project on eft 2012-2013.docx

7/29/2019 project on eft 2012-2013.docx

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ELECTRONIC FUND TRANSFER

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Chapter -1: INTRODUCTION

1.1 Meaning:

Reserve Bank of India shall introduce a system called "The Reserve Bank of

India Electronic Funds Transfer System - 1997" which may be referred to as

"RBI EFT System" or "System" and shall include the set of procedural guidelines

detailed hereunder, participating banks and institutions and the system of computer and

communication network through which funds transfer operation would take place.

Electronic Funds Transfer (EFT) is a system of transferring money from one bank

account directly to another without any paper money changing hands. One of the most

widely-used EFT programs is Direct Deposit, in which payroll is deposited straight into

an employee's bank account, although EFT refers to any transfer of funds initiated

through an electronic terminal, including credit card, ATM, Fed wire and point-of-sale

(POS) transactions. It is used for both credit transfers, such as payroll payments, and

for debit transfers, such as mortgage payments.

Transactions are processed by the bank through the Automated Clearing House

(ACH) network, the secure transfer system that connects all U.S. financial institutions.

For payments, funds are transferred electronically from one bank account to the billing

company's bank, usually less than a day after the scheduled payment date.

The growing popularity of EFT for online bill payment is paving the way for a

paperless universe where checks, stamps, envelopes, and paper bills are obsolete. Thebenefits of EFT include reduced administrative costs, increased efficiency, simplified

bookkeeping, and greater security. However, the number of companies who send and

receive bills through the Internet is still relatively small.


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The U.S. Government monitors EFT compliance through Regulation E of the

Federal Reserve Board, which implements the Electronic Funds Transfer Act (EFTA).

Regulation E governs financial transactions with electronic payment services,

specifically with regard to disclosure of information, consumer liability, error resolution,

record retention, and receipts at electronic terminals.

Banks collect payment for the service from the sender as well as from the

recipient. The sending bank typically collects a fee separate from the funds being

transferred, while the receiving bank and intermediate banks through which the transfer

travels deduct fees from the money being transferred so that the recipient receives lessthan what the sender sent.


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1.2 History of EFT:

Electronic funds transfer refers to fund transfers between financial institutions.

This allows a large number of businesses to carry out prompt business transactions,

orders and invoices. EFT is a precise and efficient system that is considered favorable

as compared to traditional money transfer methods.

The larger concept of electronic data interchange has been in use since the

1960?s, but gained popularity in the late twentieth century. This paved the way for

commencement of electronic commerce, business extranets that linked customers and

suppliers, and prompted the growth of numerous network-based technologies. It

eliminated the need for paper-based authentication for financial transactions. With

continuous development and innovation in the complicated EFT system, their use

increased considerably. These include electronic wire transfers, ATM transactions,

Direct Deposit of payroll, business-to-business payment, and federal, state, and local

tax payments.

In 1968, a team of railroad businesses who were apprehensive about accuracy

and speed of the existing data transmissions formed the? Transportation Data

Coordinating Committee (TDCC).? In its initial days, companies used individual

proprietary formats, and this prevented the use of a universally accepted transmitting

format. In the 1970?s, a number of companies had adopted a common transmission

format that allowed an external network to monitor the system. At that time, these

systems followed specific patterns within a certain industry, but this did not match the

format of other businesses.

By 1973, the TDCC started working on a number of common electronic fund transferformats to eliminate existing drawbacks in the system. After an arduous effort, and a

string of trials and errors, the governing body was able to determine a prescribed

electronic fund transfer format. This paved the way for modern EFT, and changed the

face of money transfer by considerably reducing the involvement of paperwork in money

transfers all over the world.


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1.3 DEFINITIONS:

BANK:-

Bank" means a banking company as defined in Section 5 of the banking Regulation

Act, 1949, and includes the State Bank of India,

constituted by the State Bank of India Act, 1955, a

Subsidiary Bank constituted under the State Bank

of India(Subsidiary-Banks) Act, 1959, a

Corresponding New Bank constituted under the

Banking Companies (Acquisition and Transfer ofUnder-taking) Act, 1980, a cooperative bank, as

defined in Section 56 of part V of the Banking

Regulation Act, 1949 and such other banks as

may be specified from time to time.

BENEFICIARY:-

"Beneficiary" means the person designated as such, and to whose account

payment is directed to be made in a payment order.

BENEFICIARY BANK:-

"Beneficiary bank" means the branch of the bank identified in a payment order in which

the account of the beneficiary is to be credited.


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Sending Bank:-

"Sending bank" means the branch of a

bank, maintaining an account of and to which

payment order is issued by the originator. When

the originator is a participating institution,

reference to sending bank shall be construed as

referring to the sending EFT centre.

Nodal Department:-

"Nodal Department" means the Department of Payment and Settlement Systems

of Reserve Bank which is responsible for implementation, administration andsupervision of the EFT System.

EFT Centre:-

"EFT Centre" means any office designated by the Nodal Department in each of

the centers to which EFT system is extended, for receiving, processing and sending the

EFT data file and the debiting and crediting of accounts of the participating banks andinstitutions for settlement of payment obligations or one or more of these functions. EFT

Centre is referred to as "Sending EFT Centre" when it receives EFT data file from the

participating sending banks and institutions. EFT Centre is referred to as Receiving

EFT Centre when it receives EFT data file from a sending EFT center.

EFT System:-

"EFT" System" means the Electronic Funds Transfer System established by these

Regulations for carrying out interbank and intra bank funds transfers within India,

through EFT centers connected by a network, and providing for settlement of payment

obligations arising out of such funds transfers, between participating banks or institution.


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Fund Transfer:-

Funds Transfer" means the series of transactions beginning with the issue oforiginator's payment order to the sending bank and completed by acceptance of

payment order by the beneficiary's bank for the purpose of making payment to the

beneficiary of the order.

Security Procedure:-

Security Procedure" means the set of procedural guidelines at Paragraphs underSection of these Guidelines for the purpose of.

(i) verifying that a payment order, a communication canceling a payment order or an

EFT Data File is authorized by the person from whom it purports to be authorized; and

(ii) for detecting error in the transmission or the content of a payment order, a

communication or an EFT Data File.

Valid Reasons Of Non-Payment:-

Valid Reasons of Non-payment" are the reasons listed as under due to whichbeneficiary bank fails to make payment to the beneficiary. The reasons are :

a) Beneficiary not having an account with the beneficiary bank

b) Account Number or account name indicated in the payment order not matching with

the number or name as recorded at the beneficiary bank.

c) dislocation of work due to circumstances beyond the control of the beneficiary bank

such as earth quake, fire etc. at the place where the beneficiary's account details are

maintained etc.


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CHAPTER - 2: PARTICIPANTS

Admission for participation:

No persons shall be entitled to effect a funds transfer in the EFT System, unless

the sending bank or institution and the beneficiary bank or institution as the case may

be, is admitted for participation in the EFT System.

2.1 Eligibility for admission as a participant:

To be eligible to apply for admission, an applicant must

1) be a bank or institution,

2) have attained and continues to comply with capital adequacy norms, if any,

applicable to it.

3) is willing and able to comply with the technical operational requirements of EFT

System,

4) be approved by the Reserve Bank as eligible to maintain a settlement account with it.

Provided that, having regard to the pattern of ownership and such other relevant factors,

all or any of the above conditions may be relaxed or dispensed with, if so decided by the

Governor.


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2.2 Procedure for Admission:

Any bank or institution eligible to be admitted in the EFT System may submit to the

Nodal Department, duly authenticated application in triplicate, containing full particulars

in the form specified at Annexure-I (Form: FT-IA). Every application shall be

accompanied by an undertaking in the specified form to abide by the Procedural

Guidelines in the event of admission.

The Nodal Department shall issue Letter of Admission as specified in Annexure-II

(Form: FT-IB) to every bank or institution admitted into the EFT System.

A directory of participating banks and institutions shall be prepared as on 31st

December of each year and supplied to every bank and institution either on floppy or onthe network. Additions and deletions in the directory may be notified from time to time.

2.3 Suspension:

If a participating bank or institution has defaulted in meeting its settlement obligations

or paying any charges or fees or complying with any procedural guidelines or for any

reasons specified at paragraph 3.15, the Letter of Admission issued to it is liable to be

kept under suspension for such period as may be specified in the order of suspension.

Every order of suspension shall be notified immediately to all the participating banks

and institutions including a bank or institution against which the order of suspension is

passed.

An order of suspension may be reviewed and may be revoked at any time by the

Governor upon representation received from the concerned bank or institution or on hisown. Every revocation shall be notified immediately to all participating banks and

institutions.


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A participating bank or an institution shall not, while any order of

suspension is in force against it, be entitled to send or receive any EFT data file or

otherwise to effect any funds transfer in the EFT System. Provided that a suspension

shall not affect the obligations of the suspended bank or institution, whether incurred

before or after the suspension.

2.4 Withdrawal:

Any participating bank or institution may, by giving a notice of one month, withdraw

from the EFT System.

No notice under this Regulation shall be effective unless it is given in writing and

before the expiry of one month from the date of

receipt of notice by the Nodal Department.

Notwithstanding its withdrawal, a bank or

institution shall discharge all its payment

obligations arising out of fund transfers

attributable to it, whether effected before or after

the withdrawal became effective.

The withdrawal of any participating bank or

institution shall be notified to all the participating banks and institutions. Cancellation of

Letter of Admission


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2.5 Cancellation of Letter of Admission:

A Letter of admission issued to any bank or institution may be cancelled by the

Governor on his being satisfied that such bank or institution has -

i) defaulted in complying with any Regulations or procedural guidelines issued there

under from time to time.

ii) been placed under an order of moratorium or an order prohibiting acceptance of fresh

deposits or an order of winding up or in respect of which a provisional liquidator hasbeen appointed.

iii) stopped or suspended payment of its debts.

iv) failed to get the order of suspension passed against it under Regulation 8 revoked

within a period of three months from the date of order of suspension.

v) has conducted its transactions in the EFT System in a manner prejudicial to the

interest, integrity or efficiency of the System.

No order of cancellation shall be passed without first giving an opportunity of hearing

to the concerned bank or the institution.

Every order of cancellation shall be notified to the concerned bank or institution and

also to all other participating banks and institutions in the EFT System.

Notwithstanding the order of cancellation of Letter of Admission passed against it,

such bank or institution shall discharge all its payment obligations arising out of the

funds transfers affected in the EFT System.


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CHAPTER- 3: PROCESS OF FUND TRANSFER

3.1 SIMPLE ELECTRONIC FUND TRANSFER:

Essentially, an electronic funds transfer is a transaction by which funds move

from one institution to another or one account to another at the direction of an

institutions customer and through the transmission of electronic instruction messages

that cause the institutions to make the required bookkeeping entries and make the

funds available. Funds transfers are the primary mechanism used by the business

community for fast and reliable transfer of funds between two parties.

The funds transfer process generally consists of a series of electronic messages

sent between financial institutions directing each to make the debit and credit

accounting entries necessary to complete the transaction. A funds transfer can

generally be described as a series of payment instruction messages, beginning with the

originators (sending customers) instructions, and including a series of further

instructions between the participating institutions, with the purpose of making payment

to the beneficiary (receiving customer).

The players that may be involved in a funds transfer transaction include:

Originator, e.g., individual, business entity - the initiator of a funds transfer;

Beneficiary - the ultimate party to be credited or paid as a result of a funds

transfer;

Originators Financial Institution - the financial institution receiving the transferinstructions from the originator and transmitting the instructions to the next party

in the funds transfer;

Additional Financial Institutions - other institutions that may be required to effect

the transaction.


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The simplest funds transfers occur between two customers of a single

financial institution. The originating customer simply instructs the institution to

transfer funds to the beneficiary customer. The institution makes the required

book entries in its accounting system and the transfer is complete. Such transfers

occur primarily in purely domestic transfers, but could conceivably occur within a

single institution with both U.S. and foreign branches.


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3.2 CROSS BOARD FUND TRANSFER:

Scenarios that are more complicated appear when the number of institutions

involved increases. These more complicated scenarios are far more common in the

cross-border context, especially if an originators institution does not have a branch in

the beneficiarys foreign location. In this case, one financial institution may rely upon

established business relationships with additional financial institutions to complete the

transaction. Such relationships are correspondent relationships.40 A correspondent

relationship, simply put, is the provision of banking services by one financial institution

to another financial institution. For example, in the case that two institutions that need to

complete a transaction both maintain accounts at a third institution, that third institution

may transfer the funds from ones account to the others to facilitate the customers

transfer.41 When coupled with electronic communications systems, such correspondent

relationships expedite the transfer of funds across international borders and within

countries.

To complete this kind of transfer, the customers bank must identify another

bank with which it maintains a correspondent relationship. In this case, a secure

message between the banks can result in a book transfer where funds are

simultaneously debited from one account and credited to another. In the simplest

example, the originator instructs her bank to transfer funds to the beneficiary and the

bank sends an instruction to its correspondent, which makes the funds available to the

beneficiary. When both the originators and beneficiarys institutions have a

correspondent relationship with the same third-party institution, the originatorsinstitution can send the funds transfer through this mutual correspondent.


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3.3 CHAIN OF BANK FOR THE FUND TRANSFER:

Two banks that do not have a correspondent relationship can still transfer funds if

they can establish a chain of banks that do have such a relationship. When the

originator and beneficiary financial institutions do not maintain relationships with a

mutual correspondent financial institution, they must rely upon additional correspondent

financial institutions to complete the funds transfer. The additional correspondent

financial institutions are essential pieces of the end-to-end funds transfer. Examples of

these kinds of transfers appear in the discussion of the major funds transfer payment

and messaging systems below. This process is eased by the existence of large money

center banks that maintain correspondent relationships with many smaller banks and

with each other. Importantly, a relatively small number of major money center banks

specialize in facilitating international funds transfers through their network of

correspondent relationships, and thus form a key link in the vastmajority of all

international funds transfers.

Cross-border electronic funds transfers of the type considered by this study

flow primarily through banks.42 However, money remitters also provide valid and

legitimate financial services in this area. Generally, remitters receive from their

customers cash, for which the remitter transfers corresponding value to designated

beneficiaries for a fee. Money remitters generally tend to engage in low dollar

transactions, and traditionally serve the non-banking segment of the population --

notably new immigrants, permit-holding or clandestine foreigners, or any other personnot having a bank account -- and frequently transfer funds to less advanced regions of

the world where banking services are scarce.


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3.4AUTOMATED CLEARING HOUSE

Automated Clearing House (ACH) is an electronic network for financialtransactions in the United States. ACH processes large volumes of credit and debit

transactions in batches. ACH credit transfers includedirect depositpayroll and vendor

payments. ACH direct debit transfers include consumer payments on insurance

premiums, mortgage loans, and other kinds of bills. Debit transfers also include new

applications such as the point-of-purchase (POP) check conversion pilot program

sponsored byNACHA-The Electronic Payments Association. Both the government and

the commercial sectors use ACH payments. Businesses increasingly use ACH online to

have customers pay, rather than via credit or debit cards.

Rules and regulations that govern the ACH network

are established by NACHA (formerly the National

Automated Clearing House Association) and the Federal

Reserve. In 2002, this network processed an estimated

8.05 billion ACH transactions with a total value of $21.7

trillion.[1]

(Credit card payments are handled by separatenetworks.)

The Federal Reserve Banks are collectively the nation's largest automated

clearinghouse operator, and in 2005 processed 60% of commercial interbank ACH

transactions. The Electronic Payments Network (EPN), the only private-sector ACH

operator in the US, processed the remaining 40%. FedACH is the Federal Reserve's

centralized application software used to process ACH transactions. EPN and the

Reserve Banks rely on each other for the processing of some transactions when either

party to the transaction is not their customer. These interoperator transactions are

settled by the Reserve Banks.
http://en.wikipedia.org/wiki/Financial_transactionshttp://en.wikipedia.org/wiki/Financial_transactionshttp://en.wikipedia.org/wiki/Financial_transactionshttp://en.wikipedia.org/wiki/Direct_deposithttp://en.wikipedia.org/wiki/Direct_deposithttp://en.wikipedia.org/wiki/Direct_deposithttp://en.wikipedia.org/wiki/Direct_debithttp://en.wikipedia.org/wiki/Direct_debithttp://en.wikipedia.org/wiki/Mortgage_loanshttp://en.wikipedia.org/wiki/Mortgage_loanshttp://en.wikipedia.org/wiki/Point_of_salehttp://en.wikipedia.org/wiki/Point_of_salehttp://en.wikipedia.org/wiki/Check_%28payment%29http://en.wikipedia.org/wiki/Check_%28payment%29http://en.wikipedia.org/wiki/NACHA-The_Electronic_Payments_Associationhttp://en.wikipedia.org/wiki/NACHA-The_Electronic_Payments_Associationhttp://en.wikipedia.org/wiki/NACHA-The_Electronic_Payments_Associationhttp://en.wikipedia.org/wiki/NACHA-The_Electronic_Payments_Associationhttp://en.wikipedia.org/wiki/NACHA-The_Electronic_Payments_Associationhttp://en.wikipedia.org/wiki/Federal_Reservehttp://en.wikipedia.org/wiki/Federal_Reservehttp://en.wikipedia.org/wiki/Federal_Reservehttp://en.wikipedia.org/wiki/Automated_Clearing_House#cite_note-0http://en.wikipedia.org/wiki/Automated_Clearing_House#cite_note-0http://en.wikipedia.org/wiki/Automated_Clearing_House#cite_note-0http://en.wikipedia.org/wiki/Electronic_Payments_Networkhttp://en.wikipedia.org/wiki/Electronic_Payments_Networkhttp://en.wikipedia.org/w/index.php?title=FedACH&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=FedACH&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=FedACH&action=edit&redlink=1http://en.wikipedia.org/wiki/Electronic_Payments_Networkhttp://en.wikipedia.org/wiki/Automated_Clearing_House#cite_note-0http://en.wikipedia.org/wiki/Federal_Reservehttp://en.wikipedia.org/wiki/Federal_Reservehttp://en.wikipedia.org/wiki/NACHA-The_Electronic_Payments_Associationhttp://en.wikipedia.org/wiki/NACHA-The_Electronic_Payments_Associationhttp://en.wikipedia.org/wiki/Check_%28payment%29http://en.wikipedia.org/wiki/Point_of_salehttp://en.wikipedia.org/wiki/Mortgage_loanshttp://en.wikipedia.org/wiki/Direct_debithttp://en.wikipedia.org/wiki/Direct_deposithttp://en.wikipedia.org/wiki/Financial_transactionshttp://en.wikipedia.org/wiki/Financial_transactions


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CHAPTER 4 :

TYPES OF ELECTRONIC FUND TRANSFER

India has two main electronic funds settlement systems for one to one

transactions: the Real Time Gross Settlement system (RTGS) and the National

Electronic Fund Transfer system (NEFT). Transactions which are bulk and repetitive in

nature are routed through Electronic Clearing Service (ECS) which is further of two

categories viz ECS-Credit (one debit and multiple credits e.g. Salary, Dividends) and

ECS-Debit (one credit and multiple debits e.g. bill payments, SIPs etc.). ECS iscurrently provided in around 75 centers in India.

4.1 Real Time Gross Settlement:

The acronym 'RTGS' stands for Real Time Gross Settlement. The Reserve Bank of

India (India's Central Bank) maintains this payment network. RTGS system is a funds

transfer mechanism where transfer of money takes place from one bank to another on a

'real time' and on 'gross' basis. This is the fastest possible money transfer systemthrough the banking channel. Settlement in 'real

time' means payment transaction is not subjected

to any waiting period. The transactions are settled

as soon as they are processed. 'Gross settlement'

means the transaction is settled on one to one

basis without bunching with any other transaction.

Considering that money transfer takes place in the

books of the Reserve Bank of India, the payment is

taken as final and irrevocable.
http://en.wikipedia.org/wiki/RTGShttp://en.wikipedia.org/wiki/RTGShttp://en.wikipedia.org/wiki/RTGShttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/RTGS


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Fees for RTGS vary from bank to bank.RBI has prescribed upper limit for the

fees which can be charged by all banks both for NEFT and RTGS. Both the remitting

and receiving must have Core bankingin place to enter into RTGS transactions. Core

Banking enabled banks and branches are assigned an Indian Financial System Code

(IFSC) for RTGS and NEFT purposes. This is an eleven digit alphanumeric code and

unique to each branch of bank. The first four alphabets indicate the identity of the bank

and remaining seven numerals indicate a single branch. This code is provided on the

cheque books, which are required for transactions along with recipient's account

number.

RTGS is a large value (minimum value of transaction should be Rs 2,00,000)

funds transfer system whereby financial intermediaries can settle interbank transfers for

their own account as well as for their customers. The system effects final settlement of

interbank funds transfers on a continuous, transaction-by-transaction basis throughout

the processing day. Customers can access theRTGSfacility between 9 am to 4:30 pm

on week days and 9 am to 1:30 pm on Saturday. However, the timings that the banks

follow may vary depending on the customer timings of the bank branches.

Banks could use balances maintained under the cash reserve ratio(CRR) and

the intra-day liquidity (IDL) to be supplied by the central bank, for meeting any

eventuality arising out of the real time gross settlement (RTGS). The RBI fixed the IDL

limit for banks to three times their net owned fund (NOF).

The IDL will be charged at Rs 25 per transaction entered into by the bank

on the RTGS platform. The marketable securities and treasury bills will have to be

placed as collateral with a margin of five per cent. However, the apex bank will also

impose severe penalties if the IDL is not paid back at the end of the day.
http://en.wikipedia.org/wiki/Core_bankinghttp://en.wikipedia.org/wiki/Core_bankinghttp://en.wikipedia.org/wiki/IFSChttp://en.wikipedia.org/wiki/IFSChttp://en.wikipedia.org/wiki/IFSChttp://en.wikipedia.org/wiki/RTGShttp://en.wikipedia.org/wiki/RTGShttp://en.wikipedia.org/wiki/RTGShttp://en.wikipedia.org/wiki/Cash_reserve_ratiohttp://en.wikipedia.org/wiki/Cash_reserve_ratiohttp://en.wikipedia.org/wiki/Treasury_billshttp://en.wikipedia.org/wiki/Treasury_billshttp://en.wikipedia.org/wiki/Treasury_billshttp://en.wikipedia.org/wiki/Cash_reserve_ratiohttp://en.wikipedia.org/wiki/RTGShttp://en.wikipedia.org/wiki/IFSChttp://en.wikipedia.org/wiki/Core_banking


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The RTGS system

implemented by the Reserve Bank

has been in operation for more than

four years. The system has also

stabilised over the years and has

been witnessing increased coverage

in terms of bank branches and

transaction volume.The volume of

RTGS (Real Time Gross Settlement System ) transactions is increasing rapidly. RTGS

settled 1.94 million transactions in the month

of March 2009 as against 0.72 milliontransactions in March 2008. Customer transactions settling in RTGS presently

constitute 89 percent of total RTGS transactions and are growing.

At a recent meeting with major banks, Reserve Bank of India reviewed the entire

gamut of RTGS customer transactions with a view to making them more user friendly.

Based on these discussions, the following decisions have been taken for

implementation by RTGS member banks latest by June 01, 2009.

1. It is triturated that in a Straight Through Processing (STP) environment,

standardization is very much necessary and uniformity in message format is a pre

requisite for the success of STP.

2.RTGS Customers have been complaining that there is no uniformity on information

provided to the customer in the pass books / account statements by different banks.

Some banks merely indicate `RTGS credit without details while other banks are giving

sender's bank account number or UTR number of the transactions etc. Customer is

receiving multiple RTGS credits ona given date, is at a loss to understand the source offunds leading to reconciliation issues.


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4.2National Electronic Fund Transfer(NEFT)National Electronic Fund Transfer (NEFT) is a nation-wide system that

facilitates individuals, firms and corporate to electronically transfer funds from any bank

branch to any individual, firm or corporate having an account with any other bank

branch in the country. For being part of the NEFT funds transfer network, a bank branch

has to be NEFT-enabled. As at end-January 2011, 74,680 branches / offices of 101

banks in the country (out of around 82,400 bank branches) are NEFT-enabled. Steps

are being taken to further widen the coverage both in terms of banks and branches /

offices.

IFSC or Indian Financial System Code is required to perform a transaction using

NEFTor RTGS. IFSCcode identifies a specific branch of a bank. IFSC code can be

found out on RBI website and also can be searched athttp://www.banks-india.com/ifsc-

code.php. These codes are also known from your bank branch, and it is best to confirm

the IFSC code, before going for any transaction.

How does the NEFT System Work?

NEFT system workselectronically. First you have to fill up the NEFT application

at your bank. The information required in the form is beneficiarys name, his bank and

branch name, his account number and type.

Some banks also allow you to perform NEFT transactions through net banking

or ATMs. Cash transaction is also permitted at some banks. In such case, the customer

will provide his contact details. So if the transaction fails, the bank can go back to him.
http://en.wikipedia.org/wiki/NEFThttp://en.wikipedia.org/wiki/NEFThttp://en.wikipedia.org/wiki/Indian_Financial_System_Codehttp://en.wikipedia.org/wiki/Indian_Financial_System_Codehttp://www.banks-india.com/ifsc-code.phphttp://www.banks-india.com/ifsc-code.phphttp://www.banks-india.com/ifsc-code.phphttp://www.banks-india.com/ifsc-code.phphttp://www.sendmoneyindia.org/digital-money.phphttp://www.sendmoneyindia.org/digital-money.phphttp://www.sendmoneyindia.org/digital-money.phphttp://www.sendmoneyindia.org/digital-money.phphttp://www.banks-india.com/ifsc-code.phphttp://www.banks-india.com/ifsc-code.phphttp://en.wikipedia.org/wiki/Indian_Financial_System_Codehttp://en.wikipedia.org/wiki/NEFT


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Once you fill up the form, you authorize that branch to debit your account and transfer

the specified amount to the beneficiarys bank account.

Step 1 - Once the bank receives an NEFT order, A SFMS message (Structured

Financial Message) is prepared by transferring branch. Then it will be forwarded to its

Service Center of NEFT.

Step 2 - The SFMS message is send to the NEFT Clearing Center by the service

center. It will be included in the next available settlement. The RBI NEFT Clearing

Center is operated by National Clearing Cell, Mumbai.

Step 3 - The funds transfer transactions will be sorted out according to destination bank

wise by the Clearing Center. It will then make proper accounting entries to accept funds

from remitting bank and

to give funds to the

beneficiarys bank.

Subsequently, through

the NEFT Service

Center bank wise

remittance messages

will be sent.

Step 4 - The beneficiarys bank receives transfer message from RBI and processes it.

In turn it credits the beneficiarys account.

The charges for transfer through NEFT are very small. Also as compared to other

modes of transfer, NEFT transfer is faster. So NEFT is the most appropriate way to

transfer small funds.


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4.3 Primary Industry Funds Transfer Systems in Operation

The actual exchange of data and funds necessary to complete a fundstransfer transaction relies upon electronic processing, settlement, and communication

systems.43 This study focuses primarily upon the communication aspect of these

systems. While the various payment and messaging systems offer differing levels of

functionality, the instruction messages underlying all of these functions are the primary

source of the data at issue in this study.44 From a financial intelligence perspective, it is

the information about the transaction rather than the movement of any actual funds that

advances the effort to combat illicit finance. The payment instructions themselves

identify the parties to the transaction and sometimes even more detailed information.

For the purposes of this study, FinCEN examined the operations of three payment or

messaging systems in operation in the United States Fedwire, CHIPS, SWIFT -- and

proprietary systems, primarily those used by money services business


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The Fedwire Funds Service business day begins at 9:00 p.m. eastern time (ET) on the

preceding calendar day and ends at 6:30 p.m. ET, Monday through Friday, excluding

designated holidays. For example, the Fedwire Funds Service opens for Monday at

9:00 p.m. on the preceding Sunday. The deadline for initiating transfers for the benefit of

a third party (such as a bank's customer) is 6:00 p.m. ET each business day. Under

certain circumstances, Fedwire Funds Service operating hours may be extended by the

Federal Reserve Banks.


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4.3 2)CHIPS:

Like Fedwire, the Clearing House Interbank Payments System (CHIPS) handlesboth the transmission of funds transfer instruction messages among financial

institutions, as well as the settlement of the payment between the institutions. CHIPS is

operated by The Clearing House Payments Company, L.L.C.49 CHIPS is the United

States main electronic funds-transfer system for processing international U.S. dollar

funds transfers made among international banks. Like Fedwire, CHIPS is a real-time

final settlement system. In other words, CHIPS settles the transactions at the time

CHIPS transmits the payment order; meaning that the sending participants obligation to

pay the amount of the payment order to the receiving participant is discharged at the

time CHIPS releases the payment message.

CHIPS claims to handle more than 90% of all U.S. dollar-based funds transfers

moving between countries around the world. According to recent information provided

by CHIPS, the system directly serves 46 banks representing 19 countries. Recent

figures reveal an approximate average of 280,000 transactions per day with a total

monetary value1.4 trillion.

Access to the CHIPS payment system is conditional upon a financial institutions

U.S. presence. In other words, the financial institutions using CHIPS must operate a

U.S. branch or office for the use of the system. Accordingly, the CHIPS system does not

permit a participating U.S. financial institution to transmit instructions or transfer funds

directly to a non-U.S. financial institution. As in the case of Fedwire, it is important to

note that a CHIPS instruction may serve as one segment of a cross-border funds

transfer.


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4.3 3) CHAPS

CHAPS started operating in 1984 as a nationwide, electronic interbank system for

sending irrevocable, guaranteed and unconditional sterling credit transfers. Final

settlement took place on an end-of-day multilateral net basis. In April 1996, CHAPS was

developed into an RTGS system and now handles nearly all large-value same-day

sterling payments between banks. The average daily valu e of payments passing

through the CHAPS Sterling system was GBP 195 billion in 2000 and, on a peak day,

the system has processed transfers with a total value of GBP 318 billion. There are

currently 13 direct participants in CHAPS

Sterling.

In January 1999, a second CHAPS

system - for euro-denominated payments -

was launched. CHAPS Euro connects to the

TARGET system, which links together the

RTGS systems of the 15 EU states and the

European Central Bank. This provides

member banks with the ability to make and

receive cross-border as well as domestic

payments in euros. A total of 20 banks, including two remote participants, are members

of CHAPS Euro. Of these, 12 banks (including the Bank of England) are also members

of CHAPS Sterling. With the introduction of an enhanced RTGS service called

NewCHAPS

In August 2001, CHAPS Sterling and CHAPS Euro now operate on a common

technical platform. The new platform, which is based on the SWIFT FIN Copy Financial

Application service, enables member banks to manage their outgoing payments using a

central scheduler and also to obtain real-time payment flow information viathe Enquiry

Link facility.


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4.3 4)SWIFT

The Society for Worldwide Interbank Financial Telecommunication (SWIFT)provides secure electronic financial messaging services to financial institutions. SWIFT,

which is a cooperative society owned by its member banks, is a unified international

financial transaction messaging service.52 SWIFT represents an extensive

telecommunications network by which a financial

institution in one country can communicate with its

branches or correspondent institutionsanywhere inthe world. In contrast to Fedwire and CHIPS,

SWIFT is a messaging system for funds transfer

instructions, rather than a financial settlement

system. Recent figures reveal that approximately

7,600 SWIFT members and participants located in

over 200 countries exchange approximately nine

million messages per day. SWIFT's worldwide user

community includes banks, broker/dealers and

investment managers, as well as their market

infrastructures in payments, securities, treasury, and trade. As of 2004, there were 574

U.S. financial institutions connected to SWIFT; those institutions sent approximately 383

million and received approximately 427 million SWIFT payments messages.53 SWIFT

processes over 2 billion messages per year. Daily overall volume of messages sent

using the SWIFT system has tripled over seven years, with peak days of over 10 million

messages in 2004. SWIFT messages direct the transfer of nearly $5 trillion worldwide

each day.

In contrast to Fedwire and CHIPS, a SWIFT message may travel directly from

a U.S. financial institution to a foreign institution or vice versa. In practice, SWIFT is the

primary method for international funds transfer messages.


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4.4 Interplay Between Funds Transfer Systems:

The aforementioned systems serve different functions and roles in the funds

transfer transaction process. Financial institutions often use the Fedwire and CHIPS

systems to handle both the message traffic and the actual movement and settlement of

the funds. Institutions typically use the SWIFT system for communicating message

instructions among financial institutions relating to the funds transfer.

Funds transfers often involve a combination of SWIFT and Fedwire messages or

SWIFT and CHIPS or other instruction messages in the same transaction. For example,

a U.S. institution may receive a SWIFT message from a foreign institution and map the

message into a Fedwire or CHIPS message before passing it along to the additional

U.S. financial institutions serving as correspondents.54

When a funds transfer requires multiple correspondents participation and

involves more than one message system, one or more of the institutions translates or

maps over the data from one message format to another. An estimated 70% of the

traffic on the CHIPS system, for example, originates from SWIFT message tra ffic.


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4.5Money Transmitters:

In addition to the banking industry, certain money services businesses (MSBs)

operate as retail money transmitters. The term money services business refers to five

distinct types of financial services providers that perform valuable services to a wide

array of individuals, many of whom do not have ready access to or for their own reasons

may eschew relationships with depository institutions.56 Of primary concern for the

purposes of this study are money transmitters.

Money transmitters provide many of the same attractions as the major bank-

based electronic funds transfer systems. Money transmitters often maintain agent

relationships with businesses around the globe, permitting rapid, secure transfer of

funds. In addition, because money transmitters do not have account relationships with

their customers, they are not required to perform customer identification and verification

other than pursuant to the Funds Transfer and Travel Rules and the CTR requirements.

While there are many such businesses, it is estimated that a relative handful of large

money transmitters (i.e., 3-10) account for as much as 97% of the total volume of

money remittances to or from the U.S.57 through money transmitters.

The few largest U.S. money transmitters provide money transfer services for

consumers and businesses worldwide. Through hundreds of thousands of

independently owned businesses (send and receive agents), these institutions provide

money transfer services in approximately 200 countries and territories worldwide. Each

day, these institutions process hundreds of thousands of money transfers involving

U.S.-based customers.

The largest money transmitters maintain centralized data collection systems for

all transactions and process all transactions by their agents through central processing

systems located in the United States. Every send and receive agent collects the

relevant information from its customers, including the data elements required by the


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Funds Transfer rule as appropriate, and submits the funds transfer instructions through

a centralized system which in turn transmits the instructions to another appropriate send

and receive agent for delivery of the funds.

It is possible for investigators to obtain information about funds transfers madethrough these money transmitters pursuant to a subpoena or other legal process. In

response, the companies conduct a computer-based search based on key identifying

information and generate a summary report containing basic information about the

identified transactions. The information

generally includes the send and receive

agents, the date and amount of the

transfer, and the parties to the transaction.

The large money transmitters typically can

retrieve additional detailed information in

response to follow-up requests from

investigators. In addition, these companies can conduct aggregate searches of larger

volumes of transfer data in response to a proper legal request from law enforcement.

While money transmitters offer an alternative to banks, many must retain the

services of a depository institution in order to conduct their own business.58 In this

situation, a money transmitter collects currency from its customers, sends transfer

instructions to affiliates in other locations, deposits the currency into a bank account,

and effects one or more electronic funds transfers through the bank to settle its

accounts with the affiliates.


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4.6 Proprietary Transfer Systems and Other Issues:

Whether a depository institution, a money transmitter, or otherwise, a financial

institution, may also use proprietary or internal systems to handle all or part of an

electronic funds transfer, i.e., between branches of the same institution. Such systems

pose a special challenge because of the wide range of potential message formats,

communications protocols, and data structures involved. For example, a U.S.-based

correspondent involved in a cross-border transfer may have a foreign branch that can

complete the transfer without involving additional institutions. In such a case, the U.S.-

based correspondent may employ the institutions internal systems to transmit the

instructions to its foreign branch. In such a case, the instruction may have traversed the

Fedwire or CHIPS systems, but never traversed any other messaging systems not

within the direct control of the correspondent institution.

U-Turn Transactions

It also occurs that funds transfers from one foreign location to another foreign

location may involve a U.S.-based bank serving as a correspondent bank. In this type of

transaction, there is no originator or beneficiary within the United States, but a U.S.

financial institution handles some segment of the funds transfer. As a result, these U.S.-

based banks may be privy to the specific details of such transactions and maintain

related internal records of these transactions.

Serial Payment and Cover Payment Methods

In examining these foreign location-to-foreign location funds transfers involving

U.S.-based correspondent banks, there are two primary methods of payment: the

Serial payment method and the Cover payment method.


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In the serial payment method, one financial institution transmits the funds

transfer instructions (i.e., a SWIFT MT 103 message) to the next financial institution in

the overall payment chain. Each institution in the communication chain receives thesame level of detail about the transaction at each step.

In contrast, the Cover payment method divides the message into two parts.

The originators bank sends the detailed funds transfer instruction directly to the

beneficiarys bank. In this case, no U.S. institution receives the instruction that identifies

the originator and beneficiary of the transaction. The originators bank also sends a

second cover payment instruction (i.e., a SWIFT MT 202 message) that directs the

transfer of the funds from the originators bank to the beneficiarys bank as a financial

institution-to-financial institution settlement payment.

When the Cover payment method is used, a U.S. -based correspondent

bank will receive the cover payment message identifying only the foreign institutions

involved, but not the originator and beneficiary. Although this particular message may

not contain the customer-related details that could appear in a serial payment, the cover

payment message could, nevertheless, be useful for broader analyses. This may

include, for example, examining these coverpayment messages to monitor and detectsudden and unusual spikes in overall funds flows

to, through, and from certain banks and/or countries

possibly resulting in findings warranting further

exploration from either the regulatory or law

enforcement perspectives.


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CHAPTER-5:

RIGHTSAND OBLIGATIONS

5.1 General rights and obligations of participating banks or institutions:

Every participating bank or institution admitted in the EFT System shall, subject

to compliance with the procedural guidelines, be entitled to execute any payment order

for Funds Transfer to a beneficiary of the payment order, issued or accepted by it.

Every participating bank or institution shall maintain the security, integrity and

efficiency of the System.

5.2 Obligations of sending bank

The sending bank shall not execute a payment order without complying with the

security procedure. No payment order shall be accepted for execution in the EFTSystem if the beneficiary's bank is not a participating bank or institution.

The sending bank shall be responsible for the accuracy of the name of the

beneficiary, the nature and style of the account and account number of the

beneficiary, the name of the beneficiary's bank and the authenticity of every

payment order executed by it.

The sending bank shall bear the liability for loss if any caused to any participant

in the EFT System on account of the acceptance by it of any revocation of a

payment order after it has executed it.

The sending bank shall not be entitled to bind any other participants in the EFT

System with any "special circumstances" attached to a payment order accepted

by it.


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The sending

bank shall

maintain duly

authenticated

record of all

payment orders

executed by it for

a period for

which bank

records are

required to be

preserved under

the applicable

rules.

The sending bank shall, upon completion of funds transfer of a payment order,

furnish to the originator on request by him, a duly authenticated record of the

transaction.


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5.3 Obligations of the sending EFT Service Branch

The sending EFT Service Branch shall be responsible for the accuracy of the

contents of EFT data title and the authenticity of the payment orders contained

therein as received by the EFT Centre in compliance with the security

procedures.

The sending EFT Service Branch shall be responsible for settlement of all

payment obligations in regard to payment orders executed by it.

The sending EFT Service Branch shall be responsible for ensuring execution of

the EFT data file complying with security procedures and time schedule.

The sending EFT Service Branch shall ensure, before execution of any EFT Data

File that the balance in its settlement account are adequate to cover itssettlement obligation and ensure that the ceiling, if any, specified for it is not

exceeded and the requirement of collateral if specified by the Nodal Department

is adequate for execution of the EFT data file executed by it.

The sending EFT Service Branch shall generate, dispatch and maintain records

of transaction in accordance with procedure specified. Obligations of the sending

EFT Centre

The sending EFT Centre shall be responsible for receiving the EFT data files

from the EFT Service Branches in compliance with the security procedure.

The sending EFT Centre shall be responsible for processing and sorting the

payment orders and preparing the RBI Data File EFT centre-wise in accordance

with the procedure specified.

The sending EFT Centre shall execute the payment orders received before the

cut-off time in an EFT working day. EFT data files if any, received after the out-off

time, or payment orders for which the sending service branch has not made

adequate provision for settlement may be treated as received on the opening of

the next EFTworking day and dealt with accordingly.

Sending EFT Centre shall generate and dispatch and maintain in accordance

with the procedure specified, records and reports of the transactions processed

and executed by it.


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5.4Obligations of receiving EFT Centre:

Receiving EFT Centre shall be responsible for receiving and processing the RBI

Data Files complying with the security procedure and time schedule specified for

the purpose.

Receiving EFT Centre shall in compliance with time schedule and security

procedure, process and sort out the RBI Data File bank-wise and after crediting

the settlement accounts with the corresponding value, transmit the NCC Data

Files to the respective receiving EFT Service Branches.

Receiving EFT Centre shall generate, dispatch and maintain records of

transactions, in accordance with the procedure specified.

5.5 Obligations of the Receiving EFT Service Branch

Receiving EFT Service Branch shall be responsible for receiving NCC Data File

from the receiving EFT Centre in compliance with the security procedure.

Receiving EFT Service Branch shall process the NCC Data File in compliance

with the security procedure and sort-out the payment orders branch wise and

transmit to the respective branches the payment orders for execution in

accordance with the time schedule and in compliance with the security

procedure.

Receiving EFT Service Branch shall generate, dispatch and maintain records of

transaction accordance with the procedure specified.


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5.6 Rights and obligation of beneficiary bank

The beneficiary bank shall execute the payment order on the EFT working day

on which the payment order is received by it unless it notices one or more of the

following deficiencies.

a) The beneficiary specified in the payment order has no account or the

account of the beneficiary maintained by the beneficiary's bank does not

tally with theaccount specified in the payment order

b) The beneficiary bank is prevented by instructions of the beneficiary not

to give or receive any credit to the account.

c) The account designated in the payment order is closed.

The beneficiary bank may reject a payment order on one or more of the grounds

mentioned in Clause (1) above. The beneficiary bank shall notify, in the manner

specified, the sending bank of the rejection of the payment order along with the

reasons thereof.

5.7 Branches/Offices of the participants or EFT centre

For the purpose of determination of the rights and liabilities arising out of a funds

transfer under this system, each branch or office of a participating bank or as

the case may be an institution and each EFT centre shall be treated as a

separate unit.


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CHAPTER -6:

THE BENEFITS OF ELECTRONIC FUNDS TRANSFER

One of the best cash management tools available to businesses is electronic

funds transfer, or EFT. As the name implies, EFTs enable businesses and their

customers to exchange money between each other electronically instead of via checks

or wire transfers.

EFTs are also sometimes referred to as ACH transactions. ACH stands for

Automated Clearing House, which is the nationwide electronic payment network that

allows the actual clearing of electronic payments and payment-related information

between financial institutions. Payment-related information can be sent along with ACH

transactions, a process known as electronic data interchange, or EDI.

While you may not have heard the term ACH, you may be familiar with some of

the different kinds of electronic payments that can be initiated through the ACH network.

These include the following:

Direct deposit: This is perhaps the most common type of ACH payment. Most

companies in the United States today pay their employees via direct deposit

instead of paper check. Direct deposit is also used by government entities to

make Social Security and other benefit payments and to issue refunds to

taxpayers.

Federal, state, and local taxes: ACH has become a common funds transfer

mechanism for the payment of corporate taxes at all levels of government.


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o Direct debits and credits: These types of electronic payments can be

made from business-to-

consumer and from

business-to-business.

Consumers pay many

recurring bills, such as

mortgages, utilities,

insurance, and health

club memberships, via

ACH, and many

businesses pay their

vendors and suppliers

via ACH credits instead

of paper checks.

The main benefits of making and receiving ACH payments are cost savings

and convenience. The alternative, such as moving funds via a wire transfer is

expensive: up to $20 or more per wire. If you have planned ahead and have a two- or

three-day cushion, the money can be transferred via an ACH debit or credit for less than

$1 per transaction.

Meanwhile, most employees have grown accustomed to the convenience of

receiving their pay electronically via direct deposit. And employers save money, too,because payroll direct deposit is less expensive than issuing paper paychecks.


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Companies that receive ACH payments from customers also enjoy cash-flow

advantages because they are assured that payments will be made automatically on the

date theyre due rather than having to wait for checks that may or may not be in the

mail. Utility companies and health clubs were among the first businesses to begin using

ACH on a large-scale basis, but smaller firms can enjoy the same cost savings and

cash flow benefits.

While many of these same benefits can be accrued by accepting credit cards

as an automatic payment method, ACH debits and credits are usually less expensive

because they incur a flat fee per transaction instead of a percentage of each transaction

amount. The larger the transaction the more expensive accepting a credit card is. Also,

bank accounts dont have expiration dates like credit cards do; and people rarely switch

banks, so theres less risk of bounced ACH transactions.

Using the ACH is also a green alternative to mailing and processing hundreds or

even thousands of checks. It reduces the resources used in the creation and

transportation of paper checks, including fossil fuels, trees, and water, and limits the

amount of greenhouse gasses released into the atmosphere.

Finally, ACH transfers are safe and secure. Since the inception of the ACH

nearly 40 years ago, there has not been a single reported instance of an ACH payment

being lost.


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CHAPTER -7 :

PROBLEMS WITH EFT

EFT transactions are transmitted through an automated clearinghouse. This is

known as an ACH operator and is a secured and preprogrammed system. It functions

as a clearing facility controlled by private organizations or a Federal Reserve Bank and

is a recognized system for interbank electronic fund transfers. The National Automated

Clearing House Association (NACHA) governs these systems and is responsible for

their functionality.

Problems with EFT

become apparent when

financial institutions do not

abide by the NACHA

operatives and regulations.

These are detailed and

stringent policies related toimplementation, conformity

and accountability. If these

guidelines are not adhered

to, it is not possible to

eliminate problems of EFT.

ACH transactions are stored in related files that follow an ASCII-format. These

enlist several electronic transactions, and are categorized by their credit or debit values.

At times EFT systems and securities may contain loopholes creating possibilities for

EFT frauds. This occurs when an unauthorized person acquires confidential details, and

undertakes or authorizes fraudulent EFT. An insider who has access to sensitive

information, and deliberately alters EFT can also carry out such malpractices.


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These problems occur when dubious persons are able to intercept or

modify electronic data messages transmitted between financial institutions. Threat of

EFT frauds and thefts are increased if the system is dependant upon general

telecommunication facility. Very often insiders have committed these EFT frauds, and

studies reveal that problems with EFT start when multiple authorized persons undertake

these transactions. In order to reduce problems with EFT, it is important to use systems

wherein unauthorized access to secure data is minimized.

In the US, the secret service along with protecting the president and Vice

President, are responsible for electronic funds criminals. In case EFT fraud or theft

involves two states, 18 U.S.C. Section 1343, wire fraud statute is referred to. The

implementation of 'Check 21' permits transmission of checks electronically, and

replaces electronic images for new paper checks. A number of consumers have

complained that this federal law increases the possibility of fraud, error, bounced check

fees, and duplicate check clearance, all of which are viewed as major problems related

to EFT.


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CHAPTER - 8 : ANALYSES

1.What is the inter-bank fund settlement?

TJSB:- RTGS, NEFT is a nationwide electronic funds transfer system which enables a

remitter to send monies to any other bank/branch in the country.

HDFC:- India has two main electronic funds settlement systems for one to one

transactions: the Real Time Gross Settlement system (RTGS) and the National

Electronic Fund Transfer system(NEFT)

STANDARD CHARTERED:- IBFT is a facility available on Online Banking which allows

you to transfer funds from your Standard Chartered Bank savings or current account to

any beneficiary account with any other bank which participates in NEFT clearing.

ANDHRA:- The inter banking fund settlement is do through RBI &

through set light linking.

Payment obligation between the participants shall be settled on by

debiting or crediting the settlement accounts maintained with the EFT

centre. For the Rejected Acknowledgement transactions, Reserve Bank

shall debit beneficiary banks and credit the sending bank.


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2. How to find IFSC code?

TJSB: - IFSC stands for Indian Financial System Code. This is an 11 digit

alpha numeric code. This code is bank/branch specific and is

printed on the cheque books and is also available on the banks web site.

HDFC:- It is written an cheque book.

STANDARD CHARTERED:- IFSC Code is a unique eleven-digit

alphanumeric code number that helps in identifying a branch of any given bank in any

given city.

ANDHRA:-the IFS code printed in a cheque book by respective bank. This

the code of bank/branch code.

IFSC code plays a major role in fund transfer. It display on every cheque

leaf of every bank. & it is 11 digit codes.


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3. What is contingency plan if link between bank & RBI failed?

TJSB:- There was no specific plan But transactions are hold till

system is update.

HDFS:- Transaction will not be processed.

STANDARD CHARTERED:- Have to be backup link.

ANDHRA:-there is no contingency plan. But if technical problem is there

then the transaction will not completed.

Electronic fund transfer is foolproof system.


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4. Internal auditor are required for the fund transfer in bank?

TJSB:- No there was no need of internal auditor for

funds transfer of the bank

HDFC:- Internal auditor are required in our bank but its depend on

the situation

STANDARD CHARTERED:- No internal auditor are required.

ANDHRA:- Not necessary for branch level but required in higher branch.

Internal auditor is required for some bank. But not in a branch level.

Its depends on the transaction.


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5. Which is the best mobile money transfer or internet money transfer?

TJSB:- Internet money transfer is better because there was no any

restriction of Amount for transfer.

HDFC:- Internet money transfer is best because now mobile

money transfer is in a initial stage.

STANDARD CHARTERED:- Any net banking facility provided by

bank is a best.

ANDHRA:- Internet money transfer is more safe than mobile money

transfer because its might be risky than internet money transfer.

As per convenience it is observe that internet money transfer is more

smooth & safe. & most of the people use the internet money transfer.


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6. If the currency rate fluctuated what will be the effect on international

fund transfer?

TJSB:- Difference between currencies recover from sender of money.

HDFC:- The large the amount of money you send abroad the larger the

impact the exchange rate will have on your conversion.

STANDARD CHARTERED:- The foreign currency rates keeps

fluctuating every second and this frequent change can let you lose money.

ANDHRA:-our bank takes all the precaution for international fund

transfer.

A foreign currency rate plays a vital role in this scenario. Though there is

limitation of services not available at non working hours and weekends.

Alton Sand is Forex traders have huge experience in foreign currency

rates trading.


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7. Different norms between private sector bank, public sector bank co-

operative bank for fund transfer?

TJSB:- There was no any difference Between type of bank for fund

transfer.

HDFC:-Rules are same for all the bank.

STANDARD CHARTERED:-No. same norms for all the banks.

ANDHRA:-The rules are same issued by RBI.

The banks have to follow all the rule issued by RBI for Electronic Fund

Transfer.


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8. Difference between national & international fund transfer?

TJSB:-In a national fund transfer done trough in rupees& international

is done through as per currency.

HDFC:-International is called remittances. Its takes 24 to 48 hrs to

process.

STANDARD CHARTERED:- National- RTGS, NEFT

International- SWIFT

ANDHRA:-International fund transfer is goes via SWIFT & its safer

then national fund transfer.

Fund transfer in a national level is Real Time & fund transfer in

international level it takes one 0r two days.


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9. Political pressure in co-operative bank for fund transfer.

Each bank said that there is no political pressure in Electronic Fund transfer. But

sanctioning lone some pressure is there.

NO NO

NO NO


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10. If the international fund transfer is failed then where should be the

complaint launch & who will resolve it?

TJSB:- Customer launch his complete to his bank & RBI resolve this

Complaint.

HDFC:-The bank which is initiates the transaction.

STANDARD CHARTERED:- SWIF- failed- investigation team of

every bank RTGS-failed- RBI resolve.

ANDHRA:- the complaint launch in originated bank.

The complete launch in same branch where the customer initially fund

transfer to beneficiary.


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11. Certain limit for fund transfer to key person, politicians, industrial sites.

TJSB:- No

HDFC:-No

STANDARD CHARTERED: - no separate consideration to any one

ANDHRA:-Rule is same for normal person but it will change for a key

person but for this is required RBI approval

In normal cases bank follow RBI rule but in special cases it will give

special attention to a key person.


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12. What is role of RBI?

TJSB:- This system handled by RBI.

HDFC:- RBI play an important role in the fund transfer.

STANDARD CHARTERED:-RBI is the key institute in this system.

ANDHRA:-RBI control & managed a fund transfer between two banks.

In the fund transfer the RBI perform major role. The RBI control,

managed,& monitor fund transfer between two bank.


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13. Do all the bank branch in India provide EFT service?

HDFC BANK

STANDARD CHARTERED

ANDHRA

TJSB

Electronic fund transfer is only possible where as the computerization is

available.

NO YES

YESYES


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14. When does the beneficiary get credit for EFT payment?

Transactions take place before 11am then beneficiary get amount at the same

date.

SANDARDCHARTERED

ANDHRA

HDFC TJSB

RTGS within4 hours &

NEFT within a

day.

In a sameday.

Can be insame day.

In a sameday but NEFTis goes slow

then theRTGS.


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Cooperative bank vs

Foreign bank

Question TJSB STANDARD

CHARTERED

1.What is the inter-

bank fund settlement?

RTGS, NEFT is a nationwide

electronic funds transfer system

which enables a remitter to send

monies to any other bank/branch

in the country.

IBFT is a facility available on

Online Banking which allows

you to transfer funds from your

Bank account to beneficiary

account which participates in

NEFT clearing.

2. How to find IFSC

code?

On the banks web site. Find it on cheque book.

3. What is

contingency plan if

link failed?

No plan, but transactions are

hold till system is update.

Have to be Backup link.

4.Internal auditor arerequired for EFT?

No there was no need of internal

auditor.

No internal auditor is required.

5.Which is the bestmobile money transfer

or internet money

transfer?

Internet fund transfer. Because

there was no any restriction of

amount.

Any net banking facility

provided by bank is best.

6. If the currency ratefluctuated what will be

the effect?

Difference between currencies

recovers from sender.

The currency rate keeps

fluctuating every second & this

frequent change can let you

lose money.


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7.Different normsbetween BANK for

fund transfer?

There was no any difference

Between types of bank for fund

transfer.

No. same norms for all the

banks

8.Difference betweennational & international

fund transfer?

In a national fund transfer donetrough in rupees& international is

done through as per currency.

National- RTGS, NEFTInternational- SWIFT

9.Political pressures in

co-operative bank for

fund transfer.

No there was no any political

pressure on co-operative banks

for fund transfer.

No comments

10.If the IFT is failed

then where should be

the complaint launch &

who will resolve it?

Customers launch his complete

to his bank & RBI resolves this

Complaint.

SWIF- failed- investigation

team of every bank RTGS-

failed- RBI resolve.

11. Certain limit for

EFT to key person,

politicians.

No no separate consideration to

any one

12.What is role ofRBI?

This system handled by RBI. RBI is the key institute in this

system.

13.Do all the bank

branch in India

provides EFT service?

No Yes.

14.When does the

beneficiary get creditfor EFT payment?

RTGS within 4 hours & NEFT

within a day.

can be in a same day


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Nationalized Bank VS

Private Sector Bank

Question ANDHRA HDFC

1.What is the inter-

bank fund settlement?

The inter banking fund settlement

is do through RBI & through set

light linking..

India has two main electronic

funds settlement systems for

one to one transactions: RTGSsystem and the NEFT system.

2. How to find IFSC

code?

The IFS code printed in a cheque

book by respective bank. This is

the code of bank/branch code.

It is written an cheque book.

3. What is

contingency plan if

link failed?

There is no contingency plan. But

if technical problem is there then

the transaction will not

completed.

Transaction will not be

processed.

4.Internal auditor arerequired for EFT?

Not necessary for branch level

but required in higher branch.

Internal auditor are required in

our bank but its depend on the

situation

5.Which is the bestmobile money transferor internet money

transfer?

Internet money transfer is more

safe than mobile money transferbecause its might be risky than

internet money transfer.

Internet money transfer is best

because now mobile moneytransfer is in a initial stage.


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6. If the currency ratefluctuated what will be

the effect?

Our bank takes all the precaution

for international fund transfer.

The large the amount of money

you send abroad the larger the

impact the exchange rate will

have on your conversion.

7.Different normsbetween BANK for

fund transfer?

Rules are same for all the bank. The rules are same issued by

RBI.

8.Difference betweennational & international

fund transfer?

International fund transfer is goes

via SWIFT & its safer then

national fund transfer.

International is called

remittances. Its takes 24 to 48

hrs to process.

9.Political pressures in

co-operative bank for

fund transfer.

No No

10.If the IFT is failed

then where should be

the complaint launch &

who will resolve it?

The bank which is initiates the

transaction.

The complaint launch in

originated bank.

11. Certain limit for

EFT to key person,

politicians.

No Rule is same but it will change

for a key person but for this is

required RBI approval.

12.What is role ofRBI?

RBI plays an important role in

the fund transfer.

RBI control & managed a fund

transfer between two banks.

13.Do all the bank

branch in India

provides EFT service?

Yes our all bank branch provide

this service.

Yes all banks provide.

14.When does the

beneficiary get credit

for EFT payment?

In a same day. In a same day but NEFT is

goes slow than the RTGS.


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ANDHRA Bank

VS

HDFC Bank

Nationalized Banks major stake is with Government Of India like ANDHRA.

Private sector Banks major stake is with share holder like HDFC.

Electronic fund transfer is only possible where as the computerization is available. For

this purpose each section of ANDHARA & HDFC bank should be computerized even in

rural areas also. so the ETF is possible from rural & urban area.

For convenience of customer as compared to HDFC bank ANDHAR bank should

increase More ATM coverage. In all urban & rural area.

HDFC bank has no limit on cash withdrawals on ATM cards. But the Andhra bank has

certain limit for cash withdrawal on ATM card.


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For attracted more people the HDFC bank has provide new schemes at time-to-time.

Even some gift & prizes are offered to the customer for their retention.

But ANDHRA bank is not provided this facility.

To become a more profitable ANDHRA bank and HDFC bank are sharply reducing

the transaction costs. So as the electronic fund transfer facility become more popular

and it will reach to the weaker section of society


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STANDARD CHARTERED

VS

TJSB

Cooperative sector Banks are generally owned by trust kind of setup like TJSB.

MNC Banks having offices outside India like STANDARD CHARTERED.

STANDARD CHARTERED bank has Internet banking facility available in all the

branches.

But TJSB bank has not full fill internet banking facility available in all the bank and

branches.

TJSB should change their policy about Fair dealing with the customers. And also

make special effort for more contribution from the employee of the bank. The staff

should be cooperative, friendly and must be capable of understanding the problems of

customers.

STANDARD CHARTERED bank is already one step ahead for customer relation&

more understanding customers problem than TJSB.


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24 hours banking should be induced by TJSB so as to facilitate the customers who

may not have a free time in the daytime. It will help in facing the competition more

effectively.

STANDARD CHARTERED bank has more satisfied customer because of the giving

this facilitate.

Customers generally complain for TJSB bank that full knowledge is not granted to

them. Thus the TJSB bank should properly disclose the features of the product andservices to the customers.

Moreover door to door services can also be introduced by TJSB and STANDARD

CHARTERED bank.


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CHAPTER - 9 :Conclusion

Electronic Funds Transfer (EFT) is a system of transferring money from

one bank account directly to beneficiary bank account. Without any paper money

changing hands. One of the most widely-used EFT programs is Direct Deposit, in which

payroll is deposited straight into an employee's bank account, although EFT refers to

any transfer of funds initiated through an electronic terminal, including credit card, ATM,

Fedwire and point-of-sale (POS) transactions. It is used for both credit transfers, such

as payroll payments, and for debit transfers, such as mortgage payments.

Transactions are processed by the bank through the Automated Clearing

House (ACH) network, the secure transfer system that connects all RBI financial

institutions. For payments, funds are transferred electronically from one bank account to

the billing company's bank, usually less than a day after the scheduled payment date.

Electronic funds transfer or EFT refers to the computer-based systems

used to perform financial transactions electronically. Wire transfer via an international

banking network is a method of transferring money from one person or institution

(entity) to another. A wire transfer can be made from one bank account to another bank

account or through a transfer of cash at a cash office. Bank wire transfers often the

most expedient method for transferring funds between bank accounts.


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For an example: On his way home last Friday night, Martin Wilson realized

that he had no cash for the weekend. The bank was closed, but Martin had his bank

debit card and the code to use it. He inserted the card into an automated teller machine

outside the front door of the bank; then, using a number keypad, he entered his code

and pressed the buttons for a withdrawal of $50. Martins cash was dispensed

automatically from the machine, and his bank account was electronically debited for the

$50 cash withdrawal.

Martins debit card is just one way to use electronic fund transfer (EFT)

systems that allow payment between parties by substituting an electronic signal for cash

or checks. Are we heading for a checkless society? Probably not. But making a dent in

the large number of paper checks in the countrys banking system is clearly one

advantage to electronic banking.

Technology now can significantly lower the costs of the paymentmechanism (by about $1.50 per transaction) and make it more efficient and convenient

by reducing paperwork.

The growing popularity of EFT for online bill payment is paving the way for

a paperless universe where checks, stamps, envelopes, and paper bills are obsolete.

The benefits of EFT include reduced administrative costs, increased efficiency,

simplified bookkeeping, and greater security. However, the number of companies who

send and receive bills through the Internet is still relatively small.


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It is possible for Individuals, firms or corporate to transfer funds usingNEFT if they have an account with NEFT enabled bank branch. In fact, individuals, firms

or corporate without any bank account can also deposit cash at any NEFT-enabled

branch along with necessary instructions for transferring funds using NEFT. To facilitate

the walk in customers who do not have bank account but want to deposit cash in

beneficiary account, a separate Transaction Code (No. 50) has been allocated in the

NEFT system. These customers are required to furnish complete details including

complete address, telephone number, etc.

In order

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