Electronic banking (Internet – banking), also known as electronic fund transfer (EFT), uses computer and electronic technology as a substitute for cheques and other paper instruments. They refer to any transfer of funds that is initiated by electronic means such as an electronic terminal, computer, telephone, ATM magnetic tape, etc. EFTs are initiated through devices like cards or codes that allow account holders to authorize payments and access their account.
RBI EFT is a Scheme introduced by Reserve Bank of India (RBI) to help banks those who are offering their customers money transfer service from account to account of any bank branch to any other bank branch in places where EFT services are offered. Funds transfer is possible from any branch of these banks at the EFT centres to other branch of any bank at the EFT centres both inter-city and intra-city. To avail of these services a customer can approach the bank can issue instructions to make a payment either by making cash payment or authorizing his account to be debited. The customer has to give full details regarding whose account is to be credited including his bank account and bank. If the remitting bank transmits the funds transfer message to RBI so as to hit the first settlement at 12 noon, the receiving bank’s account will be credited by RBI at the destination centre and beneficiary gets the credit on Day 1 itself. If the same is included in subsequent settlements that are for 2 pm and 4 pm, the beneficiary gets credit on Day 2. As the scheme is retail in nature the maximum amount allowed per transfer is Rs. 100,000.
EFT is an improvement over the other facilities for a number of reasons. At present demand draft, mail transfer and telegraphic transfer are the primary modes of funds transfer. The demand draft facility is paper based. The remitter, after purchasing demand draft (DD) from a bank branch, dispatches the same by post/courier to the beneficiary. The beneficiary, in turn, lodges the draft to his/her bank for the collection and clearing. The time taken for completing this process will be about 10 days. In case of telegraphic transfer, fund reaches the beneficiary either on the same day or the next; but both the remitter and the beneficiary should have accounts in the same bank. On the other hand, RBI EFT system is an inter-bank oriented system. RBI acts as an intermediary between the remitting bank and the receiving bank and makes the inter-bank funds transfer possible. The customers of banks may request their respective branches to remit funds to the designated customers irrespective of bank affiliation of the beneficiary.
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