NEFT RTGS IMPS

Introduction

With many different payment and settlement systems in India, the task of transferring money across bank accounts has now become easier and faster. Many banks in India, private companies and even government organisations are slowly onboarding different payment and settlement methods like NEFT, RTGS and IMPS. This has resulted in a significant reduction in the time and effort spent by various entities, customers and other parties involved. These new-age methods of money transfer are fast, convenient and provide easy access to documentation. Read on to find out about these payment mechanisms and related information.

Although it is easy to transfer money online, which method should one choose to transfer money? Banks offer several modes such as NEFT, RTGS and Immediate Payment Service (IMPS). Each method comes with a different feature. Depending on the value of the transaction, the speed of transfer, etc, one can choose the mode of transfer.

What is NEFT?

National Electronic Funds Transfer (NEFT): Through NEFT, one can electronically transfer funds from his/her bank account to a person’s bank account held in the same or another bank. Transfers take place in batches that are scheduled every half hour. These do not take place in real-time.

The minimum transaction value required under NEFT is one rupee and the maximum transfer limit can vary across banks. For example, the maximum transfer limit for NEFT through IDFC First bank is Rs. 20 lakhs per day and Rs. 10 lakhs per day at ICICI Bank.

NEFT transfers done through a bank’s mobile app or net banking do not attract any fees or charges. However, if one approaches a branch for NEFT transfer, there will be charges applicable. For example, ICICI Bank levies fees between Rs. 2.25 to Rs. 24.75 plus GST as per the transaction value.

• NEFT is offered by numerous banks across the nation and remittances can even be made to Nepal. It can even be used for credit card bill payments.
• NEFT Timings – The settlement does not happen in real-time like in RTGS. It takes place on an hourly basis. The amount gets credited to the beneficiary’s account within two hours. NEFT is now made available 24×7.
• There is no limit on the minimum or maximum amount allowed to be transferred using NEFT.
• For cash-based remittance, an upper limit of Rs. 50,000 per transaction is applicable. In this, customers must furnish complete details including address, telephone number, etc.
• For transferring funds from remitting account to a beneficiary account, customers must fill a form with beneficiary details (account no., account holder name, IFSC code, amount to be transferred and account type). This form can be sought from any NEFT branches and can also be found online through internet banking and mobile banking services.
• Steps involved in NEFT:
  • The remitting bank initiates the transaction and delivers the message to NEFT central service.
  • The service centre receives the message and sends it to the NEFT clearing centre (governed by RBI) with the details of the next batch available for the transaction.
  • The clearing centre distinguishes the transaction destination bank-wise and accounting entries are created to receive funds from remitting banks for transferring funds to the beneficiary bank.
  • The destination bank gets a message from the clearing centre to send the credit to the beneficiary customer’s account.
• Customers don’t have to pay any charges for NEFT transactions.

What is RTGS?

Real-Time Gross Settlement (RTGS): In the RTGS system, the money gets credited to the beneficiary’s account on a real-time basis, i.e., instantly. The RTGS system is ideal for large-value transactions that need immediate clearing. This mechanism is mainly used by corporates and institutions for real-time fund transfers. The minimum amount required to be transferred under RTGS is Rs. 2 lakhs. The maximum amount that can be transferred under this system can vary across banks. There is no upper limit set by the RBI for RTGS transactions. For example, the maximum transfer amount is Rs. 20 lakhs per day at IDFC First Bank and a maximum of Rs. 10 lakhs can be transferred through ICICI Bank under RTGS.

No transaction charges are applicable for RTGS transactions initiated through online modes (i.e. internet banking, mobile apps). Some banks, however, charge fees for transactions initiated through bank branches. For example, ICICI Bank charges Rs. 20 to Rs. 45, plus GST, as per the transaction amount.

Some of the key features of RTGS Transactions are:

• Realtime online fund transfer
• Meant for high-value transactions
• Safe and secure fund transfer option
• Immediate clearing
• Transactions executed on an individual and gross basis

RTGS Charges - Each bank can fix its charges for RTGS transactions. The details of charges (Excluding GST) are as below:

What is IMPS?

Immediate Payment Service (IMPS): IMPS is used for real-time fund transfer through online channels of banks including mobile banking, net banking, SMS and also ATMs. Under this fund transfer system, the National Payments Corporation of India (NPCI) helps facilitate the transfer of funds between member banks. The transfer across bank accounts takes place in an instant. The initiating party requires the beneficiary bank account number and IFSC code to initiate and complete the transaction. The amount can be transferred using the IMPS system throughout the year, 24/7. The minimum transaction value for this mechanism is Re. 1 and the maximum value can be Rs. 2 lakhs. This system is widely used for small-value transactions primarily by retail customers.

The transaction charges vary across banks. For example, there are no charges appliable for transferring through IDFC First Bank using IMPS. However, HDFC Bank charges between Rs 3.5 to Rs 15, plus GST, as per the transaction amount.

• It is governed by the National Payments Corporation of India (NPCI). Under this system, the beneficiary account gets credited immediately after a fund transfer request is initiated by the payer.
• IMPS timings – It is available 24×7, 365 days. It can also be used on Sundays and any bank holidays.
• It does not have any minimum limit on transactions.
• Banks may have different maximum limits on daily transactions.
• IMPS fund transfer is secure and involves a two-step authentication process to initiate transactions. The first step of security is the individual’s mobile number and the second is MMID. MMID refers to Mobile Money Identifier. This seven-digit unique number is received while registering for mobile banking at a bank branch. MMID combined with the user’s mobile number is mandatory to transfer money using mobile banking for IMPS.
• Users receive SMS confirmation on their registered mobile number for each credit or debit transaction in their account.

What is the Difference Between NEFT, RTGS & IMPS

Additional Comparison Points Between NEFT, RTGS and IMPS

Important Things to Note Before Initiating a Fund Transfer

• Timings: The timings for each transfer will vary across banks. In RTGS, depending on the bank and the location, the operating hours can vary. IMPS and NEFT payment modes are available 24x7.
• Transaction Fee: A separate transaction fee is levied for money transfer. However, in case the recipient does not receive the money, no fee is levied.
• GST: As per the latest norms, GST applies to the transaction fee.
• Network: Both the sender and receiver bank must be part of the network for the transfer to be executed successfully.

Important Terms Related to NEFT, RTGS, IMPS

Here are some of the important terms to know while using different methods to transfer money:

• Fund Transfer Charges: Any money transfer will involve certain charges/fees. According to the RBI, banks can decide the charges levied for different fund transfers.
• Fund Settlement Speed: Depending on the type of fund transfer, the settlement speed can be different. The amount of time taken to transfer money from one bank account to another bank account is called the fund settlement speed.
• Service Availability: As per the type of transfer, the timings can vary. IMPS and NEFT are available 24x7, while RTGS is available only during banking hours.
• Fund Transfer Limit: Total amount of money that can be transferred is called the fund transfer limit. The limit is generally different for different payment methods.

FAQs