Difference Between RTGS and SWIFT

Those who are close to banking industry know about the acronyms SWIFT and RTGS very well. In fact, in modern times when transfer of funds from one bank to another, not just nationally but internationally has become commonplace, people are talking and using these technologies on a much regular basis. While RTGS is electronic transfer of funds within a country, you need a SWIFT code if you wish to transfer funds electronically to your relative in a foreign country. There are differences in these two technologies that will be highlighted in this article.

RTGS

It stands for Real Time Gross Settlement and is the fastest way to send money from one bank account to another within the country. This payment system is available for a short time period in morning hours from 10 AM to 1:30 PM only, and the minimum value of transaction is pegged at Rupees 200,000. Banks charge fees for this real time settlement, which varies from bank to bank, but RTGS is very convenient as money gets deposited in another account within the same day. The inclusion of real time in RTGS means that settlement of funds is done in real time and not at some time later which is what makes RTGS so popular among businessmen. Meant primarily for high level transactions, there is no upper ceiling on RTGS while the lower level has been pegged at 200000 rupees.

As soon as the money is received by the beneficiary bank, it issues an acknowledgement that money has been received and so the person remitting money can know his money has reached destination the same day. To send money electronically to another account in India, both banks must be RTGS enabled. You can know whether the branch you are sending money is RTGS enabled or not instantly through internet or from your own bank.

SWIFT

SWIFT stands for Society for Worldwide Financial Telecommunication and was established in 1973 in Brussels. It was founded to facilitate easy communication between financial institutions all over the world. SWIFT supplies software and other services to banks and other financial institutions. However, it is best known for its Bank Identifier Codes (BIC) which are also known as SWIFT codes. These Swift codes form the backbone of all the messaging that goes on between banks in all parts of the world. SWIFT does not facilitate fund transfers but you need to know the SWIFT code of the bank in a foreign country when you are trying to send money abroad.

SWIFT code is a 8-11 digit code containing alpha numeric characters. When there are only 8 digits, it refers to primary office in a foreign country but when 11 digits are used, one can know instantly the branch of the bank in the foreign country. First 4 characters reveal the name of the financial institution; next two ate meant for the country. Next two characters reveal the location of the bank while the last three tell all about the branch of the bank.