Advantages of RTGS in Banking-Learn The Ins And Outs Of RTGS.

To make the interbank transaction system more reliable, fast, secure and efficient, on 29th October 2015 Bangladesh Bank introduced Real Time Gross Settlement (RTGS) system in Bangladesh. Real Time Gross Settlement (RTGS) system brings a revolutionary change in the arena of banking payment and settlement procedures in our country.

RTGS system was implemented in our banking system with financial assistance from Asian Development Bank and technical support from the World Bank and was developed by the Swedish company CMA Small Systems AB. Nowadays RTGS system is also operable through mobile apps of different banks.

Here in this content, we know about What is RTGS, the advantages of RTGS in Banking and so on. Let’s get started.

What is RTGS?

RTGS is an electronic fund transfer system where transactions take place from one account of a bank to another bank on a real-time basis. RTGS is mainly designed to settle high value which started from Tk. 1,00,000/- to above local currency transactions as well as domestic foreign currency transactions.

In RTGS system it is mandatory for the originator to have an account with the originating bank. Presently more than 10250 online branches of 58 scheduled banks in our country are providing RTGS facilities to its customer. The system is presently allowed to manage only local currency, however domestic foreign currency transaction is about to be started soon.

Advantages of RTGS in Banking

• RTGS allows interbank transactions from Tk.01.00 Lac and above.
• RTGS is a safe and secure system for funds transfer.
• RTGS transactions/transfer system is available on all days when most bank branches are functioning, including Saturdays.
• There is real-time transfer of funds to the beneficiary account.
• The remitter need not use a physical cheque or a demand draft.
• The beneficiary need not be apprehensive about loss/theft of physical instruments or the likelihood of fraudulent encashment thereof.
• Remitter can initiate the remittances from his / her home/place of work using internet banking if his / her bank offers such service. The beneficiary need not visit a bank branch for depositing the paper instruments.
• The transaction charges for RTGS for any amount is only Tk.100/-.
• RTGS transaction is fully legal.

Read Also: What is Bangladesh Automated Clearing House? And How it works.

The Participants in the RTGS System in Bangladesh

To complete RTGS transaction the following entities have to take part;

a) Originator: The Originator is the entity who wishes to make payment to a recipient through RTGS entries. The Originator is usually an individual, a company, a bank itself, or the government agency who will give the instruction to the Originating Bank for debiting his/her/its account maintained with them and credit the same amount to another customer’s account with a Receiving Bank.

b) Originating Bank (OB): The Originating Bank is the bank that accepts payment instructions from its customer (the Originator) initiates and the transaction in their system and forwards this transaction instruction to RTGS system in Bangladesh.

c) Bangladesh Real Time Gross Settlement (BD-RTGS) System: This system is operated by Bangladesh bank who receives instructions from Originating Banks, distributes these instructions to the appropriate Receiving Bank and settle instructed transaction.

d) Receiving Bank (RB): The Receiving Bank is the bank that receives RTGS payment instructions from BD-RTGS System and initiates their transaction for the same to the appropriate account for which instruction is received.

e) Receiver: A Receiver may be an individual, a company, bank itself, government agency who are agreed with an Originator to receive RTGS payment to its account maintained with a Receiving Bank.

Transaction types of RTGS system in Bangladesh

RTGS transaction made into the following;

01. Financial Institution to Financial Institution: 

This transaction is made between two Banks.

02. Single Customer Credit: 

In this type, the customer can make his transaction for a single customer of another bank.

03. Multiple Customer Credit: 

In this type single customer can make his transaction for more than one customer of another bank.

04. Custom Duty Payment: 

In this type, the customer can pay customs duty by debiting his account through RTGS.

Data Required for initiating RTGS:

For making an RTGS transaction originator/customer has to provide the following data and also have to ensure the genuineness of the provided data;

1. Have to provide the desired currency mode for making RTGS transactions.
2. Originator account number from which account he is agreed to make RTGS transaction.
3. Transaction mode whether it is debit instruction or transfer by cheque.
4. Originator contact number which is provided at the time of account opening.
5. Beneficiary name.
6. Beneficiary Bank account name with his bank and branch name and Detail address of the bank.
7. Routing number of the bank in which beneficiary maintained his account.
8. Transaction amount.

RTGS processes payments in the following currencies

1. Bangladesh Taka (BDT)
2. British Pound (GBP)
3. Canadian Dollar (CAD)
4. Euro (EUR)
5. Japanese Yen (JPY)and
6. United States Dollar (USD).

Each Participant has maintained a single Settlement Account for each currency in BD-RTGS System. Each Participant will also have an ILF(Intraday Liquidity Facility) account for BDT only.

RTGS Return Reason

In BD-RTGS System Rules transaction will be returned if the following criteria are found;

01. If the receiver Account is Closed.
02. No Account/Unable to Locate Account.
03. In case of an Invalid Account Number.
04. Returned per Originator/Originating Bank’s Request.
05. Representative Payee Deceased or Unable to Continue in that Capacity.
06. Beneficiary or Account Holder (other than a Representative Payee) Deceased.
07. If the receiver Account is Frozen.
08. If RTGS transaction is initiated for a Non-Transaction Account.
09. Entry Refused by the Receiver, because of;

• The minimum amount required has not been remitted.
• The exact amount required has not been remitted.
• The account is subject to litigation.
• RTGS Amount is too big which seems suspicious to the bank.
• Originator is unknown to the Receiver.
• Payments must be returned if the receiver has not authorized this credit entry to this account.
• The same day of receipt of the request by the Receiving Bank, made by the Originator/OB;
• Within one hour of receipt of the original payment where RB detects it as an erroneous payment.

If the return mark is not initiated for the payment has not been made within the timeframe, the Originating Bank/Originator may claim a penalty amount for the delayed period from the Receiving Bank. This penalty amount will be calculated on the basis of the overnight deposit rate.

Responsibilities of Bangladesh Bank:

According to the existing rules for RTGS, Bangladesh Bank will be liable for the failure to act in good faith or to exercise reasonable care at the time of the central RTGS operation. BB will not be liable for any delay or failure in making RTGS transaction by a Participant or a third party, mistake of any data or instructions provided by a Participant or a third party.

Bangladesh Bank will be liable for any unintended, incidental or consequential loss even if advised of the possibility of such loss.

a) Checking all the received Instructions for payment from originating bank for settlement.

b) When a RTGS Instruction is accepted for processing Bangladesh has to maintain integrity, security and confidentiality of the Instruction until it is dispatched to the Receiver.

c) Keeping a record of all Payment Instructions for future legal issues regarding the transactions.

d) Bangladesh bank will take all necessary possible measures to protect its computer system and to prevent it from being out of order and to protect the destruction or erasing of data stored in the computers or for possible fraudulent activities.

e) Bangladesh bank will provide all the Participant banks the updated information concerning their RTGS payment flows and the present status of their Settlement Accounts.

Operating Hours

In our country, Bangladesh Bank set The RTGS operating hours as it Starts at 10:00 AM, Ends at 3:00 PM. If anyone wishes to make payment through this system, he/she has to initiate before 2.30 PM.

Transaction Limit:

Transaction limit for RTGS are as follows;

1. Minimum Tk. 1,00,000 (One Lac) per transfer.
2. Maximum Tk. 5,00,000 (Five Lac) per transfer.
3. Maximum Tk. 5,00,000 (Five Lac) per day.
4. Maximum 5 transfers per day.

Fees and Charges for RTGS:

A customer has to pay for each RTGS transaction Tk. 100/-( Tk. 86.96 as transaction charge and Tk. 13.04 as 15% VAT) in case of any amount.

Sample RTGS form of Bangladeshi Banks:

01. RTGS_FORM-PBL

02. RTGS-FORM MIDLAND BANK

03. RTGS Form BRAC Bank

04. RTGS-Application-BKB

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