RTGS stands for Real Time Gross Settlement in its full form.
If you need to transfer a significant amount of money quickly, RTGS is a good alternative for you. As a result, we can define RTGS as the process of transferring a significant amount in a short period of time, i.e., transfers of the amount can occur as soon as the command is sent.
Real-time transaction occurs at the precise moment when the request is being processed.
Total Settlement Individual payments are settled on a one-to-one basis.
In 1985, three central banks decided to offer this service. 90 central banks began offering the same service after 2005.
All transactions of amounts done by all banks are electronically exchanged by central banks. Tangible exchange of products and services is not required in this system, which saves money and improves the national payment system’s capabilities.
Salient Features of RTGS
- RBI (Reserve Bank of India) maintains the database.)
- Service is available 24/7/365.
- When compared to IMPS, service is slow, but when compared to NEFT, it is quick.
Information Required for RTGS
- Account number, Beneficiary Name
- IFSC Code, Bank Name, and Branch.
- The amount that must be sent.
Function of RTGS
- Online First, we must log into our branch’s net banking account. Include all beneficiary information, such as name, account number, IFSC code, and amount. Proceed by selecting the RTGS option. Money will be transferred within minutes after we fill out all of the details and confirm them with an OTP.
- Offline We must complete all fields on the RTGS form, including beneficiary name, account number, and amount. We submit the completed paperwork to the bank, who then transfers the monies to us.
The inward transaction is tax-free, according to RBI guidelines.
Processing fees for RTGS outbound transactions are listed below.
|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
- Amounts are transferred in a short period of time (one-to-one settlement).
- The procedure is risk-free.
- The service is available 24 hours a day, seven days a week, 365 days a year.
- At any time, we can look up our transaction history on the internet.
- Without a check or a demand draft, money can be transferred.
- There is no maximum amount that can be transferred from branches.
Disadvantages of RTGS
- This service requires a minimum payment of Rs. 2 lakh.
- Offline transactions are subject to service taxes.
- The highest amount that can be spent online is Rs. 50 lakh.
- After a successful transaction, the fund cannot be modified or reversed.
The RTGS system provides global access, is simple to implement for all central banks, and enables for connections with other central banks.
The net settlement system collects the total amount of daily transactions and settles them separately at the end of the day by the net amount.