7. Banking Payment System

 7.  Banking Payment System 

A. RTGS (Real-Time Gross Settlement) & NEFT (National Electronic Funds Transfer) :

This two electronic payment systems used for transferring funds between bank accounts in India. While both systems facilitate fund transfers, there are differences in terms of settlement timing, transaction limits, and processing:

RTGS	NEFT
Settlement Timing
RTGS operates on a real-time basis, which means that the transactions are settled individually and immediately, without any batching. The settlement of funds in RTGS is done on a "real-time gross" basis, meaning the funds are settled individually and without netting against other transactions. RTGS operates during banking hours on working days.	NEFT operates on a deferred net settlement basis. The transactions are accumulated and settled in batches at predetermined settlement times throughout the day. NEFT settlements take place in half-hourly batches during specific time slots on all working days
Transaction Limits
RTGS is primarily used for high-value transactions. The minimum amount for an RTGS transaction is usually set by the respective bank, and there is no maximum limit	NEFT is used for both small and large-value transactions. There is usually no minimum amount for NEFT transactions, and the maximum limit for a single NEFT transaction is typically set by the respective bank.
Transaction Processing
RTGS: RTGS transactions are processed individually and settled immediately on a real-time basis. The funds are transferred from the sender's bank to the recipient's bank in real-time	NEFT transactions are processed in batches. The transactions received before a particular batch cutoff time are accumulated and settled at the next available settlement slot. The funds are transferred from the sender's bank to the recipient's bank during the settlement process
Timings
RTGS operates during banking hours on working days, with specific timings set by the RBI and individual banks	NEFT operates during specific time slots on all working days. The exact timings for NEFT batches may vary slightly between banks
Charges
RTGS transactions typically involve higher charges compared to NEFT transactions. The charges for RTGS transactions vary from bank to bank and depend on the transaction amount.	NEFT charges are usually lower compared to RTGS. The charges for NEFT transactions also vary among banks and are typically based on the transaction amount.

Both RTGS and NEFT are secure and reliable payment systems used for transferring funds electronically in India. The choice between RTGS and NEFT depends on factors such as the transaction amount, urgency, and the specific requirements of the sender and recipient. It's advisable to check with your bank for the exact details, charges, and timings applicable to RTGS and NEFT transactions

B.  CHEQUE TYPES & DD :

 

1. BEARER CHEQUE :

A bearer cheque is a type of check that is payable to the person who presents it, which means it can be encashed by anyone who possesses the physical instrument. The name of the payee (the person to whom the check is issued) is not specified on the check. Bearer cheques can carry a higher risk as they can be easily negotiable by anyone who holds them.

 

2. Crossed Cheque :  

A crossed cheque is a check on which two parallel lines are drawn across the top left-hand corner. This crossing signifies that the check should be deposited into a bank account and not cashed over the counter. It provides an added layer of security by ensuring that the funds are directly credited to the bank account of the payee rather than being encashed immediately.

 

3.  Demand Draft  :

DD stands for Demand Draft. It is a financial instrument issued by a bank or financial institution that allows the payer (the person who requests the DD) to make a payment to a payee (the person or organization receiving the payment).

Important factors of DD :

 1. Issuance: 

Demand Drafts are typically issued by banks or financial institutions at the request of their customers. The customer provides the required funds, and the bank issues a Demand Draft in favor of the specified payee.

 2. Payee: 

The payee of the Demand Draft can be an individual, company, or organization. The name of the payee is mentioned on the Demand Draft.

 3. Prepayment: 

Demand Drafts are prepaid instruments, which means the funds are debited from the payer's account at the time of issuing the DD. The amount mentioned on the Demand Draft represents the prepaid value.

 4. Security Features: 

Demand Drafts often contain various security features, such as watermarks, security threads, holograms, and unique identification numbers, to prevent fraud and ensure their authenticity.

 5. Clearing and Settlement: 

The payee can deposit the Demand Draft into their bank account. The payee's bank verifies the Demand Draft's authenticity and sends it for clearing and settlement. The funds are then credited to the payee's bank account once the Demand Draft is cleared.

6. Payment Guarantee: 

Demand Drafts are considered a secure form of payment because they are issued by banks and are backed by the bank's guarantee of payment. 

7. Crossed Demand Draft: 

A Demand Draft can be crossed by drawing two parallel lines across the top left-hand corner, similar to a crossed cheque. Crossing a Demand Draft signifies that the funds should be deposited directly into the payee's bank account and not encashed over the counter.

 

Demand Drafts are commonly used for making payments for various purposes, such as paying fees, making purchases, or settling financial obligations. The specific procedures and charges for issuing and using Demand Drafts may vary among banks and countries. It's recommended to contact your bank or financial institution for detailed information regarding Demand Drafts and their usage