RTGS – Learn Everything About It Here

The world is evolving at an extremely fast pace. Technology has evolved to a large extent and has boosted every industry. Technology has rightly provided developments for the betterment of mankind. One such development we witness is in the field of online payments. Gone are the days when we had to rush to the bank and stand in long queues to fill out and deposit the ‘pay-in slip ‘to process the transfers and ‘High–Value’ cheques.

In today’s world, there are three modes through which one can transfer money online –

• RTGS – Real-Time Gross Settlement

• NEFT – National Electronic Funds Transfer

• IMPS – Immediate Payment Service

In this article, we shall go through a panoramic view of RTGS.

What is RTGS and how does it work?

RTGS is a fund transfer mechanism that is managed and operated by the country’s central bank, the Reserve Bank of India (RBI). This mechanism facilitates the instantaneous transfer of money or securities from one bank to another on a real-time and gross basis. 

The term “real-time” implies that the transactions are not subject to the waiting period and are settled as soon as they are initiated by the sender.  The term “gross settlement” means that the transactions are handled and settled on an individual basis continuously throughout the day without getting cleared in groups or batches. 

By batches, it is intended that, say for instance, ten transactions have been initiated between 8 to 8:30 a.m., then all such ten transactions would form one batch and get cleared together at 8:30 am, on a half-hourly basis, and not before that. Therefore, the transaction that got initiated by the remitter/sender at 8:05 am, will have to wait till 8:30 am to get cleared.

However, in RTGS, there is no concept of settling in batches or groups, and transactions get affected on a one to one basis continuously, without netting. Therefore, this makes RTGS an immediate online money transfer mechanism, unlike NEFT, where the transactions are settled in batches. Further, once the transaction is done, it becomes final and irrevocable.

RTGS does not require an actual or physical exchange of funds. The RBI will rather adjust the accounts of the sending and receiving bank in electronic form. For example, the sender bank A’s balance will decrease by say ₹ 2 lakhs and the receiver bank B’s balance will increase by ₹ 2 lakh simultaneously.

Features of RTGS?

Being the most preferred mode of fund transfer, RTGS has multi-fold benefits to offer in today’s fast-moving world. Let’s see what these are:

1)     Since it is managed by RBI, therefore it has legal backing and hence is one of the safest and most secure systems for funds transfer in the country.

2)     Funds can be transferred in both online and offline modes. While online mode requires internet banking, offline mode requires one to physically visit the RTGS-enabled bank branch and submit the RTGS fund-transfer request form.

3)     It is available 24*7 and can be accessed throughout the year on all days. It can be transferred from anywhere, everywhere.

4)     Funds are cleared immediately on a real-time basis and therefore it actually saves time spent on the transfer of funds.

5)     There is no maximum ceiling on the transfer of the amount as RTGS is fundamentally used for high-value transactions. However, the minimum amount that can be transferred is ₹2,00,000/-

6)     The transaction charges have been capped by RBI.

What are the prerequisites to RTGS transactions?

To initiate an RTGS transaction, we need to have the following details handy-

1)     Name of the beneficiary

=> Beneficiary means the person to whom the amount is to be transferred.

2)     Account Number of the beneficiary

=> The account number can be of any bank. RTGS facilitates inter-bank  transactions.

 3)   IFSC of the beneficiary bank’s branch

=> IFSC (Indian Financial System Code) is a unique 11-digit alpha-numeric code that helps to identify the different bank branches that offer online money transfer options. It is easily available on RBI’s website.

4)     Registration of the beneficiary on the internet banking portal of the remitter’s bank is mandatory

=> In most banks, the registration and addition of beneficiaries are instant.  Whereas, in some banks, it may take from 1 hour to 24 hours. 

How to make transactions through RTGS?

Step 1: Log in to your internet banking account using your user ID and password.­­

Step 2: Click on the ‘Funds Transfer’ tab.

Step 3: Select the “Add beneficiary” option on the page to add to your list of beneficiaries, if not done earlier.

Step 4: Enter the beneficiary’s account details viz. Bank name, Beneficiary name, Account number and the IFSC number.

Step 5: Click on “Add” or “Confirm”.

Step 6: To authorize the above step, you might be asked to provide OTP ( One

Time Password) that is sent to your registered mobile number.

Note that once the beneficiary is added (can be instantly or in a few hours), we are now ready to initiate and complete our RTGS transaction. Let’s follow these below-mentioned simple steps to do so –

Step 1: Login and again go to the “Funds Transfer” tab.

Step 2: Select whether the funds need to be transferred within the same bank as yours or to some other bank.

Step 3: Choose “RTGS” in the Payment network drop-down list displayed.

Step 4: If you have multiple accounts in the same bank, then you need to select the account from which you wish to transfer the money.

Step 5: Select the Beneficiary name you wish to transfer the amount. When you do so, the account details along with the beneficiary’s bank details will get auto-filled.

Step 6: Add the amount that needs to be transferred.

Step 7: Add a small narration/remarks for your future reference.

Step 8: Click on “Submit” / “Confirm” and enter the OTP if asked and Voila! The amount will be transferred to the beneficiary account instantly.­­

A Unique Transaction Reference Number (UTR) will be generated after the transaction is complete. This is a unique 22-character code that is used to identify a transaction in the RTGS system. We need not memorize the UTR number as it can easily be found in the bank statements.

While the customer does not have the facility to track the RTGS transaction, RBI has implemented the aspect of ‘Positive Confirmation’. Under this, the remitting bank would receive a message from RBI that the money has been credited to the beneficiary bank or the receiving bank. Based on this, the remitting bank should guide the remitting customer concurrently that money has been credited to the beneficiary’s account.

Final Word 

RTGS, NEFT and IMPS are equally reliable fund transfer mechanisms prevalent in the country. However, RTGS is given preference in case of high-value transactions because of the security assured, instant transfers and zero delay time. These mechanisms help in the smooth and  hindrance-free working of businesses in India and therefore indirectly contribute to strengthening the country’s economy.

FAQ

 1)     Can funds be transferred on Sundays/bank holidays?

Yes! Funds can be transferred even on bank holidays and public holidays via the online mode. One just needs an internet connection.

2)     Do all bank branches in India provide the RTGS facility?

The bank branches that are RTGS-enabled are available in the form of a list on RBI’s website. For the transaction to take place, it is mandatory that both the sender’s and receiver’s banks are RTGS-enabled. Generally, most banks provide this service.

The list of RTGS-enabled bank branches in India can be viewed at the following   RBI link: https://m.rbi.org.in/Scripts/Bs_viewRTGS.aspx?Category=5

3)     Can a transaction be initiated to receive funds from another account?

No, RTGS is a push system where only a payer/remitter/sender can serve as the originator of the transaction.

4)     Can a payer initiate a transaction in advance?

No, RTGS, as of now, does not allow future-dated transactions.

5)     How should I raise a complaint relating to any RTGS transaction?

One may approach the grievance redressal department of the respective bank with the details of the transaction preferably with the UTR number. However, if the complaint is not resolved by the bank within 30 days, one may file a complaint under “Reserve Bank-Integrated Ombudsman Scheme, 2021 (RB-IOS 2021).