A bank account is important for everyone. And in recent times, the government has been boosting up digital payments through several measures. Paving way for the growth of a cashless economy, digital money transfers quicken the settlement of payments while promoting transparency, accountability, safety and security in the nation’s financial domain. Due to their popular appeal among the public, businesses, and organizations, digital payments have grown in number. Among the different digital payment systems, RTGS and NEFT are the most popular.
Introduced by The Reserve Bank of India, these two payment systems enable the users to transfer money from one bank account to another with the same bank or with two different banks. Both RTGS and NEFT are based on different settlement concepts and serve different purposes.
What is RTGS
Expanded as Real-Time Gross Settlement (RTGS), this payment system is based on a gross settlement concept in which the payment is credited to the recipient’s account in real time. RTGS is relevant in scenarios where the transaction value is high and the immediate clearing of payment is needed.
What is NEFT
Read as National Electronic Funds Transfer, NEFT is another kind of digital payment system that simplifies one to one funds transfer. NEFT payment system enables transferring funds from the account maintained with any bank to any other bank branch provided the transaction is attempted between the banks that participate in the given payment system. As against the RTGS funds transfer, the fund transfer in NEFT does not occur on a real time basis. The money transferred is settled in half hourly batches.
| Point of comparison | RTGS | NEFT |
| The concept of settlement | Real-time | Half hourly batches |
| Minimum limit of transfer | ₹2 lakh | ₹1 |
| Maximum limit of transfer | Varies from bank to bank | Varies from bank to bank(Nevertheless, the maximum amount transferable per transaction is limited to ₹50,000/- in case of cash-based remittances within India and Nepal under Indo-Nepal Remittance Facility Scheme. |
| Service Timings | Available 365 days 24×7 | Available 365 days 24×7 |
| Transaction Charges | No charges debited for inward transactionsNo charges debited for online transactionsThe charges for outward transactions between ₹2 lakh and ₹5 lakh will not exceed ₹25.The charges for outward transactions above ₹5 lakh does not exceed ₹50.GST is also applicable depending on the case. | No charges debited in case of inward transactions |
| Payment Options | Available online and offline | Available online and offline |
How to choose between RTGS and NEFT
RTGS and NEFT are based on two different concepts namely gross settlement and net settlement respectively. RTGS is the right option for transferring large amounts of money in real-time. In case of transfers involving small amounts where there is no urgency of payment, NEFT is the right option. RTGS and NEFT are safe and secure payment systems that have given impetus to the growth of a cashless, digital economy in India.
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