NEFT & RTGS Explained

With the advent of technology life has definitely became simpler (and of course complicated), banking sector has witnessed huge amount of changes in terms of its functionality and even in terms of serving the customers in much better ways by providing ATM’s which eradicates the pain of visiting the branch and standing in line for withdrawing money, Internet Banking helps us in knowing the details of your account, transferring funds online (both within the same bank & to another bank in India), Mobile banking and many more.

Today I would like to discuss about transferring funds online through NEFT (National Electronic Funds Transfer) or RTGS (Real-Time Gross Settlement) both offered under the set guidelines of RBI (Reserve Bank of India) for electronic funds transfer.

What is NEFT?

As per RBI “NEFT (National Electronic Funds Transfer) is a payment system which helps one in doing one-to-one funds transfer. People (individuals, firms and corporate houses) can transfer funds electronically from their respective bank account to anyone’s bank account with any other bank or branch in the country”.

What is RTGS?

The acronym RTGS (Real-Time Gross Settlement) itself is self-explanatory which deals with transactions between any bank/branch account to any bank/branch account (like as NEFT) where as with RTGS the process takes place in real-time and once the request is placed it will completed within few minutes.

How NEFT is Different When Compared to RTGS?

The basic difference between NEFT & RTGS is NEFT funds transfer gets done in hourly batches as defined by RBI, at the time of this writing 12 hourly settlements are being done from 8 am to 7 pm during weekdays (Monday to Friday) and in 6 hourly settlements between 8 am to 1pm on Saturday whereas in RTGS the transaction are dealt individually and will be settled down in real-time during business hours.

Charges for NEFT

• For Inward transactions it is Free.
• For Outward transactions the following charges are applicable (as per RBI)
  • For transactions up to Rs . 10,000  – Maximum permitted amount is Rs 2.50 (+ applicable Service Tax)
  • For transactions above Rs. 10,000 up to Rs.  1,00,000 – Maximum permitted amount is Rs. 5 (+applicable Service Tax)
  • For transactions above Rs. 1,00,000 and up to Rs. 2,00,000 – Maximum permitted amount is Rs. 15 (+applicable Service Tax)
  • For transactions above Rs. 2,00,000 – Maximum permitted amount is Rs. 25 (+applicable Service Tax)

Charges for RTGS

• For Inward transactions it is Free.
• For Outward transactions the following charges are applicable (as per RBI)
  • For transactions above Rs. 2,00,000 to Rs. 5,00,000 – Maximum permitted amount is Rs. 30 per transaction.
  • For transactions above Rs. 5,00,000 – Maximum permitted amount is Rs. 55 per transaction.

Important Points To Remember for NEFT/RTGS

• For NEFT, there is no restriction on the amount to transfer with in India; however there is a restriction for remittances to Nepal and the maximum amount permitted per transaction is Rs. 50000.
• For RTGS, the minimum amount is Rs. 2,00,000 and no restrictions on upper limit.
• You can also initiate RTGS/NEFT transactions by submitting the remittance form in your home branch; it is not just restricted as an online activity.
• You need the following for doing a NEFT/RTGS transaction successfully.
  1. Beneficiary’s Account Number
  2. Beneficiary’s name as per bank records
  3. Beneficiary’s Bank Name
  4. Beneficiary’s Branch Code or IFSC Code

You can learn more about the process and the way you should follow to transfer funds in coming series of articles.

Guys, do share your knowledge on NEFT/RTGS with the fellow readers and help them in gathering maximum information, on the other hand also shoot your questions (if you have any) related to this topic through the comments section and we will reply you back promptly with the required information.

PS: For more details on NEFT & RTGS check these links of RBI.