The Reserve Bank of India (RBI) has eliminated all charges on transactions through Real Time Gross Settlement System (RTGS) and National Electronic Funds Transfer (NEFT) System.
The decision became effective on 1 July 2019.
NEFT is used for transferring funds of up to INR200,000 ($2,900). For fund transfers exceeding this amount, RTGS is used.
RBI will now scrap processing charges and time-varying charges levied on banks for outward transactions through the RTGS.
It will also do away with the processing charges for transactions processed in NEFT.
The objective behind the decision is to drive digital payments in the country.
The decision is said to ultimately help customers.
At present, banks are being charged for transfers via RTGS and NEFT and they in turn charge their customers.
For instance, State Bank of India used to charge between INR1-5 for NEFT transactions and between INR5-50 for RTGS transactions until now.
In the recent times, RBI brought several changes in the regulation of the payment sector in the country.
Earlier this year, the watchdog reportedly considered plans to regulate India’s payment gateway operators and aggregators.
At the end of 2018, the regulator announced guidelines to facilitate interoperability between various forms of prepaid payment instruments such as digital wallets.