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Question

Difficulty: MediumElectronic Banking Services and Payment Systems

A manufacturing firm needs to disburse an urgent high-value sum of ���150 million to a heavy-equipment supplier's account immediately, requiring final and irrevocable settlement for the individual transaction without batching. Which electronic banking payment system is specifically designed to execute this high-value transfer on an immediate, gross settlement basis?

  1. Real-Time Gross Settlement (RTGS)Answer
  2. B
    National Electronic Funds Transfer (NEFT)
  3. C
    Point of Sale (POS) Terminal System
  4. D
    Automated Teller Machine (ATM) Network

Answer

Real-Time Gross Settlement (RTGS)
Real-Time Gross Settlement (RTGS) is a specialized electronic funds transfer system where processing occurs continuously (in real time) and individual payment instructions are settled immediately (on a gross basis) across central bank accounts without waiting for end-of-day batching.

Step-by-Step Solution

1
Analyze the requirements of the transaction
The transaction requires high-value funds transfer, immediate execution, and individual gross (non-batched) final settlement.
Large corporate transfers require immediate risk-free settlement to fulfill critical commercial contracts.
2
Evaluate electronic payment channels against settlement characteristics
Real-Time Gross Settlement (RTGS) fulfills real-time individual processing for large-value payments, whereas NEFT uses deferred net batch clearing.
RTGS settles each payment instruction individually across central bank accounts on an immediate basis.

Key Concept

Real-Time Gross Settlement (RTGS)
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Topics

Electronic Banking Services and Payment Systems

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