Everything to Know About Direct Bank Transfer System in India

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Technological innovation with each tick of the clock is a constant in this rapidly evolving world. Not a single aspect of human life is unaffected by technological advancement. Online money transfer & Direct Bank Transfer System is no exception to it.

A whole new idea of online money transfers has emerged in India, known as the Direct Bank Transfer System. It has become even easier for expatriates to send money to India online faster and more efficiently than before.

India, the world’s biggest recipient of remittances, sends about 2.5 million of her residents to the outside world as expatriates every year, catering to whose needs pushed the Indian government to come up with this idea, according to the Indian ministry of external affairs.

These expatriates find work in their chosen countries and send money to India to support their families financially.

A brief background of Direct Bank Transfer System in India

Although India is one of the fastest-growing economies in the world, its economic development still cannot cater to the needs of millions of people. A vast majority of the Indian population suffers from acute poverty.

Unemployment is rampant in India, due to which the people cannot find work and, as a result, fail to put food on the tables. So much so that most people are deprived of as basic a necessity as a toilet. It alone gives birth to a host of diseases and health hazards.

The rapid population growth complicates the issue, which severely stresses the country’s already shrinking and depleting resources.

Owing to these issues, the people of India migrate to other countries to find jobs to send money to India online.

Touching upon the Indian economy briefly is imperative here.

Indian economy in a nutshell

  • India is the 5th most significant middle-income developing economy with a nominal Gross Domestic Product (GDP) of $3.535 trillion.
  • It has a Purchasing Power Parity (PPP) of $11.745 trillion, making it the 3rd largest economy in the world.
  • Its GDP growth rate is estimated to be around 8.2% in 2022
  • Indian GDP per capita income is $2,515, and its PPP per capita income is $8,358
  • The inflation rate in India is expected to be around 7.79% in 2022

These statistics make up for a compelling case for the Indian people to travel to developed countries to find better job opportunities to support their families through money transfers to India.

These issues have also forced the government of India to think of innovative ways to ensure swift, smooth and safe online money transfers to India from abroad. 

Because as mentioned before, catering to the online money transfer needs of millions of expatriates, whose average number swells by 2.5 million Non-Resident Indians (NRIs) every year, is not easy and necessarily entails risks.

Therefore, as a result of this, the government of India came up with the concept of Direct Bank Transfer. DBT is considered safer and faster than the other conventional ways to transfer money to India online.

Let’s now understand a Direct Bank Transfer.

What is a Direct Bank Transfer (DBT)?

Direct Bank Transfer or DBT is an innovative and new way of making direct banking efficient, safe and fast. It is based on Sepa Transfers and the PSD2 Open Banking API to transfer funds within a few seconds. 

It links your bank account to the website you want to purchase from. In this method, the recipient of the funds, in this case, the merchant, receives guaranteed funds, as it does not involve any intermediary in between. It is faster than the typical money transfer between banks.

Keeping in view the needs of one of the world’s biggest Indian diaspora, the government of India came up with this idea and launched it on January 1st, 2013. Through this method, the transfer of funds to the bank accounts has become easier, safer and faster than the usual ways in which the banks move funds from one account to another.

The early struggle of Direct Bank Transfer System in India

One of the biggest challenges most developing countries face is that most of the population remains unbanked. Obviously, where one finds putting food on the table an uphill task, how would you expect them to open, hold and then maintain a bank account as a bank account that remains unattended for a certain time gets dormant?

The same was the case with the people of India. Many people did not have bank accounts, and the Indian government, therefore, faced the challenge of educating the people about the importance of having a bank account to benefit from the initiative.

There were other issues that the female beneficiaries from the rural areas faced, including deposit tracking, reading SMS notifications and knowing the exact amount of money, etc. 

The government of India launched several initiatives aimed at spreading awareness among the people about DBT, most of which turned out to be successful and actually helped people become aware to the point where DBT has become a regular practice in India now.

Advantages of Direct Bank Transfers 

Since DBT connects you seamlessly with the merchant or the online shopping website, for that matter, it provides you with a safe environment to process payments. 

It also eliminates the chances of fraud and potential mistakes that can divert funds to a stranger in the typical ways banks transfer money.

Most developing countries still use credit cards for online payments, but this DBT provides a safe and cheap alternative.

International money transfers and online money transfer companies

The launch and success of the DBT initiative by the Indian government have made online money transfers to bank accounts more accessible and faster than in the past. Many online money transfer companies, including ACE, whose services are tailor-made for expatriates worldwide, serve countless Indian expats worldwide to manage their remittance transfer needs quickly and securely.

These companies offer the best international money transfer services in exchange for bare minimum service charges. ACE Money Transfer is one of these leading services to send money to India from overseas.

Although the DBT is an innovative solution to cater to the shopping needs of millions of NRIs and the residents of India, this initiative primarily serves the interests of virtual shoppers.

At the same time, online money transfer companies have designed their operations to meet the shopping and online money transfer needs of expatriates globally.

How to Transfer Funds using Direct Bank Transfer System?

When you need to transfer money quickly and easily, you may want to use a Direct Bank Transfer System. This process allows you to transfer money from your checking or savings account directly into another person’s account. Here is a guide on how to complete a direct bank transfer.

To get started, you will need the recipient’s bank account number and the routing number for their financial institution. You can usually find this information on their website or on a check. Once you have this information, log into your online banking account and locate the section where you can send money electronically.

Next, enter in the recipient’s bank account number and routing number.

The final step in this process is for your bank to contact the recipient’s bank and initiate the transfer. This process usually takes one to two business days to complete, so be patient!

That’s it!

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