NEFT (National Electronic Funds Transfer) and RTGS (Real Time Gross Settlement) are electronic fund transfer mechanisms used in India. Here are five key differences between NEFT and RTGS:
Transaction Timing:
NEFT: NEFT operates on a deferred net settlement basis, meaning transactions are processed in batches and settled at fixed intervals. NEFT transactions are settled in hourly batches during the working hours of the bank.
RTGS: RTGS, as the name suggests, operates on a real-time basis. Transactions in RTGS are settled individually and immediately upon processing, providing real-time fund transfer.
Minimum and Maximum Transaction Limits:
NEFT: NEFT typically has lower minimum and maximum transaction limits compared to RTGS. The maximum limit for NEFT transactions can vary from bank to bank.
RTGS: RTGS is generally used for high-value transactions, and it usually has higher minimum and maximum transaction limits compared to NEFT.
Settlement Process:
NEFT: Settlement in NEFT occurs in hourly batches, and the actual fund transfer might take some time depending on when the transaction is initiated.
RTGS: Settlement in RTGS is immediate, and the funds are transferred in real-time as soon as the transaction is authorized.
Timing of Operation:
NEFT: NEFT is available for customers on all working days of the banks, including Saturdays, except for the second and fourth Saturdays of the month and bank holidays.
RTGS: RTGS operates during the working hours of the banks on all working days, including Saturdays, except for the second and fourth Saturdays of the month and bank holidays.
Transaction Cost:
NEFT: NEFT transactions are usually charged at a lower cost compared to RTGS transactions. The charges may vary between banks.
RTGS: RTGS transactions are generally associated with higher transaction charges due to the real-time nature and immediate settlement.
Both NEFT and RTGS are electronic payment systems used for transferring funds between banks, but they cater to different types of transactions based on the urgency, amount, and timing requirements of the users. Users should choose the appropriate system based on their specific needs and the associated transaction costs.