📘 IAS Prelims 2025 — GS-III | Q.68 | Classroom Explanation

(Economics: Banking & Payment Systems)

📌 Question

Q.68) Consider the following statements in respect of RTGS and NEFT:

Statement I: In RTGS, the settlement time is instantaneous while in case of NEFT, it takes some time to settle payments.
Statement II: In RTGS, the customer is charged for inward transactions while that is not the case for NEFT.
Statement 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

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✅ Correct Answer: (a) I only

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🧑‍🏫 Classroom Explanation

This question tests conceptual clarity between India’s two core retail payment settlement systems, a high-frequency UPSC area.

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🔍 Core Concepts

🔹 RTGS (Real Time Gross Settlement)

• Real-time
• Transaction-by-transaction
• No netting
• Used mainly for high-value transfers

🔹 NEFT (National Electronic Funds Transfer)

• Batch-wise settlement
• Transactions are clubbed and settled at intervals
• Suitable for retail and small-value transfers

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🔍 Statement-wise Analysis

✅ Statement I: Correct

• RTGS settles transactions instantly, individually, and continuously.
• NEFT settles transactions in batches, hence settlement is not instantaneous.

➡️ Correct understanding of operational difference
✔️ Statement I is correct.

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❌ Statement II: Incorrect

• As per RBI directions:
  • Inward transactions are FREE for both RTGS and NEFT.
  • Charges (if any) apply only to outward transactions, subject to RBI caps.

➡️ Claim that RTGS charges inward transactions is factually wrong.
❌ Statement II is incorrect.

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❌ Statement III: Incorrect

• Since 14 December 2020, RTGS operates 24×7×365, just like NEFT.
• NEFT has been 24×7 since December 2019.

➡️ There is no operational restriction on RTGS now.
❌ Statement III is incorrect.

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🧮 Logical Elimination (UPSC Style)

Statement	Status
I	✅ Correct
II	❌ Incorrect
III	❌ Incorrect

➡️ Correct option: (a) I only

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🎯 Final Takeaway (Exam Lock)

RTGS = Real-time, high-value, 24×7, inward free
NEFT = Batch-wise, retail, 24×7, inward free

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📍 GS Mapping

Banking, Digital Payments, Financial Infrastructure

GS Paper III

Indian Economy

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