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ABSTRACT
Its functioning:
This "electronic" payment system is normally maintained or controlled by the Central Bank of a country. There is no physical exchange of money; the Central Bank makes adjustments in the electronic accounts of Bank A and Bank B, reducing the amount in Bank A's account by $1000 and increasing the amount of Bank B's account by the same. The RTGS system is suited for low-volume, high-value transactions. It lowers settlement risk, besides giving an accurate picture of an institution's account at any point of time. Such systems are an alternative to systems of settling transactions at the end of the day, also known as the net settlement system such as BACS. In the net settlement system, all the inter-institution transactions during the day are accumulated. At the end of the day, the accounts of the institutions are adjusted. Extending the example above, say another person deposits a check drawn on Bank B in Bank A for $500. At the end of the day, Bank A will have to "electronically" pay Bank B only $500 ($1000 $500). The implementation of RTGS systems by Central Banks throughout the world is driven by the goal to minimize risk in high-value electronic payment settlement systems. In an RTGS system, transactions are settled across accounts held at a Central Bank on a continuous gross basis. Settlement is immediate, final and irrevocable. Credit risks due to settlement lags are eliminated. RTGS does not require core banking to be implemented across participating banks, since transactions are direct, with no central processing or clearing operations. Any RTGS employs two sets of queues: one for testing outgoing funds availability on a chronological FIFO basis with the option of prioritizing specific inquiries, while the other queue is for processing debit/credit requests received from the central bank's Integrated Accounting System
RTGS Background:
Introduced in March 2004, a real time payment system .i.e., both processing and settlement is done in real time. It is a gross settlement system, transfers are settled individually and no netting on debit against credits .RTGS is used for transaction value > 2lac. It is a faster mode of settlement for high value transaction. Almost all the high value and time critical transactions are settled. Almost 50,000 branches accept RTGS request PAN in India.
Mode of Payment: R41(customer) - customer to customer R42 (Inter Bank) - bank to bank ( EG.ICMC payments) Remitter & Beneficiary sender & receiver IFSC Indian Financial System Code (11 Digit) UTR Code Unique Transaction Reference No (16 Digit) Participant Interface (PI) System used in RTGS provided by RBI RTGS Outwards Transaction going to other banks RTGS Inward Transaction coming into a specific bank HRTGS - Customized option in ICORE for processing outward transactions I connect An interface used for processing inward credits through Icore
Features of RTGS:
If a transaction is delayed, then interest is paid by the beneficiary bank According to RBI guidelines, account No. mentioned by the remitter will be the sole criteria to credit customers accounts
To illustrate with: At ICICI bank, as a pro active measure, name matching is done for inward transactions of Rs.5lakhs and above Any mismatch found in the name matching is returned to the reemitted bank
Working of RTGS:
O\W transaction done from branches/CPC first hits RBI server from Icore RBI server checks sufficient balance in the corresponding bank a/c before processing the transaction In the event of sufficient funding not being available for the transactions lie in Awaiting Settlement stage in PI If sufficient funds are available, the transaction status is updated as settled in RBI server & passed on to bene bank