Understanding The Difference Between NEFT and RTGS

With the increased technical knowledge and introduction of digital payment systems, online Fund Transfers have become the norm. Users have various modes to choose from. However, some time-tested mediums enjoy popularity for inter-bank transfers. They are National Electronic Funds Transfer and Real-Time Gross Settlement. The Reserve Bank of India (RBI) regulated systems enable you to transfer to Savings Account directly.

One thing to note is the speed you get with these traditional systems. They are apt for making quick payments and peer transfers across India. Both offer advantages but have different settlement concepts and are suitable for specific purposes. Understanding this disparity helps in making the proper selection for transferring funds. Consider these factors to understand the

Settlement process

The method of settling payments is the significant RTGS and NEFT difference. The funds get settled hourly in NEFT and get processed in batches on weekdays. The timing varies on Saturdays, and no transfers occur during Sundays and Bank holidays. This processing happens within two hours. RTGS takes place in a specific time slot prescribed by the Reserve Bank of India, but the processing is immediate.

Timing

Getting the timing right is crucial to access these services. As discussed, NEFT gets processed in batches. This happens between 8:00 AM to 6:30 PM on weekdays. The timing varies on Saturdays. RTGS, on the other hand, begins from 9:00 AM and lasts till 4:30 in the evening. These timings change based on the regulations and depending on the bank. Ensure to check the same before online Saving Account opening.

No transfer takes place in both the cases on Sundays and bank holidays. If these transactions fail, the refund procedure varies for NEFT vs RTGS.

Difference between NEFT and RTGS:

Transaction limit

It is crucial to stay mindful of the minimum permissible limit while making transfers to avoid charges. While there is no restriction in NEFT, you require a minimum of Rs. 2 lakh to make transfers using RTGS. This is because it is meant for high-value transactions. As for the upper cap, there is no limit on both payment methods. Hence, opt for RTGS for transferring a considerable amount, whereas NEFT is suitable for regular transfers.

Charges

When you use NEFT to make outward transactions that amount to Rs. 1 lakh, you pay Rs. 5 plus service tax. The fees go up to Rs. 25 plus service tax if the transaction amount exceeds Rs. 2 lakh. Outward transactions in RTGS attract charges of up to Rs. 30 per transaction if the amount is around Rs. 2 lakh to Rs. 5 lakh. You get the exact details when you use these services through banking apps.