Real Time Gross Payment System

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RTGS stands for Real Time Gross Settlement, which can be explained as a system where there is continuous and real-time settlement of fund-transfers, individually on a transaction by transaction basis (without netting). ‘Real Time’ means the processing of instructions at the time they are received; ‘Gross Settlement’ means that the settlement of funds transfer instructions occurs individually.

Features of RTGS

• 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.
• 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.
• The Reserve Bank has waived the processing charges levied by it for RTGS transactions. Banks may pass on the benefit to its customers.
• For a funds transfer to go through RTGS, both the sending bank branch and the receiving bank branch need to be RTGS enabled. 
• The RTGS system accepts future value dated transactions from the remitting bank for settlement on RTGS working days up to three days’ in advance. Such transactions will be placed in the queue and shall be settled on the basis of the value date of the transaction.
• Unique Transaction Reference (UTR) number is a 22 character code used to uniquely identify a transaction in an RTGS system.

Advantages

• It is a safe and secure system for funds transfer.
• RTGS transactions/ transfers have no amount cap.
• 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.
• Remitter can initiate the remittances from his/ her home/ place of work using internet banking, if his/ her bank offers such service.
• The transaction has legal backing.