What are NEFT and RTGS?

National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS) allow individuals, companies and firms to transfer funds from one bank to another. You can check the RBI website for a list of NEFT and RTGS-enabled branches of your bank. These facilities can only be used for transferring money within the country. To opt for these, you need to fill a form providing your or the beneficiary’s details — name, bank branch where the account is held, the Indian Financial System Code, a unique code for identifying the branch, and the account number and type. You have to submit a cheque while opting for this facility. You can also transfer funds through net banking. These are third-party transfers and the option is available under the same header on your net banking home page.

How much can be transferred?
There is no ceiling on the minimum or maximum amount that can be transferred through NEFT. You can even transfer Re 1. However, a minimum of Rs 2 lakh must be transferred through the RTGS service. There is no cap on the maximum amount, though. However, banks may restrict the amount you can transfer in one day. For example, HDFC Bank allows a maximum of Rs 10 lakh to be transferred in a day.

What are the charges applicable?
According to RBI, banks cannot levy any charge for inward remittances or on receipt of funds. However, it has capped the charges on outward transfers through NEFT and RTGS. For transfers through the former, you need to pay around Rs 5-25, depending on the amount. Banks cannot charge more than Rs 5 for any transfer up to Rs 1 lakh, Rs 15 for Rs 1-2 lakh and Rs 25 for those above Rs 2 lakh. Under RTGS, you have to pay Rs 25 for Rs 2-5 lakh and Rs 50 for anything above Rs 5 lakh.

How are the two different?
NEFT operates on a deferred net settlement (DNS) basis and settles transactions in batches. The settlement takes place with all transactions received till a particular cut-off time. It operates in hourly batches — there are 11 settlements from 9 am to 7 pm on weekdays and five between 9 am and 1 pm on Saturdays. Any transaction initiated after the designated time would have to wait till the next settlement time. In RTGS, transactions are processed continuously, all through the business hours. RBI’s settlement time is 9 am to 4:30 pm on weekdays and 9 am to 1:30 pm on Saturdays. Banks can function within this time frame or change it. Here, transfers made are quick and can be helpful in emergencies.

What if the amount does not get credited?
If the transaction fails, the beneficiary’s bank must return the amount to your bank within two hours and the transaction must be reversed. Also, the bank must transfer the amount to your account within 30 minutes of receiving the same. The process can work quickly for RTGS . But, in case of NEFT the entire process could take an additional three-four hours.