Real time gross settlement (RTGS) as defined by RBI is a continuous (real-time) settlement of fund transfers individually on an order by order basis (without netting). ‘Real Time’ means the processing of instructions at the time they are received rather than at some later time; ‘Gross Settlement’ means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis).
RTGS differs from NEFT in the settlement time. In the case of NEFT, there are batches defined for settlement and if a transaction crosses the stated time, it has to wait for the next batch to be processed. Transactions in RTGS are processed continuously throughout the working hours.
Minimum amount of transfer required for RTGS is Rs. 2 lakh. There is no upper limit, though. The beneficiary bank has to credit the beneficiary’s account within two hours of receiving the funds transfer message.
RTGS transaction timings for Monday – Friday is 9 A.M to 4.30 P.M and for Saturday it is 9 A.M to 2 P.M.
RTGS charges are as below:
a) Inward transactions – Free, no charge to be levied.
b) Outward transaction – Rs. 2 lakh to 5 lakh – not exceeding Rs. 30 per transaction.
c) Above Rs. 5 lakh – not exceeding Rs. 55 per transaction.
RTGS Vs NEFT:
Thus, we can say that both RTGS and NEFT are schemes started by RBI for the benefit of the customers which allow accounts holders in the banks to electronically transfer the funds intra-bank. NEFT operates on a deferred net settlement (DNS) basis and settles transactions in batches. The settlement takes place with all transactions received till a particular cut-off time. It operates in hourly batches — there are 11 settlements from 9 am to 7 pm on weekdays and five between 9 am and 1 pm on Saturdays. Any transaction initiated after the designated time would have to wait till the next settlement time. In RTGS, transactions are processed continuously, all through the business hours. RBI’s settlement time is 9 am to 4:30 pm on weekdays and 9 am to 1:30 pm on Saturdays. Banks can function within this time frame or change it. Here, transfers made are quick and can be helpful in emergencies.