In today’s world, transferring money safely and quickly is essential. The RBI has two widely used electronic fund transfer systems: National Electronic Funds Transfer and Real-Time Gross Settlement. Both are convenient and secure but serve different purposes based on transaction speed, limits, and suitability.
If you are wondering what is NEFT and RTGS, this guide will help you choose the best one for your needs.
What is NEFT?
NEFT is an e-payment system that allows the transfer of funds between bank accounts. You can transfer any amount with no minimum or maximum transfer limit, making it suitable for small payments. Settlements occur in batches; transactions are processed in slots, meaning there might be a slight delay in fund transfers. NEFT operates round the clock, including weekends and holidays.
What is RTGS?
RTGS is a high-value transaction system where funds are instantly transferred and settled individually. It is best for urgent transactions requiring immediate clearance. The minimum transfer amount is ₹2 lakh. RTGS is ideal for large-value transactions. Money is credited to the recipient’s account in real time, ensuring immediate availability.
Although banks have limits, RTGS allows large transactions. Like NEFT, RTGS also operates around the clock, making it convenient for businesses and individuals.
Difference between NEFT and RTGS
The difference between NEFT and RTGS lies in transaction speed, minimum amount requirements, and processing methods. NEFT fund transfers are processed in batches, causing a delay in fund transfers, whereas RTGS transactions are settled in real-time, which is best for urgent payments. NEFT has no minimum or maximum limit and is suitable for small and medium transactions.
Meanwhile, RTGS requires a minimum transfer amount of ₹2 lakh, making it the preferred option for high-value transactions. While most banks do not charge extra for online NEFT or RTGS transactions, there may be nominal charges for branch transactions. In terms of security, both methods are highly secure and regulated by the RBI.
NEFT vs RTGS: Which one should you use?
When comparing NEFT vs RTGS, it depends on your transaction needs. NEFT is the better option as it has no minimum transfer limit and is widely used for everyday transactions. RTGS is preferred since it offers immediate fund transfers and ensures the money is credited in real-time. RTGS is ideal for transferring large amounts between businesses and suppliers or for property deals.
NEFT helps with payroll processing, vendor payments, and routine transfers. NEFT is best if you frequently send small amounts to friends, family, or service providers.
Conclusion
NEFT and RTGS are reliable and convenient fund transfer methods. If you need fast and high-value transfers, RTGS is your best bet. For smaller, non-urgent transactions, NEFT is a cost-effective and efficient option. Before choosing a method, consider your transaction's urgency, amount, and purpose to make the best decision.
