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Mahesh Kumar Sarva, Lovely Professional University Unit 6: New Age Clearing and New Age Payment

Unit 6: New Age Clearing and New Age Payment Notes

CONTENTS
Objectives
Introduction

6.1 Real Time Gross Settlement Systems (RTGS)
6.2 RTGS vs Electronic Fund Transfer System (EFT) or National Electronics Funds Transfer
System (NEFT)

6.3 RTGS Operations-impact on the Financial Sector
6.4 Delivery Notification, Message Query and Viewing Facilities
6.5 Society for World-Wide Interbank Financial Telecommunication (SWIFT)

6.6 Bank Identification Code (BIC)
6.7 Swift in India
6.8 Summary
6.9 Keywords
6.10 Review Questions

6.11 Further Readings

Objectives

After studying this unit, you should be able to:

Understand What is Real Time Gross Settlement and how does it operate?
Explain Impact of RTGS operations on the Financial Sector
Explain National Financial Switch as the facilitator of connectivity
Identify Role of Structured Financial Messaging System-SFMS in financial message
communication
Describe Various terminologies used in Banking Technology

Introduction

Real Time Gross Settlement Systems (RTGS) are funds transfer systems where transfer of money
or securities takes place from one bank to another on a "real time" and on "gross" basis. Settlement
in "real time" means payment transaction is not subjected to any waiting period. The transactions
are settled as soon as they are processed. "Gross settlement" means the transaction is settled on
one to one basis without bunching or netting with any other transaction. Once processed,
payments are final and irrevocable.

6.1 Real Time Gross Settlement Systems (RTGS)

The acronym "RTGS" stands for Real Time Gross Settlement. RTGS system is a funds transfer
mechanism where transfer of money takes place from one bank to another on a "real time" and

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