Central Bank of India has made all National Electronic Funds Transfer (NEFT) transactions up to Rs 1 lakh free with effect from July 1.
The bank, in a statement said, this is aimed at promoting payments through the electronic mode in order to increase efficiency and reduce costs. It is especially targeted at customers undertaking small-value transactions.
NEFT is a system that helps individuals, firms and corporate account holders transfer funds between bank branches anywhere in the country.
Doing away with the charges will not only encourage customers to undertake transactions through electronic mode, but will also save the bank money by not undertaking physical transactions, said the statement.
In June, the Finance Ministry had asked the banking regulator to work out a framework under which funds up to Rs 1 lakh could be transferred electronically free of charge from one account to the other.
However, Dr K.C. Chakrabarty, Deputy Governor, Reserve Bank of India, at a recent banking technology summit, had ruled out the possibility of banks providing e-transactions free of cost given the commercial viability and scalability issues.
At present, most banks charge between Rs 5 and Rs 55 for electronic funds transfer up to Rs 1 lakh from one bank account to another through the NEFT and Real Time Gross Settlement mechanisms.