RTGS, NEFT charges removed to boost digital transactions

The State Bank of India, for example, has been charging between Re 1 and Rs 5 for transactions through NEFT and between Rs 5 and Rs 50 for the RTGS route

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Mumbai: The Reserve Bank of India (RBI) on Thursday said it had done away with charges on fund transfers through RTGS and NEFT routes to boost digital transactions and asked banks to pass on the benefits to customers.

The Real Time Gross Settlement System (RTGS) is meant for large-value instantaneous fund transfers while the National Electronic Funds Transfer (NEFT) System is used for fund transfers up to Rs 2 lakh.

The largest bank of the country SBI charges between Re 1 and Rs 5 for transactions through NEFT and between Rs 5 and Rs 50 for RTGS route.

In its statement on developmental and regulatory policies after the Monetary Policy Committee’s meeting, the RBI said it levies minimum charges on banks for transactions routed through RTGS and NEFT system for other fund transfers.

Banks, in turn, levy charges on their customers.

In order to provide an impetus to digital funds movement, it has been decided to do away with the charges levied by the RBI for transactions processed in the RTGS and NEFT systems, it said.

“Banks will be required, in turn, to pass these benefits to their customers. Instructions to banks in this regard will be issued within a week,” the central bank said.

Meanwhile, the RBI has decided to set up a committee to review the charges levied on the use to ATMs as the usage by the public has been growing significantly.

“There have, however, been persistent demands to change the ATM charges and fees,” the RBI noted.

In order to address these, it has been decided to set up a committee involving all stakeholders, under the chairmanship of the Chief Executive Officer, Indian Banks’ Association (IBA), to examine the entire gamut of ATM charges and fees.

The Committee is expected to submit its recommendations within two months of its first meeting, RBI Governor Shaktikanta Das told reporters here. The composition and terms of reference of the committee will be issued within a week, the central bank said.

The move above is besides that of the cut in interest rates for the third time this year by 25 basis points to their lowest level in nine years. The RBI has signalled more easing as it looked to support an economy growing at the slowest pace since the BJP first came to power in 2014.

The central bank cut the repo rate to 5.75% and reverse repo rate to 5.50% and expected banks to transmit these to home, auto and other loan borrowers faster.