From January, banks cannot charge you for online NEFT transactions
The RBI has mandated all banks to stop charging savings account customers for NEFT use from Jan '20.
In its July monetary policy review, RBI had decided to do away with charges for NEFT and RTGS transactions. However, it hadn’t set a date by when banks had to comply. In its July statement it had said, “In order to provide an impetus to digital funds movement, it has been decided to do away with the charges levied by the Reserve Bank for transactions processed in the RTGS and NEFT systems. Banks will be required, in turn, to pass these benefits to their customers.”
In the press release issued today titled, Furthering Digital Payments, it said that it will be taking these steps to encourage digital payments further:
- Operationalise the Acceptance Development Fund to increase acceptance infrastructure with effect from January 1, 2020.
- Constitute a Committee to assess the need for plurality of QR codes and merits of their co-existence or convergence from both systemic and consumer viewpoints.
- Permit all authorised payment systems and instruments (non-bank PPIs, cards and UPI) for linking with National Electronic Toll Collection (NETC) FASTags. Going forward, this will facilitate the use of FASTags for parking, fuel, etc., payments in an interoperable environment.
- Enable processing of e-mandates for transactions through UPI.
What is National Electronic Fund Transfer (NEFT)?
NEFT is a payment system facilitating funds transfers from one bank account to another. One can access this service either by using Internet banking or by visiting the bank branch. (Not all bank branches are enabled with this service.)
Once you initiate the transfer, the money reaches the beneficiary account within hours. There is no limit on the minimum or maximum amount you can transfer, however, individual banks may put restrictions on the per transaction amount.
In July, almost immediately after RBI's saying that banks should remove charges on NEFT, State Bank of India announced waiver of charges on NEFT, RTGS and IMPS.