1. What is RTGS System? Ans The acronym "RTGS" stands for Real Time Gross Settlement.

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. "Gross settlement" means the transaction is settled on one to one basis without bunching with any other transaction. Considering that money transfer takes place in the books of the Reserve Bank of India, the payment is taken as final and irrevocable. 2 How RTGS is different from Electronic Fund Transfer System (EFT) or National Electronics Funds Transfer System (NEFT)? Ans EFT and NEFT are electronic fund transfer modes that operate on a deferred net settlement (DNS) basis which settles transactions in batches. In DNS, the settlement takes place at a particular point of time. All transactions are held up till that time. For example, NEFT settlement takes place 6 times a day during the week days (9.30 am, 10.30 am, 12.00 noon. 1.00 pm, 3.00 pm and 4.00 pm) and 3 times during Saturdays (9.30 am, 10.30 am and 12.00 noon). Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time. Contrary to this, in RTGS, transactions are processed continuously throughout the RTGS business hours. RTGS vs NEFT NEFT refers to National Electronic Funds Transfer. It is an online system for transferring funds from one financial institution to another within India (usually banks). The system was launched in November 2005, and was set to inherit every bank that was assigned to the SEFT clearing system. It was made mandatory by the RBI for all banks on the SEFT system to migrate to NEFT by mid December 2005. As such, SEFT was discontinued as of January 2006. The RBI welcomed banks that were full members of the RTGS to join the NEFT system. RTGS is an acronym that stands for Real Time Gross Settlement. RTGS is a funds transfer system where money is moved from one bank to another in ‘real-time’, and on gross basis. When using the banking method, RTGS is the fastest possible way to transfer money. ‘Real-time’ means that the payment transaction isn’t subject to any waiting period. The transaction will be completed as soon as the processing is done, and gross settlement means that the money transfer is completed on a one to one basis without clustering with another transaction. The transaction is treated as final and irrevocable as the money transfer occurs in the books of the RBI (Reserve Bank of India). This system is maintained by the RBI, and is available during working days for a given number of hours. Banks using RTGS need to have Core banking to be able to initiate RTGS transactions.

while NEFT processes in cycles during the given working day. any amount below Rs 100. while NEFT is on a Deferred Net Basis.000 may be transferred. basically only funds above Rs 100. or net-settlement. Gross settlement is where a transaction is completed on a one-to-one basis without bunching with other transactions. RTGS is gross settlement. where transfers are bundled and deferred for a specific time. . RTGS completes transactions in real-time. As for a Deferred Net Basis (DNS).000 and above. all transfers will be held up until a specific time. this is where transactions are completed in batches at specific times.000 may be transferred using this system. RTGS transactions are processed throughout the working hours of the system.000. Here. handling funds worth Rs 100. RTGS processes in real-time (‘push’ transfer). while NEFT is National Electronic Funds Transfer. This causes a NEFT transaction that is initiated later than the last cycle to be completed the next day. RTGS transactions involve large amounts of cash. RTGS is a high value transfer system. For NEFT. and this system is generally for smaller value transactions involving smaller amounts of money. while NEFT transfers smaller amounts below Rs 100. and is therefore faster than NEFT. where a transfer is completed on a one-to-one basis. Summary: RTGS is Real Time Gross Settlement. is that while RTGS is based on gross settlement. NEFT is based on net-settlement.Differences The fundamental difference between RTGS and NEFT. which completes transactions in cycles.