NEFT VS RTGS: What is the difference?

In this era of digitization, transferring money from one account to another account has become a piece of cake. Online mode of payment has become the first option for customers nowadays no one wants to physically visit a bank branch to transfer money, as it saves time and money.

Users can choose any one of the various modes of payment depending upon the amount to be transferred, the time duration in which it should be credited to the receiver’s bank account, etc. NEFT and RTGS are two of the many methods of fund transfer available to the users. Both of these methods have their advantages and disadvantages, user can decide which to choose depending on their requirements.

Understanding NEFT

NEFT stands for National Electronic Fund Transfer. It is an electronic system used worldwide by banks. By NEFT customers can transfer funds from one bank to another with a lot of ease. It was conceptualized by the Reserve Bank of India to help customers to transfer funds without any hassle. All NEFT transactions are done in batches and settled in 30-minute intervals.

Features and Benefits of NEFT

The following are a few of the features and benefits of NEFT transactions.

• NEFT transactions are safe and reliable, as they follow a secure network.
• These transactions can be processed between accounts from the same bank or accounts from different banks offering NEFT-enabled services
• You can initiate NEFT transactions through various channels like mobile banking and online banking.
• You can execute NEFT at any time throughout the year
• All NEFT transactions are settled within 24 hours
• NEFT services are available nationwide
• For each NEFT transaction customer has to pay a nominal fee, depending upon the transaction amount.
• For transferring funds through NEFT, you must first add the beneficiary through online banking
• You can use the NEFT service for various purposes, such as online purchases and bill payments.

Information Required For NEFT

To transfer funds through NEFT to individuals or organizations, you must first add a beneficiary list through online banking. To add them to the beneficiary list, the following are the things that have to be considered –

• The name of the account holder
• Account number
• Bank name
• Name of the bank branch
• The IFSC code of the bank branch
• The amount you wish to transfer

Once you submit details of the beneficiary, you have to wait for a few hours so that it can be added. After that, you can transfer your funds through NEFT.

How Does NEFT Work?

Now let us take the example of Mr. A, who has a savings account in SBI Bank. Following are the steps which Mr. A has to follow to execute NEFT transactions be it online or offline. Firstly discuss the online mode in detail:

Step 1: Sign in to your online banking account of SBI Bank using your     credentials

Step 2: Click the ‘Funds Transfer’ tab on the main page

Step 3: Select ‘NEFT’ from the different transaction types

Step 4: If you are transferring funds to a new beneficiary, you must first add them to the list of beneficiaries

Step 5: You have to click on the ‘Add Beneficiary” button to add a new beneficiary.

Step 6: Enter the required details, such as their name, account number, IFSC Code, etc.

Step 7: To confirm, provide the OTP you receive on your registered number

Step 8: Depending on the bank’s policy, the new beneficiary will be added within 24 hours

Step 9: Once the new beneficiary is added, select them as the payee from the list of beneficiaries.

Step 10: Enter the amount you have to transfer and submit the OTP so that the transaction can be completed.

Step 11: Click the option of ‘Confirm’ option so that the transaction is completed.

In case of offline payment via NEFT, Mr. A is required to visit the SBI bank and fill out the SBI NEFT Form, which will include the details of the beneficiary, including name, bank account number, bank name, branch location, IFSC Code, etc. Next, he has to authorize the branch to debit the funds from the bank account.

Understanding RTGS

Real-Time Gross Settlement (RTGS) is an electronic method of transferring funds where the funds get transferred in real time. To initiate the transfer, you must have the IFSC code of the beneficiary’s bank, along with their name, their bank’s name, and account number.

You can individually transfer funds using RTGS with an Internet banking account. This is a secure system for funds transfer, and available on all days on a 24x7x365 basis.

While the minimum amount you can transfer via RTGS is ₹2 Lakhs, there is no cap on the maximum amount set by the RBI.

Features and Benefits of RTGS

The following are a few of the features and benefits of RTGS transactions.

• Every RTGS is processed individually.
• Funds get transferred immediately to the beneficiary’s bank.
• It is available 24*7, even on weekends, and bank holidays.
• It is designed for high-value transactions and has a minimum transfer limit of INR 2 lakhs.
• They can be initiated either online or offline.
• It requires a few details like the beneficiary’s name, bank account number, branch, and IFSC.
• It is reliable, safe, and encrypted to give maximum security.

Details Required for RTGS

Mentioned below are the details for making a fund transfer via RTGS:

• The amount to be transferred
• Beneficiary account holder’s name
• Beneficiary account number
• Beneficiary account IFS Code (IFSC)
• Beneficiary bank name
• Beneficiary bank branch

How Does RTGS Work?

Suppose Mr. A has a bank account in IndusInd Bank, and he has to transfer funds via RTGS. There are two modes available i.e. online and offline which are discussed below:

1. Online Mode:

Step 1: Mr. A shall open the official bank website of IndusInd Bank and make a login using your ID and password.

Step 2: Add the beneficiary’s account details and authenticate the same using OTP.

Step 3: Click on RTGS, and enter the details required like amount, account number, and remarks.

Step 4: Click on “Confirm”.

Step 5: The funds will get transferred to the beneficiary’s account.

• Offline Mode:

Step 1: Mr. A shall visit any nearest branch and fill out the IndusInd Bank RTGS Form.

Step 2: Enter the date and amount.

Step 3: Fill out the cheque details, personal details, and beneficiary’s details.

Step 4: Submit the RTGS form to a bank representative, who will then verify the details and process the RTGS.

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