What is the difference between RTGS and NEFT?


In the article below understand the basic difference between RTGS and NEFT. Indian economy is widely being operated and controlled by common man using these two banking features.

Created On: Oct 4, 2021 18:24 IST
Modified On: Oct 4, 2021 18:35 IST

Difference between NEFT and RTGS

Indian banking system went digital more than a decade ago and it is still confusing to many who operate it. Digitalization of funds is what is on the Government’s to do list every year with regular improvisation. The article below would provide one an insight into the differences between the two major payment mechanisms used in online banking which is RTGS and NEFT. Read below to know the basic differences between them. 

NEFT and RTGS both stand for National Electronic Funds Transfer and Real-Time Gross Settlement respectively. The similarity between them is that they are both the online mode of transferring money between two parties in a bank or banks. There is however a lot of difference between them.

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Take a look at the table below to understand the major differences between National Electronic Funds Transfer and Real-Time Gross Settlement. 

Difference: National Electronic Funds Transfer (NEFT) vs Real-Time Gross Settlement (RTGS)

NEFT (National Electronic Funds Transfer)

RTGS (Real-Time Gross Settlement)

The NEFT mode is used when the transactions are of smaller values.

RTGS is used in high-value transactions.

The National Electronics Funds Transfer is used for transactions of a required amount to be sent to the recipient’s account without any maximum limit to the funds in one day.

Large amounts of funds can be used to transfer instantly with Real-Time Gross Settlement. The transaction speed is faster than any other form of online payment.

NEFT method does not have a minimum transfer limit ceiling over the amount

In RTGS the minimum amount needed to be transferred has to be of Rs. 2 Lakhs and above

The National Electronic Funds Transfer system was introduced in November 2005.

The Real-Time Gross Settlement system was first started in March 2004 in the country. It was a major technology-based electronic funds transfer system.

The funds are settled on an hourly basis in NEFT

The settlement of funds happens in real time. This means they are processed as they are made.

The funds transferred through NEFT are processed in 12 batches between 8:00 AM to 6:30 PM on weekdays. This timing varies on weekends between 8:00 AM and 1:00 PM. However, no transfers can be done on Sundays and bank holidays.

The Reserve Bank of India has allocated the following time-slots for Real-Time Gross Settlements settlements:

It begins from 9 in the morning to 4:30 in the evening on weekdays and from 9 am– 1:30 pm on Saturdays

NEFT replaced the Special Electronic Fund Transfer (SEFT) system

It did not replace any system.

When NEFT transactions fail or are not processed on time, destination banks are required to return the fund to the originating branch within two hours of completion of the batch in which the transaction was processed

When RTGS transactions fail, the money is credited into the sender’s account once it is received back by the remitting bank. The funds are then returned to the originating bank within one hour or before the end of the RTGS business day or whichever comes first.

We hope that the above table has cleared the difference between the two banking/ money transfer methods in the minds of the readers. 

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