Electronic Fund Transfers (EFT) have become an important part of India’s digital payments ecosystem. It makes sending and receiving money faster, safer, and more convenient than using cash or cheques. Whether for daily payments, business transfers, bill settlements, or personal transactions, EFT has simplified the way we manage money. As banking becomes more digital, understanding the different EFT methods helps in choosing the right one for different financial needs.
Key Takeaways
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Electronic Fund Transfer refers to the process of transferring money electronically from one bank account to another. These transfers are conducted through banking networks under the supervision of the Reserve Bank of India (RBI). EFT eliminates the need to physically visit a bank, issue cheques, or handle cash. It supports everything from bill payments and online shopping to salary transfers and personal remittances.
Below are the major EFT systems used widely across indian banks and payment platforms.
NEFT enables individuals and businesses to transfer funds to any bank account in India. It works throughout the day in regular settlement cycles. NEFT is suitable when instant payments are not required. There is no minimum transfer limit, allowing easy, secure, and bank-supported transfers for routine payments like bills, fees, and reimbursements.
RTGS is designed for high-value transactions where funds need to be transferred quickly. Transfers happen individually in real time, meaning the money moves instantly from one bank to another. The minimum transfer amount through RTGS is ₹2 lakhs. It is preferred for urgent business payments, property transactions, or large transfers. It offers high security and ensures immediate confirmation of settlement.
IMPS allows instant electronic money transfer at any time, including weekends and holidays. Transfers can be made through mobile banking, internet banking, or payment apps. It is useful for emergency payments or last-minute transactions. It is commonly used for small to medium-value payments between individuals, making daily transactions faster and convenient.
UPI has changed the way India makes payments by allowing transfers through mobile apps. It supports quick payments by scanning QR codes or selecting contacts. UPI is widely used for shopping, fuel payments, utility bills, and peer-to-peer transfers. It offers unmatched ease of use and has driven India’s move toward cashless payments.
ECS is used for recurring and bulk transfers such as salary credits, loan EMIs, mutual fund SIP, or utility bill payments. Once a mandate is set, the bank automatically deducts and transfers funds on scheduled dates. This eliminates the need for reminders or manual payments every month. ECS is suited for long-term commitments and ensures payments are always made on time.
AePS enables individuals to conduct financial transactions using their Aadhaar number and undergo biometric verification. It is especially useful in rural areas where access to traditional banking infrastructure is limited. With AePS, people can deposit, withdraw, and send money even without a smartphone or ATM card. It supports financial inclusion by enabling banking services through local micro-ATM agents.
NACH is an enhanced and more efficient version of ECS, specifically designed for handling large-scale recurring transactions. It is commonly used by companies, government bodies, and financial institutions for distributing salaries, pensions, subsidies, and collecting EMIs or insurance premiums. NACH ensures timely and organised payments with minimal manual effort, making it a reliable system for both businesses and individuals.
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Source: Money Control
Electronic Fund Transfer offer several practical benefits that make payments smoother and financial management more efficient.
Here’s how EFT systems add value to day-to-day transactions:
Choosing the right transfer method depends on your payment purpose, urgency, and convenience. The points below will help you make an informed decision:
Electronic Fund Transfers have made money movement in India faster, secure, and highly convenient. From everyday payments to recurring obligations like insurance premiums, EFT ensures seamless financial management. For term insurance policyholders, efficient payment methods also mean uninterrupted protection for their families.
If you're looking for a reliable term plan backed by easy payment options and smooth claim processes, we at Canara HSBC Life Insurance offer various plans that combine affordability, long-term protection, and flexible premium payment modes through secure EFT channels.
Managing a life insurance account is now simpler, paperless, and always within your control.
Yes. EFT systems such as NEFT, IMPS, and UPI are encrypted and regulated by the Reserve Bank of India. When paying premiums to insurers like Canara HSBC Life Insurance, these channels ensure secure, traceable, and reliable transactions.
For recurring payments like term insurance premiums, setting up NACH/ECS is ideal. It automates your payments on the due date and prevents policy lapses due to missed deadlines.
Absolutely. Insurer transfers claim amounts directly to the beneficiary's bank account through NEFT or IMPS, ensuring faster and hassle-free settlements.
UPI and IMPS transactions are usually free on most platforms, while NEFT may be free or have minimal charges depending on the bank. Always check your bank’s fee policy for clarity.
You generally need the recipient’s bank account number, IFSC code, and account holder name. For UPI, only a VPA (Virtual Payment Address) may be required, making the process even simpler.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
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