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RBI adds more features to large-value funds transfer system

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RBI Governor Raghuram Rajan said the new RTGS system's advanced liquidity and queue management features are expected to improve the efficiency of financial markets.
RBI Governor Raghuram Rajan said the new RTGS system's advanced liquidity and queue management features are expected to improve the efficiency of financial markets.

The Reserve Bank of India on Saturday launched the new Real Time Gross Settlement (RTGS) system for large-value funds transfer.

The new system has several new functionalities including advanced liquidity and queue management features, gridlock resolution mechanism, hybrid settlement facility, facility to accept future value dated transactions, and options to process multi-currency transactions. The RTGS system is a large-value funds transfer system that banks use to settle inter-bank transfers for their own account as well as for their customers.

‘Real Time’ means the processing of instructions at the time they are received rather than at some later time.

Gross Settlement’ means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis).

The minimum amount to be remitted through RTGS is Rs 2 lakh. There is no upper ceiling for RTGS transactions.

More options

The new system provides three access options to participants, whereby they can decide the mode of participation in the system based on the volume of transactions and the cost of setting up the infrastructure.

According to RBI Governor Raghuram Rajan, payment systems, like plumbing, have to be efficient and ahead of the financial markets to be able to take care of the future developments in the financial markets.

Efficiency

“With its advanced liquidity and queue management features, the new RTGS system is expected to significantly improve the efficiency of financial markets,” said Rajan.

The RBI first implemented the RTGS in March 2004 as a major technology based electronic funds transfer system across the country.

The RTGS infrastructure is critical in facilitating the orderly settlement of payment obligations.

In August 2013, the RTGS saw 62.10 lakh transactions (including customer transactions, inter-bank transactions and inter-bank clearing) aggregating to Rs 67,55,735 crore.

ramkumar.k@thehindu.co.in

(This article was published on October 19, 2013)
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