Difference between NEFT and RTGS | What is NEFT and RTGS, NEFT vs RTGS

Difference between NEFT and RTGS

When conversing about banking transactions and terminology, NEFT and RTGS come to mind as the widely used banking methods. However, do you have detailed or complete information about them? 

To provide a better understanding, we have included the difference between NEFT and RTGS along with their differences from UPI, Net Banking, Fund Transfer, EFT, Bank Transfer, IMPS, and more.

Therefore, in this write-up, we endeavor to make you know about NEFT and RTGS. We have included plenty of information for you to understand the topic in detail.

Here you will go through the meaning, features, advantages, and disadvantages of NEFT and RTGS.

Alongside, explore the limits of the transaction, amounts transferable, availability, time takes, and more about NEFT and RTGS.

Also Read:- Banking System in India

What is NEFT?

National electronic fund transfer or NEFT is designated as a nationwide payment system allowing the transfer of funds from one bank account to another.

With the focus increasing online banking, NEFT has emerged as one of the most popular ways of transferring funds.  

Through NEFT, funds can be electronically transferred from any bank branch to any individual eliminating the need of visiting a bank branch to transfer the funds.

The primary benefit offered by NEFT is the transferring of funds from any account of any branch to any other bank account located at any place across the country.

However, both the receiver and sender branches should be NEFT-enabled.

Under the NEFT system, one-way cross-border transfer of funds from India to Nepal is also facilitated under the Indo-Nepal remittance facility scheme.

NEFT Timings

National electronic fund transfer works based on the deferred settlement which is designated as the transaction which is carried out in batches. The Reserve Bank of India has regularized the NEFT transactions by making them available 24*7 on all days of the year which includes holidays as well.

Earlier common NEFT transactions are available during a time frame of 8 a.m. to 6:30 p.m. only from Monday to Friday.

Who can make NEFT Transactions?

A list of the participating Bank branches is provided by the Reserve Bank of India which is NEFT-enabled. This means that an individual can practice NEFT transactions through the bank branches.

Any individual, firm or corporation holding a bank account with the participating branch can initiate an NEFT transaction anytime.

In an instance of an individual does not hold a bank account, NEFT transaction can be made by making a cash deposit and providing the complete details required. However, the limit of such transactions is capped to ₹50000.

What are NEFT charges?

The recipient or beneficiaries are not charged for the inward transfers. The charges applicable for the remitter for fund transfer are as follows:-

Limit (up to)Fees Applicable
Up to ₹10000₹ 2.50
₹10000 to ₹1 Lakh₹ 5
₹ 1 lakh to ₹ 2 Lakh₹ 15
More than ₹ 2 Lakh₹ 25

What is RTGS?

Real-time gross settlement (RTGS)refers to a fund transfer mechanism allowing the real-time processing and settlement of requests for fund transfers.

Through this system, it can be ensured that the receiver gains access to the funds almost instantly rather than after a specific duration which is the case in some other payment methods.

The settlement of requests under RTGS takes place on instructions basis rather than on a batch-clearing basis. The central bank of the country tracks all the transfers through this method which makes all the successful transfers irreversible.

For initiating an RTGS request, the individual is required to provide certain details to the bank or branch which includes the name of the beneficiary the amount to be remitted, the account number of the beneficiary, account number of the sender, the contact information along with other details if needed such as the IFSC code.

Related Article :- What is PAN or Permanent Account Number?

RTGS Operating Windows

According to the guidelines issued by the Reserve Bank of India, RTGS request can be placed on weekdays which start from 9 a.m. until 4:30 p.m.

On working Saturdays, the timing change is from 9 a.m. to 2 p.m. These timings are provided by the Reserve Bank of India for initiating the transactions.

However, the actual timings might differ depending on the timing they are open to the customers.

What is the limit of RTGS?

Reserve Bank of India has set rules and regulations according to which an RTGS request cannot be initiated for the transactions below ₹2 lakh.

On the RTGS based fund transfer, there are no upper limit restrictions set by the Reserve Bank.

What are RTGS charges?

RTGS requires some charges to be paid to initiate a request and the receiving end of the fund transfer face is no charges.

Fund Transfer LimitFees Charged
₹2 Lakh and ₹5 Lakh₹30
₹5 Lakh₹55

Moreover, as per the new guidelines issued by the Reserve Bank of India, RTGS transactions made between 8 a.m. to 11 a.m. will face no charges.

RTGS transactions initiated between 11 a.m. to 1 p.m. will be charged at ₹ 2 why the transactions initiated after 6 p.m. the charges will be ₹ 10.

Which is better – NEFT or RTGS?

The preference for NEFT or RTGS depends on various factors which are as follows:-

Timing

The facility for initiating NEFT transactions is available 24*7 on all the days of the year including the holidays.

However, the RTGS facility is available on weekdays from 9 a.m. to 6 p.m. only. On working Saturdays, the timing changes and can be initiated from 9 a.m. to 2 p.m.

Limit

There is no minimum order maximum limit for initiating NEFT transactions. However, for initiating RTGS transactions, the minimum limit is 2 Lakhs.

Transfer

The transfer of funds in NEFT is done in batches; this means that the funds are not immediately transferred when the request is made.

In RTGS transactions, the funds are transferred from the sender to the receiver on a real-time basis.

Therefore, after ascertaining these factors, one can determine which fund transfer method is the best for them.

What will happen if NEFT is done after 7 pm?

The Reserve Bank of India has decided to make the NEFT money transaction facility available 24*7 including the holidays on all the days of the year. Until now, the facility of NEFT was not available on banking holidays.

Earlier, the NEFT transactions were selected between 8 a.m. to 7 p.m. the settlement time is 8 a.m. to 1 p.m. on 1st and 3rd Saturday.

Therefore, the NEFT transactions can be initiated even after 7 p.m.

Is NEFT available 24 hours?

Yes, NEFT fund transfer facility is available on all the days of the year at every time of the day.

This means that NEFT transaction can be carried 24*7.

Is NEFT transfer immediate?

NEFT transfer is done in batches as it has fixed batch time slots. Through this, it can take approximately 2 hours for the receiver to receive the funds.

Therefore, the money transfer in NEFT payment is not immediate rather it is done in batches which are done on regular intervals which are not too far apart.

Can RTGS be done at night?

The Reserve Bank of India has issued guidelines regarding the RTGS operating windows. According to the guidelines, RTGS request can be made on weekdays from 9 a.m. until 4:30 p.m.

This timing is a little different on working Saturdays which is from 9 a.m. until 2:00 p.m. However, the actual timings vary to a certain extent depending on the timing they are available to the customer.

Can RTGS be done on Sunday?

RTGS transactions can be initiated or requested from Monday to Friday between 9 a.m. to 6 p.m. and on working Saturdays between 9 a.m. to 2 p.m.

Therefore, these transactions cannot be initiated on Sundays.

Can I transfer 1 crore through RTGS?

As per the Reserve Bank of India, the RTGS money transfer system is primarily for high-value money transfers or transactions.

The minimum amount which can be remitted through RTGS is ₹ 2 lakh with no cap on the maximum limit.

Therefore, any individual wishing to initiate a money transfer request of one crore through Real Time Gross Settlement system can do so.

What is the Fund Transfer?

Fund transfer is designated as the movement of the funds or money from one bank account to another or from the sender to the receiver account.

Fund transfer can be initiated through various modes such as National Electronic Fund Transfer, Real-time Gross Settlement, Immediate Payment Service, Unified Payments Interface, Electronic Fund Transfer, Net banking, Bank transfer, and more alternatives that are available.

What are the advantages and disadvantages of NEFT?

Advantages of NEFT

  • Plenty of advantages are there of the National Electronic Fund Transfer over the other modes of fund transfers which are as follows:-
  • The sender is not required to send a physical cheque or a demand draft to the receiver or beneficiary, thereby reducing the effort and time and making the process seamless and efficient
  • The beneficiary does not have to visit the bank for depositing the cheque or demand draft for receiving the payment
  • It is a safe and secure payment method in which both the parties can be assured of the security without any worry of loss or theft of the physical instruments
  • Under the NEFT system, the confirmation of credit of the transfer is sent by the bank through SMS or email to both the parties
  • The national electronic fund transfer method of initiating a transaction is cost-effective and any individual can initiate or receive it directly at the convenience of their home or workplace through internet banking
  • It is almost a real-time fund transfer system to the beneficiary account in a safe way

Disadvantages of NEFT

Various advantages come along the disadvantages as well. It is important to talk about the negative side of NEFT as well. The disadvantages of NEFT are as follows:-

  • One of the major disadvantages of the national electronic fund transfer in India is that NEFT is a highly technical alternative of transferring funds which might not be easy for everyone to operate. A person having little computer or internet knowledge might find it difficult to operate and access this method.
  • Despite the bank taking proper steps to ensure the security of NEFT transactions using an unsecured browser makes your information prone to be hacked or passed onto a hacker

What are the advantages and disadvantages of RTGS?

Advantages of RTGS

Real-time gross settlement system has plenty of advantages over other modes of money transfer or transaction which are as follows:-

  • It is one of the fastest and the safest mode of interbank money transaction
  • RTGS facility is available to the customers on all the business days with the timings varying from bank to bank
  • It is designated as an immediate fund transfer mechanism which involves the paperless transfer of the funds
  • For depositing the money, the beneficiary does not have to visit the bank, and the funds through RTGS can be transferred with the use of internet banking services as well
  • It does not involve any credit and settlement risk for the recipients as every payment or transaction is settled instantly or in real-time
  • Through the RTGS facility, the customers are enabled to predict the cash flows by knowing when their accounts will be credited and debited
  • RTGS is beneficial for the economy as it involves an instant transaction ensuring fast commerce secure and irrevocable settlements of the business and financial market transactions

Disadvantages of RTGS

With the advantages of RTGS, there are certain disadvantages of the payment system as well which are as follows:-

  • In the real-time gross settlement system, the facility of tracking the transactions by the customers is not available.
  • The Reserve Bank of India has only implemented the positive confirmation feature in which the remitting bank receives a message of fund transfer to the beneficiary Bank from the Reserve Bank of India.

Which is free – NEFT or RTGS or IMPS?

In National Electronic Fund Transfer and Real-Time Gross Settlement systems, a certain amount of fees is charged depending on the number of transactions made through the system.

Moreover, in Immediate Payment Service or IMPS, there is also a certain amount of fee charged depending on the amount of the transaction.

Therefore, none of NEFT, RTGS and IMPS is free of cost. A fee is charged in every transaction made through these systems.

Difference between NEFT and RTGS

The major points of difference between National Electronic Fund Transfer and Real-time Gross Settlement are discussed as follows:-

Basis of DistinctionNEFTRTGS
MeaningNEFT designated as an online fund transfer system from one financial institution to another within the territorial limits of the country.RTGS indicates a system of fund transfer money is transferred from one bank account to another on a gross basis in real-time.
Full formThe full form of NEFT is the National Electronic Fund Transfer.The full form of RTGS is Real Time Gross Settlement
TimingsNEFT transaction can be requested or initiated any time of the day on any day of the year, i.e. 24*7The timings for initiate and RTGS transaction on weekdays is from 9 a.m. until 4:30 p.m. which on working Saturdays is from 9 a.m. to 2 p.m.
Charges/ FeesThe minimum fee charged for NEFT transactions is ₹ 2.5 for a transaction of up to ₹ 10000. The maximum fee charged for NEFT transactions is ₹ 25 for transactions more than ₹ 2 lakhThe minimum fee charged for RTGS transactions is ₹ 30 for a transaction of ranging ₹ 2 lakh to ₹ 5 Lakh. The maximum fee charged for RTGS transactions is ₹ 55 for transactions more than ₹ 5 lakh
Processing timeThe fund transfer or processing time in NEFT is 2 hours which can be a few hours as NEFT is carried out in batchesThe fund transfer or processing time in RTGS is immediate as the funds are settled on a real-time basis as soon as a request is initiated
Minimum and the maximum  transfer amountThere is no minimum and maximum transaction limit for initiating a fund transfer in the NEFT systemIn RTGS system, the minimum amount for initiating a transfer request is ₹ 2 Lakh while there is no cap on the maximum limit of the amount to be transferred.

What is UPI?

UPI or Unified Payments Interface refers to a single platform merging various banking services and features in one roof.

It is designated as an immediate real-time payment system that assists in instantly transferring the funds from one bank account to another through a mobile platform.

In this, a UPI ID and PIN are the only requirements to initiate a transaction. Payment through UPI can be made through a mobile number or a virtual payment address.

Who initiated the Unified Payments Interface or UPI?

UPI was an initiative that was undertaken by the National Payments Corporation of India (NPCI) along with the Reserve Bank of India and the Indian Banks Association (IBA).

The National Payments Corporation of India holster responsibility of handling the RuPay payment infrastructure by allowing different banks to interconnect and transfer the funds.

What is a PIN and UPI ID?

A UPI Id indicates a unique identification of the account holder or user for a bank account that will be used for sending and receiving the funds.

UPI PIN, on the contrary, is a 4-digit personal identification number used while making the payments or bank transfers.

It is entered for authorizing the transfer of money through UPI mode. UPI PIN is chosen or set by the user or account holder. 

How does UPI or Unified Payments Interface work?

  • Through Unified Payments Interface or UPI, the money transfer process has been made much easier and simplified.
  • This method does not require you to remember the receiver’s account number, account type, bank name, and the IFSC code.
  • A money transfer can be initiated only by knowing the registered mobile number with the bank, the Aadhaar number, or the UPI ID.
  • For this, you have to create a UPI ID on any of the apps supporting UPI service.
  • The general structure of a UPI ID is your registered mobile number followed by ‘@’ and the name of the app you are using for the purpose.
  • UPI ID can be set up or created by furnishing your bank account details on the authorized app.
  • You will be sent an OTP for authorization which upon entering will prompt you to create a UPI PIN for your UPI ID.
  • Once the registration process is complete, you can avail the option of transferring money to any mobile number in your contacts or request money from someone. However, the mobile numbers to send money shall be registered with UPI ID as well.

Difference between NEFT and UPI

The major points of difference in NEFT and UPI are discussed as follows:-

Basis of DistinctionNEFTUPI
MeaningNEFT designated as an online fund transfer system from one financial institution to another within the territorial limits of the country.UPI is designated as a digital payment system allowing the users to use multiple bank accounts used in a single mobile application.
Full formThe full form of NEFT is the National Electronic Fund Transfer.The full form of UPI is Unified Payments Interface.
TimingsNEFT transaction can be requested or initiated any time of the day on any day of the year, i.e. 24*7UPI system runs on the mechanism of Immediate Payment Services platform with the service being available 24*7.
Charges/ FeesThe minimum fee charged for NEFT transactions is ₹ 2.5 for a transaction of up to ₹ 10000. The maximum fee charged for NEFT transactions is ₹ 25 for transactions more than ₹ 2 lakhThere is no fee charged for initiating a transaction through the UPI system.
Processing timeThe fund transfer or processing time in NEFT is 2 hours which can be a few hours as NEFT is carried out in batchesThe processing time is immediate in the UPI system as the funds are received by the other party almost as soon as they are transferred.
Minimum and the maximum  transfer amountThere is no minimum and maximum transaction limit for initiating a fund transfer in the NEFT systemThe daily transaction limit through UPI is ₹ 1 Lakh which is much higher than most of the mobile wallets.

What is IMPS?

IMPS or Immediate Payment Service is designated as an instant interbank electronic funds payment transfer system in the country.

This money transfer mechanism was introduced by the Central Bank of India and the National Payments Corporation of India. This mechanism initiated was initiated by NPCI in 2010 with the help of a pilot project with four major banks which has now grown to more than 150 banks.

Regarded as one of the major features of the money transfer mechanism, it is available at all times for use. In case of emergencies, it serves as a great banking platform and enables the instant transfer of funds.

The nominal charges and a transfer limit on the transaction through the immediate payment system. The transfer limit is around ₹ 2 lakh per day. This money transfer mechanism is also available on mobile phones making it super convenient.

The management responsibility of the IMPS fund transfer mechanism is held by the National Payments Corporation of India. The Reserve Bank of India regulates its mechanism alongside.

Features of IMPS

  • It is one of the fastest and reliable methods of conducting inter-account money transfers
  • Along with fast, it is a safe and secure way to receive and send funds
  • The system works both on the net banking as well as mobile platforms with its services being available at all the time
  • It does not necessarily require the bank account number as the transaction can be done through the mobile number and Mobile Money Identifier (MMID)
  • The minimum transaction value allowed is rupees 1 with a transfer limit of up to 2 lakh per day

How to initiate a transaction through IMPS

  • Register for mobile banking or net banking services of your bank account
  • If you are willing to access the IMPS transfer through mobile banking, you are required to have the Mobile Money Identifier (MMID) of the beneficiary and your MPIN.
  • For those willing to transfer money through IMPS net banking mechanism, you require the account details of the payee for paying the beneficiary

Difference between NEFT, RTGS, and IMPS

The major points of difference in NEFT, and IMPS are discussed as follows:-

Basis of DistinctionNEFTIMPS
MeaningNEFT is an online fund transfer system from one financial institution to another within India.It is an instant interbank electronic funds payment transfer system in the country
Full formNational Electronic Fund TransferImmediate Payment Service
TimingsCan be requested or initiated any time of the day on any day of the year, i.e. 24*7Can be initiated round the clock across the year
Charges/ FeesThe minimum fee is ₹ 2.5 for a transaction of up to ₹ 10000. The maximum fee is ₹ 25 for transactions over ₹ 2 lakhNo fees charges for transactions through IMPS
Processing time2 hours which can be a few hoursInstant processing time
Minimum and the maximum  transfer amountThere is no minimum and maximum transaction limit for initiating a fund transfer in the NEFT systemMinimum amount is ₹ 1 with a maximum amount of ₹ 2 Lakh per day.

What is Net banking?

Net banking, internet banking or online banking indicate the facility with the banks and financial Institutions offered to their customers enabling them to use the banking services over the internet.

This eliminates the need of the customers to visit the bank branch office for availing even the smallest services. However, not all account holders get access to internet banking.

To obtain access to internet banking you should register for the facility while you open the account or anytime later.

The facility can be accessed by using the registered customer ID and password required to log into the internet banking account.

Features of Net or Online banking

  • You can check the account statement online conveniently and easily
  • Customers are the option to open a fixed deposit account and make merchant payments as well
  • You have the option to pay utility bills and transfer funds from your account to another
  • The customers can buy general insurance and order for a cheque book through the facility
  • Recharge for prepaid mobile and DTH can also be initiated through net banking

Advantages of Net Banking

  • Net banking services can be availed round-the-clock throughout the year and are not time restricted
  • Services offered by net banking are simple and easy to operate and access which is highly convenient than visiting the bank branch
  • Any transaction you need to initiate can be completed in a matter of few minutes through net banking within no time
  • Activity tracking is easier with Internet Banking as all the transactions made on the bank’s internet banking portal are recorded

Disadvantages of Net Banking

  • Net banking requires an uninterrupted Internet connection. If you do not have internet access, the net banking facilities offered online cannot be used.
  • In case of any technical glitch on the part of bank service, you cannot access the net banking services until it is fixed
  • Despite the precautionary measures taken to secure the online transactions, they are still susceptible to the hackers which cause a major threat to the data
  • Not every bank account holder in India is well aware of the web of the internet. Therefore, understanding the whole system and mechanism can be overwhelming at times
  • Plenty of passwords are there to be entered to access the services in net banking which is revealed to others can lead to some fraud or problems

Difference between NEFT, RTGS, and Net Banking

The major points of difference in NEFT, RTGS, and Net banking are discussed as follows:-

Basis of DistinctionNEFTNet Banking
MeaningNEFT is an online fund transfer system from one financial institution to another within India.Net banking is denoted as the facility to use the banking services over the internet
Full form/ Other namesNational Electronic Fund TransferNet banking, internet banking or online banking
TimingsCan be requested or initiated any time of the day on any day of the year, i.e. 24*7Can be performed at any time of the day on all the days
Charges/ FeesThe minimum fee is ₹ 2.5 for a transaction of up to ₹ 10000. The maximum fee is ₹ 25 for transactions over ₹ 2 lakhThere is no minimum or maximum fee charges on the net banking
Processing time2 hours which can be a few hours as NEFT is carried out in batchesInstant processing time of the transactions
UsesTo transfer money from one bank account to anotherTo transfer money, check account statement, open a fixed deposit account, pay utility bills, and buy general insurance among others

What is EFT?

EFT or Electronic Fund Transfer signifies the system of money transfer from one bank account directly to another bank account. The special feature of the facility is that it does not need any paper money changing hands.

It refers to any transfer of funds that is initiated through the electronic terminal and is used for both credit transfers and debit transfers.

Direct deposit deemed one of the most widely used electronic fund transfer programs in which the payroll can be deposited straight into the bank account of the employee.

Types of EFT

There are certain types of electronic fund transfer or EFT which we have discussed as listed below:-

Direct Deposit – It enables the businesses to make payments to their employees in which the employees specify the financial institution to receive the payment

Wire Transfer – It is generally used for non-regular payments like making a down payment on a house

Automated Teller Machines – ATMs allow the users to withdraw, deposit, transfer funds and check the account balances at multiple locations in which it is set up

Pay-by-phone systems – Payment of bills or transfer of money can be done over the phone through this service

Debit cards – Users have the option to pay for transactions and the money paid will be deducted from the account which is associated with the debit card

Online banking – Online banking can be accessed by users through the internet on various devices

Difference between NEFT and EFT

The major points of difference in NEFT and EFT are discussed as follows:-

Basis of DistinctionNEFTEFT
MeaningNEFT is an online fund transfer system from one financial institution to another within India.Electronic Fund Transfer signifies the system of money transfer from one bank account directly to another bank account.
Full formThe full form of NEFT is the National Electronic Fund TransferThe full form of EFT is Electronic Fund Transfer
TimingsCan be requested or initiated any time of the day on any day of the year, i.e. 24*7Electronic Fund Transfer can be initiated in different forms with specific timings
Charges/ FeesThe minimum fee is ₹ 2.5 for a transaction of up to ₹ 10000. The maximum fee is ₹ 25 for transactions over ₹ 2 lakhThere are no fees or charges for using Electronic fund transfer i.e. it is free of cost
Processing timeThe fund transfer or processing time in NEFT is 2 hours which can be a few hours as NEFT is carried out in batchesThe processing time of transactions is instant with no waiting period. Also, it does not need any paper money changing hands.
TypesNational electronic fund transfer or NEFT does not have any types or variations of it.Types of Electronic fund transfer are direct deposits, wire transfers, automated teller machines, debit cards and online banking among others.

What is Bank Transfer?

Bank transfer is designated as the form of electronic payments in which you can send money directly from one bank account to another.

Working of a bank account transfer is done when an individual instructs the bank to send money directly into another bank account on his or her behalf. This is generally done electronically through online banking.

Bank transfer is a very safe and familiar alternative for the customers who desire to pay online. Moreover, bank transfers are highly accessible with people having access to internet banking.

Above all, a bank transfer is a general term which is used to cover a wide range of credit transfers which include cash payments, giro-payments and wire transfers to the local banks as well.

Any person can initiate a bank transfer through one of the following methods:-

  • Online banking
  • Phone banking or Tele-banking
  • Mailing payment form to the bank
  • Physical visit to the bank for completing the payment form

Bank transfer generally characterized as the initiative of the customer which pushes the payment into the bank account of the seller.

Also, an order is not considered a payment always, as the customers are required to instruct their banks for initiating the payment.

Benefits of bank transfer

A huge number of customers commonly used bank transfer for making payments. It comes along with plenty of benefits which are as follows:-

  • The transactions made through these modes are safe and secure
  • Bank transfers rule out the possibility of payment reversals
  • These payments are fully electronic and are not subject to charge back
  • The bank transfer method is gaining popularity among the customers worldwide due to being customer friendly

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