The acronym 'RTGS' stands for real time gross settlement. The Reserve Bank of India (India's Central Bank) maintains this payment network. RTGS
system is a funds transfer mechanism where transfer of money takes
place from one bank to another on a 'real time' and on 'gross' basis.
This is the fastest possible money transfer system through the banking
channel. Settlement in 'real time' means payment transaction is not
subjected to any waiting period. The transactions are settled as soon as
they are processed. 'Gross settlement' means the transaction is settled
on one to one basis without bunching with any other transaction.
Considering that money transfer takes place in the books of the Reserve
Bank of India, the payment is taken as final and irrevocable.
Fees for RTGS vary from bank to bank. RBI has prescribed upper limit
for the fees which can be charged by all banks both for NEFT and RTGS.
Both the remitting and receiving must have core banking in place to enter into RTGS transactions. Core Banking enabled banks and branches are assigned an Indian Financial System Code
(IFSC) for RTGS and NEFT purposes. This is an eleven digit alphanumeric
code and unique to each branch of bank. The first four letters indicate
the identity of the bank and remaining seven numerals indicate a single
branch. This code is provided on the cheque books, which are required
for transactions along with recipient's account number.
RTGS is a large value (minimum value of transaction should be ₹2,00,000)
funds transfer system whereby financial intermediaries can settle
interbank transfers for their own account as well as for their
customers. The system effects final settlement of interbank funds
transfers on a continuous, transaction-by-transaction basis throughout
the processing day. Customers can access the RTGS facility between 9 am
to 4:30 pm (Interbank up to 6:30 pm) on weekdays and 9 am to 2:00 pm
(Interbank up to 3:00 pm) on Saturdays. However, the timings that the
banks follow may vary depending on the bank branch. Time Varying Charges
has been introduced w.e.f. 1 October 2011 by RBI. The basic purpose of
RTGS is to facilitate the transactions which need immediate access for
the completion of the transaction.
Banks could use balances maintained under the cash reserve ratio
(CRR) and the intra-day liquidity (IDL) to be supplied by the central
bank, for meeting any eventuality arising out of the real time gross
settlement (RTGS). The RBI fixed the IDL limit for banks to three times
their net owned fund (NOF).
The IDL will be charged at ₹25 per transaction entered into by the bank on the RTGS platform. The marketable securities and treasury bills
will have to be placed as collateral with a margin of five per cent.
However, the apex bank will also impose severe penalties if the IDL is
not paid back at the end of the day.
The RTGS service window for customer's transactions is available from
8:00 hours to 19:00 hours on week days and from 8:00 hours to 13:00
hours on Saturdays.
No Transaction on weekly holidays and public holidays.
Service Charge for RTGS
a) Inward transactions – 1%, no charge to be levied.
b) Outward transactions –
- For transactions of ₹2 lakhs to ₹5 lakhs -up to ₹25 per transaction plus applicable Time Varying Charges (₹1/- to ₹5/-); total not exceeding ₹30 per transaction, (+ Service Tax).
- Above ₹5 lakhs - ₹50 per transaction plus applicable Time Varying Charges (₹1/- to ₹5/-); total charges not exceeding ₹55 per transaction, (+ Service Tax).
No time varying charges are applicable for RTGS transactions settled up to 1300 hrs.
