Now-a-days NEFT and RTGS are frequently used terms. You often hear people talking about these jargons. Let us understand these terms.
National Electronic Funds Transfer (NEFT) is an electronic fund transfer service managed by RBI wherein the transfer can be done amongst the banks in any city on deferred net settlement basis. This service can be availed by any individual, firm or a corporate maintaining an account with a bank to transfer funds from his bank to another NEFT-enabled bank branch.
Real Time Gross Settlement (RTGS) is a facility managed by RBI wherein the funds transfer is done on real time basis unlike NEFT wherein the funds are settled batch-wise. Currently, it is the fastest available mode of funds transfer between two different bank accounts.
All of us remember those days when it takes minimum one week to transfer the funds from one city to another. With big round of development in technology in banking industry, such transfers now takes only few minutes. Reserve Bank of India, the apex regulator of the banking industry in India has introduced these two mechanisms to handle both inter and intra city funds transfer.
NEFT settlement is done in hourly batches with twelve batches between 8 AM and 7 PM available on weekdays i.e. Monday to Friday and six batches on Saturday’s between 8 AM and 1 PM. With this facility, the time consumed to transfer funds has been drastically reduced from the time taken to transfer through traditional methods such as cheque and demand drafts. A person can expect to get the funds transferred via NEFT on the same day in all the batches except for the last two on any day and for the remaining, the funds are normally credited in the morning of the next day. If for any reason, the funds are not credited into the beneficiary’s account, then they are returned within two hours and the sender receives the money back in almost three to four hours’ time.
RTGS funds are settled on real time basis and the beneficiary bank has to settle the funds in maximum two hours’ time and therefore two hours is the maximum time in which a person can complete the transaction of funds.
The minimum limit of funds transfer in RTGS is Rs. 2 Lakhs and there is no maximum limit. The RTGS service can be performed on all the six working weekdays and the timings being 9.00 AM to 4.30 PM on weekdays and 9.00 AM to 1.30 PM on Saturdays.
The transaction charges for NEFT and RTGS vary from bank to bank, however banks cannot charge more than what is stipulated by the RBI. All inward movements are free however charges stipulated for outwaard transactions are as These are mentioned below:
For RTGS
Rs. 2 Lakhs to Rs. 5 Lakhs: Not exceeding Rs. 30 per transaction.
Above Rs. 5 lakhs: Not exceeding Rs. 55 per transaction.
For NEFT
For transactions up to Rs. 10,000 : Not exceeding Rs. 2.50 (+ Service Tax).
For transactions above Rs. 10,000 and up to Rs. 1 Lakh: Not exceeding Rs. 5 (+ Service Tax).
For transactions above Rs. 1 Lakh and up to Rs. 2 Lakhs: Not exceeding Rs. 15 (+ Service Tax).
For transactions above Rs. 2 Lakhs: Not exceeding Rs. 25 (+ Service Tax).
Thus comparing the two, NEFT is more suitable for transferring smaller amount of funds i.e. below Rs. 2 Lakhs whereas RTGS is meant for funds greater than Rs. 2 Lakhs, as it is faster and is settled on real time basis.
