RTGS, NEFT Free from 1 July: RBI Asks Banks to Pass on Benefits

Days after the Reserve Bank of India (RBI) decided to do away with charges on fund transfers through RTGS and NEFT routes, the central bank on Tuesday, 11 June, asked the banks to put the decision into effect from 1 July, reported news agency ANI.

RBI last week had taken the decision to boost digital transactions and asked banks to pass on the benefits to customers.

What Are RTGS and NEFT?

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 country’s largest bank, SBI, charges between Re 1 and Rs 5 for transactions through NEFT and between Rs 5 and Rs 50 through the 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 systems for other fund transfers.

Banks, in turn, levy charges on their customers.

Digital Transaction Push

In order to provide an impetus to the 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.”

Reserve Bank of India

Meanwhile, the RBI has decided to set up a committee to review the charges levied on the use of ATMs as their 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 of the 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. The composition and terms of reference of the committee will be issued within a week, the central bank said.