NEFT Payment – Not chargeable
Banks will no longer be charging saving bank account holders for any NEFT online transactions from January 2020. The Reserve Bank of India (RBI) has directed banks with this instruction through a press release on 8th November. RBI has stated in the press release that this has been initiated to promote digital payment.In its July statement it had mentioned, ‘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.
Banks in turn will be required, to pass the benefits to their customers’. NEFT is a disbursement system expediting funds transfer from one bank account to another. An individual can avail this service through the option of utilising Internet banking or visit the branch in his area, though not all the branches provide this service.
Customers will not have to pay any charges for the transaction they undertake through the standard NEFT system.
Smooth Settlement of Transactions
To enable customer with easy banking transaction comprising of NEFT payment transfer, RBI has made banking transaction all through the day against only working hours on weekdays.RBI Governor Shaktikanta Das, in its monetary policy mentioned that the revised timings would be effective from December this year. Earlier NEFT was made available till 7.45 pm on working days.
Besides this, NEFT was not operational on the 2nd and the 4th Saturday of the week. The central Indian bank had commented, “in order to facilitate smooth settlement of these transactions in the accounts of the banks maintained with RBI, it has been decided that the Reserve Bank will extend the collateralised liquidity support, which is currently available till 7.45 pm on NEFT working days, round the clock.
Motivate Digital Transaction
When an individual initiates the transfer of funds, the same is reflected in the recipient’s account within hours. No restrictions are there on the minimum or maximum amount on the funds to be transferred.However, they could be some amount of restrictions, on individual banks on the per transaction sum. In this regard to motivate digital transactions, RBI had presented a proposal on the anniversary of demonetisation. FASTags has been proposed by the central which would permit customers to pay for parking fee as well as at the fuel station.
Due to digital payments, a high of 96% of overall non-cash retail payment had been established during October 2018 to September 2019. The National Electronic Funds Transfer – NEFT together with Unified Payments Interface UPI system, at the same time had managed 252 crores and 874 crores transactions with a yearly growth of around 20% and 263% respectively.
Acceptance Development Fund
The central bank had mentioned in a statement that `this rapid growth in the payment system, inter-alia had been facilitated by a series of measures taken by the Reserve Bank of India. To empower it further every citizen with an “Exceptional (e) Payment experience” and provide her access to a bouquet of options, the RBI said it proposes to “mandate banks not to charge savings bank account customers for online transactions in the NEFT system with effect from January 2020”.Its intentions are to make operational the Acceptance Development Fund in order to enhance the acceptance infrastructure from January 1, 2020. In order to assess the requirements for group of QR codes together with merits of their co-existence or merging from the systemic and consumer point of view, a committee would be formed.
Moreover the central bank intends to enable all authorised payment systems and instruments (non-bank PPIs, UPI and cards, to connect with National Electronic Toll Collection NETC FASTags. As per the statement, it is mentioned that `going forward, this will facilitate the use of FASTags for parking, fuel etc., payments in an interoperable environment.’
Development of Synergies
This announcement from RBI had come up on the third anniversary of the significant resolution of the government for demonetising Rs 500/1,000. It was on November 8, 2016, that Rs 500 & 1,000 which were in circulation had been banned with RBI coming up with new currency notes of 2,000 and 500 respectively.Moreover Reserve Bank of India mentioned that the benchmarking application taken portrays great position appreciated by the country in numerous factors with regards to payment systems. The banking regulator mentioned that it simplified RuPay card acceptance in Bhutan.
This would enable the activity with the payment system regulators in the other jurisdictions. Moreover it would also share its knowledge in the development of synergies thereby reducing the time and the cost in inward remittances, particularly in maintransmittal corridors.
Increase Digital Payment
According to the Founder and VP of Sarvatra Technologies, Mandar Agashe, the abandonment of charges on the online transaction namely RTGS and NEFT, makes it obvious that RBI is pushing the bank on increasing digital payment. This initiative would particularly benefit small traders marketing in small value transaction and functioning on small margins.For these traders, the transaction would be of great importance to them. Besides this, RTGS and NEFTtend to be economical in comparison to the other modes of payment. For instance cheques involve end to end management for transaction till its ultimate settlement.
