Consider the following statements regarding National Electronic Fund Transfer (NEFT) and Real-Time Gross Settlement (RTGS):

Question

Consider the following statements regarding National Electronic Fund Transfer (NEFT) and Real-Time Gross Settlement (RTGS):

1. In National Electronic Fund Transfer (NEFT), the transaction happens in batches and hence it is slow

2. In Real-Time Gross Settlement(RTGS), transactions happen in real time and hence being fast

3. There is no minimum limit in RTGS

4. There is a Rs 2 Lakh minimum limit for NEFT

How many of the above Statement/s is/are correct?

1. A. Only one statement
2. B. Only two statements (Correct answer)
3. C. Only three statements
4. D. All the four statements

Correct Answer

Option B — Only two statements

Detailed Solution & Explanation

The correct answer is Only two statements.

Key Points

• Statement 1 is correct. NEFT settles in batches — transactions are queued and settled in half-hourly batches, which is why it is not instantaneous.
• Statement 2 is correct. RTGS settles in real time, transaction by transaction, on a gross basis rather than netted off against others.
• Statement 3 is incorrect. RTGS has a minimum limit of ₹2 lakh. It is designed for large-value transfers.
• Statement 4 is incorrect. NEFT has no minimum limit — it can be used for any amount, however small.
• Statements 3 and 4 simply state the position the wrong way round. Two of four are correct.

Additional Information

• Comparing the two systems:

• "Gross" settlement means each instruction is settled individually and finally, with no netting — which is what eliminates settlement risk and makes RTGS suitable for systemically large payments.
• The RBI has waived its own charges on NEFT and RTGS transactions, and banks are barred from levying charges on savings bank account holders for online NEFT.
• The wider payments landscape: IMPS (Immediate Payment Service, 24x7, up to ₹5 lakh), UPI (Unified Payments Interface, built on IMPS rails, now the dominant retail channel by volume), NACH for bulk repetitive payments such as salaries and subsidies, and AePS for Aadhaar-authenticated basic banking.
• NPCI — the National Payments Corporation of India — operates UPI, IMPS, NACH, RuPay, AePS, FASTag and BHIM. It is an umbrella organisation set up in 2008 under the guidance of the RBI and the Indian Banks' Association, incorporated as a not-for-profit company under Section 25 of the Companies Act. NEFT and RTGS, by contrast, are operated by the RBI itself.