RTGS has revolutionised the way funds get transferred. You no longer have to wait for 2-3 days to transfer funds. RTGS means Real Time Gross Settlement, which is an electronic method of transferring funds in real time. To initiate the transfer, you must have the IFSC code of the beneficiary’s bank, along with their name, their bank’s name, and account number.
You can individually transfer funds using RTGS with an Internet banking account. RTGS in banking is a secure system for funds transfer and is available 24x7 on all days. While the minimum amount you can transfer via RTGS is ₹2 Lakhs, there is no cap on the maximum amount set by the RBI.
Now that you’ve read about what an RTGS is, know more about how it works:
Initiation: A sender requests their bank to transfer a specific amount to a recipient's account in another bank via RTGS. The sender's bank verifies the sender's account balance and the availability of funds.
Communication: The sender's bank communicates with the recipient's bank through a secure network. The two banks exchange the transaction details, including the sender's account, the recipient's account, and the amount to be transferred.
Verification: The recipient's bank verifies the transaction details and ensures that the recipient's account is valid and can receive the funds.
Settlement: Once both banks have confirmed the transaction details and the availability of funds, the sender's bank debits the sender's account, and the recipient's bank credits the recipient's account. This process is done simultaneously, ensuring that the transaction settles in real time.
Confirmation: Both the sender and recipient receive confirmation of the completed transaction, which typically includes a transaction reference number.
RTGS systems are widely used for high-value and time-sensitive transactions, such as interbank transfers, large business payments, and securities settlement. It reduces settlement risk and allows for secure and efficient fund transfers.
RTGS offers a host of features and benefits to the end users. Here’s a quick overview of some of the key advantages and features of this electronic fund transfer system.
Every RTGS transaction is processed individually.
Funds are transferred to the beneficiary bank account instantly.
RTGS online fund transfer facility is available 24x7, even on weekends and bank holidays.
RTGS was designed for high-value transactions and has a minimum transfer limit of ₹2 Lakhs.
Fund transfers via RTGS can be initiated online or offline by visiting a bank branch.
RTGS fund transfers only require a few details such as the beneficiary’s name, bank account number, branch and IFSC.
RTGS online fund transfers are reliable, safe and encrypted for maximum security.
RTGS significantly reduces the risk associated with high-value transactions between financial institutions.
RTGS fund transfer happens electronically and on a real-time basis. Also, you can transfer a large amount of money in one go. As a result, it is extremely popular among corporates and retail establishments, who need to conduct large value interbank transfers of funds regularly.
There are plenty of reasons why Real-Time Gross Settlement (RTGS) is important.
Firstly, it is operated by the Reserve Bank of India (RBI). This makes it one of the safest and most secure ways to transfer funds from one bank account to another. In fact, RTGS is even used by banking institutions for high-value inter-bank transfers.
And secondly, since all RTGS transactions are processed individually, the funds are transferred instantly in real time without any delay. Also, RTGS online transactions can be initiated from anywhere in the world and at any time.
RTGS transactions can be carried out online as well as offline. Depending on the mode you opt for, you would need to follow the steps mentioned below:
To transfer funds instantly, you must first register yourself for RTGS services online through your net banking portal. Once that is done, you need to enter the RTGS details for the beneficiary, the amount you would like to transfer and authenticate the payment.
If you do not have access to RTGS net banking, you can still transfer money from one account to another using the Real-Time Gross Settlement system offline. All you need to do is visit your nearest bank branch, fill in the RTGS form with the beneficiary details, and pay the amount in cash or cheque.
You would need to provide the below-mentioned details for successfully transacting via the RTGS system:
The amount to be transferred
Beneficiary account holder's name
Beneficiary account number
Beneficiary account IFS Code (IFSC)
Beneficiary bank name
Beneficiary bank branch
While RTGS is one of the most frequently used methods for money transfer, in some rare cases, RTGS transfer may fail. The primary reason for this could be typing of incorrect/non-existent account numbers or insufficient funds in your account. Sometimes RTGS transfer failures can take place due to technical or server errors. However, if any of these technical issues or glitches occur where the transfer has failed but the money has been debited from your account, it is generally credited back to your account within an hour or a maximum of one working day.
Here are a few things that you should consider before you proceed to transfer funds using the Real-Time Gross Settlement facility.
The beneficiary’s bank account must first be added as a payee in your internet banking account before you can transfer funds via RTGS.
To add the beneficiary’s bank account, you need a few details such as the bank account number, branch and IFSC.
The minimum amount of transfer that you can make via RTGS is ₹2 Lakhs.
There is no maximum transfer limit for RTGS.
For every RTGS online transaction, you will receive a 22-digit code known as the UTR number which serves as a unique reference number.
Only RTGS-enabled banks offer the option of transferring funds using the said service. Popular Indian banks such as HDFC Bank, Axis Bank, RBL Bank, State Bank of India, etc., offer the RTGS service. However, before you opt for the service, you should take a look at the RTGS transfer process along with the RTGS fees and charges of the specific bank.
You can call on the bank’s customer care number to connect with an executive and resolve your RTGS-related queries. Other customer care channels, such as email, chatbot, etc., can also be used to address doubts or get additional RTGS information.
Apart from RTGS, you can also use IMPS or NEFT to transfer money from one account to another. Know about the difference between IMPS vs NEFT vs RTGS and select the mode that suits you best!
More About Payments & Other Credit Cards
Yes, you can schedule an RTGS transaction in advance. It can be done three days before the payment date.
Unfortunately, the RTGS system of payment can only be availed through RTGS-enabled banks located within India.
RTGS is a payment service used for higher-value transactions and does not have a maximum amount. The RTGS minimum amount is ₹2 Lakhs.
If not by cheque, RTGS payments can be done by depositing cash at an RTGS-enabled bank branch. Alternatively, you can also opt for NEFT transfer online via net banking.
The RTGS full form in banking is ‘Real-Time Gross Settlement’. It refers to the real-time transfer of funds from one bank account to another. When you avail the service, the money is debited from your bank account and instantly credited to the beneficiary account electronically. The processing of payments in RTGS occurs individually and not in batches.
Yes. You can initiate an RTGS fund transfer from your mobile device using your bank’s mobile banking application. Alternatively, you can log into your internet banking account using your mobile phone’s browser to initiate RTGS fund transfers as well.
Net settlement and real-time gross settlement are two different methods used in the financial industry to settle transactions.
In net settlement, multiple transactions between parties are batched together and settled at predefined intervals, typically at the end of a day. All transactions within a batch are netted out, meaning that the total amount owed by one party to another is calculated, and only the net amount is transferred. This method can reduce the number of individual transactions and the associated costs but may introduce credit and liquidity risks.
RTGS is a settlement system where each individual transaction is settled immediately and independently, as soon as it is processed. There is no netting of transactions; each transaction is settled in real-time, ensuring that the funds are transferred from the payer to the payee immediately. RTGS systems are often used for high-value and time-sensitive transactions and help minimize credit and liquidity risks.
The key difference is that net settlement batches and nets out multiple transactions, while RTGS settles each transaction individually in real time. RTGS is generally considered more secure and is used for critical financial transactions, while net settlement can be more cost-effective but may introduce some risk.