RTGS System

The acronym RTGS stands for Real Time Gross Settlement. It means a continuous settlement of accounts by making payments hand to hand, at the time of order, and not by holding the orders to form batches. Real Time means settling the instructions received at the time when they are received, and not at some other time. Gross Settlement means settling the transactions on a one on one basis, i.e. individually rather than holding them for some time period. As the transactions take place in the books of Reserve Bank of India (RBI), they are final and irrevocable.

People often use the terms RTGS and NEFT (National Electronic Funds Transfer) interchangeably, however these are two very different things. NEFT is an electronic fund transfer mechanism which operates on a Deferred Net Settlement basis. This means, that upon receiving orders, the payments/ transactions are not conducted hand to hand, but they are held for some duration, till a particular point of time. When that cut off time arrives, all the accumulated transactions are processed in batches. Hence the main difference between RTGS and NEFT is that, in RTGS, transactions take place in real time, whereas in NEFT, the transactions are netted.

RTGS is meant primarily for the purpose of making transactions involving large amounts. The minimum amount required for an RTGS is RS. Two Lakhs, however there is no upper limit for the same. Under normal circumstances, the beneficiary’s account receives the amount transacted in real time, however the maximum time limit for the same is half hour.

The RTGS facility is available for the account holders to use from 9 AM to 4:30 PM on weekdays, however on Saturdays, the time is from 9 AM to 2 PM on the RBI’s end. This service is provided by RBI at nominal charges. Inward transactions are free of cost, however the outward transactions’ charges are as follows: not more than Rs.30 for a payment involving Rs. 2 Lakhs to 5 Lakhs, and not more than Rs. 55 for a payment above Rs. 5 Lakhs.

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