In a move to boost digital transactions, the Reserve Bank of India (RBI) on Thursday removed NEFT and RTGS charges from transactions.
RBI has asked banks to inform about the same to customers.
The announcement was made shortly after RBI cut the repo rate to 5.75%, bringing it down from 6%. These decisions were taken by RBI's Monetary Policy Committee.
First, let's understand what is NEFT
National Electronic Fund Transfer (NEFT) is a facility customers use to transfer money online.
Once a person initiates money transfer through this option, the amount reaches the other person within 2 hours.
Though there is no maximum or minimum amount on a transaction, some banks put a cap.
As of now, SBI charges Rs. 2.50 + GST for transactions under Rs. 10,000.
Let's take a look at SBI's charges for different transactions
SBI charges Rs. 5 plus GST on transactions between Rs. 10,000 and Rs. 1 lakh. The charge for a transaction between Rs. 1 lakh and Rs. 2 lakh is Rs. 15 plus GST; for more than Rs. 2 lakh it is Rs. 25 plus GST.
Meanwhile, RTGS is used for transferring big amount
Separately, RTGS stands for Real Time Gross Settlement, and this facility is used to transfer more than Rs. 2 lakh.
SBI charges Rs. 25 plus GST for a transaction between Rs. 2 lakh and Rs. 5 lakh and Rs. 50 plus GST for transactions above Rs. 5 lakh.
Banks will be formally informed about the changes within a week, said RBI.
RBI is also thinking about changing ATM fees
Apart from this, RBI is also mulling changes in ATM transaction fees. The apex bank said there have been demands to make some changes and hence a committee has been set up.
The committee will be headed by Chief Executive Officer, Indian Banks' Association (IBA), to address concerns related to ATMs.
It is expected to submit its findings within two months of the first meeting.
Meanwhile, RBI cut repo rate, noted growth has been slow
Notably, this is the third time that RBI slashed repo rate, which is essentially an interest rate in which commercial banks take short-term loans from the bank.
In a statement, RBI noted that growth impulses have weakened significantly. Considering economic distress, experts were also expecting a similar decision from the central bank.
These decisions were taken at MPC's bi-monthly monetary policy review for 2019-20.