Difference Between NEFT and RTGS

Electronic transfer of money is growing rapidly due to its speed, safety, simplicity, and ease with the progress of technology.

NEFT vs RTGS

The difference between NEFT and RTGS lies in their basis of settlement. RTGS transactions operate in real-time, and hence it is faster than NEFT. NEFT has its advantages. NEFT allows lower-value transactions and is processed on all days, whereas RTGS transactions are processed on specific days and timings.

Neft, also known as National Electronic Fund Transfer, is an online payment system. It lets the users transfer funds from one bank account to another.

RTGS is also known as Real-Time Gross Settlement. It is an electronic system that enables the transfer of funds in real-time.

Comparison Table

Parameters of Comparison	NEFT	RTGS
Function	NEFT is an electronic system that enables the transfer of small to large sums of money across India.	RTGS is an electronic system that allows the transfer of large sums of money in real-time.
Transfer limit	It requires a minimum transfer value of Rs 1.	It requires a minimum transfer value of Rs 2 lakh.
Speed	It can take up to around 12 hours to complete a transaction.	In Rtgs, transactions happen within seconds. It is considered the fastest mode of transferring funds.
Usage	It is used for small transactions.	It is used mainly for transactions that are of high value.
Introduction	It was introduced in November 2005.	It was introduced in March 2004.

What is NEFT?

 National Electronic Funds Transfer(NEFT) is an electronic system to facilitate the transfer of funds between two bank accounts.The process involved in the Neft transaction are: 

Step 1: Use your login ID and password to log in to your online bank account.

Step 2: Go to the Transfer Section of the NEFT Fund.

Step 3: Enter the recipient name, bank account, and IFSC code.

Step 4: Start an NEFT transfer after the beneficiary is successfully added. Enter the amount and send.

The only requirement is that the depositor and recipient bank accounts should support NEFT transfer. NEFT transfer can be made by an individual, a firm, or a company.

NEFT transactions offer several benefits. Some of them include

• Electronic transfer of funds, i.e., physical presence, is not required
• Simple and easy to use
• Quick and efficient as payment confirmation can be received through SMS or email within minimal time.
• Minimal to no chances of fraud as it is a highly secured method.

What is RTGS?

Real-Time Gross Settlement(RTGS) processes the transaction in real-time. Requirements of RTGS transactions:

• Bank account
• Minimum transaction limit of Rs 2 lakh
• Transactions should be processed within India

Transfer of funds through online mode requires no additional charges. RBI in July 2019 waived all the charges in RTGS transactions.The process involved in RTGS transaction through online mode:

Step 1: Log in to net banking

Step 2: Add details of the recipient account

Step 3: Go to the Transfer tab of RTGS Funds

Step 4: Choose the required amount to be transferred

Step 5: Accept the terms mentioned 

Step 6: Send the online form for RTGS

Following the above-mentioned steps, it will enable the user to transfer funds hassle-free. RTGS transactions are managed by RBI, and hence once the transaction has been processed, it cannot be reversed.

Main Differences Between NEFT and RTGS

1. NEFT is slower than RTGS as NEFT transactions happen in hourly batches as opposed to real-time basis.
2. NEFT transactions operate 24*7, even on holidays, whereas RTGS transactions operated only during working hours.

References

1. https://www.emerald.com/insight/content/doi/10.1108/JMD-04-2017-0144/full/html
2. https://www.indianjournals.com/ijor.aspx?target=ijor:jcmt&volume=7&issue=1&article=012