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RBI Removes NEFT, RTGS Payment Charges to Push Digital Transactions

The NEFT system provides for batch settlements at hourly intervals

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The Confederation of All India Traders (CAIT) welcomed the move calling it progressive and said it would encourage digital payments by the business community. Pixabay

In a bid to boost digital fund transfer systems, the Reserve Bank on Thursday said that it will remove charges levied on transactions conducted through Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).

The NEFT system provides for batch settlements at hourly intervals, while RTGS transfers funds from one bank to another on a “real time” and on “gross” basis. Introduced in 2004, RTGS settles all inter-bank payments and customer transactions above Rs 2 lakh.

Both are popular financial transaction systems. Currently, banks charge between Rs 30-55 on RTGS and Rs 2-25 on NEFT fund transfer.

Announcing the plan on the sidelines of the second monetary policy decision, RBI Governor Shaktikanta Das said: “In the area of payment and settlement systems, it has been decided to do away with the charges levied by the Reserve Bank for transactions processed in the RTGS and NEFT systems in order to provide an impetus to digital funds movement.”

RBI, NEFT, RTGS
The Reserve Bank on Thursday said that it will remove charges levied on transactions conducted through Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT). Pixabay

“Banks will be required, in turn, to pass these benefits to their customers. Instructions to banks in this regard will be issued within a week.”

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The Confederation of All India Traders (CAIT) welcomed the move calling it progressive and said it would encourage digital payments by the business community. (IANS)

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RBI Won’t Hesitate on Steps for Financial Stability, Says Governor

Das further said that in a flexible inflation targeting framework, a delicate balance needs to be maintained between inflation and growth objectives

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Reserve Bank of India. VOA

Assuring the crisis-hit NBFC sector will be monitored, Reserve Bank of India Governor Shaktikanta Das on Friday said the central bank will not hesitate to take any required measure to maintain the financial stability of the economy.

In a lecture at the Lal Bahadur Shastri National Academy of Administration, Mussoorie, on the “evolving role of central banks”, Das also said that financial stability is major factor considered in the RBI’s monetary policy.

“In the non-banking sector, the Reserve Bank has recently come out with draft guidelines for a robust liquidity framework for the NBFCs. We are also giving a fresh look at their regulatory and supervisory framework. It is our endeavour to have an optimal level of regulation and supervision so that the NBFC sector is financially resilient and robust,” he said.

“The Reserve Bank will continue to monitor the activity and performance of this sector with a focus on major entities and their inter-linkages with other sectors. The Reserve Bank will not hesitate to take any required steps to maintain financial stability,” he added.

Reserve Bank of India. Wikimedia Commons

The liquidity crisis in the non-banking financial companies (NBFC) came to light when IL&FS defaulted on a commercial paper in September.

Das further said that in a flexible inflation targeting framework, a delicate balance needs to be maintained between inflation and growth objectives.

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“Post global financial crisis, it has been recognised that price stability may not be sufficient for financial stability and therefore financial stability has emerged as another key consideration for monetary policy, though jury is still out as to whether it should be added as an explicit objective of monetary policy.

“The fact remains that though the focus of monetary policy is mainly on inflation and growth, the underlying theme has always been financial stability,” the Governor said. (IANS)