Full-Form of RTGS
Why you Need RTGS?
Various reasons justify the need for real-time gross settlement:
#1 – Minimization of Risks
Real-time gross settlement systems are increasingly used by Central Banks nationally and internationally. RTGS systems help minimize payment settlement risks high in value among banking institutions.
#2 – Protection of Sensitive & Confidential Information
The real-time gross settlements type mechanism even helps protect financial data and mitigate related risks by making it more vulnerable to fraudsters and criminals like hackers and social engineers for a limited period.
#3 – Eliminates the Probability of Social Engineering
Real-time gross settlement systems protect banking institutions from threats like phishing and social engineering, where hackers and criminals hack and obtain sensitive data and misuse the same, causing losses like finances and reputation.
#4 – Saves a Hell Lot of Time
RTGS system is the fastest interbank payment facility available through various banking channels, nationally and internationally.
#5 – Irrevocable
This facility is meant solely for large-value transactions. The payments made in real-time gross settlement mechanisms are final and irrevocable.
#6 – Zero Forgery
In real-time gross settlement systems, all the processes are online, meaning there is hardly any threat of money getting stolen or forgery concerning cheques.
#7 – Better Management of Business Capital
RTGS systems help the organization better manage its business capital.
#8 – No Counter-Party Default Transactions
There are bare minimum possibilities for counterparty defaults.
#9 – Saves Paperwork
The real-time gross settlement can be without any physical documentation and paperwork. Therefore, one can make huge sums of transfers instantly without any paperwork.
#10 – Ensures the Smoother Flow of Operations for Companies
The RTGS systems make it easy to transfer a huge sum of money. All and all, it allows companies to operate smoothly.
#11 – Develops a Better Buyer-Supplier Relationship
With RTGS, one can transfer a huge amount of payments quickly and easily, eliminating the possibility of delayed payments and helping establish a profound buyer-supplier relationship framework.
#12 – No Amount Cap
The real-time gross settlement transfers/transactions have no amount cap.
#13 – Individual Basis
One can execute RTGS transfers/transactions individually.
#14 – Gross Basis
Organizations can execute RTGS transfers/transactions on a gross basis.
#15 – Reliability
Real-time gross settlement systems are highly reliable.
#16 – Legal Backing
RTGS transfers/transactions have legal backing.
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Pre-Requisites of using RTGS
The customer at the remitting front needs to furnish information to a banking institution while initiating an RTGS transaction. The prerequisites of the real-time gross settlement are below:
- The total amount used for remitting purposesThe account number to debitedThe beneficiary bank details, such as its name, branch name, etc.The IFSC code of the branch is supposed to receive the RTGSBeneficiary customer’s details (name, account number, etc.)In case there is any other information that needs to be shared by the sender with the receiver.
What are the RTGS Timings?
- The real-time gross settlement does not work 24*7 hours. The system operates on all the days when most financial institutions operate, including Saturdays. Therefore, one can execute RTGS transfers/transactions only during certain banking operational hours.RTGS transfers/transactions occur from 9.00 a.m. to 4.30 p.m. during the weekdays (excluding national holidays) and from 9.00 a.m. to 2.00 p.m. during the weekends (Fridays and Saturdays).RTGS transfers/transactions might be a little restrictive for individuals who miss the designated time slot for the day. In such a case, the individual must wait for the next working day to make their payments.
What are the Limits of RTGS?
Real-time gross settlement transfers/transactions are primarily for high-end transactions (large value transactions). The minimum amount to be remitted for real-time gross settlement is ₹200,000, while the maximum amount is not applicable.
Are There Any Charges for RTGS?
RTGS transfers/transactions are usually free of cost. It is entirely to encourage the use of digital transactions. However, to charge or not depends on the banks. Many banking institutions have seen charging their customers for RTGS transfers/transactions. The amount these banks charge is very basic and usually depends on the amount to be remitted. In the case of inward transactions, there is no fee or charges levied, while in the case of outward transactions, the fee depends on the total amount to remit. This amount is pre-decided, and it differs from range to range.
Conclusion
- Real-time gross settlement transactions are a credit-push system, which means the transactions are to be initiated solely by the remitter/payer/sender for transferring or remitting funds to the beneficiary customer (receiver).RTGS transactions occur in real-time and based on the transaction (i.e., without netting).Real-time gross settlement transactions are quick and save a lot of time. This system also minimizes or eliminates the possibilities of data manipulation and ensures data protection. RTGS transactions are final and irrevocable.RTGS systems are safe, secure, and reliable for transferring funds. Real-time gross settlements happen for free; however, few banks may choose to charge a minimum fee for executing such transactions.The remitting customer must provide details like his name, account number, amount, date, name of the bank and branch, IFSC code of the beneficiary branch, and name and account number of the receiving customer (beneficiary) for successfully making a remittance.One must do real-time gross settlement transactions within the bank timings, or the receiver and the sender must wait for the next working day to make a remittance.
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