RTGS stands for Real-Time Gross Settlement. It is a system used for transferring funds electronically between banks.
Here's a breakdown of the key elements:
- Real-Time: This means that transactions are processed instantly, without any delay.
- Gross Settlement: This means that each transaction is settled individually, without being bundled with other transactions.
How does RTGS work?
- Initiation: You initiate a fund transfer through your bank's online banking platform or mobile app.
- Verification: The bank verifies your transaction details, including the beneficiary's account number and the amount.
- Settlement: The bank sends the funds to the beneficiary's bank in real-time.
- Confirmation: You receive a confirmation of the successful transaction.
Benefits of RTGS:
- Speed: Transactions are processed instantly, making it ideal for urgent payments.
- Security: Each transaction is settled individually, reducing the risk of fraud.
- Finality: Once a transaction is completed, it cannot be reversed.
Examples of RTGS transactions:
- Paying a large sum of money to a supplier
- Transferring funds between accounts
- Making a down payment on a property
RTGS vs. NEFT:
RTGS and NEFT are both electronic fund transfer systems, but they differ in their processing times and transaction limits.
- RTGS processes transactions in real-time and has no upper limit on the transaction amount.
- NEFT processes transactions in batches and has a limit on the transaction amount.
