Decoding RTGS Meaning, Transaction Limit, Fees and Charges and How it Works

RTGS stands for Real-Time Gross Settlement, a system designed for high-value transactions that demand immediate clearing. Unlike traditional banking methods that batch process payments, RTGS settles each transaction individually, ensuring instant fund transfers. The Reserve Bank of India (RBI) operates this system, ensuring its safety and reliability, making it the preferred mode for large transactions across banks.

How RTGS Works

1. Real-Time and Gross Transactions

RTGS processes transactions in real time, meaning the fund transfer is immediate. Each transaction is settled on a gross basis, i.e., individually, ensuring no intermingling or offsetting with other transactions. This mechanism eliminates settlement risk, making it highly reliable.

2. Role of Central Banks

RTGS systems are often managed by central banks to maintain transparency and integrity. In India, the RBI oversees the entire process, ensuring regulatory compliance and minimizing financial system risks.

3. Step-by-Step Process of RTGS 

• Initiation: The sender initiates a transaction via online banking, mobile apps, or by visiting the bank.
• Verification: The bank verifies sufficient funds and authorizes the transaction.
• Transmission: The transaction request is sent to the central RTGS system.
• Settlement: The central bank debits the sender’s bank and credits the recipient’s bank instantly.
• Confirmation: Both parties receive a confirmation, ensuring transparency and trust.

Key Features and Benefits of RTGS

1. Instantaneous Transfers

Funds are credited to the beneficiary’s account in real time, ensuring faster and more efficient transactions.

2. High-Security Standards

RTGS transactions are electronically monitored, reducing risks like theft or fraud commonly associated with physical transfers.

3. Minimum and Maximum Limit

While RTGS has a minimum limit of ₹2 lakhs, there is no upper cap set by RBI. The maximum limit varies across banks. For Ujjivan Small Finance Bank, the maximum RTGS transfer limit per day is capped at ₹10 lakh. 

4. 24x7 Availability

Since December 2020, RTGS has been available 24/7, including weekends and public holidays, offering unparalleled convenience.

5. Reduced Risk with No Physical Instruments

Unlike traditional payment methods involving cheques or demand drafts, RTGS eliminates the need for physical instruments, reducing associated risks.

6. Faster Settlement

RTGS facilitates the immediate settlement of funds, enhancing liquidity and cash flow management for businesses and individuals.

7. Secure Transactions

Operated under the purview of the RBI, RTGS guarantees secure transactions, ensuring peace of mind for both senders and recipients.

8. Legal Protection

RTGS transactions are legally backed, offering users a sense of security knowing their transactions are safeguarded by regulatory standards.

What are RTGS Limit, Fees and Charges

Ujjivan Small Finance Bank has a minimum RTGS daily transfer cap of ₹2 lakh and a maximum of ₹10 lakh.

There are no RTGS transfer charges for inward transactions. For offline RTGS transactions, the charges are listed below:

• RTGS outward transactions - ₹2 lakh to ₹5 lakh (Through Branch / Net banking / Mobile banking): ₹24.50
• RTGS outward transaction above ₹5 lakh: ₹49.50

How to Initiate an RTGS Transfer

1. Via Internet Banking

• Log into your bank’s online portal.
• Navigate to the 'Funds Transfer' section.
• Select 'RTGS' and input beneficiary details (name, account number, IFSC).
• Enter the transfer amount and authenticate using OTP.

2. Mobile Banking Apps

• Open the bank’s mobile app.
• Choose RTGS under the 'Transfers' menu.
• Enter the necessary details and confirm the transaction using the OTP.

3. At Bank Branch

• Visit the bank with the beneficiary details.
• Fill out the RTGS form and submit it at the counter.
• The bank processes and provides a confirmation of the transfer.

Details Required for RTGS Transactions

To successfully initiate an RTGS payment, the following information is necessary:

1. Beneficiary’s Name
2. Beneficiary’s Bank Name
3. Bank Branch
4. Account Number
5. IFSC Code
6. Transfer Amount
7. Sender’s Account Details
8. Purpose of Transfer

Important Considerations for RTGS Transactions

• Network Compatibility: Ensure both banks are part of the RTGS network.
• Accurate Information: Verify account numbers and IFSC codes to avoid transaction errors.
• Documentation: Keep transaction confirmations for future reference.