RTGS

'RTGS' stands for Real Time Gross Settlement. RTGS system is a funds transfer mechanism
where transfer of money takes place from one bank in India 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. Stop Payment be cannot be initiated.

The minimum amount to be remitted through RTGS is Rs.1 lakh (though individual banks
can further raise the minimum amount) and no upper ceiling.

RTGS is a credit-push system, which implies that pre-funding is a vital ingredient of the
entire chain.

It should be noted that both NEFT and RTGS system can be used only for remitting Indian
rupee among the participating banks within the country.

Goals of RTGS

The goals of RTGS are

1. To reduce settlement risk due to settlement lag

2. To reduce credit risk

3. Speed up the process of high value payments

4. To give accurate position of the participating bank

Processing Charges

a) Inward transactions – Free, no charge to be levied

b) Outward transactions –

Rs. 1 lakh to Rs. 5 lakh - not exceeding Rs. 25 per transaction.

Rs. 5 lakh and above – not exceeding Rs. 50 per transaction.

As compared to other modes of transfer like Demand Drafts, the charges are nominal.
Basic Information required

The remitting customer has to furnish the following information to a bank for effecting a
RTGS remittance:

1. Amount to be remitted
2. His account number which is to be debited
3. Name of the beneficiary bank
4. Name of the beneficiary customer
5. Account number of the beneficiary customer
6. Sender to receiver information, if any
7. The IFSC Number of the receiving branch

Difference with NEFT

EFT and NEFT are electronic fund transfer modes that operate on a deferred net settlement
(DNS) basis which settles transactions in batches. In DNS, the settlement takes place at a
particular point of time. All transactions are held up till that time. For example, NEFT
settlement takes place 6 times a day during the week days (9.00 am, 11.00 am, 12.00 noon.
13.00 hours, 15.00 hours and 17.00 hours) and 3 times during Saturdays (9.00 am, 11.00 am
and 12.00 noon). Any transaction initiated after a designated settlement time would have to
wait till the next designated settlement time. Contrary to this, in RTGS, transactions are
processed continuously throughout the RTGS business hours.

Settlement Process

Settlement Queues

There are queuing mechanisms available in RTGS. In this mechanism, the transactions that
cannot be settled due to lack of funds will be kept and retried later when the funds arrive. By
this mechanism, the rejection of transactions due to lack of funds will be avoided.

Gridlock Mechanism

When there are multiple transactions to be settled and each transactions wait for another
transaction to settle, the situation is called gridlock. In gridlock situation no transaction settles
and waits indefinitely for other transaction to settle. RTGS has gridlock solving algorithms
which will consolidate those transactions and settle it as a group. The gridlock program can
be scheduled to run automatically or by manual trigger.
Note: For a funds transfer to go through RTGS, both the sending bank branch and the
receiving bank branch would have to be RTGS enabled. The lists are readily available at all
RTGS enabled branches. Besides, the information is available at RBI website
(www.rbi.org.in/Scripts/Bs_viewRTGS.aspx).

Similar settlement system existing in other countries

*Australia - RITS (Reserve Bank Information and Transfer System)

*Bulgaria - RINGS (Real-time INterbank Gross-settlement System)

*Brazil - STR (Sistema de Transferência de Reservas)

*Canada - LVTS (Value Transfer System)

*China - China National Advanced Payment System ("CNAPS") (Super Online Banking

System)

*Chile - LBTR/CAS (Spanish: Liquidación Bruta en Tiempo Real)

*Croatia - HSVP (Croatian: Hrvatski sustav velikih plaćanja)

*Czech Republic - CERTIS(Czech Express Real Time Interbank Gross Settlement System)

*Hong Kong - Clearing House Automated Transfer System (CHATS)

*Hungary - VIBER (Hungarian: Valós Idejű Bruttó Elszámolási Rendszer)

*India - RTGS

*Indonesia - Sistem Bank Indonesia Real Time Gross Settlement (BI-RTGS)

*Iran - SATNA (Real-Time Gross Settlement System)

*Israel - Zahav (Credit and Transfers in Real Time)

*Japan - BOJ-NET (Bank of Japan Financial Network System)

*Kuwait- KASSIP(Kuwait's Automated Settlement System for Inter-Participant Payments)

*Malaysia - RENTAS (Real Time Electronic Transfer of Funds and Securities)

*New Zealand - ESAS (Exchange Settlement Account System)

*Macedonia - MIPS (Macedonian Interbank Payment System)

*Peru - LBTR (Spanish: Liquidación Bruta en Tiempo Real)

*Philippines - PhilPaSS

*Poland - SORB

*Russia - BESP system (Banking Electronic Speed Payment System)

*România - ReGIS system

*Saudi Arabia - (Saudi Arabian Riyal Interbank Express) SARIE

*Singapore - MEPS+ (MAS Electronic Payment System Plus)

*South Africa - SAMOS (The South African Multiple Option Settlement)

*Switzerland - SIC (Swiss Interbank Clearing)

*Thailand - BAHTNET (Bank of Thailand Automated High value Transfer Network)

*Turkey - EFT (Electronic Fund Transfer)

*United Kingdom - CHAPS (Clearing House Automated Payment System)

*United States - Fedwire

RTGS systems covering multiple countries:

TARGET resp. TARGET2 (Trans-European Automated Real-time Gross Settlement Express

Sites referred

1. www.rbi.org.in
2. www.indianbank.in/pdfs/faq/faq_rtgs.pdf
3. https://www.bobibanking.com/FAQ_NEFT_RTGS.pdf
4. en.wikipedia.org/wiki/Real_Time_Gross_Settlement
5. www.e-investing.in/financial-services/2045-neft-vs-rtgs.html