REAL TIME GROSS SETTLEMENT (RTGS)

 

For: Preliminary; Economics

Topic covers: RTGS, RBI’s guidelines, Significance

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News Flash

To ease online fund transfers, the Reserve Bank of India extend the time window for online fund transfer through Real Time Gross Settlement (RTGS) transactions beginning June 1, 2019.

• Earlier customers could do online RTGS transactions till 4:30 pm, it has now been extended till 6pm.
• The RTGS system is primarily meant for large value transactions.

RBI had in its vision document 2019-21 on Payment and Settlement Systems in India proposed the possibility of extending the availability of National Electronic Funds Transfer (NEFT) round-the-clock and seven days a week.

 

What are the Current Limits?

Through RTGS customers can transfer between Rs 2 lakh and Rs 25 lakh through netbanking in day.

RBI is still working on making the NEFT window available 24*7, as of now customers can transfer money through Immediate Payment Service (IMPS) round the clock but the maximum amount allowed is Rs 2 lakh.

 

Highlights

• Transactions will now take place under three windows: 8 am to 11 am, 11 am to 1 pm and 1 pm to 6pm
• There shall be no charge for transactions between 8 am and 11 am.
• A charge of will be levied on every transaction conducted between 11 am and 1 pm.
• ₹5 shall be charged for every transaction between 1 pm and 6 pm

 

RTGS

Real-time gross settlement (RTGS) systems are specialist funds transfer systems where the transfer of money or securities takes place from one bank to any other bank on a “real time” and on a “gross” basis.

Settlement in “real time” means a payment transaction is not subjected to any waiting period, with transactions being settled as soon as they are processed.

“Gross settlement” means the transaction is settled on one-to-one basis without bundling or netting with any other transaction. “Settlement” means that once processed, payments are final and irrevocable.

 

Source: The Hindu

 

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