[noNEFT, IMPS, RTGS: Which mode should you choose to transfer your money?

Find out the differences between NEFT, IMPS, and RTGS and when you should use each of them.

NEFT, IMPS, RTGS Which mode should you choose to transfer your money

Thanks to the proliferation of smartphones, easy access to cheap internet, and the emergence of mobile applications, online banking has become hugely popular in India. It’s been estimated that India has 150 million online banking users as of 2020.

Online banking in India has three modes of money transfer: NEFT, IMPS, and RTGS. These have evolved into vital channels of digital payments. You are likely to have heard of all three but might not know how exactly they differ. In this article, we shall explore these modes in detail and figure which of them you should be using to transfer money.

NEFT vs RTGS vs IMPS

What do the acronyms mean?

NEFT stands for National Electronic Fund Transfer. It was introduced in 2005 by the Reserve Bank of India (RBI). Funds can be transferred from one NEFT-enabled bank account to another NEFT bank account in India on a one-to-one transfer basis. 

IMPS stands for Immediate Payment Service. It was launched in November 2010 by the National Payments Corporation of India (NPCI). As of June 2020, more than 198 million IMPS transactions were occurring each month, with an average of Rs 10,404 per transaction. IMPS is an inter-bank fund transfer system that operates on a real-time basis.

RTGS stands for Real Time Gross Settlement. It was launched in March 2004 by the RBI, and is primarily used for instant transfer of high-value amounts. Presently, more than 6.3 lakh RTGS transactions occur daily. Taken together, they account for a massive Rs 4.17 lakh crores. In November 2020, the average ticket size of funds transferred through RTGS was an impressive Rs 57.96 lakh. 

Related: What happens to your money if RBI puts restrictions on your bank?

How do they work?

NEFT works on the basis of half-hourly settlements. There are 48 half-hourly settlement batches that occur daily. The settlement of the first batch begins at 12.30 am and the settlement of the last batch happens at 12 am. 

Funds transferred through IMPS are reflected immediately with the real-time settlement occurring on an order-by-order basis. However, IMPS transfers can only be made via a mobile app or through netbanking.

Funds transferred via RTGS are reflected instantly. The beneficiary bank is instructed to transfer funds immediately, which results in instantaneous transfers. The settlement of funds occurs individually. A real-time settlement occurring in RTGS is similar to that of IMPS. RTGS can be done either online or at a bank branch. 

What are the transaction limits?

The minimum transfer value for NEFT payments is set as Rs 1, and there is no maximum transfer limit. Nevertheless, individual banks have placed their own limits on the maximum transfer per transaction and per day according to their risk perceptions. For instance, HDFC Bank has set an upper limit of Rs 2 lakh per transaction per customer per day. However, each customer can set a maximum limit on the overall amount to be transferred in a day to a third party. In the case of HDFC Bank customers, the maximum third party transfer limit per customer is Rs 50 lakh per day (in lots of Rs 2 lakh each). 

The minimum transfer value for IMPS is RS 1 and the maximum limit per transaction has been set at Rs 2 lakh. The maximum transfer IMPS limit per day at Rs 20 lakh. 

The minimum transfer value through RTGS is Rs 2 lakh. There is no maximum limit. 

RelatedRBI makes NEFT transfers available 24X7 

What are the time slots to transfer funds through each mode?

Earlier, you could use NEFT only on days when your bank branch was open between 8 am and 6.30 pm. However, from 16 December 2019, RBI made it possible to perform NEFT transfers anytime, any day of the year. Notably, if you wish to make NEFT transfers at your bank branch, it would have to be done during the working hours of the branch.

The IMPS window is always open and you can make IMPS transfers anytime, any day. 

From December 2020, India will join a group of select countries in making RTGS available 24x7x365. Earlier, RTGS was only available between 7 am and 6 pm on all working days, the exceptions being second and fourth Saturdays as well as Sundays.

Will any charges be applicable?

Since November 2017, there are no charges for transferring funds using NEFT through the bank’s website or mobile application. However, charges may apply if you wish to perform NEFT through your bank’s branch.

There are no charges for inward IMPS transfers. For outward IMPS transfers, however, the charges depend on the amount being transferred. 

For example, this is what HDFC Bank charges: 

  • Rs 3.5+GST for transactions up to Rs 1000
  • Rs 5+ GST for transactions between Rs 1001 and Rs 1,00,000
  • Rs 15+GST for transactions beyond Rs 1,00,000 

There are no charges for RTGS transfers done online since July 2019, when RBI stopped levying charges for the same. Even so, transactions done at a branch will incur charges. For example, HDFC Bank charges Rs 15+GST for RTGS transactions done from its branches.

When to use NEFT, IMPS, and RTGS?

Usually, NEFT is used to transfer funds up to Rs 2 lakhs that don’t need to be reflected immediately in the recipient’s account. For example, it can be used to transfer funds to friends or family members, or even for paying rent.

Since IMPS is available 24x7x365 and is primarily used to transfer smaller amounts quickly, you can use this to transfer payments that need to be reflected immediately, especially on holidays or weekends. For example: If a family member is purchasing something from a store on a Sunday and is falling short of money, you could transfer funds through IMPS. 

RTGS transactions are used to transfer large amounts quickly. Say, if you need to pay fees for your child’s educational expenses, or make business-related payments to vendors.

RelatedRBI okays 24x7 RTGS and raises contactless transaction limits 

What if there is an error in the transaction but funds get debited?

In such a case, provided that the details of the recipient are correct, the amount that has been debited should be credited back into your account within 72 working hours. It is also recommended that you get in touch with your bank branch or customer care centre.

What if funds are transferred to the wrong account?

Immediately inform your bank branch or the bank’s customer service about the error. They would be able to guide you on what needs to be done.

RelatedHow Unified Payment Interface (UPI) can change the way you bank 

Last words

As India begins to adopt digital payments for making online money transfers, it is likely that you will find yourself using either NEFT, IMPS, or RTGS to make payments on a frequent basis. As a precautionary measure, it is highly recommended that you don’t transfer a large sum of money at one go. You could transfer it in 3-4 instalments so that if something goes wrong, only a part of your funds will be unavailable. Here’s how Digital Savings Account can come handy during lockdown

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