How does domestic money transfer work in India?
Domestic money transfer is a convenient way of sending money from one bank account to another bank account within
the same country. In India, there are three main ways of domestic money transfer - NEFT, RTGS, and IMPS.
NEFT is a type of electronic fund transfer system for transferring funds from one bank to another. RTGS is an acronym
for Real-Time Gross Settlement and it is a real-time nationwide payment system in India, developed by the National
Payments Corporation of India (NPCI).
There are two major differences between NEFT and RTGS. The first difference is that NEFT requires identification but it
doesn’t require any security features like PIN/password while RTGS does not require identification but requires security
features like PIN/password. A second difference between them is that NEFT transfers money on demand while RTGS
transfers money on a pre-scheduled time slot.
With NEFT, it would take up to 3-4 days for funds to be transferred. It also requires all the parties involved in the
transaction including sender, receiver, and bank branch to have an account with an RBI regulated bank. The account
must be in good standing and there must not be any negative balance at all times.
The Immediate Payment System (IMPS) is a real-time interbank electronic fund transfer service that facilitates money
transfers in India. The IMPS method is an instant way to send money from one bank account to another. It does not
require the receiver’s bank details, or even their account number, and can be completed simply by providing the
recipient’s mobile phone number. The IMPS is a faster alternative to NEFT for transferring funds. Some advantages of
IMPS are that it can be done 24/7, the transaction fees are lower, and the settlement time is much faster.
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