What Makes NEFT And RTGS Different From Each Other?

by shashankbhaskar

Online Banking is a blessing. It has brought a world of convenience, from transferring and receiving funds to paying bills online. This money transfer is possible using simple and effective payment systems like real-time gross settlement, national electronic fund transfer, and Immediate Payment Service. The Reserve Bank of India maintains these systems, which are applicable for transferring money to any corner of the country.

Let us understand the difference between NEFT and RTGS in detail.

Turnaround time

Under the RTGS system, funds are transferred in real time, i.e., when the transfer request is received. RTGS is the fastest money transfer mode available through Indian banking channels, with the beneficiary receiving the fund credit within minutes. On the other hand, NEFT is also a swift mode but operates on a deferred settlement basis, and fund transfers are settled in batches, i.e., in hourly slots, not in real-time.

Requirement of Bank Account

Customers can avail of NEFT and RTGS systems with a Current or Savings Account. While individuals who do not have a Bank Account cannot avail of RTGS services, they can still deposit cash at NEFT-enabled bank branches. Note that such NEFT Remittances are restricted to Rs. 50,000 per transaction.

Minimum transaction amounts

While no minimum amount can be sent using the NEFT payment solution, the RTGS facility is meant for transactions of larger values. This is a significant RTGS and NEFT difference. Retail customers need to remit a minimum of Rs. 2 lakh on every RTGS transaction. Since RTGS was specially designed for large payments to and for businesses, transactions below Rs. 2 lakhs are disallowed.

Associated charges

On average, you get charged a small amount of Rs. 25, excluding the service tax on every transaction done via NEFT. However, for an RTGS transfer, you need to pay approximately Rs. 55 with an additional service charge. Customers who use the Banking app for both NEFT and RTGS are typically charged a lower fee than those who carry out the NEFT transaction through the bank branches.

Option for stop payment

Both RTGS and NEFT solutions do not offer the option for stop payment instructions. Since the transactions under RTGS happen in real-time and the settlement takes place immediately in the books of the RBI, the payments made are considered irrevocable. Meanwhile, NEFT transfers are made in hourly slots, and there is still no facility for the sender to give any instructions to stop the payment if the transaction has already been initiated.

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