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Difference Between NEFT And RTGS

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We all have heard about the terms NEFT and RTGS while dealing with bank transactions. In broader term both these terms are related to electronic money transfer from one banks to another in India. Both NEFT and RTGS mechanism are maintained by Reserve Bank Of India to ensure safety while transferring funds from one bank to another bank. Although both NEFT and RTGS serves the same purpose i.e transferring money from one bank to another but still differs from each other on the ground how it works. Lets have a look how both these systems are different from each other i.e NEFT vs RTGS and how it works?

NEFT

National electronic fund transfer (NEFT), is a system set up by Reserve Bank Of India which process all the interbank money transfer requests in batches. In simple words, when we electronically transfer money from one bank account to another in the same bank, we can see the transaction completes in few seconds and funds get transferred immediately. But that’s not the case if you transfer funds from one bank to another, then it doesn’t get processed at the same time. NEFT processes the interbank money transfer request raised by customers in batches. These batches runs every hour and takes the queued money transfer requests and process them.

Which means when we make a money transfer request using the bank webpage then our request gets queued and fund transfers on next batch run. Currently NEFT runs 11 batches starting from 9:00 am to 7:00 pm, which means the first batch starts at 9:00 am and last runs till 7:00 pm. And money transfer request after last run gets queued and processed next day. The NEFT timings for Saturday are from 9:00 am to 1:00 pm.

ALSO READ : Difference Between IFSC And MICR Code

NEFT Vs RTGS

NEFT vs RTGS

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Normally NEFT transfers done between 8:00 am to 5:00 pm gets processed on the same day else your request will be queued and get processed the next working day.

Lets have an example to understand how NEFT works in real life:-

Monday : Mr. Rohit transferred Rs 10,000 from his ICICI bank account at 11:00am through NEFT to one of his employee Rahul who have bank account in SBI bank. As NEFT transfer request happened between 8:00 am to 5:00 pm the money will be transferred to Rahul’s bank same day on the next batch run and his bank will credit his account with Rs 10,000. If due to some reason the transaction doesn’t took place, the money debited from the ICICI bank will be credited back within 2 hours and Mr. Rohit’s bank.

NEFT Charges

NEFT is a sort of premium services offered by banks for which bank charges fees. Although RBI has instructed banks for the maximum fees they are allowed to charge from there customers for these services but it finally depends on the bank in question. Here are the charges which your bank may charge for NEFT service.

Amount Charges
Upto Rs 10,000 Rs 2.5 (+ Service Tax)
Rs 10,001 to Rs 1 lakh Rs 5 (+ Service Tax)
Rs 100,001 to Rs 2 lakh Rs 15 (+ Service Tax)
Rs 200,001 and above Rs 25 (+ Service Tax)

*With the latest notification from RBI, many banks have waived NEFT charges and some upto Rs,100,000/- nil per day – (Informed By a Reader – Shivaram).

RTGS

Real time gross settlement (RTGS), is an another system to transfer money from one bank to another in real time. Which means the transfer of money happens the same time customer raises the transfer request. This is an another safe mechanism which allows you to transfer money electronically.

Lets have an example to understand how RTGS works in real life:-

Monday : Mr. Rohit transferred Rs 1 lakh from his ICICI bank account at 11:00am through RTGS to Rahul’s who have bank account in SBI bank. In this case ICICI bank will transfer Rs 1 lack to SBI bank instantly and SBI bank will credit the account of Rahul with the same amount immediately.

Bank gets 2 hours to transfer money in case of RTGS which can sometime create a lag of 2 hours in amount transfer through RTGS.

RTGS Charges

RTGS is a sort of premium services offered by banks for which bank charges fees. Although RBI has instructed banks for the maximum fees they are allowed to charge from there customers for these services but it finally depends on the bank in question. Here are the charges which your bank may charge for RTGS services.

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Timings Amount Charges
9:00 am to 12:00 Noon Rs 2 to Rs 5 lakhs Rs 25
9:00 am to 12:00 Noon Above Rs 5 lakhs Rs 50
12:01 pm to 3:30 pm
(12:01 pm to 12:30 pm on Saturday)
Rs 2 to Rs 5 lakhs Rs 26
12:01 pm to 3:30 pm
(12:01 pm to 12:30 pm on Saturday)
Above Rs 5 lakhs Rs 51
After 3:30 pm Rs 2 to Rs 5 lakhs Rs 30
After 3:30 pm Above Rs 5 lakhs Rs 55

Details Required To Make RTGS Or NEFT Transaction?

To make any NEFT or RTGS transfer you will require some information i.e.

  • Amount that needs to be transferred
  • Bank account number which is to be debited.
  • Beneficiary bank name.
  • Name of the beneficiary.
  • Bank account number which is to be credited (beneficiary account number).
  • Indian Financial System Code (IFSC code) of the beneficiary bank branch

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One comment

  1. With the latest notification from RBI, many banks have waived NEFT charges and some upto Rs,100,000/- nil per day.

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