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UPSC Prelims 2025, Question 68

The concept being tested: RTGS and NEFT — real-time vs batch settlement mechanisms.

Consider the following statements in respect of RTGS and NEFT: I. In RTGS, the settlement time is instantaneous while in case of NEFT, it 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?

Options

  1. AI onlyCorrect answer
  2. BI and II
  3. CI and III
  4. DIII only

The answer: I only

RTGS settles every transaction individually, on a gross basis, the moment it is processed, so the transfer is credited to the beneficiary almost instantly. NEFT, by contrast, is a deferred net settlement system that processes transfers in half-hourly batches, so a payment initiated at, say, 9:05 am waits until the 9:30 batch to settle, making statement I correct. On statement II, RBI directs banks not to levy any charge on inward transactions under either RTGS or NEFT, so RTGS customers are not singled out for inward charges, only outward remittances attract fees. On statement III, RTGS has run 24x7x365 since December 2020, exactly like NEFT, which went 24x7x365 in December 2019, so neither system carries a day-restriction the other lacks. Only statement I survives, giving 'I only' as the correct answer.

What UPSC was testing

UPSC is testing whether aspirants know that both RTGS and NEFT moved to round-the-clock 24x7x365 operation (NEFT in December 2019, RTGS in December 2020), and that RBI's inward-transaction fee waiver applies equally to both — two common points of confusion built into statements II and III as traps.

How often this comes up

This concept has appeared 10 times in UPSC Prelims General Studies Paper I between 2015 and 2025 — in 2015, 2016, 2017, 2018, 2019, 2023 and 2025.

The option-by-option autopsy for this question — why each of the other three is wrong, and which neighbouring concept each one was built from — is in the app.

More questions on this

Other past-year questions touching Financial Inclusion & Digital Payments (UPI, JAM).

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