The central bank has asked banks to pass on these benefits to the customers to boost digital payments
The Reserve Bank of India (RBI) has lifted charges on net banking services like Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) that helped companies and individuals transfer money electronically. The central bank has asked banks to pass on these benefits to the customers to boost digital payments. The regulator has also constituted a committee to look into ATM charges and fees.
While the charges on electronic transactions could come down, the ATM charges could rise as banks and cash handling companies are demanding higher charges. Banks are demanding higher interchange fees and cash handling companies are demanding higher charges as the security costs have gone up substantially. As per the estimates, one ATM transaction costs around Rs 30 (based on 120 transaction/per day), while banks charge customers a max of Rs 20 per transaction. Against this backdrop, RBI's decision to review entire gamut of ATM charges and fees is very timely said SBI Ecowrap, the economic report from SBI.
"The move to scrap transaction charges for RTGS & NEFT which will boost digital transactions," said Rajnish Kumar, chairman State Bank of India.
"The committee will decide on the pros and cons. But it is likely that ATM charges will go up," said a banker dealing with ATM services for his bank.
Banks charge Re 1 to Rs 5 for transactions through NEFT and Rs 5 to Rs 50 for electronic money transfers through RTGS depending on the quantum of the transaction. "This could come down substantially or some banks could make it completely free," said another banker, who is in charge of retail banking services.
In a notification, the central bank stated that it "levies minimum charges on banks for transactions routed through its RTGS meant for large-value instantaneous fund transfers and NEFT System for other fund transfers. Banks, in turn, levy charges on their customers. In order to provide an impetus to digital funds movement, it has been decided to do away with the charges levied by the Reserve Bank for transactions processed in the RTGS and NEFT systems."
"There has been persistent demand to change the ATM charges and fees, " RBI noted. In order to address these issues, it has been decided to set up a committee involving all stakeholders under the chairmanship of the chief executive officer, Indian Banks' Association (IBA), to examine the entire gamut of ATM charges and fees.
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