RTGS Full Form: Real Time Gross Settlement
Overview:
– RTGS is a system used for the continuous settlement of funds in real time.
– It is primarily utilized for large-value transactions requiring immediate transfer of funds between banks.
Key Features of RTGS:
– Real-Time Processing: Transactions are processed instantly, without any waiting period.
– Gross Settlement: Each transaction is settled on an individual basis rather than netting it with others, ensuring immediate transfer.
– High-Value Transactions: Typically used for large amounts, often above a specified threshold set by the central bank.
Benefits of RTGS:
– Speed: Immediate transfer of funds enhances liquidity and reduces the time taken for transactions.
– Certainty: Once a transaction is completed, it is final and irrevocable, providing security to the parties involved.
– Risk Reduction: Minimizes the risks associated with the delay in settlement and potential default.
Usage:
– Commonly used in:
– Corporate Payments: Businesses making large payments to suppliers or service providers.
– Real Estate Transactions: Large sums involved in property purchases.
– Interbank Transfers: Settling dues between financial institutions.
Conclusion:
RTGS plays a crucial role in the financial ecosystem, facilitating smooth and efficient movement of funds, particularly for high-value transactions.