Real Time Gross settlement (RTGS)
Real Time Gross settlement (RTGS), designed to make inter-bank payment and receipts safe, transparent and efficient. Transfer of money takes place from one bank to another on a “real time” and on “gross” basis. This is the fastest possible money transfer system through the banking channel. Settlement in “real time” means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. “Gross settlement” means the transaction is settled on one to one basis without bunching with any other transaction. Considering that money transfer takes place in the books of the Reserve Bank of India, the payment is taken as final and irrevocable.
Using RTGS Customers of the Bank can remit Rs. 1 Lakhs and above to the beneficiary’s account in another Bank. At present 89 Banks and more than 39000 Branches are participating in RTGS system across the country. The fund transfer requests under RTGS are allowed between 9.00 a.m. to 3.00 p.m. on weekdays and between 9.00 a.m. to 11.30 a.m. on Saturdays.
In RTGS environment the payer has to inform his bank to debit his account and credit the payee’s account with any other RTGS member bank, with an equivalent amount. Accordingly the payer’s bank will debit his customer’s account and will send credit instruction through RBI RTGS Gateway to the beneficiary’s (payee’s) bank to credit the amount to the beneficiary’s account. Meanwhile the funds are transferred from remitting bank to the receiving bank through RBI. In similar way a customer can receive the remittance from their counter parties maintaining accounts with other RTGS member banks. For sending the fund through the RTGS the customer has to fill the Fund Transfer Instruction Form (available at branch) with the necessary details, such as Name of the beneficiary, Name of the Bank and Branch, A/c No. and IFSC Code of the beneficiary’s Bank/Branch. For receiving the funds the customer needs to inform the IFSC Code of our Bank, his Bank and Branch name, Type of Account and Account Number to the remitter of the funds. The remitter will approach his banker (RTGS member) to remit the funds to the customers account.
National Electronic Fund Transfer (NEFT)
National Electronic Fund Transfer (NEFT) is an online system for transferring funds of financial institution, especially for the banks in India. This service is used mainly to transfer funds below Rs 100000.The instant funds transfer system, known as the Real Time Gross Settlement (RTGS) cannot be used for an amount below Rs. 1 lakh by the banks as per the instructions of the banking regulator, the Reserve Bank of India. RBI has asked banks to offer National lectronic Fund Transfer (NEFT) which provided T+0 and T+1 settlement system depending on the time a customer gives instruction to the bank for transferring the fund for small transactions.