NEFT vs RTGS: Which is a Better Method for Transferring Money?
NEFT (National Electronic Fund Transfer) and RTGS (Real Time Gross Settlement) enable individuals, firms, and organisations to 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 RBI. 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.
How Does NEFT Work?
NEFT funds transfer process is quite easy and straightforward. The following steps will show you how the entire process of NEFT works and how the funds get transferred:
- Log in to your online banking account.
- As the main page appears, click on the ‘Fund transfer’ option.
- A dropdown menu will appear with several options, and out of them, you have to select ‘NEFT.’
- Make sure to ‘Add beneficiary’ to the beneficiaries list in your account.
- If you are a new member, then click on the ‘Add beneficiary’ option.
- Insert information accordingly like name, bank account number, IFSC code etc.
- Click on ‘Add’ or ‘Confirm’.
- In order to complete the step, you have to enter a One Time Password (OTP) sent to your registered mobile number.
- After this, the action will take around a day or so to get processed and add a beneficiary.
- Select all the details of the beneficiary after the beneficiary is activated on your account.
- Enter your required amount and click on the ‘Confirm’ option.
- After confirmation, the amount will be debited from your account and sent to the creditor.
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. The method of RTGS transfers money instantly after the payer sends it. This transfer method is applicable for high-value transactions.
How Does RTGS Work?
Here’s how RTGS works:
- Sign in to your online personal bank account by inserting the username and password.
- Go to the tab ‘Funds Transfer.’
- Select “Add a beneficiary” and click on “Select Beneficiary Type” for choosing “Transfer to Another Bank.”
- Enter the beneficiary account details, including name, bank, account number, and IFSC code.
- Click on “Add” to confirm.
- Wait until you receive the confirmation message.
- After confirmation, log in to your net banking account.
- In the Netbanking account, go to the Funds Transfer option.
- Select the RTGS option and then select the beneficiary/payee to whom you will transfer the money.
- Enter the amount to be transferred.
- Recheck every detail for one final time before clicking on ‘Submit’.
- After submission, the funds will be credited within 30 minutes of the request.
Also Read: NEFT vs IMPS: A Detailed Comparison Between Payment Methods
Key Differences Between NEFT and RTGS
The major differences between NEFT & RTGS are discussed below:
| Basis | NEFT | RTGS |
| Minimum transferable amount | Re.1 | Rs.2 lakh |
| Maximum transferable amount | No limit | No limit |
| Settlement type | Amount settled in batches | Amount settled one by one |
| Settlement time | Within an hour or two | Instantly |
| Transfer Timings | 24X7, all 365 days | Differs from bank to bank |
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 Rs.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 takes 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. If the amount is huge (more than Rs.2 lakh) and there is urgency, you can go for the RTGS system.
Also Read: 7 Best Payment Apps of 2022
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.
FAQs on Difference Between NEFT and RTGS
Ans: 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.
Ans: 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.
Ans: 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.
Ans: No. The RTGS method of payment is only available through the banks or financial institutions that are RTGS-enabled and situated inside India.
Ans: 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
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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