In a relief to the savings bank accounts holders, the Reserve Bank of India (RBI) on Saturday directed banks ‘not to charge savings bank account holders for online transactions in the NEFT with effect from January 2020’.
With this step, the federal bank is aiming to promote digital payments among the bank account holders.
NEFT or National Electronic Funds Transfer (NEFT) is an electronic funds transfer system maintained by the RBI, which is used to transfer funds from one bank account to another. The transaction can take place between accounts of the banks that are member of the NEFT scheme, according to the RBI.
The RBI said earlier that it had done away with charges on NEFT and RTGS (Real-time gross settlement) transactions.
“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 central bank said in a statement.
NEFT is used to transfer funds up to Rs 2 lakh, while RTGS is used for large-value instantaneous fund transfers.
(With input from agencies)