What is the Difference Between NEFT and RTGS?

Hey there,

My aunt, who has a home-based bakery, has always told me that she believes inter-bank transfers can be a really beneficial and practical service. She would be able to invoice for her goods and collect money from her customers. She hasn't been able to use these services though since when she tries to transfer money, she frequently becomes perplexed by abbreviations like NEFT, RTGS, and IMPS. She knows what NEFT, RTGS, and IMPS are, but she is unclear of

what is the difference between NEFT and RTGS

. I then made the decision to assist her in comprehending the distinctions between the two terminologies, and here is how I did it.

What is difference RTGS and NEFT?

Differences in RTGS and NEFT can be understood by firstly understanding the meaning of both RTGS and NEFT.

RTGS, or Real-Time Gross Settlement, is an abbreviation. The real-time gross settlement system (RTGS) allows money to be transferred instantly from one lender to another. RTGS is mainly made for large transaction volumes. Therefore, even if there is no cap on the transfer amount, you must send at least INR 2 lakhs at a time. So when the transaction amount is large and payment must be done right away, RTGS is particularly helpful. Similar to NEFT, a typical RTGS transfer requires the beneficiary's name, the account number and type, the bank's name, and the Indian Financial System Code (IFSC) of the bank.

What is the difference between RTGS & NEFT?

The distinction between RTGS and NEFT is best understood in terms of how each payment system handles transactions. The transfers made using RTGS are handled in actual on a transaction-by-transaction basis, as opposed to the half-hourly batches of transactions handled by NEFT. The primary distinction between NEFT and RTGS can be summed up as follows: whereas RTGS transactions are dependent on total settlement, NEFT transactions are dependent on net settlement.

Now let's compare many aspects of NEFT and RTGS to better grasp their differences. They are listed below:

• Transaction Charges: If the transaction is made online with NEFT, there are no fees assessed. However, fees could be charged for offline NEFT transactions made through a bank branch that requests the service. In terms of RTGS transactions, there are no fees associated with this kind of fund transfer.

• Transaction Timings: You can transfer money at any time of day using online RTGS and NEFT operations. Both services are accessible and available around-the-clock, every day of the year. However, because certain banks and their branches are in charge of initiating the transfers, the offline NEFT service is governed by the policies and deadlines of those institutions.

• Transaction Limit: As previously stated, NEFT transactions are not subject to any minimum or maximum transfer limits. It is simple and convenient to transfer amounts ranging from 10 to 1,000,000 INR in a single transaction. There is a minimal restriction of INR 2 lakhs for each transaction using RTGS, though. You can transmit any amount of money as necessary with RTGS because there is no absolute transaction limit. However, it should be remembered that banks may set upper limitations depending on their own sense of risk.

The difference in NEFT vs RTGS

If you were also confused like my aunt, I hope now you are clear and you know

what is the difference between NEFT and RTGS.