The primary difference between EFT (Electronic Funds Transfer) and RTGS (Real-Time Gross Settlement) lies in the settlement speed and security. RTGS offers real-time settlement, making it faster and generally more secure.
Here's a breakdown:
| Feature | EFT (Example: NEFT) | RTGS (Real-Time Gross Settlement) |
|---|---|---|
| Settlement | Deferred Net Settlement (transactions are batched) | Real-Time Gross Settlement (transaction-by-transaction) |
| Speed | Slower (transactions are processed in batches) | Faster (transactions are processed immediately) |
| Security | Generally considered less secure | Generally considered more secure and reliable |
| Risk | Higher risk of fraud and errors | Lower risk of fraud and errors |
According to provided context, transactions processed through RTGS are settled on a real-time basis, unlike the deferred net settlement used in systems like NEFT (National Electronic Funds Transfer), which falls under the broader EFT category. RTGS is considered more secure and reliable than other EFT systems because it minimizes the risk of fraud and errors.
In essence:
- RTGS is faster and more secure, settling transactions individually in real-time.
- EFT (like NEFT) settles transactions in batches, making it potentially slower and posing a slightly higher risk.
