RBI: RTGS could be Expanded Beyond India
Governor of Reserve Bank of India, Shaktikanta Das, while speaking at 7th edition of India Economic Conclave has called for effective regulation which should help innovation in fintech space.
Highlights
According to RBI Governor, Real-Time Gross Settlement (RTGS) has multi-currency capabilities. So, there is scope to explore if it can be expanded beyond India. He also underlined the huge role which technology and innovation played in serving consumers better and faster. According to him, during the covid-19 pandemic, RBI processed 274 crore digital transactions in order to provide direct benefit transfer to people. To boost the digital payments, RBI also allowed transfer of funds through Real-Time Gross Settlement (RTGS).
Real-Time Gross Settlement (RTGS)
Real Time Gross Settlement systems are specialist funds transfer systems in which transfer of money or securities is done from one bank to another bank in “real-time” and on a “gross” basis. It is the fastest possible money transfer system among the banking channel. Real-Time Settlement means a payment transaction is not subjected to ‘waiting period’. In such system, transactions are settled as and when they are processed. While, the “Gross settlement” means transaction is settled on one-to-one basis. RTGS System is used for high-value transactions. Banks are also free to use balances maintained under cash reserve ratio (CRR) and intra-day liquidity (IDL) to be supplied by central bank, to meet any eventuality arising out of this payment system. RBI also fixed IDL limit for banks to three times their net owned fund. This system is monitored by RBI which has stopped levying any charges on transactions made through RTGS from July 2019.
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Month: Current Affairs - March, 2021