The full form of RTGS in Banking sector is REAL-TIME GROSS SETTLEMENT
What is RTGS?
Real-Time Gross Transfer is a method of fund transfer introduced in 2005 where the money can be sent to the receiver instantly or in real-time. There’s a minimum limit of 2 lakhs to transfer the money and there is no upper limit.
What is the history behind RTGS system?
The first system that resembled RTGS very much was the US Fedwire system in 1970, it was a system based on transacting money electronically through Telegraph.
Then in 1984, UK and France developed RTGS system independently. The UK system was called CHAPS and it was developed by Bankers’ Clearing House, French system was called SAGITTIARE. The system was introduced to India in March 2004 by Reserve Bank of India (RBI).
How does RTGS work?
Real Time Gross Settlement, as the name suggests works on real time, meaning the receiver receives money immediately after the sender’s successful transaction.
The transaction also happens individually without grouping or bunching up with other transactions. It is used mainly for inter-bank transaction of large sums of money and the transaction cannot be reversed once it’s been processed.
RTGS system is managed by RBI, the Central Bank makes adjustments to the sender’s and receiver’s banks. Money from the sender’s account is reduced and the money of the receiver’s account is increased by the same amount.
What are the Benefits of RTGS?
The system is regulated by RBI and hence highly reliable, safe and secure
Funds can be transferred online
No geographical limitation
The transaction occurs instantly and is used for large fund transfer
What is the difference between RTGS and NEFT transactions?
There’s a minimum limit of 2 lakhs for RTGS which is not the case in NEFT.
In RTGS the fund transfer occurs in real-time whereas fund transfer in NEFT takes time and is settled in hourly batches.
Also Read: What is the Financial Decision Support System(DSS)?
What are the features of RTGS?
- Transactions are done in real time without any delays.
- RTGS immediately clears payment on the sender’s end and reflects on the beneficiary account within two hours.
- The money is transferred and received on a one-to-one basis.
How can I transfer money to a person using RTGS?
Activate your internet banking facility by contacting your bank and then log in to web portals by the User ID and Password provided to you
Go to your profile->beneficiary->inter-bank payment->RTGS
Add a beneficiary and fill the required fields
Accept the terms and condition and then click confirm
To authorize beneficiary to submit the password sent on your mobile number
After the beneficiary is activated (will take about 30 mins or more) in the Payments/Transfers tab click the Inter-Bank Transfer link.
Click transaction-type as RTGS, add the beneficiary’s account from the list of accounts displayed
Enter the amount (min 2 lakhs) and then accept the terms and conditions followed by clicking confirm.
Your fund will be transferred instantly.
What is the essential information needed to make a RTGS payment?
- The account number of the receiver.
- Name of the receiver’s bank and branch name.
- IFSC (Indian Financial System Code) code of the receiving branch.
- Name of the recipient.
- Sender to receiver information if needed.