BANKING AFFAIRS

Detailed explanation-1: -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.

Detailed explanation-2: -The acronym ‘RTGS’ stands for Real Time Gross Settlement, which can be explained as a system where there is continuous and real-time settlement of fund-transfers, individually on a transaction-by-transaction basis (without netting).

Detailed explanation-3: -An RTGS system is a gross settlement system in which both processing and final settlement of funds transfer instructions can take place continuously (i.e., in real time). 4 As it is a gross settlement system, transfers are settled individually, i.e., without netting debits against credits.

Detailed explanation-4: -Real Time Gross Settlement (RTGS) is an electronic form of funds transfer where the transmission takes place on a real time basis. Over 60 countries worldwide use RTGS systems. RTGS systems are typically run by the central bank of a country. Often, these systems are integral components of the country economy.

Detailed explanation-5: -NEFT, i.e. National Electronic Funds Transfer is an online facility that enables the transfer of funds from one financial institution to another. NEFT operates on Deferred Net Settlement (DNS) basis in which the transactions are settled in batches, i.e., all the transactions received till a particular time are netted.