NEFT and RTGS are the two convenient modes of money transfer between banks in India.

# “RTGS” refers to Real Time Gross Settlement, it is  popular fund transfer mechanism which enables the transfer of money between two banks on a “real time” and on “gross” basis. Gross basis means one by one transaction without delay.

# “NEFT” refers to National Electronic Funds Transfer which is an online system for transferring funds. The fundamental difference between RTGS and NEFT which can be clearly understood from the above definitions is that RTGS is based on gross settlement and NEFT is a net-settlement process.

# In RTGS payment transaction will not involve any waiting period which is the true meaning of “real time” settlement. Under normal circumstances the transactions are settled as soon as they are processed by remitting bank. The transaction is settled on one-one basis without clustering any other transaction making it a “Gross settlement”.  NEFT functions on a deferred settlement basis where transactions are completed in batches at specific times.

# another significant factor that differentiates RTGS and NEFT is amount limit. RTGS is for minimum amount of Rs 1 lakH. There is no maximum limit for RTGS transactions. Contrary to that, NEFT is used mainly to transfer funds below Rs 1 lakh, and this system is most commonly used for smaller value transactions i.e  from an amount of rupee 1. However, there is no maximum limit for NEFT.

# In RTGS the beneficiary bank credits the beneficiary’s account in a span of two hours post the receipt of funds transfer. RTGS transactions are processed throughout the working hours of the system. Marking its difference yet again NEFT is done on net basis where the bank clubs transactions together and only the net amount is transferred. This settlement usually takes place 6 times a day on weekdays and 3 times on Saturday.

# Any transfer of funds with in the same bank will be done on real time no matter NEFT or RTGS.

*below Mentioned rates are just an estimates

Normal charges by banks on fund transfer-excluding service tax

NEFT

For transactions up to Rs 1 lakh – maximum Rs 5 
For transactions above Rs 1 lakh and up to Rs 2 lakhs – maximum Rs 15  
For transactions above Rs 2 lakhs – maximum Rs 25

RTGS

For transactions between Rs 2 lakh to Rs 5 lakh - maximum Rs. 30 per transaction.
For transactions above Rs 5 lakh - maximum Rs. 55 per transaction.

Hence, RTGS AND NEFT are same facilities working in two different ways and one can say RTGS is nothing but extended form of NEFT

                                                         SUMIT GERA

                                                    (CA FINAL STUDENT)

                                                         PANIPAT