Understanding the meaning and features of RTGS funds transfer service.
The modern era has allowed us to enjoy newer, more convenient methods of conducting payments and settlements. However, with so many new methods of transferring funds, it can be confusing to pick one that meets your needs. This article focuses on one such payment method that has become incredibly popular in India – RTGS. Continue reading to know more.
RTGS full form is Real-Time Gross Settlement. This fund transfer facility was first introduced by the Reserve Bank of India (RBI) in 2004. It is a system that allows continuous real-time transfer of funds. The word ‘real-time’ highlights the nature of the transfer wherein the instructions are processed at the time they are received as opposed to after a delay or waiting period. Subsequently, the term ‘gross settlement’ means that the instructions for the transfer of funds are handled on an instruction-by-instruction basis. This transfer method is generally designed for high-value transactions, and you can use it for online and offline transactions.
RTGS Transactions are available on all days, at all times. It is a 24 x 7 x 365 service. You can transfer funds anytime, irrespective of bank or national holidays.
While the RBI has not placed an upper limit on RTGS transfer, the lower limit is INR 2 lakh per transaction. Also, if you choose to conduct an RTGS transfer via internet banking, you should verify the upper limits on RTGS transactions set by the bank, as it can differ from bank to bank.
The RBI has set a limit on the charges banks may levy for RTGS transfers. While there is no charge on inward transactions, you have to pay nominal fees on outward transactions as under:
RTGS Fees and Charges
INR 2 Lakh - INR 5 Lakh
Upto INR 24.5 + Taxes
INR 5 Lakh and Above
Upto INR 49.5 + Taxes
Now that you know what is RTGS, you can leverage this fund transfer method for high-value transactions. To successfully conduct an RTGS transfer, you must ensure that both the sending and receiving banks are RTGS enabled bank branches. Also, note that RTGS transfers take place in the books of the RBI, and the payments are final and irrevocable.
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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.