Fund Transfer Systems in India

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Questions and Answers

What does the term 'Gross' refer to in the context of Real Time Gross Settlement (RTGS)?

Transactions can be grouped with others.

Funds can be held for a certain period.

Each transaction is processed individually. (correct)

Transactions are processed in batches.

Which of the following statements about RTGS transactions is accurate?

There is no minimum transaction amount limit.

Transactions can occur until midnight on weekdays.

The transfer is temporary and can be reversed.

The receiving bank must credit the account within 30 minutes. (correct)

During which hours is RTGS service generally available?

8:00 a.m. to 5:00 p.m. on weekdays.

24 hours a day, seven days a week.

10:00 a.m. to 4:00 p.m. on weekdays.

9:00 a.m. to 3:00 p.m. on weekdays and 9:00 a.m. to 12:00 noon on Saturdays. (correct)

What is the minimum transaction amount required for RTGS?

₹2 lakhs Signup and view all the answers

Which statement correctly reflects a feature of NEFT?

NEFT facilitates electronic transfers from any bank branch. Signup and view all the answers

What is a disadvantage of electronic banking related to client transactions?

Errors in transactions can result in significant financial harm. Signup and view all the answers

Which of the following is NOT a feature of electronic banking?

Allows for direct face-to-face interaction. Signup and view all the answers

How does electronic banking provide a competitive advantage to banks?

Through the expansion of the bank's network beyond physical locations. Signup and view all the answers

What must banks and clients invest in for electronic banking to function effectively?

E-banking technology. Signup and view all the answers

What does the Electronic Funds Transfer System (EFTS) primarily facilitate?

Direct transfer of wages and salaries to employee accounts. Signup and view all the answers

What is the maximum transfer amount for which IMPS charges ₹5?

₹10,000 to ₹1 lac Signup and view all the answers

Which of the following platforms does IMPS NOT primarily support for fund transfers?

Physical bank branches Signup and view all the answers

Which of these features is NOT associated with IMPS?

Support for international payments Signup and view all the answers

How long does it typically take for an IMPS transaction to complete?

Within one hour Signup and view all the answers

What does MMID stand for in the context of IMPS?

Mobile Money Identifier Signup and view all the answers

Which of the following services is NOT mentioned as a typical use of IMPS?

Buying cryptocurrency Signup and view all the answers

What is the maximum charge for an IMPS transaction exceeding ₹2 lac?

₹25 + Applicable GST or No Charge Signup and view all the answers

Which statement about IMPS is incorrect?

IMPS ensures all transactions are free of charge. Signup and view all the answers

What is one significant difference between NEFT and RTGS when it comes to transaction processing?

RTGS transactions are processed continuously. Signup and view all the answers

What is the maximum amount that can be transferred through NEFT without having a bank account?

₹ 49,999 Signup and view all the answers

Which of the following statements about NEFT is incorrect?

NEFT supports foreign remittances. Signup and view all the answers

If a firm initiates a NEFT transfer of ₹ 1,50,000, what will be the total charge including service tax?

₹ 15 + Service Tax Signup and view all the answers

In what ways can an individual participate in NEFT transfers?

Without a bank account, by cash deposit at a NEFT-enabled branch. Signup and view all the answers

During which of the following timeframes can NEFT transfers not be initiated?

After the designated settlement time until the next batch Signup and view all the answers

How many times can NEFT transactions occur on weekdays?

Six times Signup and view all the answers

What is a feature that distinguishes NEFT from IMPS?

IMPS facilitates real-time fund transfers. Signup and view all the answers

Which of the following is NOT an advantage of electronic funds transfer?

It allows for anonymous transactions. Signup and view all the answers

What is a primary feature that distinguishes a debit card from a credit card?

Debit cards require funds to be deposited before use. Signup and view all the answers

How do ATMs primarily benefit banks compared to human tellers?

They reduce operational costs and wait times. Signup and view all the answers

Which statement about credit cards is accurate?

Credit cards can be obtained by anyone regardless of financial history. Signup and view all the answers

What is a common misconception about the use of debit cards?

They provide credit facilities similar to credit cards. Signup and view all the answers

Why have banks installed devices such as cash-depositing machines alongside ATMs?

To reduce the need for bank branch locations. Signup and view all the answers

What is one of the features of debit cards that is not typical of credit cards?

Immediate payment upon transaction. Signup and view all the answers

What role have automated machines taken over in the banking process?

They act as mini-bank kiosks to assist customers. Signup and view all the answers

What distinguishes a bank draft from other remittance methods?

The bank charges a commission for its issuance. Signup and view all the answers

Which statement accurately describes the safety features of a bank draft?

There is no risk of the draft being dishonored. Signup and view all the answers

Which process is NOT involved in obtaining a bank draft?

Requesting it via electronic mail. Signup and view all the answers

What is the minimum transaction amount for using NEFT in electronic banking?

There is no minimum limit. Signup and view all the answers

What aspect of bank drafts facilitates trust during transactions?

The issuance by a recognized bank authority. Signup and view all the answers

What is one primary advantage of mobile banking compared to branch banking?

Mobile banking is at least 10 times cheaper. Signup and view all the answers

Which month recorded the highest number of mobile banking transactions in the given data?

Dec. 2012 Signup and view all the answers

What limitation is placed on mobile banking transactions by the RBI?

Transactions are limited to ₹50,000 per day. Signup and view all the answers

Which statement regarding the reach of mobile banking in India is correct?

More than 60% of Indians have mobile phones but not bank accounts. Signup and view all the answers

What is a restriction on the mobile accounts allowed per customer?

Only one m-account per customer is permitted. Signup and view all the answers

How does mobile banking facilitate cash transfers for individuals without bank accounts?

By supporting Aadhaar-based cash transfers. Signup and view all the answers

What feature is commonly associated with CBS (Centralised Banking Solution)?

Instant fund transfers between accounts. Signup and view all the answers

What is the projected value of the global mobile banking market by 2026?

$1,824.7 million Signup and view all the answers

What is a requirement for the cardholder to obtain a credit card?

They should have a good reputation. Signup and view all the answers

Which statement best describes the payment process using a credit card?

Payment occurs after the transaction is completed. Signup and view all the answers

Which of the following features distinguishes a debit card from a credit card?

Credit facility is not available with a debit card. Signup and view all the answers

What does the term 'customer of the bank' refer to in a Core Banking Solution (CBS)?

A customer who can access their account in any CBS branch. Signup and view all the answers

What is a primary advantage of using mobile banking compared to branch banking?

It is often cheaper than branch transactions. Signup and view all the answers

What type of transactions does free inter-bank mobile banking primarily support?

Aadhaar-based transactions. Signup and view all the answers

Which feature is common to both credit and debit cards?

They inscribe the cardholder's personal details. Signup and view all the answers

What essential service is provided by tele banking?

Linking the customer's PC to the bank's computer for account access. Signup and view all the answers

What is a primary advantage of using a bank draft compared to a regular cheque?

Bank drafts are always payable on demand. Signup and view all the answers

Which of the following services is commonly NOT performed using mobile banking?

Applying for a personal loan. Signup and view all the answers

In which scenario would the Electronic Clearing Service (ECS) be most appropriately used?

Settle transactions in hourly batches for regular payments. Signup and view all the answers

What is a key feature of Core Banking Solutions (CBS)?

It connects branches to facilitate customer account access. Signup and view all the answers

Which of the following statements about the Cheque Truncation System (CTS) is TRUE?

CTS utilizes electronic images of cheques for processing. Signup and view all the answers

What is the maximum transaction limit for the National Electronic Funds Transfer (NEFT)?

₹50,000 per transaction. Signup and view all the answers

Which mobile banking feature might lead to potential user difficulties?

Navigating a different mobile website than on a computer. Signup and view all the answers

Which of the following is NOT true regarding the process of purchasing a bank draft?

The issuer banks hold no responsibility after issuing the draft. Signup and view all the answers

Study Notes

Real Time Gross Settlement (RTGS)

RTGS is a funds transfer system that settles transactions in real-time and on a gross basis.
Transactions are processed individually and continuously throughout banking hours.
Minimum transaction amount is ₹2 lakhs.
Available at CBS-enabled branches only.
Receiving bank must credit funds within 30 minutes of receiving transfer message.
Transfer is final and irrevocable.

National Electronic Funds Transfer (NEFT)

NEFT is a nationwide system for transferring funds between bank accounts.
Transfers are held until a specific time and processed in batches, including on Saturdays.
Minimum transfer amount is ₹100,000.
Allows transfers even without a bank account.
NEFT does not support foreign remittances.

Immediate Payment Service (IMPS)

IMPS is an instant money transfer service facilitated by the National Payments Corporation of India (NPCI).
IMPS allows real-time fund transfers between banks.
Available 24 hours a day, 7 days a week via mobile and internet banking.
Requires a 7-digit Mobile Money Identifier (MMID).

Electronic Banking (E-Banking)

Electronic banking refers to handling banking transactions using computer systems.
Enables customers to access bank services via PCs and browsers.
Requires both bank and customer to have computer access and e-banking enabled.

Advantages of E-banking for Customers

24/7 and 365-day services.
Transactions can be made from home or office, even while traveling.
Promotes financial discipline by recording all transactions.
Offers greater security as customers do not carry cash.
Increases customer satisfaction by providing unlimited bank access.

Advantages of E-banking for Banks

Provides a competitive advantage.
Expands bank network beyond physical branches.
Reduces workload on branches with centralized databases.

Disadvantages of E-Banking

Requires investment in technology for both banks and customers.
Requires training on technological aspects for all parties.
Transactions may be disrupted due to software defects or viruses.
Errors such as incorrect number entry can lead to significant financial losses.

Electronic Funds Transfer System (EFTS)

Enables money transfers between accounts.
Examples include direct crediting of salaries, wages, pensions, and dividends.
Reduces the need for handling large amounts of cash.

Direct Debits

Enables automatic debiting of accounts for payments such as loan installments, school fees, and utility bills.
Ensures payments are made on time and efficiently.

Automated Teller Machine (ATM)

Automated machine that allows customers to withdraw or deposit money using ATM cards and PINs.
Operates 24/7 and is less costly and time-consuming compared to human tellers.
Has become a mini-bank kiosk replacing many branch visits.

Debit Card

A card issued to a person holding money in a bank account.
Allows immediate payments for goods and services.
Funds are automatically transferred from the buyer's account to the seller's account.
Can also be used for cash withdrawal from ATMs.

Credit Card

Issued to individuals with good credit history from banks.
Allows purchases and services without needing money in the account.
Offers credit facility to cardholders who pay after using the card.

Differences Between Debit and Credit Card

Debit Card: Cardholder is not a debtor, no credit facility, payment before use.
Credit Card: Cardholder is a debtor, credit facility available, payment after use.

Tele Banking

Enables customers to access their account balance and recent transactions via telephone.
Available 24/7 and connects the customer's computer to the bank's.

Core Banking Solution (CBS)

Makes a customer of the bank rather than a specific branch.
Allows access to the same account across all CBS branches of the same bank nationwide.

Global Mobile Banking and SMS Alerts

Enables mobile transactions and provides updates to the customer via their mobile phone.
Offers real-time transaction information via SMS alerts.

Mobile Banking

Encompasses banking transactions conducted through mobile phones.
Often less expensive and faster than branch transactions.
Enables bill payments, fund transfers, and other urgent transactions.

SMS Alerts

Automated SMS alerts provide customers with transaction details and account balance updates.
Helps customers stay informed without visiting the bank.

Bank Draft

A type of cheque drawn by a bank in favor of a third party.
Payable on demand, making it a reliable and safe method for sending money.
Issued after depositing money in a bank and paying a commission fee.
No risk of dishonor.

Key Features of Bank Draft

Offers easy and safe remittance.
Includes a commission fee.
Has no risk of being dishonored.

Additional Notes

RTGS is for high-value transaction, while NEFT is for smaller amounts when the customer doesn't have an account with the specific bank.
CBS facilities include instant transfers, cash withdrawals, and passbook updates at all CBS branches.
Global mobile banking market expected to reach $1824.7 million by 2026.

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Description

This quiz covers the essential aspects of various fund transfer systems in India, including Real Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT), and Immediate Payment Service (IMPS). Test your knowledge on their features, transaction limits, and processing mechanisms.