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Wednesday, Dec 04, 2002

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Electronic funds transfer yet to click

M. Ramesh


LACK of awareness among customers and branch-level staff and banks' unwillingness to let go of a more lucrative demand draft (DD) business, appear to have ensured that the `Electronic Funds Transfer' (EFT) remains a product only on paper.

What is EFT ? Here is RBI's own definition: "It is a scheme introduced by the RBI (over two years ago) to help banks offer their customers money transfer service from one account of a bank to any other account of any other bank". At present, 13 major cities are covered.

A customer can use an EFT facility, instead of a DD, to transfer money. There are some advantages of doing so. First, the money transfer takes place in just one day — a DD would take much longer, as it would have to move physically between the remitter and the beneficiary.

Second, there is no danger of the instrument being lost in transit. Third, typically, the EFT charges are lower than DD charges.

The EFT facility is the same as Mail Transfer or Telegraphic Transfer, except that in the case of MT and TT, both the remitter and the beneficiary have to be account holders in the same bank. If not, as RBI says, "a good deal of paper processing is required".

However, EFT does not appear to have taken off at all, as the patronage figures show. According to the RBI, the total value of money transfers that took place through EFT-based products grew from Rs 137 crore in 2000-01 to Rs 202 crore in 2001-02.

What is this, as a percentage of total value of all cheques — Rs 1.07 lakh crore in 2000-01 and Rs 1.20 lakh crore in 2001-02?

In fact, there does not even appear to be enough awareness at the branch level about EFT, in the public sector banks. Almost invariably, the branch-heads speak of the absence of connectivity among branches, although RBI says that it is not necessary for all branches to be networked — the remittance forms go to the bank's `service centre' (where instruments like cheques and DDs are aggregated) in the city, which is connected to the RBI's hub.

Andhra Bank introduced a product, (eMoney), just two months ago. However, some branches here said that it was only a few days ago that the eMoney forms were made available to the customers. The bank's service centre here said that so far only inward remittances have been taking place into Chennai. The volume? About 6-7 each day, on an average.

One senior banker said that unless the customers make a demand, products like EFT are not likely to take off.

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