RTGS and NEFT

The acronyms “RTGS” and “NEFT” stand Real Time Gross Settlement and National Electronics Fund Transfer respectively. The former is a system that enables the transfer of money from one bank to another on a “real-time” and “gross” whereas the latter is an electronic or online system of transfer of money.

The RTGS is considered as the fastest means of transferring money. The “real time” refers to the processing of instruction at the time they are received and “gross settlement” means that money transferred according to the instructions is settled individually. The transfer of money made under this system is irrevocable due to its “real-time” functioning. There is no cap on the amount of money that can be transferred through RTGS. However, the minimum amount required to remitted through RTGS has been set at ?2,00,000/-. Further, the RBI (Reserve Bank of India) has completely waived the processing charges on the RTGS transactions. The RTGS system is mainly supervised and managed by the RBI and is not functional 24x7 but only during a specified number of hours on working days only.

The NEFT was established by the Institute for Development and Research in Banking Technology in 2005 to allow online transfer of money between the NEFT-enabled banks on a one-to-one basis. The NEFT does not allow a real-time transfer of money as the transfer takes place in hourly batches. This system has not set any minimum or maximum amount of money required for the transfer. The NEFT system can be used through internet as well as mobile banking and cash deposits at NEFT enabled branches.