What is the Difference Between NEFT and RTGS?
Digital payment modes such as RTGS, NEFT and IMPS have made our lives easier than before. Gone are the days when you had to wait for weekdays for the bank to open to withdraw cash. Through these digital modes of payment, you can do transactions within some time at your convenience from any part of the world.
Two of the most used methods of digital payments include NEFT and RTGS. These methods are NEFT and RTGS. Let us discuss these methods in detail in this article.
Table of Contents
Difference Between NEFT and RTGS
In the previous sections, we have discussed NEFT and RTGS in detail. In this section, we will discuss the difference between the two payment methods:
| Category | NEFT | RTGS |
| Purpose | For funds transfers that do not have time dependency | Urgent transfer of funds |
| Bank account requirement | Yes, a person without a bank account can send money through NEFT | No, a bank account is mandatory |
| Minimum Amount Transferable | ₹ 1 | ₹ 2 lakh |
| Maximum Amount Transferable | No limit | No limit |
| Timings | 24×7 | 24×7 |
| Payment Mode | Both online and offline | Both online and offline |
| Settlements | In batches | Individual |
| Time for Transfer to be Completed | Minimum of 2 hours | Instant |
| Transaction Charges | It depends on the bank (as per the limits set by the RBI) | It depends on the bank (as per the limits set by the RBI) |
| Beneficiary Addition | Required | Required |
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What is NEFT?
National Electronic Fund Transfer (NEFT) is an electronic fund transfer system used by Indian financial institutions. It is a half-hourly batch-wise payment format. This means that payments are done in batches all-day 24 x 7. For performing transactions through NEFT, you would need to enter the beneficiary’s details.
How to Transfer Money Through NEFT?
To make a payment through NEFT, you have to follow the below-given steps:
- Log in to the net banking account. You can also use mobile banking applications for NEFT.
- Now, you would need to add the beneficiary. It is the person or entity to which you want to transfer funds. To do so, you would be required to add the following details related to the beneficiary:
- Bank IFSC code
- Bank account number
- Account holder name
- Branch Name
3. After adding the beneficiary, you can send money via NEFT.
Charges on Transactions Through NEFT
| Transaction Amount | Fee Amount |
|---|---|
| Less than or equal to Rs. 10,000 | Rs. 2.5 |
| Between Rs. 10,000 and Rs. 1 Lakh | Rs. 5 |
| Between Rs. 1 Lakh and Rs. 2 Lakh | Rs. 15 |
| Equal to or more than Rs. 2 Lakh | Rs. 25 |
The RBI has released its guidelines in January 2021. According to these guidelines, no banks can levy charges on online fund transfers done through the savings account.
Why Should You Use NEFT for Fund Transfer?
You should use NEFT because of its following benefits:
- Easy and faster way of fund transfer.
- No need for physical instruments and third parties to transfer funds.
- Transfer money anytime from anywhere around the world.
- Real-time transactions.
What is RTGS?
Real-Time Gross Settlement (RTGS) is a find transfer system that allows instant transfer of funds in real-time. These payments are managed by the countries’ central banks and are irrevocable in nature. This system does not use netting debits with credits. These payments are settled individually.
How to transfer money through RTGS?
- You can either log in to your bank account or you can visit your branch for making RTGS transactions.
- Click on the fund transfer option.
- Choose the RTGS option for fund transfer and click on the 'submit' button.
The following information should be available for making an RTGS transaction:
- Name of the beneficiary
- Bank Account number
- IFSC code of the beneficiary’s bank account
- Bank and branch name
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Charges on RTGS Transactions
| Transaction Amount | Charges |
|---|---|
| Up to ₹2,00,000 | Not Applicable (RTGS is not allowed for amounts below ₹2,00,000) |
| ₹2,00,000 to ₹5,00,000 | ₹24.50 to ₹30 + Applicable GST |
| Above ₹5,00,000 | ₹49.50 to ₹55 + Applicable GST |
Why Choose RTGS?
The following reasons make RTGS an efficient method for making transactions:
- You can instantly transfer the amount in a secure manner.
- No need to visit the bank in person for transactions.
- No physical instrument is required for making payments.
Read LaterWhich is better between NEFT and RTGS?
The choice of the payment method depends on the urgency and the amount you need to transfer.
- If you have to make a huge payment, you should choose RTGS.
- In case there is no urgent need to transfer the money and the sum is not large, you may choose NEFT.
Overall, both methods are secure to use since the RBI governs them. These methods will enable you to make payments in a secure manner without the need to visit the bank in person.
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FAQs
What exactly does RTGS stand for?
RTGS is an abbreviation for Real Time Gross Settlement.
Are RTGS payments final and irreversible?
Because the fund's settlement occurs on the books of the Reserve Bank of India, the payments are final and irrevocable.
Can we make NEFT and RTGS transfers from any branch?
No. RTGS and NEFT services are only available in a few bank branches.
Is it possible to cancel NEFT?
Online NEFT is only available during the specified time frame. We are unable to halt or cancel an already initiated NEFT transaction.
Which is free RTGS or NEFT?
Both NEFT and RTGS are free when done digitally. If you try to do it through a branch, then you will have to pay a fee for it.
Is RTGS possible throughout 24 hours?
Yes, it is possible to do RTGS at any time during all days of the week
Can a retail customer transfer 1 crore INR online in a day?
It is not possible since the maximum daily transfer limit is u20b920 lakh from both branch and any digital means.
Can a person who does not have a savings account in the bank request for NEFT?
Yes, a person who does not have a bank account can remit funds through NEFT. This can be done by depositing the cash at NEFT-enabled branches. For this purpose, you will have to submit the details requested by the NEFT member bank.
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