RTGS or Real-Time Gross Settlement is a money transfer facility where there is a continuous and real-time settlement of fund-transfers, individually on a transaction-by-transaction basis (without netting). Real time, in this case, means processing of instructions at the time they are received, while gross settlement means the settlement of funds transfer instructions occurs individually.
The processing of RTGS is different from the National Electronic Funds Transfer (NEFT) System as in the case of NEFT, the transactions are received at a particular time and are processed in batches. However, in the case of the RTGS, the transactions are processed continuously through the day. The process of RTGS had been made available 24×7 since 14 December, 2020.
The processing fees
The Reserve Bank of India (RBI) has waived the processing charges levied by it for RTGS transactions. Further, to rationalise service charges levied by banks for offering funds transfer through the RTGS facility, take a look at a broad framework of charges.
> Inward transactions: It is free, that is, no charge has to be imposed.
> Outward transactions: ₹ 2 to 5 lakh not exceeding ₹ 24.5 (exclusive of tax, if any). Above ₹ 5 lakh not exceeding ₹ 49.5 (exclusive of tax, if any)
However, banks can charge a lower rate, but cannot seek more than the rates prescribed by RBI.
Details for remittance
The customer needs to provide some information to a bank for initiating an RTGS remittance. This includes an amount to be remitted, the debiting account number, the beneficiary bank branch, the IFSC number of the receiving branch, name and account number of the beneficiary, and sender to receiver information if any.
Benefits of using RTGS
The RTGS can offer you many benefits over the other modes of funds transfer. For instance, it is a safe and secure system for funds transfer and has no amount cap. The facility is available on all days on 24×7.
You can initiate the remittances using internet banking. Where you don’t have to use a physical cheque or a demand draft, on the other hand, the beneficiary also need not have to visit a bank branch for depositing the paper instruments.
Besides, the transactional charges are capped by RBI and have legal backing.
(With inputs from RBI website)
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