The Full Form of RTGS is Real Time Gross Settlement
If you have to transfer a large number of funds and can’t wait for a long time, then RTGS will be a good option for you. So we can define RTGS as the process of transferring a large amount in a quick interval of time i.e. transfers of the amount could take place as soon as we give the command.
Real-Time – Transaction at the exact time during the processing of the request.
Gross Settlement – Settlement of payments on an individual (one to one basis.)
Three central banks agreed to provide this service in 1985. After 2005, 90 central banks started the same service.
Central banks electronically exchange all transactions of amounts done by all banks. Physical exchange of goods and services is not required in this system, which results in cost-effectiveness and enhances the ability of the national payment system.
Salient Features of RTGS
- Maintained by RBI(Reserve Bank of India)
- 24x7x365 service is available.
- Service is slow as compared to IMPS but fast compared to NEFT.
Information Required for RTGS
- Beneficiary Name, Account number
- Bank Name, Branch, IFSC Code.
- The amount to be remitted.
Function of RTGS
- Online – First, we need to log in to net banking concerning our branch. Add all the beneficiary details like Name, Account no., IFSC Code, Amount, etc. Select the RTGS option and proceed. Once we fill up all the details and confirmed them through OTP, then money will be transferred within a few minutes.
- Offline – We need to fill up all the details in the RTGS form like beneficiary name, account number, amount, etc. After filling the complete form, we submit it to the bank, and they transfer the funds.
According to the RBI guideline, the inward transaction is taxless.
List of processing charges for RTGS on the outward transactions.
|Sr. No.||Transaction Amount (in Rs.)||Approx. Charges apply by Bank|
|1.||2,00,000/- to 5,00,000/-||Rs. 24.50+GST|
|2.||Above 5,00,000/-||Rs. 49.50+GST|
Advantages of RTGS
- Transfer of amount within a short interval of time (settlement on a one-to-one basis).
- The process is safe and secure.
- Service is available 24x7x365.
- We can track our transaction history online at any time.
- Fund transfer is possible without check and demand draft.
- No maximum limit of fund transfer from branches.
Disadvantages of RTGS
- The minimum required amount for this service is Rs. 2 lakh.
- Service taxes are levied on offline transactions.
- The maximum limit for online transactions is Rs. 50 lakh.
- The fund cannot be changed or reversed after the successful transaction.
RTGS system allows access globally, it is easy to adopt for all central banks, and links with other central banks.
The central bank collects the entire per-day transaction amount and settles it individually at the end of the day by the net amount known as the net settlement system.