New Delhi / RBI directs banks to make NEFT transactions free from January

Livemint : Nov 09, 2019, 04:22 PM

To promote digital transactions, the RBI has asked banks not to charge savings bank account customers for online transactions in the NEFT or National Electronic Funds Transfer system with effect from January 2020. There are two systems of inter bank transfer - RTGS and NEFT - and both these systems are maintained by RBI. NEFT system of fund transfer operates on a deferred settlement basis. Fund transfers in NEFT transactions are settled in batches as opposed to the continuous, individual settlement in RTGS.

"Reserve Bank’s endeavour has been to establish state of the art payment systems that are efficient, convenient, safe, secure and affordable. The efforts have resulted in a rapid growth in the retail digital payment systems," the RBI said in a statement.

Digital payments constituted 96% of total non-cash retail payments during the period October 2018 to September 2019.

During the same period, the National Electronic Funds Transfer (NEFT) and Unified Payments Interface (UPI) systems handled 252 crore and 874 crore transactions with year on year growth of 20% and 263%, respectively.

Presently, NEFT operates in half hourly batches currently there are 23 settlements on all working days, from 8 am to 7 pm.

The RBI had earlier proposed to make the service available on a 24x7 basis from December 2019.

India's biggest bank SBI had earlier decided not to levy any transaction charges on online money transfer through RTGS and NEFT. While NEFT and RTGS transactions through digital means are free, a small fee is imposed if done at branches.

NEFT transaction up to ₹10,000, will invite ₹2 plus GST charges. For a transaction above ₹2 lakh via NEFT, SBI will charge ₹20 plus GST.

For RTGS transfer between ₹2 lakh to ₹5 lakh, a customer must pay ₹20 plus GST. RTGS transfer above ₹5 lakh will be charged ₹40 plus GST.