RTGS Vs NEFT: Know the Difference

Online banking has always been the preferred choice for tech-savvy individuals and business for sending and receiving funds easily and conveniently. For this purpose, NEFT and RTGS are the two of most common options used today, but how are they different? Let’s find out.

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What is RTGS?

RTGS stands for Real Time Gross Settlement, which also explains its properties:
Real Time: It means that the funds are transferred in real time. In other words- the instructions for the transfer are processed at the same time when they are received rather than later.

Gross Settlement: It means that that the transaction is executed individually and on a gross basis (on an instruction by instruction basis) unlike NEFT, in which transactions are carried in batches.

What is NEFT?

NEFT stands for National Electronic Funds Transfer. Just like RTGS, it’s a service for the transfer of funds from one bank account to another. However, in this, the transactions are executed in batches and usually on an hourly basis.

RTGS vs NEFT

The following are some of the main differences between RTGS and NEFT:

Minimum Transaction Amount: Since RTGS is meant for large transactions, the minimum amount for a transfer has to be Rs. 2 lakh. However, there is no such limit on NEFT transactions.

Charges: NEFT charges can be Rs. 25 tops and those of RTGS can be Rs. 55 tops. In both cases, the charges for transactions made through online banking are generally lower than those made from the bank branches.

Transaction Failures: For RTFS transactions, if for some reason the transfer of funds has failed (say, if the beneficiary account doesn’t exist) then the remitting bank has to transfer the funds back to the originating bank within an hour. For NEFT transactions, the bank has to transfer the funds back to the originating bank within two hours from the completion of the batch in which the transaction was processed.