Know the Difference Between NEFT, RTGS and IMPS

In recent years, the banking landscape has undergone significant transformations. Introduction of NEFT, RTGS, and IMPS has completely revolutionized the money transfer process. The advent of these new services has simplified money transfers, allowing funds to move swiftly between bank accounts. This streamlined system benefits businesses, customers, and banks alike, facilitating faster payments and alleviating workloads. Moreover, it narrows the gap between customers, entities, companies, and other stakeholders, fostering convenience, utility, and speed in financial transactions. Let’s get to know the difference between NEFT, RTGS and IMPS.

Multiple ways for transferring money via online mode

As previously mentioned, transferring funds through online processes is common in India, with various methods widely used by organizations, government bodies, and the general public:

NEFT (National Electronic Funds Transfer)
RTGS (Real-Time Gross Settlement)
IMPS (Immediate Mobile Payment Service)

Initiated by the Reserve Bank of India (RBI), NEFT and RTGS, along with IMPS introduced by the National Payments Corporation of India (NPCI), are key payment processes. Before delving into the differences between these systems, it’s essential to understand crucial aspects of online money transfers.

Essential terms related to online money transfer

Service Availability: Many of these systems operate within specific timeframes, while some offer 24/7 accessibility. Services available round the clock enable users to transfer funds at any given time. It’s crucial to note that funds settle only during active service periods.

Fund Transfer Charges: The amount charged by banks for fund transfers, speed, and additional features varies individually. These charges, aligned with RBI norms, may or may not apply to fund transfers, depending on the banks.

Fund Settlement Speed: The total time consumed by a process initiated by an individual for transferring money between accounts varies across different fund transfer systems.

Fund Transfer Limit: Ranging from minimum to maximum amounts, the limit for money transfer varies among payment systems. It plays a pivotal role in determining the suitability of a money transfer system for individuals, entities, or organizations.

Different payment systems

National Electronic Funds Transfer or NEFT

NEFT enables individuals to transfer funds online between banking accounts, whether within the same bank or different banks. These transfers operate in batches, with intervals of 30 minutes, not in real time. The minimum transaction is Re 1, while the maximum varies among banks (e.g., X bank allowing up to Rs 5 lakhs, Y bank up to Rs 10 lakhs daily).

Using a bank’s mobile app or net banking for NEFT typically incurs no additional charges. However, opting for in-person NEFT transactions at the bank may result in transfer fees. For instance, ABC bank may charge between Rs. 2.50 to Rs. 25 (excluding GST), dependent on the transferred funds.

The settlement of funds follows an order-by-order basis through batch systems, adhering to RBI’s 2-hour remittance rule. This settlement, executed via the InterBank Transfer Scheme (IBTS) on RBI’s books, renders transactions irrevocable and final. The RBI then notifies the remitting bank, which, in turn, informs the remitter.

Features of NEFT

For NEFT transactions conducted outside of banking hours, exceeding Rs 10 lakhs, the crediting will occur on the next working day.
The minimum transfer amount is Rs 1, while the maximum is Rs 20,00,000.
NEFT allows money transfers through online modes like internet banking or by visiting the bank branch.
Online NEFT transfers are free of cost.
However, it’s essential to note that this service is available only if the receiving bank has enabled the NEFT option.

How to transfer money using NEFT?

Step 1: Log in to the official net-banking site of the bank using the assigned username and password. Navigate to the NEFT transfer section.
Step 2: Click the ‘Add’ button, enter the beneficiary’s account number, name, bank branch address via IFSC, and the transfer amount. Choose the beneficiary account from the list of banks. If you’re unaware of the IFSC code, use the location option in the drop-down menu to locate the branch.
Step 3: Select the ‘Accept Terms and Conditions’ button, then click ‘confirm.’
Step 4: Choose the transaction type.
Step 5: For NEFT transfers to a payee in a different bank account, select the ‘Inter-Bank Transfer’ link.
Step 6: An OTP will be sent immediately to the registered mobile number.

Validate the transaction by entering the OTP. If the OTP is not visible, resend it by clicking the ‘resend OTP’ option. After entering the OTP, the transaction is complete. This outlines the basic steps for an NEFT transfer, which may vary across different banks.

Real-Time Gross Settlement or RTGS

The RTGS process enables instant crediting of money to another person’s account in real-time, particularly suitable for large amounts requiring immediate clearing or settlement. Widely favored by businesses and corporates, this method ensures swift money transfers.

The minimum amount eligible for RTGS transfer is Rs. 2 lakhs, with varying maximum limits among banks. However, there’s no upper limit as per the Reserve Bank of India (RBI) norms. For example, XYZ bank may set a daily maximum transfer limit of Rs. 10 lakhs, while ABC Bank might have a limit of Rs. 20 lakhs.

Similar to the NEFT process, online RTGS transfers typically incur no additional charges. However, when conducting RTGS transactions through a bank branch visit, the bank may impose a fee.

Features of RTGS

RTGS ensures real-time settlement on an order-by-order basis, with the RBI processing the order within half an hour of transfer.
The settlement, executed through the RBI’s InterBank Transfer Scheme (IBTS), renders the transaction irrevocable and final. Subsequently, the RBI informs the remitting bank, which, in turn, reports to the remitter.
RTGS services are available 24/7, including Sundays and bank holidays throughout the year.
If an RTGS transaction is conducted outside banking hours, exceeding Rs 10 lakhs, the crediting occurs on the next working day.
The minimum transfer amount for RTGS is Rs 2,00,000, while the maximum amount may vary depending on the banks.
RTGS allows money transfers through online modes such as internet banking or in-person visits to the bank branch.
Online RTGS transfers are free of cost, and this service is accessible only if the receiving bank has enabled the RTGS option.

How to transfer money using RTGS?

To initiate an RTGS fund transfer, it is necessary to first add a beneficiary. Here are the steps for adding a beneficiary:

Log in to the bank’s official net-banking site using the assigned username and password.
Navigate to the Funds Transfer tab in the menu.
Click on “Add a beneficiary” and select “Find Beneficiary Type” to choose “Transfer to Other Bank.”
Input all the account details of the beneficiary, including their name, account number, IFSC code, and bank name.
Choose the “add & confirm” option, and a confirmation message will confirm the successful addition of the beneficiary.

After adding the beneficiary, follow these steps to complete the RTGS transfer:

Log in to the bank’s official net-banking site.
Access the Funds Transfer tab and select RTGS.
Add the payee or beneficiary you intend to transfer funds to.
Enter the amount of money to be transferred.
Verify all the necessary details and confirm the transaction. The funds will be transferred within 30 minutes.

Immediate Mobile Payment Services or IMPS

While NEFT and RTGS may involve some waiting time for money transfers, IMPS stands out as a rapid real-time inter-bank funds transfer system managed by the National Payment Corporation of India. Operating 24/7, 365 days a year, including holidays, IMPS facilitates instant fund transfers through various online channels such as mobile banking, net banking, SMS, and ATMs.

Transferring funds from your account to a supplier’s account via IMPS happens in a fraction of a second. Simply input the beneficiary’s account number and IFSC code to complete the transaction. With a minimum transaction limit of one rupee and a maximum capped at Rs. two lakhs, IMPS is a preferred choice among retail customers across India for small-value transactions.

Transaction charges for IMPS vary among banks.

Features of IMPS

IMPS facilitates transfers with a minimum of Rs 1 and a maximum of Rs 20,00,000, capped at Rs 2 lakh per transaction.
Exclusive to online modes like internet banking, IMPS ensures instant confirmation of fund transfers.
Accessible only if the receiving bank is an NPCI member, IMPS enables 24/7 settlements, akin to UPI transactions.
Regardless of banking hours, IMPS transactions, regardless of the amount, are instantly processed, showcasing its continuous availability.

How to transfer money using IMPS?

To initiate an IMPS transfer via mobile banking, follow these steps:

Log in to your bank’s mobile banking application.
Click on the “Send Money/Fund Transfer” tab and select the IMPS option.
Enter the beneficiary’s mobile number, transfer amount, and Mobile Money Identifier (MMID).
Input your Mobile Personal Identification Number (MPIN) to validate the transfer.
Upon entering the MPIN, the specified amount will be sent to the intended beneficiary.
Receive a confirmation text message from the bank with the transaction number, which can be used for queries or feedback.

For receiving funds through IMPS:

Provide your name (as per bank records), mobile number, and MMID to the payer.
The payer can use this information to transfer funds to you.

To transfer money through IMPS on the online banking/net-banking platform:

Log in to your bank’s net banking/online banking portal.
Add an IMPS beneficiary by entering the beneficiary’s account number, account type, IFSC code, name, and branch details.
After confirmation of the beneficiary, go to Fund Transfer.
Select the specific beneficiary, enter the amount and remarks if needed.
Confirm the transfer to complete the transaction, and the payment will be settled.
Keep the transaction reference number for any queries or feedback.

Difference between RTGS, IMPS and NEFT

Here are the basic differences between NEFT, RTGS and IMPS which are explained in the form of a table below.

Comparison Type	NEFT	RTGS	IMPS
Mode of process	Online as well as offline	Online as well as offline	Online only
Minimum amount for transferring money	Re 1	Rs 2 lakhs	Re. 1
Maximum amount for transferring money	No limit	No limit	Rs 2 lakhs
Settlement type	Half yearly batches	Real time	Real time
Time taken	30 minutes to 72 hours	30 mins	Instantly
Transaction charges	No charge for inward transaction or online process	No charge for online process or inward transaction For outward transactions:- Rs 2 lakhs to Rs 5 lakhs – Upto Rs 25 plus GST Rs 5 lakh and above – Upto Rs 50 plus GST	Charges depend on bank to bank
Timings	Available all round the year 24/7	Available all round the year 24/7	Available all round the year 24/7
Process speed	Slow	Faster	Fastest
Reliable	Yes	Yes	Yes

Benefits and advantages of transferring money online

Here are the advantages of online money transfers:

Convenience, speed, and reliability are key benefits.
No need for in-person branch visits or waiting in queues; transactions can be conducted at any time.
Online transfers through NEFT, RTGS, and IMPS are cost-free.
Offers flexibility and choice in terms of the amount to be transferred, transaction speed, timing, and cost, allowing customization based on individual needs.

Which method will work best for you?

The choice of the ideal money transfer method depends on the purpose and urgency. For urgent or emergency transfers, IMPS is the most suitable, offering instant transactions. If the transfer involves smaller amounts and time is not a critical factor, NEFT is a good option. On the other hand, RTGS is beneficial for substantial business transactions or when sending funds for property or asset deals.

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Know the Difference Between NEFT, RTGS and IMPS