The Reserve Bank of India has decided to remove charges levied on transactions conducted through Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).
The RBI move will boost digital fund transfer systems across the country. The NEFT system provides for batch settlements at hourly intervals, while RTGS transfers funds from one bank to another on a “real time” and on “gross” basis.
Introduced in 2004, RTGS settles all inter-bank payments and customer transactions above Rs 2 lakh.
Both are popular financial transaction systems. Currently, banks charge between Rs 30-55 on RTGS and Rs 2-25 on NEFT fund transfer.
Announcing the plan on the sidelines of the second monetary policy decision, RBI Governor Shaktikanta Das said: “In the area of payment and settlement systems, it has been decided to do away with the charges levied by the Reserve Bank for transactions processed in the RTGS and NEFT systems in order to provide an impetus to digital funds movement.”
“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 Confederation of All India Traders (CAIT) welcomed the move calling it progressive and said it would encourage digital payments by the business community.