Q. Consider the following statements in respect of RTGS and NEFT:
- In RTGS, the settlement time is instantaneous while in case of NEFT, it takes some time to settle payments.
- In RTGS, the customer is charged for inward transactions while that is not the case for NEFT.
- Operating hours for RTGS are restricted on certain days while this is not true for NEFT.
Which of the statements given above is/are correct? (UPSC Prelims 2025)
Answer:
1 only
Notes: The correct answer is
[A] 1 only. Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) are both managed by the RBI but function under different mechanisms.
- Statement 1 (Correct): RTGS settles transactions individually and continuously throughout the day on a real-time basis. In contrast, NEFT operates on a Deferred Net Settlement (DNS) basis, where transactions are settled in half-hourly batches, leading to a slight time lag.
- Statement 2 (Incorrect): According to RBI guidelines, inward transactions (receiving money) for both RTGS and NEFT are free of charge. Charges are generally only applicable for outward (sender) transactions, though many banks have waived these for online transfers to promote digital payments.
- Statement 3 (Incorrect): Historically, both systems had restricted hours. However, NEFT became available 24x7x365 in December 2019, and RTGS followed suit in December 2020. Both systems now operate round-the-clock, including weekends and holidays.
RTGS is primarily used for high-value transactions (minimum 2 lakh rupees), whereas NEFT has no minimum limit and is used for smaller, routine transfers.