Neft vs. RTGS

Attribute	Neft	RTGS
Meaning	National Electronic Funds Transfer	Real Time Gross Settlement
Transaction Speed	Slower	Faster
Settlement Type	Deferred Net Settlement	Gross Settlement
Transaction Limit	No upper limit	Higher limit
Transaction Cost	Lower	Higher
Availability	Available 24x7	Available during banking hours
Usage	Commonly used for small value transactions	Commonly used for large value transactions

Introduction

When it comes to electronic funds transfer systems, two popular options that are widely used in banking and financial sectors are NEFT (National Electronic Funds Transfer) and RTGS (Real Time Gross Settlement). Both NEFT and RTGS provide a convenient and secure way to transfer funds between bank accounts, but they differ in several key attributes. In this article, we will explore and compare the attributes of NEFT and RTGS to help you understand their differences and choose the most suitable option for your needs.

Transaction Processing

One of the primary differences between NEFT and RTGS lies in their transaction processing mechanisms. NEFT operates on a deferred net settlement basis, which means that transactions are processed in batches at specific intervals throughout the day. This can result in a slight delay in the transfer of funds, as the actual transfer occurs only when the batch is processed. On the other hand, RTGS operates on a real-time basis, where transactions are processed individually and settled immediately. This ensures that funds are transferred in real-time, making RTGS a preferred choice for time-sensitive transactions.

Transaction Limits

Another important attribute to consider when comparing NEFT and RTGS is their transaction limits. NEFT has a relatively lower transaction limit, typically ranging from a few thousand to a few lakhs, depending on the bank's policies. This makes NEFT suitable for smaller value transactions. On the contrary, RTGS has a significantly higher transaction limit, usually starting from a few lakhs and going up to several crores. This makes RTGS more suitable for large value transactions, such as high-value business payments or real estate transactions.

Transaction Charges

Transaction charges are an essential aspect to consider when choosing between NEFT and RTGS. NEFT transactions are generally charged at a nominal fee, which varies from bank to bank. The charges for NEFT transactions are often fixed, regardless of the transaction amount. On the other hand, RTGS transactions usually have higher charges compared to NEFT. The charges for RTGS transactions are often a percentage of the transaction amount, making it more expensive for larger value transfers. Therefore, if you frequently make high-value transactions, the transaction charges associated with RTGS should be taken into account.

Transaction Timings

The timings for NEFT and RTGS transactions are another attribute that sets them apart. NEFT transactions can be initiated and processed during the working hours of the bank, which are typically from 9:00 AM to 6:00 PM on weekdays and 9:00 AM to 1:00 PM on Saturdays. However, NEFT transactions are not available on Sundays and bank holidays. In contrast, RTGS transactions can also be initiated and processed during the working hours of the bank, but they have extended timings compared to NEFT. RTGS transactions can be made from 9:00 AM to 4:30 PM on weekdays and 9:00 AM to 1:30 PM on Saturdays. Similar to NEFT, RTGS transactions are not available on Sundays and bank holidays.

Availability and Accessibility

NEFT and RTGS also differ in terms of their availability and accessibility. NEFT is available to all individuals and businesses holding a bank account in India. It can be accessed through various channels, including internet banking, mobile banking, and visiting the bank branch. This makes NEFT widely accessible to a large number of users. On the other hand, RTGS is typically available to individuals and businesses holding a bank account with a higher minimum balance requirement. RTGS transactions can be initiated through internet banking, mobile banking, or by visiting the bank branch. However, due to the higher minimum balance requirement, RTGS may not be as accessible to all users as NEFT.

Settlement Process

The settlement process is another attribute that distinguishes NEFT and RTGS. NEFT transactions are settled in batches, where the funds are transferred from the originating bank to the destination bank in predefined batches. This batch settlement process can result in a slight delay in the transfer of funds, especially if the transaction is initiated close to the batch processing time. On the other hand, RTGS transactions are settled individually and in real-time. This means that the funds are transferred immediately from the originating bank to the destination bank, ensuring quick and efficient settlement.

Conclusion

In conclusion, NEFT and RTGS are both electronic funds transfer systems that provide a convenient and secure way to transfer funds between bank accounts. However, they differ in several key attributes, including transaction processing, transaction limits, transaction charges, transaction timings, availability, accessibility, and settlement process. NEFT operates on a deferred net settlement basis, has lower transaction limits, lower transaction charges, and specific transaction timings. On the other hand, RTGS operates on a real-time basis, has higher transaction limits, higher transaction charges, extended transaction timings, and may have higher accessibility requirements. Understanding these attributes will help you choose the most suitable option based on your specific requirements and preferences.