What is RTGS?
RTGS or Real Time Gross Settlement refers to a fund transfer system where the transfer of money from one bank to another takes place on a real-time and gross basis.
Settlement in real-time means the transactions are not subjected to any waiting time. The payment system processes every fund transfer instruction as and when it is received.
Settlement on a gross basis means the banks settle the transactions on a one-to-one basis. They do not group it with other transfers, as in the case of NEFT.
RTGS is used for high-value transactions (above Rs 2 lakhs), such as large business payments or government transactions. It is considered one of the safest and most efficient methods of transferring funds. RTGS payments are recorded directly in the books of the Reserve Bank of India (RBI) and are, therefore, irreversible once completed.
Banks process RTGS transactions, which can be time-consuming and prone to errors. However, with the rise of fintech and the increasing use of technology in the financial sector, the RTGS process has become much more streamlined and efficient.
In this blog, we will explore everything about RTGS and how fintech can help in the processing of RTGS.
What is the RTGS Transfer Timing?
In 2020, RBI notified that RTGS will be available 24/7, that is, you can do fund transfers 24 hours a day, seven days a week. However, offline RTGS requests can be made only within the bank’s operating hours.
What is the RTGS Transfer Limit?
RTGS was introduced for high-value bank transfers. The minimum RTGS transfer limit is Rs 2,00,000. However, there is no maximum limit on the amount that one can transfer through RTGS.
Related Post: UPI Transaction Limit
What is the RTGS Processing Fee?
Online: No fees for online RTGS transfers
Offline at a bank branch: Fees of Rs.15-20 plus GST
| Transactions | Charges |
| Inward transactions | Free |
| Outward transactions ranging from Rs. 2,00,000 to Rs. 5,00,000 | Not exceeding Rs. 24.50 (exclusive of tax, if any) |
| Above Rs. 5,00,000 | Not exceeding Rs. 49.50 (exclusive of tax, if any) |
Note: Banks may charge a lower rate but the banks cannot charge more than the rates capped by the RBI.
Which Banks Provide RTGS Services?
RTGS facility is enabled only in specific home bank branches across the country. We recommend that you double-check before using the service. Below are some of the major Indian banks offering RTGS services:
- HDFC Bank
- State Bank of India (SBI)
- RBL Bank
- Axis Bank
- ICICI Bank
How can I Use the RTGS Service?
You can avail of RTGS service online or offline at a bank branch. For RTGS, you must have the following information at hand for making an RTGS remittance.
Information Needed for Availing RTGS Service Offline:
- Beneficiary’s name
- Beneficiary’s bank and branch name
- IFSC code of the receiving bank
- Your bank account information
- Chequebook (for offline RTGS remittance)
How to Avail RTGS Service Offline?
The process for requesting offline RTGS service is as follows:
- Visit an RTGS-enabled bank branch
- Ask for the RTGS fund transfer request form
- Fill up the form and attach a cheque leaf with the form
- The bank official will review the information and process your request in real-time, i.e. the amount will be debited from your account and transferred to the beneficiary’s account instantly.
How to do RTGS Online?
You can do the RTGS online process can by following these steps:
- Log in to your net banking account
- Click on ‘Fund transfer’ from the dashboard
- Add beneficiary account details
- Select RTGS from the dropdown menu
- Enter the amount to be transferred and submit the request
You should exercise extreme care in providing the account number of the beneficiary. The beneficiary is the receiver that the bank will approve. The fund transfer will happen solely based on their account number, and such transactions will be irrevocable. The beneficiary’s bank would receive the funds immediately after they are transferred by the remitting bank and must credit the beneficiary’s account within the next 30 minutes.
How to Check the Status of the RTGS Fund Transfer?
Although customers cannot directly track an RTGS transaction, the RBI has implemented a positive confirmation system where you will receive a message from your bank that the funds have been credited to the beneficiary’s account. If there is a delay in crediting the fund to the beneficiary’s account, you may contact your bank to resolve the issue.
If the issue remains unresolved, a complaint can be filed with the RBI using the unique transaction reference (UTR) number, a 22-digit code used to identify the transaction in the RTGS system.
How does Fintech help in Processing Real Time Gross Settlements?
The Role of Fintech in RTGS
Fintech, or financial technology, refers to the use of technology in the financial sector to improve and streamline financial services. In the context of real-time gross settlement (RTGS), fintech can facilitate the efficient and secure processing of financial transactions in real time.
One of the key ways that fintech helps in RTGS is through the use of APIs, or application programming interfaces. APIs allow different systems to communicate with each other, enabling the seamless transfer of funds between banks.
For example, when a business wants to make a large payment to another business, it can initiate the transaction through its online banking platform. The platform will then send a request to the receiving bank’s system through an API, which will automatically process the transaction and transfer the funds. This process is much faster and more efficient than manually processing the transaction, and it reduces the risk of errors or fraud.
Benefits of Using Fintech for RTGS
Fintech can help in several ways to facilitate RTGS. Some key benefits of using fintech for RTGS include:
- Speed: As mentioned, the use of fintech solutions enables the real-time transfer of funds even beyond the bank’s operating hours. The transactions can be completed much faster than in offline mode.
- Accuracy: Fintech solutions reduce the risk of errors in RTGS transactions, as the process is automated and less prone to human error. It is important, particularly for high-value transactions, as even small mistakes can have significant consequences.
- Security: We have seen various cases of RTGS fraud by bank staff and through cyber attacks. Fintech solutions for RTGS are generally more secure than traditional methods, as they use advanced security measures such as two-factor authentication and encryption to protect against fraud and cyber-attacks. It is important for both banks and their customers, as it helps to ensure the safety of their funds.
- Convenience: Fintech solutions for RTGS have made the process of transferring funds more convenient for both banks and their customers. Customers can initiate transactions from their smartphones or computers, and banks can process them more efficiently and accurately. This reduces the need for manual processing, freeing up staff to focus on other tasks.
Overall, the use of fintech in RTGS can help improve the speed, efficiency, security, and transparency of financial transactions. It will enable banks and other financial institutions to better serve their customers and meet their needs.
In 2021, the RBI announced that it would allow fintech companies to process RTGS and NEFT transactions. It will establish new norms for interoperability and cash withdrawal facilities for digital payment wallets. These measures will create a level playing field for non-bank payment operators and banks to reduce settlement risks by expanding the ecosystem.
As of today, these channels are only available to banks. However, we can expect these developments to be implemented soon.
FAQs
Q. Can RTGS be cancelled?
Ans. No, once initiated, RTGS payments cannot be cancelled.
Q. Can RTGS be done within the same bank?
Ans. Yes, Real-Time Gross Settlement allows people to send or receive money between two bank accounts of the same bank or two different banks through mobile or/and internet banking.
Q. What are the disadvantages of RTGS?
Ans. The disadvantage of Real-Time Gross Settlement is that it doesn’t allow the remitter to transfer funds below Rs. 2 lakh.
Q. What happens if RTGS transfer takes place in the wrong account?
Ans. It is not possible to get the funds back once transferred via RTGS. If the funds are transferred to the wrong account, in that case, the funds will be reversed to the account from which the transaction has been initiated.
Q. Are the payments under RTGS final and irreversible?
Ans. Yes, the payments are final and irreversible considering the settlement of funds takes place in the book of Reserve Bank of India.
Q. How is processing RTGS different from NEFT?
Ans. In NEFT the transactions received up to a particular time are processed in batches whereas, in RTGS, the transactions are processed continuously one by one throughout the day.
Q. Can we get compensation for the delay in returning the payment?
Ans. If there is a delay in returning the failed payment, the originating customer is eligible to get compensation at the current repo rate plus 2%.
Q. What is the UTR number in RTGS?
Ans. Unique Transaction Reference number is a 22-character code used to uniquely identify transactions in the RTGS system.
