Difference between EFT, NEFT and RTGS

Read this article to learn about the difference between EFT, NEFT and RTGS.

Difference between EFT, NEFT and RTGS

EFT and NEFT are electronic fund transfer modes that operate on a deferred net settlement (DNS) basis, which settles transactions in batches. In DNS, the settlement takes place at a particular point of time. All transactions are held up till that time.

For example, NEFT settlement takes place 6 times a day during the week days (9.30 am, 10.30 am, 12.00 noon. 1.00 pm, 3.00 pm and 4.00 pm) and 3 times during Saturdays (9.30 am, 10.30 am and 12.00 noon). Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time. Contrary to this, in RTGS, transactions are processed continuously throughout the RTGS business hours.

The RTGS system is primarily for large value transactions. The minimum amount to be remitted through RTGS is Rs.1 lakh. There is no upper ceiling for RTGS transactions. No minimum or maximum stipulation has been fixed for EFT and NEFT transactions.

Under normal circumstances the beneficiary branches are expected to receive the funds in real time as soon as the remitting bank transfers funds. The beneficiary bank has to credit the beneficiary’s account within two hours of receiving the funds transfer message.

The remitting bank receives a message from the Reserve Bank that money has been credited to the receiving bank. Based on this the remitting bank can advise the remitting customer that money has been delivered to the receiving bank.

It is expected that the receiving bank will credit the account of the beneficiary instantly. If the money cannot be credited for any reason, the receiving bank would have to return the money to the remitting bank within 2 hours. Once the money is received back by the remitting bank, the original debit entry in the customer’s account is reversed.

The RTGS service window for customer’s transactions is available from 9.00 hours to 15.00 hours on week days and from 9.00 hours to 12.00 noon on Saturdays i.e. to accept the customer transactions for settlement at the RBI during 9.00 hours to 15.00 hours on week days and between 9.00 hours and 12.00 noon on Saturday.

However, the timings between these hours would vary depending on the customer timings the branches have. For inter-bank transactions, the service window is available from 9.00 hours to 17.00 hours on week days and from 9.00 hours to 14.00 hours on Saturdays.

While RBI has waived its processing charges for all electronic payment products till March 31, 2008, levy of service charges by banks is left to the discretion of the respective banks. The bank-wise details of charges levied are available with respective bank.

The beneficiary customer can obtain the IFSC code from his branch. The IFSC code is also available in the cheque leaf. The beneficiary to the remitting customer can communicate this code number and bank branch details.

All the bank branches in India are not RTGS enabled. The list of such branches is available on RBI website.

It would depend on the arrangement between the remitting customer and the remitting bank. Some banks with Internet banking facility provide this service. Once the funds are credited to the account of the beneficiary bank, the remitting customer gets a confirmation from his bank either by an e-mail or by a short message on the mobile.

For a funds transfer to RTGS, both the sending bank branch and the receiving bank branch would have to be RTGS enabled. The lists are readily available at all RTGS enabled branches. Besides, the information is available at RBI website.