NEFT & RTGS
GS 3: Economy
Why in news?
The RBI has proposed to examine the possibility of extending availability of National Electronic Funds Transfer (NEFT) round-the-clock on all the seven days of the week — 24×7 basis — to facilitate beyond the banking hour fund transfer. Besides, the central bank will also examine the possibility of extending the timings for Real Time Gross Settlement (RTGS) transactions.
- NEFT is an electronic funds transfer system maintained by the Reserve Bank of India (RBI).
- Started in November 2005, the setup was established and maintained by Institute for Development and Research in Banking Technology (IDRBT).
- NEFT enables bank customers in India to transfer funds between any two NEFT-enabled bank accounts on a one-to-one basis. It is done via electronic messages.
- Unlike Real-time gross settlement (RTGS), fund transfers through the NEFT system do not occur in real-time basis.
- RTGS are specialist funds transfer systems where the transfer of money or securities takes place from one bank to any other bank on a “real time” and on a “gross” basis.
- Settlement in “real time” means a payment transaction is not subjected to any waiting period, with transactions being settled as soon as they are processed.