Banking & Financial Awareness Quiz: Payment Systems: NEFT, RTGS and IMPS

RTGS is meant for large value payments, and the Reserve Bank has fixed a floor of two lakh rupees for a remittance through it, while setting no ceiling of its own on the amount.

NEFT is the nationwide system operated by the Reserve Bank of India for transferring funds from one bank account to another, settled on a deferred net basis in half hourly batches and available on all days of the year since December 2019.

The words in the name say it: real time means the instruction is carried out as it is received, and gross settlement means each instruction is settled by itself rather than set off against others.

IMPS was launched by that organisation in 2010 and was the first Indian system to offer interbank transfer instantly at any hour, including Sundays and holidays.

NEFT holds instructions for a short period, works out what each bank owes the others on balance, and settles only that difference; the batches run every half hour through all twenty four hours, since the service was made available on all days of the year in December 2019.

The Indian Financial System Code is made of eleven characters: the first four letters stand for the bank, the fifth is always the digit zero and is kept in reserve for future use, and the last six identify the particular branch.

This Act designates the Reserve Bank as the authority for payment systems, makes its authorisation necessary before any payment system may be operated, and provides for the Board for Regulation and Supervision of Payment and Settlement Systems.

UPI was launched in 2016 and allows a customer to pay from a bank account using a virtual payment address, so that the account number and the IFSC need never be shared; it runs on the same immediate settlement arrangement that IMPS introduced.

The Magnetic Ink Character Recognition code has nine digits, of which the first three stand for the city, the next three for the bank and the last three for the branch; it is printed in magnetic ink so that a sorting machine can read it during cheque clearing.

The National Automated Clearing House is a bulk clearing service of that corporation, used for repeated credits such as salary, pension, dividend and subsidy and for repeated debits such as loan instalments and utility bills.