Hence, RBI Governor Shaktikanta Das suggested the feasibility of extending RTGS to settle major trade currencies like the US dollar, euro, and pound sterling. He added that it could be done through bilateral or multilateral arrangements.
Banks in India will soon be able to settle transactions in US dollars, euros, and pound sterling using the Real Time Gross Settlement System (RTGS).
RBI Governor Shaktikanta Das proposed widening the scope of RTGS to major trade currencies. The RB aims to provide increased access to cheaper cross-border payments and remittances.
The RBI maintains the RTGS system, which allows for continuous, real-time settlement of fund transfers on an individual transaction-by-transaction basis without netting.
This means the payments are credited directly from the remitter to the recipient’s bank instead of being bunched together with Rs 2 or more through RTGS.
What it means: An extension of RTGS in global currencies will also offer RBI an alternative to its traditional cross-border tie-ups, which rely on correspondent banking networks.
Under this mechanism, traditional systems use several intermediaries, which make settlements of various currencies much more time-consuming, expensive, and complex.
