Real Time Gross Settlement RTGS Real Time Gross Settlement An Insight…… Presentation by S.R.Ramananda, Consultant, IT Solutions

Introduction “RTGS” stands for Real Time Gross Settlement. RTGS system is a funds transfer mechanism where transfer of money takes place from one account of one bank to another account of another bank on a “real time” and on “gross” basis.

RTGS 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

Regarding RTGS Real Time Gross Settlement (RTGS) system, introduced in India since March 2004, is a system through which electronic instructions can be given by banks to transfer funds from their account to the account of another bank. The RTGS system is maintained and operated by the RBI and provides a means of efficient and faster funds transfer among banks facilitating their financial operations. As the name suggests, funds transfer between banks takes place on a ‘real time’ basis. Therefore, money can reach the beneficiary instantaneously and the beneficiary’s bank has the responsibility to credit the beneficiary’s account within two hours.

Volume and Value of Transactions On a typical day, RTGS handles about 14000 transactions a day Approximate value of turnover Rs.1,50,000 crores per day. 33000 branches at more than 3,000 cities/ towns and taluk places are covered under the RTGS system, .

Flow of RTGS Transactions PI (Participatory Interface) Thru P-Connect Processing by Branch Official in P-Connect Authorizing By officer at Branch Updating in CBS HO RTGS ops PI (Participatory Interface) RBI RTGS Payment Gateway Bank-1 Settlement A/c PI (Bank-1) Host (Bank-1) Bank-2 Settlement A/c PI (Bank-2) Host (Bank-2) Outwards Inwards Bank-3 Settlement A/c PI (Bank-3) Host (Bank-3)

Step by Step description of the RTGS process flow Step 1 Customer submits the outward Instruction slip Step 2 Scrutiny of Instruction slip (Clear funds, name and a/c no. of customer, IFSC code, signature) Step 3 Branch scans the Instruction slip in Staffware  & sends it to RTGS Central Team Step 4 Branch will file the slip for the purpose of maintaining records Step 5 RTGS Central Team executes the transaction in Finacle and Participant Interface (PI) of RTGS

Message moves to RBI Server Step 6 Message moves to RBI Server Step 7 Bank’s RTGS Settlement Account is debited and Beneficiary Bank’s RTGS Settlement Account is credited Step 8 Beneficiary Bank passes the credit to the beneficiary customer’s account      

About RTGS… Payment instructions between banks are processed and settled individually and continuously without netting the debits against credits Payments are processed as per prescribed Timings by RBI (except on Sundays and National holidays across states) Transactions Supported through RTGS presently - Inter-bank Payments Customer Payments Own Account Transfers Net Clearing NDS / CCIL

Benefits of RTGS … Secured Online Real Time Funds Transfer To Customers.. Secured Online Real Time Funds Transfer Eliminates problem of debtors delaying their payments No longer the customer have to rely demand draft (DD) / cheque. No more the anxious wait for a week or a fortnight, wondering if the instrument reached safely and was duly realized. Debtor will no longer be able to enjoy the kind of "float" he did by deliberately giving an outstation cheque Debtor will not be able to give "stop payment" instructions to his bank to escape payment.

To Economy.. RTGS will reduce the systemic risk that exists in the present settlement systems like cascading affect on banks due to failure of one bank to meet it's settlement commitments. It improves confidence of out side agencies like world bank in Indian Economy It enables efficient settlements and avoids settlement delays

Transaction initiation By person receiving payment  COMPARISION Clearing system RTGS Settlement basis Net Gross Time of settlement At specified times On continuous basis System Based on Physical instruments Electronic messages Transaction initiation By person receiving payment By person making payment. Receipt of funds Depends on location and clearing type Day zero Finality of Settlement Only after return clearing Immediate, final and irrevocable Return reason Insufficient funds, stale instruments Incorrect account no., account frozen

Charges Charges are fixed Very cheaper compare to the charges o DD and other mode of transfer of funds For Corporate Clients: Outward transactions   Min Rs.250, Max 1500) Inward transactions:Rs.100  For retail category Outward transactions for SB :MIN 150 Rs and MAX 1500 for Current account :min 250 , maximum 1500 Inward transactions :No Charges

Remitting customer has to furnish the following information 1. Amount to be remitted 2. His account number which is to be debited 3. Name of the beneficiary bank 4. Name of the beneficiary customer 5. Account number of the beneficiary customer 6. Sender to receiver information, if any 7. The IFSC code of the receiving branch

About RTGS… Limitation: Restriction: - Customer Transactions - >Rs. 1 Lakh – No upper Limit – Targeted for Corporate / Interbank Payments - Interbank Transactions – Re 1 & above – No upper Limit Restriction: - Against Cash – not maintaining account with us - Inward RTGS Credit to parties who are not having account with us

Exclusions: Purpose of payment (“Sender to Receiver Info”) is to be captured in the message (AML) Sender Name / A/c No. / Address mandatory in message (KYC) Source of funds mandatory in case of NRI / NRE A/cs RBI Payment Gateway cancels any RTGS transaction processed after cut-off time. “Cancellation” of payment is “non-compliance” of RBI guidelines Transactions cannot be processed on Sunday / National Holidays Any transactions processed after cut-off time/ Holidays – It throws message “Payment will be effected on next working day”. Branches shall note to inform RTGS Ops to push the same. Without confirmation from Branch, transaction will not be considered settlement on next working day.

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