1. National Electronic Funds Transfer (NEFT)
Transfer of funds initiated by electronic means such as an electronic terminal, telephone, computer, or ATM. The NEFT facilitates the process of fund transfer within the same bank or inter-bank transfers. The minimum amount that can be transferred is as low as Rs 100.
NEFT
The acronym “NEFT” stands for National Electronic Funds Transfer. It is an online system for transferring funds from one financial institution to another within India usually the banks). The system was launched in November 2005, and was set to inherit every bank that was assigned to the SEFT (Special Electronic Funds Transfer System) clearing system. It was made mandatory by the RBI for all banks on the SEFT system to migrate to NEFT by mid December 2005. As such, SEFT was discontinued as of January 2006. The RBI welcomed banks that were full members of the RTGS to join the NEFT system.
RTGS
The acronym “RTGS” Stands For ‘Real Time Gross Settlement’. RTGS is a funds transfer system where money is moved from one bank to another in ‘real-time’, and on gross basis. When using the banking method, RTGS is the fastest possible way to transfer money. ‘Real-time’ means that the payment transaction isn’t subject to any waiting period. The transaction will be completed as soon as the processing is done, and gross settlement means that the money transfer is completed on a one to one basis without clustering with another transaction. The transaction is treated as final and irrevocable as the money transfer occurs in the books of the RBI (Reserve Bank of India). This system is maintained by the RBI, and is available during working days for a given number of hours. Banks using RTGS need to have Core banking to be able to initiate RTGS
Minimum/Maximum amount for RTGS/NEFT transactions under Retail Internet Banking
Type
|
Minimum
|
Maximum
|
RTGS
|
Rs. 2 Lakh
|
No limit
|
NEFT
|
No Limit
|
No limit
|
Minimum/Maximum amount for RTGS/NEFT transactions under Corporate Internet Banking
Type
|
Minimum
|
Maximum
|
RTGS
|
Rs. 2 Lakh
|
No limit
|
NEFT
|
No Limit
|
No limit.
|
Time Schedule for RTGS & NEFT services
RTGS transactions will be sent to RBI based on the following schedule:
RBI Settlement Timings for RTGS Transactions
(other than Inter Bank Transactions)
|
Day
|
Start Time
|
End Time
|
Monday to Friday
|
09:00 hrs
|
16:30 hrs
|
Saturday
|
09:00 hrs
|
13:30 hrs
|
· NEFT transactions will be sent to RBI based on the following schedule:
RBI Settlement Timings
|
Day
|
Start Time
|
End Time
|
Monday to Friday
|
09:00 hrs
|
19:00 hrs
|
Saturday
|
09:00 hrs
|
13:00 hrs
|
NEFT transactions are settled in batches based on the following timings:
· Settlements on weekdays at hourly intervals from 9:00 hrs to 19:00 hrs
· Settlements on Saturdays at hourly intervals from 9:00 hrs to 1:00 hrs.
Please note that all the above timings are based on Indian Standard Time (IST) only
Mandatory information for RTGS & NEFT payment
The Remitter has to provide the following details:
· Amount to be remitted
· Account no. to be credited
· Name of the beneficiary bank
· Name of the beneficiary customer
· Sender to receiver information, if any
· IFSC code of the receiving branch.
· Mobile number of the remitter.
The amount will be credited to the account basing on the account number only. As such remitter has should be cautious on the account number while transferring the amounts in electronic mode
Difference between RTGS Vs. NEFT
The fundamental difference between RTGS and NEFT, is that while RTGS is based on gross settlement, NEFT is based on net-settlement. Gross settlement is where a transaction is completed on a one-to-one basis without bunching with other transactions. On the other hand a Deferred Net Basis (DNS), or net-settlement means that the transactions are completed in batches at specific times. Here, all transfers will be held up until a specific time. RTGS transactions are processed throughout the working hours of the system.
RTGS transactions involve large amounts of cash, basically only funds above Rs 200,000 may be transferred using this system. For NEFT, any amount below Rs 200,000 may be transferred, and this system is generally for smaller value transactions involving smaller amounts of money.
RTGS processes in real-time (‘push’ transfer), while NEFT processes in cycles during the given working day. This causes a NEFT transaction that is initiated later than the last cycle to be completed the next day.
So if you want to transfer large sums of money real time RTGS is better but for small amounts where there is not much urgency NEFT is a Better Option. Usually RTGS costs more than NEFT Transactions.
TABLE OF DIFFERENCES BETWEEN NEFT & RTGS
Criteria
|
NEFT
|
RTGS (Retail)
|
Settlement
|
Done in batches (Slower)
|
Real time (Faster)
|
Full Form
|
National Electronic Fund Transfer
|
Real Time Gross Settlement
|
Timings on Mon – Fri
|
8:00 am – 6:30 pm
|
9:00 am – 4:30 pm
|
Timings on Saturday
|
8:00 am – 12:30 pm
|
9:00 am – 1:30 pm
|
Minimum amount of money transfer limit
|
No Minimum
|
2 lacs
|
Maximum amount of money transfer limit
|
No Limit
|
No Limit
|
When does the Credit Happen in beneficiary account
|
Happens in the hourly batch Between Banks
|
Real time between Banks
|
Maximum Charges as per RBI
|
Upto 10,000 – Rs. 2.5
from 10,001 – 1 lac – Rs. 5 from 1 – 2 lacs – Rs. 15 Above 2 lacs – Rs. 25 |
Rs. 25-30 (Upto 2 – 5 lacs)
Rs. 50-55 (Above 5 lacs) (Lower charges for first half of day) |
Suitable for
|
Small Money Transfer
|
Large Money Transfer
|
