Payment systems in India: RTGS, NEFT, UPI and NPCI: notes for bank exams

At a glance

India's payment systems move money between bank accounts. The RBI owns and runs the two big interbank systems, RTGS and NEFT, while the National Payments Corporation of India (NPCI) runs retail systems such as UPI, IMPS and RuPay. All of them are regulated by the RBI under the Payment and Settlement Systems Act, 2007, and even UPI payments are finally settled in the RBI's books.

Key facts

Law: Payment and Settlement Systems Act, 2007 (in force from 12 August 2008)
Regulator: RBI, through the Payments Regulatory Board (PRB), chaired by the RBI Governor; PRB replaced the BPSS from 9 May 2025
RBI-run systems: RTGS and NEFT
NPCI: set up in 2008 by the RBI and the Indian Banks' Association; a not-for-profit Section 8 company owned by banks; HQ Mumbai
NPCI MD and CEO: Dilip Asbe (current term from 8 January 2023 for five years)
NPCI-run systems: UPI, IMPS, RuPay, NACH, AePS, NETC FASTag, CTS; Bharat BillPay is run by its subsidiary NBBL
RTGS: minimum ₹2 lakh, no upper limit; real-time, one by one; 24x7 since 14 December 2020
NEFT: no minimum or maximum; settled in half-hourly batches; 24x7 since 16 December 2019
UPI launched: 11 April 2016
UPI volume, September 2026: about 24.07 billion transactions worth ₹29.37 lakh crore (about 802 million a day)

How it works

RTGS vs NEFT vs IMPS vs UPI.

System	Run by	Settlement	Typical limit	Hours
RTGS	RBI	Real time, gross (each transaction separately)	Minimum ₹2 lakh, no maximum	24x7
NEFT	RBI	Deferred net, half-hourly batches	No minimum or maximum	24x7
IMPS	NPCI	Instant to customer, net settlement later	Up to ₹5 lakh	24x7
UPI	NPCI	Instant to customer, net settlement in RBI books	Usually ₹1 lakh person-to-person; higher for some categories	24x7

Gross vs net. In gross settlement each payment is settled on its own and is final at once, which suits large values. In net settlement the system adds up what each bank owes and is owed and settles only the difference, which saves liquidity.

UPI layers. A customer links a bank account to a UPI app; NPCI's switch routes the request between banks; banks credit and debit customers instantly, and the net positions are settled in the banks' current accounts with the RBI several times a day.

Infrastructure. The RBI's data centres host RTGS, NEFT and government banking. Its new Tier-IV data centre in Bhubaneswar (inaugurated 25 October 2026) is the first outside Maharashtra and adds geographical separation.

Timeline

2004: RTGS launched by the RBI
2005: NEFT launched
2008: PSS Act comes into force; NPCI incorporated
2010: IMPS launched
2012: RuPay card launched
2016: UPI launched (11 April)
2019: NEFT available 24x7 (16 December)
2020: RTGS available 24x7 (14 December)
2025: Payments Regulatory Board replaces the BPSS (9 May)

Recent developments

25 Oct 2026: PM Modi inaugurated the RBI's Tier-IV data centre (about ₹169 crore) and Cybersecurity Training Institute at Jatni, near Bhubaneswar; it will host RTGS, NEFT and government banking.
Oct 2026: NPCI data showed UPI processed 24.07 billion transactions in September 2026, with daily volume above 800 million for the first time.

Exam traps

NPCI runs UPI and IMPS, but RTGS and NEFT are owned and operated by the RBI itself.
RTGS has a minimum (₹2 lakh) but no maximum; NEFT has neither.
NPCI is not a government company or a statutory body; it is a bank-owned Section 8 company promoted under RBI guidance.
The regulator of payment systems under the PSS Act is the RBI (via the PRB), not SEBI or the Finance Ministry.

Quick check

Q: Under which Act are payment systems regulated in India? A: Payment and Settlement Systems Act, 2007.
Q: Which body operates NEFT? A: The RBI.
Q: When did RTGS become available 24x7? A: 14 December 2020.

Sources

In the news

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26 October 2026PM inaugurates RBI's data centre and cybersecurity training institute in Bhubaneswar