What is the full form of TRF
TRF stands for Transfers which is stated as Transfer of Funds in the banking industry. It can be defined as a series of events that causes money to travel from the sender to the recipient. It can also be described as the transfer of money from one person to another or to itself using the banking system. Depending on the bank, transferring funds can be done manually or automatically. Bankers perform manual transfers of funds by the instructions provided by central banks. One another mode to transfer funds is to use banking software such as Treasury Management System.
Process of TRF in India
The transfer of funds is usually done in batches in India. The process usually takes time and funds for transfer are collected from branch counters once transactions have been completed at the branch. The funds are transferred to other departments before being credited to a specific account at the final destination branch. Transfers between banks are the movements of funds from a source branch to a destination branch simultaneously. In the case of manual Transfer of Funds, these transfers may take a few days and be delayed at some time.
Importance of TRF in Bank
TRF has gained a lot of importance in banks because of the following reasons.
Need for TRF
Transfer of funds is not required if done automatically, but still, most of the transactions are done manually, it is required before crediting because the entire process requires human intervention. There is no need for TRF if all transactions are already automated. Some of the advantages of TRF are:
i) Cost Reduction
Maintaining just one branch office saves a lot of money even when no transfer is necessary. In other terms, having a branch office where all of the staff members are able to manually transfer payments is more cost-effective than not having such a facility. To keep expenses as low as possible, only the amount the branch might need is transferred rather than the entire amount, as in the case of manual transactions. As a result, this also reduces the cost of bank branches.
ii) More Accuracy
Banks should ensure that the correct amount of money is transferred when they transfer funds. Due to inaccuracy sometimes, money may not be transferred completely under the customer's requirements in manual transactions. As a result, the Transfer of Funds is performed to improve accuracy while other specified activities are decreased.
iii) Less Time Taking
It typically takes 3 working days to transfer money from one bank to another. Usually, in manual transactions, it takes more than ten working days to transfer less than five thousand rupees because of which there is a significant delay in communication between the branches, which got resolved further by sending money through a Treasury Management System.
Difference Between Transfers (TRF) & Immediate Payment Service (IMPS)
Transfers between branches are made utilizing mobile phones and an electronic system called IMPS that uses the IFSC Code. It takes very less time and is faster than TRF transfers. The input must be the user's mobile number and the recipient bank's IFSC code in IMPS for the fund to be transferred immediately. To transfer funds via TRF, users must manually enter Branch details such as Bank Name, Account Number, IFSC Code, etc. at both ends. This method requires more time than IMPS. TRF can be utilized for intrabank and interbank transactions, but IMPS is only effective for interbank accounts. TMS software transfers money between bank branches, whereas IMPS uses an IFSC code to operate through mobile devices.
National Electronic Fund Transfer (NEFT)
National Electronic Funds Transfer is a nationwide payment system that allows for one-to-one transfers of money. Individuals can use this System to electronically transfer funds from any bank branch into any other bank branch in the country.
Real-Time Gross Settlement (RTGS)
Real-Time Gross Settlement is a method that allows for the constant and real-time settlement of transferring funds on a transaction-by-transaction basis.