Real Time Gross Settlement (RTGS)
The real-time gross settlement system facilitates an instant transfer of money from one account to other across cities. This is basically a large value remittance system where funds are required to be transferred quickly. While all the above payment and remittance systems are settled between banks on a net basis, this system is settled on a gross basis which means that each transaction is scaled independently. Settlement in real time means the payment is not subjected to any excessive waiting period. This facility is useful to banks for their fund’s management, for companies to transfer large amounts for individuals who require urgent payments. This system is typically used for high-value transactions that require and receive instant clearing. This system can allow a minor of a window of time for significant information to be susceptible, thus helping moderate threats.
Real Time Gross Settlement payments usually acquire higher transaction costs and generally operated by a country’s central bank. It is an electronic form of funds transfer where the transmission takes place on a real-time basis. The recipient bank has to credit the recipient’s account within 30 minutes of receiving the fund’s transfer message. It is the continuous procedure of settling payments on an individual order basis without netting debits with credits across the books of a central bank.