RTGS is a short form for Real-Time Gross Settlement. It is a facility provided by the banks, that allows instant and complete settlement of funds from one bank to another and from one place to another, on an individual order basis. Real-Time Gross Settlement means that the transactions are settled at the same time when they take place and so there is no waiting period. It is mainly used for the high-value interbank transfer of money, to mitigate the risk of settlement and fraud.
RGTS is most used for high-value transactions and is managed by the Reserve Bank of India. In India, there are more than 110,000 RTGS enabled bank branches. There are two modes by which customers can avail of RTGS service
- Online, through mobile and internet banking.
- Offline by depositing cash at RTGS enabled branches.
- It is a safe mode of money transfer with no amount cap
- It is a real-time fund transfer system
- No additional charges
- Available 24×7 from Monday to Sunday
- Customers can initiate the remittances from his / her home or place of work using internet banking
- Transaction through RTGS has legal backing
- Inward transactions – Free, no charge to be levied
- RBI has directed all the banks to not charge any service fee on transfer of funds through RTGS initiated online via internet banking and/or mobile banking
- Outward transactions – 2,00,000/- to 5,00,000/-: not exceeding 30/-
- Above 5,00,000/- not exceeding 55/-
Timing of RTGS service
RTGS service is available on a round-the-clock basis i.e. 24x7x365. This change has been recently made to help customers adopt digital payment systems. Earlier, RTGS was available from 8 am to 4.30 pm on a working day, for settlement at the RBI end.
Details Required for RTGS
The sender who initiates the transfer must have the following details:
- Indian Financial System Code (IFSC) of the beneficiary’s bank.
- Name of beneficiary
- Account number of the beneficiary
- Amount to be remitted
- Name of the beneficiary’s bank and branch
- Account number of the sender/originator
Along with this, the bank branches of both parties need to be RTGS-enabled, only then the transaction will be processed.
Minimum and Maximum Limit
This system is primarily developed to facilitate the transfer of large value funds between parties. Hence the least amount which is transferred through this system is Rs. 2 lakhs, while no maximum ceiling is there in RTGS.
Banks provide this service for a specified fee, wherein inward transactions are free, but a certain amount is charged on the outward transaction, depending upon the amount remitted.
Advantages of Real-Time Gross Settlement
- It is one of the safest as well as the fastest mode of interbank transfer
- This facility is available on all business days, whose timings may vary from bank to bank.
- It is an immediate fund transfer mechanism.
- It is a paperless transfer of funds.
- The beneficiary is not required to visit the bank, to deposit the money.
- The funds can be transferred using the internet banking service.
Differences between NEFT, IMPS, and RTGS
|Minimum transfer value||Rs.1||Rs.2 lakh||Rs.1|
|Maximum transfer value||Depends on the customer segment||No upper limit||Rs.2 lakh|
|Type of settlement||Batches||One-on-one settlement||One-on-one settlement|
|Speed of settlement||2 hours (subject to cut-off timings and batches)||Immediately||Immediately|
|Service availability||24/7||Depends on the bank||24/7|