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What is RTGS? Meaning, Features, Charges, Limits and Benefits

SME - 17 Mar, 2024

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RTGS: Explained in Simple Terms

How large sums of money move between banks instantly? That’s the magic of RTGS or Real-Time Gross Settlement. It’s a system that lets banks transfer money between accounts immediately, ditching the waiting game.

Think of it like this: you’re paying a friend for a car with RTGS. The money leaves your account immediately and lands in theirs instantly, with no delays! This makes RTGS perfect for important transactions where speed and security are essential.

This article will explain everything you need to know about RTGS, from how it works to when it’s best. So buckle up and get ready to dive into the world of fast and secure money transfers!

What is RTGS?

RTGS stands for Real-Time Gross Settlement. It’s a unique bank system for quickly moving large sums of money between banks. Think of it like an express lane for your cash! Unlike regular transfers, the money arrives in the other account immediately, usually within minutes.

Here’s what makes RTGS unique:

Real-time: No waiting! The transfer happens instantly.
Gross settlement: Each transfer is handled separately, ensuring secure delivery.

Because of these features, RTGS is ideal for essential transactions like high-value purchases or urgent payments. Authorities also oversee it to keep the financial system running smoothly.

RTGS: features and benefits

RTGS, which stands for Real-Time Gross Settlement, is a secure and convenient way to transfer funds electronically between banks. Here’s how it benefits you:

Secure: Forget worries about lost checks or stolen cash. RTGS uses electronic transfers, minimizing risks like theft or fraud.
Big or Small, It Works: Need to send a large sum for a down payment on a house? No problem! Unlike some methods, RTGS often has no upper limit on transfer amounts.
Lightning Speed: Money moves in real-time! Once you initiate the transfer, the recipient’s account gets credited instantly.
Always Available: Banks are closed on weekends? Not RTGS! You can transfer funds 24/7, whenever you need to.
Ditch the Paperwork: RTGS is entirely electronic, so you won’t have to worry about checks or demand drafts anymore. It’s faster and simpler.
Reduced Risk: No physical documents mean less chance of getting lost, stolen, or misused.
Easy as Online Banking: Initiate your RTGS transfer conveniently from your Internet banking platform from your home or office.
Cost-Effective: While some banks might have small fees, many offer RTGS for free, making it a budget-friendly way to send money.
Peace of Mind: RTGS is legally recognized and regulated, so you can be confident that your transactions are secure and protected by law.

How Real-Time Gross Settlement (RTGS) Works in RTGS

Do you ever need to transfer money to someone urgently? RTGS (Real-Time Gross Settlement) is a unique system that lets banks move money between each other instantly, 24/7 (depending on the bank’s operating hours). Here’s how it works, explained:

You initiate the transfer by telling your bank (through online banking, mobile app, or branch visit) how much money you want to send and to whom it’s going (their bank account details).
Your bank checks your account: They ensure you have enough money to send.
Off to the RTGS system: If all is good, your bank sends the transfer request to the RTGS system, which your country’s central bank often runs.
Central bank checks things out: The central bank confirms everything is valid and follows the rules.
Money on the move: The central bank instantly moves the money from your bank’s account to the recipient’s bank account.
Money arrives!: The recipient’s bank puts the money straight into their account, making it available for them to use.
Everyone gets confirmation: Both you and the recipient get a message saying the transfer is complete.
Records are kept: Both banks keep a transaction record for future reference.

This process typically takes just a few seconds, making RTGS ideal for urgent or high-value transfers. Remember, some banks might have limitations on RTGS transfers, so check with them before initiating one.

What are the various modes of initiating RTGS transactions in India?

Need to transfer a large sum of money fast? You can use RTGS (Real-Time Gross Settlement) in India for quick and secure transfers. Here’s how you can initiate an RTGS transaction:

Do it yourself online: Most banks let you do RTGS through their internet banking portal. Just log in and follow the bank’s instructions, and you’re good to go!
Mobile app on the move: Many banks offer mobile banking apps where you can initiate RTGS transfers from your phone or tablet. Convenient for sending money anytime, anywhere.
Visit your bank branch: If you prefer in-person assistance, head to your branch. A staff member can help you process the RTGS transfer and ensure you have all the necessary details.

Sending money with RTGS? Here’s what you’ll need:

Beneficiaries’ details: Include their full name, bank name, and branch name.
Account numbers: You’ll need both your account number and the recipient’s.
Bank code (IFSC): This unique code identifies the recipient’s bank branch. You can find it on your bank statements or online.
Transfer amount: Enter the exact amount you want to send.
Reference (optional): You can add a short message explaining the reason for the transfer (valid for both you and the recipient).

That’s it! Once you have this information, you can initiate your RTGS transfer through your bank’s online platform or by visiting a branch.

RTGS Transaction Fees in Indian Banking: What Are They?

Sending large sums of money (over ₹2 lakh) has become more accessible and cheaper thanks to the Real-Time Gross Settlement (RTGS) system. Here’s what you need to know:

No fees to receive money: Your bank will not charge a fee to anyone receiving money via RTGS.
Low fees to send money: There are minimal charges for sending money through RTGS. Banks can charge a fee, but only up to:
1. ₹25 (excluding tax) for transfers between ₹2 lakh and ₹5 lakh.
2. ₹50 (excluding tax) for transfers above ₹5 lakh.
Banks can offer even lower fees: Some banks charge less than the limits set by the RBI.

Overall, these changes make RTGS a convenient and affordable way to transfer large amounts of money quickly and securely.

How to do an RTGS Transfer Online?

Need to send a considerable sum quickly? An RTGS (Real-Time Gross Settlement) transfer might be the answer! Here’s how to do it online in a few easy steps:

Log in to your bank’s website and access your online banking account.
Find the section for moving money or payments. It might be called “Funds Transfer.”
Choose “RTGS Transfer” as the way you want to send the money.
You must add details about the person you’re sending the money to. This includes their account number, name, bank information (their bank’s name and branch), and a unique IFSC code.
Enter the amount of money you’re sending.
Double-check all the information you’ve entered to make sure it’s correct.
Your bank will likely ask you to verify the transfer using a one-time password (OTP) sent to your phone.
Once approved, you’ll get a confirmation message with a reference number for your records.
The person you sent the money to will be notified almost instantly.

That’s it! Remember to keep your confirmation details for future reference.

RTGS Transaction Timings in India

Forget about bank hours! In India, you can send money via RTGS (Real-Time Gross Settlement) any day, any time - even on weekends and holidays. This 24/7 service lets you transfer money quickly, with funds arriving in the recipient’s account usually within 30 minutes. Remember, RTGS is for more significant amounts, typically over ₹2 lakh, and your bank may have its limits.

How Fast are RTGS Transfers?

RTGS stands for Real-Time Gross Settlement. It’s a super-fast way to transfer money between bank accounts in India. Here’s the gist:

Real-time transfer: Ideally, the money reaches the other bank when you send it.
Crediting beneficiary: The other bank has 30 minutes to put the money in the receiver’s account.

So, in most cases, you can expect the transfer to be completed within 30 minutes!

Understanding RTGS Limits in India

The transaction limits for RTGS (Real-Time Gross Settlement) are as follows:

Minimum Send: The lowest amount you can send via RTGS is ₹2 lakh.

Bank Branch Limits: There’s no cap on how much you can send if you visit a bank branch for your RTGS transaction (above the ₹2 lakh minimum).

Online Banking Limits: While online banking offers convenience, it often comes with a limit. This typically falls around ₹25 lakh, but check with your bank for their specific limit.

Considerations for Initiating an RTGS Transaction

When initiating an RTGS (Real-Time Gross Settlement) transaction, it is essential to exercise care and attention to ensure the accuracy and security of the transfer. Here are some key considerations to keep in mind:

Banks Gotta Match: Ensure your bank and receiver bank are on the RTGS network. This ensures that the transfer happens smoothly.
Double-Check Details: Get the recipient’s name, account number, and bank branch info precisely right, including the IFSC code (like a bank’s fingerprint). Even a tiny mistake can send the money elsewhere!
Accuracy is Key: Double and triple-check the account number. RTGS relies on it to get the money to the right person.
Keep Records: Save a copy of your RTGS request. This is helpful if you need to track the transfer or clear up any issues.
Check Your Bank’s Rules: Every bank has its policies for RTGS, like transfer limits or fees. Make sure you know what they are before you send your money.

Conclusion:

RTGS is a secure and efficient system for high-value, instant money transfers. This vital service underpins modern banking by ensuring swift and reliable transactions, all backed by legal frameworks. Its advantages over other systems solidify RTGS as a cornerstone of digital finance in our fast-paced world.

FAQ’s

What is RTGS payment?

RTGS stands for Real-Time Gross Settlement. It’s a system for transferring money instantly between bank accounts.

What is RTGS in banking?

In banking, RTGS is used for high-value transfers that need to happen right away.

What is RTGS transfer?

An RTGS transfer is when you use this system to move money from one account to another.

How much time does RTGS take?

RTGS takes just minutes to complete the transfer.

How to do RTGS offline?

You can do an RTGS transfer offline by visiting your bank branch.

What is an RTGS transaction?

An RTGS transaction is a single, high-value transfer that’s settled immediately.

Which is better: RTGS or NEFT?

RTGS is better for urgent high-value transfers, while NEFT is better for low-value transfers that aren’t urgent.

Is RTGS chargeable?

There are typically no charges for online RTGS transactions. However, if you initiate the transfer at a bank branch, there might be a Rs. 15 Plus GST charge.