Difference between NEFT and RTGS: NEFT VS RTGS

All customers having savings and current account are eligible to use NEFT and RTGS services.

Key Takeaways

• NEFT stands for National Electronic Funds Transfer whereas RTGS is short for Real-Time Gross Settlement.
• NEFT is a payment system where the settlement of funds takes place in half-hourly batches.
• RTGS a payment system of continuous and real-time settlement of fund transfers.
• RTGS is preferred for urgent transfer of large amounts.
• NEFT is preferred for transfers that are not time-sensitive.

Introduction

Mrs Lohia runs a home-based bakery and believes that inter-bank transfer can be an extremely useful and convenient service. It would enable her to pay for her supplies as well as receive payments from her clients. But Mrs Lohia has not been able to avail of these services because she often gets confused by the acronyms like NEFT, RTGS, and IMPS while attempting to transfer funds. While she has some ideas, she is unsure of the difference between NEFT and RTGS and IMPS. This article is for Mrs Lohia and others like her. It is to designed to help the likes of her become well-informed bank customers and take optimum advantage of their banking services.

Different ways of transferring money

In India, there are three different ways in which you can transfer money online. These include the National Electronic Fund Transfer (NEFT), Real Time Gross Settlement (RTGS) and Immediate Payment Services (IMPS). All of these are electronic payment systems that allow you to transfer funds from one bank to another within the country. Of these payment systems, NEFT and RTGS are extremely popular, especially among business owners who need to make large amounts of transactions. It is, therefore, crucial to understand the difference between NEFT and RTGS. Let us begin with the meaning of two types of fund transfers.

What is NEFT?

The acronym 'NEFT' stands for National Electronic Funds Transfer. It is a 24*7 available service of funds transfer wherein the transaction gets processed in batches of half an hour. The RBI has not specified any minimum or maximum limit on the transfer amount. All you need to provide is a few details of the beneficiary to initiate an NEFT transfer. The details required for a typical NEFT transfer are the name of the beneficiary, account number and account type, name of the bank, and the Indian Financial System Code (IFSC) of the bank.

RTGS vs NEFT - Which is the Better Method of Transferring Funds

Understanding the difference between NEFT and RTGS is crucial in choosing which method of transaction suits you best. In case you need to initiate transactions of large sums of money in real-time, RTGS is the better option for you. Conversely, if you have to transfer small amounts without any urgency of clearance, NEFT is the better option.

Both the methods are safe and secure systems of funds transfers and are also monitored by the RBI. Both the services are easily accessible and available 24×7×365 via bank websites, internet banking portals, and mobile applications, downloadable from the Google Play and iOS App Store, on your internet-enabled phones.

Do you need a Bank Account for RTGS and NEFT?

A savings account or current bank account is required for online transactions of both RTGS and NEFT. However, a person having no bank account can also send funds through NEFT. Such a person will have to deposit cash at the nearest NEFT enabled branch of any bank. The transfer can be done to a beneficiary having a bank account with another NEFT enabled bank. There is a maximum limit of INR 50,000 for such transactions.

Conclusion

Online transfer of funds is a vital and essential service in the global banking industry. For India, these payment systems have revolutionised the banking sector of the country and given momentum to the growth of a digital and cashless economy. After understanding different methods of transferring funds online and figuring out the NEFT and RTGS difference, Mrs Lohia has also started sending and receiving payments online. In fact, she believes that this push for digitalisation has made her financials more transparent and secure.

With the digibank by DBS app, you can easily and conveniently initiate RTGS and NEFT transactions. All transactions done via the digibank by DBS mobile app are safe and secure.