In India, the time taken for funds transfer from remittance account to beneficiary account depends on the type of method used for funds transfer.
There are basically two types of funds transfer system via the internet banking in India.
(1) Real time Gross System (RTGS): It is a funds transfer mechanism characterised by money transfer from one bank to another in real time and on gross basis. It is regarded as the fastest possible money transfer system through the banking channel. The real time refers to the payment transaction happening at that moment without any waiting period. Thus, it implies that transactions are settled as quickly as they are processed.
“Gross settlement” refers to the transaction that gets settled on one to one basis and it does not get clubbed with any other transaction. The transaction is regarded as final and irreversible as money transfer takes place in books of RBI.
Time taken in RTGS fund transfer system: It is done in real time basis so the funds are transferred into beneficiary account as soon as the transaction is processed. As a result of successful RTGS transaction, the beneficiary branches receive the amount in real time as soon as it is transferred by the remitting bank. The beneficiary bank is required to credit the transferred funds into the beneficiary’s account within two hours of receiving the funds.
Customers can transfer funds through RTGS from 9.00 hours to 16.30 hours on week days. The timing for Saturday is from 9.00 hours to 13.30 noon.
(2) Electronic Fund Transfer System (EFT) or National Electronics Funds Transfer System (NEFT): It is a nation-wide system of electronically fund transfer from any bank branch to any other bank branch in the country. It allows the fund transfer from any individual or firm to any other individual or firm across the country. In order to facilitate fund transfer between bank accounts of different banks branches, it is necessary that participating bank branches should be NEFT-enabled.
Time taken in NEFT fund transfer system: NEFT are the electronic fund transfer modes which functions on the basis of deferred net settlement (DNS) which settles the NEFT transactions in batches. In cases of DNS, the transaction is not settled as soon as it is processed but the settlement is done at a fixed point of time. Till that moment, all the transactions are kept on hold.
Timings for NEFT settlement during the weekdays: It takes place 6 times a day including 9.30 am, 10.30 am, 12.00 noon. 1.00 pm, 3.00 pm and 4.00 pm.
Timings for NEFT settlement during Saturdays: It takes place 3 times on Saturday including 9.30 am, 10.30 am and 12.00 noon.
In case of NEFT transfer, any transaction which begins after a designated settlement time will be kept on hold till the next designated settlement time. It is in sharp contrast to RTGS where the transactions are continuously processed during the RTGS business hours.
Overall, RTGS is faster as compared to NEFT as it is done on real time basis.