RTGS vs NEFT

Context: The Reserve Bank of India (RBI)  has announced that the money transfer facility, RTGS, will be available round the clock, 24 hours a day. The announcement comes after the RBI made the NEFT facility available 24X7 from 2019.

Concept:    

National Electronic Funds Transfer (NEFT) is an online system used for transferring small to large amounts of money from one financial entity to another within India.

Real-Time Gross Settlement (RTGS) is a funds transfer system where funds of high quantity are transferred from one bank to another in ‘real-time’ and on a gross basis.

Differences between NEFT and RTGS

• National Electronics Funds Transfer, transactions of any amount can be sent to the recipient’s account without any maximum limit to the funds that can be sent in a day. Large amounts of funds can be used to transfer instantly with Real-Time Gross Settlement. The transaction speed is faster than any other form of online payment.
• The National Electronic Funds Transfer method does not have a minimum transfer limit ceiling. The minimum amount needed to be transferred has to be of Rs. 2 Lakhs and above for RTGS
• The settlement of funds happens on a half-hourly basis The settlement of funds is instantaneous and happens in real-time
• The NEFT mode is used when the transactions are of smaller values. RTGS is used in high-value transactions.