RBI’s NEFT Charge Waiver Benefits Savings Account Holders in India
The Reserve Bank of India (RBI) has implemented a significant change in transaction fees, waiving off NEFT charges for savings account holders effective from January 1, 2020. This move is expected to provide substantial savings for individuals who frequently rely on NEFT for online fund transfers.
Understanding NEFT and RTGS: A Brief Overview
NEFT (National Electronic Funds Transfer) is an electronic payment system that facilitates direct one-to-one payments nationwide. It enables individuals to transfer funds electronically from any bank branch to an individual’s account in another bank branch participating in the NEFT scheme. NEFT transfers can also be initiated through internet banking and mobile banking platforms.
RTGS (Real Time Gross Settlement), on the other hand, is a system where fund transfers are settled continuously and in real-time, on a transaction-by-transaction basis without netting. This system is mainly intended for large value transactions, with a minimum amount of Rs 2,00,000/- and no maximum limit.
Charging Structure for NEFT and RTGS Transactions
Banks in India typically apply charges for transactions conducted at their branches. The charges for NEFT and RTGS transactions at major banks like SBI, HDFC Bank, ICICI Bank, and Punjab National Bank (PNB) vary based on the amount transferred and the channel used (branch or online).
Impact of RBI’s NEFT Charge Waiver
The RBI’s decision to waive off NEFT charges for savings account holders is a welcome move that aligns with the government’s efforts to promote digital payments and financial inclusion. This change will encourage individuals to adopt digital payment methods, reducing reliance on cash transactions.
While NEFT transactions are now free for savings account holders, it’s important to note that charges may still apply for RTGS transactions. This is because RTGS is a real-time settlement system that incurs higher operational costs compared to NEFT. Therefore, banks may continue to levy charges for RTGS transactions to cover their expenses.
Overall, the RBI’s NEFT charge waiver is a positive step towards making digital payments more accessible and cost-effective for savings account holders in India.
