Saturday, January 18, 2014

Difference between NEFT and RTGS or IMPS Interbank Fund transfer

NEFT and RTGS are two main ways of electronically transferring money between two banks in India using net banking accounts. Suppose you have a resident, NRI or NRO account from ICICI bank and want to transfer money to your family member or third party, which has account in HDFC bank, then you can either use NEFT (National Electronic Funds Transfer) or RTGS (Real Time Gross Settlement) depending upon, how much money you want to transfer. A third way, rather new way of money transfer between banks is IMPS (Interbank Mobile Payment Service or Immediate Payment Service) was introduce in 2010 by the National Payments Corporation of India to empower customers to transfer money instantly.


If you go to your net banking account, you can see all three ways of transferring money between banks. By the way, if you just want to transfer money to another account but in same bank e.g. to your wife's account in ICICI bank, you don't need to use NEFT, RTGS or IMPS, it’s done instantly by the bank itself.

I think that's the fastest way of transferring money between two accounts. In this article, we will see some key differences between NEFT vs RTGS vs IMPS way of transferring money, so that you can take maximum benefits of these online services. Two most important things to know is charges (as interbank money transfer is no more free in India) and timings (as both NEFT and RTGS has cut-off times) to avoid being late on money transfer.




Differences between NEFT and RTGS Money transfer between Banks

First and fore most differences between them is amount, NEFT is suitable for transferring small amounts (e.g. up to 2 lacs) while RTGS is used for transferring large amounts e.g. 2 to 10 lacs, in fact minimum amount which can transfer using RTGS is 2 lacs. Second major difference between RTGS and NEFT is that, settlement of RTGS is much faster than NEFT.

RTGS stands for Real Time Gross Settlement and true to its name Settlement happens at real time, while settlement of NEFT transfers are done in batches e.g. every hour means if you initiate an NEFT transfer between your account in Axis Bank to your wife's account in Kotak Mahindra at 10.10 AM then its settlement will happen at 11.00 AM, because next hourly batch is at 11.00 AM, even a 10.50 AM NEFT transfer will also settle at 11.00 AM.


Here Settlement means money will be reflected on receiver's account. By the way, you may see delay even on RTGS transfer, because though settlement between banks happens at real time, beneficiary bank may take up to 2 hours to deposit amount into receiver's account.

Let me give you an example, suppose you own an SBI saving account and your Wife owns ICICI saving account and you transfer 5 lacs from your SBI to your Wife's ICICI at 11.30 AM using RTGS transfer, though SBI bank will immediately deduct money from your saving account and transfer that to ICICI bank within minutes, ICICI banks can take up-to 2 hours to show that money in your Wife's account. But don't worry that's the maximum delay, normally no bank take that much amount, but it’s always safe to take screenshot of transfer while transferring large amounts between two accounts.


Like all modern bank, ICICI bank also provides all three modes of fund transfer in India e.g. NEFT, RTGS and IMPS , as shown in below image.

NEFT vs RTGS charges to transfer money

Another key difference between NEFT and RTGS transfer is that RTGS may look  more expensive than NEFT, but always remember it’s used for large money transfer, and RTGS charges also depends upon timing, it charge more during evening than morning. For example here is comparison of NEFT charges and RTGS charges. Following section contains detailed NEFT and RTGS charges ( this may vary, so always follow your banks’s information, they will tell you exact charge during interbank money transfer).

NEFT Charges for Inter Bank Money Transfer    

  1. Rs 2.5 for amount upto 10,000 Rs
  2. Rs 5.0 for amount from 10,000 to 1 lacs
  3. Rs 15 for amount above 1 lacs but below 2 lacs
  4. Rs 25 for amount more than 2 lacs



RTGS charges for transferring money between two bank accounts  
As I said, RTGS services charges different for same amount during different periods of day.  We can basically divide amounts in two category between 2 to 5 lacs and above 5 lacs.

9 am to 12 pm -  RTGS will charge Rs 25 for amount between 2 - 5 lacs, and Rs 50 for more than 5 lacs
12.01 to 3.30 pm - Rs 26 for amount between 2 to 5 lacs and Rs 51 for amount above 5 lacs
After 3.30 to close - Rs 30 for  transfer between 2 - 5 lacs and Rs 55 for transfer of more than 5 lacs


IMPS Charges
IMPS or Immediate Payment service was initially offered free of charge to promote, but now banks are charging money for using IMPS facility for fund transfer. ICICI bank charges same money as NEFT for IMPS. ICICI bank customers can compare NEFT, RTGS and IMPS charges by seeing this link


 You can see that RTGS charges Rs 25 for transferring 2-5 lacs during morning 9 am - 12 noon, charges Rs 26 for same money during 12 noon - 3.30 pm and charges Rs 30 for same amount after 3.30. So if you want to transfer amount, which is more than 2 lacs, prefer to do it on morning than evening. Similarly for amount more than 5 lacs, RTGS charges Rs 50 during morning hours and Rupees 55 after 3.30 PM as shown below.
  
One more key difference between NEFT and RTGS money transfer is that 8.00 am to 6.30 pm on Monday to Friday, while RTGS facility is only available between 9.00 am to 4.30 pm. Similarly on Saturday, RTGS facility is available only between 9.00 am to 01.30 pm, while NEFT is available between 8.00 am to 12.30 pm.

This is the most important difference between NEFT and RTGS you must remember to transfer money at same day, otherwise your transfer will happen at next day. Another think is that NEFT and RTGS service will not be available during bank holidays, so plan your transfer accordingly.



IMPS (Immediate Payment Service)

IMPS is next generation instant money transfer service from your mobile, effectively any time, any where. It has some key difference between RTGS and NEFT. This service is designed to make use of your mobile phone for transferring money between banks but you can also it via netbanking.

In fact, IMPS Funds Transfer facility for ICICI bank is available through iMobile, SMS Banking and Internet Banking. You will need a 7 digit MMID (Mobile Money Identifier) number to transfer funds via IMPS.

Though you need to check whether bank is participating on IMPS service or not.  Though most popular public sector banks e.g. Union bank, SBI, Syndicate bank and private sector banks, even newly launched DBS (Development bank of Singapore), Fedral Bank, YES Bank, BNP Paribas are all part of IMPS service.

Now let's compare IMPS with NEFT and RTGS, main difference between IMPS and NEFT, RTGS is that is available 24x7, including Sundays and even on bank holidays, while both NEFT and RTGS available only limited period and also not available during bank holidays.

Second difference is that IMPS is Immediate Payment service, The beneficiary account is credited immediately when a Fund Transfer request is made through your mobile phone or net banking, while NEFT is hourly settlement service.

Third difference between IMPS and RTGS is that transaction limit is Rs 1 in IMPS while its 2 lacs in RTGS, which means like NEFT, you can transfer any amount of money using IMPS.  Initially IMPS service was free, but now almost all banks are charging money, which is in-line with NEFT e.g. for ICICI bank customers, IMPS Service on Internet and Mobile banking will be chargeable from April 1, 2012. With all its benefits, IMPS is still relatively new but its picking up momentum.



That's all about difference between NEFT and RTGS and IMPS way of transferring money between two banks. Use RTGS for transferring large amount and NEFT for transferring small amount. Also remember than NEFT starts early at 8.00 am and available till 6.30 pm, while RTGS starts at 9.00 and available only till 04.30 pm.

Also note that RTGS charges more for transferring money at different times, it charges less at morning and more at evening, so if you want to transfer large amounts, try to do it at morning e.g. transferring more than 5 lacs using RTGS facility will cost you Rs 50 between morning 9.00 to 12.00 pm

12 comments:

  1. I want to transfer 2.5 lacs from my one account of HDFC bank to another one from Axis bank, Should I use RTGS or NEFT as it seems NEFT will charge me less money. Also if you own two accounts between two banks, will bank still charge you for fund transfer between them. Since I am not transferring this money to any third party account, it is just my another account.

    ReplyDelete
  2. Its up to you, if you want the money immediately go for RTGS else you can wait upto 1 or 2 Hrs you can go with NEFT. Hope you wont mind for 5 Rs extra charging for RTGS after 3.30 PM.
    Even though its your account in different banks, it will be treated as third party only.
    If you want to transfer amount to same bank, you can transfer anytime without any charges.

    ReplyDelete
  3. How do I remitte imps fund transfered from HDFC to sbi

    ReplyDelete
  4. Thnx 4 sharing dis precious information wid us

    ReplyDelete
  5. very helpful post, thanks for putting together

    ReplyDelete
  6. How to stop neft transfer from SBI to hdfc bank.

    ReplyDelete
  7. I m transfering 10000 it deducts extra 5.73 ₹ every time sbi 2 sbi why??

    ReplyDelete
  8. of around 60 participant banks only SBI, AXIS, ICICI and UCO Bank are charging. Rest of the banks are providing this for free.

    ReplyDelete
    Replies
    1. No,absolutely wrong.The Bank of Baroda charging for neft/rtgs

      Delete
  9. My son is studying in china. How can I send his fees 5 lack fees to his china bank account by online. I have NRI account in Indian bank kollam

    ReplyDelete
  10. every account number is a unique number then what is need of ifsc code during transaction ?

    ReplyDelete
  11. very helpful one, thanks to blogger.

    ReplyDelete

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