Banking Awareness is an important part of Bank exams. Study our Banking Awareness topics to excel in Bank exams. Comparison between NEFT, RTGS and IMPS. The points in red color are the most important for exams.
NEFT System – National Electronic Funds Transfer
Introduction: NEFT is a nationwide payment system facilitating one-to-one funds transfer. Under this Scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme.
Limit on amount transfer through NEFT: There is no Maximum Limit or Minimum limit.
- Points to remember: Individuals who do not have a bank account (walk-in customers) can also deposit cash at the NEFT-enabled branches with instructions to transfer funds using NEFT. However, such cash remittances will be restricted to a maximum of ₹ 50,000/- per transaction.
- Maximum amount per transaction is limited to ₹ 50,000/- for cash-based remittances within India and also for remittances to Nepal under the Indo-Nepal Remittance Facility Scheme.
How does NEFT operates?- NEFT system operates in batches of half hour interval. It operates on Deferred Net Settlement (DNS) basis which settles transactions in batches.
- There will be 48 half-hourly batches every day. The settlement of first batch will commence after 00:30 hours and the last batch will end at 00:00 hours. NEFT is now available on all days of the year, including holidays.
Some Extra: (Suppose you went to your bank and did a NEFT transfer of Rs 10,000 at 3:35 PM and many people like you behind in the queue also did the NEFT transaction. Now at the next batch like say at 4:00 PM all these NEFT transaction that were done between 3:30 and 4:00 PM will be processed and the money will be actually transferred.)
What is IFSC?: IFSC or Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system.
- It is of 11 digit. First Four: alpha characters representing the bank; and the last 6 characters representing the branch. The 5th character is 0 (zero).
Structured Financial Messaging Solution (SFMS) message: containing a batch of NEFT payment instructions for funds transfer, processed and consolidated in the manner specified for transmission of payment instructions.
Credit-push system – a payment system where transactions can be originated by the payer / remitter/sender only to pay/ transfer / remit funds to a beneficiary. So NEFT is a Credit push system.
- Note: UPI is a both Push and Pull System.
Penal Interest Rate for banks is NEFT deposit is not done on time: Repo Rate + 2%
RTGS- Real Time Gross Settlement
Introduction– It is a continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting).
- As the bank receives an RTGS request it is processed at the same time and hence fund in RTGS is transferred instantly unlike in NEFT where you have to wait for 30 mins batch.
- ‘Real Time’ means the processing of instructions at the time they are received rather than at some later time; ‘Gross Settlement’ means the settlement of funds transfer instructions occurs individually.
Limit for transaction: Minimum Amount: Rs 2 lakh
- There is no maximum limit.
Time Limit: RTGS is available on 24×7 basis. Means it is available all day. However there is a cutoff timing in RTGS after it has become 24×7. This is mentioned below:
- Cutoff timing in RTGS= 23:50 hours
- End of day at 00:00 hours
- Open for Business at 00:30 hours.
Hence RTGS is unavailable for 40 minutes during a day.
IMPS- Immediate Payment Service
- It stands for Immediate Payment Service. It is managed by NPCI. NEFT and RTGS are managed by RBI.
- IMPS provides the facility of 24 X 7 X 365 interbank real-time fund transfer.
- Plus Point: IMPS can be accessed on multiple channels like Mobile, Internet, ATM, SMS, Branch and USSD(*99#).
- This facility is provided by NPCI through its existing National Financial Switch (NFS).
Fund transfer/Remittance through IMPS –Channels
- Using Mobile number & MMID (P2P)- MMID – Mobile Money Identifier (7 digit code) Each MMID is linked to a unique Mobile Number. Different MMIDs can be linked to same Mobile Number.
- Using Account number & IFS Code (P2A) – Person to Account
- Using Aadhaar number (ABRS)- Aadhaar based Remittance Service (Extra- QSAM- Query Service on Aadhaar Mapper)
- Mobile number + MPIN
- Card + ATM PIN
- User ID + Internet Banking Password/Transaction Password
Transaction Limit: No Minimum Limit;
Maximum: Banks can set their own limit but not greater than Rs 10 lakh as per NPCI.