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Difference between RTGS and

NEFT
• Categorized under Finance | Difference Between RTGS and NEFT
RTGS vs NEFT
Background
NEFT refers to National Electronic Funds Transfer !t is an online s"ste#
for transferring funds fro# one financial institution to anot$er
wit$in !ndia %usuall" banks& T$e s"ste# was launc$ed in No'e#ber ())*+
and was set to in$erit e'er" bank t$at was assigned to t$e SEFT clearing
s"ste# !t was #ade #andator" b" t$e RB! for all banks on t$e SEFT s"ste#
to #igrate to NEFT b" #id Dece#ber ())* ,s suc$+ SEFT was discontinued
as of -anuar" ()). T$e RB! welco#ed banks t$at were full #e#bers of t$e
RTGS to /oin t$e NEFT s"ste#
RTGS is an acron"# t$at stands for Real Ti#e Gross Settle#ent RTGS is a
funds transfer s"ste# w$ere #one" is #o'ed fro# one bank to anot$er in
0real1ti#e2+ and on gross basis 3$en using t$e banking #et$od+ RTGS is t$e
fastest 4ossible wa" to transfer #one" 0Real1ti#e2 #eans t$at t$e 4a"#ent
transaction isn2t sub/ect to an" waiting 4eriod T$e transaction will be
co#4leted as soon as t$e 4rocessing is done+ and gross settle#ent #eans t$at
t$e #one" transfer is co#4leted on a one to one basis wit$out clustering wit$
anot$er transaction T$e transaction is treated as final and irre'ocable as t$e
#one" transfer occurs in t$e books of t$e RB! %Reser'e Bank of !ndia& T$is
s"ste# is #aintained b" t$e RB!+ and is a'ailable during working da"s for a
gi'en nu#ber of $ours Banks using RTGS need to $a'e Core banking to be
able to initiate RTGS transactions
Differences
T$e funda#ental difference between RTGS and NEFT+ is t$at w$ile RTGS is
based on gross settle#ent+ NEFT is based on net1settle#ent Gross settle#ent
is w$ere a transaction is co#4leted on a one1to1one basis wit$out bunc$ing
wit$ ot$er transactions ,s for a Deferred Net Basis %DNS&+ or net1settle#ent+
t$is is w$ere transactions are co#4leted in batc$es at s4ecific ti#es 5ere+ all
transfers will be $eld u4 until a s4ecific ti#e RTGS transactions are 4rocessed
t$roug$out t$e working $ours of t$e s"ste#
RTGS transactions in'ol'e large a#ounts of cas$+ basicall" onl" funds abo'e
Rs 6))+))) #a" be transferred using t$is s"ste# For NEFT+ an" a#ount
below Rs 6))+))) #a" be transferred+ and t$is s"ste# is generall"
for s#aller 'alue transactions in'ol'ing s#aller a#ounts of #one"
RTGS 4rocesses in real1ti#e %04us$2 transfer&+ w$ile NEFT 4rocesses in c"cles
during t$e gi'en working da" T$is causes a NEFT transaction t$at is initiated
later t$an t$e last c"cle to be co#4leted t$e ne7t da"
Su##ar"8
RTGS is Real Ti#e Gross Settle#ent+ w$ile NEFT is National Electronic
Funds Transfer RTGS co#4letes transactions in real1ti#e+ and is t$erefore
faster t$an NEFT+ w$ic$ co#4letes transactions in c"cles
RTGS is gross settle#ent+ w$ere a transfer is co#4leted on a one1to1one basis+
w$ile NEFT is on a Deferred Net Basis+ w$ere transfers are bundled and
deferred for a s4ecific ti#e
RTGS is a $ig$ 'alue transfer s"ste#+ $andling funds wort$ Rs 6))+))) and
abo'e+ w$ile NEFT transfers s#aller a#ounts below Rs 6))+)))
Ser'ice C$arge for RTGS
a& !nward transactions 9 Free+ no c$arge to be le'ied
b& :utward transactions 9
1 For transactions of ( lak$s to * lak$s 1 (* 4er transaction 4lus a44licable
Ti#e ;ar"ing C$arges % 6<1 to *<1&= total not e7ceeding >) 4er transaction+
%? Ser'ice Ta7&
1 ,bo'e * lak$s 1 *) 4er transaction 4lus a44licable Ti#e ;ar"ing C$arges %
6<1 to *<1&= total c$arges not e7ceeding ** 4er transaction+ %? Ser'ice Ta7&
No ti#e 'ar"ing c$arges are a44licable for RTGS transactions settled u4 to
6(8>) $rs
Ser'ice C$arges for NEFT
T$e structure of c$arges t$at can be
a& !nward transactions at destination bank branc$es %for credit to beneficiar"
accounts&8
• Free+ no c$arges to be collected fro# beneficiaries
b& :utward transactions at originating bank branc$es %c$arges for t$e
re#itter&8
• For transactions u4 to 6)+)))8 not e7ceeding (*) %? Ser'ice Ta7&
• For transactions abo'e 6)+))) u4 to 6 lak$8 not e7ceeding * %?
• Ser'ice Ta7&
• For transactions abo'e 6 lak$ and u4 to ( lak$s8 not e7ceeding 6* %?
Ser'ice Ta7&
• For transactions abo'e ( lak$s8 not e7ceeding (* %? Ser'ice Ta7&
Special Electronic Funds Transfer (SEFT)
Since t$e EFT s"ste# could enable funds transfer onl" fro# and to branc$es
4artici4ating in t$e EFT 4rocess and falling wit$in t$e clearing /urisdiction at
t$e centres w$ere clearing o4erations were #anaged b" RB!+ #an" centres
were left out of t$e 4ur'iew of suc$ transfers !n order to widen t$e reac$ of
EFT+ in ())>+ t$e SEFT sc$e#e was introduced w$erein t$e 4artici4ating
bank branc$es $ad to necessaril" be co#4uterised and networked so as to
enable funds transfer wit$in t$e sti4ulated ti#e zone T$e 4rocessing of
transactions is centralised at National Clearing Cell+ @u#bai and inter1bank
funds settle#ent also takes 4lace at De4osit ,ccounts De4art#ent+ @u#bai
office T$e networked branc$es 4artici4ating t$is Sc$e#e+ will sub#it t$e EFT
files of t$eir branc$ to t$e ser'ice branc$ %t$roug$ t$eir internal network&+
and t$e ser'ice branc$ will forward t$e files to NCC @u#bai T$ereafter+ NCC
@u#bai will 4rocess+ arri'e at t$e settle#ent figures and s4lit t$e files
according t$e beneficiar" banks and branc$es and send t$ese files to t$e
ser'ice branc$ of t$e beneficiar" bank :n t$e basis of t$is infor#ation+ t$e
ser'ice branc$ forwards t$e data to t$e branc$ $a'ing t$e account of t$e
beneficiar" t$roug$ its internal network 5owe'er+ t$is sc$e#e $as been
re4laced b" National EFT %NEFT&
National Electronic Funds Transfer (NEFT)
RB! $as taken ste4s to graduall" re4lace EFT and SEFT wit$ t$e NEFT sc$e#e
w$ic$ uses secure digital signatures and AB! tec$nolog" T$e data flow is t$e
sa#e as SEFT e7ce4t t$e a44lication of t$e new secured en'iron#ent w$ic$ is
co#4liant wit$ !T ,ct+ ())) T$e NEFT s"ste#+ an i#4ro'ed 'ersion of t$e
EFT s"ste#+ $as en$anced securit" features and facilitates retail funds
#o'e#ent wit$ #ulti4le dail" settle#ents+ w$ic$ enable custo#ers to recei'e
funds wit$in two $ours of t$e settle#ent Toda"+ t$e NEFT facilit" co'ers
#ore t$an *))) branc$es of >( banks s4read across ()) centres T$e Reser'e
Bank $as taken u4 as its #ission+ t$e e74ansion of t$e reac$ of NEFT to co'er
all co#4uterised < networked branc$es of banks as outlined in t$e Aa"#ent
S"ste#s ;ision docu#ent T$e 4lan is to 4ro'ide NEFT facilities initiall" at all
t$e RTGS custo#er1enabled branc$es and t$ereafter+ e7tend t$e sa#e to
co'er al#ost all t$e co#4uterised branc$es of banks across t$e countr"
Cheque Truncation System
T$e use of 4a4er based instru#ents as a 4a"#ent #et$od is still t$e #ost
4redo#inant #ode of #aking non1cas$ 4a"#ents in !ndia T$us+ RB! 4lans to
i#4le#ent t$e C$eCue Truncation S"ste# to enable faster realisation of
c$eCues Dnder t$is s"ste#+ c$eCues will be scanned and t$e electronic i#age+
instead of t$e 4$"sical c$eCue+ will be trans#itted in t$e clearing c"cle ,
truncated c$eCue is defined in Section . of t$e Negotiable !nstru#ents ,ct as
a c$eCue w$ic$ is truncated during t$e course of a clearing c"cle eit$er b" t$e
clearing $ouse or b" t$e bank w$et$er 4a"ing or recei'ing 4a"#ent+
i##ediatel" on generation of an electronic i#age for trans#ission+
substituting t$e furt$er 4$"sical #o'e#ent of t$e c$eCue in writing T$e legal
issues related to 4resent#ent of c$eCues Dnder Section .E of t$e Negotiable
!nstru#ents ,ct w$ic$ reCuire a c$eCue to be 4resented for 4a"#ent on be$alf
of t$e $older is taken care of b" redefining a 0c$eCue2 under section . of t$e
Negotiable !nstru#ents ,ct as a#ended b" t$e Negotiable !nstru#ents
%,#end#ents and @iscellaneous Aro'isions& ,ct+ ())( to include an
electronic i#age of a truncated c$eCue 5ence+ t$e 4resent#ent of an
electronic i#age of a truncated c$eCue would a#ount to 4resent#ent of
c$eCue for t$e 4ur4ose of section .E T$e ad'antages of c$eCue truncation are
t$at t$e s"ste# a'oids t$e 4$"sical #o'e#ent of t$e 4a4er instru#ents and
instead trans#itting t$e electronic i#age of t$e truncated instru#ents t$ereb"
ensuring faster clearing of t$e instru#ents and reduction in t$e cost of
4rocessing !t is+ $owe'er+ o4en to t$e drawee bank to de#and furt$er
infor#ation regarding a truncated c$eCue fro# t$e bank $olding t$e
truncated c$eCue in case of an" reasonable sus4icion about t$e genuineness of
t$e a44arent tenor of t$e instru#ent :nl" in t$e case of sus4icion of an"
fraud+ forger"+ ta#4ering or destruction of t$e instru#ent+ t$e drawee<4a"ing
bank is entitled to de#and t$e 4resent#ent of t$e truncated c$eCue itself for
'erification