Reserve Bank of India (RBI) has done away with charges levied on transactions processed in the RTGS and NEFT systems operated by it in order to provide an impetus to digital funds movement. It has also directed banks to pass these benefits to their customers.
In its statement on developmental and regulatory policies, the RBI said banks will, in turn, be required to pass on this benefit to their customers. This, it said, will give a big boost to digital transactions while bringing down payments through other modes such as cash, demand draft and cheque.
The Reserve Bank levies minimum charges on banks for transactions routed through its Real Time Gross Settlement System (RTGS) meant for large-value instantaneous fund transfers and the National Electronic Funds Transfer (NEFT) System for other fund transfers. Banks, in turn, levy charges on their customers.
RBI said it will issue instructions to banks in this regard within a week.
The Real Time Gross Settlement System (RTGS) is meant for large-value, instantaneous fund transfers above Rs2 lakh and is largely used by trade and industry. It is available on weekdays. The National Electronic Funds Transfer (NEFT) System is used for fund transfers up to Rs2 lakh. The charges for NEFT are in the range of Re1 to Rs5, and for RTGS, it is between Rs5 and Rs50 at present.
According to a report submitted by an RBI committee headed by Nandan Nelekani on ways to deepen digital payments, the number of cheque transactions has come down post demonetisation, and at the same time, RTGS/NEFT transactions have grown substantially.
The usage of cheque, on the other hand, has come down drastically in the past five years with a CAGR of (-) 2 per cent, the report noted.
RTGS usage (in volume terms) has steadily grown with a CAGR of about 11 per cent over the past four years. While the number of transactions is small, the value is large with an average ticket size of Rs70 lakh to Rs90 lakh. NEFT has grown by 26 per cent.
RBI also announced the constitution of a committee to review the Automated Teller Machines (ATM) interchange fee structure.
While the usage of ATMs by the public has been growing significantly, there has also been persistent demand to change the ATM charges and fees. In order to address these, RBI has decided to set up a committee involving all stakeholders, under the chairmanship of the chief executive officer, Indian Banks’ Association (IBA), to examine the entire gamut of ATM charges and fees. RBI said it will decide on the composition and terms of reference of the committee within a week. The committee is expected to submit its recommendations within two months of its first meeting.