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Difference Between IMPS and NEFT

  • Post last modified:March 15, 2023
  • Reading time:8 mins read
  • Post category:Technology
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Contents hide
  1. 1. Definition of IMPS and NEFT
  2. 2. Understanding NEFT
  3. 3. Understanding IMPS
  4. 4. Differences Between IMPS and NEFT
    1. 4.1. Which One to Use: IMPS or NEFT?
    2. 4.2. Reference website

Definition of IMPS and NEFT

IMPS and NEFT are two popular methods of transferring funds electronically in India.

IMPS (Immediate Payment Service) is a real-time interbank electronic fund transfer service offered by the National Payments Corporation of India (NPCI). It allows users to transfer money instantly to any bank account in India, 24×7, including weekends and holidays. IMPS uses a unique identifier called the Indian Financial System Code (IFSC) to facilitate transactions.

NEFT (National Electronic Funds Transfer) is another electronic fund transfer service offered by the NPCI. It allows users to transfer funds from any bank account to any other bank account in India. NEFT transactions are processed in batches and settled in hourly intervals throughout the day. NEFT transactions can only be initiated during the working hours of the banks, and there are certain transaction limits that apply.

Understanding NEFT

NEFT (National Electronic Funds Transfer) is an electronic fund transfer system that allows individuals, firms, and corporations to transfer funds from one bank account to another bank account in India.

Here are the key features of NEFT:

  • How NEFT Works: NEFT transactions are processed in batches, and the transactions are settled in hourly intervals throughout the day. The NEFT system is based on a Deferred Net Settlement (DNS) basis, which means that transactions are settled in batches and not in real-time. This makes NEFT transactions slower than IMPS transactions.
  • NEFT Transaction Limits: There are certain transaction limits that apply to NEFT transactions. For individual transactions, the maximum amount that can be transferred is Rs. 10 lakhs. However, there is no minimum transaction limit. Additionally, there is no limit on the number of NEFT transactions that can be done in a day.
  • NEFT Transaction Timings: NEFT transactions can only be initiated during the working hours of the banks, which are generally from 9:00 am to 7:00 pm on weekdays and from 9:00 am to 1:00 pm on Saturdays. NEFT transactions cannot be initiated on bank holidays.
  • NEFT Charges: The charges for NEFT transactions vary from bank to bank. Generally, the charges are nominal and depend on the amount of the transaction.
  • NEFT Availability: NEFT is available to individuals, firms, and corporations with a bank account in India. The sender and the receiver must have a bank account with a bank that is a member of the NEFT network. Currently, all major banks in India are part of the NEFT network.

Understanding IMPS

IMPS (Immediate Payment Service) is an interbank electronic fund transfer service offered by the National Payments Corporation of India (NPCI). Here are the key features of IMPS:

  • How IMPS Works: IMPS allows users to transfer money instantly to any bank account in India, 24×7, including weekends and holidays. IMPS transactions are settled in real-time, which means that the funds are transferred instantly from the sender’s account to the receiver’s account.
  • IMPS Transaction Limits: IMPS has transaction limits that vary from bank to bank. Generally, the maximum amount that can be transferred in a single transaction is Rs. 2 lakhs. There is no minimum transaction limit for IMPS transactions.
  • IMPS Transaction Timings: IMPS transactions can be initiated at any time, including weekends and holidays. There are no restrictions on the timing of IMPS transactions.
  • IMPS Charges: The charges for IMPS transactions vary from bank to bank. Generally, the charges are nominal and depend on the amount of the transaction.
  • IMPS Availability: IMPS is available to individuals, firms, and corporations with a bank account in India. The sender and the receiver must have a bank account with a bank that is a member of the IMPS network. Currently, all major banks in India are part of the IMPS network.

Differences Between IMPS and NEFT

While both IMPS and NEFT are electronic fund transfer services offered in India, there are several key differences between the two. Here are the main differences:

  1. Transaction Speed: IMPS transactions are settled in real-time, which means that the funds are transferred instantly from the sender’s account to the receiver’s account. NEFT transactions, on the other hand, are processed in batches and are settled in hourly intervals throughout the day. This makes IMPS transactions faster than NEFT transactions.
  2. Transaction Limits: The transaction limits for IMPS and NEFT are different. The maximum amount that can be transferred in a single IMPS transaction is generally higher than the maximum amount that can be transferred in a single NEFT transaction. Additionally, there are no minimum transaction limits for IMPS transactions, whereas NEFT has a minimum transaction limit of Re.1.
  3. Transaction Timings: IMPS transactions can be initiated at any time, including weekends and holidays, whereas NEFT transactions can only be initiated during the working hours of the banks, and not on bank holidays.
  4. Service Availability: While both IMPS and NEFT are available to individuals, firms, and corporations with a bank account in India, the availability of the services may differ. Some banks may offer IMPS but not NEFT, or vice versa.
  5. Transaction Charges: The charges for IMPS and NEFT transactions vary from bank to bank. Generally, the charges for IMPS transactions are higher than the charges for NEFT transactions.

IMPS is faster and more flexible than NEFT, but it may also be more expensive. NEFT, on the other hand, may be a more cost-effective option for larger transactions, but it is slower and has restricted timing for transaction initiation.

Which One to Use: IMPS or NEFT?

The choice between IMPS and NEFT depends on your specific requirements and preferences. Here are some factors to consider when deciding which service to use:

  1. Transaction Speed: If you need to transfer funds urgently, IMPS may be a better option as it offers real-time transfer of funds. NEFT, on the other hand, may take several hours to transfer the funds.
  2. Transaction Amount: If you need to transfer a large amount of money, NEFT may be a better option as it generally has higher transaction limits than IMPS.
  3. Transaction Fees: If you are concerned about transaction fees, you may want to compare the charges of the banks you use for IMPS and NEFT. Generally, IMPS transactions are more expensive than NEFT transactions.
  4. Transaction Timings: If you need to transfer funds during non-banking hours, IMPS may be a better option as it is available 24×7, including weekends and holidays. NEFT can only be initiated during the working hours of the banks and not on bank holidays.
  5. Availability: Check if the banks you and the recipient use offer both IMPS and NEFT services.

If you need to transfer a small amount of money urgently, IMPS is a good option. If you need to transfer a large amount of money or are not in a rush, NEFT may be a better option as it is generally cheaper than IMPS. Ultimately, the choice between IMPS and NEFT depends on your specific requirements and preferences.

Conclusion

IMPS and NEFT are electronic fund transfer services that allow for easy and quick transfer of funds between bank accounts in India. IMPS is faster, more flexible, and available 24×7, making it a good option for urgent transfers. NEFT is generally cheaper and suitable for larger transactions that don’t require immediate transfer. The choice between the two services depends on your specific needs, including transaction amount, urgency, transaction fees, and bank availability. It is important to compare the features and charges of the services offered by different banks before choosing between IMPS and NEFT.

Reference website

Here are some references you may find helpful:

  1. National Payments Corporation of India (NPCI): https://www.npci.org.in/
  2. Reserve Bank of India (RBI): https://www.rbi.org.in/
  3. Comparison of IMPS, NEFT and RTGS: https://www.bankbazaar.com/ifsc/imps-vs-neft-vs-rtgs.html
  4. How to transfer money using IMPS: https://www.bankbazaar.com/ifsc/how-to-transfer-money-using-imps.html
  5. How to transfer money using NEFT: https://www.bankbazaar.com/ifsc/how-to-transfer-money-using-neft.html