NEFT and RTGS : Banking Awareness For IBPS Exams

Banking Awareness

Introduction about NEFT and RTGS :

NEFT and RTGS : In line with Government reforms, Prime Minister Narendra Modi has pushed Indians to adopt cashless transactions, giving the digital payments sector a significant boost. Digital Payment Systems for Banking like MTSS, NEFT and RTGS are going to occupy the largest part of transactions. With the unmatched jump in growth of E-Commerce in the world, knowledge of these Cashless Transaction modes has become very necessary for aspirants of IBPS, SSC and other banking exams.

The paper instruments popular for transfer of funds are cheques and demand drafts. There are also systems which provide you paperless transactions. A customer just has to give some details for the funds transfer to a bank. The beneficiary or the drawee of payment does not have to move to a bank branch for depositing the paper instruments. The one transferring funds can also initiate the process at home using internet banking. Transactions are secured.

The two popular systems NEFT and RTGS for funds transfer are explained in this article.

You May Also Read : Bharat Bill Payment System 

National Electronic Funds Transfer (NEFT) :

National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. Under this Scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme.

It is an electronic fund transfer system that operates on a Deferred Net Settlement (DNS) basis which settles transactions in batches. By the word ‘batches’ it mean that instructions received for transferring the money will not be done as soon the request is received. So, the settlement takes place with all transactions received till the particular cut-off time.

Example : If you submit your request of transfer of payment at say, 2: 10 PM on any of the week day, the settlement will get started at next batch i.e. 3 PM to 4 PM batch along with all the requests which were submitted in the 2 PM to 3 PM batch.

  • There is no minimum or maximum limit for opting for a NEFT payment system. However, if you do not have an account in a bank, then you can only transfer up to Rs 50,000 per transaction.
  • NEFT payment system is also available to transfer funds to Nepal under Indo-Nepal Remittance Facility scheme. While transferring funds to Nepal, there is a maximum limit of Indian Rupees 50,000 and the beneficiary in Nepal will get them in Nepalese Rupees. Any customer of bank or walk-in-customer can do a transfer of up to Rs 50,000 to Nepal.
  • It is for Small Money Transfer
  • IFSC code is must for NEFT Transfer. IFSC is 11 digit Alpha-Numeric code. It stands for Indian Financial System Code.
  • Banks charge Processing Charges / Service Charges for NEFT transaction.

You May Also Read : Immediate Payment Service

Real Time Gross Settlement (RTGS) :

The acronym ‘RTGS’ stands for Real Time Gross Settlement. Real Time means that the processing of instructions start at same time when they are received and not at some later time. Gross settlement means that the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis) without netting.

  • This is in contrast with the NEFT system in which settlements take place in batches.
  • In contrast with NEFT system, there is a minimum limit of Rs 2,00,000 to be transferred through RTGS. Though there is no maximum limit.
  • It is for large money transfer.
  • IFSC code is must for RTGS transfer . IFSC is 11 digit Alpha-Numeric code. It stands for Indian Financial System code.
  • Banks charge Processing Charges / Service Charges for RTGS transaction.

Differences Between NEFT and RTGS :

Criteria NEFT RTGS
Acronym National Electronic Funds Transfer Real Time Gross Settlement
Arrangement Done in Batches and slower Real-time transfer and faster
working Timings on weekdays & weekends 8:00 A.M – 6:30 P.M(Mon-Fri)

8:00 A.M – 12:30 P.M (Sat)

9:00 A.M – 4:30 P.M(Mon-Fri)

8:00 A.M – 1:30 P.M (Sat)

Transfer Limit Minimum : No Limit

Maximum : No Limit

Minimum : 2 Lakhs

Maximum : No Limit

Credit in Beneficiary Account Happens in hourly batch between banks (It takes 2 to 3 hrs of time) Real-time between the banks
Charges as per RBI up to Rs.10,000 : Rs.2.5

Rs.10,001 to 1 lakh : Rs.5

Rs.1 lakh to 2 lakh : Rs.15

up to 2 to 5 lakhs : Rs.25-30

Above 5 lakhs : Rs.50 – 55

We hope it would have helped for your competitive exam preparation. If you find any error in this article you can report us through commenting section.

Thanks for visiting.!

Team MarksBooster

BHIM App – Bharat Interface For Money Application

Leave a Reply

Your email address will not be published. Required fields are marked *