Banking has become an indispensable aspect of our daily lives. Many of our responsibilities have gotten much easier to do once they go online. You do not have to go to the bank and stand in huge lines till your turn comes to request a money transfer. You no longer need to fill out cheques, withdrawal papers, or challans. NEFT and RTGS are some of the online money transfer methods that are now in use.
What is the Meaning of NEFT?
The Reserve Bank of India introduced National Electronic Payments Transfer (NEFT) as a method of online funds transfer (RBI). It instantly transfers funds across banks across India. A bank branch must be NEFT-enabled in order for a customer to transfer funds to another party.
Starting with Re.1, you can initiate an NEFT fund transfer. The RBI, on the other hand, has not set a maximum limit for the same. Cash transactions are limited to a maximum of Rs.50,000 per transaction. Furthermore, there is no cap on the total amount you can transfer. Few institutions, such as HDFC Bank, have set their own maximum limit, such as Rs.25 lakh per day per user ID using online NEFT.
Inward transactions for credit to beneficiary accounts at recipient bank branches are free of charge for beneficiaries. Outward transactions at transaction initiating bank branches are charged.
What are the Characteristics of NEFT?
- NEFT is a one-to-one payment system.
- NEFT transactions can only be executed between banks that provide NEFT-enabled services.
- NEFT transactions do not occur in real-time, suggesting that NEFT transactions take a few days to complete.
- All NEFT transactions are subject to a fee, which ranges from an amount of Rs. 2.5 all the way to Rs. 25, depending on the amount transferred.
- Payments made via NEFT are processed and paid in half-hour batches, according to RBI norms.
- Prior to December 2019, the RBI has set times for NEFT transactions to be completed. Any NEFT transaction will be executed only between the hours of 8:00 a.m. and 6:30 p.m., Monday through Friday, and 8:00 a.m. to 12:00 p.m., Saturdays. However, beginning in 2020, NEFT transactions will be available 24 hours a day, seven days a week.
- To transfer cash via NEFT, you must first add beneficiaries to your necessary bank’s internet banking portal.
- The number of NEFT transactions is not limited.
What is the Meaning of RTGS?
Real Time Gross Settlement, which is the RTGS full form – is a funds transfer method that will let the money be transferred from one bank to another in “real-time” and on a “gross” basis. The RTGS system is designed particularly for high-value transactions. The minimum amount that can be transferred via RTGS is 2 lakh rupees, with no higher restriction.
The transaction is settled in “real-time,” which implies there is no waiting period. As soon as the transactions are processed, they are settled. “Gross settlement” means that the transaction is settled one to one without being bundled with any other transaction.
As the payment is recorded in the Reserve Bank of India’s accounts, it is considered final and irreversible. The RTGS transfer system is available all year.
What are the Characteristics of RTGS?
- Transactions done through RTGS are handled one-to-one.
- The RTGS facility is available at all times and on all days of the year.
- The Real Time Gross Settlement method is typically utilized for high-value transactions.
- The RTGS service is available in both online and offline modes.
- To process transactions via RTGS, the following information must be provided:
The amount that will be transferred
Account number at a bank
Name of the Beneficiary
A bank branch
Beneficiary’s IFSC code
Bank branch of the beneficiary
What is the Difference Between NEFT and RTGS?
The primary distinction between RTGS and NEFT is that RTGS is based on gross settlement, whereas NEFT is based on net settlement. Gross settlement occurs when a transaction is completed one-to-one without being bundled with other transactions. A Deferred Net Basis (DNS) or net settlement, on the other hand, indicates that transactions are completed in batches at certain periods. All transfers will be halted until a certain time. RTGS transactions are processed throughout the system’s operating hours.
What Do You Need in Order to Use these Services?
Both RTGS and NEFT online transactions require a savings or current bank account. A person without a bank account, on the other hand, can transmit funds via NEFT. Such a person must deposit cash at the nearest NEFT-enabled bank branch. The transfer can be sent to a beneficiary who has a bank account with another NEFT-enabled institution. Such transactions are subject to a maximum restriction of INR 50,000.
Which Option is Better – NEFT or RTGS?
Understanding the distinction between NEFT and RTGS is critical in determining which mode of transaction is appropriate for you. If you need to initiate big volumes of money transactions in real-time, RTGS is the preferable alternative. NEFT, on the other hand, is the ideal alternative if you need to transfer modest amounts quickly.
Both methods are safe and secure methods of transferring funds, and they are also supervised by the RBI. Both services are easily accessible and available 24 hours a day, seven days a week via bank websites, online banking portals, and mobile applications, which can be downloaded from the Google Play and iOS App Stores on your internet-enabled phones.
So, if you have to pick between these two payment choices, you can do so based on your needs, which are outlined below-
- If you only need to transfer a modest amount and there is no need for the transaction to be completed quickly, you can use NEFT.
- Alternatively, if you need to send a large sum of money quickly, RTGS should be your preferred method of financial transfer.
Is there a shortage of ways you can make online payments today? Definitely not! But, always make sure you choose options that you are good at and are also very trustworthy because it is your money that you are dealing with.