You must have heard about NEFT, RTGS and IMPS earlier also, and many of you might also be using them for fund transfer. However, these payment systems have become more popular particularly after the demonetisation of high-value currency notes, when a huge surge was witnessed in digital payments across the country and people had to use these methods of payments on a regular basis. Still there are many people who may not be familiar with these payment systems or may wish to know how these work. Here we are taking a look at what are NEFT, RTGS and IMPS, and whether they are similar or different:
NEFT: NEFT stands for National Electronic Funds Transfer. It is a nation-wide payment system facilitating one-to-one funds transfer. Individuals, firms and corporates maintaining accounts with a bank branch can transfer funds using NEFT. Individuals who do not have a bank account (walk-in customers) can also deposit cash at the NEFT-enabled branches with instructions to transfer funds using NEFT. However, according to RBI, such cash remittances will be restricted to a maximum of Rs 50,000 per transaction.
There is also no limit on the minimum or maximum amount of funds that could be transferred using NEFT. However, the maximum amount per transaction is limited to Rs 50,000 for cash-based remittances within India and also for remittances to Nepal under the Indo-Nepal Remittance Facility Scheme. The money is credited to the beneficiary’s account on the same day or at the most next day in case the message is sent during the last batch of settlement.
RTGS: RTGS stands for Real Time Gross Settlement, which can be defined as the real-time settlement of fund transfers individually. ‘Real Time’ means the processing of instructions at the time they are received rather than at some later time; ‘Gross Settlement’ means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis). Considering that the funds settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable. The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is Rs 2 lakh, while there is no upper ceiling for RTGS transactions. Under normal circumstances, the beneficiary branches are expected to receive the funds in real time as soon as funds are transferred by the remitting bank. The beneficiary bank has to credit the beneficiary’s account within 30 minutes of receiving the funds transfer message.
How is RTGS different from NEFT?
NEFT is an electronic fund transfer system that operates on a Deferred Net Settlement (DNS) basis, which settles transactions in batches. In DNS, the settlement takes place with all transactions received till the particular cut-off time. These transactions are netted (payable and receivables) in NEFT whereas in RTGS the transactions are settled individually. For example, currently, NEFT operates in hourly batches. 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.
IMPS: IMPS is an innovative real time payment service that is available round the clock. This service is offered by the National Payments Corporation of India (NPCI) that empowers customers to transfer money instantly through banks and RBI-authorized Prepaid Payment Instrument Issuers (PPI) across India. There are many benefits of IMPS. One, it is instant. Two, it is available 24 x7 and is functional even on holidays. Three, its is safe and secure, easily accessible and cost effective. Four, it can be initiated through mobile, Internet or ATM channels. Five, you also get debit & credit confirmation by SMS. The charges for remittance through IMPS are decided by the individual member banks and PPIs.