9 Difference Between NEFT And RTGS- Limit, Charges, And Timing

9 Difference Between NEFT And RTGS

NEFT And RTGS – Everyone needs a bank account. In recent years, the government has taken a number of steps to encourage the use of digital payments. Digital money transfers speed up payment settlement while also increasing transparency, accountability, safety, and security in the country’s financial sector, paving the path for the development of a cashless economy. Digital payments have become more common as a result of their widespread acceptance by the public, businesses, and organisations. RTGS and NEFT are the most prevalent digital payment methods.

NEFT Meaning

National Electronic Fund Transfer, or NEFT, is a nationwide fund move system that allows an individual or a business to quickly transfer funds from one account/bank/branch to another. The system is based on Deferred Net Settlement, which involves processing transactions in hourly batches. Transactions are held up for a set amount of time under this system.

The system was originally implemented in November 2005 to replace the Special Electronic Fund Transfer (SEFT) system (SEFT). The Reserve Bank of India (RBI) mandated that all banks migrate to the NEFT system from the SEFT system. Since then, the SEFT system has fallen out of favor.

NEFT transactions can only be processed by bank branches that have NEFT capabilities. Anyone with a bank account at an NEFT-enabled bank branch is eligible to use this method to transfer money. Having a bank account, however, is not required; an individual or corporation can deposit cash with the bank and authorize the transfer of funds via NEFT. Clients who come in on their own are referred to as walk-in customers.

Processing or service costs are a small fee charged by the bank for delivering this service.

NEFT Process

Simply said, instead of withdrawing money and then paying it in cash or by writing a check, an individual can transfer a quantity of money from his bank account to another person’s bank account via the NEFT method.

  • The major advantage of NEFT is that it may transfer funds from any branch account to any other bank account in any location.
  • The sole stipulation is that both the sender and recipient branches must support NEFT.
  • To double-check, go to the RBI’s website and look for a list of NEFT-enabled bank branches, or just contact your bank’s customer care.
  • Under the Indo-Nepal Remittance Facility Scheme, the NEFT system also enables one-way cross-border transfers of money from India to Nepal.

The Permissible Times For Completing A NEFT Transaction

Previously, the NEFT clearing would occur within specific time slots:

  • Monday through Friday, 8:00 a.m. to 7:00 p.m.
  • Saturday, from 8:00 a.m. until 12:00 p.m.

The Reserve Bank of India (RBI) launched the all-new NEFT payment system in December 2019, which is operational 24 hours a day, 365 days a year. The purpose of this new clearing mechanism is to enhance digital transactions and Indian financial markets’ worldwide connectivity.

You may initiate a NEFT request at any time. A queue will be created for the NEFT request. Each hour, all NEFT requests in the queue will be cleared.

NEFT Transfer Limit

From Re.1, you may initiate an NEFT money transfer. On the other hand, the RBI has not established a ceiling for the same. Cash transactions are limited to Rs.50,000 per transaction. Additionally, there is no cap on the total amount that can be sent. Several banks have imposed their own maximum limits, for example, HDFC Bank has imposed a daily restriction of Rs.25 lakh per user ID via online NEFT.

Charges Of NEFT

  1. Credit to beneficiary accounts through inward transactions at recipient bank branches—free of charge to beneficiaries.
  2. Outward transactions at the transaction starting bank branches—the remitter’s transaction costs are as follows:
Transfer Amount (in ₹)Transaction Charges(in ₹)
Up to 10,0002.5+ GST
10,000- 1 lakh5+ GST
1 lakh- 2 lakh15+ GST
Above 2 lakh25+ GST

Steps To Transfer NEFT

Step 1: Log in to your bank’s internet banking page.

Step 2: Select the ‘Fund Transfer’ option from the main screen.

Step 3: On the money transfer screen, select the ‘NEFT’ option.

Step 4: To send money, choose a beneficiary from the list.

Step 5: To add a new beneficiary, click the ‘Add Beneficiary’ option at the top of the page. Enter account information such as the account number, the owner’s name, the IFSC code, the bank branch, and the kind of account.

Step 6: Verify and validate the entered information.

Step 7: Confirm the beneficiary addition by entering the four-digit OTP sent to the registered cellphone number.

Step 8: After the specified time period has passed, the recipient will be prepared for fund transfer.

Step 9: Select the recipient, the bank account from which funds must be sent, input the transfer amount, and click the ‘Confirm’ button to begin the transaction.

Advantages And Disadvantages Of NEFT

Advantages

  • NEFT is available 24 hours a day, 365 days a year.
  • There are no fees for online NEFT transactions for consumers with a savings bank account.
  • The RBI does not levy any fees on banks.
  • Provision for penalty interest in the event of a credit or transaction return delay.
  • The remitter receives positive confirmation of credit to the recipient account through SMS/email.
  • Funds flow to the recipient account in near real-time and safe settlement.
  • We are available every day of the year, 24 hours a day, 7 days a week.
  • The recipient does not need to go to the bank to deposit the check or obtain a draught in order to receive payment.
  • It is a safe and secure payment technique in which both parties are guaranteed protection without having to worry about the physical instruments being lost or stolen.
  • The national electronic fund transfer method of beginning a transaction is cost-effective, and individuals may initiate or receive it immediately through online banking from the comfort of their own home or workplace.
  • This electronic transmission is economical.

Disdvantages

  • Despite the bank’s efforts to maintain the security of NEFT transactions, utilizing an unsecured one exposes your information to the risk of being hacked or handed on to a hacker.
  • NEFT is a highly sophisticated method of transferring payments that may not be straightforward to use for everyone. This approach may be tough to run and access for someone with fewer computer skills.
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Benefits Of Using NEFT

  • Neither party’s physical presence is necessary to execute a transaction.
  • No physical instrument is required to be transmitted between the conducting parties at any point in time to complete the transaction.
  • No bank visit is necessary as long as a person has a legitimate bank account.
  • A physical instrument’s shortcomings are easily overcome. This means that NEFT has excluded all incidents of physical damage to monetary instruments, as well as instances of theft or forgery.
  • NEFT is quick and easy to use – it can be completed in less than a minute and requires no formality.
  • Email and SMS alerts make it simple to get and display confirmation of a successful transaction.
  • Internet banking may be accessed and used from any location. This means that NEFT transactions do not require a person to be physically present at a particular place.
  • Real-time transactions ensure the security of both parties.

RTGS Meaning

Real-Time Gross Settlement is abbreviated as RTGS. RTGS is a real-time funds transfer system based on the gross settlement principle, in which money is transferred from one bank to another. RTGS was created with large transaction quantities in mind. As a result, while there is no maximum restriction on the amount you can transfer, you must do it in increments of INR 2 lakhs. When the transaction value is large and payment must be handled quickly, RTGS is very beneficial. The name of the beneficiary, account number, and account type, name of the bank, and Indian Financial System Code (IFSC) of the bank are all required for a normal RTGS transfer, just as they are for NEFT.

In other word, RTGS (Real-Time Gross Settlement) is a cash transfer technique that sends money instantly and without any delays. The lowest amount that may be transmitted using RTGS is Rs.2 lakh, and it is generally used for higher-value transactions.

To send money using RTGS, you can utilize online banking or a mobile banking app. To send money using this method, you’ll need the individual’s bank account information.

Importance Of RTGS

The central bank typically uses real-time gross settlement to help minimize the risk associated with high-value transactions made by users. Despite the fact that banks and financial institutions maintain a high degree of security to protect their customers’ information and cash, dangers are increasing daily.

Thus, the availability of a real-time gross settlement mechanism has provided much-needed assurance to consumers by clearing settlements nearly quickly. In India, money more than Rs 2 lakh are transferable by real-time gross transfer.

RTGS Transfer Information

  • Account information is being sent.
  • The name of the bank and branch where the money will be sent.
  • The name of the client who will benefit.
  • Account number of the beneficiary.
  • The amount that will be transferred.
  • If you have any comments or remarks, please include them here.
  • The receiving bank’s IFSC code.

To RTGS Mode

RTGS can be performed in two ways:

Banking On The Internet
Many banks allow you to add beneficiaries to your account via their internet banking service. You can send funds to the beneficiary when you’ve successfully added recipients. Corporate account holders, in addition to individuals, can use online banking to conduct RTGS transfers.

Branch
To begin a financial transfer, go to your local bank branch and fill out the RTGS form.

RTGS Fund Transfer Online

Step 1: Use your customer ID and password to log in to your bank’s net banking page.

Step 2: Select the ‘Funds Transfer’ tab.

Step 3: Select the ‘Add Beneficiary’ option from the drop-down menu.

Step 4: Enter the account number, IFSC, bank name, and branch name for the recipient.

Step 5: Select the ‘Add’ button and confirm your choice.

Step 6: You may need to type in your credentials to authenticate the addition.

Step 7: Once the beneficiary has been added, you will receive a confirmation message.

After you’ve added a beneficiary, you may begin sending cash by following these steps:

Step 1: Go to your bank’s internet banking page and click on the ‘Funds Transfer’ button.

Step 2: Choose the account number of the recipient.

Step 3: Type in the amount that needs to be transferred.

Step 4: Check the box indicating that you accept the terms and conditions.

Step 5: Review the information and complete the procedure by clicking the “Confirm” button.

Customer Transaction Timings For RTGS

The transaction time frames for RTGS transfers have been updated a few times. Customers can conduct RTGS transactions from 7 a.m. to 6 p.m., according to the most recent update on August 26, 2019. Interbank transactions are available between the hours of 7 a.m. and 7:45 p.m.

Transaction Limits For RTGS

RGS allows you to transfer a minimum of Rs.2 lakh. When it comes to the higher limit, when you transfer through a bank branch, there is no related limitation. Instead, there may be a restriction if you use internet banking to make the transfer. It is usually Rs 25 lakh, however, it varies by bank.

Applicable Charges For Doing RTGS Transactions

  1. Inward transactions are free; no fees will be charged.
  2. The Reserve Bank of India has instructed all banks not to impose any service fee on RTGS transfers started electronically via internet banking and/or mobile banking.
  3. Outward transactions worth between 2,000 and 5,000 rupees: not more than 30 rupees
  4. Amounts in excess of 5,00,000/- but not exceeding 55/-

Advantages And Disadvantages Of NEFT

Advantages

  • RTGS is one of the safest and quickest interbank transfer methods.
  • It’s a paperless money transfer.
  • RTGS transactions are not subject to any extra fees.
  • The money can be deposited without the beneficiary having to go to the bank.
  • The money may be sent using online banking.
  • This service is accessible on all business days, with different times depending on the bank.
  • It’s a system for transferring money quickly.
  • From Monday through Sunday, RTGS is now available 24 hours a day, 7 days a week.
  • The RTGS function is available online through mobile or internet banking, as well as in person at a bank branch.
  • Because every transaction is completed instantaneously, there is no credit or settlement risk for the beneficiaries.
  • Customers can forecast cash flow since they know when their accounts will be credited and debited.

Disadvantages

  • Customers that use RTGS do not have the ability to trace their transactions. The central bank is the only one that implements the give confirmation. The remitting bank receives a notification from the central bank indicating a financial transfer to the recipient bank.
  • RTGS means that the gross system has a danger of congestion due to a lack of funds.
  • The lowest amount that may be sent using RTGS is Rs 2 lac, and there is no maximum amount.
  • The Reserve Bank of India (RBI) has only adopted positive confirmation, in which the remitting bank receives a message from the RBI confirming a financial transfer to the recipient bank.

Benefits Of Using RTGS

  • It is a safe and secure method of money transfer.
  • RTGS transactions made through a bank branch have no upper limit.
  • A real-time financial transfer to the recipient account is possible.
  • Funds can be transferred at any time of the day.
  • There is no need for a physical check or demand draught.
  • There is no risk of physical instrument loss or theft, as well as a fraudulent encasement for beneficiaries.
  • Internet banking can be used to begin the transaction from his or her home or job.
  • There are no fees or penalties for transferring funds.
  • RTGS transactions are legally supported.
  • Available 24×7 from Monday to Sunday

Comparison Chart 

BASIS FOR COMPARISONNEFTRTGS
MeaningNEFT is an online money transfer system that allows payments to be done in near real-time.RTGS is an electronic payment system in which money is transmitted simultaneously with the transaction.
Introduced in the year20052004
BasisDeferred Net Settlement (DNS)One to One
Business Hours8:00 a.m. to 7:00 p.m. on all working days (excluding the 2nd and 4th Saturdays).9:00 a.m. to 4:30 p.m. on all working days (excluding the 2nd and 4th Saturdays).
Settlement cycleIn a working day, there are 12 settlements.Continuous Settlement
Operates onBatches every hourReal-time
Ceiling limitThere is no such limit, but the maximum transaction value is limited at Rs. 50,000. (for cash-based payment within the country and payments to Nepal).Minimum – 2 lakh, Maximum – No limit
AppropriateSmall value transactionHigh-value transaction
ProcessingSlow in comparisonFast

Difference Between NEFT & RTGS

  • National Electronic Fund Transfer (NEFT) is an online payment system that allows money to be moved from one location, bank or account to another. The Real-Time Gross Settlement (RTGS) system is an online money transfer system that allows cash to be sent on a per-instruction basis.
  • In 2005, NEFT was established to replace the Special Electronic Fund Transfer system (SEFT). RTGS, on the other hand, was introduced in 2004.
  • The Deferred Net Settlement (DNS) mechanism underpins NEFT, whereas RTGS operates on a one-to-one basis.
  • On working days, NEFT and RTGS are open from 8:00 a.m. to 7:00 p.m. and 9:00 a.m. to 4:30 p.m., with the exception of the 2nd and 4th Saturdays.
  • In the case of NEFT, there are a total of 12 settlements every working day. When it comes to RTGS, though, the settlement is ongoing.
  • NEFT processes transactions in hourly batches, whereas RTGS processes transactions in real-time.
  • In NEFT, there are no minimum or maximum ceiling limits. However, for remittances based on the cash inside the nation and payments to Nepal, the amount per transaction should not exceed Rs. 50000. RTGS, on the other hand, has a minimum restriction of 2 lakhs and no limit on the maximum amount.
  • For low-value transfers, NEFT is the ideal option. RTGS, on the other hand, is designed for large-scale transactions.
  • RTGS is a real-time fund transfer system, whereas NEFT takes longer to complete.
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I hope you enjoyed and learned a lot from this essay. Thank you very lot for your help. If you have any questions about this post, please leave a comment. I, Aarti Devatwal, would want to express my sincere gratitude for taking the time to read this essay. I hope you learned a lot from this.

What is the meaning of Neft?

National Electronic Fund Transfer, or NEFT, is a nationwide fund move system that allows an individual or a business to quickly transfer funds from one account/bank/branch to another.

What is the meaning of RTGS?

Real-Time Gross Settlement is abbreviated as RTGS. RTGS is a real-time funds transfer system based on the gross settlement principle, in which money is transferred from one bank to another.

What is the limit of NEFT transfer?

From Re.1, you may initiate an NEFT money transfer. On the other hand, the RBI has not established a ceiling for the same. Cash transactions are limited to Rs.50,000 per transaction.

What is the limit of RTGS transfer?

RGS allows you to transfer a minimum of Rs.2 lakh. When it comes to the higher limit, when you transfer through a bank branch, there is no related limitation.

Differentiate between NEFT and RTGS?

National Electronic Fund Transfer (NEFT) is an online payment system that allows money to be moved from one location, bank or account to another. The Real-Time Gross Settlement (RTGS) system is an online money transfer system that allows cash to be sent on a per-instruction basis.

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