Key things you must know about NEFT, IMPS, and RTGS before digital money transfer and the key difference between them.

Difference between NEFT, RTGS and IMPS
Mobile Banking or Internet Banking is much popular these days. It has various reasons for its popularity. Some of them are listed below:
  • Ease of payments as it eliminates the waiting in long queues in banks for all kind of transactions. Transfer of funds could be done easily from your home or office on a single click.
  • Faster processing time and most of the times it is instant.
  • It Widers boundaries i.e. no geographical limitations within India for money transfer.
  • Available 24×7, throughout the year including Sundays and bank holidays

In this article, we will try to explore India’s electronic money transfer system i.e. NEFT, RTGS and IMPS. We will also discuss the key differences between them. So keep reading…

NEFT (National Electronic Funds Transfer):

National Electronic Funds Transfer (NEFT) is a nationwide electronic funds transfer system maintained by the Reserve Bank of India (RBI). NEFT enables bank customers in India to electronically transfer funds from any bank branch to any individual having an account with any other bank branch in the country participating in the Scheme. The transactions under the NEFT scheme are settled in batches.

NEFT transactions are done via electronic messages. NEFT settles fund transfers in half-hourly batches with 23 settlements occurring between 8:00 AM and 7:00 PM on weekdays and the 1st, 3rd and 5th Saturday of the calendar month. Any transaction initiated outside this time period would have to wait till the next designated settlement batch. No settlements are made on the second and fourth Saturday of the month, or on Sundays, or on public holidays.

How Exactly The NEFT Transaction Works?

  • The sender will initiate the NEFT transaction with desired money either by visiting the bank or online using mobile banking or internet banking.
  • The originating bank branch prepares a message and sends the message to its pooling center called the NEFT Service Centre.
  • The pooling center forwards the message to the NEFT Clearing Centre managed by Reserve Bank of India. The clearing center would include this mandate for the next available batch.
  • The Clearing Centre sorts the funds transfer transactions destination bank-wise. It also prepares to account entries to receive funds from the originating banks (debit) and give the funds to the destination banks(credit). Thereafter, bank-wise remittance messages are forwarded to the destination banks through their pooling center.
  • The destination banks receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary customers’ accounts.

NEFT Transaction Charges By The Banks:

  • Free for beneficiaries i.e. there won’t be any charges for the beneficiaries under the NEFT transaction.
  • Following charges would be applied to the sender by the bank:
    • Transactions up to ₹10,000 (not exceeding) : ₹2.50 (+ GST)
    • Transactions above ₹10,000 up to ₹1 lakh (not exceeding) : ₹5 (+ GST)
    • Transactions above ₹1 lakh and up to ₹2 lakhs (not exceeding): ₹15 (+ GST)
    • Transactions above ₹2 lakhs: ₹25 (+ GST)

RTGS (Real Time Gross Settlement):

Real Time Gross Settlement (RTGS) is the fastest money transfer system through its banking channel. The Reserve Bank of India (India’s Central Bank) maintains this payment network. In this scheme, the transfer of money takes place from one bank to another on a ‘real time’ (i.e. there is no waiting time) and on ‘gross’ (transaction is settled on a one-to-one basis) basis.

RTGS systems are typically used for high-value transactions that require and receive immediate clearing. The transactions are settled as soon as they are processed. Considering that money transfer takes place in the books of the Reserve Bank of India, the payment is taken as final and irrevocable. The central bank makes adjustments in the electronic accounts of Bank A and Bank B, reducing the balance in Bank A’s account by the amount in question and increasing the balance of Bank B’s account by the same amount.

The RTGS service window for customer’s transactions is available between  8:00 AM and 4:30 PM on weekdays and between 8:00 AM and 01:00 PM on Saturdays ((Except 2nd and 4th Saturday). Transaction through Branches – As per Branch working Hours. No Transaction on weekly holidays and public holidays.

RTGS Transaction Charges By The Banks:

  • Free for beneficiaries i.e. there won’t be any charges for the beneficiaries under the NEFT transaction.
  • Following charges would be applied to the sender by the bank:
    • Transactions of ₹2 lakhs to ₹5 lakhs – up to ₹25 per transaction plus applicable Time-Varying Charges (₹1/- to ₹5/-); total not exceeding ₹30 per transaction, (+ GST).
    • Above ₹5 lakhs – ₹50 per transaction plus applicable Time-Varying Charges (₹1/- to ₹5/-); total charges not exceeding ₹55 per transaction, (+ GST)
    • No time-varying charges are applicable for RTGS transactions settled up to 1300 hrs.

IMPS (Immediate Payment Service):

Immediate Payment Service (IMPS) is an instant interbank electronic fund transfer service available 24×7, throughout the year including Sundays and any bank holiday. It is an initiative of National Payments Corporation of India (NPCI). In the IPMS scheme, the money can be transferred immediately from one account to the other account, within the same bank or accounts across other banks. The beneficiary account is credited immediately when a Fund Transfer request is made either via Mobile Banking or Internet Banking.

IMPS Transaction Charges By The Banks:

  • Free for beneficiaries i.e. there won’t be any charges for the beneficiaries under the NEFT transaction.
  • Following charges would be applied to the sender by the bank:
    • Transactions up to ₹10,000 (not exceeding) : ₹2.50 (+ GST)
    • Transactions above ₹10,000 up to ₹1 lakh (not exceeding) : ₹5 (+ GST)
    • Transactions above ₹1 lakh and up to ₹2 lakhs (not exceeding): ₹15 (+ GST)

Difference between NEFT, RTGS, and IMPS

Since we know about NEFT (National Electronic Funds Transfer), RTGS (Real Time Gross Settlement) and IMPS (Immediate Payment Service) transactions now, let’s try to explore the key differences between them.

  • Fund transfers through the NEFT system do not occur on a real-time basis whereas, in RTGS and IMPS, it happens on a real-time basis.
  • IMPS is not a time-bound service and it is possible to transfer money using IMPS 24 * 7 including public holidays and weekends, whereas NEFT and RTGS are not 24 * 7 service.
  • The maximum transaction limit for IMPS is ₹2,00,000 but there is no maximum limit for the RTGS or NEFT (No upper ceiling for RTGS transactions through Branch, however, for the internet banking or mobile banking the maximum amount of funds that can be transferred per Customer ID per day is Rs. 25 Lakh).
  • Minimum transaction limit should be ₹2,00,000 for RTGS, whereas ₹1 could be sent using the NEFT or IMPS.
  • The RTGS system is suited for low-volume, high-value transactions. It lowers settlement risk, besides giving an accurate picture of an institution’s account at any point of time.

I hope you learned something new in this post. If you know more about these payment services then do mention in the comment section to help the community. You may also consider sharing this post with your friends and family if you find it interesting.

Thank you for reading and God bless you all.

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