RTGS is the abbreviation of Real-Time Gross Settlement which can define as a process of the inter-bank transaction. It is the system of fund transfer that allows for immediate transfer of money or securities. These transactions are of high value which needs instant and full clearance by the central bank of the country.
There is lesser risk in the settlement because it is done instantly throughout the day. It is different from the NEFT (National Electronic Fund Transfer), where the settlement processes in batches. Thus, customers have to incur high costs for real-time gross settlement.
Features of RTGS
- The fund transfer instruction under RTGS is process individually on an order basis
- It is the fastest and most secure system of fund transfer
- Through it, one can transfer payment from one bank to another bank on an urgent basis
- It is mean for high-value transactions i.e. above Rs 2 lakh
- In order, the service is facilitate by all banks across India. But not every branch of every bank support this facility. Till now, there are around 1,00,000 + branches all across India that facilitates this facility.
In the case of the online RTGS, the transaction facility charges will remove by the Reserve Bank of India (RBI). Thus enhance the digitalization of banking and service products. Moreover, some charges are levied by the bank in the offline facility as:
For this purpose, the transaction slabs are divide into two parts such as:
- Transaction between Rs 2 lakh to Rs 5 lakh
- Transaction above Rs 5 lakh
The charges for these transactions slabs are as:
- The slab of Rs 2 lakh to Rs 5 lakh carries a nominal charge of Rs 24.5 per transaction. Along with Rs 5 per transaction through net banking channels.
- The slab above Rs 5 lakh carries a nominal charge of Rs 49.5 per transaction. Along with Rs 10 per transaction through net banking channels.
Necessary things to consider for RTGS
- The minimum amount which can be transfer through it is Rs 2 lakh per day with no maximum limit
- It process facility is available 24 x 7 since 14, December 2020.
- There are no charges or processing fees on the inward transaction.
- In case of outward transaction: For Rs 2 lakh to Rs 5 lakh, the processing fee is Rs. 24.5 (exclusive of tax, if any). For above Rs 5 lakh, the processing fee is Rs 49.5 (exclusive of tax, if any).
Requirements for RTGS transaction
The requirements that customers need to meet before effective transfer are as:
- Remittance Amount
- Account details of the other person for fund transfer
- Name of beneficiary bank and branch
- IFSC code of the beneficiary branch
- Name and account number of the beneficiary customer
- Sender to receiver information (if any)
Sometimes, due to any technical issue, where the funds have not to transfer successfully, the remitting customer will inform same and the amount is credit back to his/her account.
Difference between NEFT and RTGS
The major differences between NEFT and RTGS are mention below:
|Full-Form||NEFT is an abbreviation for ‘National Electronic Fund Transfer‘.||RTGS is an abbreviation for ‘Real-Time Gross Settlement‘.|
|Settlement||The settlement of funds in NEFT is done in batches.||The settlement of funds in RTGS is done in real-time.|
|Speed||It is a comparatively slower method of transferring funds between two accounts.||It is very fast and the best option for transferring funds quickly between accounts.|
|Minimum Transfer||In NEFT there is no limit for a minimum transfer.||Under RTGS, the minimum amount to be transferred is two lakhs.|
|Maximum Transfer||There is a limit of Rs 10 lakh for a maximum fund transfer.||There is no limit for a maximum fund transfer in RTGS mode.|
|Credit in the beneficiary account||The funds are credited into the beneficiary accounts in hourly batches depends upon the bank system.||The funds are credited within a few minutes i.e., 30 minutes to few hours.|
|Charges as per RBI||Charges in NEFT- Rs. 2.5 (Up to 10,000) Rs. 5 (From 10,001 to 1 lakh) Rs. 15 (From 1-2 lakh) Rs. 25 (Above 2 lakhs) In addition, these charges may vary from bank to bank.||Charges in RTGS- Rs. 24.5 (Up to 2- 5 lakhs) Rs. 49.5 (Above 5 lakhs) Just like NEFT, the charges in RTGS may also vary from bank to bank.|
|Implementation||NEFT was first implemented in November 2005 which replaced the SEFT (Special Electronic Fund Transfer) method.||RTGS was first introduced in March 2004. It was implemented as the fastest and technology-based funds transfer method across India.|
|Suitable||It is best suited for small-value transactions.||It is best suited for the high-value transaction.|
Benefits of RTGS
The reason why RTGS transactions will prefer over NEFT transactions are the main benefits which are as:
- It saves time as it facilitates the immediate transfer of funds. As, earlier payments are process through demand draft, which is clear in a period of three days.
- Without any need for physical documentation, paper work is reduce to zero. Thus, enhance towards digitalization and made efforts towards a paperless economy.
- It prevents fraud, the threat of money (stolen), and any other loss since all the process is process online and has no amount cap.
- There is no geographical limit in India to use this service.
- It makes easier to companies and business firm to run smoothly by making huge money transfer within a second.
- Helps an organization to manage its capital effectively and maintain liquidity.
- Further, it maintains a better supplier and buyer relationship, as a huge sum of money is transfer without any delay.
To conclude, RTGS is the most convenient and easiest way which is mean for high-value transactions. As it does not have any upper transfer limit with a 24 x 7 X 365 facility.
In addition, it reduces paperwork, prevents fraud and delays in fund transfers. Thus if one wants the ease of making payment can opt for real-time gross settlement.
Frequently Asked Questions
The RTGS is an abbreviation for Real-Time Gross Settlement. It can be defined as a system of inter-bank transactions. It is the system of fund transfer that allows for immediate transfer of money or securities.
It usually takes 30 minutes to a few hours depending upon the bank security and server for an RTGS transfer. Once the beneficiary account is activated, the transfer will be done instantly.
The minimum fund transfer limit in RTGS is Rs 2 lakh with no maximum limit.
No, once initiated, it is impossible to cancel the RTGS transfer.
RTGS transfer online via the internet or mobile banking is not chargeable. Whereas, RTGS done at the bank is chargeable with some nominal amount. The slab of Rs 2 lakh to Rs 5 lakh carries a nominal charge of Rs 24.5 per transaction. Along with Rs 5 per transaction through net banking channels. The slab above Rs 5 lakh carries a nominal charge of Rs 49.5 per transaction. Along with Rs 10 per transaction through net banking channels.
Yes, RTGS can be done within the two accounts of the same bank as well as two different banks also.
With effect from 14 December 2020 the RTGS is available 24 X 7 X 365.
Unique Transaction Reference (UTR) number is a 22 character code used to identify an RTGS transaction.
Yes, the remitting bank will receive a message from RBI after crediting the beneficiary account.