Everything You Need to Know About RTGS in Banking

When it comes to quickly and securely transferring substantial amounts of money, many individuals opt for RTGS. This method has established itself as one of the most dependable ways to transfer funds between banks in India. But, what is the full form of RTGS? In this blog, we will discuss RTGS full form, what it means, and more importantly, how it works. 

What is RTGS?

RTGS full form stands for Real-Time Gross Settlement. It refers to a system of funds transfer that enables instantaneous transfer of funds and securities. RTGS is an electronic payment system where funds are transferred to an individual in real time and on a gross basis. 

Hence, it means that the transactions are processed individually, and not in batches. RTGS meaning in banking is simple, as it allows for an immediate fund transfer with no waiting period. This makes it ideal for high-value transactions. 

Working of RTGS

Now that we have established RTGS full form and  RTGS meaning in banking, let us understand how this system works. Here is a detailed explanation of the RTGS working:

• Initiation: Once you initiate the transfer online or through a bank by providing all the relevant details, the RTGS system starts working.

• Verification: Once you have initiated a transfer, the bank will verify your bank balance to ensure you have sufficient funds in your account.

• Notification is sent to RBI: After the initial verification is complete, the details of the transaction are forwarded to the Reserve Bank of India. 

• Real-Time Transfer: After RBI’s approval and verification, the fund transfer takes place in real time. This typically happens within seconds or minutes. 

• Update at the Beneficiary’s Bank: The bank recipient will be notified of the incoming funds transfer by the RBI. 

• Completion: The fund transfer process will be complete once the recipient’s bank account is credited. 

What are the Benefits of RTGS? 

There are numerous benefits of RTGS. Here is why you should use it: 

• Efficient Method of Transferring Funds

As the transfer of funds takes place almost instantly, it is a very efficient method of transferring funds from one account to another. 

• Secure Transactions

RTGS is constantly monitored by the banks and above all, the Reserve Bank of India (RBI). This makes it secure and ensures that your funds are not sabotaged. 

• Lowered Risk of Fraud

Once the transactions are processed, it cannot be changed. As the transactions are happening in real time, it lowers the risk of any fraud or misrepresentation. 

• Settlement Risks are Low 

Since the transactions are all settled instantaneously, and in real-time, the chances of defaulting are very low. 

• Useful for High-Value Transactions

RTGS is very useful for high-value transactions as it is settled in real-time. It is particularly helpful for commercial and interbank transactions. Moreover, it is legally backed by the RBI. 

Difference between RTGS and Other Fund Transfer Methods

RTGS transfers are one of the many fund transfer methods available in India. The differences between them are as follows: 

What are the Charges and Limits of RTGS? 

Understanding the charges and limits of RTGS is essential to establish RTGS’ full meaning. 

RTGS Charges

RTGS charges are listed below: 

1. Online Mode: According to a mandate issued by RBI, all online RTGS transactions made through mobile banking or net banking are exempt from any charges or processing fees. 
2. Offline Mode: Certain charges are levied by RBI on RTGS transactions made through offline modes. However, the RBI does not charge any processing fee, but it does levy a service fee. The following table shows the charges levied by RBI for offline RTGS transactions:

RTGS Transaction Limits

The RTGS transaction limits are listed below: 

1. Minimum Transaction Amount: ₹2 lakhs
2. Maximum Transaction Amount: No limit (Although it varies from bank to bank)

Banks may have their own restrictions in place concerning the maximum transaction amount. Hence, you must check with your bank for such restrictions and charges before you conduct an RTGS transaction. 

Steps to Make an RTGS Transfer

You can send money through RTGS either in online or offline mode. 

Online RTGS Transfer 

You may follow the given steps to initiate an online RTGS transaction:

Step 1: Login to your bank’s website using your credentials to initiate an online RTGS transaction

Step 2: Choose RTGS as the fund transfer method option. If this is not available, you may choose the interbank transfer option.

Step 3: To transfer money to the recipient, you must add this person as a beneficiary. Add the recipient’s details such as account number and IFSC code.

Step 4: Enter the amount you want to transfer.

Step 5: After you have reviewed and confirmed all the details, you may now confirm. The bank will now send you an OTP to verify your identity. 

Step 6: Enter the OTP. 

The transaction is now complete and you and the beneficiary will be notified about the successful completion of the transaction. However, these steps are general and may vary from bank to bank. 

Offline RTGS Transfer

Alternatively, you can choose to carry out an RTGS transfer offline. For this, visit your nearest bank branch and fill out the RTGS form. Enter your beneficiary’s name, account number, IFSC code, and name. The bank official will assist you during the transaction process. 

Final Thoughts

Understanding the RTGS full form, its meaning, benefits and how to initiate a transaction is beneficial to conduct the RTGS transaction. Its security function, real-time settlement system and reliability make it one of the best fund transfer systems in India. Whether using it for business or personal reasons, RTGS ensures seamless and secure money transfers.

Open a savings account with Torus Digital and indulge in all the benefits. You can earn up to 7.75% interest p.a. Download the app today! 

Rate this article

Share this article