BackOnline money transfer to become faster & costlier
Online money transfer to become faster & costlier
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Mumbai: Online transfer of funds from bank accounts may soon become faster, but this could lead to higher charges for customers, as banks may have to pay the Reserve Bank of India (RBI) a fee for this service from 1 April.
The National Electronic Fund Transfer (NEFT), which allows bank customers to transfer funds electronically, has been a highly successful service ever since it was launched in late 2005. More than 60 lakh transactions are estimated to be taking place every month through this route.
In a circular to the chiefs of all the member-banks providing NEFT service, the RBI has asked the banks to take necessary measures to “strengthen the NEFT system in terms of availability, convenience, efficiency and speed" with effect from 1 March.
Among these measures, the apex bank has asked banks to extend the operating hours of NEFT system from 9 am to 7 pm on weekdays and from 9 am to 1 pm on Saturdays. Currently, NEFT is available from 9 am to 5 pm on weekdays and from 9 am to 12 noon on Saturdays.
The central bank has also asked banks to move to hourly settlement of NEFT transactions, as against current practice of six batches of settlements on weekdays and three on Saturdays.
However, the extension of timing and faster settlements could coincide with higher charges for such transactions.
Currently, banks do not need to pay any processing or service charges to RBI for electronic fund transfer, but the waiver of this fee is valid till 31 March only. Thereafter, a charge would be required to be paid to RBI by banks, which in turn would pass on the same to the customers.
In the absence of any charges to be paid to RBI, banks are allowed to levy a nominal fee of up to Rs5 per transaction for outward transactions up to Rs1 lakh and of up to Rs25 for outward transactions of Rs1 lakh and above. There are currently no charges for inward transactions under the NEFT.
While many banks have been charging their customers for outward NEFT transactions from the very beginning, some of them, including the country’s second largest private sector bank HDFC Bank, were providing this service for free till some time ago.
In a recent circular to its customers, HDFC Bank said it would charge Rs5 per transaction for NEFT transactions up to Rs1 lakh and Rs25 for above Rs1 lakh.
Similar fees are charged by other banks such as ICICI Bank, SBI and many others.
According to industry experts, the current charges are quite nominal and banks have been levying the same to recover their own costs. However, the charges are set to go up once banks start paying any processing or service charge to RBI for NEFT system, they added.
Banks together handled transactions worth over Rs32,000 crore in January itself under the NEFT system, but are estimated to have collected a cumulative fee of about Rs10 crore only for the same.
In its circular to bank chiefs for refinement and enhancement of features under NEFT system, the RBI said over 63,000 bank branches across the country provided this service and over 6 million transactions were processed by the system in January 2010 alone.
Among the various measures to be implemented from 1 March, RBI has sought to make NEFT system more real-time, increase the operating hours, move to hourly settlements and bring in place a system for dissemination of acknowledgement immediately after credit to beneficiary account.
“At present, the uncredited NEFT transactions are returned by destination banks and it is presumed that credit for all other transactions have been afforded to beneficiary accounts. To remove any ambiguity and to introduce the element of positive confirmation, the NEFT outward message format is being modified to contain two additional fields, wherein mobile number and/or e-mail address of the originating customer can be populated.
“A new message format is also being introduced to relay to the originating bank an acknowledgement containing the date and time of credit, immediately after the credit is afforded to beneficiary accounts. This message would flow from the destination bank/branch to the originating bank/branch.
The originating banks after receiving the positive confirmation from the destination banks shall have to initiate a mobile SMS or generate an e-mail to the originator to convey the fate of the transaction," RBI said.
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