<p>Real-time gross settlement (RTGS) transactions have been hit hard as the business activities have come down drastically following the imposition of lockdown to fight Covid-19 pandemic.</p>.<p>The RTGS transactions by the Indian banks have almost halved, hinting at a lesser circulation of money in the economy. In volume terms, Reserve Bank of India (RBI) data shows that RTGS transfers were down by 54% on a month-on-month (M-on-M) basis in April. During the month, the country saw just 1.09 crore RTGS transfers, compared with 2.38 crore transactions during the month of April -- a whopping drop of 1.29 crore transactions as 1.3 billion people in the country are restricted mostly to their homes.In value terms, the RTGS transfers were down 47% on a sequential basis. During the month, the country witnessed RTGS transactions worth Rs 128.87 lakh crore, down sharply by Rs 112.07 lakh crore from Rs 240 lakh crore in March.</p>.<p>Analysts have attributed the phenomenon to suspension of business and commercial activity due to lockdown. The decline in the RTGS transfers has happened despite the fact that both RBI and government insisted people to use more of digital transactions during the lockdown.</p>.<p>The RTGS is a funds transfer system where the money, in excess of Rs 2 lakh, is moved from one bank to another in ‘real-time’, and on a gross basis. RTGS is the fastest possible way to transfer money.</p>.<p>The steep decline in RTGS transfers can further dent the bottomline of the Indian banks, along with impacting the goods and services tax collection by the government. The banking services, including the RTGS transfers, are chargeable at an 18% GST rate.</p>.<p>The banks have already been hit by RBI’s moratorium on loan repayments and excess liquidity. Most analysts expect a severe spike in the defaults as the moratorium is lifted. </p>
<p>Real-time gross settlement (RTGS) transactions have been hit hard as the business activities have come down drastically following the imposition of lockdown to fight Covid-19 pandemic.</p>.<p>The RTGS transactions by the Indian banks have almost halved, hinting at a lesser circulation of money in the economy. In volume terms, Reserve Bank of India (RBI) data shows that RTGS transfers were down by 54% on a month-on-month (M-on-M) basis in April. During the month, the country saw just 1.09 crore RTGS transfers, compared with 2.38 crore transactions during the month of April -- a whopping drop of 1.29 crore transactions as 1.3 billion people in the country are restricted mostly to their homes.In value terms, the RTGS transfers were down 47% on a sequential basis. During the month, the country witnessed RTGS transactions worth Rs 128.87 lakh crore, down sharply by Rs 112.07 lakh crore from Rs 240 lakh crore in March.</p>.<p>Analysts have attributed the phenomenon to suspension of business and commercial activity due to lockdown. The decline in the RTGS transfers has happened despite the fact that both RBI and government insisted people to use more of digital transactions during the lockdown.</p>.<p>The RTGS is a funds transfer system where the money, in excess of Rs 2 lakh, is moved from one bank to another in ‘real-time’, and on a gross basis. RTGS is the fastest possible way to transfer money.</p>.<p>The steep decline in RTGS transfers can further dent the bottomline of the Indian banks, along with impacting the goods and services tax collection by the government. The banking services, including the RTGS transfers, are chargeable at an 18% GST rate.</p>.<p>The banks have already been hit by RBI’s moratorium on loan repayments and excess liquidity. Most analysts expect a severe spike in the defaults as the moratorium is lifted. </p>