RBI Governor Shaktikanta Das has suggested that the real time gross settlement (RTGS) system can be expanded globally to settle transactions in international currencies.
“The feasibility of expanding RTGS to settle transactions in major trade currencies such as USD, EUR and GBP can be explored through bilateral or multilateral arrangements,” he said.
Currently, India is one of the few large economies with a 24×7 real time gross settlement (RTGS) system.
Governor Das has highlighted that India and a few other economies have already commenced efforts to expand linkage of crossborder fast payment systems both in the bilateral and multilateral modes.
What is the current available tool for international transfers?
RTGS is a domestic payment system used to process payments within India, and it cannot be used for international transfers.
Notably, all the foreign transactions are covered under the Foreign Exchange Management Act, and NEFT, RTGS and IMPS are domestic payment systems and scheduled banks within India have access to them.
All the international transfers under the current arrangement is done using the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.
A SWIFT transaction, also known as an international wire, is a secure way to send or receive electronic payments internationally using the SWIFT network.
RBI aggressive on RTGS penetration
RBI seems to be aggresive towards the penetration of RTGS as recently while announcing the Monetary Policy Committee (MPC) decision, Governor Das proposed to introduce a ‘beneficiary account name look-up facility’.
Also Read: Sender can now verify beneficiary before paying through RTGS, NEFT: RBI
Under this facility, the remitters in RTGS and NEFT will be able to verify the name of the beneficiary account holder before initiating funds transfer.
The move aims to to prevent the wrong credits and fraud while making payments through RTGS.
