Everything about RTGS and NEFT


Due to the demonetization suddenly EFT i.e RTGS and NEFT transactions have gained popularity.   In this article we try to answer the following questions of our readers

  1. What is RTGS?
  2. What is NEFT?
  3. Difference between RTGS and NEFT?

Apart  from the above we provide the holiday list, timings and also the charges applicable.

What is NEFT? When it was started in India?

Full form of NEFT is National Electronic Funds Transfer.  It was started by RBI in the year 2005.  It works on the basis of  Deferred Net Settlemet (DNS). Wherein transactions and settlement between the accounts and banks are done in batches.

In the following example we have explained the process of clearing settlement between the banks in simple terms.

Example for clearing and Net settlement.

For better understanding of  settlement of funds transfer we should understand the clearing mechanism.  During the days of normal clearing,  all the cheques of a  Bank branch (ICICI ))day will be pooled up and will be sorted according to bank and will be totaled.   After totaling individual bank wise total amount grand total of all presenting cheques will be arrived. Which will be called  as “ A” for better understanding. Let the amount of A  be Rs.1,10,25,468/-

At a clearing house all the banks will assemble and exchange of cheques takes place here. The Bank branch (ICICI) will distribute the cheques of all other banks.  Same time the branch will collect the cheques from other banks also.  All the cheques received from others banks will be collected and total amount will be arrived.  Let us call it “ B “  and the amount be Rs.1,98,22,451/-.

Now after the cheques are exchanged the difference between A and B is called the clearing settlement amount for a particular bank branch.  In the instant case the amount is Rs. 87,96,983/-.  This is called as adverse settlement, wherein the branch is due to other banks as their presented amount is less than the received amount.  Hence the branch has to pay funds to other branches. Opposite to the favour settlement where in the branch received the amount from other banks.

The adverse is to be make good on the same day by the bank branch from their bankers account maintained with RBI or the Clearing House.

Here one thing is important in the account of bank branch (ICICI) only one entry will appear i.e debit of Rs.87,96,983/-  with narration clearing adverse.   For clearing favour branches there will be credit in their account which will also be a single entry.  This is called clearing net settlement.

What is RTGS?  When it was started in India?

Simple full form of RTGS is Real Time Gross Settlement.  Reserve Bank of India has started the live operations of  RTGS on 26th March 2004.  The rollout was partial involving only  5 constituents namely SBI, RBI, HDFC Bank, Standard Chartered Bank and Saraswat Co-Operative Bank.   Now the RTGS facility is available in each and every bank branch.

Definition of RTGS as per RBI

“ RTGS can be defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). ‘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”.

What is Real Time?

As we have already informed meaning of RTGS is Real Time Gross Settlement. Here a big question what is Real Time?  A simple explanation for this,  money is transferred from account of one bank to account of another bank instantly. The settlement between the banks is also done on transaction to transaction basis immediately and continuously. There is no netting effected here so the settlement is made between the banks for the gross or total amount.


RTGS Timings:

For Customers for all days:    8 AM  to  16.30 PM.

For interbank transactions the timings are   8 AM to 19.45 PM.

NEFT Timings and operating Batch Timings:

For Customers for all Days:  8 AM to 19.00 PM

For NEFT transactions majority banks needs a transaction window time of 15 to 30 minutes.  Hence the timings for customers were restricted to 18.30 PM.

Transactions will be settled in hourly batches.  There are 12 settlements starting from 8 AM to 7 PM.

For a transaction to be credited to the beneficiary account it takes nearly one hour to one and half hour’s of time.

Minimum / Maximum  amount:

There is no minimum and maximum amount stipulated for NEFT.  However for RTGS  the minimum amount should be Rs.2.00 lacs ( Rupees Two lacs only)

HOLIDAYS for 2016

Sr. No. Date Day Occasion
1 January 26, 2016 Tuesday Republic Day
2 March 25, 2016 Friday Good Friday
3 April 1, 2016 Friday Annual Closing of banks
4 April 14, 2016 Thursday
 Birthday of Dr. B. R. Ambedkar
5 August 15, 2016 Monday Independence Day
6 September 13, 2016 Tuesday Id-ul-Zuha (Bakrid)
7 October 11, 2016 Tuesday Dussehra / Vijaya Dasami
8 October 12, 2016 Wednesday Moharram


Maximum Service Charges as per RBI Master Circular


                                                  NEFT  Service Charges for Customers

Value Band Maximum Charges 
(exclusive of service tax)
Amounts up to  10,000/-     2.50/-
Amounts from  10,001/- to  1 lakh  5/-
Amounts above  1 lakh up to  2 lakh  15/-
Amounts above  2 lakh  25/-


                                               RTGS Service Charges for Customers

RTGS Transaction Maximum Customer Charges (exclusive of service tax)
Inward transactions Free
Outward transactions
 2 lakh to 5 lakh   25 + applicable time varying charge, subject to a maximum of ₹ 30/-.
Above   5 lakh   50 + applicable time varying charge, subject to a maximum of   55/-.


Additional Service Charge according to Time

Sr. no. Time of Settlement at the Reserve Bank of India Time varying charge per outward transaction
(in addition to flat processing charge) (exclusive of service tax)
From To
1 08:00 hours 11:00 hours Nil
2 After 11:00 hours 13:00 hours  2.00
3 After 13:00 hours 16:30 hours  5.00
4 After 16:30 hours 10.00


There are no charges for incoming transactions.

Compensation for delay in crediting the proceeds:

In case of delay in crediting the  NEFT proceeds to customers RBI has instructed all the Banks to pay interest for the delayed period.  The interest will be RBI LAF Repo Rate plus two percent for the period of delay.  The penal interest should be paid  suo-moto to customer.  i.e even of the customer has not claimed the penal interest for the delay the banks are instructed to pay the interest automatically.   Even in case of back dating or value dating the transaction the banks should pay the penal interest.


Difference Between RTGS and NEFT:

Minimum stipulated amount of Rs.2.00. No minimum amount and Maximum amount.
Credit to Beneficiary account immediately. Credit to Beneficiary account will take 1 hour.
Settlement of funds between banks on real time. Settlement of funds between banks in hourly batches.
Instruction will expire if not executed within time. Instruction will be in queue and will be carried out next day if not executed within time.



2 Replies to “Everything about RTGS and NEFT”

  1. krishnamoorthy

    no new appointment in bank in future one bank one man one army
    now days superiors are suffering due to politics and npa

  2. sivasankar yadalam

    Tank you very much for the very useful information about EFT,NEFT and RTGS. Not only this, all articles of your website are good.


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