With the RBI’s move to remove the NEFT and RTGS bank payment charges, it will benefit small traders who do small value transactions and work on small margins for which every money matters. This step is a great step for the general public and will encourage digitization of payments and promote financial inclusion.
NEFT / RTGS bank payment fee
Removal of bank payment fees on NEFT / RTGS transactions will lead to digital fund movement. Now RBI decides to charge for processing transactions in RTGS / NEFT systems. That’s why banks will need to give their customers the benefit. RBI will issue instructions to banks in this regard within a week.
National Electronic Funds Transfer (NEFT) System
National Electronic Funds Transfer (NEFT) is a nationwide payment system, which facilitates one-to-one fund transfer. Under this scheme, individuals, firms and corporates can transfer funds from any bank branch to any other bank branch in any country, firm or corporate account holder in any bank branch. The person holding the account with the bank branch, the firm or corporates can transfer funds using NEFT. Even those who do not have a bank account (walk-in customers) can also deposit cash in NEFT-enabled branches using instructions to transfer money using NEFT. However, such cash dispatch will be limited to a maximum of Rs. 50,000 / – per transaction. NEFT, thus, facilitates the origin or remitter to initiate the money transfer transaction without a bank account. At present, NEFT operates in hourly batches – weekdays (Friday to Friday) from 8 a.m. to 7 p.m. and on Saturday, there are six settlements from 8 a.m. to 1 p.m.
Real Time Gross Settlement (RTGS)
RTGS is defined as the continuous (real-time) settlement of funds, which individually transfers on the basis of order order (without netting). ‘Real Time’ means processing of instructions at the time which they have received rather than later; ‘Gross Settlement’ means that money transfer instructions are settled individually (on an instruction basis). Keeping in mind that money is settled in the books of Reserve Bank of India, payments are final and irreversible. The RTGS system is mainly for big value transactions. The minimum amount to be transmitted through RTGS is 2 lakhs. There is no upper ceiling for RTGS transactions. For customer transactions RTGS service banks are available from 9.00 hours to 16.30 hours on weekdays and from 9.00 hours to 14:00 on Saturday for settlement at the end of the RBI. However, depending on the timing of the bank branches, the time followed by the banks can vary.
Source : RBI