NEFT vs RTGS – Working, Difference and Which is Better?
NEFT (National Electronic Fund Transfer) and RTGS (Real Time Gross Settlement) enable individuals, firms, and organisations to quickly and securely transfer money from one bank account to another. Although these two systems act quite similar as they are involved in payment activities, there are a few differences between NEFT and RTGS. This article takes you through every detail of NEFT and RTGS and the key differences between them. Read on!
What is NEFT?
The full form of NEFT is National Electronic Funds Transfer. It is an electronic method of funds transfer controlled by the Reserve Bank of India. NEFT takes part in transferring funds from one bank account to another across the country. However, both of the banks must be NEFT-enabled.
Due to the popularisation of online banking, transferring money electronically has been widely used by individuals or companies. Moreover, allocating money online is much more convenient, quick, and safe than traditional payment methods like cash transactions.
How Does NEFT Work?
NEFT is a one-to-one payment facility wherein the transfer of money is settled in 30-minute batches. Meaning, there could be a slight delay up to 30 minutes for the funds to be transferred.
After December 2019, NEFT services are available on a 24x7x365 basis. There’s also no upper limit for the amount to be transferred via NEFT.
The transaction charges of NEFT are capped by the RBI and the transfers come with legal backing. There’s also an RBI provision of penal interest for delay in credit or return of transactions.
The near-real-time transfer facility has a pan-India network and also allows one-way transfers to Nepal.
However, you must add the beneficiary account details through your bank’s net banking or mobile banking services before making an NEFT transfer.
How to Transfer Money Through NEFT?
- Step 1: Log in to your online banking account and click on the ‘Fund transfer’ option
- Step 2: A dropdown menu will appear with several options, and you have to select ‘NEFT’
- Step 3: If you are sending money to a new beneficiary, first click on ‘Add beneficiary’
- Step 4: Insert information accordingly like name, bank account number, IFSC code, etc. of the beneficiary
- Step 5: Click on ‘Add’ or ‘Confirm’
- Step 6: Enter an OTP sent to your registered mobile number to confirm addition of the beneficiary
- Step 7: Wait for around 30 minutes, and check if the beneficiary has been added
- Step 8: If added, click NEFT transaction, choose beneficiary, enter transfer amount and click on ‘Confirm’
- Step 9: Enter OTP sent to your registered mobile number to validate the transfer
- Step 10: If you want to transfer money to an existing beneficiary, jump directly to Step 8 after Step 2
Also Read
What is RTGS?
The full form of RTGS is Real Time Gross Settlement. It is a funds transfer system in which the money is transferred electronically from one bank to another but on a “gross time” or “real-time” basis. RTGS involves instant money transfers for high-value transactions above ₹2 lakh.
How Does RTGS Work?
RTGS is an easy, secured and quick money transfer mechanism that is available to Indian users on a 24×7 basis across the year. The transaction charges are capped by the RBI and they also come with legal backing, making it a highly preferable method of making big-ticket fund transfers.
According to RBI, the RTGS transactions are processed continuously on a transaction-by-transaction basis throughout the day. However, both the originating and the destination bank branches must be a part of the RTGS network.
How to Transfer Money Through RTGS?
Online Process
- Step 1: Login to your bank’s netbanking portal via website or mobile app
- Step 2: Select ‘RTGS’ under ‘Funds Transfer’
- Step 3: Add new beneficiary by entering his/her name, account number and IFSC code if you’re planning to transfer money to a new beneficiary
- Step 4: After beneficiary is added, select RTGS, followed by desired beneficiary
- Step 5: Enter amount (it should be above ₹2 lakh) and click ‘Confirm’
- Step 6: Enter OTP sent to your registered mobile number to validate the transaction
Offline Process
You can also visit your bank to make an RTGS money transfer using an offline method. Steps as follows:
- Step 1: Visit your nearest bank branch
- Step 2: Fll in the RTGS form with all the required details like beneficiary name, account number, IFSC, transfer amount, etc.
- Step 3: Pay the amount via cash or cheque at the branch
Key Differences Between NEFT and RTGS
The major differences between NEFT & RTGS are discussed below:
| Parameter | NEFT | RTGS |
| Minimum transferable amount | ₹1 | ₹2 lakh |
| Maximum transferable amount | No limit, subject to internal daily transfer limits | No limit, subject to internal daily transfer limits |
| Settlement type | Amount settled in batches | Amount settled one by one |
| Settlement time | Within 30 minutes | Instantly |
| Transfer Timings | 24X7, all 365 days | 24X7, all 365 days |
| Transfer Mode | Online and offline | Online and offline |
Charges on Transfers: NEFT vs RTGS
| Type of charges | NEFT | RTGS |
| Inward transactions | NIL | NIL |
| Outward transactions | • For transactions up to ₹10,000: Max ₹2.5 • For transactions between ₹10,000 and ₹1L: Max ₹5 • For transactions between ₹1L and ₹2L: Max ₹15 • For transactions above ₹2L: Max ₹25 *All exclusive of GST | • Outward transaction up to ₹5 lakh: Max ₹25 (exclusive of taxes) • Outward transaction above ₹5 lakh: Max ₹50 (exclusive of taxes) |
NEFT vs RTGS: Which One is Better for Transferring Money?
NEFT and RTGS are two different funds transfer methods. On one hand, NEFT has no such criteria about a minimum or maximum amount limit, on the other, RTGS gives the criteria that you have to transfer a minimum amount of ₹2 lakh when you are making a payment. Therefore NEFT can be used for any type of transaction, whereas RTGS can only be applied for big transactions.
When it comes to timing, NEFT could take a few hours to complete the transaction, but in the case of RTGS, the funds are transferred at once.
If you are wondering which one to choose between NEFT and RTGS, the answer is that it depends on the amount and urgency. If you are transferring a small amount and there is no such hurry, you can select NEFT (or even IMPS or UPI). But if the amount is huge (more than ₹2 lakh), you can go for the RTGS system.
Final Word
Online money transfer methods have made it easier for customers across the country to send and receive money. NEFT and RTGS have many similarities as they are both payment methods, but certain conditions distinguish NEFT from RTGS. Choose any of these money transfer methods depending on the amount needed to be transferred and the urgency.
That said, if you’re looking for urgent cash, you can consider an instant Navi Cash Loan up to ₹20 lakh starting from 9.9% p.a. Just download the Navi app, and get the loan amount transferred to your bank account in a few minutes, subject to terms and conditions.
FAQs
NEFT has no limit on the minimum or maximum amount to be transferred through it. But, while making NEFT cash transactions, the maximum amount you can transfer is Rs.50,000.
The timings for RTGS transactions differ from bank to bank. Hence, you have to read the terms and conditions of every bank to figure out the exact RTGS timings.
There are various methods available for money transfer. They are RTGS, NEFT, IMPS, UPI and digital wallet. All of them are online methods so sending money through them is more quick and convenient.
No. The RTGS method of payment is only available through the banks or financial institutions that are RTGS-enabled and situated inside India.
There are three types of channels through which NEFT transactions occur. They are:
– Internet Banking – Send money from your computer
– Mobile Banking – Send money via a mobile app
– Branch – Visit the nearest bank and fill out an NEFT form
NEFT stands for National Electronic Funds Transfer while RTGS stands for Real Time Gross Settlement.
In terms of outward transactional charges, NEFT could be cheaper than IMPS and RTGS. Please note, the minimum transfer amount for RTGS is ₹2 lakh.
There’s no daily maximum limit for NEFT transfers. However, do check for internal transfer limits by banks and customers before making an NEFT transfer.
There’s no daily maximum limit for RTGS transfers. Some banks might have a maximum internal daily limit of ₹25 lakh or ₹50 lakh for online transactions; however, if the RTGS transaction is done through a bank branch, there is no upper RTGS limit.
Yes, applicable RTGS transaction charges carry 18% GST.
Personal Loan in Your City
