RBI removes NEFT and RTGS payment charges

The central bank as part of its monetary policy review has announcement that RBI has removed charges for payments via NEFT and RTGS and asked banks to pass on the benefits to customers.

Due to recent announcement payments via NEFT and RTGS would become either free or charges would be drastically reduced.

What is RTGS System?

RTGS stands for ‘Real Time Gross Settlement’. RTGS is a funds transfer system where transfer of money takes place from one bank to another on a real time basis. This is the fastest mode of funds transfer available in India through banking channel.

– Timings for RTGS

Though the available hours for RTGS transactions vary based on the individual banks and their branches, this is the standard timing:

  • 9:00 a.m. to 4:30 p.m. on Weekdays
  • 9:00 a.m. to 2:00 p.m. on Saturdays

– Transaction limits and transfer charges

There’s a minimum limit of Rs. 2 lakhs for RTGS transactions, and there’s no maximum limit as such. The service fee is a bit higher for RTGS transactions: each transaction is charged from Rs. 30 to Rs. 50.

To get an RTGS-enabled account, you can either contact your bank or check your eligibility status in your online banking portal. If you’re using RTGS for a fund transfer, make sure that both you and the recipient have RTGS enabled accounts.

– Procedure

To transfer funds via RTGS, log in to your banking portal and add the recipient as a beneficiary so enter details like their name, account number, account type and IFSC code. Then choose RTGS as the mode of transfer and enter the amount to be transferred, and the fund transfer will be completed.

What is NEFT?

NEFT stands for ‘National Electronic Funds Transfer’ and the funds transfer takes place within the same day if it is within the cut-off time and the next working day if it is beyond the cut-off time prescribed. It is a Batch settlement mode.

– Timings for NEFT

One important feature of this method is that the funds are transferred in batches that are settled in hourly time slots. So, depending on the batch in which the funds were transferred, you can expect the recipient to receive the funds within 2 hours of transfer. The fund transfers are processed in 12 batches between 8 a.m. to 7 p.m. on weekdays and 6 batches between 8 a.m. to 1 p.m. on Saturdays. NEFT is not available on Sundays and bank holidays. If a transfer is initiated any time after the specified hours for that day, it will be processed on the next working day.

– Transaction limits and transfer charges

Even individuals without bank accounts can deposit cash through NEFT, but it’s limited to Rs. 50,000 per transaction. The service fee for NEFT transactions varies from Rs. 2.50 to Rs. 25 per transaction (exclusive of tax).

With NEFT, you can initiate transactions to transfer funds from one bank account to another throughout India. However, you must make sure that the banks are a part of the NEFT transfer network (another way to say this is that the banks should be NEFT-enabled).

– Procedure

To transfer funds via NEFT, all you have to do is log in to your net banking portal and add the recipient as a beneficiary. You’ll need to enter details like their name, account number, account type and IFSC code under the Add New Payee section. Once you choose NEFT as the preferred mode of transfer and enter the amount to be transferred, the fund transfer will be completed.

How are the two different?

NEFT operates on a deferred net settlement (DNS) basis and settles transactions in batches. The settlement takes place with all transactions received till a particular cut-off time. It operates in hourly batches — there are 11 settlements from 9 am to 7 pm on weekdays and five between 9 am and 1 pm on Saturdays. Any transaction initiated after the designated time would have to wait till the next settlement time. In RTGS, transactions are processed continuously, all through the business hours. RBI’s settlement time is 9 am to 4:30 pm on weekdays and 9 am to 1:30 pm on Saturdays. Banks can function within this time frame or change it. Here, transfers made are quick and can be helpful in emergencies.

What if the amount does not get credited?

If the transaction fails, the beneficiary’s bank must return the amount to your bank within two hours and the transaction must be reversed. Also, the bank must transfer the amount to your account within 30 minutes of receiving the same. The process can work quickly for RTGS . But, in case of NEFT the entire process could take an additional three-four hours.