Introduction
NEFT and RTGS are two electronic payment systems in India that enable the transfer of money between bank accounts. NEFT is best suited for low-value transactions and operates in batches while RTGS is used for high-value transactions and settles payments in real-time.
The two systems differ in terms of fees, minimum transfer amounts, and settlement speed. By understanding the differences between NEFT and RTGS, individuals and businesses can make informed decisions about which system is best for their specific needs.
What is NEFT?
NEFT or National Electronic Funds Transfer is an electronic payment mode that enables the transfer of funds, from one NEFT bank account to another across the country. It is a payment system regulated by the Reserve Bank of India (RBI) and works as per the RBI guidelines. The basic details required to transfer funds through NEFT are:
- Name of the beneficiary
- Account number
- IFSC code
- Name of the bank
- Name of the branch
- Amount to be transferred.
NEFT transactions are processed in batches throughout the day and the processing will take longer. NEFT is generally used for low-value transactions and the services can be accessed both offline and online.
What is RTGS?
RTGS or Real-Time Gross Settlement is another electronic mode of payment that enables funds transfer from one bank account to another. In contrast to NEFT, RTGS settles transactions on a one-to-one basis immediately after the instruction is received. The basic details required for the transfer of funds through RTGS are:
- Name of the beneficiary
- Account number
- IFSC code
- Name of the bank
- Name of the branch
- Amount to be transferred.
RTGS is generally used for high-value transactions and the transfer of funds can be done both offline and online.
Differences between NEFT and RTGS
While NEFT and RTGS are both electronic modes of payment, there are some striking differences between the two. These are as follows:
NEFT | RTGS | |
Settlement | Processing in batches at intervals | Real-time basis or one-on-one |
Minimum amount | No minimum amount | Rs. 2 lakhs |
Maximum amount | Upto Rs. 2 lakhs | No maximum amount |
Charges | No charges for inward transactions. Charges for outward transactions of between Rs. 2.5 to Rs. 25 depending on the amount. | No charges for inward transactions. Charges for outward transactions of between Rs. 25 to Rs. 50 depending on the amount. |
Settlement time | Within hours | Instant |
Operating hours | 24x7 on all days throughout the year | 24 x7 on all days throughout the year |
Cash remittance for funds transfer | A non-account holder can transfer funds through NEFT by remitting amounts up to Rs. 50,000. | Funds can only be transferred between accounts. |
Conclusion
NEFT and RTGS are both popular electronic payment systems in India, but they differ in terms of settlement speed, transaction fees, and minimum transfer amounts. To choose the right system for your needs, consider the amount being transferred and the urgency of the payment.
