UPSC Prelims 2025 Q68: Indian Economy – Digital Payments & Financial Inclusion
Consider the following statements in respect of RTGS and NEFT :
I. In RTGS, the settlement time is instantaneous while in case of NEFT, it takes some time to settle
payments.
II. In RTGS, the customer is charged for inward transactions while that is not the case for NEFT.
III. Operating hours for RTGS are restricted on certain days while this is not true for NEFT.
Which of the statements given above is/are correct?
- (a) I only
- (b) I and II
- (c) I and III
- (d) III only
Answer: (a) I only
Explanation
RTGS vs NEFT — Reserve Bank of India Payment Systems
| Statement | Claim | Verdict | Why |
|---|---|---|---|
| I | RTGS settlement = instantaneous; NEFT = takes some time | TRUE | RTGS (Real-Time Gross Settlement): each transaction settled individually and immediately. NEFT (National Electronic Funds Transfer): settled in half-hourly batches (no real-time settlement). ✓ |
| II | In RTGS, customer is charged for inward transactions | FALSE | As per RBI guidelines (effective Jan 2020): no charges for inward RTGS or NEFT transactions. Charges only apply to the sender (outward), not the receiver. Additionally, RBI mandated zero charges for online RTGS/NEFT in January 2020. |
| III | RTGS operating hours are restricted on certain days; NEFT is not restricted | FALSE | Since December 2019, both RTGS and NEFT operate 24×7 (all days including weekends and holidays). Previously RTGS had restricted hours, but this is no longer true. |
Only Statement I is correct → Answer: I only
RTGS vs NEFT Quick Comparison:
| Feature | RTGS | NEFT |
|---|---|---|
| Settlement | Real-time (instant) | Half-hourly batches |
| Minimum amount | ₹2 lakh | No minimum (Re. 1+) |
| Maximum amount | No upper limit | No upper limit |
| Availability | 24×7 (since Dec 2019) | 24×7 (since Dec 2019) |
| Inward charges | NIL (since 2020) | NIL (since 2020) |
Answer: (a) I only.
Why each option is right or wrong
- (a) CORRECT. Only Statement I is correct — RTGS = real-time settlement, NEFT = batch settlement. Statement II is wrong (no inward charges for either since 2020). Statement III is wrong (both operate 24×7 since December 2019).
- (b) Incorrect. 'I and II' would mean inward RTGS transactions are charged — RBI mandated zero charges for RTGS/NEFT inward transactions from January 2020.
- (c) Incorrect. 'I and III' would mean RTGS still has restricted hours — since December 2019, both RTGS and NEFT operate 24×7 including weekends and holidays.
- (d) Incorrect. 'III only' would mean RTGS has restricted hours (wrong since Dec 2019) and Statement I (real-time vs batch) is wrong — the real-time vs batch settlement distinction is fundamental and correct.
Key point
RTGS = real-time settlement (instant). NEFT = batch settlement (every 30 min). Both now operate 24×7 with zero inward charges — the old restrictions no longer apply.
Remember
RTGS = real-time settlement. NEFT = batch (every 30 min). Both operate 24×7 since Dec 2019. Both have zero inward charges since Jan 2020. RTGS minimum = ₹2 lakh.
Common mistakes
- Thinking RTGS still has restricted operating hours — since December 2019, RTGS is 24×7 just like NEFT.
- Thinking inward RTGS transactions carry charges — RBI eliminated all RTGS/NEFT charges for savings account customers in January 2020.
- Confusing RTGS minimum amount (₹2 lakh) with NEFT (no minimum) — RTGS is designed for large-value, time-critical transfers.
Exam tip
Only I is true: RTGS = real-time (individual settlement), NEFT = batches (every 30 min). Both = 24×7 now. Both = zero inward charges now. RTGS minimum = ₹2 lakh (key distinguisher). UPSC often tests outdated rules — verify with current RBI guidelines.
Sources
- Reserve Bank of India — RTGS and NEFT System Guidelines
- RBI Press Release (December 2019) — RTGS made available 24×7
- RBI Circular (January 2020) — Zero charges on RTGS/NEFT