GROUP - 6

Understanding ‘NEFT & RTGS

How does one transfer money from one bank to

another?

Obvious answer : By Cheque

How long does it take for money to move into

your account after depositing the Cheque ?

Probably a day or two

In essence it does take some time?

Is there no other option for money transfer which quickly transfers money from one bank account to

another bank account?

NEFT and RTGS are two convenient modes of money

transfer between banks in India

RTGS stands for “Real Time Gross Settlement” – It enables transfer of

money in real time.NEFT stands for “National

Electronic Funds Transfer” which is an online system of transferring

funds between financial institutions,

In RTGS the beneficiary bank credits the beneficiary’s account in a span of two

hours after receiving the funds transfer message. RTGS transactions are

processed throughout the working hours of the system.

NEFT is done on a net basis where the bank clubs transactions together and only

the net amount is transferred. This settlement usually takes place 12 times a

day on weekdays and 6 times on Saturdays. NEFT takes place within the same day if it is within the cut off time

and the next working day if it is beyond the cut-off time.

• The acronym 'RTGS' stands for Real Time Gross Settlement

• RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a 'real time' and on 'gross' basis

• This is the fastest possible money transfer system through the banking channel

• Settlement in 'real time' means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed

• 'Gross settlement' means the transaction is settled on one to one basis without bunching with any other transaction

• Considering that money transfer takes place in the books of the Reserve Bank of India, the payment is taken as final and irrevocable

• The acronym “NEFT” stands for National Electronic Funds Transfer.

• Funds are transferred to the credit account with the other participating Bank using RBI's NEFT service.

• RBI acts as the service provider and transfers the credit to the other bank's account.

NEFT operate on a deferred net settlement (DNS) basis which settles transactions in batches.

In DNS, the settlement takes place at a particular point of time. All transactions are held up till that time

Type Minimum Maximum

RTGS Rs. 2 Lakh No Limit

NEFT No Limit No Limit

(abroad facility only in Nepal 50,000 max)

* HOWEVER MAXIMUM AMOUNT PER TRANSACTION IS LIMITED TO RS 2,00,000

RTGS transactions will be sent to RBI based on the following schedule:

Day Start Time End Time

Monday to Friday 9:00 hrs 16:00 hrs

Saturday 9:00 hrs 13:30 hrs

NEFT transactions will be sent to RBI based on the following schedule:

Day Start Time End Time

Monday to Friday 8:00 hrs 19:00 hrs

Saturday 8:00 hrs 13:00 hrs

REMITTING CUSTOMER

BENIFICARY CUSTOMER A/C

BENIFICIARY BRANCH

Clearing House(RBI)

PROCESS

• The essential information that the remitting customer would have to furnish to a bank for the remittance to be effected

Amount to be remitted

Account number which is to be debited

Name of the beneficiary bank

Name of the beneficiary customer

Account number of the beneficiary customer

Sender to receiver information, if any

The IFSC Number of the receiving branch

It depends on the arrangement between the remitting customer and the remitting bank.

Some banks with internet banking facility provide this service.

Once the funds are credited to the account of the beneficiary bank, the remitting customer gets a confirmation from his bank either by an e-mail or by a short message on the mobile

Majority of commercial banks have employed RTGS and it is available in

over 30472 branches

NEFT facility is available in 32407 branches of banks. These branches

may be in remote corner of the country also

BENEFITS

Available to all All our Net banking (existing & new) users are eligible to utilize this on-line facility.

It's simple, convenient, quick and secure Users can transfer funds to the beneficiaries in other banks in a simple, convenient and

seamless manner.

Funds transfer to other banks is faster, secure and safe

Anytime, anywhere... Simple and easy to operate - from home / office anytime, anywhere

Save time and energy

Get more for less RTGS/NEFT cost less than the conventional modes of remittance such as DD/MT

To conclude I’ve tried to summarize the key differentiation in these concepts through diagrams in the next 2 slides

Money transfer happens in real time and directly

through the banking system

Money is aggregated in clusters for reconciliation

and settlement