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UPSC Prelims 2025GS1EconomyRTGS and NEFT

Q78. Consider the following statements in respect of RTGS and NEFT :
I. In RTGS, the settlement time is instantaneous while in case of NEFT, is 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✓ Correct
B. I and II
C. I and III
D. III only

Detailed Solution

✓ Correct Answer: Option A
✓ Statement I is correct
RTGS (Real Time Gross Settlement) processes transactions individually and continuously, leading to instantaneous settlement. NEFT (National Electronic Funds Transfer) operates on a deferred net settlement basis, processing transactions in batches at specific intervals, so it takes some time for payments to settle.
✗ Statement II is incorrect
For RTGS, the Reserve Bank of India (RBI) has mandated that inward transactions (receiving money) should be free of charge for customers. For outward transactions, banks may levy charges within prescribed limits. Similarly, for NEFT, inward transactions are also free.
✗ Statement III is incorrect
With effect from December 14, 2020, RTGS has been made available 24x7x365, similar to NEFT, which has also been available 24x7. Therefore, operating hours for RTGS are no longer restricted. Only statement I is correct. Understanding digital payment systems and their operational differences is important for UPSC Economy.

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Digital Payment Ecosystems are important. Previously asked.

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