29-04-2014, 04:00 PM
Presentation on RTGS system
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Background of RTGS
In June 1998, the Reserve Bank of Australia (RBA)implemented Real Time Gross Settlement (RTGS)
purpose of achieving finality of payments and enhancing stability in the financial and securities settlements can be completed have changed.
In india this system was launched on March 26, 2004 (on pilot basis by involving 4 banks) by RBI for large value transactions for banks and their clients.
RBI expects 120 scheduled commercial banks and primary dealers to become part of the real time gross settlement system by June 2004.
Advantage & disadvantage of RTGS
Real-time Payment Settlement: Payments settled in real time on a transaction-by-transaction basis, as soon as they are accepted by the system.
No Credit Risk :- There is no credit and settlement risk involved in RTGS system for receiving participant as each payment transaction is settled instantly.
Predictability of Cash Flows:- RTGS facilitates predictability of cash flows as customers know when their accounts will be debited or credited.
Benefits to Economy : The instant finality of payments ensures fast, secure and irrevocable settlement of major business and financial market transactions
RTGS different from NEFT
NEFT is also an electronic funds transfer system that operates on deferred net
settlement (DNS) basis which settles transactions in batches. In DNS, the settlement
takes place at a particular point of time. All transactions are held up till that time.
NEFT Settlement take place 6 times a day during the week days (9.00 AM,11.00AM,
12.00 noon, 1.00PM, 3.00PM and 5.00 PM) and 3 times during Saturdays (9.00AM,
11.00 AM and 12.00 noon), Any transaction initiated after a designated settlement
time would have to wait till the next designated settlement time. Contrary to this, in
RTGS, transactions are processed continuously throughout the RTGS business
hours.
RTGS business hours:
Monday to Friday : 9.00 AM to 4.30 PM
Saturday : 9.00 AM to 12..30 PM