- Make NEFT and RTGS free: There's no fee charged for using cheques, and so should NEFT and RTGS be. More so because cheques cost banks much more than the cost of NEFT and RTGS systems. It's unfortunate that these fast, electronic systems are not free, forcing people to use slower, paper-based methods.
- Abolish IFSC: We don't need this. Really. If a customer of HDFC Bank wants to transfer some money to someone who holds an account with SBI, only the account number of the recipient should be required. The NEFT/RTGS systems should be redesigned so that the communication is from bank to bank, rather than from branch to branch. HDFC Bank should be concerned with transferring money to the specified account number of SBI. It should be up to SBI's computers to determine the branch and transfer money to it.
- Allow hot transfers without addition as beneficiary: It's possible to write anyone's name on a cheque, but it's not the same with doing a NEFT transfer through a bank's website. You have to first add a beneficiary, a process that, for some banks, requires a mandatory 24 hour waiting period before a payment can be made to that beneficiary. Ridiculous! Reminds me of License Raj and how it inhibited India's progress. It should be possible to do hot transfers to anyone without having to go through the ordeal of adding a beneficiary (I'm not sure if this step is mandated by RBI, but it's possible that it's the banks that have implemented this requirement and that this isn't an integral part of the NEFT system). The philosophy should be the one followed in online email services - you can add someone to your address book if you want, and this'll make your life easy, but you can also always send an email to someone without having to add him to your address book.
- Introduce a NEFT/RTGS book, like a cheque book: The process of transferring money using cheques (clearing) typically takes two days. This can be reduced by one day if banks introduce a new NEFT/RTGS book (can be named Tatkal cheque book to make it easy to remember by the Average Joe in India). An individual or a firm needs to mention only the name, bank name and account number of the payee (this assumes that IFSC isn't required, as listed above). Give this Tatkal cheque to your bank and the transfer will be done on the same day (using NEFT, RTGS, etc.).
- Allow NEFT/RTGS 24x7x365: I find it appalling that two of the most important/popular electronic methods of money transfer in India, NEFT and RTGS, have been handicapped by some arbitrary cutoff timings set by the RBI. Cutoff timings for electronic systems? What's the rationale behind this? Credit and debit cards work 24x7x365, and so should NEFT and RTGS. After all, there's no human involved in these transactions, and barring the occasional maintenance and rare outages, computers can work nonstop without breaking a sweat!
- Eliminate "free-floating" RTGS forms: A gaping hole in the way RTGS transfers are conducted is that some banks (such as SBI) have placed booklets of generic RTGS forms at various counters, openly available to anyone. A signature is now the sole barrier to fraud. Unlike cheques, that must be issued to the firm/individual who wants to transfer money, these RTGS forms can be picked up and filled by anyone. This makes it futile to securely keep the forms in your locker (something most people do with their cheque books), since both payer and payee can be filled in these generic forms. This hole must be plugged, by issuing NEFT/RTGS books in the same way that cheque books are issued today.
These are just some of the improvements that I think will encourage the use of electronic money transfer in India, and also make the whole process more convenient, efficient, quick and secure.