RBI directs banks to make NEFT free from Jan
MUMBAI, Nov 9: In a bid to boost digital payments, the Reserve Bank of India has mandated banks to offer free account-to-account transfers using the National Electronic Funds Transfer (NEFT) platform from January 2020.
From July this year, the RBI had waived NEFT processing charges that it imposes on banks with a directive that they pass on the reduction. SBI was the first to announce a waiver of charges for NEFT, Immediate Payment Service and Real-Time Gross Settlement transactions done using digital channels.
Some banks reduced charges, while others made it free for a section of customers.
The RBI's latest directive now forces all banks to waive charges. It comes at a time when the government plans to make electronic toll collection mandatory on national highways using FASTags.
The RBI said that it will soon permit all authorised payment systems, including e-wallets, cards and the Unified Payments Interface to be linked with the National Electronic Toll Collection FASTags. "Going forward, this will facilitate the use of FASTags for parking, fuel, and other payments in an interoperable environment," the RBI said.
Consumer activists had earlier pointed out that by imposing charges for NEFT even as cheques were free, banks were disincentivising an efficient system while a costlier and more time-consuming method of transaction was free. The move is likely to increase the volume of transactions. Several banks charge a minimum Rs 2 for transactions up to Rs 1 lakh. This is a disincentive for low-value transactions.
In a statement issued on Friday, the third anniversary of demonetisation, the RBI said that it is taking steps to "empower citizens with an exceptional ePayment experience". Besides waiving NEFT charges, the RBI would also operationalise an acceptance-development fund that will help banks acquire merchants for digital payments.
According to the RBI, digital payments digital payments constituted 96per cent of total non-cash retail payments during the period October 2018 to September 2019. During the same period, the NEFT and UPI systems handled 252 crore and 874 crore transactions with year-on-year growth of 20per cent and 263per cent, respectively. -TNN