What is NEFT and RTGS – Difference Between NEFT and RTGS online funds transfer?

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NEFT and RTGS are the two convenient modes of money transfer between banks in India.

The acronym “RTGS” refers to for Real Time Gross Settlement, it is a unique and     popular fund transfer mechanism which enables the transfer of money between two banks on a “real time” and on “gross” basis.

“NEFT” is the abbreviation for National Electronic Funds Transfer which is an online system for transferring funds between financial institutions. This system was introduced in 2005 and is highly improved version of EFT (Electronic Funds Transfer) which was confined to a select centre.

•The fundamental difference between RTGS and NEFT which can be clearly educed from the above definitions is that RTGS is based on gross settlement and NEFT is a net-settlement process.

•RTGS is the swiftest money transfer system through the banking channel as it is done in real time (‘push’ transfer), while NEFT being net based is comparatively slower than RTGS.

•In RTGS payment transaction will not involve any waiting period which is the true meaning of “real time” settlement. Under normal circumstances the transactions are settled as soon as they are processed by remitting bank. The transaction is settled on one-one basis without clustering any other transaction making it a “Gross settlement”. The transaction is considered irrevocable as the money transfer occurs in RBI records. NEFT functions on a deferred net settlement (DNS) basis where transactions are completed in batches at specific times. These settlements takes place at a particular point of time and all transactions are held up till that time

•Another significant factor that differentiates RTGS and NEFT is fixing a floor limit. RTGS is an exclusive message based transfer mechanism for an amount over Rs 2 lakhs i.e the minimum amount to be remitted through RTGS is Rs.2 lakhs. There is no upper ceiling for RTGS transactions. Contrary to that, NEFT is used mainly to transfer funds below Rs 2 lakhs, and this system is most commonly used for smaller value transactions involving smaller sum of money i.e from an amount as minute as one rupee. However, there is no maximum limit for transfers through NEFT.

•In RTGS the beneficiary bank credits the beneficiary’s account in a span of two hours post the receipt of funds transfer message. RTGS transactions are processed throughout the working hours of the system. Marking its difference yet again NEFT is done on net basis where the bank clubs transactions together and only the net amount is transferred. This settlement usually takes place 7 times a day on weekdays and 3 times on Saturdays. NEFT takes place within the same day if it is within the cut-off time and the next working day if it is beyond the prescribed cut-off time.

•Majority of the commercial banks have employed RTGS and it  is available in over 30472 numbers of branches while the count of banks which have purchased the software required to facilitate NEFT based transaction are over 89 and NEFT facility is available at approximately 32407 branches of banks in India. These branches may be available in remote corner of country also.

Hence, RTGS and NEFT though distinct in their functionality and process, are unique and similar in their ultimate service which is now rendering plethora of advantages making the easiest service available in service sector industry across globe.

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{ 61 comments… read them below or add one }

Anjaneya May 29, 2011 at 6:04 am

Hi Sathish, thanks for providing useful information regarding RTGS and NEFT. But I have a doubt regarding the minimum transaction amount under RTGS. I believe it is Rs 2 lacs. Please find the link below:

http://www.rbi.org.in/scripts/FAQView.aspx?Id=65

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Sathish Emmadi May 29, 2011 at 9:23 am

Hi Anjaneya,

Many thanks for this. It seems the minimum amount limit for RTGS has been increased by RBI now. The post has been updated.

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mir armaan ali June 28, 2011 at 9:38 am

i am running a technical support process for australia and using paypal for realisation of funds
is there a possibility i can get the fund transferred from customers in australia via a safe and sound way without a hassle

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Kaushik Patel August 15, 2011 at 7:55 am

Thanks,
Satish for valuable information.
Your information helps me a lot.
Thanks a ton.

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Sathish Emmadi August 15, 2011 at 8:42 am

Hi Kaushik,

Thanks. Keep visiting the site.

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DEBARCHAN KHETI February 7, 2012 at 10:44 am

can we send more than 2 lacs through NEFT ?

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Eskay February 14, 2012 at 12:41 pm

Yes but the money shall reach it’s destination later than RTGS

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Swati September 2, 2011 at 8:09 am

hi,
Can NEFT or RTGS be used to do international money transfer transactions?
If not then what is used in that case?

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Vishaal March 24, 2012 at 7:03 am

NEFT or RTGS is not useful to do international money transfer transactions. But SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a worldwide network for its members those are banks in different countries to exchange money transfer for their customer.

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Sukumar September 20, 2011 at 9:40 am

hi sathish,
me also having the same doubt as Swati…..Please explain elaborately about this….. well..thank u for providing useful information regarding NEFT and RTGS …….

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Praveen Maddi September 23, 2012 at 7:12 am

No, we cant..
because NEFT and RTGS are Low value clearing and high value clearing which are in INDIA diameter and money transfer through IFCS code.

Low and high value clearing are differs from county to country

if u want use international money transfer, go to TTC ( Telegraphic Transfer) money transfer through SWIFT code.

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Sathish Emmadi September 20, 2011 at 5:17 pm

Hi Swati and Sukumar,

RTGS and NEFT are only for domestic inter bank transfers. For international money transfers you will need to contact your bank as the process varies from bank to bank.

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Sivakumar.S September 21, 2011 at 10:38 am

Hi sathish.
I have a small doubt ie: Is IFSC, NEFT and RTGS codes will be one and the same??

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Sathish Emmadi September 21, 2011 at 3:36 pm

Hi Sivakumar,

Yes. IFSC is Indian Financial System Code, which is used to identify a bank’s branch. NEFT and RTGS are modes of transferring money, which use IFSC codes. Hope it’s clear.

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Eskay February 14, 2012 at 12:56 pm

If the funds required to be remitted are passengers,
the IFSC code is the destination.
And RTGS & NEFT are the vehicles to reach it.

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vikash September 27, 2011 at 12:06 pm

where can i get detailed study about NEFT?

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vikash September 27, 2011 at 12:07 pm

seems to be very good site and is definitely helpful

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Sathish Emmadi September 29, 2011 at 4:36 pm

Hi Vikash,

Please check RBI site. You may find more info on NEFT and RTGS in archives.

Thanks, keep visiting the site.

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Phaniraj October 17, 2011 at 4:22 am

Very much useful
Thanks for the information.

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Surya October 20, 2011 at 2:18 pm

Hi Sathish,

It’s good information…….

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aryan January 7, 2012 at 1:22 pm

if i want to transfr 5000 to 10000 than which is best
can i transfer with both..??
can i register for both of type in hdfc bank or i have to select between one them ..??

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Eskay February 14, 2012 at 1:08 pm

Sorry Bro!
Amounts less then Rs. 2 lac can be sent through NEFT only.

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Sathish Emmadi January 8, 2012 at 1:46 pm

Hi Aryan,

You can’t send the amounts mentioned through RTGS. You will need to choose NEFT. For RTGS minimum transfer amount should be Rs 2,00,000

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Prashanth Sadashiva January 9, 2012 at 10:32 am

Hi Satish,

Thanks for the Information.

Is there any difference in charges between NEFT and RTGS.

RTGS transfer happens through Swift messages…Does this transactions happen through Clearing house…please clarify..

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Sathish Emmadi January 9, 2012 at 6:00 pm

Hi Prashanth,

The charges are same as far as I know. For ex: HDFC charges Rs 5 upto 1 Lakh,Rs 15 from 1Lakh to 2 Lakhs and Rs 25 above 2 Lakhs in NEFT mode. It charges Rs 25 for RTGS transactions.

It should be noted that most of the banks don’t charge anything for salary accounts.

RBI acts as intermediary in all the transactions.

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MuhamedHarif pattalathil January 12, 2012 at 10:09 am

HAI SATHISH
ihave a doubt regarding the minimum amount for rtgs

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Sathish Emmadi January 12, 2012 at 3:20 pm

Hi Harif,

It’s 2 Lakh now. earlier it was 1 Lakh. Hope it helps.

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shahnawaz February 2, 2012 at 12:42 am

how much money is deducted when i transfer the money up to 1 lakh from HDFC bank to third party….

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SHIVA February 3, 2012 at 9:29 am

can I transfer eg. rs.200 from my account to another account through NEFT. using net

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Sathish Emmadi February 6, 2012 at 10:49 am

Hi Shiva, Yes you can transfer.

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Sathish Emmadi February 6, 2012 at 10:51 am

Hi Shahnawaz,

It actually depends on the type of accunt you hold and your agreement with the bank. Usually HDFC charges Rs 5 for normal accounts.

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prem February 9, 2012 at 5:54 pm

could you please tell me how to cancel last transaction

please tell me

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SANTHI February 11, 2012 at 6:27 am

hi sathish,

if i transfer any funds through” rtgs or neft” is any number to be given by the bank for that transaction for the futere reference.

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SANTHI February 11, 2012 at 6:36 am

hi satish,

after regestered with any bank they give any stamp to us (means whether registered party is a company or individual) .because one of our client put a stamp on payment voucher regarding neft or rtgs transaction.

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Sathish Emmadi February 13, 2012 at 5:01 pm

Hi Santhi,

Yes, a reference number is given by the bank for future reference.

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Anil Kumar February 17, 2012 at 5:44 am

Hai,
I hv one doubt.I will do cash transfer(amount rs 1000/-) from hdfc to sbt through hdfc netbankig.Which i select transation type (NEFT/RTGS)?
Pls revert me..
Regards,
Anil

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Stock tips intraday February 17, 2012 at 9:03 am

Choose whatever you prefer.
NEFT is an electronic fund transfer system that operates on a Deferred Net Settlement (DNS) basis which settles transactions in batches. In DNS, the settlement takes place with all transactions received till the particular cut-off time. These transactions are netted (payable and receivables) in NEFT whereas in RTGS the transactions are settled individually. For example, currently, NEFT operates in hourly batches – there are eleven settlements from 9 am to 7 pm on week days and five settlements from 9 am to 1 pm on Saturdays. Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time Contrary to this, in the RTGS transactions are processed continuously throughout the RTGS business hours.

But your amount is very small.

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madhav February 20, 2012 at 1:51 am

it seems to be very useful for bank po aspirants

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madhav February 20, 2012 at 1:52 am

thank u

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ubento March 6, 2012 at 6:55 am

very usefull matter thank u

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Nisha April 6, 2012 at 6:00 am

Hi,

Can anybody tell me how much time/working hour ll be taken by a bank to credit the amount to bennificier account when money transfered using IFSC code.. (from HDFC to SBI)..

Thanks
Nisha

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PRASANTH.T April 9, 2012 at 5:46 am

Dear Nisha,

If u r doing the fund transfer through NEFT it will take 48 hours(As per RBI rules) and if u r doing through NEFT it will take 3 hours.

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jagadish April 9, 2012 at 7:43 am

Hi,

It is really appriciatable innovation. Thanks for the info.

Best regards
jagadish malloju

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Mitul Doshi April 9, 2012 at 10:20 am

Hey,
Its really good article. Even for a layman its refreshing..
Keep up!!

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Ranjeth April 20, 2012 at 1:42 pm

Hi
If i try to transfer the money through neft after 7 pm is it possible to transfer the money after 7 Pm from karur vysya bank.

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Mahesh April 27, 2012 at 4:03 am

Hey Satish,

Thanks a Ton for this valuable information presented in a simple manner and then again you actually answered all queries from people like us.

That’s Kind !! Thanks again

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Mahesh Kulkarni May 7, 2012 at 6:00 am

Hi Sathish,

Useful and Crisp information. Helps completely to understand the difference between RTGS and NEFT.

Thanks a lot.

Regards,
Mahesh

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jay joshi May 8, 2012 at 2:43 pm

Wht is DNS related to NEFT and wht is gross settlement related to RTGS
and in wht time a beneficiary receive the amount transaction done by RTGS & NEFT

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Ramana May 11, 2012 at 7:22 am

Thnaks a lot. Useful information

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Santosh Kumar Palasala May 16, 2012 at 2:03 pm

hi,

I have a doubt regarding NEFT or RTGS; suppose I have to transfer money from Hyderabad ICICI Bank to Machilipatnam SBI, suppose say at 7:00 pm which is a Cut-off time (after office hrs) of that particular sender bank (SBI), My doubt is will this amount be credited in the beneficiary account on the first hour of very next day or the same day.. Pls. explain..

Thanking you in anticipation

Santosh Kumar Palasala

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BADRI May 21, 2012 at 12:10 pm

really I have been satisfied with details available. And I thank you once again

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Stock tips intrady May 23, 2012 at 1:53 pm

Wow satish! this post has gained popularity. Well, these two banking terms are becoming very popular now is just showing that banking services are utilized by a good proportion of people now.

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Nirav May 25, 2012 at 2:57 pm

Can i expedite the transfer of money under NEFT if the payment is below 2 lacs ?

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sugan June 12, 2012 at 3:51 pm

hi i’m doing a project in RTGS and NEFT system in banking sector any impact of in the system. pls reply me. any person doing the banking project.

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ASHWIN June 15, 2012 at 5:38 pm

Hey SATISH,
THANK U for great thing,
wat’z the difrnc btvn D.D, RTGS & NEFT.

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Priyank June 22, 2012 at 9:45 pm

Now that core banking happens digitally, isn’t it high time that concepts like “home branch” and “working hours” die? Why apply “working hours” rules on electronic transactions?

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RONIT July 24, 2012 at 12:35 pm

thank u sir ! please keep writing such things in your site…….

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rahul rai September 7, 2012 at 7:08 pm

SIR , FROM CURENT A/C I DO UNLMITED NEFT.IN 1DAY’S.

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NJTech September 17, 2012 at 4:17 pm

Good Site….
Gross Settlement vs Deffered Net Settelement. If the beneficiary holds an account in the same bank as the remitter. How does this transaction settle? Does it have to go thru RBI or not?

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shyam potliya September 25, 2012 at 9:03 am

please tell me about swift and its process

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Giridharan September 27, 2012 at 10:55 am

As i am deposited in Bank Rs.150000/- for RTGS but they trfd via NEFT why they are not trfd by RTGS. Pls explain.
regards

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