Previous Year Question
Consider the following statements in respect of RTGS and NEFT:
I. In RTGS, the settlement time is instantaneous while in case of NEFT, it 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?
I only
I and II
I and III
III only
Correct Answer: A
Detailed Solution
Statement I is correct.
Under Real Time Gross Settlement—RTGS, each transaction is settled individually, in real time and on a gross basis.
Real time means that a payment instruction is settled without a waiting period after it is received.
Gross settlement means that each payment is settled separately without being netted against other payments.
An RTGS payment, once settled, is final and irrevocable. The minimum amount that can be transferred through RTGS is ₹2 lakh. RBI has not prescribed an upper limit, although an individual bank may impose an operational limit.
In contrast, National Electronic Funds Transfer—NEFT operates through Deferred Net Settlement. Transactions are settled in half-hourly batches. It therefore takes some time and does not settle every transaction instantaneously in the same manner as RTGS.
Statement II is incorrect.
Customers are not charged for inward transactions under RTGS. Inward NEFT transactions are also free. Therefore, the distinction claimed in the statement does not exist.
RBI also discontinued the processing charges imposed by it on banks for transactions conducted through RTGS and NEFT. A distinction must be maintained between any permissible outward customer charge and a charge for an inward transaction.
Statement III is incorrect.
NEFT was made available round the clock on all days from 16 December 2019. RTGS was also made available round the clock from 14 December 2020.
Thus, in 2025 both systems were available on a:
24 × 7 × 365
basis. It is consequently incorrect to claim that RTGS operating hours were restricted on certain days.