What is RTGS?
RTGS refers to a funds transfer system that allows for the instantaneous transfer of money and/or securities. RGTS is the continuous process of settling payments on an individual order basis without netting debits with credits across the books of a central bank. Under RTGS, the minimum transfer amount is Rs 2 lakh.
'Real Time' means the processing of instructions at the time they are received rather than at some later time.'Gross Settlement' means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis). Considering that the funds settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable.
At present RTGS facility is available only during working hours of banks. Interbank transfer enables electronic transfer of funds. There are two systems of Inter Bank Transfer – RTGS and National electronic funds transfer (NEFT), both maintained by Reserve Bank of India. In RTGS system, the beneficiary bank branch receives the funds in real-time as soon as funds are transferred by the remitting Bank meaning the beneficiary Bank has to credit the beneficiary’s account within two hours of receiving the funds transfer message.
RTGS Limit:
The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is Rs 2 lakh with no upper or maximum ceiling.
RTGS Charges:
In a bid to promote digital transactions in the country, the Reserve Bank stopped levying processing charges on transactions through NEFT and RTGS from July 2019. The central bank had said that with effect from July 1, 2019, processing charges and time-varying charges levied on banks by RBI for outward transactions through the RTGS, as also the processing charges for transactions processed in NEFT will be waived off by RBI.
With a view to rationalize the service charges levied by banks for offering funds transfer through RTGS system, a broad framework of charges has been mandated by RBI:
Inward transactions: Free, no charge to be levied.
Outward transactions: Rs 2 lakh to Rs 5 lakh - Not exceeding Rs 24.50 (exclusive of tax, if any), Above Rs 5 lakh - Not exceeding Rs 49.50 (exclusive of tax, if any)
Banks may decide to charge a lower rate but cannot charge more than the rates prescribed by RBI.
Das said, "In December 2019, the RBI made available the National Electronic Funds Transfer (NEFT) system on a 24x7x365 basis and the system has been operating smoothly since then. In order to facilitate swift and seamless payments in real-time for domestic businesses and institutions, it has been decided to make available the RTGS system round the clock on all days from December 2020."
"India will be among very few countries globally with a 24x7x365 large value real-time payment system. This will facilitate innovations in the large value payments ecosystem and promote ease of doing business," he further added. Worth mentioning is that (NEFT) became a 24x7 facility from last year.
