NEFT and RTGS are electronic funds transfer systems operated by the Reserve Bank of India. NEFT operates in hourly batches for fund transfers of any amount with no minimum limit. RTGS provides real-time fund transfers for high-value transactions of Rs. 2 lacs and above, with settlement occurring individually on a continuous basis. Both systems allow fast domestic transfers between banks across India using IFSC codes, with NEFT being suitable for smaller transfers and RTGS for larger, time-critical transfers.

1. NEFT/RTGS

2. Group Members
• Benson Verghese 19
• Sarita Sapaliga 29
• Aditi Mahapadi 40
• Dhananjay Joshi 43
• Shruti Ketkar 52

3. Evolution of the Payment System in India
• Earliest Payment Instrument - Coins punch-marked or
cast in silver or copper & credit system involved Bills of
Exchange.
• In ancient India - rnapatra or rnalekhya.
• In Mauryan period – adesha
• In Mughal period – dastawez
 dastawez-e-indultalab
 dastawez-e-miadi
 barattes

4. • Hundis
were used,
 as remittance instruments
 as credit instruments
 for trade transactions
types of Hundis,
 Darshani Hundis
 Muddati Hundis
• Paper Money
• Cheques
• Post Bill – Inland Promissory Notes

5. • Cash Credit Account & Buying and Selling of Bills of
Exchange
• Negotiable Instruments Act, 1881
• Clearing House
• Reserve Bank of India (RBI)
• Till early 2000, cash, DDs & cheque payments were the
famous modes of transactions
• Payment going E-way
 ECS (Credit)
 ECS (Debit)
 NEFT
 Credit cards & Debit cards etc

6. Classification

7. National Electronic Fund Transfer
(NEFT)
• Introduced in November 2005
• Electronic funds transfer
• ‘Eleven’ hourly settlements
– Weekdays : 9 am to 7 pm
– Saturday : 9 am to 1 pm

8. NEFT Transfer Online screen

9. PROCESS
Request for NEFT by bank customer
Data Entry at the Sending Bank Branch
Processing /Data Upload at Sending NEFT Service Centre
Transmission/Submission of NEFT message to the NEFT centre
Processing & transmission of NEFT message to the beneficiary banks
Data validation at receiving NEFT Service Centre
Payment to beneficiary

10. How does NEFT system operate
Step 1: First of all, the remitter has to provide the requisite
information like
• Beneficiary’s Name.
• Beneficiary’s Account number.
• Beneficiary’s Account type ( cash credit, loan account, etc)
• Bank name, location & base branch in which the
beneficiary account is held.
• IFSC code of beneficiary bank etc in order to start the
process of NEFT.
Step 2: The bank branch at which the fund transfer request
originated, prepares a message and sends it to its pooling
centre (also called the NEFT Service Centre).

11. Step 3: The pooling centre forwards the message to the NEFT
Clearing Centre (operated by the National Clearing Cell, RBI,
Mumbai) to be included in the next available batch.
Step 4: The RBI at the clearing centre sorts the transactions
bank- wise and prepares accounting entries to receive funds from
(debit) the originating banks and give the funds to (credit) the
destination banks. Thereafter, bank-wise remittance messages
are forwarded to the destination banks through their pooling
centre (the NEFT Service Centre).
Step 5: The destination banks receive the remittance messages
from the Clearing Centre and pass on the credit to the beneficiary
accounts.

12. Benefits
• Faster – Its faster and more convenient than
sending Demand Drafts / Cheques / Telegraphic
Transfers.
• Easier – Forget long queues and time-consuming
DDs, cheques and pay orders! No need to visit the
bank branch and search for a courier.
• Reach – No Geographical limitations within India as
long as it is a participating bank in the RBI's
RTGS/NEFT system.

13. Indian Financial System Code(IFSC)
• IFSC Code is 11 digit code for identifying the bank
and branch
• Used by both RTGS and NEFT finance transfer
systems
• code consists of 11 characters-
 first 4 characters – entity
 fifth position - ‘0’
 last 6 characters – branch number
• E.g. (ICIC0000039) is an IFSC code of one of
the branches of ICICI Bank.

14. Real Time Gross Settlement (RTGS)
• Started in October 2004
• Transactions of a value of greater than “Rupees Two
Lac “ is processed and no upper limit
• RTGS is a large value funds transfer system
• Transfer of money takes place from one bank to another
on a “real time” and on “gross basis”
• Money can be transferred to only those branches of
banks where RTGS facility is enabled

15. Features of RTGS system
• Participant Interface (PI)
• Y-Topology

16. Features Contd.
• Intra-day Liquidity Provision
• Interaction with Net Settlement Systems

17. RTGS Transaction Flow

19. Criteria NEFT RTGS
Settlement Done in batches (Slower) Real time (Faster)
Minimum amount of money
No Minimum 1 lacs
transfer limit
Maximum amount of
No Limit No Limit
money transfer limit
When does the Credit
Happens in the hourly
Happen in beneficiary Real time between Banks
batch Between Banks
account
Upto 10,000 – Rs 2.5 Rs 25-30 (Upto 1 – 5 lacs)
Maximum Charges as per from 10,001 – 1 lac – Rs 5 Rs 50-55 (Above 5 lacs)
RBI from 1 – 2 lacs – Rs 15 (Lower charges for first half
Above 2 lacs – Rs 25 of day)
Suitable for Small Money Transfer Large Money Transfer

20. Thank You.