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RTGS, NEFT, IMPS, Online Demand Draft ISC 12

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CommerceISC Class 12 · Banking: Latest Trends

RTGS, NEFT, IMPS and Online Demand Drafts (ISC Class 12 Commerce)

Updated 18 October 2026 · Fact-checked

RTGS settles large payments individually in real time (minimum Rs 2 lakh, no upper limit). NEFT settles transfers in batches, with no minimum or maximum. IMPS is an instant 24x7 transfer, usable by mobile phone, internet banking and ATMs. A demand draft is a prepaid instrument payable on demand that can be requested online; it cannot be dishonoured for lack of funds.

Understand RTGS, NEFT, IMPS and Online Demand Drafts

1. RTGS (Real Time Gross Settlement). Funds move from one bank to another in real time and on a gross basis: each transaction is settled individually, without bunching. It is meant for large-value transactions, with a minimum of Rs 2 lakh and no upper limit, as stated in the chapter. Features: immediate and final settlement; safe; available round the clock; needs the beneficiary's account number and the bank branch's IFSC.

2. NEFT (National Electronic Funds Transfer). A nationwide system in which transfers are settled in batches at regular intervals (deferred net settlement). There is no minimum or maximum amount. It suits routine payments, is available 24x7, and has low or no charges for online transfers.

3. IMPS (Immediate Payment Service). An instant, 24x7 interbank transfer service usable through mobile phones, internet banking and ATMs, operated by the National Payments Corporation of India (NPCI). Credit is instant even on holidays; transfer is made with account number and IFSC, or mobile number and MMID.

4. Comparison

BasisRTGSNEFTIMPS
SettlementEach transaction individually, real timeIn batches at intervalsInstant, transaction by transaction
AmountLarge: minimum Rs 2 lakh, no upper limitNo minimum or maximumSmall and medium, within limits set by system and banks
Availability24x724x724x7 through mobile phones too
Typical useLarge business paymentsRoutine payments, salaries, billsInstant transfers by mobile

5. Demand draft. A prepaid negotiable instrument issued by a bank directing another branch or bank to pay a specified sum on demand to the named payee. Since it is paid for in advance, it cannot be dishonoured for lack of funds, which is why institutions often ask for fees by demand draft.

Online issue: a customer applies through internet banking; the amount and charges are debited from the account; the draft is delivered to the customer's address or collected from the branch.

Features: payable on demand; prepaid, so payment is assured; payable at a specified place; a crossed draft is paid only into a bank account; safe for sending money by post; can be requested online without visiting the branch.

6. Choosing the mode. Large and urgent: RTGS. Routine bills or salaries: NEFT. Instant small transfers at any hour, even on a holiday: IMPS. A payee who insists on assured payment: demand draft.

RTGS, NEFT, IMPS and Online Demand Drafts: key facts

RTGS
  • Real time
  • Gross settlement
  • Minimum Rs 2 lakh
  • No upper limit
Large-value payments.
NEFT
  • Batch settlement
  • No minimum
  • No maximum
  • 24x7
Routine payments.
IMPS
  • Instant
  • 24x7
  • Mobile, internet, ATM
  • NPCI
Small and medium values.

How to answer RTGS, NEFT, IMPS and Online Demand Drafts questions

Questions describe a payment and ask for the best mode, or ask for meaning, features and differences.

  1. 1Check the amount: Rs 2 lakh or more and urgent points to RTGS.
  2. 2If instant and by mobile at any hour, choose IMPS; if routine and batch-settled, choose NEFT.
  3. 3If the payee needs assured prepaid payment, choose a demand draft.
  4. 4Give one reason linked to the situation.

RTGS, NEFT, IMPS and Online Demand Drafts in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

RTGS

Suppose a trader must pay Rs 12,00,000 to a wholesaler today, with immediate final settlement.

Which mode is suitable and why?

Try it first, then show the solutionSolution
  1. The amount is large and above the minimum for RTGS.
  2. RTGS settles each transaction individually in real time.

Answer: RTGS, for immediate individual settlement of a large payment.

Memory hook: Large and live: RTGS.

IMPS

Imagine a student wants to send Rs 1,500 to a friend late at night on a public holiday, using a mobile phone.

Which mode is suitable?

Try it first, then show the solutionSolution
  1. The amount is small and needs instant credit.
  2. IMPS works 24x7, even on holidays, via mobile.

Answer: IMPS.

Memory hook: Instant, any time, even on holidays.

Tricks to remember RTGS, NEFT, IMPS and Online Demand Drafts

Short memory aids. Say each one aloud once, then use it on a question the same day.

  • R-N-I: Rich, Normal, Instant

    RTGS for big (rich) amounts, NEFT for normal batches, IMPS for instant mobile transfers.

    Use it when: Choosing the mode.

  • Draft is prepaid

    A demand draft is paid for first, so it cannot bounce.

    Use it when: Why institutions ask for drafts.

RTGS, NEFT, IMPS and Online Demand Drafts: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Best mode of transfer · 1 mark · MCQBoard level

A builder wants Rs 18 lakh settled today, finally and individually, from a buyer's bank account. The most suitable online transfer is:
(a) IMPS
(b) NEFT
(c) RTGS
(d) cheque

Try it first, then show the solutionSolution
  1. Large amount with immediate settlement: RTGS.

Answer: (c)

Example 2: Features of a demand draft · 2 marks · Short answerBoard level

Explain a demand draft and state why it is safe for the payee.

Try it first, then show the solutionSolution
  1. A demand draft is a prepaid instrument issued by a bank directing payment of a stated sum on demand to the named payee.
  2. It is safe because the amount is paid in advance, so it cannot be dishonoured for lack of funds.

Answer: Prepaid instrument payable on demand; assured payment.

Example 3: Choose between RTGS and NEFT · 4 marks · Short answerHarder board level

Suppose a school wishes to pay Rs 1,60,000 to a supplier tomorrow and Rs 6,40,000 to a contractor today. Using the minimum for RTGS stated in the chapter, advise which of RTGS or NEFT fits each payment.

Try it first, then show the solutionSolution
  1. RTGS minimum is Rs 2,00,000.
  2. Rs 1,60,000 is below Rs 2,00,000, so RTGS is not available; NEFT (no minimum) or IMPS is suitable.
  3. Rs 6,40,000 is above the minimum and is to be paid today with immediate settlement, so RTGS fits.
  4. Total payments = 1,60,000 + 6,40,000 = Rs 8,00,000.

Answer: Rs 1,60,000 by NEFT; Rs 6,40,000 by RTGS.

Example 4: Distinguish NEFT and RTGS · 4 marks · Short answerHarder board level

Distinguish between NEFT and RTGS on three bases.

Try it first, then show the solutionSolution
  1. Settlement: NEFT settles in batches at intervals; RTGS settles each transaction individually in real time.
  2. Amount: NEFT has no minimum or maximum; RTGS is for large values, minimum Rs 2 lakh.
  3. Use: NEFT is for routine payments such as salaries and bills; RTGS is for large business payments.

Answer: Differ in settlement, amount and typical use.

Example 5: Payment plan for a firm · 8 marks · Long answerHOTS / competency

Suppose a firm must make four payments: Rs 25,00,000 to a machinery supplier today; salaries of Rs 3,40,000 to staff; Rs 900 to a friend at midnight on a holiday; and a college fee of Rs 70,000, which the college insists on receiving by an assured instrument. Suggest a mode for each and justify.

Try it first, then show the solutionSolution
  1. Rs 25,00,000 today: RTGS, large value with immediate individual settlement.
  2. Salaries of Rs 3,40,000: NEFT, a routine payment (RTGS would also be allowed since the amount exceeds Rs 2 lakh, but batch settlement is acceptable for routine payments).
  3. Rs 900 at midnight on a holiday: IMPS, instant and available 24x7.
  4. College fee of Rs 70,000: demand draft, which is prepaid and cannot be dishonoured, and can be requested online.
  5. Total of the four = 25,00,000 + 3,40,000 + 900 + 70,000 = Rs 29,10,900.

Answer: RTGS, NEFT, IMPS and demand draft; total Rs 29,10,900.

Where students lose marks in RTGS, NEFT, IMPS and Online Demand Drafts

The slips examiners see most often, and what to write instead.

  • Mistake: Choosing RTGS for small amounts

    RTGS has a minimum of Rs 2 lakh as stated in the chapter.

    Wrong working

    Pay Rs 50,000 by RTGS.

    Right working

    Pay Rs 50,000 by NEFT or IMPS.

    Do this: Check the minimum.

    Usually costs: 1 mark.

  • Mistake: Not writing 'demand draft' in full

    The syllabus term is the demand draft.

    Wrong working

    DD issued online.

    Right working

    Demand draft, issued online.

    Do this: Write full terms.

    Usually costs: 1 mark.

  • Mistake: Confusing gross and net settlement

    Gross means each transaction individually; net means batches.

    Wrong working

    RTGS settles in batches.

    Right working

    RTGS settles each transaction individually in real time; NEFT settles in batches.

    Do this: Gross is single.

    Usually costs: 1 mark.

Exam tips

  • Learn the full form of each with one defining feature.
  • Quote the RTGS minimum as in the chapter; do not state other limits.
  • In a situation, state the amount and urgency before choosing the mode.
  • Demand draft must be written in full.

Practice questions on RTGS, NEFT, IMPS and Online Demand Drafts

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

  1. Q1 · 1 mark · Very short answerBoard level

    Expand IMPS and NEFT.

    Hint

    Payment service.

    Answer

    Immediate Payment Service; National Electronic Funds Transfer.

  2. Q2 · 2 marks · Short answerBoard level

    State two features of RTGS.

    Hint

    Real time and large.

    Answer

    Each transaction is settled individually in real time and finally; it is meant for large values, minimum Rs 2 lakh with no upper limit (also available round the clock).

  3. Q3 · 2 marks · Short answerHarder board level

    Why is a demand draft preferred to a cheque by an institution collecting admission fees?

    Hint

    Dishonour.

    Answer

    A demand draft is paid for in advance, so it cannot be dishonoured for lack of funds, whereas a cheque may bounce.

  4. Q4 · 4 marks · Short answerHarder board level

    Suppose Mr Rao must send Rs 1,80,000 to his daughter's hostel and Rs 3,50,000 to a builder, both today. State the mode possible for each if RTGS requires at least Rs 2 lakh, and compute the total sent.

    Hint

    Check the minimum.

    Answer

    Rs 1,80,000 is below the RTGS minimum, so NEFT or IMPS must be used. Rs 3,50,000 may be sent by RTGS. Total = 1,80,000 + 3,50,000 = Rs 5,30,000.

  5. Q5 · 4 marks · Short answerHOTS / competency

    A customer says IMPS and NEFT are the same since both are electronic. Evaluate with two differences and one similarity.

    Hint

    Instant versus batch.

    Answer

    They are not the same. IMPS credits instantly transaction by transaction and works through mobile phones, whereas NEFT settles in batches at intervals. IMPS is for small and medium values within limits, whereas NEFT has no minimum or maximum. Similarity: both work 24x7.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

  1. 1.Which mode settles each transaction individually in real time?Show answer

    RTGS.

  2. 2.Which mode has no minimum or maximum?Show answer

    NEFT.

  3. 3.Who operates IMPS?Show answer

    The National Payments Corporation of India.

  4. 4.Can a demand draft be dishonoured for lack of funds?Show answer

    No, because it is prepaid.

RTGS, NEFT, IMPS and Online Demand Drafts: frequently asked questions

Can IMPS be used on holidays?

Yes, it is available 24x7 including holidays.

What details does RTGS need?

The beneficiary's account number and the bank branch's IFSC.

Is a demand draft sent online?

It is requested online and then delivered or collected from the branch.