NEFT vs RTGS: What’s the Difference?

Transferring money between bank accounts is now simpler than ever with online payment options like NEFT and RTGS. Depending on how much you want to send and how quickly you need it to reach the recipient, you can choose the best method for your needs.

In this blog, we’ll break down NEFT and RTGS, making it easy for you to understand the differences and pick the right option for your money transfers.

Difference Between NEFT vs RTGS

The following are the key differences between NEFT and RTGS-

Understanding NEFT- National Electronics Funds Transfer

What is NEFT?

NEFT is a nationwide payment system developed by the Reserve Bank of India (RBI) to facilitate the transfer of funds from one bank account to another, regardless of the location of the banks. It operates in batches, with transactions settled in a single batch at specific intervals throughout the day.

Key Features

• Timings: NEFT transactions are processed in batches, and the system operates 24×7, including holidays. However, settlements typically occur in half-hourly batches.
• Transaction Limit: There is no upper limit on the amount that can be transferred through NEFT, though individual banks may impose their own limits.
• Processing Time: Transfers are usually completed within a few hours, but settlement may take up to one business day.
• Fees: Banks may charge a nominal fee for NEFT transactions, though many offer it for free.

How It Works

1. Initiation: The sender initiates the transfer request through their bank, either via an online banking platform, mobile app, or at a branch.
2. Batching: NEFT transactions are grouped into batches at regular intervals (e.g., every half hour).
3. Settlement: Transactions are processed and settled in batches. The amount is credited to the recipient’s bank account within a few hours, but it can take up to one business day.

Details Needed for Transferring Funds via the NEFT System

To transfer funds through NEFT, the following beneficiary details are required:

1. Full name of the beneficiary
2. Name of the beneficiary’s bank branch
3. Name of the beneficiary’s bank
4. Type of the beneficiary’s account (savings/current, etc.)
5. Beneficiary’s account number
6. IFSC code of the beneficiary’s branch
7. Legal Entity Identifier (LEI) for both sender and beneficiary (for applicable transactions)

NEFT Charges on Transactions

NEFT transactions involved the following additional charges as money transfer fees until December 2019-

Understanding RTGS- Real-Time Gross Settlement

What is RTGS?

RTGS is an electronic payment system developed by the Reserve Bank of India (RBI) to facilitate real-time and secure transfer of large sums of money from one bank account to another. Unlike NEFT, which processes transactions in batches, RTGS processes transactions individually and in real-time.

Key Features

• Timings: RTGS operates 24/7, throughout the year, including weekends and holidays.
• Transaction Limit: There is no upper limit on the amount that can be transferred via RTGS. However, the minimum amount that can be transferred is usually ₹2 lakh.
• Processing Time: Transactions are processed and settled instantly, making it a faster option for transferring large sums of money.
• Fees: As per RBI guidelines, the charges for RTGS transactions are capped at:

• For transactions between ₹2 lakh to ₹5 lakh: Maximum charge is ₹24.50 + GST.
• For transactions above ₹5 lakh: Maximum charge is ₹49.50 + GST.
• Banks are allowed to charge lower fees but cannot exceed these limits set by the RBI.

How It Works

1. Initiation: The sender initiates the RTGS transaction through their bank, either via online banking, mobile app, or at a branch.
2. Real-Time Processing: The transaction is processed in real-time, meaning funds are immediately transferred from the sender’s account to the recipient’s account.
3. Settlement: The transfer is settled individually and instantaneously, without waiting for batch processing.

To initiate an RTGS remittance, the customer must provide:

• Amount to be transferred
• Account number to be debited
• Name of the beneficiary’s bank and branch
• IFSC code of the receiving branch
• Name of the beneficiary
• Beneficiary’s account number
• Any sender-to-receiver information, if applicable
• Sender and Beneficiary Legal Entity Identifier (for eligible transactions)

RTGS Charges on Transactions 

The following charges are applicable on transactions made through RTGS-

NEFT vs RTGS: Which is Better?

NEFT: Flexible and Cost-Effective for Daily Transfers

NEFT is perfect for everyday transactions, whether it’s paying bills, transferring money between your own accounts, or sending funds to others. With no minimum amount requirement, NEFT handles both small and large transactions effortlessly. This flexibility makes it a go-to option for personal and business use alike.

Available 24/7, including weekends and holidays, NEFT lets you transfer money at any time that suits you. Plus, for online NEFT transfers from savings accounts, banks no longer charge fees, making it a cost-effective choice for regular users.

When to Use NEFT:

• For day-to-day transfers, regardless of amount.
• When timing isn’t urgent but you need reliable service.
• To save on fees, especially for online savings account transactions.

RTGS: Fast and Reliable for Large, Urgent Transfers

RTGS is designed for those moments when you need to transfer a significant amount of money instantly. With a minimum transaction value of ₹2 lakhs, RTGS is ideal for high-value transfers such as property purchases, large business transactions, or urgent payments.

Since RTGS works in real-time, the funds are transferred immediately, giving you peace of mind when time is of the essence. This system is also available 24/7, including weekends and holidays, ensuring that important transfers can happen at any time, even outside of regular banking hours.

When to Use RTGS:

• For high-value transfers above ₹2 lakhs.
• When immediate settlement is required.
• For secure, real-time payments in critical situations.

Irrespective of whichever method you choose, it is important to note that both these methods are equally safe and secure and are governed by the Reserve Bank of India. Both NEFT and RTGS are reliable payment systems that support the digital, cashless initiative in building an advanced economy in the country.