What is RTGS?
RTGS is short for Real-Time Gross Settlement. RTGS is a way of settling funds transferred by an individual in real-time. In RTGS, money is transferred from one bank to another continuously. This system is beneficial for transactions of a higher monetary value, which need to be cleared immediately. Settlements are generally done in batches, but when using RTGS the transaction is settled immediately. In simple terms, RTGS is processed at the time of receipt, whereas in the case of gross settlement, the instructions for settlements are received individually. Since these settlements take place through the RBI, the transaction cannot be reversed.
History Of RTGS in India
The Real-Time Gross Settlement system (RTGS) was launched in India in March 2004. This system is maintained by the RBI. Initially, it was started as a settlement system for any inter-bank transactions, but over time, this system was made available for money settlements by customers.
Difference Between RTGS and NEFT
Both RTGS and NEFT play an important role in their own way when it comes to effective fund transactions. RTGS is a better payment gateway when the transaction amount is large and is urgent. Because RTGS transactions are generally more expensive, it might not be a better solution for a smaller and less urgent amount. In the case of the latter, NEFT transactions would be an ideal choice as it is free.
- The settlement basis for RTGS is gross, which means that the settlements are done individually and are not bunched with other transactions. However, for NEFT, it occurs on a net basis.
- Access to the RTGS facility is only available on weekdays and Saturdays, whereas the NEFT method is available at any time of the week or year.
- The main difference between RTGS and NEFT is that the former has settlements in real-time while the latter has settlements in batches.
- NEFT has neither a minimum nor a maximum transaction limit, whereas RTGS has a minimum transaction limit of 2 lakhs for retail internet banking and corporate internet banking.
Key Points About RTGS
- This payment network is maintained by the Reserve Bank of India.
- RTGS is the fastest money transfer system.
- The fees for RTGS are not consistent across banks; they vary from one bank to another.
- To use the RTGS system to transfer money, the minimum value of the fund should be at least ₹2,00,000.
- The RTGS facility is not available throughout the day. The timings for RTGS transactions are 9 am to 4:30 pm on weekdays and 9 am to 2:00 pm on Saturdays. This time limit also depends on the banks.
- About 72 banks are currently participating in inter-bank settlements.
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