In the world of electronic fund transfers, two popular methods are NEFT RTGS Difference NEFT Vs RTGS(National Electronic Funds Transfer) and RTGS (Real-Time Gross Settlement). Both NEFT and RTGS are electronic payment systems that facilitate hassle-free transactions between individuals, businesses, and banks. However, there are significant differences between the two that every user should understand. In this article, we will explore the distinctions, benefits, and use cases of NEFT and RTGS.

Introduction

As digital banking services continue to evolve, electronic fund transfers have become an integral part of our daily lives. NEFT and RTGS are two popular systems that enable quick, secure, and convenient transfer of funds. Understanding their differences will help you make informed decisions when conducting transactions.

NEFT RTGS Difference

NEFT	RTGS
Operates on deferred net settlement basis	Operates on real-time settlement basis
Funds are settled in batches at predefined intervals	Funds are transferred individually in real-time
Suitable for small and medium-value transactions	Ideal for high-value transactions
No minimum or maximum transaction limit	Minimum threshold for high-value transactions
Lower transaction charges compared to RTGS	Higher transaction charges compared to NEFT
Available during the working hours of bank branches	Available during the working hours of bank branches
Deferred settlement leads to a delay in funds	Instant availability of funds to the recipient
Widely used for salary credits, bill payments,	Suitable for real estate purchases, business payments,
and online shopping	and high-value investments

Note: NEFT stands for National Electronic Funds Transfer, and RTGS stands for Real-Time Gross Settlement.

NEFT: A Brief Overview

How NEFT Works

NEFT is a payment system that operates on a deferred net settlement basis. It allows individuals and businesses to transfer funds electronically from one bank account to another. The sender initiates the NEFT transaction through internet banking, mobile banking, or by visiting a bank branch. The funds are credited to the recipient’s account in batches and settled at predefined intervals.

NEFT Timings

NEFT operates in hourly batches during the working hours of the respective bank branches. While the sender can initiate a transaction at any time, the actual transfer of funds occurs within the NEFT business hours.

NEFT Charges

NEFT transactions are usually subject to nominal charges levied by banks. However, many banks offer NEFT transfers free of cost for certain account types, such as savings accounts.

Advantages of NEFT

• Widely accepted: NEFT is supported by almost all banks and financial institutions in India.
• Convenient: Users can initiate NEFT transactions through various channels, including online banking and mobile apps.
• No minimum transaction limit: NEFT allows for both small and large value transfers.
• Cost-effective: NEFT charges are relatively low, making it an affordable option for individuals and businesses.

Limitations of NEFT

• Deferred settlement: NEFT transactions are settled in batches, leading to a delay in funds reaching the recipient’s account.
• Limited timings: NEFT is available only during the working hours of the bank branches, which may not be suitable for urgent transfers.

RTGS: A Brief Overview

How RTGS Works

RTGS is a real-time payment system that facilitates instantaneous and irrevocable fund transfers. It enables individuals and businesses to transfer large sums of money with immediate settlement. RTGS transactions are processed individually, and the funds are transferred in real-time.

RTGS Timings

RTGS operates during the working hours of the respective bank branches. Similar to NEFT, the sender can initiate an RTGS transaction at any time, but the actual transfer occurs within the RTGS business hours.

RTGS Charges

RTGS transactions are usually subject to higher charges compared to NEFT. The charges vary based on the amount being transferred and the bank’s policies.

Advantages of RTGS

• Real-time settlement: RTGS transactions are processed immediately, ensuring quick availability of funds to the recipient.
• High transaction limits: RTGS allows for large-value transfers, making it suitable for high net worth individuals and businesses.
• Secure and reliable: RTGS ensures the transfer of funds with minimum risk and offers real-time status updates.

Limitations of RTGS

• Costly for small transactions: RTGS charges can be relatively higher, making it less favorable for small-value transfers.
• Restricted timings: Similar to NEFT, RTGS is available only during the working hours of the bank branches.

NEFT Vs RTGS: Key Differences

Transaction Limit

NEFT does not have a minimum or maximum transaction limit, making it suitable for both small and large-value transfers. On the other hand, RTGS is designed for high-value transactions, with a minimum threshold set by banks.

ICICI Credit Card

ICICI Bank is India’s largest private sector bank with total consolidated assets of Rs. 11,242.81 billion (US$ 172.5 billion) at March 31, 2018 and profit after tax of Rs. 67.77 billion (US$ 1.0 billion) for the year ended March 31, 2018. ICICI Bank currently has a network of 4,867 Branches and 14,367 ATMs across India.ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its group companies.

Settlement Time

NEFT operates on a deferred net settlement basis, and the funds are settled in batches at predefined intervals. This results in a delay in the recipient receiving the funds. In contrast, RTGS offers real-time settlement, ensuring instant availability of funds to the recipient.

Transaction Charges

NEFT charges are generally lower compared to RTGS charges. However, the specific charges may vary depending on the bank and the type of account held by the user.

Timings

NEFT and RTGS have similar timings, operating during the working hours of the respective bank branches. However, it’s essential to check with your bank for specific timings as they may vary.

Use Cases

NEFT is commonly used for various purposes, including salary credits, small-value transactions, bill payments, and online shopping. RTGS, on the other hand, is ideal for large-value transactions such as real estate purchases, business payments, and high-value investments.

Conclusion

In summary, NEFT and RTGS are both efficient electronic payment systems, but they differ significantly in terms of settlement time, transaction limits, and charges. NEFT is suitable for small and medium-value transactions with deferred settlement, while RTGS is ideal for high-value transactions requiring immediate settlement. Understanding these differences will help you choose the most appropriate payment system based on your specific requirements.