In a paradigm shift for the Indian banking industry, the real-time gross settlement system was finally launched on a live platform today by the Reserve Bank of India.
With this -- among other things -- clearing of funds through cheque payments, which took two to three days earlier, will be instantaneous, and executed online.
All inter-bank transactions and treasury operations have been shifted to the RTGS platform today in the first phase.
Customer-related fund transfers will be shifted to RTGS in due course.
As per the programme, after about two weeks, more banks and primary dealers will join the system in a phased manner depending on their preparedness, especially on the technical side.
It is expected that all prospective participants will join the system in about three months.
RTGS has been one of the prime initiatives of the RBI to reduce risks, especially of the settlement and systemic kind, in payment systems.
It is a mechanism for settling inter-bank transactions on a gross basis online at real time.
Four had banks participated in a pilot run. During this period, as a measure of abundant caution, RTGS, the policies, procedures, security and other aspects were also subjected to a review by an external group of experts.
In order to fund the shortages during the day, the RBI has also agreed to provide intra-day liquidity at a nominal cost.