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Published by: Bari Rajnish on Jun 13, 2012
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Presentation on RTGS system

presented byArun awasthi Jaiprakash Keshab

Content’s of RTGS system  Background of RTGS  Definition of RTGS system  Advantage and disadvantage of RTGS  RTGS different from NEFT  Process of RTGS system  IFSC &Remitting customer  Impact of RTGS  Procedure for a customer and charges in RTGS .

2004 (on pilot basis by involving 4 banks) by RBI for large value transactions for banks and their clients.Background of RTGS   In June 1998. RBI expects 120 scheduled commercial banks and primary dealers to become part of the real time gross settlement system by June 2004.   In india this system was launched on March 26. the Reserve Bank of Australia (RBA)implemented Real Time Gross Settlement (RTGS) purpose of achieving finality of payments and enhancing stability in the financial and securities settlements can be completed have changed. .

 “Gross settlement” means the transaction is settled on one to one basis without bunching with any other transaction.Definition of RTGS  RTGS system is a funds transfer mechanism where 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. .

secure and irrevocable settlement of major business and financial market transactions . as soon as they are accepted by the system.  No Credit Risk :.Advantage & disadvantage of RTGS  Real-time Payment Settlement: Payments settled in real time on a transaction-by-transaction basis.  Benefits to Economy : The instant finality of payments ensures fast.  Predictability of Cash Flows:.There is no credit and settlement risk involved in RTGS system for receiving participant as each payment transaction is settled instantly.RTGS facilitates predictability of cash flows as customers know when their accounts will be debited or credited.

   The only disadvantage of RTGS systems is the fact that it requires more liquidity than net settlement systems. and algorithms that calculate the order of which payments should be made in order to get a smooth flow of payments . The system could have rules for how fast payments should be made in the system.. several way to mitigate this liquidity problem. as liquidity has to be available for each individual payment.Cont…. RTGS system and the participants can develop queuing features.

NEFT Settlement take place 6 times a day during the week days (9.30 PM Saturday : 9. transactions are processed continuously throughout the RTGS business hours.11.00PM.00 AM. All transactions are held up till that time. Contrary to this.30 PM .00 noon).00 AM and 12.00 AM to 4. 1. Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time.00 PM) and 3 times during Saturdays (9. the settlement takes place at a particular point of time. 11. in RTGS. RTGS business hours: Monday to Friday : 9. 12.RTGS different from NEFT NEFT is also an electronic funds transfer system that operates on deferred net settlement (DNS) basis which settles transactions in batches. In DNS.00PM and 5..00AM. 3.00 AM to 12.00AM.00 noon.

Process of RTGS RTGS transaction diagram .

cover all networked branches in the country. in due course.first 4 characters (4!A) represent the entity. when all bank branches participate in electronic payment systems. The IFSC code is used both by the RTGS and NEFT finance transfer systems. and the last 6 characters (6!X) denote the branch identity. and it would. IFSC is being identified by the RBI as the code to be used for various payment system projects within the country. The code consists of 11 characters . fifth position has been defaulted with a '0' (Zero) for future use. In due course.IFSC    The Indian Financial System Code (also known as IFSC) is a 11 digit code for identifying the bank and branch which an account is held. they would need to have a single identifiable unique code and IFSC would serve the purpose effectively .

RBI expects about 20000-25000 cheques which involve high value customer transactions to migrate to RTGS. no charge to be levied b) Outward transactions – ` 2 lakh to `. 5 lakh . a) Inward transactions – Free. he will have to go to an RTGS-enabled bank branch where he maintains his account and give an online instructions for the funds to be credited to the beneficiary’s account instead of using draft and cheque Presently.not exceeding ` 25 per transaction. about 3000 branches at 275 locations in India meet this criterion. Above ` 5 lakh – not exceeding ` 50 per transaction .Procedure for a customer and charges in RTGS   customer wants to use the RTGS.

Remitting customer The remitting customer has to furnish the following information to a bank for effecting a RTGS remittance:  Amount to be remitted  Remitting customer’s account number which is to be debited  Name of the beneficiary bank  Name of the beneficiary customer  Account number of the beneficiary customer  Sender to receiver information. if any  The IFSC Number of the receiving branch .

it takes about 1-2 days under EFT which is available in 134 cities. lose their significance with the RTGS in place and banks may have to design other innovating products for their customers. .Impact of RTGS   It is expected that some traditional products like cash management for corporate customers and traditional money transfer systems among branches. While a demand draft takes about 7 days.


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