What is difference between NEFT & RTGS ?

NEFT (National Electronic Funds Transfer) and RTGS (Real Time Gross Settlement) are both payment systems in India that allow electronic funds transfer. They offer convenience and flexibility to account holders but differ in various aspects:

NEFT (National Electronic Funds Transfer)

1. Nature of Transfers:

   • Funds transfer is not real-time.
   • Settlements occur in 23 half-hourly batches throughout the day.

2. Transaction Speed:

   • Slower compared to RTGS.
   • Funds are credited to the beneficiary’s account in a batch process, typically within a few hours.

3. Transaction Limits:

   • No minimum transaction limit.
   • No maximum transaction limit (depends on the bank's specific policies).

4. Availability:

   • Operates during bank working hours.
   • Available on all working days of the bank.

5. Use Case:

   • Suitable for small to medium-sized transactions.
   • Ideal for regular payments like salary, bill payments, etc.

6. Charges:

   • Lower charges compared to RTGS.
   • Charges vary based on the amount being transferred and the bank’s policy.

RTGS (Real Time Gross Settlement)

1. Nature of Transfers:

   • Funds transfer occurs in real-time.
   • Settlements are processed individually as they happen.

2. Transaction Speed:

   • Immediate transfer of funds.
   • Funds are credited to the beneficiary’s account instantly, generally within 30 minutes.

3. Transaction Limits:

   • Minimum transaction limit of INR 2 lakh.
   • No maximum transaction limit (depends on the bank's specific policies).

4. Availability:

   • Operates during bank working hours.
   • Available on all working days of the bank.

5. Use Case:

   • Suitable for large value transactions that require immediate clearing.
   • Commonly used for high-value inter-bank transfers, corporate transactions, etc.

6. Charges:

   • Higher charges compared to NEFT.
   • Charges vary based on the amount being transferred and the bank’s policy.

Summary

• NEFT is best for small to medium transactions and offers batch processing during bank hours.
• RTGS is designed for large value transactions requiring immediate clearing and offers real-time processing.

Both systems require the remitter to have the beneficiary’s bank account details, including the beneficiary’s name and the bank’s IFSC code. Each system has its own advantages, depending on the urgency and amount of the funds being transferred.