NEFT online money transfers will be free of charges from January 2020: RBI

The Reserve Bank of India has asked banks to waive online transaction charges for savings bank account customers, in the case of the National Electronic Funds Transfer (NEFT) system with effect from January 2020.

There are three different systems of inter-bank fund transfer offered, namely, NEFT, RTGS (Real Time Gross Settlement. and IMPS (Immediate Payment Service). IMPS is used for small amounts and offers an immediate transfer, while NEFT transactions are settled in batches and RTGS employs a process of continuous, individual settlement. NEFT currently occurs in half-hourly batches and continue from 8 am to 7 pm on all working days. The RBI had earlier suggested making it a 24x7 service from December 2019.

According to a press release by the RBI, "Digital payments constituted a high 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."

Even before the RBI decision, the State Bank of India had decided to not levy transactional charges for RTGS and NEFT at least via digital means. If done at bank branches a small fee is applied. NEFT transactions up to Rs. 10,000, costs an Rs. 2 (and GST charges), while transactions greater than Rs. 2 lakhs incur a charge of Rs. 20 plus GST. RTGS transfers from Rs. 2 lakhs to Rs. 5 lakhs costs customers, Rs. 20 plus GST. Any amount above that is charged at Rs. 40 plus GST.

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