The Indian Banking System has introduced a range of cashless transaction methods to transfer our money securely and conveniently from one place to another. It includes both online and offline methods. But the most common methods for cashless online transactions provided by the Reserve Bank of India are NEFT and RTGS. Online transfer using NEFT or RTGS is comparatively faster than transfers through cheque or DD. Online transfer can be done from anywhere using internet facility.
National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS) allow individuals, companies and firms to transfer money from one bank to another. These facilities can only be used for transferring money within the country. Both these systems are maintained by the Reserve Bank of India.
RTGS allows us to transfer money on a real-time basis which means that beneficiary bank processes the request for fund transfers as soon as the request is received, it is not bunched with any other transaction and settlements of funds transfer instructions happen individually. Under RTGS, the beneficiary bank is liable to process the request within 30 minutes of receiving the message. It is one of the fastest facility to transfer funds to the banks in India.
Whereas NEFT operates on a deferred net settlement (DNS) basis which means that transactions are completed in batches at a specific time. The batches are settled in hourly time slots. In DNS, the settlement takes place with all transactions received till the particular cut-off time. Any transaction initiated after a designated settlement time would have to wait until the next settlement time.
On the contrary, under RTGS, transactions are processed continuously throughout the RTGS business hours.
What amount can be transferred?
There is no minimum amount for transfer through NEFT, however, RTGS facility is available for large amount transactions. For retail customers, the minimum amount remitted through RTGS is 2,00,000.
What are the charges applicable?
As per RBI guidelines, banks can only charge for outward transfer of funds and not on receipt of funds. For transfers through NEFT, charges vary from Rs 5-25 according to the amount. Banks cannot charge more than Rs 5 for any transfer up to Rs 1 lakh, Rs 15 for Rs 1-2 lakh and Rs 25 for those above Rs 2 lakh. Under RTGS, you have to pay Rs 25 for Rs 2-5 lakh and Rs 50 for anything above Rs 5 lakh. Bank charges are lower in internet banking as compared to transactions done through the bank.
NEFT operates in specific hourly batches. Currently, it has 11 settlements from 9 am to 7 pm on weekdays and five settlements from 9 am to 1 pm on Saturdays. So, any transactions initiated after the settlement time will be automatically transferred to the next settlement time. But RTGS transactions are processed constantly throughout the RTGS business hours.
The service window for RTGS at banks is available from 9 am to 4.30 pm on weekdays and from 9 am to 1.30pm on Saturdays for settlement at the RBI end. Under RTGS transactions are more prompt and is best when funds are to be transferred immediately.