Advantages of RTGS (Real-Time Gross Settlement)
- Speed: RTGS facilitates near-instantaneous transaction settlement, reducing the time required for funds to be available to the recipient. They provide high level of transaction where no time is critical and no delay is there.
- Mitigated Counterparty Risk: RTGS’s gross settlement approach minimizes counterparty risk. Each transaction is handled individually, preventing a chain reaction of defaults from a single transaction.
- Enhanced Liquidity Management: For financial institutions, RTGS supports efficient liquidity management, allowing precise planning of cash positions due to real-time settlement.
- Cost Reduction: Because no intermediates are used in this settlement process funds are directly transferred from one bank to, RTGS can lead to cost savings for financial institutions and their clients.
RTGS Full Form – Real-Time Gross Settlement
RTGS Full Form: RTGS (Real-Time Gross Settlement) is a system used by banks to transfer money or securities from one bank to another on a “real-time” and on a “gross” basis. This means the transactions are completed instantly, without waiting for any batching process, and the settlement of funds is done individually on an order by order basis. It plays an important role in contemporary financial systems by facilitating high-value, interbank transactions efficiently and securely.
In this article, we have provided the RTGS full form, is history, characteristics, features, advantages and drawbacks.