RAS question
Real-Time Gross Settlement (RTGS) system in India processes:
Correct answer: (A) High-value fund transfers in real-time on individual basis.
RTGS in India processes high-value fund transfers in real time, settling each transaction individually on a gross basis without netting.
Explanation
RTGS stands for Real Time Gross Settlement. The RBI FAQ explains it as a system for continuous, real-time settlement of fund transfers, with each transfer processed individually on a transaction-by-transaction basis and without netting. RTGS is not a deferred batch arrangement but a real-time mechanism, and it is meant mainly for large-value transactions. The minimum amount is ₹2 lakh, the system has been available 24x7 since December 2020, and RBI operates it. NEFT and UPI sit in the same payments ecosystem, but they serve different settlement and retail-use patterns.
Why the other options are wrong
- (B) Weekly batch settlement is the opposite of RTGS, because RBI describes RTGS transactions as processed continuously on a transaction-by-transaction basis rather than in batches.
- (C) RTGS is a domestic RBI-operated fund-transfer settlement system in India, so international-only transfer use misstates its scope.
- (D) RTGS is primarily meant for large-value transactions, with a ₹2 lakh minimum, so it is not a system only for small payments.
Concept
Payment and settlement systems fall under the Indian economy and financial infrastructure portion of the RAS syllabus. RTGS, NEFT and UPI are standard examples for comparing real-time settlement, batch processing and retail digital payments.