NEFT and RTGS A detailed Guide

Lets try to understand what is NEFT and RTGS and what is the difference between them.
NEFT and RTGS are two main mechanisms to transfer money from one bank to another bank in
India. Transferring money between two accounts in same bank is pretty straight forword and its a
internal matter of the bank, it does not have to deal with other banks and their protocols, however
when one bank wants to send the money to another bank in India, there is a defined mechanism it
has to be done and hence NEFT and RTGS comes into picture. Both these systems are
maintained by Reserve Bank of India. Lets understand both of these
NEFT National Electronic Fund Transfer
NEFT full form is National Electronic Fund Transfer, and its a system of transfer between two
banks on net settlement basis. Which means that each individual transfer from one account to
another account is not settled or processed at that same moment, its done in batches . A lot of
transactions are settled in one go in each batches. Presently, NEFT services are available from
8:00 am to 6:30 pm on weekdays (Mon Fri) and from 8:00 am 12:30 pm on Saturday.
Any NEFT Transfer done between 8 am 5 pm generally gets settled on the same day, but if you
deposit the money after 5 pm, then that will be settled the next working day. In case of Saturday,
any money deposited between 8 am 12 noon can be expected to reach the beneficiary account
the same day.
NEFT Transfer Example
For example lets say Ajay has ICICI Bank account and Robert has a bank account in HDFC bank
, Now Ajay deposits Rs 10,000 in Vijay account through NEFT transfer at 10:30 am . The money
will be then taken out from Ajays ICICI Account and will be sent to Vijays HDFC bank the
same day, then HDFC bank will credit Vijays bank account. In case money can not be
transferred to the target account (beneficiary account) , the money will be credited back to the
source branch within 2 hours of the batch in which it was processed.
RTGS Real Time Gross Settlement
RTGS full form is Real Time Gross Settlement and its a system of money transfer between two
banks in real time basis, which means the moment one bank account transfer the money to
another bank account, its settled at that time itself on real time basis between the banks, but the
beneficiary bank has to make the final settlement to the bank account within two hours of getting
the money. RTGS is the fastest possible money transfer between two banks in India through a
secure channel.
Let me give an example, lets say Ajay has a SBI Bank account and Vijay has an Axis Bank
account, Ajay transfers Rs 5 lacs to Vijays account through RTGS transfer, SBI bank instantly
transfers Rs 5 lac to Axis Bank, now Axis bank has 2 more hours to deposit it in Vijays account
. Hence in worst case even with RTGS transfer there can be delay of 2 hours.

NEFT and RTGS Charges
NEFT and RTGS transfer charges depends on the Bank. RBI has guidelines for the maximum
fees which can be charged, but it finally depends on the bank in question. Note that NEFT and
RTGS charges, varies depending on the amount transferred and the timings when its done.
While NEFT charges depends purely on the amount transfered, RTGS charges depends on the
amount transferred as well as the timings of the day when its done . A RTGS transfer early will
cost a little less charges. Note that, Service tax is also applicable to the charges. Below are the
charges shows for NEFT and RTGS for retail banking (not for institutional banking)

Information required to make an RTGS & NEFT payment?
For making a payment through NEFT/RTGS, following information has to be furnished.
Amount to be remitted
Remitting customers account number which is to be debited.
Name of the beneficiary bank.
Name of the beneficiary.
Account number of the beneficiary.
IFSC code of the destination bank branch
Note : MICR code is generally not required for NEFT or RTGS transfer
Points to Note
Each Bank has their own NEFT and RTGS application form, which you can download
from their website
RBI declared holidays each year when you cant do NEFT and RTGS fund transfer
transactions, see 2012 list
To find out different bank branches which are enabled for NEFT and RTGS transactions,
you can see this RBI list
Difference Between NEFT and RTGS
Finally let me list down all the differences between NEFT and RTGS in a table, so its easy for
you to understand the conclude finally.
Criteria NEFT RTGS (Retail)
Settlement
Done in batches
(Slower)
Real time
(Faster)
Full Form
National
Electronic Fund
Transfer
Real Time
Gross
Settlement
Timings on Mon Fri
8:00 am 6:30
pm
9:00 am 4:30
pm
Timings on Saturday
8:00 am 12:30
pm
9:00 am 1:30
pm
Minimum amount of money transfer limit No Minimum 2 lacs
Maximum amount of money transfer limit No Limit No Limit
When does the Credit Happen in beneficiary account
Happens in the
hourly batch
Real time
between Banks
Between Banks
Maximum Charges as per RBI
Upto 10,000 Rs
2.5
from 10,001 1
lac Rs 5
from 1 2 lacs
Rs 15
Above 2 lacs Rs
25
Rs 25-30 (Upto
2 5 lacs)
Rs 50-55
(Above 5 lacs)
(Lower charges
for first half of
day)
Suitable for
Small Money
Transfer
Large Money
Transfer