Secondary Services of Banks

Remittances: 
Remitting money from one bank branch to another bank branch or its own bank branches is called Remittances. This can be done through various means like NEFT, RTGS, Demand Draft, Bankers'
Cheque. In olden days banks used to remit money through Mail Transfer (MT), Telegraphic Transfer (TT) etc. For international transactions banks use Outward Remittance and Travelers' Cheque (TC).

National Electronic Funds Transfer (NEFT): 
This system was introduced by RBI in order to transfer funds within the banking system through electronic format. Under this system, an individual or a business entity can transfer funds from a paisa to any amount as it has no upper limit. This is a reliable, secure, efficient and economical system of funds transfer and clearing in banking system. A service charge is collected per transaction form the customer.

Real Time Gross Settlement System (RTGS): 
This is also an Electronic Fund Transfer System like NEFT. But an important difference is seen in settlement. This is settled on gross basis at real time. Each and every remittance transaction will be settled individually. These transactions are irrevocable. Each participating bank need to open an account with RBI for settlement of funds. The settlement is done to the banks' account with RBI on individual transaction basis. For both NEFT and RTGS, we need have IFSC code of beneficiary in order to remit the funds.

Bankers' Cheque (BC) and Demand Draft (DD): 
This is also an oldest method of fund transfer with confirmed and secure way of transfer of funds. These are the document based negotiable instruments used to transfer funds. An applicant needs to purchase a bankers cheque or demand draft from a bank in order to pay the payee on the same bank's different branch.

★ Bankers' Cheque is issued on its own branch where as demand draft is issued on other branches. Bankers' cheque is also called as pay order. The life of the BC is of three months from the date of issue and the life of DD is six months from the date of issue. And it can be revalidated.

★ BC and DD can be purchased across the counters through cash but as per RBI anti money laundering and income tax provisions Rs.50000 and above need to be routed through bank account only. Commission is the income generation from DD and BC / PO to Banks. These types of services are being used less now a days due to introduction of online payment system.