RBI has done away with the charges levied by the central bank for transactions processed in RTGS and NEFT systems
A committee will review ATM charges
The RBI will set up a committee to review the charges for usage of ATMs. The central bank has also abolished its charges for NEFT and RTGS money transfer to promote digital transactions. Draft guidelines for on tap licensing of small finance banks will be issued soon while a forex trading platform for retail participants will be set up to make more transactions more transparent. These announcements were made by the RBI as part of its measures for broadening and deepening the financial markets.
1) To promote digital transactions, the RBI has decided to abolish charges levied by the central bank for transactions processed in the RTGS and NEFT systems. The Reserve Bank levies minimum charges on banks for transactions routed through its Real Time Gross Settlement System (RTGS) meant for large-value instantaneous fund transfers and the National Electronic Funds Transfer (NEFT) System for other fund transfers.
2) This will make money transfer through RTGS and NEFT cheaper. RBI said that banks will be required to pass the benefits to their customers and instructions to banks in this regard will be issued within a week.
3) The RBI has also decided to review the fees charged for usage of Automated Teller Machines (ATMs). The central bank said that there have been persistent demands to change the ATM charges and fees. So to address these issues, RBI has set up a committee under the chairmanship of the chief executive officer, Indian Banks’ Association (IBA), to examine the entire gamut of ATM charges and fees. The committee is expected to submit its recommendations within two months of its first meeting.
4) On Tap Licensing of Small Finance Banks: The RBI said a review of the performance of Small Finance Banks reveals that they have achieved their priority sector targets and thus attained their mandate for furthering financial inclusion. The central bank also said that there is a case for more players to be included to enhance access to banking facilities to the small borrowers and to encourage competition. RBI will issue draft guidelines for ‘on tap’ licensing of small finance banks by the end of August 2019.
5) Foreign Exchange Trading Platform for Retail Participants: To ensure transparent pricing for users of foreign exchange (such as Small and Medium Enterprise (SME) exporters and importers, individuals, etc.), Clearing Corporation of India (CCIL) has developed a forex trading platform and it is being tested by users. RBI expects the forex platform to be available to users for transactions from early August 2019.
"This platform would provide transparency of pricing and promote competition among market-makers leading to better pricing for all customers, regardless of order size," the RBI said.
The Reserve Bank of India today cut its policy interest rate (repo rate) by 25 basis points while also changing its monetary policy stance to "accommodative" from “neutral" after the economy grew at its slowest in over four years. All six of the monetary policy committee members voted unanimously for a 25 basis points cut, and for the policy stance to be changed to "accommodative".
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