Real Time Gross Settlement (RTGS) - All You Need To Know?

The modern era has provided us with newer, more convenient payment and settlement methods. However, with so many new methods of transferring funds available, it can be difficult to select one that meets your requirements. This article focuses on RTGS, a payment method that has grown in popularity in India. Continue reading for more information.

What does RTGS stand for?

The acronym RTGS stands for Real Time Gross Settlement, and it refers to a system that allows for the continuous and real-time settlement of fund transfers on a transaction-by-transaction basis (without netting). 'Real Time' refers to the processing of instructions at the time they are received; 'Gross Settlement' refers to the individual settlement of funds transfer instructions.

What are the benefits of using RTGS?

• RTGS is a safe and secure way of transferring funds.
• The RBI has not set a limit for RTGS transactions or transfers.
• The service is available 24/7. In real time, the funds are transferred to the beneficiary's account.
• It is not necessary for the remitter to use a physical cheque or demand draught.
• It is not necessary for the beneficiary to deposit the paper instruments at a bank branch.
• The beneficiary is not at risk of physical instrument loss or theft, nor is he or she at risk of fraudulent encashment.
• If his or her bank offers such a service, the remitter can initiate the transfers from the convenience of his or her own home or workplace.
• Transaction fees have been set by the RBI.
• The transaction is legally safeguarded.

How does RTGS processing differ from that of the National Electronic Funds Transfer (NEFT) System?

NEFT is an electronic fund transfer system that processes transactions received up to a specific time in batches. In contrast, transactions in RTGS are processed continuously on a transaction-by-transaction basis throughout the day.

What information must the remitting customer provide to the bank in order to make a remittance?

• Amount to be sent
• The account number that will be debited
• Beneficiary bank and branch information
• The receiving branch's IFSC code
• Name of the customer who will benefit
• Beneficiary customer's account number
• Information from sender to receiver, if any Sender and Beneficiary Legal Entity Identifier (for eligible transactions)

What precautions should be taken when initiating an RTGS transaction?

The RTGS network includes both originating and destination bank branches.
Beneficiary information such as the beneficiary's name, account number and type, as well as the name and IFSC of the beneficiary's bank branch, should be available to the remitter.
Extreme caution should be exercised in providing the beneficiary's account number, as credit will be applied to the customer's account solely based on the account number provided in the RTGS remittance instruction / message during the processing of RTGS transactions.

How long does it take to transfer funds from one account to another via RTGS?

Normally, the beneficiary branches should receive funds in real time as soon as the remitting bank transfers funds. The beneficiary's bank account must be credited within 30 minutes of receiving the funds transfer message.