Its good news for digital bankers! Making fund transfer through Real Time Gross Settlement System (RTGS) and National Electronic Funds Transfer (NEFT) System through banking channels will not be charged going forward.
In order to provide an impetus to the online transactions and funds movement, RBI in its Statement on Developmental and Regulatory Policies has stated that it has decided to do away with the charges levied by it for transactions processed in both the RTGS as well as NEFT systems.
As of now the Reserve Bank of India levies minimum charges on banks for transactions routed through its Real Time Gross Settlement System (RTGS) meant for large-value instantaneous fund transfers and the National Electronic Funds Transfer (NEFT) System for other fund transfers. Banks, in turn, levy charges on their customers. For eg. SBI charges Re 1 to Rs 5 for NEFT, and Rs 5 to Rs 50 for RTGS.
NEFT is a nation-wide payment system facilitating one-to-one funds transfer. Under this Scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme.
As per the RBI website, the structure of charges that can be levied on the customer for NEFT is given below:
a) Inward transactions at destination bank branches (for credit to beneficiary accounts)
- Free, no charges to be levied on beneficiaries
b) Outward transactions at originating bank branches – charges applicable for the remitter
- For transactions up to Rs 10,000 : not exceeding Rs 2.50 (+ Applicable GST)
- For transactions above Rs 10,000 up to Rs 1 lakh: not exceeding Rs 5 (+ Applicable GST)
- For transactions above Rs 1 lakh and up to Rs 2 lakhs: not exceeding Rs 15 (+ Applicable GST)
- For transactions above Rs 2 lakhs: not exceeding Rs 25 (+ Applicable GST)
RTGS is the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). ‘Real Time’ means the processing of instructions at the time they are received rather than at some later time; ‘Gross Settlement’ means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis).
The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is Rs 2 lakh. However, there is no upper ceiling for RTGS transactions.
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.
These announcements were made at the end of the RBI’s bi-monthly monetary policy meeting:
- The RBI also announced a reduction of 25 basis points in the repo rate
- The repo rate, which is the interest rate at which the central bank lends money to commercial banks, now stands at 5.75 per cent
- The RBI’s rate cut see interest rates on home and car loans come down