The terms RTGS and NEFT are largely used by people and quite often they term RTGS as NEFT and vice versa. RTGS is the abbreviation of Real Time Gross Settlement and NEFT is the short form of National Electronic Funds Transfer.
Through both of them one can directly transfer fund from the account maintained in one bank to any account of any other bank, but the condition is that both the banks should be RTGS/NEFT enabled. The list of banks which are RTGS/NEFT enabled is available in the website of RBI.
Real Time for RTGS
The advantage of RTGS is that the amount can be transferred immediately or on real time, while for a NEFT transaction the amount is not transferred immediately, the amounts are settled in different batches that are executed time to time. It works on the Deferred Net Settlement basis.
However, it must be noted that the minimum amount that can be transferred through RTGS is Rs. 2 lakhs with no maximum limit. There is no minimum or maximum stipulation with respect to a NEFT transaction.
These two electronic transfer mechanism has brought a revolutionary change in the banking system. It has considerably reduced the time taken to transfer funds across banks, earlier it could be done only through cheque and clearing house.