In a major reform by RBI, all online payment transfers done through NEFT or RTGS are made charge-free. It means that millions of online banking users in India, who indulge in NEFT or RGTS payment transfers actively, can have any number of online transactions in a day without worrying about the charges that banks levy on them.
Generally, RBI charges a nominal fee from banks for every transaction done through NEFT or RTGS. In turn, banks pass on the same charges to customers against the service provided. After the decision taken by RBI to waive off charges, all the banks are now directed to pass the benefits to customers. However, it’s not yet clear whether Banks will make NEFT, RTGS completely charge free or reduce it drastically.
Free NEFT, RTGS in India
Reserve Bank of India (RBI) offers a variety of online payment transfer facility to internet banking customers The most popular amongst all is National Electronic Funds Transfer, aka NEFT. Customers make use of NEFT for small to medium size of payment transfers during the banking hours from Monday to Saturday.
Real Time Gross Settlement, aka RTGS, is another type of online payment facility offered by Indian banks to their customers. Unlike NEFT, RTGS allows customers to transfer money instantly. The amount gets credited to the beneficiary account within seconds. However, RTGS facility is meant for the large transactions, valued anything above INR 2 Lakh.
Generally, charges on NEFT transactions vary anything between Rs 2.5 (+Service Tax) and Rs 25 (+Service Tax), which completely depends on the transferred amount. On the other hand, since RTGS provides an instant credit facility, charges on RTGS are Rs 30 and Rs 55.
NEFT is the most used online payment transfer system in India. In April 2019, the number of NEFT transactions reached 203.44 million, amounted to Rs 20.55 trillion. The YoY growth of 21.5% in the number of NEFT transactions that took place in April is a clear indication of the increasing penetration of internet banking in India.
At the same time, the number of RTGS transactions in India grew to 11.48 million in April, from 10.66 million in the same month a year ago. Due to the high-value nature of RTGS transaction, the total amount transferred reached to Rs 148.48 trillion, a 22.9% YoY growth in April.
IMPS Is The Exception
The only exception is IMPS, which RBI has excluded from the new reforms. Online banking customers would have to pay the same charges for IMPS, which is quite similar to RTGS but no restriction on the minimum amount.