What is the Difference Between NEFT, RTGS, and IMPS?

Posted on Wednesday, September 25th, 2024 | By IndusInd Bank

When it comes to transferring money, several electronic methods make the process fast and efficient. Three of the most used systems are NEFT (National Electronic Funds Transfer), RTGS (Real-Time Gross Settlement), and IMPS (Immediate Payment Service).

The Reserve Bank of India (RBI) introduced NEFT and RTGS systems, whereas IMPS was launched by the National Payments Corporation of India (NPCI). Although the primary goal of each payment method is to securely process online transactions, there are several differences that set them apart. Continue reading to know more.

IMPS vs NEFT vs RTGS – The Key Differences

Whether you maintain a zero-balance account or a regular savings account, understanding the key distinctions between IMPS, NEFT, and RTGS is crucial. Let’s closely review how each one varies.

NEFT (National Electronic Funds Transfer)

NEFT is a nation-wide centralised payment system introduced by the RBI in 2005. This system operates on a deferred settlement basis, meaning that transactions are settled in batches.

Key Features

• Availability: NEFT is available round the clock on all days of the year.

• Transaction limits: NEFT transactions do not have any minimum or maximum amount constraints. However, individual banks may apply their own limits.

• Charges: No charges are applicable for inward transactions at destination bank branches for crediting beneficiary accounts.

For outward NEFT transactions, the RBI has discontinued the levy of processing charges on member banks from July 01, 2019.

• Processing time: Although NEFT settlements occur in half-hourly batches, a timeline of two hours is the standard expectation for the batch settlement.

RTGS (Real-Time Gross Settlement)

Launched in 2004, RTGS is another popular method for transferring funds. Unlike NEFT, RTGS operates on a real-time basis, and transactions from your savings account are settled individually rather than in batches.

Key Features

• Availability: Since December 14, 2020, RTGS is available 24/7, 365 days a year.

• Transaction limits: The minimum amount for RTGS transactions is ₹2 lakh, with no upper limit.

• Charges: Similar to NEFT, inward transactions are free for the recipient. But some banks may charge outward transaction processing fee up to ₹ 50 (without tax). However, IndusInd Bank does not levy any outward transaction processing charges since July 2019.

• Processing time: RTGS transactions are processed in real-time, which means that funds are transferred instantly.

IMPS (Immediate Payment Service)

IMPS, launched in 2010, is an advanced and fast method for transferring funds. Managed by the NPCI, IMPS is known for its versatility and accessibility.

Key Features

• Availability: IMPS offers a real-time, 24/7 interbank electronic funds transfer service. It is capable of processing remittances from person to person, person to account, and person to merchant through mobile, internet, and ATMs.

• Timing and settlement: IMPS operates round the clock, 365 days a year, even on bank holidays.

• Transaction limits: Typically, the minimum amount is ₹1, and the RBI increased the daily IMPS transaction limit to ₹5 lakh from ₹2 lakh in 2021. This maximum limit is the keydifference between NEFT and RTGS and IMPS transactions.

• Processing time: IMPS transactions are instantly settled upon initiation.

Also Read: Steps to be Taken If Your Bank Account is Frozen

Which One Should You Use?

Choosing the right digital payment method depends on several factors, including the urgency of the transaction, the amount, and when you need to transfer the funds.

NEFT: It processes transfers in half-hour batches, which makes it optimal for planned or non-time-sensitive transfers.

RTGS: It facilitates real-time transfers with a minimum transaction value of ₹2 lakh and no maximum limit. Best for urgent and large-value transfers. 

IMPS: Available 24/7, IMPS allows real-time transfers with no minimum limit and a maximum limit of ₹5 lakh. It can be ideal for instant, small to medium-value transactions.

Key Takeaways

NEFT, RTGS, and IMPS differ significantly in terms of their transaction limits, processing times, and availability. NEFT is ideal for batch-processed transactions without amount restrictions. RTGS, on the other hand, for high-value, real-time transfers, and IMPS for immediate fund transfers up to ₹5 lakh at any time. However, a crucial similarity among these payment methods is that they all simplify managing your finances.

To achieve flexibility and convenience in all these transactions, consider the IndusInd Bank Indus Delite Savings Account. You can open this zero-balance account from anywhere with a 100% digital and paperless process. Moreover, you benefit from exclusive cashback, rewards, deals, and insurance coverage. Apply Now!

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.