RBI cuts charges on NEFT for transaction up to INR 10,000

The Reserve Bank of India has announced rationalised charges that banks levy on customers for transferring funds online, through National Electronic Funds Transfer (NEFT). According to the new revision, a new slab of transaction amount upto Rs 10,000 has been created, for online fund transfers. As per RBI notification, now banks can not charge more than Rs 2.50 (exclusive of service tax) for online fund transfer upto INR 10,000. However, charges for transfers beyond Rs 10,000 would remain the same, at INR 5 for transfers between Rs 10,001 to Rs 1,00,000, Rs 15 for transfers between INR 1,00,000 and INR 2,00,000; and Rs 25 for transfers above Rs 2,00,000. The new charges will come into effect starting August 1st 2012.

Value Band (Amount in INR)

Maximum Charges (exclusive service tax)

Up to 10,000

INR 2.50

Up to 10,001 to 1 lakh

INR 05

Above 1 lakh to 2 lakh

INR 15

Above 2 lakh

INR 25

This move is aimed at promoting greater use of the electronic payment system and providing the large number of people being covered under the financial inclusion programme with an efficient and affordable remittance mechanism.

The apex bank said in its notification ‘as NEFT transactions had grown exponentially in the past few years, the benefits accruing on account of increasing volume of transactions could be passed on to the customers through lower charges, boosting greater use of the electronic payment system’.

NEFT is a nation-wide payment system facilitating one-to-one funds transfer. Through this scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the scheme.There is no limit either minimum or maximum on the amount of funds that could be transferred using NEFT. However, the maximum amount per transaction is limited to Rs 50,000 for cash-based remittances and remittances to Nepal. Earlier in July this year, former Finance Minister, Pranab Mukherjee, had asked public sector banks to follow the decision taken by Oriental Bank of Commerce (OBC) to waive all charges for all net based real time gross settlement/NEFT transactions up to INR 1 lakh.

Also see: RBI Slashes Merchant Discount Rate, MDR On Debit Cards By Half