and 11:00 AM = NIL, between 11:00 AM and 1:00 PM = INR 2 only, between 1:00 PM and 6:00 PM = INR 5 only, after 6:00 PM = INR 10 only.

    The Real-Time Gross Settlement (RTGS) method of money transfer is the next most popular money transaction method used in India, especially for transferring large sums of money quickly with online banking. 

    As it facilitates transferring funds of INR 2,00,000 and over immediately in real-time, small and large business owners find it extremely convenient. You will need the IFSC code of the recipient account holder for successful RTGS money transfers. In addition, the sender’s and recipient’s bank accounts need to be RTGS-enabled for completing the monetary transaction successfully. 

    Steps for Fund Transfer Using RTGS 

    These are the simple steps that help to complete an RTGS money transfer successfully:

    1. Open you online banking portal and tap to open “Transfer” tab before clicking on “Transfer to other banks (RTGS)” option 
    2. Choose/add the recipient account holder details in the space given
    3. Click on “Accept” when the Terms & Conditions box pops up
    4. Finally, ensure that you receive the confirmation notice that the transaction has been successfully completed. 

    Benefits of RTGS Fund Transfer

    These are the top benefits of using RTGS for fund transfer:

    • Instant online money transfer
    • The safe and secure monetary transaction
    • Excellent for large-value fund transfer
    • RBI-approved online money transferring method 
    • Immediate fund clearance 
    • One-on-one fund crediting
    • Individual and gross transaction options 

    IMPS

    Highlights of IMPS

    • Minimum Fund Transfer – INR 1.00 
    • Maximum Fund Transfer – INR 2,00,000 
    • Transaction Type – Online
    • Settlement In – One-on-one settlement 
    • Settlement Speed – Instantly 
    • Service Availability – 24/7 (Round-the-clock)
    • Transaction Fees – From INR 1 to INR 10,000 = INR 2.5 only, from INR 10,001 to INR 1,00,000 = INR 5 only, from INR 1,00,001 to INR 2,00,000 = INR 15 only.

    The Immediate Payment Service (IMPS) is another excellent and top choice for users as a reliable and secure method of online money transactions. 

    In contrast to other online banking methods that are dependent on the bank’s working hours to get completed, IMPS is a fund transfer service that works 24 hours a day, 7 days a week, irrespective of Sundays, public holidays and bank holidays. Although it is designed to handle low-value fund transfers, it does the online transaction instantly. Today, most banks provide IMPS as an SMS-based service, making it excellent and efficient for mobile phone users to transfer money immediately through online banking. 

    Steps for Fund Transfer Using IMPS

    These are the simple steps to follow and successfully complete an IMPS transaction:

    1. Log-in to your online banking portal using your ID and password
    2. Scroll to the “Funds Transfer” tab for Other Bank Account
    3. Select the type of beneficiary account type, choose IMPS as a mode of transfer
    4. Enter the amount you wish to transfer to the recipient account, then click on “Submit”
    5. Click once on “Confirm” to initiate money transfer immediately 
    6. Once you receive the OTP (One-Time-Password) on your registered mobile number, enter it to finalize the transaction 
    7. Click on “Submit” again, this completes the process of a money transfer using IMPS

    Benefits of IMPS Fund Transfer

    These are the express benefits of using IMPS for online fund transfers:

    • Ease of fund transfers
    • Secure and Safe online transaction
    • Quicker fund transferring and receiving
    • Mobile friendly banking transactions 
    • Round-the-clock fund transfers

    UPI

    Unified Payment Interface (UPI) is any real-time online payment app that allows fund transfer from your bank account to the recipient’s bank account using Virtual Payment Address) VPA on smartphones. 

    These are excellent apps for easy and immediate fund transfers that are growing in popularity immensely. Using UPI does not require you to divulge your bank account details, instead only the recipient’s mobile number and name are sufficient to send them funds over the internet. 

    UPI apps work 24/7 and can easily allow fund transfers of up to INR 1,00,000 at a time. 

    Cheque

    Cheques have been the conventional mode of payment, besides cash, for a long time now. 

    You simply need to draw a cheque with the recipient’s name, account number and bank details and sign at the mentioned place. Once you draw the cheque, you can choose to make a cheque deposit directly into the recipient’s account.

    Using cheque to transfer funds is secure but may take around 2-3 working days for the transferred amount to get reflected in the recipient’s bank account. 

    It is highly recommended to check the specific terms and conditions of the above-stated fund transferring methods with your bank before choosing the best-suited money transaction method. 

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