real time gross settlements

real time gross settlements (RTGS) / national electronic funds transfer (NEFT):

Real Time Gross Settlements (RTGS)

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). `Real Time` means the processing of instructions at the time they are received; `Gross Settlement` means that the settlement of funds transfer instructions occurs individually.

Are the payments under RTGS final and irrevocable?

Considering that the funds settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable.

What are the benefits of using RTGS?

RTGS offers many advantages over the other modes of funds transfer:

How is the processing of RTGS different from that of National Electronic Funds Transfer (NEFT) System?

Ans. NEFT is an electronic fund transfer system in which the transactions received up to a particular time are processed in batches. Contrary to this, in RTGS, the transactions are processed continuously on a transaction by transaction basis throughout the day.

Is RTGS a 24x7 system or are there some timings applicable?

RTGS is available 24x7x365 with effect from December 14, 2020.

Is there any minimum / maximum amount stipulation for RTGS transactions?

Ans. The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is Rs. 2,00,000/- with no upper or maximum ceiling.

What about processing charges / service charges for RTGS transactions?

Charges Applicable W.E.F. 20-05-2022

What is the essential information that the remitting customer needs to furnish to the bank for making a remittance?

Ans. The remitting customer has to furnish the following information to a bank for initiating an RTGS remittance:

How would one know the IFSC number of the receiving branch?

The IFSC number can be obtained by the remitter (customer) from his / her bank branch. Alternatively, it is available on the cheque leaf of the beneficiary. This code number / bank branch information can be communicated by the beneficiary to the remitting customer. The list of IFSCs is also available on the RBI website at the link http://rbidocs.rbi.org.in/rdocs/RTGS/DOCs/RTGEB0815.xlsx

What care should be taken while originating an RTGS transaction?

The following should be ensured while putting through a funds transfer transaction using RTGS –

What is the time taken for effecting funds transfer from one account to another through RTGS?

Under normal circumstances, the beneficiary branches are expected to receive the funds in real time as soon as funds are transferred by the remitting bank. The beneficiary bank must credit the beneficiary`s account within 30 minutes of receiving the funds transfer message.

Can a remitting customer initiate a transaction for a future date?

No, the RTGS system does not accept future value dated transactions.

Can a transaction be originated to draw (receive) funds from another account?

No. RTGS is a credit-push system i.e., transactions can be originated by the payer / remitter / sender only to pay / transfer / remit funds to a beneficiary.

Can an RTGS transaction be tracked? Would the remitting customer receive an acknowledgement of money credited to the beneficiary`s account?

While the customers do not have the facility to track the transaction, the RBI has implemented the feature of positive confirmation in an RTGS transaction. Under this, the remitting bank would receive a message from RBI (through the beneficiary bank) that the money has been credited to the beneficiary bank / customer account. Based on this, the remitting bank should advise the remitting customer that money has been credited to the receiving bank’s beneficiary account.

Contact Details of RTGS Cell

Punjab National Bank

RTGS Cell

2^nd Floor, Plot No.- 5

Sector- 32, Gurugram

Haryana- 1220011

Tel: 0124- 4176985

Email: rtgs@pnb.co.in

Would the remitting customer get back the money if it is not credited to the beneficiary`s account? Is there any time frame prescribed for it?

Ans. Yes, if it is not possible to credit the funds to the beneficiary customer’s account for any reason, 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 (PI) or before the end of the RTGS Business day, whichever is earlier. Once the money is received back by the remitting bank, the original debit entry in the customer`s account needs to be reversed.

Is a customer eligible to get compensation for delay in returning the payment?

In case of any delay in returning the failed payment, the originating customer is eligible to receive compensation at current repo rate plus 2%.

What is UTR number?

Unique Transaction Reference (UTR) number is a 22 character code used to uniquely identify a transaction in RTGS system.

What is LEI and what is its purpose?

The Legal Entity Identifier (LEI) is a 20-digit number used to uniquely identify parties to financial transactions worldwide. It has been implemented to improve the quality and accuracy of financial data reporting systems for better risk management. It is used to create a global reference data system that uniquely identifies every legal entity in any jurisdiction that is party to a financial transaction. It can be obtained from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF), the body tasked to support the implementation and use of LEI. In India, LEI can be obtained from Legal Entity Identifier India Ltd. (LEIL) (https://www.ccilindia-lei.co.in), which is also recognised as an issuer of LEI by the Reserve Bank.

Which RTGS transactions should include LEI information?

All payment transactions of value Rs. 50 crore and above undertaken by entities (non-individuals) should include remitter and beneficiary LEI information from April 1, 2021.

Is LEI required for individual customer transactions?

No, LEI is not required for customer transactions where both remitter and beneficiary are individuals.

National Electronic Funds Transfer (NEFT) system

National Electronic Funds Transfer (NEFT) is a nation-wide centralised payment system owned and operated by the Reserve Bank of India (RBI). It is an application developed by RBI to facilitate customers to transfer funds from one bank account to another bank account in India. It is an efficient, secure, economical, reliable and expeditious system of funds transfer between Banks. There is no minimum or maximum limit for remittance through NEFT

What are the advantages of using NEFT system?

NEFT offers the following advantages for funds transfer or receipt:

How does the NEFT system operate?

Following is the step-wise flow of NEFT transaction.

Step-1: An individual / firm / corporate willing to transfer funds through NEFT can use the internet/mobile banking facility offered by his/her bank for initiating online funds transfer request. The remitter has to provide details of beneficiary such as, name of the beneficiary, name of the bank branch where the beneficiary has an account, IFSC of the beneficiary bank branch, account type and account number, etc. for addition of the beneficiary to his/her internet/mobile banking module. Upon successful beneficiary addition, the remitter can initiate online NEFT funds transfer by authorizing debit to his/her account. Alternatively, the remitter can also visit his/her bank branch for initiating NEFT funds transfer through branch/off-line mode. The customer has to fill-in the beneficiary details in NEFT application form available at the bank branch and authorize the branch to debit to his/her account to the extent of the amount requested in NEFT application form.

Step-2: The originating bank prepares a message and sends the message to its pooling centre, also called the NEFT Service Centre.

Step-3: The pooling centre forwards the message to the NEFT Clearing Centre, operated by the RBI, to be included for the next available batch.

Step-4: The Clearing Centre sorts the funds transfer transactions beneficiary bank-wise and prepares accounting entries to receive funds from the originating banks (debit) and give the funds to the beneficiary banks (credit). Thereafter, bank-wise remittance messages are forwarded to the beneficiary banks through their pooling centre (NEFT Service Centre).

Step-5: The beneficiary banks receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary customers’ accounts.

What is Indian Financial System Code (IFSC)?

IFSC or Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system. It’s a 11-digit code with the first 4 alpha characters representing the bank, and the last 6 characters representing the branch. The 5th character is 0 (zero). IFSC is used by the NEFT system to identify the originating / destination banks / branches and also to route the messages appropriately to the concerned banks / branches.

How can I find the IFSC of a bank-branch?

Bank-wise list of IFSCs is available with all the bank-branches participating in NEFT scheme. List of bank-wise branches participating in NEFT and their IFSCs is also available on the website of RBI at https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2009.

Who can avail NEFT system for fund transfer / receipt?

Individuals, firms and corporates maintaining accounts with our Bank can electronically transfer funds to any individual, firm or corporate having an account with any other bank in the country participating in the NEFT system.

Can the NEFT system be used for remitting funds even by those who do not have a bank account?

Yes, the person having no bank account can remit funds through NEFT to a beneficiary having a bank account, with another NEFT member bank. It can be done by depositing cash at any branch of the bank, by furnishing additional details such as complete address, telephone number, etc. Such cash remittances will, however, be restricted to a maximum of Rs. 50,000/- per transaction.

Can I send funds to my relative / friend residing abroad through NEFT system?

The outbound remittances through NEFT system are permitted only to Nepal under Indo-Nepal Remittance Scheme. Under this scheme, the remitter can transfer funds from any branch of the bank in India to Nepal, irrespective of whether the beneficiary in Nepal maintains an account with a bank branch in Nepal or not. The beneficiary would receive funds in Nepalese Rupees.

What are the operating hours of NEFT?

The NEFT system is available round the clock throughout the year on all days, i.e., on 24x7x365 basis. NEFT presently operates in batches on half-hourly intervals throughout the day.

What are the essential details required for remitting funds through NEFT system?

The essential elements of beneficiary`s identification are:

Charges Applicable W.E.F. 20-05-2022

Can I use NEFT to transfer funds from / to NRE and NRO accounts?

Yes, NEFT can be used to transfer funds from / to NRE and NRO accounts in the country. This, however, is subject to the adherence of the provisions of the Foreign Exchange Management Act, 2000 (FEMA) and Wire Transfer Guidelines.

Can I originate a NEFT transaction to draw / receive funds from another account?

No. NEFT is a credit-push system i.e., transactions can be originated by the payer / remitter / sender only to pay / transfer / remit funds to beneficiary.

How can I track status of NEFT transactions initiated? Who should be approached to know status of the NEFT transaction?

The remitter and the beneficiary can track status of NEFT transaction by contacting NEFT Customer Facilitation Centre (CFC) of their bank, respectively. Details of NEFT Customer Facilitation Centre of bank are as below:-

Punjab National Bank

RTGS – NEFT Cell

2^nd Floor, Plot No.- 5

Sector- 32, Gurugram

Haryana- 1220011

Tel: 0124- 4176993/995

Email: neft@pnb.co.in

For the purpose of faster tracking of transaction, you need to provide few details related to transaction such as Unique Transaction Reference (UTR) number / transaction reference number, date of transaction, etc., to our bank.

How much time should I expect for receipt of funds by beneficiary?

You may expect timeline of two hours from the batch settlement within which beneficiary’s account should be credited.

What happens if funds are not credited to the beneficiary? Or Do I get my money back, if funds are not credited to the beneficiary due to various reasons?

If it is not possible to afford credit to the account of the beneficiary for any reason, destination banks are required to return the transaction (to the originating branch) within two hours of completion of the batch in which the transaction was processed.

What are the penalties / compensation for delayed credit or return of funds by beneficiary bank?

If the NEFT transaction is not credited or returned within two hours after batch settlement, then the bank is liable to pay penal interest to the affected customer at the current RBI LAF Repo Rate plus two percent for the period of delay / till the date of credit or refund, as the case may be, is afforded to the customers’ account without waiting for a specific claim to be lodged by the customer in this regard.

What happens if I write wrong account number of beneficiary?

The credit is given to the account number written / given by remitter in his / her application / instruction. Credit to beneficiary account is released solely based on account number. It is the responsibility of remitting customer to write correct account number. The originator / sender should exercise due care in providing the correct account number of the beneficiary, in the NEFT remittance instruction / application.