Most people use online money transfers nowadays. They are easy, simple, and make financial transactions really easy. The convenience of transferring money online provides access to individuals across the country with the latest technology in their hands. To transfer money from one account to another, banks offer a variety of services depending on the customer’s preferences.
When you transfer money from one bank account to another, you debit the sender’s account and credit the receiver’s account. Since fund transfer in India involves two correspondent banks, RBI (Reserve Bank of India) devises protocols for effecting those money transfers. RBI is the central banking institution of India responsible for monetary policy and banking regulations. RBI regulates and controls money transfer through three main options- RTGS, NEFT, and IMPS. Understanding them and knowing their differences will help you be smart financially and make your life easier. These are all money transfer services provided by Indian banks. The limits, the timings, and the style of the transaction differs with each category. If you know those things then you can select which type of transfer you wish to do or accept depending on your requirement.
RTGS- RTGS stands for Real-Time Gross Settlement. It is an option for online money transfer with your bank account. RTGS transfers happen in real-time as the name suggests. The settlement of the amount is not done in batches but on a one by one basis. There are approximately 140,000 RTGS-enabled bank branches in India. This is a completely safe and secure system of money transfer. RTGS only settles during bank hours or working hours. So if you transfer during a bank holiday, public holiday, weekend, or after working hours, you will have to wait till the bank opens. RTGS window is open between 7 am and 5.55 pm every day. The fees for RTGS services are not set by the Reserve Bank of India (RBI). Most banks don’t charge for RTGS. However, some banks do charge an amount for services.
RTGS is reserved for large transactions as the minimum amount for transfer is INR 200,000. The maximum transfer limit is INR 20,00,000. RBI stipulates remittance within 30 minutes of transfer. You can do RTGS transfer through the bank branch or you do online RTGS through internet banking. RTGS services are only available if the receiving bank branch is RTGS enabled.
NEFT- NEFT stands for National Electronic Funds Transfer. With NEFT, individuals, companies, and organizations can do one-to-one bank transfers digitally. Even if you and your recipient are associated with different banks, you can deposit money directly into their account using NEFT. Like RTGS, the system only works if both banks are NEFT enabled. It is a common money transfer service so most banks are NEFT enabled. Unlike RTGS, the difference is that there is no minimum or maximum amount that needs to be done in NEFT. Unless you are doing an in-person cash-based remittance within India, then there is a cap of INR 50,000. RBI stipulates remittance within 2 hours of transfer. Unlike RTGS, NEFT is available for customers throughout the day 24×7 (through Net Banking and Mobile Banking).
IMPS- Immediate Payment Transfer Service is a revolutionary way of money transfer in India. It differs from RTGS and NEFT as in it doesn’t require any excess details or bank information. You can transfer money using just the recipient’s mobile number. It allows for transfers 24 hours a day, 7 days a week, and 365 days a year. The money can be debited from your account and credited to the recipient instantly. IMPS is designed to transfer small amounts as the service caps transfer at INR 200,000. IMPS transactions are charged by the bank, fees usually ranging from INR 1 TO INR 25. The service is designed for mobile users and you can simply use a payee’s MMID (Mobile Money Identifier) to make transfers. MMID is a unique 7-digit number issued by the bank on registration of your mobile. This is a great resource for transferring urgently or during emergencies.
Each money transfer method, be it NEFT, RTGS, or IMPS has its benefits and disadvantages. The main differences lie in their transfer limits, time taken to transfer money, information or access needed, and availability. NEFT and IMPS are available 24×7 and have mobile banking support which makes them more user friendly. In today’s digital age, it is essential to allow banking support over the internet and mobile. IMPS has a maximum cap of INR 200,000 which makes it ideal for small and urgent transfers. For NEFT and RTGS, you will need complete banking details of the recipient whereas IMPS requires just a mobile number. Each method can be used depending on your urgency, amount, and need. Both the receiving and sending banks need to be RTGS, NEFT, or IMPS enabled which you can find out when you make your account.
