They are allowed to charge for administrative and fixed costs, network charges, manpower, etc. from these services.
India's largest public sector bank, SBI, gave its customers reason to rejoice as it announced a waiver of charges for online money transfers through the NEFT and RTGS routes. Of course, money transfer can be done online or by walking into your branch (branch banking) and filling a form. But not everyone is following suit in reducing charges for the online money transfer mode like how SBI did.
Some banks continue to charge for RTGS and NEFT transactions while using online banking. For instance, Gaurav Mashruwala, a Sebi-registered investment adviser from Mumbai was recently charged for NEFT transaction by Bank of Baroda (BoB). After raising a complaint with the BOB authorities, Mashruwala got a reply from the bank stating that it has revised its service charges and waived off the processing charges and time varying charges for NEFT transactions as per the RBI circular, with effect from July 1, 2019. The bank will continue to charge for other applicable costs which it incurs on such transactions. A senior retail banker requesting anonymity said, “Banks can continue to charge for administrative and fixed costs, network charges, manpower, etc. from these services. Only charges paid to the RBI by banks for this transaction must be reduced.”
In June, during the second monetary policy meeting, the Reserve Bank of India (RBI) announced the removal of charges levied by the Central Bank for transactions processed in the Real Time Gross Settlement System (RTGS) and National Electronic Funds Transfer (NEFT) systems. So, banks were required to pass on these reduced charge benefits on RTGS and NEFT to customers. But that doesn’t mean that money transfer using the NEFT or RTGS systems would become free across the board.
Not fully free
There was a misconception among customers that, effective July 1, there will be no charges on RTGS and NEFT based money transfers online. It boils down to there being two major cost components. First is what the RBI used to charge banks for the online transfer facility and the second being banks' own costs while offering the option to customers. RBI has waived the first component. It is up to the banks to decide if they wish to remove or retain the second cost component.
In the last one week, several complaints have been raised by customers to banks on social media and the banking ombudsman of the RBI for charging them while making these transactions.
Another retail banker requesting anonymity said, “Banks will charge according to their own cost structure on RTGS and NEFT transactions. If it doesn’t come down, then they can’t extend the benefit to the customers by waiving it off.” So, now, charges for RTGS and NEFT transactions will vary from bank to bank.
Effective July 1, the State Bank of India (SBI) has waived off charges on funds transfers made via RTGS and NEFT for its YONO (mobile app), internet and mobile banking customers. The bank will also give free access to IMPS (Immediate Payment Service) for the same set of customers from August 1. For customers transacting through branch banking, RTGS and NEFT charges were reduced by 20 percent across all slabs of money transaction.
ICICI Bank has also waived off RTGS and NEFT charges effective July 1 for online transactions. There are some of the banks that had waived off these charges quite a while ago. For instance, HDFC bank had waived off these charges in November 2017. This was applicable across all retail savings, salary and non-resident customers.
There are other banks that have waived off these charges to customers on certain category (type) of savings account. For instance, IDBI bank has waived off RTGS, NEFT (for both online and branch transactions ) and IMPS charges on its Royale Plus account, whereas in other categories of savings accounts, it continues to charge from customers. For example, for its IDBI super savings account, it continues to charge from customers for NEFT in the range of Rs 1 to Rs 12. These charges are updated as on July 1, 2019.However, it’s important to note as RBI has waived the charges on RTGS and NEFT transactions for banks, they have to reduce the charges and cannot keep it at the same level. If charges don’t reduce, raise a complaint to your bank or to banking ombudsman of RBI.