Online money transfer upto Rs 1 lakh to become free of additional charges

Promoting cashless and paperless transactions seems to be a top priority of apex banking body – Reserve Bank of India (RBI) and Finance Ministry in the country. In its latest move, Finance Ministry has asked public sectors banks not to charge anything for electronic funds transfer up to Rs 1 lakh.

At present, banks charge a fee of Rs 5 and Rs 2.50 for online fund transfer up to Rs 1 lakh and Rs 10,000 respectively. However, charges for funds transfer (NEFT) exceeding Rs 1 lakh and upto Rs 2 lakh would remain Rs 15 and Rs 25 for transfers above Rs 2 lakh. It is worth noting that foreign banks never had any such transaction charges on fund transfer via internet.

India, primarily a cash economy has seen very little action on electronic payments. This move could improve the situation. Earlier this month, the National Payment Corporation of India (NPCI) announced extension of inter mobile payment system (IMPS) service to merchant payments. The service enables consumers to pay merchants for products & services bought via mobile phones and vice-versa.

In July 2012, as per RBI data, nearly 3 crore NEFT transaction took place through 114 banks worth Rs 2.1 lakh crore. HDFC bank tops the volume and value of NEFT based transactions with 49.39 lakhs transactions worth Rs 25, 8556 crore, closely followed by State Bank of India (SBI) with 38.96 lakh transaction worth Rs 25503 crore.

Public sector banks have also been directed by Finance Ministry to identify top 20% branches in respect of business volumes to slash the number of cheque based transactions by minimum one-fifth in the current financial year and ensure that all payments by them are done through internet (except sundry payments).

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