NEFT, NIP, NIBSS, MICR and Other Banking Acronyms


NEFT, NIP, NIBSS, MICR and Other Banking Acronyms

“When doing online banking transactions, I am often asked to use the option of NEFT or NIP.  I do not know the meaning of these two abbreviations, and would therefore, appreciate your explanation of them in your blog”.  This was an enquiry from one of the readers of our blog, recently.     
          Ordinarily, the above enquiry ought to have been directed to bankers, but owing to the fact that this blog is a forum for interactive teaching, the required explanations on NEFT, NIP and other banking acronyms are provided hereunder:
N E F T:    

NEFT simply stands for National Electronic Funds Transfer.  It is a payment system usually used nation-wide, for facilitating one-to-one funds transfer.  With this system, one bank account holder can transfer funds electronically from one bank branch to another account holder in any other bank branch within that country or beyond, that is participating in the scheme.  NEFT can be used for bulk transfer, which is, transferring funds to many recipients at the same time.
N I P:
          NIP means NIBSS Instant Payments.  It is an account-number based, online inter-bank payment solution developed by NIBSS in the year 2011. It is a solution that guarantees instant value to the beneficiary, usually within ten (10) minutes after the sender has made the transaction (except if there is network failure).
NIP is a system preferred by the Nigerian financial industry.  But unlike, NEFT which can be used for bulk transfers, NIP is limited to being used to transfer funds to only one or two persons at a time.  Also, NIP has a limitation of being used to transfer Five Million Naira (N5, 000,000.00) maximally to individuals, and Ten Million Naira (N10, 000,000.00) maximally to corporate organisations.
N I B S S:
          NIBSS stands for Nigeria Inter-Bank Settlement System Plc (NIBSS).  It is a financial body owned by the Central Bank of Nigeria (CBN) in conjunction with all other licensed banks in Nigeria.  NIBSS is empowered with facilities for handling of inter-bank payments, for removal of potential bottlenecks associated with inter-bank funds transfers and settlements, and for facilitation of the electronic clearing of cheques, electronic funds transfers and paper-based instruments etc.
M I C R:
          MICR means Magnetic Ink Character Recognition.  It is a 9-digit code normally printed on cheques using MICR technology.  The code uniquely identifies the bank and branch participating in an electronic clearing system. This enables identification of the encoded cheques and facilitates the processing of such cheques.  Issuers/holders of MICR cheques are always strongly advised to refrain from writing below the printed (MICR) line at the foot of their cheques.
R T G S:
          RTGS means Real Time Gross Settlement.  It is a system of electronic fund transfer where the transmission takes place quickly between the sender and the receiver, just like NIP (described above).  But unlike NIP, RTGS is used to transfer big amounts of money as in India, and other countries, where the system is operated.
I M P S:
          The acronym IMPS stands for Immediate Payment Service.  It is a service operated with mobile phones or tablets for transferring funds from one person to another, using the receiver’s bank account number.  IMPS transactions are usually cleared instantly or without much delay; thus, the service is rated as one of the fastest in the world.
C P V:
          CPV means Contact Point Verification.  This is a process by which bank officials ascertain the correct identity/location of their customers, particularly their names, phone numbers and addresses.  Submission of correct contact point is usually considered as one of the parameters for granting loan facilities to customers.  The loan requests of those who submit false contact points are usually declined or turned down for mendaciousness.

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