With the government's focus towards 'Digital India', online transactions have gained significant popularity. The three most popular and widely used money transfer channels are NEFT, RTGS and IMPS.
Account holders can transfer and receive money instantly with the help of these channels. We explain the fundamental difference between NEFT, RTGS and IMPS.
NEFT is an abbreviation for National Electronic Funds Transfer. Developed and maintained by the Reserve Bank of India, NEFT has been in operation since November 2005. It enables the online transfer of money between NEFT-enabled bank accounts. Since it is under RBI regulation, it operates in accordance with the rules set forth by the central bank.
READ MORE: Your Questions Answered: Opening an RD account: What are its advantages, tenure, deposit limits and other features?
RTGS stands for Real-Time Gross Settlement. The RBI initially offered this fund transfer option in 2004. It is a mechanism that enables continuous real-time money transfers. You may utilise this transfer method for both online and offline transactions, and it is often intended for high-value transactions.
IMPS or Immediate Payment Service was first introduced in 2010 and is a "fast payments" system. It offers a 24x7 rapid domestic cash transfer service. Through the National Financial Switch (NFS), the National Payments Corporation of India (NPCI), a governing body for running retail payments and settlement systems in India, provides this facility.
Before initiating an NEFT transfer, one needs to ensure that both the sender's and receiver's banks are part of the NEFT transfer network.
If you're utilising RTGS for a transfer, make sure that both you and the recipient have RTGS-enabled accounts. You may either get in touch with your bank or verify your eligibility on your online banking site to acquire an RTGS-enabled account.
To send money via IMPS, you must first sign up for the bank's mobile banking service and obtain an MPIN and Mobile Money Identifier (MMID) from the institution. You need to confirm that your beneficiary or receiver also possesses an MMID.
Minimum and Maximum amount
There is no limit on the amount of money transferred through NEFT. It can be as low as Re.1 with no cap on the upper limit.
RTGS facilitates high-value transactions with a minimum transaction limit of Rs. 2 lakh and no constraint on the maximum transaction amount.
Under IMPS, the maximum transaction limit is Rs. 5 Lakh with no minimum transaction limit.
Mode of transaction
While NEFT and RTGS facilitate both online and offline transactions, IMPS services can be used to make online transactions only.
All NEFT transactions can be completed instantly or within a few hours (usually 2 hours). However, the actual time needed for the settlement of these transactions may differ from bank to bank.
Under RTGS, the beneficiary branches are often anticipated to receive the money as soon as they are transmitted by the remitting bank in real-time. Hence the transfer process is immediate.
In the case of IMPS, it is an instantaneous payment service that enables year-round financial transfers between banks. It is the quickest inter-bank payment service.
Online money transfers are trustworthy, quick, and convenient. By using these services, you may transfer money quickly without having to stand in long queues to get cash out of the bank or make an effort to be physically present there. They also provide you with options and flexibility; depending on the amount of money you want to transfer, the speed of the transaction, the cost, and the scheduling, you may choose the service that best meets your demands.