The Reserve Bank of India (RBI) announced on March 1, 2024, that the National Electronic Funds Transfer (NEFT) system had achieved a historic milestone of processing the highest-ever number of daily transactions of over 4.10 crore transactions on February 29, 2024.
Over the past decade (2014-23), both NEFT and Real Time Gross Settlement (RTGS) grew by 700 per cent and 200 per cent respectively. In terms of volume, NEFT soared by 670 per cent and RTGS grew by 104 per cent respectively in terms of value.
RTGS system processed its highest-ever volume of 16.25 lakh transactions in a day on March 31, 2023.
While both Unified Payments Interface (UPI) and NEFT are used for fund transfers between bank accounts, they differ fundamentally in their operation and features.
UPI (Unified Payments Interface): Developed by the National Payments Corporation of India (NPCI), UPI enables real-time money transfers between bank accounts.
Transactions are instantly done in a few seconds, utilising virtual payment addresses (VPAs). Users can link multiple bank accounts to a single VPA and conduct transactions via mobile phones or other digital devices.
UPI transactions have a maximum limit of Rs. 1 lakh per day across all UPI applications and are generally free of any charges.
NEFT (National Electronic Funds Transfer): Operated by RBI, NEFT enables users to transfer money between bank accounts.
Unlike UPI, NEFT transactions are not instant and can take several hours or up to 24 hours to process, depending on the bank's processing schedule and time of day when you initiate a transaction.
NEFT should used for high-value transactions and can be initiated through Internet banking or by visiting a bank branch.
Many banks impose varying charges on NEFT based on the transaction amount, ranging from Rs. 2.50 (+ GST) for transfers up to Rs. 10,000 to Rs. 25 (+ GST) for transfers above Rs. 2 lakh.
Essentially customers should choose the mode of transaction based on the transaction value and for higher transaction value NEFT should be used.
