Real Time Gross Settlement (RTGS)

Real-time gross Settlement system or RTGS is one of the most popular transfer platforms used all over the World. Sometimes, RTGS has a different name in certain countries but the basic processing of all the transactions are more or less the same. Unlike, other fund transfer systems RTGS allows you to make money transfers of large amounts, in India as long as they are over Rs.2 lakhs. Any larger similar money transfer system is present only in Europe and is known as TARGET2 which allows bank account money transfers between banks that are located across countries in Europe. But, RTGS allows people to transfer money if their bank has an IFSC code which is assigned to each bank branch under the NEFT and RTGS system by the Reserve Bank of India. Unlike NEFT money transfer method, where the transactions take place in hourly batches, RTGS transactions take place individually.

How Does RTGS Work?

The processing of standing instructions during the time when received is done at the moment instead of being done in batches or later. Each transaction has a different instruction and occurs individually. The fund transfers are directly operated by the Reserve Bank of India and therefore are irreversible while the money transfer is made. Before, UPI was introduced NEFT and RTGS were one of the most common ways to transfer money.

It is essential to know the IFSC code of both the sender’s bank and the recipient's bank, without which the transaction will not be possible. It is always an alphanumeric code made up of 11 characters which is unique and assigned to a specific branch by RBI for any bank that functions under the RTGS and NEFT network in India. The IFSC code can be broken down into 3 specific parts: The first part is the bank name, continued by the number “0” and then the unique branch code assigned by NEFT. It looks like this, ‘XYZ00000123’.

Features of RTGS Transaction:

Here are the main features of an RTGS transaction that one should be aware of before using it:

1. The recipient’s and sender’s banks’ IFSC code along their account numbers should be available.
2. A minimum of Rs.2 lakhs has to be sent through RTGS. NEFT and UPI can be used as alternative ways for money transfers if the amount is less than Rs.1 lakh.
3. On a given day, a maximum of Rs. 10 lakhs can be transferred through RTGS.
4. These transactions can be queued in well in advance, especially for special payments such as tax, hedge funds or cash management transfer.
5. The scheduling for the funds allowed, varies from bank to bank and the purpose of transfer of money.
6. The transfer when accepted by RBi has to credited within 30 minutes of the request.
7. If the money does not get credited, regardless of the reasons, the money has to crdited bank to the sender’s bank within an hour.

Fees and Charges of RTGS Transactions:

The recipient bank does not charge anything to the recipient account for a RTGS transaction.

For the sender, the bank charges the following based on the amount being transferred as follows:

• For transactions between Rs. 2 lakhs to Rs.5 lakhs: Rs.25 + Service Tax applicable
• For transactions between Rs.5 lakhs to Rs.10 lakhs: Rs.30 + Service Tax applicable