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RBI Reduces Bank Charges On NEFT For Transactions Under Rs 10,000

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

The bank said that ‘since NEFT transactions had grown exponentially in the recent years, the benefits accruing on account of increasing volume of transactions could be passed on to the customers in the form of lower charges, incentivising greater use of the electronic payment system’.

It’s interesting to note that the Ministry of Finance, Government of India, had advised (pdf) all Public sector banks (PSB) to promote online payments and reduce charges for NEFT (National Electronic Funds Transfer) transactions to zero for transaction amount value up to Rs 1 lakh, starting 1st July, to save on cheque/draft processing charges.

While creating a new slab for transaction amount less than Rs 10,000, would encourage online payments in that range, we’re not sure why these transactions could not have been exempted. Perhaps, there was pressure from banks, which wanted to  this additional revenue stream to continue. We feel that transaction upto Rs 1,00,000 should be exempted from bank charges, if the government (and the Central Bank) really intends to incentivize online payments.

Also, we’ve still not seen Banks promote mobile fund transfers via IMPS.  Although we had reported about the National Payments Corporation of India (NPCI) seeking for an approval from the Reserve Bank of India (RBI) to make the mobile payments services by telecom companies like Airtel Money and m-wallet services offered by banks, interconnect, we’ve not heard about any major development in relation to it.

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