In its latest press release titled, ‘Furthering Digital Payments’, the Reserve Bank of India has directed all banks to stop charging savings account customers for online NEFT transactions from January 2020.
From January 2020, banks will not be allowed to charge savings bank account holders for online transactions in the NEFT system. RBI mentioned that this will help to promote digital payments.
In its July monetary policy review, RBI had decided to do away with charges for NEFT and RTGS transactions and suggested that banks pass on this benefit to their customers. However, it had not set a date by when banks had to comply. In July 2019, the State Bank of India had already waived charges on NEFT, RTGS, and IMPS.
The RBI added that it will be taking these steps to encourage digital payments further:
• Operationalise the Acceptance Development Fund to increase acceptance infrastructure with effect from January 1, 2020.
• Constitute a Committee to assess the need for plurality of QR codes and merits of their co-existence or convergence from both systemic and consumer viewpoints.
• Permit all authorised payment systems and instruments (non-bank PPIs, cards and UPI) for linking with National Electronic Toll Collection (NETC) FASTags. Going forward, this will facilitate the use of FASTags for parking, fuel, etc., payments in an interoperable environment.
• Enable processing of e-mandates for transactions through UPI.
On the third anniversary of demonetisation, this latest release by RBI, mentions that digital payments constituted 96 percent of total non-cash retail payments during the period October 2018 to September 2019.
The release added that "During the same period, the National Electronic Funds Transfer (NEFT) and Unified Payments Interface (UPI) systems handled 252 crore and 874 crore transactions with year on year growth of 20% and 263%, respectively. This rapid growth in the payment systems, inter-alia, has been facilitated by a series of measures taken by the Reserve Bank of India.
Presently, NEFT operates in half hourly batches currently there are 23 settlements on all working days, from 8 am to 7 pm. The RBI had earlier proposed to make the service available on a 24x7 basis from December 2019.