Difference between NEFT and RTGS Explained

When it comes to fund transfer, there are some different options to do this like NEFT, RTGS, IMPS and UPI. But these are very confusing for a normal person. When we go to do fund transfer then have to choose an option from NEFT, RTGS and IMPS. So here we will know about these payment methods one by one. Apart from that we will know what the difference between NEFT and RTGS is.

Difference between NEFT and RTGS

If you are curious to know how these banks transfer funds to each other physically then you should read this article till the last, so that you known well about this interesting thing.

What are NEFT, RTGS, IMPS and UPI?

1 What is NEFT?

NEFT text png

NEFT means National Electronic Fund Transfer which is launched in 2005. This is a very basic fund transfer process that all banks are using till now. If we use NEFT for funds transfer from a bank to another bank, it takes two to four hours approximately. This method can be used in the working hours of banks and it doesn’t work on holidays of banks.

Now the question is that why does it take time? And why it cannot be used after closing the bank?

Banks make a bunch of some transactions, so that the system does not have to work continuously. Thus it saves the time and makes work easy for the bank. If any problem creates during fund transfer then employees can fix it easily. That’s why NEFT can’t be used after closing the banks.

2 What is RTGS?

RTGS text png

This service is also launched in 2005 but it is totally different from NEFT. RTGS means Real Time Gross Settlement. There is no bunch and no delay for transactions. If consumers want to transfer money without waiting and the amount is 2 Lac or over 2 Lac rupees then they could choose RTGS method for fund transfer.

So here RTGS is not the solution of all problems because it doesn’t work 24×7. This also can be used in working hours of banks like NEFT. Another problem is that people with the amount under 2 Lac rupees can’t transfer fund at real-time.

3 What is IMPS?

IMPS text png

IMPS were the solution of all problems. IMPS mean Immediate Payment Service. It is the best option for instant payment or transfer money. It was founded in 2010 by NPCI (National Payment Corporation of India), so you can use this service 24×7 and also it doesn’t depend on holidays of banks.

Using IMPS, you can transfer funds anytime, anywhere with any amount at the real-time. It means IMPS is the best so banks should remove NEFT and RTGS. But friends many banks have been using NEFT and RTGS for a long time and consumer also familiar with these services. Therefore banks can’t refuse to consumers for using NEFT and RTGS.

4 What is UPI?

UPI text png

We can say UPI is the upgraded version of IMPS because it was also developed by NPCI in 2016 for enhances the capability of IMPS. Its full form is Unified Payments Interface.

In UPI, you do neither need to have receiver’s account number nor registered mobile number. Here you have to create an ID then map to your bank account. After this, all payment will be done on this ID through IMPS.

So UPI is the latest and very popular payment method nowadays. Now many apps have rights to make UPI payments. People also loving this method because it is very easy and don’t take time. It happens at real-time.

Difference between NEFT and RTGS

Points of Ref.NEFTRTGS
Full FormNational Electronic
Fund Transfer
Gross Settlement
Timing08:00 AM – 06:00 PM09:00 AM – 04:00 PM
Minimum LimitNo Limit2 Lac
Maximum LimitNo LimitNo Limit
ChargesUp to 10,000 – Rs.2.5
from 10,001 – 1 lac – Rs.5
from 1 to 2 lac – Rs.15
Above 2 lac – Rs.25
Up to 2 to 5 lac- Rs.25-30
Above 5 lac – Rs.50-55
Good ForSmall transactionsLarge Transactions

How do banks physically transfer money?

Friends, this is the million dollars question how do banks transfer money between each other physically? So guys, as we have bank accounts in different banks (SBI, HDFC, ICICI etc) just like all banks have accounts in RBI (Reserve Bank of India). It means RBI is the boss of all banks.

Any transaction done by NEFT, RTGS, IMPS and UPI from different banks is managed by RBI. They only charge for services (NEFT, RTGS, IMPS and UPI) because of manpower.

Difference between NEFT and RTGS

We have covered these topics in this article-

  • What are NEFT, RTGS, IMPS and UPI?
  • What is the “Difference between NEFT and RGTS”?
  • How do banks physically transfer money?

I Hope your all confusions have removed. If you have any other query, please comment below.

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