Transferring Funds from a Current Account to Another’s Current Account: A Comprehensive Guide

When it comes to transferring funds between current accounts, whether the amount is modest or substantial, there are several methods available, including Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT). Each method has its own set of pros and cons, along with associated costs and tax considerations. Let’s explore the process in detail.

Methods of Fund Transfer from a Current Account

1. RTGS (Real-Time Gross Settlement)

RTGS allows large-value transactions, typically exceeding Rs. 2 Lakh, to be settled in real-time. This method ensures that the funds are transferred instantly and provides a secure, reliable, and cost-effective means of payment. The Reserve Bank of India (RBI) has recently removed its charges, leading to a significant reduction in transaction costs.

2. NEFT (National Electronic Funds Transfer)

NEFT is more suitable for smaller transactions and is processed in hourly batches throughout the day. It is also a reliable option, though transactions tend to be slower than RTGS. Both RTGS and NEFT do not involve any taxation or bank charges as such, as mentioned in the previous guidelines.

Using Internet Banking for Fund Transfer

If you have a net banking facility, you can transfer funds to another account without any additional charges or deductions. Here’s how to do it:

Log in to your internet banking account. Goto the payment/transfer menu. Select third-party transfer and choose whether the recipient’s account is with the same bank or a different one. Enter the recipient's name, account number, and IFSC code. Select RTGS as the transfer method for amounts exceeding Rs. 2 Lakh. Review the details and confirm the transfer. An OTP will be sent to your registered mobile number, and an acknowledgment will be generated. A message will be sent to your registered mobile number, containing the transaction ID for future reference.

Note: No bank charges or taxation apply during the transfer process.

Alternative Methods

For those who prefer manual methods, transfers can also be made using:

Real-Time Gross Settlement (RTGS) By visiting the branch By issuing a cheque in favor of the drawee

The drawee can then deposit the cheque in their bank, which will credit their account through a transfer entry or cheque clearing entry. No charges or tax will be deducted by the bank in this scenario.

Conclusion

Transferring funds from one current account to another involves various methods, each with its own advantages and considerations. RTGS is ideal for larger transactions, while NEFT is better for smaller amounts. Internet banking provides a convenient and cost-free option for both parties involved. By familiarizing yourself with these methods, you can ensure a smooth and secure transfer of funds.

For detailed specifications and charges, it is always best to contact your bank. Remember, there are no taxes or bank charges involved in these transfers.