What is the difference between NEFT and EFT?
The banking regulator, the Reserve Bank of India has instructed
banks that they should NOT use the instant funds transfer system,
known as the Real Time Gross Settlement (RTGS), for an amount BELOW
Rs.1 lakh. The new rule would come into effect from January 1,2007.
For small transactions, RBI has asked banks to offer National
Electronic Funds Transfer (NEFT) which provided T+0 and T+1
settlement system (depending on the time a customer gives
instruction to the bank for tranferring the fund).
The key difference between RTGS and NEFT is that while RTGS in
on gross settlement basis, NEFT is on net settlement basis.
Besides, RTGS facilitates online transfer, while NEFT involves four
settlement cycles a day 9.30 am, 10.30 am, 12 pm and 4 pm. Thus if
a customer has given instruction to its bank to transfer money
through NEFT to another bank in the morning hours, money would be
transferrd the same day, but if the instruction is given later
during the day, money would be transferred next day.
However, RTGS facility is available in over 25000 branches,
while NEFT is availabel in 9800 branches. Besides, while all
commercial banks have put in place the RTGS facility, only 43 banks
have purchased the software required to facilitate NEFT based
transaction. RBI has instructed banks that all branches which are
RTGS enabled should also provide NEFT by December 2006. Sources
said that RBI also had planned to discountinue EFT-Electronic funds
Transfer. This is because EFT is availabel only in 15 locations
where RBI has its clearing house.
As of now, customers can access the RTGS facility only upto 3 pm
and inter-bank transactions are possible upto 5 pm.
Related Q&A：
What is difference between NEFT and RTGS？Well, let me tell you, there are some significant differences between NEFT and RTGS. NEFT is a payment system where transactions are processed in batches and might take some time to get credited. But RTGS, oh boy, it's way faster! With RTGS, the transfer of funds happens in real-time, meaning the money is credited immediately. Another thing is that the minimum amount requirement for RTGS is usually higher than that of NEFT. So, if you need the money urgently, RTGS is the way to go. But if you're not in a rush and the amount is smaller, NEFT could work just fine.
