Context

• The Reserve Bank of India (RBI) has proposed to examine the possibility of extending availability of National Electronic Funds Transfer (NEFT) on the basis of 24×7 to facilitate fund transfer beyond the banking hours.
• Besides, the central bank will also examine the possibility of extending the timings for Real Time Gross Settlement (RTGS) transactions.

About

• Though money can be transferred through Immediate Payment Service (IMPS) round the clock, the maximum amount allowed is Rs. 2 lakh. The RTGS window, which is used for transfer of big amounts, is for customer transactions available to banks from 8 am to 4.30 pm on a working day.
• In a move that may ease the online fund transfer for customers beyond banking hours, the RBI proposed the possibility of extending the availability of NEFT round-the-clock, i.e., 24 hours, seven days a week along with extending the timings for Real Time Gross Settlement (RTGS) transactions.

Current limits of RTGS and NEFT

• Customers can transfer anywhere between Rs 1 and Rs 25 lakh via NEFT (for HDFC Bank; varies from bank to bank) through net banking. Through RTGS, they can transfer between Rs 2 lakh and Rs 25 lakh through net banking. However, as of now, these online transactions are not available on Sundays, on the second and fourth Saturdays of every month and on bank holidays.
• On working days, NEFT is available between 8 am and 7 pm (varies from bank to bank) except on working Saturdays (8 am and 1 pm) and hence, they restrict customers’ ability to carry out such transactions.
• Online RTGS transactions are available for lesser hours. It can be done till 4 pm (varies from bank to bank).

Difference between NEFT and RTGS

NEFT	RTGS
It is an electronic funds transfer system maintained by RBI.	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.
Started in November 2005, the setup was established and   maintained by Institute for Development and Research in Banking   Technology (IDRBT).	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.
NEFT enables bank customers in India to transfer funds between any   two NEFT-enabled bank accounts on a one-to-one basis via electronic   messages.	“Gross settlement” means the transaction is settled on one-to-one basis without bundling or netting with any other transaction.
Unlike RTGS, fund transfers through the NEFT system do not occur in   real-time basis.	“Settlement” means that once processed, payments are final and irrevocable.

Benefits of this step

• If RBI makes NEFT 24×7, it will not only ease the fund transfer for customers round the clock but will also take some load-off the bank branches for executing such transactions.
• It will also help in promoting a highly-digital and cashless society.