One of the prime functions of the banking system is to circulate money in the economy and settle payments. These payments can range between clients, foreign settlements, or between banks. Often the high-value, low-volume nature of payments requires higher security and instant process which are typically unavailable with traditional payment methods like NEFT, NPSB, or BACH. And that is where RTGS comes in. Let’s look at what RTGS is and how it works in the Bangladeshi banking system.  What is RTGS?  The term RTGS stands for "Real-Time Gross Settlement". It is a system devised for large-value interbank funds transfer operating in real-time. RTGS is different from the conventional funds transfer channel in the sense that it is instant and irrevocable.  Conventional transfer systems like BEFTN and NPSB use a batch clearance system that bundles several transactions and clears them at a time. These processes are time-consuming, often taking several hours to several days to settle a transaction.  Read More: Which are the Top 10 Strongest Currencies in the World in 2023? While undertaking high-value transfers, there is always credit risk in the case of batch settlements. For example, a fund transfer failure in the case of BEFTN or NPSB may result in the payable sum being halted for up to 45 days in the gateway. In the case of large-value transactions, such risks may have serious financial consequences.  Why is RTGS better than other funds transfer methods? There are several reasons why RTGS is a better funds transfer method, even if there are some caveats to it.  Speed RTGS transfers are settled in real-time and in gross amounts. Well, what does this actually mean? In essence, unlike every batch transaction that happens between banks, RTGS is regulated by the central bank.  The central bank debits funds from Bank A and credits it in Bank B. This happens instantly without the need for the actual movement of money from Bank A to Bank B.  Read More: How to Build a Successful Company? Security RTGS transactions use Swift routing through the central bank. The central bank acts as the intermediary and uses a closed channel for transaction settlement. Moreover, the gross settlement amount ensures that there is no chance of transaction failure whatsoever.  High-value transfers RTGS specializes in high-value and low-volume transactions. It is most commonly used for gross business transactions, government payments, and security settlements. However, being a high-value transfer means there is a very steep minimum transfer amount for each RTGS settlement.  Finality Even though the central bank acts as the intermediary, the transactions completed through RTGS are final and irrevocable. Once the transaction is completed, it is impossible to reverse the transaction in any way by any party. This provides security against fraud or wire-tagging in transactions.  Read More: Silent Partner vs Investor in Business: Know the Difference, Pros and Cons How does the RTGS system work?  The RTGS payment system works much like most other transaction systems with a few exceptions. It starts with: Initial Request  The RTGS payment procedure starts with the sender requesting a transfer of the amount to a certain beneficiary account. The sender is required to input the amount to be transferred and beneficiary account details.  Verification Process  The sender’s bank will then cross-check two things – whether the sender’s account can cover the amount to be sent and also verify the beneficiary’s banking details.  Read More: How to Identify Fake Currency Notes in Bangladesh Transfer to RTGS  The transaction details are then sent from the sender’s bank to the RTGS system. This closed channel system is controlled by the central bank. Here, the central bank debits the amount from the sender and credits it to the beneficiary’s account.  Settlement  The settlement occurring in the RTGS system is gross. Meaning each individual transfer request is fulfilled individually by the central bank and the associated scheduled banks. This completely removes the credit risk.  Confirmation  The RTGS system confirms the sender and the beneficiary of the transaction and shows the debit and credit information in real-time.  Read More: How to safely send remittance to Bangladesh? Limitations of the RTGS System  The RTGs system was first introduced in 1985 with just three central banks. Today, over 100 countries and their central banks across the globe use the RTGS system. Even though RTGS is a popular transaction method, it comes with its limitations.  The first limitation is the high minimum transaction limit. In the case of RTGS in Bangladesh, the minimum limit is 1 Lac BDT with a maximum of 5 Lac BDT per transfer. The upper limit is only for personal RTGS transfers. In the case of government payment or interbank foreign currency transfer, there is no upper limit.  There is another issue regarding the liquidity crunch. Every scheduled bank can keep 10% of their scheduled deposit as liquid assets with the Bangladesh Bank treasury and circulate the rest as loans. In the case of high-value high-volume transactions, banks with lower liquidity may not be able to follow through with the debit process.  Read More: Explainer: What it means to let taka float Even though the sender may completely cover the debit, the liquidity crisis may force banks to default on the RTGS request, resulting in failed transactions. It also has a negative economic signal regarding the liquidity state of the bank.  RTGS in Bangladesh  RTGS was formally inaugurated in Bangladesh on 29 October, 2015. Since then, Bangladesh Bank has connected 60 scheduled banks along with 19 NBFIs into the RTGS system. As of September 2022, Bangladesh Bank has also introduced scheduled transfers for foreign currency interbank with no upper limit. In 2022, the RTGS system settled 7,977,052 transactions amounting to 5,156,432 crore BDT. There were additional settlements of 5.17 million USD, 15,822,810 EUR, and 204,261 GBP.  Read More: Digital Currency: Benefits and Risks of the Cashless Economy in Bangladesh A single sender account can request up to 5 RTGS transactions per day, taking the max RTGS limit to 25 lacs BDT per day.  For each transaction, most banks charge 100 BDT as a processing fee. Additional VAT will be included in the transfer amount as per government regulation.  Most RTGS transactions begin at 10 AM and close by 3 PM each banking day. RTGS cannot be utilized on holidays.  Read More: Can You Travel Abroad Without Buying US Dollars? Final Words  The RTGS system has been a breakthrough in the fund transfer scenario of Bangladesh. While it's not exactly the system for regular day-to-day fund transactions, it provides a secure way for high-value low volume transactions. RTGS essentially brings an added layer of security to the transaction process, barring the credit risk threats and ensuring irreversible gross settlement instantaneously.

An intelligence team of Dhaka Metropolitan Police (DMP) has arrested three more people including the mastermind, from Dhaka and Netrakona districts in connection with the robbery of Tk 11.25 crore of a bank from a private security agency’s vehicle in Turag area of Uttara in the capital. They also recovered Tk 58.7 lakh from thir possession. The arrestees are Mohammad Hridoy, 21, Mohammad Milon Mia, 29 and Akash, the mastermind of the robbery incident. Tipped off, a team of intelligence team of DMP conducted separate drives in Karail slum of Banani area in the capital and Durgapur upazila of Netrakona district and arrested them, said a press release issued by deputy commissioner of police (media and public relations) of DMP, Faruk Hossain. With this, 11 people have been arrested and Tk 7.1 crore recovered so far. Also Read: Tk 2.53 crore more recovered , 8 arrested over Uttara robbery During interrogation, it was known that, among the robbers, Akash and Sohel Rana made the plot of the robbery incident and a number of people divided into different groups committed the robbery, the release added. Sohel Rana, now fugitive, was a driver of Money Plant Link Limited, a private security agency, and he knew well about the  movement of the vehicle. The robber gang took the control of the vehicle on that day without any obstruction, it said. During interrogation, police came to know that the members of the gang were collected from Sunamganj, Sylhet, Netrakona, Gopalganj and Barishal. After the robbery, they took their share and managed to flee the scene, the release said. Akash and Sohel took a lion share of the money. Robbers looted cash money worth Tk 11 crore cash from a vehicle of Money Plant Ltd while it was going to refill money at the ATM of Dutch Bangla Bank in Savar, in Turag area of Uttara in the capital. Earlier, on Saturday, the intelligence teams recovered over Tk 2.53 core more and arrested eight people from Dhaka, its adjacent areas and Sunamganj. A private car, used in the robbery, has also been seized, it said.        

In a circular on Wednesday Bangladesh Bank said that obtaining banking diploma is a must to get promoted to a senior officer post in banks. “One has to pass both phases of the banking diploma. This rule will be applicable to promote the officers’ level of all scheduled banks operating in the country,” the circular stated. The banking regulation and policy department of BB issued the circular on Wednesday and sent it to the top executives of banks. This directive will be effective from January 1, 2024. At the same time, the central bank canceled the instructions given on October 13, 2022, in this regard. The notification said the new requirement won’t be applicable for those not directly involved in banking activities. The exceptions are for doctors, engineers (civil engineering, mechanical engineering, and electrical engineering.   According to the central bank, the syllabus of the Diploma in Banking includes all the theoretical and practical knowledge of banking subjects. In the first phase, basic and fundamental subjects related to banking are taught, and in the second phase, advanced banking knowledge and skills are tested. The Institute of Bankers, Bangladesh (IBB) offers this two-phase Banking Diploma degree. The BB circular stated that the importance of the banking sector in the country's overall development is immense. Such a directive has been issued considering the need to create skilled human resources with basic banking knowledge in this sector and increase the capacity of officials in decision-making.    

The government of Bangladesh is optimistic about expanding digital banking in the country to accelerate financial inclusion with an aim to create more jobs for young jobseekers. According to an official document seen by UNB, the government has stepped in to examine the possibility of “establishing digital banks.” It says if digital banking, which involves high levels of process automation and web-based services, could be expanded new jobs will be created for graduates in information technology. Digital banking provides services mostly through non-physical means such as app-based requesting systems and without printed paperwork, without filling out forms and making transactions through e-wallets. Read more: Towards a cashless society: MFS monthly transactions cross Tk 1.11 lakh crore The government is also considering if Bangladesh Bank can introduce digital currency. Introduction of Central Bank Digital Currency (CDBC) will facilitate currency in virtual transactions and encourage startups and e-commerce businesses, the document says. It is to be noted that establishing digital banks is under either initial implementation or experimental stage in various developed countries and some developing countries in Asia including Singapore, Malaysia and India. It also says that introduction of services like Mobile Financial Services (MFS) and Agent Banking in the country has facilitated financial inclusion. Read more: MFS transforming money transactions in Bangladesh, soon to cross Tk. 1 trillion But, it says, due to lack of interoperability of transactions between MFS service providers, the users of the service did not have the opportunity to perform direct inter-transactions. “To make financial inclusion more dynamic, the government has introduced financial interoperability in the country and fixed nominal fee and charge for inter-transactions,” it says. The government has also formulated the National Financial Inclusion Strategy-Bangladesh (NFIS-B) to establish social cohesion and economic stability by ensuring access to quality financial services for people from all walks of life. Read Bangladesh Bank to flirt with digital currency en route to cashless society Its main objective is to provide a comprehensive framework through which cooperation may be enhanced by coordinating and prioritising the work of all stakeholders involved in financial inclusion activities. The NFIS National Council (NNC) has been formed to implement various programmes under the said strategy. “All these steps will further strengthen the foundation of the financial inclusion process in Bangladesh,” it says. Read HSBC introduces domestic foreign currency transaction through RTGS As the risky use of virtual currencies such as Crypto Currencies continues to grow worldwide, many central banks around the world are working to launch digital versions of their currencies as an alternative to Crypto Currencies. The main purpose of launching Central Bank Digital Currency (CDBC) is to facilitate currency in virtual transactions and to encourage startups and e-commerce businesses. As a result of the time-befitting steps of the present government, the coverage of the internet and e-commerce in the country has increased tremendously. Read World's 7th largest data centre eyes foreign currency In this context, Bangladesh Bank will conduct a feasibility study on the possibility of introducing digital currency in Bangladesh. The Bangladesh Systemic Risk Dashboard is being made to identify the systemic risks and present the assessment of Bangladesh Bank to the stakeholders on a half-yearly basis. The financial projection model is being implemented to identify potential risks and weaknesses in the financial system. Read Digital Currency: Benefits and Risks of the Cashless Economy in Bangladesh Moreover, an interbank transaction matrix is being implemented to determine the nature, risk, and contagion effect of interbank transactions. Bangladesh Bank has formulated a recovery plan to prepare the banks for digital banking to adapt automatically and efficiently to the situation of severe stress in advance.

The Bangladesh Securities and Exchange Commission (BSEC) Wednesday approved bonds of NRBC Bank worth Tk500 crore. The decision came at 840th meeting of the commission held in Dhaka, BSEC Executive Director and spokesperson Mohammad Rezaul Karim told UNB. NRBC would raise Tk500 crore by issuing non-convertible, unsecured, fully redeemable, floating rate subordinated bonds. The bonds would be issued through private placement. Read: NRBC Bank conferred with Krishi Padak The face value of each bond is Tk1 crore, and the coupon rate is 7 to 9 percent. With the bond proceeds, the lender would strengthen its Tier-2 capital base. The trustee of the bonds is City Bank Capital Resources, and UCB Investment is the lead arranger, Rezaul said.

The Hongkong and Shanghai Banking Corporation Limited (HSBC) Bangladesh has recently been named as the market leader in highest number of (three) categories in Bangladesh for corporate banking, environmental, social and governance (ESG) and corporate social responsibility (CSR) in a survey done by Euromoney. This survey is an independent assessment conducted by Euromoney, a leading global financial publication. It evaluates the work done by financial service providers across key banking categories and markets, HSBC Bangladesh said on Sunday. HSBC Bangladesh said it is proud to be recognised in three different categories for the quality services that the bank has been providing during its long 25 years of service in Bangladesh. The recognition is an acknowledgement of the strengths of HSBC Bangladesh driven by client-centric approaches all the way through its banking offerings, it said. Md Mahbub ur Rahman, CEO of HSBC Bangladesh said, “Winning the ’Market Leader’ award and getting recognised by Euromoney inspired us more to serve our customers, society, and environment even better. Three recognitions in the same year- is a testament of the confidence our customers have bestowed on us as to our superior capability and service standards. We are humbled and committed to uphold our excellent performances in the days to come. “ Read: HSBC Bangladesh launches instant payments collection solution for customers Kevin Green, Country Head of Wholesale Banking, HSBC Bangladesh said this is tremendous recognition for the services they are providing to their clients, the community and the environment.   “These prestigious awards were earned as a result of several notable industry-first transactions we have executed in the last year, reflecting our international footprint and expertise, digital propositions and thought leadership to support our clients in their transition to ’net zero‘.  These awards will inspire us to continue the great work in the future,” Kevin Green said.

Islami Bank Bangladesh Limited (IBBL) recently organised a training program on onboarding customers through e-KYC, Cellfin and security issues related to agent banking operations.  The workshop discussed different features of Cellfin, an omni-channel platform of IBBL for digital services and transactions. In three phases, 2,700 agents attended the programme, according to a media statement. Read: IBBL board of directors' meeting held Md Omar Faruk Khan, additional managing director of IBBL, spoke at the inaugural ceremony of the final day of the programme. Md Maksudur Rahman, senior executive vice-president, Mohammad Rezaul Karim, executive vice-president, and Abu Sayed, vice-president, also joined the programme.

Islami Bank Bangladesh Limited (IBBL) has launched a month-long fintech campaign. Mohammed Monirul Moula, managing director and chief executive officer of the bank, inaugurated the "All of Your Banking Through Fintech" campaign as the chief guest in Dhaka Monday. IBBL additional managing directors Muhammad Qaisar Ali and Md Omar Faruk Khan addressed the function as special guests. Read: IBBL Chattogram North, South hold Shariah compliance webinar Md Mostafizur Rahman Siddiquee, deputy managing director, presided over the programme. AFM Kamaluddin, deputy managing director, delivered the welcome speech. Monirul Moula said: "IBBL has been working to attain the Sustainable Development Goals (SDGs) in line with the initiatives of the government. We are contributing to the digital transformation of the country through the expansion of modern fintech services." Read Nagad bags Visa 'Excellence in Fintech' award

Chattogram North, Mymensingh and Bogura zones of Islami Bank Bangladesh Limited (IBBL) recently organised a half-yearly business development conference online. Mohammed Monirul Moula, managing director and chief executive officer of the bank, addressed the programme as the chief guest Wednesday. Read IBBL organises orientation for RDS field officers IBBL additional managing directors Muhammad Qaisar Ali, Md Omar Faruk Khan; deputy managing directors JQM Habibullah, Md Mostafizur Rahman Siddique, Md Nayer Azam; senior executive vice-presidents Md Siddiqur Rahman, Mohammad Jamal Uddin Mazumder, AFM Kamaluddin, Mohammed Shabbir, Md Mahboob Alam, Mohammod Ullah, Mizanur Rahman and Md Maksudur Rahman attended the conference. IBBL executive vice-presidents Md Anisul Haque, Ahmed Zubayerul Huq and Miftah Uddin; Md Rezaul Islam, head of Bogura, and Mohammad Nurul Hossain, head of Chattogram North, also joined the virtual business development conference programme, according to a media statement. Read: IBBL Chattogram South, Sylhet, Rangpur hold half-yearly business development conference

Chattogram South, Sylhet and Rangpur zones of Islami Bank Bangladesh Limited (IBBL) recently organised a half-yearly business development conference online. Mohammed Monirul Moula, managing director and chief executive officer of the bank, addressed the programme as the chief guest Tuesday. IBBL additional managing directors Muhammad Qaisar Ali, Md Omar Faruk Khan; deputy managing directors JQM Habibullah, Md Mostafizur Rahman Siddique, Md Nayer Azam; senior executive vice-presidents Md Siddiqur Rahman, Mohammad Jamal Uddin Mazumder, AFM Kamaluddin, Mohammed Shabbir, Md. Mahboob Alam, Mohammod Ullah, Mizanur Rahman and Md Maksudur Rahman attended the conference. Executive vice-presidents Abu Sayed Md Idris, Sikder Md Shehabuddin, Md Mizanur Rahman Bhuiyan, Ahmed Zubayerul Huq, Md Barkat Ullah and Miftah Uddin also joined the programme, according to a media statement. Read: IBBL holds executive development program