Net Banking gets cheaper; RBI removes charges on RTGS & NEFT; sets up Committee on ATM charges
Now, transfer funds by paying a little or even no extra charges! The Reserve Bank of India has done away with the charges levied on fund transfers through RTGS and NEFT.
The Reserve Bank of India has done away with the charges levied on fund transfers through RTGS and NEFT. The central has also asked the banks to pass on the benefits to customers, a move that will boost digital transactions. The decision was announced by the RBI as part of its measures to deepen and broaden the financial markets.
At present, RBI levies minimum charges on banks for RTGS and NEFT transactions of fund transfers and Banks in turn levy charges on their customers for the same. While doing away with the charges, RBI instructed the Banks to pass these benefits onto their customers.
The central bank will issue the guidelines and instructions in this regard for banks soon.
Note: Banks charge Re 1 to Rs 5 for transfer of funds through NEFT, and Rs 5 to Rs 50 through RTGS, depending on the quantum of the transaction. The banks would now either reduce these charges down substantially or could even make it completely free.
Recommendation of Nandan Nilekani-led committee
The decision comes after the Nandan Nilekani-led Committee on Digital Payments gave out a few suggestions lately to promote digital payments in India. Nilekani panel suggested to do away with the RTGS and NEFT facilities and also recommended that these facilities should be available 24x7. The Committee also recommended duty free import of point of sales machines.
What do you mean by RTGS and NEFT?
RTGS and NEFT are the routes used for transfer of funds online through mobile banking or internet banking. These are the electronic payment methods that allow transfer of funds among different banks. Both the systems are maintained by the RBI and are used within India.
RTGS stands for Real Time Gross Settlement. The RTGS is used for instantaneous fund transfers of large-value. It is a continuous and real-time settlement of fund transfers done individually on an order by order basis. The RTGS transactions are processed continuously throughout the RTGS business hours.
On the other hand, NEFT stands for ‘National Electronic Funds Transfer’. The NEFT System is used for transferring funds up to Rs 2 lakh. The NEFT operates in hourly batches, that is, the settlement of transfer of funds takes place on hourly basis.
Committee set up to review ATM charges
RBI has also decided to set up a committee to review the charges levied on the use of Automated Teller Machines (ATMs) by the public. The RBI has been receiving persistent demands to change the ATM charges and fees. The central bank also observed that the usage of ATMs has grown significantly in India.
Considering these, the RBI decided to set up a committee that will involve all stakeholders under the Chairmanship of the Chief Executive Officer of the Indian Banks' Association (IBA) to examine the present system of ATM usage and the charges levied.
The RBI will issue the composition and terms of reference of the committee soon. The Committee will submit its recommendations within two months of its first meeting.