Fund transfers via RTGS, NEFT likely to get cheaper from today
01 Jul 2019
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Beginning today, fund transfers through RTGS and NEFT systems are expected to become cheaper after the Reserve Bank of India (RBI) decided not to impose any charges on such transactions from 1 July.
RBI, which operates the National Electronic Fund Transfer (NEFT) and the real-time gross settlement (RTGS) system, decided to drop all charges on these transactions and also asked banks to pass on the benefits to customers without delay after announcing its decision to waive all charges on such fund transfers.
RBI used to levy “minimum charges” on banks for transactions routed through its RTGS and NEFT system while State Bank of India, the country’s largest bank, used to charge customers between Re1 and Rs5 for transactions through NEFT and between Rs5 and Rs50 for RTGS route.
The RTGS system is meant for large-value instantaneous fund transfers between Rs 5 lakh and Rs50 lakh, while the NEFT system is used for fund transfers of up to Rs2 lakh.
“With a view to push the digital transaction, the RBI has decided not to charge the RTGS and NEFT transactions. This would help banks reduce the fees from customers for these transactions,” Indian Banks’ Association Chairman Sunil Mehta said in IBA’s newsletter.
While announcing the decision last month, RBI had said the decision was aimed at providing an impetus to digital funds movement.
In its statement on developmental and regulatory policies, the RBI said banks will, in turn, be required to pass on this benefit to their customers. This, it said, will give a big boost to digital transactions while bringing down payments through other modes such as cash, demand draft and cheque.
The RBI has also constituted a high-level committee under IBA chief executive V G Kannan to examine ATM charges and fees by banks amid demands for reviewing the levies. The use of automated teller machines (ATMs) has been growing significantly and there have been persistent demands to change ATM charges and fees.
According to a report submitted by an RBI committee headed by Nandan Nelekani on ways to deepen digital payments, the number of cheque transactions has come down post demonetisation, and at the same time, RTGS/NEFT transactions have grown substantially.
The usage of cheque, on the other hand, has come down drastically in the past five years with a CAGR of (-) 2 per cent, the report noted.
RTGS usage (in volume terms) has steadily grown with a CAGR of about 11 per cent over the past four years. While the number of transactions is small, the value is large with an average ticket size of Rs70 lakh to Rs90 lakh. NEFT has grown by 26 per cent.
