NEFT, RTGS and IMPS Money Transfers - All you need to know

Table of Contents

• Inter-bank funds transfers within India
• What are the different ways to do bank transfers within India?
• What is NEFT and how does it work?
• How to do an NEFT transfer?
• What are the key benefits of NEFT transfers?
• What is RTGS and how does it work?
• How to do an RTGS transfer?
• What are the key advantages of RTGS transfers?
• What is IMPS and how does it work?
• How to do an IMPS transfer?
• What are the main benefits of IMPS transfers?
• How to choose between NEFT, RTGS and IMPS Transfers?
• Conclusion

Inter-bank funds transfers within India

In today's connected digital economy, direct bank to bank transfers for business as well as personal money transfers have become a norm. Online banking has made day-to-day funds transfers extremely easy to execute, thereby contributing to continued increases in money transfer volumes. As an example, in 2019 alone, the number of online payments across India were around 6.2 billion. This number continues to increase and is expected to double by the end of 2020.

What are the different ways to do bank transfers within India?

Funds transfers in India can be done through three methods. These include NEFT (National Electronic Funds Transfer), RTGS (Real Time Gross Settlement) and IMPS (Immediate Payment Service). While all these three methods help you move money within the banking system, the ideal choice will depend on your needs and the required urgency of the transaction.

So, if you want to learn how to choose the right option for your needs, stay with us to know all the essential details about NEFT, RTGS and IMPS transfers. We will also present a comparison table that will help you easily differentiate these three methods of funds transfers from each other.

What is NEFT and how does it work?

National Electronic Funds Transfer, popularly known as NEFT in short, is a payment system owned and operated by the Reserve Bank of India (RBI). It helps make the process of bank-to-bank funds transfers a lot easier. With the help of NEFT, you can transfer money electronically to different bank accounts. The transaction takes around two hours to be executed before funds are credited into the receiver's account.

The NEFT system is available throughout day and night without any stoppages every day of the year regardless of holidays. There are no limits on the amount that can be transferred. You can initiate the funds transfer from one bank account to another bank account throughout the country so long as both banks are a part of the NEFT network.

How to do an NEFT transfer?

To make use of the NEFT system, log in to your bank's online banking portal. Then, add your beneficiary with relevant details like their name, account number, account type and IFSC (Indian Financial System Code) code. The IFSC is a unique 11-digit code that helps uniquely identify a bank branch. Choose NEFT as the preferred mode of transfer, enter the amount that needs to be sent, and you are good to go!

What are the key benefits of NEFT transfers?

Below we list some of the most important benefits of the NEFT system.

• Year-round availability
• Safe and secure
• Near real-time funds transfer
• No need for cheque or demand draft
• No additional charges by RBI
• No additional charges to savings bank account customers for NEFT transactions
• Can be used for several types of transactions

What is RTGS and how does it work?

RTGS stands for Real-Time Gross Settlement and is a payment system that offers a continuous settlement of fund transfers in real-time. RTGS payments work on an individual order basis without netting. This captures the ‘Real Time' and ‘Gross Settlement' aspects of RTGS. Once an RTGS transaction is complete, payments are irrevocable. One of the biggest advantages that differentiate RTGS from other money transfer modes is real-time nature of the transaction.

While there is no upper limit in RTGS transactions, the minimum amount that can be transferred through RTGS is Rupees 2 Lakh. RTGS transfers can be done by going to the nearest bank branch, or through internet or mobile banking. There are, however, charges on RTGS transactions; these are capped by the Reserve Bank of India at Rupees 24.50 for a transfer amount between Rupees 2-5 Lakh. For transfers of Rupees 5 Lakh and above, you may be charged around Rupees 49.50. The Reserve Bank of India launched RTGS 24x7x 365 with effect from 14 December 2020 which enables banks to operate this fund transfer system round the clock all through the year.

How to do an RTGS transfer?

The procedure of transferring funds through RTGS is quite similar to NEFT. Just log in to the banking portal and add the details of the beneficiary including their name, account number and type along with the IFSC code (make sure that the recipient also has an RTGS enabled account). Choose RTGS as the mode of payment and enter the amount. Your funds transfer will be completed instantly!

What are the key advantages of RTGS transfers?

Below we list some of the key advantages of the NEFT system.

• No maximum amount limit (although there is a minimum limit of Rupees 2 Lakh)
• Safe and secure
• Instant, real-time funds transfers
• No need for a cheque or a demand draft
• Receiver won't have to visit a bank branch or deposit any papers
• Charges are capped by the Reserve Bank of India

What is IMPS and how does it work?

IMPS (Immediate Payment Service) is another real-time payment service that is available 24/7. IMPS is offered by the NPCI (National Payments Corporation of India) and enables instant funds transfers. The NPCI also allows customers to transfer money through banks and PPIs (Prepaid Payment Instruments) that include smart cards, stripe cards and digital wallets. The use of PPI payment options, thereby, helps people who do not have a bank account to avail the benefits of electronic funds transfers.

IMPS is available round the clock and every day, including even bank holidays. There isn't a limitation on the minimum funds transfer limit; however, there is an upper limit of Rupees 2 Lakh. In this way, IMPS is a mode of funds transfer with the combined perks of NEFT and RTGS.

How to do an IMPS transfer?

The procedure of using IMPS is also straight forward. First, you have to register for the mobile banking services of your bank. This generates an MPIN (Mobile Personal Identification Number) and an MMID (Mobile Money Identifier). You also need to ensure that your beneficiary has an MMID to execute an IMPS transfer. Post-registration, log in to the portal and select IMPS as the mode of transfer. Fill in the required details like the receiver's mobile number, MMID, and transfer amount. After that, fill in your MPIN, and your funds are on the way. You will also receive a transaction confirmation message through SMS. It's that simple!

What are the main benefits of IMPS transfers?

Below we list some of the biggest benefits of IMPS funds transfers.

• Instant money transfers
• Safe and secure
• Available 24x7, even on national holidays
• Easily accessible – all you need is mobile banking enabled on your account
• Cost-effective; no charges involved
• PPI (Prepaid Payment Instrument) services can be used if no bank account exists

How to choose between NEFT, RTGS and IMPS Transfers?

Now that you know more about various popular methods of funds transfer like NEFT, RTGS and IMPS, we will present the key difference between them in a tabular form. This will help you quickly determine the right mode for your next bank transfer. But before we do that, take a look at some important terms.

• Settlement Duration: Total time for funds to settle after the transfer is initiated. Settlement duration may also vary based on service availability.
• Transfer Limit: Minimum or maximum transfer amount limits.
• Service Availability: System availability time as well as holiday coverage.
• Additional Charges: Using funds transfer systems may involve additional charges. If charges apply, they are decided by the bank and are subject to RBI guidelines.
• Payment Mode: Online and/or offline payment modes.

Conclusion

There are various advantages to use online funds transfer systems like NEFT, RTGS and IMPS. These systems are fast, reliable and can be accessed from anywhere. With the help of these online banking systems, you can transfer money or make payments without the hassle of going to your bank and standing in long queues. Additionally, you have a plethora of flexible choices at your disposal. Depending on the amount and the needed urgency of your transfer, you can choose which transfer method is best for your needs, keeping factors like transaction speed, additional charges and most importantly, timing, in consideration!