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Electronic Fund Transfer and Clearing System

The Indian Banking Association has been busy. Having launched the Electronic Fund Transfer (EFT) and the Electronic Clearing System (ECS) among member banks, customers were looking forward to catching up with the time-is-money culture in more ways than way. Here is a look at what gives and the "many-a-slip-tween cup-and-lip" even as domestic banks spruce up their act.

Electronic Fund Transfer

Unlike Swadhan, this is a system that IBA offers that is better-applied and waiting for appreciation. EFT is probably the safest and fastest way to transfer money from your account to another individual in another city regardless of which bank she uses.

All the transferor needs is her account number. A maximum of Rs. 0.1 mn can be transferred for a flat fee of Rs. 25 The bank has discretionary powers to raise the limit for select customers. Or a customer can break up the transactions in to multiples of upto Rs. 0.1 mn The money sent is credited overnight and can be withdrawn by the receiver the day after transfer.

The hitch, it is not well known and secondly, the facility is only available in the four metros! Plus, money sent from abroad cannot be transferred through EFT.

Disclosing other advantages of the EFT, an official of the IBA's department of information technology, says, "The facility can be availed of even if the branch from where you are sending the amount is not fully computerized. The details of the transfer have to be sent to the RBI which in turn notifies the receiving bank to credit the individual with the mentioned amount."

Most bank officials agree that publicizing and marketing these facilities should be a priority since many customers are used to old methods of transaction: telegraphic machinery or by the cheques.

Electronic Clearing System

Never mind the vagaries of the stock market. For those who are and will always make equity investments a way of life the ECS has made that life a lot easier as far as dividend payments go. All a person has to do is provide the company with details about the bank where the deposits should be made. The firm can then directly deposit the dividends into the shareholder's account. The maximum that a company can deposit is Rs. 0.1 mn, though here too, the bank has the discretion to raise that ceiling.

Apart from being a free service, from four metros the facility can now be availed of in 15 cities (those that have regional RBI offices) including Ahmedabad, Pune, Thiruvananthapuram and Nashik.

This geographical spread, lacking in the EFT, has led to the increasing popularity of ECS. By one estimate, the volume of transactions has increased this year. Last year, the IBA recorded Rs. 2.3 mn through ECS; this year upto now the transactions have already touched over Rs. 4 mn What stymies growth is the number of firms that use ECS. At present the facility is available with 65 Indian companies, so check if your investible companies are on this list.

A word of caution. Despite assurances of speed and safety, there have been complaints of delays in transfers to accounts. To ensure that the money has been credited, check account statements at regular intervals.

So it’s not that IBA's intentions are not honorable. If only the infrastructure was in place, real-time banking off-hours would be available to the loyal customers. On par with the rest.

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