I. In RTGS, the settlement time is instantaneous while in case of NEFT, is takes some time to

settle payments.

II. In RTGS, the customer is charged for inward transactions while that is not the case for

NEFT.

III. 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?

(a) I only

(b) I and II

(c) I and III

(d) III only

Ans-a

Explanation

The acronym ‘RTGS’ stands for Real Time Gross Settlement, which can be explained as a system where there is continuous and real-time settlement of fund-transfers, individually on a transaction-by-transaction basis (without netting). ‘Real Time’ means the processing of instructions at the time they are received; ‘Gross Settlement’ means that the settlement of funds transfer instructions occurs individually.

Funds settlement takes place in the books of the Reserve Bank of India (RBI), the payments are final and irrevocable.

 RTGS is available 24x7x365 with effect from December 14, 2020.

The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is ₹ 2,00,000/- with no upper or maximum ceiling.

service charges levied by banks for offering funds transfer through RTGS system, a broad framework of charges has been mandated as under:

a) Inward transactions – Free, no charge to be levied. Hence statement  2 is incorrect

b) Outward transactions – ₹ 2,00,000/- to 5,00,000/-: not exceeding ₹ 25/- (exclusive of tax, if any)

Above ₹ 5,00,000/-: not exceeding ₹ 50 (exclusive of tax, if any)

Banks may decide to charge a lower rate but cannot charge more than the rates prescribed by RBI.

National Electronic Funds Transfer (NEFT) is an electronic fund transfer system in which the transactions received up to a particular time are processed in batches. Contrary to this, in RTGS, the transactions are processed continuously on a transaction-by-transaction basis throughout the day.

The NEFT system is available round the clock throughout the year on all days, i.e., on 24x7x365 basis. NEFT presently operates in batches on half-hourly intervals throughout the day. So its not instant like RTGS , it takes some time . 

Hence statement  1 is correct

Besides funds transfer, NEFT system can be used for a variety of transactions including payment of credit card dues to the card issuing banks, payment of loan EMI, inward foreign exchange remittances, etc.

Customer charges levied by bank for NEFT transactions

There are no charges to be levied for inward transactions at destination bank branches for giving credit to beneficiary accounts.

For outward transactions undertaken using the NEFT system, RBI stopped levying processing charges on member banks from July 01, 2019.

Also, in order to give further impetus to digital retail payments, banks have been advised to not levy any charges from their savings bank account holders for NEFT funds transfers initiated online with effect from January 01, 2020.

The maximum charges which originating bank can be levy from its customers for other outward transactions, if they so desire, are given below: –

– For transactions up to ₹10,000 : not exceeding ₹2.50 (+ Applicable GST)

– For transactions above ₹10,000 up to ₹1 lakh: not exceeding ₹5 (+ Applicable GST)

– For transactions above ₹1 lakh and up to ₹2 lakhs: not exceeding ₹15 (+ Applicable GST)

– For transactions above ₹2 lakhs: not exceeding ₹25 (+ Applicable GST)

Hence statement 3 is incorrect 

Read: Previous Year UPSC Economy Questions (PYQs) With Explanation 2025