Banking · Payment Systems - RTGS vs NEFT
A corporate client approaches a scheduled commercial bank to transfer a sum of 15,00,000 Rupees to a vendor using the Real Time Gross Settlement (RTGS) system. Considering the regulatory environment and operational guidelines of the Reserve Bank of India, which of the following statements most accurately describes the legal and operational characteristics of the RTGS system in contrast to the NEFT system?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1RTGS transactions are governed primarily by the Negotiable Instruments Act of 1881, which provides the same legal status to an electronic message as a physical demand draft or a check for the purpose of settlement.
- 2Under RTGS, the beneficiary bank must credit the account of the recipient within two hours of receiving the funds transfer message, whereas in NEFT, the credit must be afforded within thirty minutes of the batch settlement.
- 3The RTGS system allows for continuous and real-time settlement of fund transfers individually on a transaction-by-transaction basis without netting, and the settlement is final and irrevocable in the books of the central bank.✓
- 4The RTGS system operates on a deferred net settlement basis where transactions are bundled in half-hourly batches and the minimum amount for transfer is 2,00,000 Rupees while the maximum is unlimited.
Correct answer
The RTGS system allows for continuous and real-time settlement of fund transfers individually on a transaction-by-transaction basis without netting, and the settlement is final and irrevocable in the books of the central bank.
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