Real-Time Gross Settlement (RTGS): A Detailed Guide
Reviewed by: Fibe Research Team
- Updated on: 12 Dec 2024
Reviewed by: Fibe Research Team
RTGS refers to a payment facility provided by banking institutions for the transfer of funds from one bank account to another. Although UPI transactions in India are being accepted widely, they have a specified limit of ₹1 lakh per day. For a larger amount, there are other online methods to opt from.
Unlike an NEFT transfer, the RTGS one is quick. In this type, the transaction happens within 30 minutes of initiation. To know more about RTGS payments, features, limitations, and steps to make the transfer, read on.
The Reserve Bank of India established RTGS in 2004. The RTGS stands for Real-Time Gross Settlement. Here, ‘real-time’ refers to the speed of fund transfer. As such, you get the experience of instantaneous transactions.
On the other hand, ‘gross settlement’ indicates the individual settlement of each transaction. This means that there is no bundling or grouping of multiple transactions. Together, this forms the foundation of the real-time gross settlement system.
The RBI guidelines need banks to follow the payment time of 30 minutes. The meaning of RTGS is a banking system where funds are transferred in real time within minutes after initiation. As such, it is no surprise that this is an option available across thousands of bank accounts in India.
Several features of RTGS make transferring money convenient and secure.
You can initiate fund transfers through this option from any location using online banking. Alternatively, you can opt for an offline option when you want to transfer funds after depositing them in the bank.
Since the RBI has directed banks to keep the RTGS transfer time at 30 minutes, your requests get cleared instantly.
You cannot reverse an RTGS money transfer at any point. The transferred amount becomes irrevocable once you make the transaction through the system. This provides an added layer of security. You can rest assured that your funds will reach the intended recipient without any possibility of reversal.
The minimum amount supported by an RTGS money transfer is ₹2 lakhs. The RTGS system will not support a transfer amount below this threshold.
Most digital payments come with limitations like a transaction limit, maximum amount limit, etc. There is no upper limit for RTGS. This makes it an ideal choice for high-value transactions. However, keep in mind that online transfers related to RTGS may come with an upper cap, depending on the bank.
The working of RTGS is simple. As soon as you initiate an RTGS transaction, the bank will cross-check if you have a sufficient amount in your account. As soon as the evaluation is positive, the bank will transfer this request to the central bank, acting as an intermediary. The central bank then takes the action and deposits the amount from the recipient’s bank account to the payee’s account.
Among many benefits, it has some restrictions, such as:
RTGS gives you the facility to both receive and transfer funds. Receiving a payment attracts no charges for RTGS, but initiating it does. Although there is no processing fee charged on RTGS, banks may levy certain charges when paying a beneficiary offline. Such RTGS charges for transfers depend on your bank.
However, the RBI has set a cap on the maximum a bank can charge for an outward RTGS transaction. It is as follows:
Remember, these RTGS charges are only applicable when you choose an outward transaction. Meaning, a transaction where you are not the recipient. There is no charge levied on any inward transaction to your account through RTGS.
Follow these steps if you want to initiate RTGS via cheque:
Now that you know its full form, how much time RTGS takes, and its features, remember to enter the correct details. This ensures quick access to funds, especially during an emergency.
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Its full form is Real Time Gross Settlement.
It refers to a secure electronic mode of instant fund transfers.
The RTGS system has been available in India since 2004.
An RTGS transfer is the process of sending funds instantly from one bank to another.
Here’s how to fill out an RTGS cheque:
RTGS is ideal for making instant transactions and should take no longer than 30 minutes, as per the Reserve Bank of India’s guidelines.
RTGS payments are a secure option for real-time transfer of money.
The transfer limit depends on the bank. However, the RBI has imposed no upper limit for RTGS transactions.
To draw a self-withdrawal cheque, you will have to write ‘Yourself for RTGS’ on the cheque leaf. You can also confirm this with a representative at the bank, as different banks may require different wording.
As per the RBI, there is no maximum RTGS amount limit.
Fill out the details required in the cheque such as name, account number, amount, date, etc. enter the payee’s name, enter the amount and sign the cheque.
You need to mention ‘Yourself for RTGS’ on the cheque along with the mandatory form that you fill out.
There is no such upper limit for RTGS transactions. However, the minimum limit for RTGS transactions limit of ₹2 lakhs.
