Payments, Clearing and Digital Banking
This domain tests whether you can choose the correct payment channel and explain clearing and cheque rules exactly.
Channels and their limits
- NEFT: 24×7, no statutory minimum or maximum, settled in batches; bank limits apply.
- RTGS: 24×7 since December 2020, minimum ₹2 lakh, real-time gross settlement, for large urgent payments.
- IMPS: 24×7 through NPCI, typically up to ₹5 lakh.
- UPI: instant, mobile-based, paid to a VPA and authenticated by PIN, generally ₹1 lakh per transaction with higher caps for specified categories.
- AePS: Aadhaar plus biometric, used for DBT and small withdrawals.
Clearing and instruments
Cheques move through the Cheque Truncation System, where an image replaces the physical cheque. CTS-2010 standard cheques carry prescribed security features, and a cheque is valid for three months from its date. A demand draft is prepaid and safer for an unknown payee. The Positive Pay System makes the issuer confirm details of high-value cheques, cutting fraud.
Worked example
A firm must pay ₹6,00,000 today with final settlement. Reasoning: RTGS, because the amount exceeds ₹2 lakh and immediate settlement is required; NEFT is batch-settled and IMPS/UPI limits may be too low. The reasoning must name the amount test, not just the channel.
Traps that cost marks
Claiming RTGS has a maximum limit (it does not); confusing IMPS with NEFT settlement; forgetting the three-month cheque validity; thinking UPI needs an account number rather than a VPA; ignoring that a bank may set lower per-day limits.