What is the full form of RTGS?

What is RTGS?

RTGS can be expanded as Real-Time Gross Settlement. RTGS is a money transfer system which can be used to transfer money from sender to recipient instantaneously. RTGS is being used successfully in 60 countries and the central bank of a country runs the service.

RTGS is used to transfer money of high value and the minimum transfer amount should be ₹2 lakhs. You need to have the IFSC code of the recipient to whom money is to be sent. Other requirements for the recipient include his name, bank branch, account type, and account number. Both sender and recipient banks should be RTGS enabled.

Features of RTGS

• RTGS has the following features −

• RTGS is one of the secure methods of transferring funds

• You can transfer any amount of money as there is no limit

• It offers real-time fund transfer and a recipient receives the money instantly when sent by a sender

• RTGS is available 24x7x365 and provides uninterrupted service

• Instruments like demand drafts, cheques, etc. are not needed as the system is fully electronic

• RTGS transactions can be initiated from anywhere as the transactions can be done through internet banking

• Most banks conduct the transactions free of cost while some banks may charge a small amount

• No intermediaries are needed to transfer funds through RTGS

• Businesses can control their cash flow easily through RTGS

How does RTGS work?

Here are the steps that are taken to use RTGS

• The first step is initiation in which you have to instruct your bank to transfer a certain amount of money through RTGS. You can go to the bank and ask to initiate the RTGS process. You can also go to the website of the bank or the mobile app to give instructions.

• Sender banks choose whether the amount requested is available with the bank or not. If such an amount is available, the transaction continues.

• The sender bank initiates the transfer process after authorization. It transmits the payment instructions to the RTGS system which is managed by RBI in India and central banks in other countries.

• The central bank plays the role of processing the transaction details and making sure that all the security and regulatory requirements are complete.

• The central bank transfers the amount from the sender’s bank to the recipient’s bank.

• The central bank sends a notification to the recipient bank about the fund transfer. After this, the recipient bank credits the money sent by the central bank from the sender bank

• The sender’s bank sends the message about the successful transfer of funds.

• The sender and recipient bank keep a record of all the successful and failed transactions.

Modes of Initiating the Transaction

There are many modes which RTGS uses to initiate a transaction. These modes are discussed below −

Internet Banking

Customers can initiate an RTGS transaction by using internet banking. In order to do so, customers have to log in to their bank accounts and initiate the transaction as per the instructions given by their banks.

Mobile Banking Apps

Many banks have mobile banking applications which customers can use to initiate the RTGS transaction. These apps are easy to use as they come with a user-friendly interface.

Bank Branch

Customers can approach their bank branch for the initiation of the RTGS transaction. They can take the help of bank staff to follow the steps to initiate the transaction.

Information needed to perform RTGS transaction

The sender should have the following information of a recipient to send money through RTGS −

• Bank and branch name

• Full name of the recipient

• IFSC code

• Amount

• Information about the sender's bank

• Account number of the recipient

Fees for RTGS Transactions

RTGS transactions are free for inward transactions. Recipients do not have to pay any charges to receive the money. For outward transactions, customers have to pay ₹25 along with taxes if required for transferring money between ₹200,000 and ₹500,000If the transaction is above ₹500,00, the fee will be ₹50.

Step-by-Step RTGS Online Transfer

Here are the steps which you have to follow to transfer money through RTGS.

• Navigate to the website of your bank and log in with your credentials to access your bank account

• Look for the Funds Transfer or Payment section and choose RTGS

• Fill out all the details of the recipient like the recipient's full name, account number, IFSC code, bank name, branch, etc.

• Add the amount you want to transfer

• Confirm all the transaction details

• Use authentication methods like OTP to initiate the transaction

• You will receive a reference number for transaction confirmation

• The recipient will get a notification regarding the money transfer and the money will be transferred

Transaction Charges

Banks charge a nominal fee for different types of transactions and they are mentioned below −

Inward Transactions

Inward transactions are free. None of the banks are allowed to take any fee for receiving money in the recipient account.

Outward Transactions above ₹200,000 and up to ₹500,000

If the outward transaction is in the range of ₹200,000 and ₹500,000, the sender has to pay ₹25 along with tax if applicable.

Outward Transactions above ₹500,000

If the outward transaction is above ₹500,000, the sender has to pay ₹50 along with the applicable tax.

Processing Time

Let us discuss about the processing time of RTGS transactions

Real-Time Transfer

The transactions through RTGS are conducted in real-time. When the sender sends money, the recipient receives it instantly.

Crediting the account of the recipient

When the bank of the recipient receives the message of fund transfer, the money is transferred within 30 minutes.

Transaction Limit

The minimum and maximum transaction limit through RTGS is discussed below −

Limit of RTGS Transaction through a Bank Branch

For RTGS transactions there is no limit to the maximum amount. You can transfer any amount above ₹200,000 through a bank branch.

Limit of RTGS transactions through Internet Banking

If you are using internet banking to send money, the maximum amount is limited to ₹25 lakhs but it depends on banks through which money is to be transferred.

Difference between NEFT, IMPS, and RTGS

NEFT, IMPS, and RTGS are the mechanisms through which funds can be easily transferred. There are a few differences between the three and we will discuss them here.

NEFT	IMPS	RTGS
Suitable for low-value transactions	Convenient for small transactions	Ideal for high-value transactions
Minimum transfer value is ₹1	Minimum Transfer value is ₹1	Minimum transfer value is ₹200,000
Maximum transfer value depends on customer value	Maximum transfer limit is ₹200,000	No Maximum transfer limit
Settlement is done in batches	One-to-one settlement	One-to-one settlement
Settlement takes at least 2 hours	Settlement is done immediately	Settlement is done immediately
Available online and offline	Available online	Available online and offline

Advantages of RTGS

RTGS has many advantages and some of them are listed below −

• High value of money can be transferred at a lower cost

• Funds are transferred in a secure environment

• Services available 24/7

• Chances of fraud are very low

Disadvantages of RTGS

RTGS has a few disadvantages also which are listed below −

• Money below ₹200,000 cannot be transferred

• RTGS transactions cannot be revoked

• RTGS is expensive in comparison to other money-transfer mechanisms

• Not all banks and their branches support RTGS

Conclusion

RTGS is a system which can be used to send money instantly. The sender needs to have the bank details of the recipient along with the IFSC to transfer the money. The minimum amount of money that can be sent is ₹200,000 but there is no limit to the maximum amount.

FAQs

FAQ 1: For how much time RTGS services are available?

Ans: RTGS is available for 24x7x365.You can perform RTGS transactions any time of the day.

FAQ 2: Can the transaction through RTGS be revoked?

Ans: No! the RTGS transaction cannot be revoked

FAQ 3: Is IFSC necessary for RTGS transactions?

Ans: Yes! IFSC of the recipient’s bank should be available to transfer money through RTGS.

FAQ 4: Do all branches of all banks support RTGS in India?

Ans: Currently, 160,000 bank branches support RTGS.

FAQ 5: Can the initiation of RTGS transactions be scheduled for a later date?

Ans: No! Future dates cannot be scheduled for RTGS transactions.