Real-time gross settlement (RTGS)

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An RTGS system is a specialized funds transfer system for rapid and secure movement of money or securities between banks. RTGS systems are specialized funds transfer systems designed for immediate and individual transactions between banks, ensuring real-time and irrevocable settlement to mitigate settlement risk. Transactions are settled as soon as they are processed, on a one-to-one basis without netting or bundling with other transactions.

  • Real-Time Settlement: Payments are processed and settled immediately, eliminating waiting periods.
  • Gross Settlement: Each transaction is settled individually, without bundling or netting with other transactions, minimizing risk.
  • Final and Irrevocable: Once processed, payments are final and cannot be reversed.

How RTGS Works?

  • Typically operated by a central bank, RTGS facilitates electronic transfers between bank accounts.
  • When a bank initiates a transfer through RTGS, the central bank electronically debits the sender’s account and credits the receiver’s account simultaneously.


By 1985, three central banks had implemented RTGS systems. This number grew significantly to 90 central banks by the end of 2005. The US Fedwire system, launched in 1970, was the precursor to modern RTGS systems, initially using electronic telegraph for inter-bank fund transfers. In 1984, both the United Kingdom (CHAPS) and France (SAGITTAIRE) independently developed RTGS-type systems, tailored to their specific financial environments. Throughout the 1990s, international financial organizations emphasized the importance of RTGS systems in facilitating large-value fund transfers within and across countries.

Why Central Banks Adopt RTGS?

  • Global Integration: Enables access to other countries’ RTGS systems, facilitating international transactions.
  • Competitive Advantage: Provides a modern and efficient payment infrastructure.
  • Knowledge Sharing: Adoption by one central bank encourages others to implement RTGS.
  • Reduced Costs: Collaboration with established RTGS providers can lower implementation costs.


  • Typically operated by a country’s central bank, RTGS systems are considered critical infrastructure for national economies, enhancing efficiency in payment processing and reducing financial risks.
  • RTGS transactions do not involve physical exchange of money; instead, the central bank adjusts electronic account balances between participating banks immediately and irrevocably.
  • RTGS systems are well-suited for low-volume, high-value transactions, minimizing settlement risks and providing real-time visibility of account balances.
  • Unlike net settlement systems like the UK’s BACS, which settle transactions at the end of the day on a net basis, RTGS settles transactions individually and immediately.

Benefits of RTGS Systems

  • Reduced Settlement Risk: Immediate settlement minimizes the risk of failed transactions.
  • Improved Efficiency: Real-time processing speeds up financial transactions.
  • Enhanced Transparency: Provides a clear picture of a bank’s account balance at any given time.
  • Financial Market Stability: Efficient payment systems are essential for a healthy financial market.