What is RTGS? Know the RTGS Fund Transfer Process

In India, the Payment and Settlement Systems Act, 2007 (PSS Act) regulates the smooth flow of money transfers. Real-Time Gross Settlement (RTGS) is one of the most popular methods for electronically transferring funds within the country. It's a versatile system that allows you to initiate transfers via both offline and online channels. Here, we've compiled an explanatory guide to help you understand RTGS.

What is RTGS In Banking and its Full Form?

Real-Time Gross Settlement (RTGS) refers to a specialised electronic funds transfer system banks and other financial institutions use for urgent and high-value transactions. Funds are transferred between banks in real-time (RTGS) systems, meaning the transaction is completed instantly, usually in minutes or seconds. In Real-Time Gross Settlement (RTGS), ""gross"" means that every transaction is settled separately, in total, and without netting or offsetting against other transactions.

How Does RTGS Work?

RTGS, or Real-Time Gross Settlement, offers a secure and speedy way to transfer large sums of money between banks in India. It operates on two key principles: real-time settlement and gross settlement. Real-time settlement ensures the transfer happens instantly, crediting the beneficiary's account as soon as the sending bank transmits the transaction. Gross settlement means each transfer is handled individually, eliminating the delays or complications that can arise from bundling transactions together. Because of these features, RTGS is ideal for urgent and high-value transfers, often managed by the central bank.

Features and Benefits of RTGS

1. Real-Time Settlement: Funds are transferred and settled immediately, meaning the beneficiary receives the money in their account within seconds or minutes. In contrast to other methods like NEFT, which process transactions in batches.
2. High Security: RTGS transactions are highly secure due to several factors. The individual settlement of each transaction reduces the risk of fraud or errors. Additionally, the involvement of the Reserve Bank of India (RBI) as an intermediary adds another layer of security.
3. No Intermediaries: Unlike money transfer methods involving intermediary banks, RTGS operates directly between the sender's and receiver's banks. This eliminates the need for additional processing steps, leading to faster transfers and potentially lower fees.
4. High Transaction Limits: RTGS is typically used for high-value transactions. While there may not be a strict upper limit, individual banks might have their own maximums. This makes RTGS ideal for large payments like property purchases or investments.
5. One-to-One Crediting: This feature builds upon the real-time nature of RTGS. The transferred funds are directly credited to the beneficiary's account, eliminating the need for waiting periods or batch processing. This ensures the recipient has immediate access to the money.

What are the different modes of RTGS transactions in India?

1. Internet Banking: This is the most convenient mode, allowing you to initiate RTGS transfers directly from your bank's website.
2. Mobile Banking: Many banks offer RTGS functionality through their mobile banking apps, providing a way to transfer funds on the go.
3. Branch Banking: You can visit your bank branch and fill out an RTGS form to initiate a transfer. This mode is suitable if you don't have access to internet banking or mobile banking.

What Information Is Necessary to Begin an RTGS Transaction?

1. The name of the beneficiary bank and branch.
2. Recipient’s full name.
3. IFSC code of the receiving bank.
4. Amount to be transferred.
5. Any relevant remarks or notes, if necessary.
6. Sender’s account particulars.
7. Beneficiary’s account number.

RTGS Fund Transfer Process

1. Log in to your bank's internet banking account using your username and password.
2. Navigate to the home page and select the Funds Transfer option.
3. Choose RTGS, and enter the beneficiary's details such as account number and IFSC code.
4. Review all the information and submit. The funds will be credited to the payee's account immediately.

Understanding RTGS Transaction Limits in India

Effective July 01, 2019, the Reserve Bank of India (RBI) has introduced significant changes to the processing and service charges for RTGS transactions to make them more affordable and accessible for customers. To ensure uniformity and transparency, the RBI has set a framework for banks to follow when determining RTGS transaction charges.

• Receiving Transactions — No Charge: Banks are not allowed to impose fees for processing incoming RTGS transactions, ensuring recipients do not incur any costs.
• Sending Transactions (₹2,00,000/- to ₹5,00,000/-): Banks can levy a maximum fee of ₹25/- (excluding applicable taxes) for outgoing RTGS transactions within this range.
• Sending Transactions (Above ₹5,00,000/-): For outgoing RTGS transactions exceeding ₹5,00,000/-, banks can charge up to ₹50/- (excluding applicable taxes).

Note: Banks can opt to charge lower fees but cannot exceed the limits set by the RBI. These adjustments aim to standardize RTGS service charges and offer a more customer-friendly approach for both individuals and businesses.

What is the Difference between RTGS and NEFT

While NEFT has no minimum or maximum limit on the amount to be transferred, RTGS transactions can only be completed if the amount to be transferred is equal to or more than Rs. 2 lakh. In the same way, RTGS transactions are completed right away, whereas NEFT transactions require roughly two hours to complete.

FAQs

1. What does RTGS stand for?

RTGS full form is Real Time Gross Settlement.

2. What are the timings for RTGS?

RTGS timings- transactions can be completed on a 24/7 basis except between 11:30 p.m. and 00:30 a.m. due to cut-off.

3. How much time does RTGS take?

After receiving the cash transfer notification, the beneficiary bank has thirty minutes as rtgs transfer time to credit the beneficiary's account. Normally, as soon as the remitting bank transfers the funds, the recipient branches are anticipated to receive them instantly.

4. What are the fees and charges for RTGS transactions?

For online transfers, there are no rtgs charges levied for transactions. For RTGS transactions completed at a bank branch, a charge of ₹15 plus GST is applied.

5. What is the minimum and maximum limit for RTGS transactions?

RTGS transactions are primarily for larger value transfers. The RTGS minimum amount for transactions is ₹2 lakh. For RTGS maximum amount, there is no RTGS limit.

6. When should I use RTGS to transfer money?

RTGS is best suited for transactions that need to be settled in real-time and have a minimum amount of ₹2 lakh.

7. Is it possible to schedule an RTGS transaction in advance?

Yes, you can schedule RTGS transactions in advance.

8. What happens if the amount sent through RTGS does not reach the beneficiary?

If the amount transferred through RTGS does not reach your beneficiary, the exact amount will be refunded to the originating account within an hour of receipt.

9. Are there any limitations or drawbacks of RTGS transactions?

Since RTGS is usually intended for high-value transactions, it has a minimum transaction threshold, which is one of its limitations. Furthermore, RTGS may only be available within certain hours, often the same as bank business hours.

10. How long does it take for an RTGS transaction to be processed?

RTGS transactions are processed and settled instantly, usually within a few minutes of initiation.

11. Can RTGS transactions be reversed or cancelled once initiated?

Once an RTGS transaction is processed and settled, it is considered final and irrevocable. Therefore, it cannot be reversed or cancelled. It’s essential to double-check the transaction details before initiating an RTGS transfer.

12. Can RTGS transfers be made on bank holidays and Sundays?

Yes, RTGS transactions can be carried out 24/7 and 365 days a year, including holidays and weekends.