What is RTGS – Full Form, Benefits & How It Works

RTGS stands for Real-Time Gross Settlement. It is a fast and secure method used to transfer money from one bank to another instantly and in full.

Let’s say Ravi wants to send ₹5,00,000 to his daughter for her college fees. If he uses RTGS, the money will reach her bank account almost immediately, without waiting or bundling with other transactions. 

This is because RTGS settles payments in real time (right away) and on a gross basis (one at a time).

RTGS in Action
 

RTGS is useful for large payments that need to be made quickly, especially above ₹2 lakh. It is safe, tracked, and widely used for business and personal needs.

Key Features of RTGS

RTGS (Real-Time Gross Settlement) is one of the fastest and most secure ways to transfer money between banks in India. It works in real time and processes each transaction one by one, without any delays. Let’s look at some of its main features:

Why is RTGS useful?
 

• Real-Time Fund Transfer: The system settles payments as soon as they are made. There is no wait or delay in processing.
   
• Best for High-Value Payments: RTGS is ideal for large amounts. The minimum amount allowed is ₹2,00,000.
   
• Safe and Reliable: RTGS is managed by the Reserve Bank of India (RBI). It uses a strong and secure server that hackers cannot break.
   
• Immediate Settlement: Funds reach the receiver's account within 30 minutes. If the transaction fails, the money is returned within 2 hours.
   
• One-to-One Transfers: Each payment is processed alone, not grouped with other transfers.
   
• Fixed Operating Hours: RTGS works from 8:00 AM to 4:00 PM, Monday to Saturday (except 2nd and 4th Saturdays).

RTGS Compared with NEFT

RTGS is the best choice when you need to send large sums quickly and safely. It gives you full control, peace of mind, and immediate results.

Benefits of RTGS: A Trusted Way to Send Big Payments

RTGS (Real-Time Gross Settlement) offers several strong benefits for both individuals and businesses. It is one of the fastest and most reliable systems for sending money directly from one bank to another.
 

How Does RTGS Work? 

RTGS (Real-Time Gross Settlement) is like sending money from one bank to another straight away. It’s fast, safe, and used for sending large amounts. Here’s how it works in very simple steps:

1. Start the Transfer (Initiation)

You begin by entering the other person’s name, bank account number, bank name, IFSC code, and the amount you want to send. You can do this on your phone, computer, or at the bank branch.

2. Check Your Balance (Verification)

The bank checks if you have enough money in your account to send the amount. If yes, the process moves forward.

3. Central Bank Gets Involved

Now, the Reserve Bank of India (RBI), which is like the big boss of all banks, steps in. It helps move the money safely between banks.

4. Money Moves in Real Time

The RBI checks everything and moves the money from your bank account to the receiver’s bank. This happens in seconds or just a few minutes.

5. Receiver’s Bank Gets the Money

The RBI tells the other bank that money has arrived. That bank then gets ready to credit the money to the right person.

6. Transfer Complete

The money reaches the receiver’s account. Both you and the receiver get a message saying the money was sent successfully.

Ways to Start an RTGS Transfer
 

• Mobile Banking App
  Open your bank’s app on your phone, go to RTGS, and fill in the details to send money. It’s quick and simple.
   
• Internet Banking
  Log in to your computer, choose RTGS, and add the person’s bank details. Then send the money with a few clicks.
   
• At the Bank Branch
  If you’re not comfortable with apps, go to the bank. The staff will help you fill out a form and send the money for you.

What do You Need to Send Money by RTGS?

Before you send money, make sure you have:

• The receiver’s name (same as in their bank account)
   
• The receiver’s account number
   
• The receiver’s bank name and branch
   
• The IFSC code of the receiver’s bank

That’s it! RTGS is a safe and fast way to send big payments.

Challenges of Using RTGS

Rahul wanted to send ₹3,00,000 to his sister in Delhi for her house repairs. Since it was a large amount, he chose RTGS for the transfer. While the process seemed simple, Rahul faced a few challenges.

1. Not for Small Transfers
Rahul had earlier tried sending ₹50,000 to a friend using RTGS but couldn’t. The system rejected it because the minimum limit for RTGS is ₹2,00,000. He had to use NEFT instead.

2. No Way to Reverse the Payment
This time, Rahul made sure he typed the right account number and IFSC code. A few months ago, he sent ₹2,50,000 to the wrong account and couldn’t get it back. RTGS doesn’t allow reversals, even for small typing mistakes.

3. Only for Bank Accounts in India
He thought about helping his cousin in the UK, too, but RTGS doesn’t work for international payments or cash transfers. It only works between Indian bank accounts.

4. Bank Systems Must Work Smoothly
On the day of the transfer, his bank's server went down. The money didn’t go through until evening. RTGS depends fully on both banks' systems working without issues.

5. Not All Branches Support RTGS
Rahul’s local branch in a small town didn’t support RTGS. He had to use internet banking or visit a bigger city branch for such transfers.

6. The Bank Must Have Enough Money at the RBI
Rahul’s transfer got delayed once because the bank didn’t have enough balance with the RBI. RTGS needs the bank to keep money ready to send payments.

7. Risk of Cyber and System Errors
Though rare, Rahul’s friend once faced a technical error during an RTGS transfer. Even with strong RBI security, there’s always a risk of digital glitches or cyberattacks.

8. Extra Charges Apply
Finally, Rahul had to pay ₹25 plus tax as a fee for sending ₹3,00,000. If he had sent more than ₹5,00,000, the fee would have been ₹50 plus tax.

Even though RTGS is fast and safe, it’s wise to know these challenges before using it, especially for large or urgent payments.

Conclusion

RTGS (Real-Time Gross Settlement) is a fast and secure way to send large sums of money between Indian bank accounts. It settles payments instantly and one by one. RTGS is best for urgent and high-value transactions.

FAQ’s

1. What does RTGS mean in banking?
RTGS stands for Real Time Gross Settlement. It lets you transfer large amounts of money quickly and directly from one bank to another.

2. Can I use RTGS for small payments?
No. RTGS is only for high-value transfers, usually above ₹2 lakh. For smaller amounts, you can use NEFT or IMPS.

3. When does RTGS work during the day?
RTGS works during bank hours, usually from 7 am to 6 pm on working days. Some banks may allow 24/7 service online.

4. How fast is an RTGS transfer?
RTGS transfers happen instantly. The money reaches the receiver’s bank account in real time, without delay.

5. Is RTGS safe to use for big payments?
Yes. RTGS is highly secure and used by banks for safe, direct settlement of large payments between accounts.

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We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?