NEFT vs RTGS Key Differences Explained: Transaction Limits Settlement Time and More

One of the central pillars of Digital Public Infrastructure is India’s digital payments ecosystem, which has been one of its main components. While the highest number of transactions in India is seen by the National Payments Corporation of India-backed Unified Payment Services Interface (UPI) – which has been reported as being at least 50%, average transaction value remains relatively low. The traditional digital payment methods are still used for high-value transactions, and people continue to use the same method of . With the majority of private owned and state-owned financial institutions in India expanding their online banking service portfolio, most digital transaction settlement systems (including Real-Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT) and Immediate Payment Service (IMPS) are now on your phone. However, each settlement system has some core differences with its predecessor, .

Hence, here is everything you need to know about the two transaction settlement systems NEFT and RTGS (maximum and minimum transaction value limits, settlement times, and their advantages).

What is RTGS?

In March 2004, the RTGS payment settlement system was introduced by the Reserve Bank of India (RBI) as part of its decision to implement an RGS payments settlement scheme. The system first allowed the transfer of money between banks. In August 2004, RTGS was live to settle payments between one customer’s bank account and another. RGS is the process of initiating high-value transactions in India, usually with a transfer value greater than Rs. a 2 lakh , with the aim of saying “I’m in love” The RBI books the transfer in its own books when a transaction is completed to prevent discrepancies from being transferred.

RTGS Benefits

1. There is no maximum transaction value limit set by the RBI.
2. The RBI claims that it is a “safe and secure” fund transfer system.
3. It is available on mobile banking apps and internet banking portals.
4. You can visit your bank’s branch and use a physical cheque or a demand draft to initiate transactions.
5. You do not have to visit your bank’s branch to receive the funds.
6. You do not have to worry about financial losses or theft, as there is no cash involved.
7. The RBI claims that the chances of fraudulent withdrawals are limited.
8. The RBI has imposed an upper limit on the transfer fee that a bank charges.
9. RTGS transactions have legal backing.

What is NEFT?

NEFT is another payment settlement system that allows users to transfer money to their peers, and was launched in 2005 by the RBI as one of the first payments on its own. The RBI owns and operates a centralised nationwide payment system, which is known as the “centralised” national payment scheme of s. NEFT, for the most part, is generally used to transfer low-value transactions with a relatively lower maximum transaction value limit.

This is also the only option for online transactions, where you can initiate through the mobile banking apps on your phone or internet banking portals via your laptop or PC. You can also pay your EMIs or repay other loans with NEFT.

NEFT Benefits

1. Similar to RTGS, NEFT is also available at all hours of the day throughout the year.
2. It offers “near-real-time” fund transfer to the beneficiary account.
   Paraphrasing 3. A secure way to transfer money to the accounts of your peers is also NEFT, which can be legal under RBI support.
3. NEFT allows you to transfer money across the country to all types of banks.
4. Visiting your bank branch is not required for to do so. It’s also possible to transfer money from your home, where you can be at the comfort of your house.
   Paraphrasing 6. Transfer fee is relatively low and varies by bank, but it does not apply for the transfer fee. NEFT transactions online are free, even if you have a savings bank account.
5. You can also transfer money to Nepal.

Key Differences Between RTGS and NEFT

Payment Settlement Time

RTGS: The transactions below Rs. 10 lakh are transferred instantly.

NEFT: It offers “near” real-time payment settlement. The transaction is made within hours.

Minimum and Maximum Transaction Value

RTGS: The RBI has set a minimum transaction value limit of Rs. 2 lakh. However, there is no maximum limit.

***NEFT **NEF No minimum transaction value limit is there, however. Similarly, some banks have specific restrictions on NEFT transactions so it’s best to check with your bank before starting a transaction. ** **

Transaction Fee

RTGS: Banks levy a transaction fee between Rs. 25 and Rs. 50, depending on the transaction value.

NEFT: Banks charge a fee between Rs. 2.5 and Rs. 25, depending on the transaction value.

Operating Hours

Bank and public holidays are all days of the year, with 24 hours a day for settlement services such as NEFT (the service that provides financial support) and RTGS.

FAQs

1. What is the minimum amount I can transfer using RTGS?

The RBI allows you to transfer a minimum amount of Rs. 2 lakh.

2. What is the maximum amount I can transfer using NEFT?

You can transfer up to Rs. 2 lakh using NEFT.

3. Does my bank support RTGS and NEFT transactions?

Both are centralised transaction settlement systems available at all banks across India.

4. Can I transfer money through RTGS and NEFT on public holidays?

In fact, both NEFT and RTGS are available at all hours of the day throughout the year even on public holidays. But if you go to your bank’s branch and start RTGS transactions, it would be impossible on bank holidays.