NEFT, RTGS and IMPS Comparison

In October 2020, while making the RBI’s (Reserve bank of India) announcement for Monetary Policy, Governor Shaktikanta Das said that the RTGS (Real Time Gross settlement) facility of fund transfer will be made available 24*7*365 basis from December 2020 onwards. This decision was made so as to facilitate swift and seamless payments in real-time for domestic institutions and businesses. Before December, the RTGS window for service was available to customers from 7 AM to 6 PM on a working day. Similarly, in the year 2019, RBI altered the rule in NEFT (National Electronic Fund Transfer) and made it available on a 24*7*365 basis.

With the introduction of UPI based apps and net banking, transferring money online is becoming easier. But the question - which method one should choose to transfer funds to others? still prevails. Banks provide several modes such as IMPS, NEFT, and RTGS. Each of these methods has different features, based on the speed of transfer, the value of the transaction, and other factors.

Now, let’s head toward a detailed explanation of these three and a brief comparison table.

NATIONAL ELECTRONIC FUND TRANSFER (NEFT)

With this facility, one can transfer any amount to the recipient’s bank account on a one-on-one transfer basis. These transactions don’t have any maximum limit for funds that can be transferred in a day.

Timings

The NEFT facility is available on a 24x7x365 basis i.e. throughout the year, round the clock on all days. Funds are transferred in batches that are settled in 48 30-minutes time slots throughout the day.

Transaction limits

There is no minimum or maximum limit on the amount that can be transferred through this facility. With this facility, one can initiate transactions to transfer funds from one bank account to another throughout the nation. However, one must make sure that the banks are enabled with an NEFT transfer network.

Procedure

To transfer funds through NEFT, all one has to do is log in to the net banking portal and add the recipient as a beneficiary. Enter details like their name, account type, account number, and IFSC code under the Add New Payee section. After choosing NEFT as the preferred mode of transfer and entering the amount to be transferred, the fund transfer will be accomplished.

REAL-TIME GROSS SETTLEMENT (RTGS)

Institutions and Business owners can use this facility when they need to transfer huge amounts instantly. RTGS has an edge over the other methods when it comes to the transaction speed since the entire amount is transferred in real-time.

Timings

As per the new RBI norms, from December 2020, the RTGS facility will be available throughout the year, round the clock on all days (24x7x365).

Transaction limits

There’s a minimum limit of INR 2,00,000 for these transactions, but there is no maximum cap on the amount.

Procedure

To have an RTGS-enabled bank account, one can either check the eligibility status on the online banking portal or contact the bank. If RTGS is used for a fund transfer, one must make sure that both the sender and recipient have RTGS enabled bank accounts.

To transfer the amount, log in to the banking portal and add the recipient as a beneficiary by submitting details like their name, account type, account number, and IFSC code. Then select RTGS as the mode of transfer, enter the amount to be transferred, and the fund transfer will be accomplished.

IMMEDIATE PAYMENT SERVICE (IMPS)

IMPS is another real-time payment facility, this is also available 24*7 and can avail of the facility on bank holidays also. Using this, one can transfer comparatively lower funds and the max cap is Rs. 2,00,000, instantly.

So, one can consider IMPS as the transfer mode that has the best features of both NEFT and RTGS. You can transfer amounts as low as Re 1, any time you please, with instant results. Though IMPS services are majorly used online, a few banks offer SMS facilities. One can check with his bank to see if they support IMPS transfers through SMS.

The IMPS service is offered by the NPCI (National Payments Corporation of India). To be eligible for offering IMPS services, the bank or entity needs to have a valid Prepaid Payment Instrument (PPI) or banking license from the Reserve Bank of India. PPIs are instruments that allow you to initiate fund transfers or purchase goods and services using a value that is stored in the PPI. Some examples of PPIs include digital wallets, smart cards, vouchers, and magnetic strips. Individuals who don’t have bank accounts can transfer funds by IMPS using PPI.

Procedure

To transfer funds via IMPS, one should first register for the mobile banking service of the concerned bank and generate an MPIN and MMID (Mobile Money Identifier) from the bank. One should make sure that the recipient or beneficiary has the MPIN and MMID too.

Once registered, log in to the net banking portal and select IMPS as the preferred mode of fund transfer. Then submit details like the recipient’s mobile number, the amount to be transferred, the recipient’s MMID, and MPIN. Once this is done, you will receive a confirmation message via SMS on the registered number.

COMPARISON TABLE of NEFT, RTGS and IMPS

BASIS OF COMPARISON	NEFT	RTGS	IMPS
Minimum transfer amount	Rs 1	Rs 2,00,000	Rs 1
Maximum transfer amount	No Limit	No Limit	Rs 2,00,000
Payment Option	Offline + Online	Offline + Online	Online
Transfer Speed	2 hours (subject to cut-off timings and batch time)	Immediate	Immediate
Settlement Type	Half Hourly Basis	Real-Time	Real-Time
Service Timings	*247365*	*247365*	*247365*
Transaction Charges	Online - Nil Offline - Applicable, varies across banks.	Online - Nil Offline - Applicable, varies across banks	Decided by Individual Member Bank PPIs
Managed By	RBI	RBI	NPCI

THE CRUX

Living in today's era, we fully understand the importance of digitization. Whether it's about booking movie tickets, reservation of hotels, air tickets, or making massive payments of business-related transactions, we all do need a digital mode of transfer of funds which not only solves our problems but also is secure and safe.

The above-discussed mode of transfers are indeed very important and play a vital role not only in the business ecosystem but also in our daily routine. These facilities are very efficient, but one should always keep in mind that there are underlying terms and conditions associated with them which should be thoroughly studied and understood.

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