The RBI's latest vision document for payment and settlement systems, which outlines the road map for 2019 to 2021, is gunning for "a highly digital and cash-lite society" and to that end the regulator has made several announcements of late. Two weeks ago, it announced round-the-clock fund transfers through NEFT from December and yesterday it issued a notification stating that the timings for fund transfer through real-time gross settlement, or RTGS, will be extended by one hour from Monday. Here's all you need to know about the new timings and this payment system:
What are the new RTGS timings?
At present, the RTGS system is available for customer transactions from 8 am to 6 pm and for inter-bank transactions from 8 am to 7:45 pm. "In order to increase the availability of the RTGS system, it has been decided to extend the operating hours of RTGS and commence operations for customers and banks from 7 am," the RBI said in a notification on Wednesday. The extended customer transactions timing will be applicable from August 26.
Incidentally, this is the second time this year that the regulator has increased timings for this payment system. In May, it had similarly extended RTGS timings by one-and-a-half hours to 6 pm starting June 1.
What is RTGS?
The Real Time Gross Settlement (RTGS) system is primarily meant for large value transactions, with the minimum cap set at Rs 2 lakh. There is no upper ceiling. In this option, there is continuous and real-time settlement of fund-transfers, individually on a transaction by transaction basis, unlike National Electronic Funds Transfer (NEFT), which clears transactions in batches. Moreover, the NEFT system is used for fund transfers of up to Rs 2 lakh.
What are the charges involved?
In order to provide an impetus to digital funds movement, the apex bank recently waived charges levied by it for RTGS transactions. "It has been decided that with effect from July 1, 2019, processing charges and time varying charges levied on banks by Reserve Bank of India for outward transactions undertaken using the RTGS system, as also the processing charges levied by RBI for transactions processed in NEFT system will be waived," the RBI had announced in a circular dated June 11. The regulator also made it clear that banks are expected to pass on the benefits to their customers.
Do all bank branches in India provide RTGS service?
According to the RBI, for a funds transfer to go through RTGS, the sending bank branch as well as the receiving bank branch need to be RTGS enabled. Presently, there are more than 140,000 RTGS enabled bank branches in the country.
What happens if the funds are not credited to the beneficiary's account?
While RTGS transfers are real time, if for some reason it is not possible to credit the funds to the beneficiary customer's account, "the funds received by the RTGS member bank will be returned to the originating bank within one hour of receipt of the payment at the Payment Interface or before the end of the RTGS Business day, whichever is earlier". In case of any delay in returning the failed payment, the originating customer is eligible to receive compensation at current repo rate plus 2 per cent.