Difference Between RTGS And NEFT

1. National Electronic Funds Transfer (NEFT)

Transfer of funds initiated by electronic means such as an electronic terminal, telephone, computer, or ATM. The NEFT facilitates the process of fund transfer within the same bank or inter-bank transfers. The minimum amount that can be transferred is as low as Rs 100.

NEFT

The acronym “NEFT” stands for National Electronic Funds Transfer.  It is an online system for transferring funds from one financial institution to another within India usually the banks). The system was launched in November 2005, and was set to inherit every bank that was assigned to the SEFT (Special Electronic Funds Transfer System) clearing system. It was made mandatory by the RBI for all banks on the SEFT system to migrate to NEFT by mid December 2005. As such, SEFT was discontinued as of January 2006. The RBI welcomed banks that were full members of the RTGS to join the NEFT system.

RTGS

The acronym “RTGS” Stands For ‘Real Time Gross Settlement’.  RTGS is a funds transfer system where money is moved from one bank to another in ‘real-time’, and on gross basis. When using the banking method, RTGS is the fastest possible way to transfer money. ‘Real-time’ means that the payment transaction isn’t subject to any waiting period. The transaction will be completed as soon as the processing is done, and gross settlement means that the money transfer is completed on a one to one basis without clustering with another transaction. The transaction is treated as final and irrevocable as the money transfer occurs in the books of the RBI (Reserve Bank of India). This system is maintained by the RBI, and is available during working days for a given number of hours. Banks using RTGS need to have Core banking to be able to initiate RTGS

Minimum/Maximum amount for RTGS/NEFT transactions under Retail Internet Banking

Type	Minimum	Maximum
RTGS	Rs. 2 Lakh	No limit
NEFT	No Limit	No limit

Minimum/Maximum amount for RTGS/NEFT transactions under Corporate Internet Banking

Type	Minimum	Maximum
RTGS	Rs. 2 Lakh	No limit
NEFT	No Limit	No limit.

Time Schedule for RTGS & NEFT services

RTGS transactions will be sent to RBI based on the following schedule:

RBI Settlement Timings for RTGS Transactions (other than Inter Bank Transactions)
Day	Start Time	End Time
Monday to Friday	09:00 hrs	16:30 hrs
Saturday	09:00 hrs	13:30 hrs

·         NEFT transactions will be sent to RBI based on the following schedule:

RBI Settlement Timings
Day	Start Time	End Time
Monday to Friday	09:00 hrs	19:00 hrs
Saturday	09:00 hrs	13:00 hrs

NEFT transactions are settled in batches based on the following timings:

·         Settlements on weekdays at hourly intervals from 9:00 hrs to 19:00 hrs

·         Settlements on Saturdays at hourly intervals from 9:00 hrs to 1:00 hrs.

Please note that all the above timings are based on Indian Standard Time (IST) only

Mandatory information for RTGS & NEFT payment

The Remitter has to provide the following details:

·         Amount to be remitted

·         Account no. to be credited

·         Name of the beneficiary bank

·         Name of the beneficiary customer

·         Sender to receiver information, if any

·         IFSC code of the receiving branch.

·         Mobile number of the remitter.

The amount will be credited to the account basing on the account number only. As such remitter has should be cautious on the account number while transferring the amounts in electronic mode

Difference between RTGS Vs. NEFT

The fundamental difference between RTGS and NEFT, is that while RTGS is based on gross settlement, NEFT is based on net-settlement. Gross settlement is where a transaction is completed on a one-to-one basis without bunching with other transactions. On the other hand a Deferred Net Basis (DNS), or net-settlement means that the transactions are completed in batches at specific times. Here, all transfers will be held up until a specific time. RTGS transactions are processed throughout the working hours of the system.

 RTGS transactions involve large amounts of cash, basically only funds above Rs 200,000 may be transferred using this system. For NEFT, any amount below Rs 200,000 may be transferred, and this system is generally for smaller value transactions involving smaller amounts of money.

RTGS processes in real-time (‘push’ transfer), while NEFT processes in cycles during the given working day. This causes a NEFT transaction that is initiated later than the last cycle to be completed the next day.

So if you want to transfer large sums of money real time RTGS is better but for small amounts where there is not much urgency NEFT is a Better Option. Usually RTGS costs more than NEFT Transactions.

TABLE OF DIFFERENCES BETWEEN NEFT & RTGS

Criteria	NEFT	RTGS (Retail)
Settlement	Done in batches (Slower)	Real time (Faster)
Full Form	National Electronic Fund Transfer	Real Time Gross Settlement
Timings on Mon – Fri	8:00 am – 6:30 pm	9:00 am – 4:30 pm
Timings on Saturday	8:00 am – 12:30 pm	9:00 am – 1:30 pm
Minimum amount of money transfer limit	No Minimum	2 lacs
Maximum amount of money transfer limit	No Limit	No Limit
When does the Credit Happen in beneficiary account	Happens in the hourly batch Between Banks	Real time between Banks
Maximum Charges as per RBI	Upto 10,000 – Rs. 2.5 from 10,001 – 1 lac – Rs. 5 from 1 – 2 lacs – Rs. 15 Above 2 lacs – Rs. 25	Rs. 25-30 (Upto 2 – 5 lacs) Rs. 50-55 (Above 5 lacs) (Lower charges for first half of day)
Suitable for	Small Money Transfer	Large Money Transfer