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Differences between NEFT vs. RTGS?

What Makes NEFT Different From RTGS?

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What is RTGS?

• It is an acronym which means Real Time Gross Settlement.
• As its name applies, this system uses gross settlement as the basis for its transactions.
• It is a system that instantly transfers funds from one financial company or bank to another based on gross figures.
• RTGS transactions are only initiated from banks which have Core banking.
• It is a system that is functional for limited number of hours during working days.
• It is maintained by no other than the Reserve Bank of India or RBI.
• It completes the funds transfer on a 1 to 1 basis without messing with other transactions.
• RTGS transactions are done as soon as you are finished with the processing procedure.
• Any RTGS transaction cannot be undone for it is final and it is expected to be recorded in the Reserve Bank of India or RBI books.
• If you want to transfer your funds real time, then this is the fastest method that you can use.

What is NEFT?

• It is an acronym which stands for National Electronic Funds Transfer.
• It uses net settlement or Deferred Net Basis (DNS) as the basis for its transactions.
• NEFT transactions are done in batches which follow a specific time frame.
• This system came to life in November 2005.
• It enables the transferring of funds from one bank or from any financial company to another within India through the use of an online system.
• It deals with every financial company that falls under the SEFT clearing system.
• It was mandated by the RBI and set a deadline for all banks which was in the middle of December 2005.
• Unfortunately, SEFT was cancelled starting from January 2006 which opened NEFT to RTGS banks.

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