RBI mandates banks, not to charge NEFT for savings account holders from January 2020

The Reserve Bank of India (RBI) on Friday mandated banks "not to charge savings bank account holders for online transactions in the NEFT (National Electronic Funds Transfer) system from January 2020.

Earlier the Reserve Bank said that it had done away with charges on NEFT and RTGS (Real-time gross settlement) transactions.

In a statement, the central bank also proposed to "operationalise the acceptance development fund to increase acceptance infrastructure with effect from January."

"This rapid growth in the payment systems, inter-alia, has been facilitated by a series of measures taken by the Reserve Bank of India," the central bank said in a statement on furthering digital payments.

Now to further empower every citizen with an "Exceptional (e) Payment Experience", and provide them access to a bouquet of options, the RBI said it proposes to "mandate banks not to charge savings bank account customers for online transactions in the NEFT system with effect from January 2020".

The central bank specified, "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. Instructions to banks in this regard will be issued within a week,".

The RTGS system is meant for large-value instant fund transfers, while the NEFT system is used for fund transfers of up to Rs 2 lakh.