homepersonal finance NewsRBI floats discussion paper on IMPS, NEFT, RTGS charges: Key things to know

RBI floats discussion paper on IMPS, NEFT, RTGS charges: Key things to know

The Reserve Bank of India (RBI) on Wednesday released a discussion paper on “Charges in Payment Systems”. The central bank has sought inputs from the general public on the paper till October 3, 2022.

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By Anshul  Aug 19, 2022 12:47:52 PM IST (Updated)

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RBI floats discussion paper on IMPS, NEFT, RTGS charges: Key things to know
The Reserve Bank of India (RBI) has recently invited feedback from the public on the various changes proposed in the payments system including Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) system and Real Time Gross Settlement (RTGS) system.

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Feedback may be provided in respect of questions raised therein, including other relevant suggestions, through email on or before October 3, 2022, the RBI said.
This initiative is a part of RBI's Payments Vision 2025.
Let' see what RBI is exactly saying on these charges and what that means for consumer:
What is IMPS and what is apex bank saying about it?
IMPS is a funds transfer system (push transactions) operated by NPCI that works 24x7x365. The system facilitates funds transfer up to a limit of Rs 5 lakh, on real-time basis.
Charges are imposed on the originator in an IMPS transaction by the participating bank. NPCI in turn imposes transaction fee on the participant banks to recover its cost of operations.
IMPS transactions have continued to increase in spite of availability of other systems facilitating funds transfer without any charges.
Questions for Feedback
i. Should charges for IMPS transactions be regulated by RBI?
ii. Should RBI fix a ceiling on charges that can be imposed in IMPS?
What is NEFT and what is central bank saying about it?
National Electronic Funds Transfer (NEFT) is a nationwide centralised payment system owned and operated by the Reserve Bank of India (RBI). It offers round-the-clock availability on all days of the year and provides near-real-time funds transfer to the beneficiary account and settlement in a secure manner.
As the regulator, RBI prescribes rules for NEFT. These rules currently provide RBI the mandate to charge participating banks for processing transactions through NEFT. Further, these rules also permit the direct participants to charge the customers (remitters and beneficiaries) for the services availed through them.
RBI does not levy any processing charges on member banks and has also advised banks to not levy any charges on savings bank account holders for fund transfers initiated online through NEFT. However, considering that banks incur additional cost and man-hours to facilitate these transactions from their branches, RBI has prescribed certain maximum customer charges (exclusive of taxes, if any) for outward transactions undertaken using NEFT
initiated through branches.
Questions for Feedback
i. Should RBI charge member banks for transactions processed through NEFT?
ii. Should banks be permitted to charge customers for NEFT transactions, whether initiated online or otherwise?
iii. Should RBI prescribe charges for NEFT transactions to be levied by banks on their customers, or should they be market driven?
What is RTGS and what is central bank saying about it?
RTGS is a system used mainly for large value transactions and is predominantly used by banks and large institutions / merchants to facilitate real-time settlement.
The RTGS System Regulations impose a monthly membership fee on direct members. They also provide RBI the mandate to charge participating banks / non-banks for processing transactions in RTGS. Though the regulations have enabling provisions, RBI discontinued levying processing charges and time
varying charges, on members from July 1, 2019.
Questions for Feedback
i. Should RBI review the policy of not levying charges on members for RTGS transactions?
ii. Should the time-variable charges be re-introduced?
iii. For RTGS transactions, should RBI prescribe the charges that can be levied on
customers by members, or should they be market driven?
What is RBI exactly saying on these charges?
The RBI has said that the main friction points in the country’s payment systems has been the high charges. Hence, the central bank has been trying to bring down the charges over the years, it said.
Hence, an efficient payment system, the bank said, requires appropriate fees “to ensure optimal cost to users and appropriate return to operators.”
So, if any changes if done, how will it impact consumers?
While there’s no real giveaway in terms of which way the RBI may move, this move of RBI highlights affordability for customers. Hence, there are less changes that any charges would increase significantly for consumers.

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