Remittance is a process of money transfer. In this process, an individual or group of individuals can use various banking techniques to transfer the money from their accounts to any other account globally. In India, banks offer various kinds of methods to perform remittances some of them are discussed below:
a) Demand Drafts- Demand draft is an order made from one bank to another branch of the same bank, for paying the specified amount (mentioned in draft) to an individual in his/her account or in his/her name. As the name suggests a draft is always payable on demand. Banks are authorized to issue a draft at their branch for sending the money from one account to another account or account of another individual. As per the Section 85-A of the Negotiable Instruments Act (Made by the government of India) "Demand draft is an order to pay money, drawn by an office of the bank at another office of the same bank for the amount of money payable to order on demand". An individual can buy a demand draft by paying the amount in advance to the respective bank. After this, bank issues the draft to an individual. The bank also makes the additional charges for providing this service.
b) Banker’s Cheque- Another service offered by the bank for transferring the money. In this process, a cheque which is payable by a bank itself is payable for a simple cheque which is payable from the funds of a particular customer's account. This is a cheque which is usually received by the bank customer (by paying additional value), the point being that the person receiving the cheque has the security to know that it is payable by the bank and thus not bounced. A banker's cheque or bankers draft is a cheque (or cheque), where the amount is withdrawn directly from a bank's funds from a person's account. This is a negotiable instrument to order and draw all the provisions applicable to the investigation of an order and is valid for six months from the date of issue and may be invalid in actual cases.
c) Truncated Cheque- The present system of cheque clearance is paper based; it makes the involvement of exchanging the cheques physically. This exchange of cheques requires a clearing cycle of 3 to 7 days. Generally, most of the cheques are cleared in a cycle of three days, these cycles are long and banks delay the receipt of value by customers.
d) Electronic Fund Transfer (EFT) - Electronic funds transfer or EFT refers to the usage of IT enabled services for performing various transactions related with money transfer. This deals with the usage of computer-enabled systems for performing various financial transactions electronically. The EFT is a term which can be further used for a number of different concepts some of them are mentioned below: (i) Transactions initiated by cards i.e. debit/credit. (ii) Electronic cheques i.e. CTS enabled cheques. Electronic fund transfer provides a mechanism for electronic payments of amounts and collections of money. In today’s scenario, EFT is one of the safest, secure, efficient and less expensive techniques rather than using of paper cheque payments and collection.
e) RTGS (Real Time Gross Settlement) - RTGS is the process of settling the payment of an individual as per his/her order. This is also known as the special fund transfer technique where transfer of money can be done from one bank to another bank as per the permissions of account holder. In this system, transfer of money can be done in real time or gross basis. This system was carried by top three leading banks of India in 1985 but in 2005 this has been raised to 90 banks. This system can be operated by central bank of a country so as per the Indian context RBI (Reserve Bank of India) is responsible for all the financial transactions done under RTGS. Implementation of RTGS is an historical event in the history of Indian economy/banking. This system has been proved as an important mile stone for Indian banking system. One of the major benefits of RTGS system is that it minimizes the settlement risks or making the payment in real time basis. This system is designed to transfer the funds on real time basis i.e. no waiting is required for transferring of money.
f) NEFT (National Electronic Fund Transfer) - The NEFT is a nation-wide payment system which allows one-to-one funds transfer between accounts. In this system, an individual account holder can electronically transfer funds from any of the bank’s branch to any other individual which had an account with any other bank branch in the country participating in this scheme. This scheme has been initiated in the year 2005 by the Reserve Bank of India. The central bank of India i.e. RBI acts as the custodian for this scheme. It is responsible for resolving all the concern issued raised from this system. Recently, the government of India has raised the working hours for this scheme i.e. on 27*7*365 days (on any time basis).
g) IMPS (Immediate Payment Service) - As the name suggests, this system allows the instant payment of money from anywhere and anytime basis. Initially this was the only system which allows the payment between accounts on any time basis but now government has allowed NEFT transaction also to be round the clock or any time basis. One major difference between IMPS and other service like NEFT, in IMPS there is a limitation of certain amount for transfer but it get transfer on real time basis whereas this could not be possible for NEFT i.e. it new some time to get transfer the amount to another’s account.
h) SWIFT (Society for Worldwide Interbank Financial Telecommunication) - This is a payment body which is acceptable world-wide. The SWIFT system allows the financial systems globally to send and receive information at global level. This is also known as a messaging network which is used by financial institutions to securely transfer the information and instructions through a standard system of codes at global level. In this system, each participating body get an eight- or eleven-digit code for transferring/exchanging the money between them. The important key feature about this system is its global acceptance world-wide. Originally, this system was introduced in 1970’s and used at global level or transfer of funds between two or more countries.