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What is the full form of RTGS:

RTGS represents Real Time Gross Settlement.

It is a special way of transferring funds from one bank to another on a real time and on gross basis. As the name suggests it is the real time transaction, which means that there is no waiting period for the completion of transaction. Once the transaction is performed, it is settled as soon as it is processed. The meaning of Gross settlement is that the transactions are settled on one to one basis. This means that there is no bundling of multiple transactions. If there is one RTGS transaction, it will be processed and settled at the same time. Once the transaction is processed, it is final and the payment is irrevocable.

RTGS is the best system of transferring money on the same day. If there is an urgent requirement of transferring funds, RTGS is used. Mostly it is used for high value transactions which require quick clearing. For normal transfers and regular payments, RTGS system is not used, a normal national payment system is used that has a batch payment which is done at the EOD.

RTGS is controlled and maintained by the central bank of the country. The money is not exchanged physically. An adjustment of the particular amount is made electronically by the central bank. The particular amount is debited from Bank A and credited in Bank B. RTGS is best for low volume and high value transactions.

RTGS system is used in many countries but is known with a different name is every country. In United Kingdom it is called as CHAPS (Clearing House Automated Payment System). In Japan it is known with the name BOJ-NET (Bank of Japan Financial Network System). In Australia it is called as RITS (Reserve Bank Information and Transfer System). Whereas is U.S. it is called as Fedwire. It is the fastest possible way of transferring money between two banks.

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