Real-Time Gross Settlement (RTGS)

Reviewed by Vineeth | Updated on Aug 27, 2020

Introduction

Real-Time Gross Settlement (RTGS) is one of the processes that settle payments to the recipient on an instant basis without having to wait for some time for the settlement to happen. RTGS services are irrevocable once the settlements are done.

What is Real-Time Gross Settlement (RTGS)?

Real-time gross settlements are a process that is used for high-value inter-bank transactions. These transactions typically need instant and full clearing and are generally done by the central bank of the country.

RTGS reduces the overall risk as these settlements are made almost instantly throughout the day. It is not like National Electronic Funds Transfer (NEFT) in which settlements are made in batches. Hence, the charges involved in the real-time gross transfer of funds may incur higher costs to customers.

Why Real-Time Gross Settlement (RTGS) is Important?

The real-time gross settlement is typically utilised by the central bank and help in minimising the risk involved in high-value transactions made by users. Despite banks and financial institutions having high-level security to shield customer’s information and funds, the threats are on the rise each day.

Hence, the existence of real-time gross settlement process has given the much-needed security to the customers to make safe and secure transactions by clearing settlements almost instantly. In India, funds above Rs 2 lakh can be transferred through real-time gross transfer.

Tips and Tricks to Gain Maximum Benefits

The RTGS transactions come at a cost for the customers. However, the fact that the funds are transferred instantly outweighs the cost involved in these transactions. Also, the transaction charges are very nominal.

The Reserve Bank of India (RBI) has capped transaction charge at Rs 49.50 for funds transfer exceeding Rs 5,00,000 and Rs 24.50 in case a customer has to transfer funds in the range of Rs 2,00,000 and Rs 5,00,000.

All that a customer needs to furnish to transfer funds through real-time gross settlement is the duly filled form which contains the information of the account from which the funds have to be debited from, the account to which the funds have to be credited, and message (if any).