When it comes to transferring funds in India, two popular systems are NEFT and RTGS. Each has its own specific features, making them ideal for different needs. Understanding the nuances of both methods helps you decide which one suits your financial requirements best.
Understanding NEFT
NEFT stands for National Electronic Funds Transfer. It is a nationwide payment system that allows the electronic transfer of funds from one bank account to another.
NEFT operates in half-hourly batches, making it less instantaneous than some other payment methods. However, it is widely used due to its simplicity and ease of access. NEFT transactions are typically used for smaller amounts, as there is no minimum limit, but there is usually a cap on the maximum amount transferable depending on the bank’s regulations.
Understanding RTGS
RTGS, or Real-Time Gross Settlement, is a system that enables real-time transfer of funds between two bank accounts. As the name suggests, transactions are settled individually and instantly, making RTGS the fastest method of moving large amounts of money. Unlike NEFT, RTGS is designed primarily for high-value transactions, with a minimum limit of ₹2 lakhs.
Because of its real-time processing, RTGS is ideal for urgent or large-value transactions that need to be settled quickly. The money transferred via RTGS is credited instantly to the recipient’s bank account, ensuring there are no delays. It's available round-the-clock as well, allowing businesses and individuals to make large payments efficiently at any time.
Key differences between NEFT vs RTGS
| Feature |
NEFT |
RTGS |
| Transaction speed |
Operates in half-hourly batches; processed in intervals |
Real-time settlement; immediate transfer |
| Transaction amount |
No minimum limit; the maximum limit depends on the bank |
Minimum ₹2 lakh; no maximum limit |
| Purpose |
Suitable for routine, smaller transfers |
Designed for large-value and urgent transactions |
| Availability |
24/7 including holidays |
24/7 including holidays |
| Settlement type |
Processed in batches; not instant |
Instant, real-time processing |
| Charges |
Generally lower transaction fees |
May incur higher fees due to the instant nature |
| Security |
Highly secure, regulated by RBI |
Equally secure, with immediate transaction finality |
| Use cases |
Ideal for personal payments and bill settlements |
Best for high-value business or corporate payments |
NEFT vs RTGS: Which is better?
Choosing between NEFT and RTGS depends on the nature and urgency of your transactions. Here are some specific use cases to guide your decision:
NEFT use cases:
1.
Monthly payments:
Ideal for smaller, non-urgent transactions like rent or utility bills.
2. Personal transfers: Convenient for sending under ₹2 lakhs to friends or family.
3. Small business payments: Suitable for multiple smaller payments, like vendor settlements, with low fees.
RTGS use cases:
1. Corporate payments: Best for bulk transactions over ₹2 lakhs that need immediate processing, such as salaries.
2. Emergency transfers: Perfect for urgent, high-value payments, ensuring instant clearance.
Conclusion
Both NEFT and RTGS provide essential services within India's banking system, with each catering to different transaction types.
If you are looking for secure and efficient ways to manage your fund transfers, you may consider exploring Axis Bank's Digital Banking services, which offer easy access to NEFT and RTGS facilities for seamless money transfers across the country.
Also Read: National Electronic Fund Transfer (NEFT) Timings – A complete guide
FAQs
What are the transaction limits for NEFT and RTGS?
NEFT has no minimum limit, suitable for small transfers, though banks may impose a maximum cap. RTGS is for high-value transfers, with a minimum of ₹2 lakhs and no upper limit.
What are the processing times for NEFT and RTGS?
NEFT processes in half-hourly batches, while RTGS offers real-time, immediate fund transfers.
Can NEFT and RTGS be used for both domestic and international transfers?
No, NEFT and RTGS are for domestic transfers within India. International transfers require services like SWIFT.
How secure are NEFT and RTGS transactions?
Both are highly secure, regulated by RBI, and use encryption to ensure transaction safety.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
