RTGS Fund Transfer
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RTGS also known as Real Time Gross Settlement, as defined by the RBI, is a continuous and a real-time settlement of fund transfers individually on an order-by-order basis. The transfer takes place from bank to bank and not between individuals.
‘Real Time’ means the processing of instructions at the time they are received rather than at some later time, which means that the transactions are settled as soon as they are processed; ‘Gross Settlement’ means the settlement of funds transfer instructions occurs individually.
This means that the transactions are settled on a one-on-one basis without any bundling or netting with any other transaction. Here a settlement means that once processed, payments are final and irrevocable.
RTGS Fund Transactions
RTGS transactions are usually used to facilitate high value transactions that require and receive immediate clearing. RTGS is always used with a sense of urgency as in some countries it is always used to settle transactions when either parties are in urgent need of money.
The RTGS system is monitored and controlled by the countries central bank, in this case, that would be the Reserve Bank of India. It is purely electronic in nature without any physical movement of money. This electronic transfer is done so as to reduce the amount of risk involved in fund transfer in high amounts.
The best RTGS national payment system, cover up to 95% of high-value transactions within the national monetary market.
RTGS systems are an alternative to systems of settling transactions at the end of the day, also known as the net settlement system, such as the BACS system in the United Kingdom.
In a net settlement system, all the inter-institution transactions during the day are accumulated, and at the end of the day, the central bank adjusts the accounts of the institutions by the net amounts of these transactions.
Most of the RTGS systems in place are secure and have been designed around international standards and best practices.
RTGS differs from NEFT in the settlement time. In the case of NEFT, there are batches defined for settlement and if a transaction crosses the stated time, it has to wait for the next batch to be processed.
Transactions in RTGS are processed continuously throughout the working hours. So we can say that the RTGS system works on a more spontaneous basis compared to the NEFT system. Also the NEFT system is based on transfer of funds between individuals and not banks.
Minimum amount of transfer required for RTGS is Rs. 2 lakh. There is no upper limit, though. The beneficiary bank has to credit the beneficiary’s account within two hours of receiving the funds transfer message.
RTGS Fund Transfer Service
The service window for RTGS at banks is available from 9am to 4.30pm on week- days and from 9am to 1.30pm on Saturdays for settlement at the RBI end. For RTGS, inward transactions (when you receive funds through RTGS) are free.
For outward transactions (when you send funds via RTGS), if the amount is between Rupees 2 lakh and Rupees 5 lakh, the charges will be up to Rupees 30 per transaction. If the amount transferred is above Rupees 5 lakhs, the charges can’t exceed Rupees 55 per transaction.
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