RTGS (Real-Time Gross Settlement) is a system in which payments between banks are settled one by one, continuously, with funds moving across accounts held at the central bank. "Gross" means each transaction is settled on its own rather than netted against others.
Why it matters
Because settlement is immediate and final, RTGS is used for high-value and time-critical transfers such as property payments, treasury operations and large supplier settlements. Many countries run an RTGS system at the core of their payment infrastructure. In India the RBI operates RTGS, which has been available 24x7 since December 2020 and carries a minimum transaction value (currently 2 lakh rupees, though this can change).
Example
A company pays 15,00,000 to a supplier on the last day of a contract. Its bank submits the instruction with the beneficiary's account number and IFSC code. The central bank debits the sending bank and credits the receiving bank in real time, and the supplier's account shows the money shortly after.
Common misconceptions
- "Real time" refers to settlement between banks. The beneficiary bank still applies its own credit-to-customer checks.
- RTGS is not the same as NEFT, which settles in batches, or IMPS and UPI, which are retail instant systems.
- Final means final. A mistaken RTGS payment cannot simply be reversed by the sender.
Limits, hours and charges vary by country and bank; this entry is a definition only.
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