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What is RTGS?  What is NEFT?  

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Rajesh Goyal 



What is RTGS ?


The full form of RTGS is "Real Time Gross Settlement".   RTGS can be defined as  "as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting")



What do you mean by Real Time? What is the Meaning of Gross Settlement"?


Here the words 'Real Time' refers to the process of instructions that are executed at the time they are received, rather than at some later time.  On the other hand "Gross Settlement" means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis).  The settlement  of funds actually takes place in the books of RBI and thus the payments are considered as final and irrevocable.



What is NEFT ?


The full form of NEFT is "National Electronic Funds Transfer (NEFT).  The NEFT is a nation wide payment system facilitating one-to-one funds transfer.   Under this system, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an acount with any other bank branch in the country participating in the system.




Thus, we can say that both RTGS and NEFT are schemes started by RBI for the benefit of the customers which allow accounts holders in the banks to electronically  transfer the funds intra-bank.  In the case of RTGS, settlement in on 'Real Time' basis whereas in case of NEFT the settlement in on batch basis and net basis.   There are some other rules, regulations and differences, which we will be discussing below:-


What are the minimum and maximum amount of remittance under RTGS and NEFT :


                                                                 RTGS                                                 NEFT


Minimum Amount :                           RS 2 lakhs                                               No minimum limit

Maximum Amount :                          No upper ceiling                                     No upper ceiling


(However, maximum amount per transaction is limited to Rs.50,000/- for cash-based remittances and remittances to Nepal.)



What are the operating hours of RTGS and NEFT ?


RBI has prescribed the following operating hours for NEFT : Presently, NEFT operates in hourly batches - there are twelve settlements from 8 am to 7 pm  (Monday through Friday and also on Working Saturdays i.e. Saturdays other than 2nd & 4th Saturdays)..


RBI has prescrbed the following operating hours for RTGS : The RTGS service window for customer's transactions is available from 8.00 hours to 16.30 hours(Monday through Friday and also on Working Saturdays i.e. Saturdays other than 2nd & 4th Saturdays).


However, remember that the timings of both RTGS and NEFT at the bank can vary depending on the customer timings of the bank branches.  Moreover, normally, banks close their own window for accepting the transactions, about 15 minutes before the above time as to allow them to put the transaction in the system so that it reaches by the upper time limit at the RBI window.   Thus, for each bank / branch the above timings may sometimes vary.



What are the processing / service Charges for RTGS and NEFT transactions :


RTGS : (a) Inward Transactions : Free, no charge to be levied;  

            (b) Outward Transactions: Rs 2 lakh to Rs 5 lakh - Not exceeding Rs 30 per transaction; Above Rs 5 lakh - not exceeding Rs 55 transactions;



a) Inward transactions at destination bank branches (for credit to beneficiary accounts) - Free, no charges to be levied from beneficiaries


b) Outward transactions at originating bank branches charges applicable for the remitter

For transactions up to Rs  10,000 : not exceeding Rs 2.50 (+ Service Tax)

- For transactions above Rs 10,000 up to Rs  1 lakh: not exceeding Rs 5 (+ Service Tax)

-  For transactions above Rs 1 lakh and up to Rs 2 lakhs: not exceeding Rs 15 (+ Service Tax)

-  For transactions above Rs 2 lakhs: not exceeding Rs 25 (+ Service Tax)



How Much Time it takes to transfer the funds through RTGS?  I do not see that transfer takes place on real time basis?



In terms of the procedure as laid down by RBI, under RTGS the beneficiary branches are expected to receive the funds on real time basis i.e.  as soon as funds are transferred by the remitting bank.  However, sometimes there may be delays due to processing at the remitting / receiving bank.    RBI has prescribed that the beneficiary bank has to credit the beneficiary's account within 30 minutes of receiving the funds transfer message.      Thus, we do not see the transfers on real time basis but these are credited usually within less than 30 minutes.

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