Payment and Settlement System In India

Do you think without payment and settlement system,we can grow our economy and circular money flow activities? If no, there is a development in the Indian economy system because of payment and settlement system made properly.

Payment and settlement system is helpful for fast money transactions. Even taking a cash and giving to the seller becomes an old-fashioned one. Everyone has android mobile now. So, people are spending most of the money online. Online transactions are made with the guidance of payment and settlement system.

This article discusses payment and settlement act, various modes of payment and settlement system and what details you need to provide when doing money transactions online.

What is payment and settlement system?

Payment and settlement system was introduced by RBI in December, 2007. Reserve Bank of India is the sole responsible for payment and settlement system.

RBI also encourages online money transactions, which can bring security and efficiency to make payments faster. Nowadays, sometimes you don’t have coins to spend money. This payment and settlement system made even small pennies to spend easily. Because, there is a huge demand for Rs1, Rs2 and Rs5 coin in India.

Major 4 payment and settlement system in India

1.NEFT

 NEFT called as National Electronic Fund Transfer. It came into effect in 2005. This method of payment and settlement system was introduced by Reserve Bank of India(RBI). One of the major advantages of using NEFT is no service charges and maximum amount limit. NEFT has over 1,15,000 branches all over India.

Major drawbacks of NEFT are batchwise clearing mechanism system and 23 half-hourly settlement cycles.

Before introducing UPI, NEFT was known for fastest mode of money transaction. You can do money transaction only with bank time. Particular timings for NEFT transaction are 9:00am to 7:00pm (weekdays) and 9:00am to 1:00pm (weekends).  Each day you can do money transaction maximum limit is Rs50,000. 

2.RTGS

 RTGS is known as Real Time Gross Settlement. The major reason why RTGS introduced is to provide large amount of money transaction easily. When you are making money transaction, you won’t wait to initiate your money transaction. Without any difficulties, you can do your money transaction easily. There is no upper amount money limit.RTGS has over 1,13,000 branches all over India.

When you do transaction within India, there is no additional charges. For an overseas, transaction between 2lakhs and 5lakhs is Rs25(additional  charge). Money transfer above Rs5lakhs is Rs50(additional charges.)

3.IMPS

IMPS is called as Immediate Payment Service.  IMPS is helpful to transfer money from one bank to the other bank across India. This system is secure and affordable to all people.It is available for 24*7 all the time.

One of the major drawbacks of using IMPS is service tax. For every transaction, they will deduct some amount of money. IMPS  started by NPCI via NFS switch.Payments are transferred directly through this service by using beneficiary’s bank account number and IFSC code.

4.UPI

UPI stands for Unified Payments Interface. The main aim of UPI is to add more bank accounts into a single mobile app. Using mobile app, you can transfer funds between two accounts.

In the recent days, UPI payments become more popular among the users.Because, it becomes the fastest mode of money transaction system in India. It was started on 11th April,2016 by NPCI.

The major advantage of UPI is you can do cashless transactions without using debit or credit system.

Bharat Bill Payment System

Bharat Bill Payment System is still in implementation. It is an integrated bill payment system where it can accessible via an agent network, authorizes multiple payment modes, and gives an information on instant confirmation of payment.

Essential information to be provided while doing money transaction

• Total amount
• The account number where it debits money
• Receiver bank name and branch
• Receiver bank account number
• Receiver IFSC code
• Receiver name

Conclusion

No one can imagine without payment and settlement system in India, we don’t have a proper financial and economy system. There is no circular money flow. No business and employment activities take place in the Indian society. This payment and settlement system provides electronic money transfer directly to the remitter’s account without hassle-free.

These payment and settlement system has changed and improved so many process in the Indian Banking system. Even, Indian Banking system had suffered due to socio-cultural factors. But, payment and settlement system has become the solution to all kind of people across India for money transactions.