New RBI proposal on NEFT transaction fees: The Reserve Bank of India has prescribed the implementation of processing charges on NEFT transactions through bank branches.
In a ‘Discussion paper on Charges in payment Systems’, the Reserve Bank of India (RBI) has prescribed the implementation of processing charges on NEFT transactions through bank branches. The paper has proposed to levy up to Rs 25 as a transaction fee for amounts above Rs 2 lakh.
Currently, the RBI doesn’t levy any processing charges for NEFT transactions on the member banks. The central bank has also advised banks to not levy any charges on savings account holders for online NEFT transactions.
However, in the discussion paper released on Wednesday (17 August 2022), the RBI prescribed the following cap on customer charges (exclusive of taxes, if any) for outward NEFT transactions initiated through bank branches:
- Rs 2.5 for transactions up to Rs 10,000
- Rs 5 for transactions above Rs 10,000 and Rs 1 lakh
- Rs 15 for transactions above Rs 1 lakh and up to Rs 2 lakhs
- Rs 25 for transactions above Rs 2 lakhs
The above prescription is currently open to discussion among stakeholders. Users should note that they have not yet been implemented. According to the discussion paper, the above charges have been prescribed as “banks incur additional cost and man-hours to facilitate these transactions from their branches.”
“Banks incur cost in implementing and maintaining the infrastructure required for processing NEFT transactions. They have both fixed and recurring costs which are incurred for ensuring that the infrastructure is safe and secure, and processing of payments is done in timely manner. Processing such transactions also involves costs as sufficient manpower/resources need to be deployed to support their processing,” the paper said while sharing three questions for feedback from stakeholders:
- Should RBI charge member banks for transactions processed through NEFT?
- Should banks be permitted to charge customers for NEFT transactions, whether initiated online or otherwise?
- Should RBI prescribe charges for NEFT transactions to be levied by banks on their customers, or should they be market driven?
The discussion paper has not made any new prescription for IMPS and RTGS transactions.
RBI is currently the owner, operator, as well as regulator of NEFT service. As per rules, the central bank can charge participating banks for processing transactions through NEFT.
Commenting on the discussion paper, Vishwas Patel, Chairman, Payments Council of India (PCI) said: “RBI has been very supportive with regulations and guidelines to deepen financial inclusion initiatives across India. The industry appreciates the issuance of a discussion paper about charges in payment systems however also believes that pricing of financial instruments should be left up to market forces, to continue to support the required investments and innovation in digital payments. As an industry body, PCI will submit detailed feedback to RBI within the requested timeframe.”
“The discussion paper issued by the Reserve Bank of India (RBI) primarily will help streamline the payment system, which will reduce the friction and bring a commonality in the various payment modes. The entire focus of the paper is to bring transparency in the payment system, wherein customers and other stakeholders have a clear understanding of the payment mechanism,” said Ketan Patel, CEO, Mswipe technologies.
