What is RTGS?

Real Time Gross Settlement system is a fund transfer system. The funds are transferred from one bank to another bank on a “real time” and on “gross” basis. The system does not work on a batch processing method.

Real time: When a payment transaction does not have any waiting period then that transaction is a “real time” transaction. The moment the transaction is processed, it is resolved.

Gross Settlement: In gross settlement, the transfers are made on a continuous and on an individual order basis. Through out a processing day, transaction by transaction funds are transferred and they are not grouped with each other.

The RTGS system gives immediate finish to the transaction. The RTGS transaction is an ultimate transaction and can not be reversed after it is processed and settled.

Limits of RTGS System

RTGS system is meant for high value transactions. Hence, you cannot use it for small value transactions. While the lower limit to the amount to be transferred through RTGS is Rupees 100,000 there is no upper limit for the transfer.

How RTGS System Works?

Reserve Bank of India controls and operates the RTGS, the electronic payment system. Even if a fund transfer between two banks happens, actual exchange of money never takes place. But the electronic accounts of those banks are modified accordingly.

RTGS do not need to employ core banking across the banks which have joined the RTGS network. Instead it will implement two sets of queues. One queue will be for checking the availability of funds and the other queue will handle the debit or credit requests obtained from the Integrated Accounting System. The submission of any transaction to checking funds availability will be on ‘first in first out’ and priority basis.

For high value transfer of funds RTGS is a good choice as it is risk free and is an immediate transfer mode. For small value transactions, you can always use NEFT.