How Real-Time Gross Settlement Works.
                     How Real-Time Gross 
Settlement Works
INTRODCUTION
• RTGS or Real Time Gross Settlement is a fund transfer method which is done on a 
real-time basis and without any delays. 
• This wire transfer method allows the money sent by the remitter to immediately 
reach the beneficiary/payee as and when the request is received. 
Source: indialends.com
INFORMATION NEEDED
• When money is transferred using RTGS, one needs the 
following information:
– The amount that needs to be transferred
– Name of the beneficiary/payee
– Name of the bank of the beneficiary/payee
– IFSC code of the payee/beneficiary
– Account number of the payee/beneficiary
Source: indialends.com
How does Real-Time Gross Settlement work?
• RTGS usually do not involve any physical transfer of funds, but rather are settled 
whilst Central Bank reduces funds on the account of Originating Financial Institution 
and adds them on the account of Receiving Financial Institution. 
• Hence, in order for RTGS to operate both Financial Institutions involved in the 
Transaction must hold accounts with the Central Bank. 
Source: paisabazaar.com
Why RTGS is Important?
• The real-time gross settlement is typically utilized by the central bank and help in 
minimizing the risk involved in high-value transactions made by users. 
• Despite banks and financial institutions having high-level security to shield customer’s 
information and funds, the threats are on the rise each day.
Source: cleartax.in
Advantages of RTGS
• Considering that the funds settlement takes place in the books of the Reserve Bank of 
India, the payments are final and irrevocable.
• RTGS is a safe and secure system for funds transfer. RTGS transactions / transfers have 
no amount cap. 
• The system is available on all days when most bank branches are functioning, 
including Saturdays.
Source: Razorpay
Advantages of RTGS Cont.
• There is real time transfer of funds to the beneficiary account.
• The remitter need not use a physical cheque or a demand draft.
• The beneficiary need not visit a bank branch for depositing the paper instruments.
• The beneficiary need not be apprehensive about loss / theft of physical instruments 
or the likelihood of fraudulent encashment thereof.
Source: paisabazaar.com
How is the processing of RTGS different from 
that of NEFT?
• NEFT is an electronic fund transfer system in which the transactions received up to a 
particular time are processed in batches. 
• Contrary to this, in RTGS, the transactions are processed continuously on a 
transaction by transaction basis throughout the RTGS business hours.
Source: indiatvnews.com
Minimum / maximum amount stipulation for 
RTGS transactions
• The RTGS system is primarily meant for large value transactions. The minimum 
amount to be remitted through RTGS is ₹2,00,000/- with no upper or maximum 
ceiling.
Source: indiatvnews.com
Can an RTGS transaction be tracked? 
• While the customers do not have the facility to track the transaction, the RBI has 
recently announced the feature of positive confirmation in an RTGS transaction. 
• Under this, the remitting bank would receive a message from RBI that the money has 
been credited to the beneficiary bank / customer account. 
Source: indiatvnews.com
Tips and Tricks to Gain Maximum Benefits
• The RTGS transactions come at a cost for the customers. However, the funds are 
transferred instantly outweighs the cost involved in these transactions. Also, the 
transaction charges are very nominal.
• RBI has capped transaction charge at Rs 49.50 for funds transfer exceeding Rs 
5,00,000 and Rs 24.50 in case a customer has to transfer funds in the range of Rs 
2,00,000 and Rs 5,00,000.
Source: timesnow.com