Internet-based fund transfer service soon

Kathmandu, June 17

If things go according to plan, people will soon be able to transfer money from the account of one bank to the account of another bank by tapping their smartphones, laptops or desktop computers.

A system that enables such fund transfers using the internet or mobile phones has been installed at Nepal Clearing House Ltd (NCHL), a public company established jointly by Nepal Rastra Bank, banks and financial institutions, among others.

“We are currently conducting test runs. If everything goes as per our plan, we will launch the system within mid-July,” NCHL CEO Neelesh Man Singh Pradhan told The Himalayan Times.

So far, 25 commercial banks, 23 development banks, six finance companies and three remittance firms have signed pacts with NCHL to make use of platform called interbank payment system.

“We’re planning to enter into agreements with Agricultural Development Bank, Nabil Bank and Sanima Bank next week,” said Pradhan, adding, “We’ll rope in other financial institutions and remittance companies in the coming days.”

Banking institutions and remittance companies that have entered into a deal with NCHL will have the option of offering internet-based and mobile-based payment services to their clients.

This will allow customers to transfer funds using e-banking and mobile payment platforms offered by banks and financial institutions.

“But so far only around four banks have completed online banking integration process,” said Pradhan, without disclosing names of the banks.

This means customers will have to wait for some more time to avail internet and mobile payment services.

Till the time majority of banks and financial institutions make arrangements to cater internet and mobile banking services, customers will have to rely on offline facility to transfer funds from the account of one bank to the account of another bank located within the country.

This means customers will have to walk into the office of a bank or a financial institution where they have an account, fill up a form and ask the teller to transfer the amount.

In a similar manner, private firms and government agencies can also instruct their banks to transfer funds to beneficiaries’ accounts located in different banks and financial institutions.

This facility can end the practice of opening bank accounts in multiple banking institutions just for the sake of facilitating fund transfer process.

Currently, for instance, private firms and government agencies ask their employees to open salary accounts in the same bank where they have an account to ease fund transfer process.

“But once the new system comes into operation, such procedure need not be followed, as funds can be easily transferred from employers’ account to employees’ accounts located in any bank and financial institution within a few hours,” Pradhan said.

“This is the same with transfer of social security, dividend, pension and subsidy payments. Also, the new system will facilitate the process of extending refunds to investors who have taken part in initial public offering.”

Another benefit of the new system is the option it provides to accountholders to issue direct debit instructions to transfer certain amount from their accounts on a periodic basis.

This feature will help people who have to deposit certain fee, like insurance premium, or make other payments on a certain day every month.

Yet, these types of fund transfer services are not new. However, banks and financial institutions are using different systems to make different types of payments, and the entire process can be cumbersome at times.

“The new system will enable banks, financial institutions and remittance companies to make various types of payments through a single gateway,” Pradhan said. In other words, banking institutions will not have to rely on one system to make remittance payment and another to settle corporate payments.

NCHL has said it will make fund transfer services available for a fee of two rupees to Rs 100 depending on the nature of the fund transfer product and volume of amount that is being transferred.

Banks, financial institutions and remittance companies are free to design their own fee structure.

NCHL has also said it will allow individual clients to transfer up to Rs 10 million at a time.

This ceiling has been fixed at Rs 200 million for corporate clients.

“However, banks, financial institutions and remittance companies can fix their own ceilings on fund transfers,” Pradhan said.