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Remittance

The document discusses various methods for transferring money between banks, known as remittance business. It describes demand drafts, where a customer fills out a form and receives a draft to transfer funds to a recipient. It also outlines mail and telegraphic transfers, where instructions are sent by mail or telegram to deposit funds in another account. Finally, it mentions newer electronic modes for quicker fund transfers between banks using systems like EFT within hours or minutes.

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Pankaj Nagar
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103 views2 pages

Remittance

The document discusses various methods for transferring money between banks, known as remittance business. It describes demand drafts, where a customer fills out a form and receives a draft to transfer funds to a recipient. It also outlines mail and telegraphic transfers, where instructions are sent by mail or telegram to deposit funds in another account. Finally, it mentions newer electronic modes for quicker fund transfers between banks using systems like EFT within hours or minutes.

Uploaded by

Pankaj Nagar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Remittance Business

Apart from accepting deposits and lending money, Banks also carry out, on behalf of their
customers the act of transfer of money - both domestic and foreign.- from one place to
another. This activity is known as "remittance business" . Banks issue Demand Drafts,
Banker's Cheques, Money Orders etc. for transferring the money. Banks also have the
facility of quick transfer of money also know as Telegraphic Transfer or Tele Cash Orders.

In Remittance business, Bank 'A' at a place 'a' accepts money from customer 'C' and
makes arrangement for payment of the same amount of money to either the customer 'C'
or his "order" i.e. a person or entity, designated by 'C' as the recipient, through either a
Branch of Bank 'A' or any other entity at place 'b'. In return for having rendered this
service, the Banks charge a pre-decided sum known as exchange or commission or
service charge. This sum can differ from bank to bank. This also differs depending upon
the mode of transfer and the time available for effecting the transfer of money. Faster the
mode of transfer, higher the charges.

Demand Draft

A demand draft or "DD" is an instrument most banks in India use for effecting transfer of
money. It is a Negotiable Instrument. To buy a "DD" from a Bank, you are required to fill an
application form which asks the following information :

Type of instrument needed


Name of the recipient
Name of the sender
Amount to be transferred
Place where the transferred money is to be paid
Mode in which money is to be paid i.e. in cash or through a Bank Account
Mode in which you will pay money to the Bank i.e. in cash or by debit to your account

The application form along with the cheque on your account or cash is deposited with the
counter clerk who gives you a Demand Draft (which looks like a cheque) for the amount.

Tips:

Check the particulars like name of the beneficiary, amount, place where payable etc. filled
in the DD, match these with what you had filled in the application form.

Spellings of the beneficiary's name should be exactly the same.

Get the DD "crossed" for security.

Your PAN number will be necessary if the amount of DD exceeds Rs.10,000/=

Charges for issuing drafts differ from Bank to Bank. So if your requirements are large, do
shop around for best bargain.

Mail Transfers or Mail Orders

This is the mode used when you wish to transfer money from your account in Center 'A' to
either your own account in Center 'B' or to somebody else's account. In this mode of
transfer, you are required to fill in an application form similar to the one for DD, sign a
charge slip or give a cheque for the amount to be transferred plus exchange and collect a
receipt. The Bank will, on its own, send an order to its branch at center 'B' to deposit the
said amount in the account number designated by you.This is, however, a dying product
and many banks like State Bank of India have since withdrawn this.

Telegraphic Transfers or Tele Orders

This is similar to the Mail Transfer except that the message is sent to center 'B' by way of a
telegram and the money is deposited the next day. The mode of instructions nowadays is
increasingly the fax.

Electronic Mode

More and more banks are now offering electronic mode of transfer of funds like Electronic
Transfer System, Cash Management product etc. The remittance of funds through these
modes is much quicker and the time is reduced to hours and in some cases even minutes

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