Know all about RTGS, NEFT Services that become free of cost

The RBI said that it has done away with charges on fund transfers through RTGS and NEFT routes to boost digital transactions.

Mumbai: 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 Central bank has also asked banks to pass on the benefits to customers.

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."

Let us know what exactly RTGS and NEFT are:

RTGS can be explained as a system where there is a continuous and real-time settlement of fund-transfers, individually on a transaction by transaction basis (without netting).

'Real Time' means the processing of instructions at the time they are received. Where as the 'Gross Settlement' means that the settlement of funds transfer instructions occurs individually.

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.

Difference between NEFT and RTGS:

NEFT is an electronic fund transfer system in which the transactions received up to a particular time are processed in batches. Contrary to this, in RTGS, the transactions are processed continuously on a transaction by transaction basis throughout the RTGS business hours.

RTGS is meant for large-value instantaneous fund transfers while the NEFT System is used for fund transfers up to Rs 2 lakh.

Transaction charges:

Currently, banks charge between Rs 30-55 on RTGS and Rs 2.50-25 plus applicable GST on NEFT fund transfer.