What is RTGS - Real Time Gross Settlement - Banking Terms

Real Time Gross Settlement (RTGS) is an electronic form of funds transfer where the transmission takes place on a real time basis.

in other words

Real Time Gross Settlement (RTGS) is an online system for settling transactions of financial institutions, especially banks. RTGS systems are push payment systems with transactions initiated by the paying bank. If Bank A or one of its customers need to pay Rs.10,000 to Bank B or one of its customers, Bank A initiates the transaction and Bank B is immediately paid Rs 10,000 electronically by Bank A.

Examples of RTGS systems include CHAPS in the UK and Fed Wire in the United States. Each country has its own RTGS system. This electronic payment system is normally maintained or controlled by the central bank of a country. The RTGS system is suited for low-volume, high-value transactions. It lowers settlement risk, besides giving an accurate picture of an institution's account at any point of time.

The customer initiating the funds transfer through RTGS has to have the Indian Financial System Code (IFSC) of the beneficiary's bank, along with the name of the beneficiary, account number and name of the bank. The bank branches, both at the initiating and receiving end, have to be RTGS-enabled for the transaction to be processed. Customers with Internet banking accounts can do RTGS transactions on their own.

In India, transfer of funds with RTGS is done for high value transactions, the minimum amount being Rs 2 lakh. The beneficiary account receives the funds transferred, on a real time basis.

Timing for RTGS in India

RBI has prescribed the following operating hours for RTGS : The RTGS service window for customer's transactions is available from 8.00 hours to 16.30 hours(Monday through Friday and also on Working Saturdays i.e. Saturdays other than 2nd & 4th Saturdays),

In terms of the procedure as laid down by RBI, under RTGS the beneficiary branches are expected to receive the funds on real time basis i.e. as soon as funds are transferred by the remitting bank. However, sometimes there may be delays due to processing at the remitting / receiving bank. RBI has prescribed that the beneficiary bank has to credit the beneficiary's account within 30 minutes of receiving the funds transfer message. Thus, we do not see the transfers on real time basis but these are credited usually within less than 30 minutes.

Processing / Service Charges for RTGS Transactions :

(a) Inward Transactions: Free, no charge to be levied;
(b) Outward Transactions: Rs 2 lakh to Rs 5 lakh - Not exceeding Rs.30/- per transaction; Above Rs 5 lakh - not exceeding Rs.55/- transactions;