The need for secure and efficient transaction methods has become paramount in today’s banking era. Thus, the Reserve Bank of India (RBI) offers a Real-Time Gross Settlement (RTGS) system for transferring high-value funds. RTGS is one of the most popular payment settlement systems in the country.

This article explores the meaning of RTGS, its significance, how it works, its applications and more.

What is RTGS? 

RTGS full form stands for Real-Time Gross Settlement, a system that facilitates fund transfers between banks quickly without delays. Real-Time Gross Settlement is a banking system that transfers funds directly from one bank account to another. 

As the name suggests, the bank processes and settles on a transaction-by-transaction basis (without netting) in real-time and on a gross basis. The banks handle each transaction individually, without it being a group or batch with other transactions.

Unlike other payment systems, such as NEFT, cheque transfers, or Automated Clearing Houses (ACH), which settle transactions in batches at a particular time in the day, RTGS settles transactions continuously throughout the day. 

How Does RTGS Work?

RTGS enables immediate and secure fund transfers between banks. Here’s how it works:

• The customer initiates an RTGS transfer via online banking, mobile banking, or a bank branch.
• The customer’s bank checks if he/she has sufficient funds for transfer and authorises it.
• The bank sends the payment instructions to the RTGS system, managed by the central bank.
• After verification, the central bank debits the customer’s bank and credits the beneficiary or recipient’s bank account.
• Once the amount is sent, the beneficiary’s bank informs the customer’s bank.
• The customer receives notification of the successful money transfer.

RTGS Example

Suppose you initiate an RTGS transaction of Rs. 3,00,000 lakh at 11:00 a.m. The transfer will be processed immediately, and the beneficiary will receive the funds within minutes (maybe by 11:30 a.m.). 

Ways of RTGS Transfer

Following are the different ways to do an RTGS transfer:

• Internet Banking: Customers can initiate RTGS transfers through their bank’s net banking portal. Upon successfully adding beneficiaries, you can transfer funds to the beneficiary.
• Mobile Banking Apps: Most banks provide mobile banking apps, enabling users to perform RTGS transfers via smartphones or tablets. 
• Bank Branch: For those who prefer in-person assistance, RTGS transfers can be initiated at a bank branch. Customers need to fill out the respective form, and the bank staff processes the transaction.

RTGS Requirement

The following details are essential to initiate an RTGS transaction:

• Name of the beneficiary
• Name of the beneficiary’s bank and branch
• IFSC code of the beneficiary’s bank branch
• Beneficiary’s account number
• The amount you wish to transfer
• Sender to receiver’s information, if any
• Notes or references (optional)
• Sender and Beneficiary Legal Entity Identifier, if applicable

How to Do RTGS Online? 

To make an RTGS transfer online, you need to first add a beneficiary online and then proceed to make the transfer. However, if you have already added a beneficiary before, you can proceed directly to initiate the RTGS transfer.

Here are the steps to add a beneficiary:

Step 1: Log into your bank’s net banking portal using your credentials.

Step 2: Go to the ‘Funds Transfer’ section. 

Step 3: Click on the ‘Add Beneficiary’ option. 

Step 4: Provide beneficiary account details such as account number, IFSC, bank name, and branch name. 

Step 5: Click the ‘Add’ button and then confirm your action. 

Step 6: You may have to authenticate the addition by typing in your credentials. 

Step 7: A confirmation message will be sent to you once the beneficiary is added. 

Upon adding a beneficiary, you can start transferring funds through RTGS by following these steps:

 Step 1: Log into your bank’s net banking portal using your credentials.

Step 2: Go to the ‘Funds Transfer’ tab on your bank’s internet banking page.

Step 3: Select the beneficiary’s account number and choose ‘RTGS’ as a transfer mode.

Step 4: Enter the amount to be transferred. 

Step 5: Select the checkbox that says you agree to the terms and conditions. 

Step 6: Review the details and click the ‘Confirm’ button to complete the process.

How to Do RTGS Offline?

Step 1: Go to the bank branch where you hold an account and request an RTGS transfer.

Step 2: Complete the RTGS form provided by the bank with the following details- beneficiary's name, account number, bank details, transfer amount and your account details.

Step 3: Submit the completed form along with your identification or any required documents.

Step 4: If applicable, pay the RTGS transaction fee as per the bank’s charges.

Step 5: The bank will process the transaction and provide a confirmation slip or message containing the transaction reference number and status.

RTGS Transaction Fees in Banking in India

The RBI has removed or waived the processing charges for RTGS transactions from 1 July 2019. 

To rationalise the service charges levied by banks for funds transfer through the RTGS system, the RBI has mandated the following broad framework of charges:

However, the service charges for RTGS transfers may vary from bank to bank. Usually, most banks do not charge any fees for RTGS transfers online.

RTGS Timings

From December 2020 onwards, the RBI has provided RTGS service 24/7 for 365 days a year, including public holidays, bank holidays, and weekends. 

RTGS Limit

As per the RBI, the minimum RTGS amount limit is Rs. 2,00,000 and there is no maximum upper limit for RTGS.

Benefits of RTGS

The advantages of using RTGS (Real-Time Gross Settlement) are numerous: 

• RTGS transfer is highly secure because it is regulated by the Reserve Bank of India (RBI). 
• One of the best advantages of using the RTGS transfer system is that it allows real-time transfer of funds; the account of the recipient is credited within minutes. 
• The RTGS transfer system does not set a maximum limit on the funds being transferred, making it a great option for high-value/commercial transactions. 
• It can also be done online through internet banking from your office or home, so there is no need to wait in line at your bank. 
• RTGS transfer also has the security of not exposing any private and sensitive information, which decreases the potential cybersecurity threats when it comes to data tampering or hack and unauthorised access. 
• Additionally, RTGS has its own transaction fee regulated by the Reserve Bank of India; the user will know the fees before they initiate the RTGS transfer, and there will be no hidden charges in the process. 
• RTGS is available throughout the year, every day (including weekend and holiday), it operates consistently every day to give the user access and it has become an easy and convenient way to transfer and settle funds for the user but also to receive funds.

Challenges of RTGS

Although RTGS has many advantages, it has some disadvantages. Here are some common challenges with RTGS transactions: 

• RTGS has a minimum transfer limit of Rs. 2,00,000. RTGS transfers are generally not a suitable option for small transfers, because of the limitations. 
• When you put in the request for an RTGS transaction, you can't stop it or take it back. It is very important to have all the correct beneficiary information to avoid mistakes, including the full name of the beneficiary, account number, and IFSC code. 
• RTGS can only facilitate transfers to bank accounts in India. RTGS cannot be used for cash transfers or sending remittances/international payments. 
• The success and speed for an RTGS transaction depend on the systems of the sender's bank and receiver's bank. If there are technical problems, the RTGS transaction may delay. 
• To settle RTGS transfers, there have to be adequate funds in your bank account. If there is no liquidity, any RTGS transaction will delay.  

RTGS vs NEFT 

RTGS fund transfers are settled real-time while NEFT transfers are settled in half-hourly batches. NEFT can be used to transfer small amounts since the minimum limit is Rs.1 while the minimum limit for RTGS is Rs. 2,00,000. 

RTGS vs IMPS 

Both RTGS and IMPS fund transfers are settled real-time but IMPS can only be initiated online and not by visiting the bank. IMPS allows the transfer of small amounts since the minimum limit is Rs.1 while the minimum limit for RTGS is Rs. 2,00,000. However, the maximum amount that can be transferred using IMPS is Rs. 2,00,000 while there is no maximum limit for RTGS.

RTGS Form​

Each bank has its own RTGS form. Thus, you can get the RTGS form of your bank by visiting it. Here are some of the RTGS forms of different banks:

HDFC Bank RTGS Form

Central Bank of India RTGS Form

SBI RTGS Form

Real-Time Gross Settlement (RTGS) provides safe transactions, as it is backed by the RBI. It ensures immediate and real-time settlements. RTGS is the best payment option for high-value transactions since there is no upper limit on the amount that can be transferred. RTGS is now available 24x7, with a nominal transaction charge, making it easy to make large transfers. 

Related Article:
1. Differences between NEFT, RTGS and IMPS