Umesh Kurmi is a semi-qualified Chartered Accountant from the Institute of Chartered Accountants of Nepal with seven years of experience.
RTGS Full-Form & Meaning
Real-Time Gross Settlement is abbreviated as RTGS. Simply described, it is the process of continuous (real-time) fund settlement that takes place on an order-by-order basis without netting. To put it another way, your request to transfer or settle funds is processed immediately rather than in batches (as is the case in NEFT).
Because the money is settled in the Reserve Bank of India's books, RTGS payments are final and irreversible.
RTGS systems are commonly used for high-value money transactions that need to be cleared right away. The electronic payment mechanism does not rely on actual money exchange. For instance, it deducts the sum from account A and deposits it into account B.
In India, RTGS is one of the fastest ways to transfer payments between banks via internet banking. The funds are transferred between the two accounts in 30 minutes.
Is it true or not that you are turning out to be more inquisitive about RTGS? The answers are listed below.
Details Needed for RTGS
When transferring money using RTGS, you'll need the following information about the Payee's account:-
- The sum of money you're willing to send.
- The payee's account number
- The payee's bank branch
- The payee's bank branch's IFSC code
- The payee's name
- The payee's account number
- Basic information about the sender
The Reserve Bank of India manages the RTGS money transfer system. Hence, it is one of the most recognized and safe, and sound means of money transfer.
Minimum & Maximum Limit For RTGS
If you want to send money via RTGS, the minimum amount you can send is INR 2 lacs. If the amount you're sending is less than INR 2 lacs, you won't be able to use RTGS. The maximum amount of money that can be transferred or sent with RTGS, on the other hand, is unlimited. When making an RTGS payment, you can send any amount of money.
Previously, RTGS transactions were only permitted between the hours of 7:00 a.m. and 6:00 p.m. on all working days in India. The Reserve Bank of India changed the RTGS time limit regulation in December 2020, making the option available 24 hours a day, 365 days a year.
In Nepal, the RTGS through connectIPS presentment and response period is open for 24 hours. After 10:30 p.m. and 1:30 p.m., however, the final settlement is open.
What are the Charges for RTGS?
Once you have familiar with RTGS meaning, you should look into the fees that may be incurred while performing an RTGS. The Reserve Bank of India waived the processing cost on RTGS transactions. Be that as it may, you will be charged a service fee by the bank, which is recorded underneath:
You will not be charged an additional fee if you conduct an inward transaction using RTGS.
If the amount being transferred via RTGS is between INR 2 and INR 5 lacs, you will be charged a service charge of up to INR 24.5.
If the amount being transferred exceeds INR 5 lacs, you will be charged a maximum of INR 49.5.
However, because each bank has its own RTGS price structure, the charges may vary from one bank to the next.
How Does RTGS Work?
At the point when you hear "real-time," it alludes to a settlement that happens as soon as the funds are received. In other words, the transaction settles at the receiving bank as soon as it is transferred from the sending bank. The gross settlement means that each transaction is handled and settled separately, rather than being bundled or aggregated together. A real-time gross settlement framework is based on this foundation.
A country's central bank usually operates and organizes large-value interbank payments transfers using the RTGS system. These transactions frequently necessitate rapid and comprehensive clearance. As previously stated, once a transaction has been resolved, it cannot be overturned.
How Did RTGS Evolve?
The United States Fedwire system was initiated in 1970. It was the first system that looks a lot like a real-time gross settlement system. That technology evolved from a previous telegraph-based method for electronically transferring funds between US Federal Reserve institutions. The RTGS type system was implemented in the United Kingdom in 1984.
The Bank of England now manages the British system, known as the Clearing House Automated Payment System (CHAPS). TARGET is a system used by France and other Eurozone countries (for Trans-European Automated Real-time Gross Settlement Express Transfer System). Other industrialized and developing countries have implemented RTGS-style systems as well.
Real-time gross settlement reduces overall settlement risk, also known as a delivery risk because interbank settlement occurs in real-time throughout the day rather than all at once at the end of the day. This eliminates the chance of a transaction being deferred. RTGS charges are frequently greater than methods that bundle and net payments.
Difference Between RTGS And NEFT
The term RTGS represents Real-Time Gross Settlement. The beneficiary bank gives direct instructions for the transfer in this program. Since the cash is made in full, every exchange should be finished independently. These installments are conclusive and non-refundable.
The key difference between NEFT and RTGS is that, unlike RTGS, funds are moved in batches with NEFT. Consequently, hourly spans are determined, and the settlement is delivered to one of them.
Difference Between RTGS & BACS
A real-time gross settlement system differs from a net settlement system, such as Bacs Payment Schemes Limited (formerly Bankers' Automated Clearing Services) in the United Kingdom (BACS). During the day, the transactions that take place between institutions using BACS are aggregated. A central bank adjusts active institutional accounts by the net quantities of funds exchanged at the end of the business day.
RTGS does not necessitate a physical transfer of cash. A central bank will frequently make computerized adjustments to the accounts of the sending and receiving banks. The balance of sender Bank A, for instance, will be diminished by $1 million, while the balance of recipient Bank B will be added up by $1 million.
How Is RTGS Making Your Business Easier?
RTGS frameworks are progressively being embraced by central banks all over the planet. This can assist financial institutions with diminishing the risk of high-value installment repayments. Although corporations and financial institutions dealing with sensitive financial data normally have high levels of protection in place to protect information and funds, the extent and nature of online threats are continually changing.
RTGS-style systems help protect financial data by exposing it to hackers for a shorter period.
Real-time gross settlement can assist limit vulnerabilities by allowing a smaller window of time for crucial information to be vulnerable. Social engineering or phishing—tricking people into disclosing their information—and data theft—where a hacker acquires and sells data to others—are two common instances of cybersecurity threats to financial data.
To summarize the RTGS has the following advantages to offer to your business, which you can read about in the points below: -
RTGS transactions are carried out continually throughout the day.
You can also use your bank's Net Banking or Mobile Application to send money using RTGS.
You can transfer funds at any time because this service is available 24X7.
The Reserve Bank of India sets a limit on transaction fees.
RTGS is safe and secure.
Because actions are carried out in real-time, there is no opportunity for latency.
You will save a significant amount of time
In India, the use of RTGS is not limited by geography.
RTGS transactions do not have any processing costs
Fund transfers are simple and may be done from the comfort of your own home or workplace.
The maximum amount you can transfer with RTGS is unlimited.
What is the maximum/minimum amount for RTGS transactions under Corporate Internet Banking?
|Type||Minimum||Maximum (per transaction)|
Saral - Rs.25 Lakhs, Vyapaar - Rs.50 Lakhs, Vistaar - Rs.2000 Crores
Saral - Rs.25 Lakhs Vyapaar - Rs.50 Lakhs Vistaar - Rs.2000 Crores
What is the maximum/minimum limit of RTGS transactions under Retail Internet Banking?
Rs. 10 Lakhs
Rs. 10 Lakhs
The continuous process of settling interbank payments on an individual order basis across a central bank's books is known as real-time gross settlement.
The process utilized by this framework is contradictory with netting debits and credits toward the day's end.
For large-value interbank financial transfers, real-time gross settlement is commonly used.
Central banks around the world are increasingly using RTGS systems, which can help reduce the risks associated with high-value payment settlements between financial institutions.
Can I transfer 20 lakhs through RTGS?
A retail user can transfer up to Rs. 20 lakh in a single day through mobile and internet banking channels like RTGS, NEFT, IMPS, and UPI. Customers can always transfer money exceeding this limit using the branch channel.
What is the minimum limit for RTGS?
The RTGS system is aimed at prolific transactions. The least amount that can be sent using RTGS is 2,00,000/-, with no upper limit.
Do we need to add an account for RTGS?
Yes. To engage in RTGS transactions, you must have a bank account. On the off chance that you don't have a bank account, you can make a payment at a bank branch that acknowledges NEFT.
How can I do RTGS in the bank without a cheque?
Banks may give a temporary checkbook in your name if you do not have a checkbook with you while requesting a fund transfer through the NEFT or RTGS service.
Is RTGS a wire transfer?
NEFT transactions are executed in hourly batches, whereas RTGS transactions are performed continuously throughout business hours. Without the intervention of bank staff, wire transfers or electronic money transfers can now be completed instantly.
What are the timings of RTGS transactions?
Prior, RTGS exchanges were allowed from 7.00 a.m. to 6.00 p.m. on every single working day. The Reserve Bank of India changed the RTGS time limit in December 2020. Now, the service is available 24X7.
Which is faster RTGS or NEFT?
It depends upon how much important your transactions are and how much you are willing to transfer. RTGS is a quicker and more effective method of payment assuming your transaction surpasses Rs. 2 lakh. NEFT, then again, is a more efficient method for payment for more modest payments.
Which is cheaper RTGS or NEFT?
So, whereas RTGS is excellent for transferring big sums of money in real-time, NEFT is preferable for little amounts with no urgency. RTGS transactions are by and large more overpriced than NEFT transactions.
Which is the fastest mode of payment?
RTGS is the quickest method for interbank fund transfer right now.
How can I increase my RTGS limit?
- Sign in to NetBanking
- Select "Change TPT Limit" from the Request area
- Click "Increase"
- Select your favored TPT limit starting from the drop menu
Is RTGS online or offline?
Offline NEFT and RTGS transactions can be completed by visiting your bank's nearest branch. This permits clients who don't have access to the internet or a computer framework to finish an NEFT or RTGS transaction.
How many types of RTGS transactions are there?
A. Funds transfer solely between two RTGS members/participants in an inter-institutional / inter-bank transaction.
B. Customer transaction - A RTGS participating member transfers or receives funds on behalf of a customer.
Is a checkbook required for RTGS?
One thing to keep in mind is that if the sum is greater than Rs 2,00,000, you must include a check leaf with the RTGS form. In any case, regardless of whether you have a checkbook with you at that point, the bank will typically accommodate an impermanent checkbook in your name.
What are the disadvantages of RTGS?
The RTGS system does not allow users to trace transactions since the central bank only uses the positive confirmation feature, in which the remitting bank receives a message from the central bank confirming the payment transfer to the beneficiary bank.
Can I do RTGS from a non-home branch?
No. RTGS and NEFT services are enabled only in selected bank branches around the country.
Can we do RTGS by cash?
Customers with a savings or checking account can use the NEFT/RTGS service. Individuals without a bank account can make cash deposits at NEFT-enabled banks. Cash settlements are restricted to a limit of ₹.50,000 per exchange.
Will RTGS work on bank holidays?
Yes. The NEFT and RTGS services are available 24X7. RTGS transactions only deal with huge sums of money, so you can only send money via RTGS if you have more than Rs 2 lakh.
Can we send money abroad using RTGS?
No, you can't use the RTGS to transmit money to every country in the world. Only Nepal, and only through the Indo-Nepal Remittance Facility Scheme, is a country where you can send money.
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2022 Umesh Kurmi