Fund transfers through RTGS and NEFT will cost less from July 1 onwards.
The Reserve Bank of India announced on Tuesday that it would drop all the charges on the fund transfer through RTGS and NEFT systems from July 1 onwards and ordered banks to transfer the benefits to the customers from the same day.
The Real Time Gross Settlement System (RTGS) is used for large-value fund transfers instantly while the National Electronic Funds Transfer (NEFT) System is meant for fund transfers of up to Rs 2 lakhs.
RTGS- Real-time gross settlement (RTGS) systems are the fund's transfer systems where the transfer of cash takes place from one bank to another bank on "real-time" basis. Settlement in "real time" means a payment transaction is processed as soon as it was received and is not subjected to any waiting period. "Settlement" means that once the transactions processed, payments are final and irrevocable in nature.
NEFT- National Electronic Funds Transfer (NEFT) is an electronic funds transfer system which is maintained by the (RBI). It was started in November 2005. NEFT enables bank customers in India to transfer funds between any two NEFT-enabled bank accounts. It is done with the help of electronic messages. Fund transfers via NEFT system do not occur on a real-time basis. NEFT settles fund transfers in half-hourly batches.
Country's largest bank State Bank of India charges Re one minimum and Rs 5 maximum for NEFT transactions and between Rs 5 to Rs 50 through RTGS route.
After the announcement made on June 6 and bi-monthly monetary policy review, the RBI told that it had reconsidered the different charges imposed by it on the member banks for transactions made by way of RTGS and NEFT systems.
In order to provide an encouragement to digital funds movement, the central bank further declared that it has been decided with effect from July 1, 2019, processing charges and time-varying charges imposed on banks by the apex body for outside transactions through the RTGS and also the processing charges for transactions processed in NEFT will be dropped by the Reserve Bank.