Come August 1, transferring small value transactions up to Rs 10,000 from one bank account to another using national electronic funds transfer (NEFT) will become cheaper.
The Reserve Bank of India, on Friday, said it has rationalised the charges that banks can levy on customers for transfer of funds through NEFT.
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.
Banks can levy not more than Rs 2.50 (exclusive of service tax) for funds transfer up to Rs 10,000, said a RBI notification.
Charges for transfers beyond Rs 10,000, however, remain unchanged — Rs 5 for transfers between Rs 10,001 to Rs 1 lakh; Rs 15 for transfers between Rs 1 lakh and above and up to Rs 2 lakh; and Rs 25 for transfers beyond Rs 2 lakh.
Hitherto, there used to be three value bands for NEFT. But now the RBI has created four NEFT bands by carving up the up to Rs 1 lakh band into two — up to Rs 10,000 and between Rs 10,001 to Rs 1 lakh.
Nationwide system
NEFT is a nation-wide payment system facilitating one-to-one funds transfer. Under 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.
At present, NEFT operates in hourly batches — there are eleven settlements from 9 a.m. to 7 p.m. on week days (Monday through Friday) and five settlements from 9 a.m. to 1 p.m. on Saturdays.
Last month, the former Finance Minister, Mr Pranab Mukherjee, had asked public sector banks to follow the decision taken by Oriental Bank of Commerce to waive all charges for all Net based real-time gross settlement/NEFT transactions up to Rs 1 lakh.
Central Bank of India has made all NEFT transactions up to Rs 1 lakh free from levy of any charges with effect from July 1, 2012.