Interbank transfers are form of money transfers that occur between two banks. One may want to transfer a certain amount of money from an account in one bank to another account in a different bank. This will count as an interbank exchange. There are two main modes of interbank transfers in India, namely National Electronic Fund Transfer or NEFT and Real Time Gross Settlement or RTGS.
However, one must understand the essential differences between these two modes of money transfer to take advantage of them. Both are useful in their own ways and are used in case of retail banking as well as corporate banking. Listed below are some of the main differences between the two.
Minimum transfer limit
For NEFT transfers there are no minimum limits, as people can transfer very low amounts of money with the same as well. However, For RTGS, the transfer amount should be at least Rs. 2 Lacs. The RTGS limit ensures that smaller sums of money cannot be transferred using this procedure.
However, there is no upper limit for either NEFT or RTGS, which indicates that you can transfer as much money as you like using these methods.
Settlement
Since RTGS refers to real-time settlement, the fund transferred through this method is debited into the receiver’s account instantaneously. There is no waiting involved for the banks to clear the transaction. However, in case of NEFT, the funds are settled throughout the day in batches. This is why if a NEFT transfer is initiated toward the end of the day; there is a high possibility that the settlement will be completed the next day.
Timings
For NEFT, the timings are 8 am to 6.30 pm Monday to Friday, while on Saturday, the timing ranges from 8 am to 12.30 pm. On the other hand, for RTGS the timings are 9 am to 4.30 pm between Monday and Friday. On Saturday, the RTGS transfers can be initiated between 9 am and 1.30 pm.
Suitability
NEFT has no minimum limit and is thus more suitable for transfer of small amounts of money. The RTGS limit signifies that this kind of interbank transfer is more suited for greater sums of money. Mostly corporate transfers are completed using RTGS. This may involve a large-scale business or a transaction between two banks. For such organizations, instant settlement of the funds is very vital, which is why RTGS offers real-time transfers.
In any case, both of these modes of interbank exchanges are useful, even though they cater to different clients.
However, one must understand the essential differences between these two modes of money transfer to take advantage of them. Both are useful in their own ways and are used in case of retail banking as well as corporate banking. Listed below are some of the main differences between the two.
Minimum transfer limit
For NEFT transfers there are no minimum limits, as people can transfer very low amounts of money with the same as well. However, For RTGS, the transfer amount should be at least Rs. 2 Lacs. The RTGS limit ensures that smaller sums of money cannot be transferred using this procedure.
However, there is no upper limit for either NEFT or RTGS, which indicates that you can transfer as much money as you like using these methods.
Settlement
Since RTGS refers to real-time settlement, the fund transferred through this method is debited into the receiver’s account instantaneously. There is no waiting involved for the banks to clear the transaction. However, in case of NEFT, the funds are settled throughout the day in batches. This is why if a NEFT transfer is initiated toward the end of the day; there is a high possibility that the settlement will be completed the next day.
Timings
For NEFT, the timings are 8 am to 6.30 pm Monday to Friday, while on Saturday, the timing ranges from 8 am to 12.30 pm. On the other hand, for RTGS the timings are 9 am to 4.30 pm between Monday and Friday. On Saturday, the RTGS transfers can be initiated between 9 am and 1.30 pm.
Suitability
NEFT has no minimum limit and is thus more suitable for transfer of small amounts of money. The RTGS limit signifies that this kind of interbank transfer is more suited for greater sums of money. Mostly corporate transfers are completed using RTGS. This may involve a large-scale business or a transaction between two banks. For such organizations, instant settlement of the funds is very vital, which is why RTGS offers real-time transfers.
In any case, both of these modes of interbank exchanges are useful, even though they cater to different clients.
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