In Banking Industry, NEFT and RTGS are mostly used transaction system through online mode (using internet) to transfer fund from one bank account to another account. It is the one of the most important topic in IBPS/SBI written exams and interview. We have given below details about NEFT and RTGS system used in banking industry.
The remitting branch prepares a Structured Financial Messaging Solution (SFMS) message and then sends it to its service centre for NEFT. At the clearing centre, RBI sorts the bank-wise transactions and then prepares the accounting entries of net credit or debit for passing on to the banks.
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What is NEFT System?
A system has been introduced by Reserve Bank of India which is named as ‘The Reserve Bank of India National Electronic Funds Transfer System’ which is referred to as NEFT system. In this system, there is no upper value limit for transactions. Amount of transaction inclusive of paisa component are made through NEFT system. This system provides a secure, efficient, reliable and economical system transferring of funds in banking sector. It reduces the workload as no need to use paper based fund transfer.
How does NEFT system work?
What is RTGS System?
The full form of RTGS is Real Time Gross Settlement system. Like NEFT, it is also an electronic payment system. In RTGS, the payment instructions are processed on a continuous (Real Time) basis and settled on individual (Gross) basis. It does not net the debit against the credits. It also reduces the credit risk.How does RTGS system work?
RTGS system lets the customers to transfer funds across the banks on a nearly instantaneous basis. Each participant bank is required to open a dedicated settlement account to put transactions through RTGS. Money can be transferred by both customers and banks on the same day in various cycles.Posts related to IBPS Banking Awareness-
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