From scrapping RTGS-NEFT charges to repo rate cut; Key decisions by RBI's Monetary Policy Committee
Mumbai, June 6: In a bid to boost the digital transactions, the Reserve Bank of India (RBI) on Thursday saidit has done away with the charges levied on Real Time Gross Settlement System (RTGS) and the National Electronic Funds Transfer (NEFT). The central bank asked banks to pass on the benefits to customers.
The RTGS is meant for large-value instantaneous fund transfers while the NEFT System is used for fund transfers up to Rs 2 lakh. Country's largest bank SBI charges between Re 1 and Rs 5 for transactions through NEFT and between Rs 5 and Rs 50 for RTGS route.
In its statement on developmental and regulatory policies after the Monetary Policy Committee's meeting, the RBI said it levies minimum charges on banks for transactions routed through RTGS and NEFT system for other fund transfers.
Banks, in turn, levy charges on their customers. In order to provide an impetus to digital funds movement, it has been decided to do away with the charges levied by the RBI for transactions processed in the RTGS and NEFT systems, it said.
"Banks will be required, in turn, to pass these benefits to their customers. Instructions to banks in this regard will be issued within a week," the central bank said.
Meanwhile, the RBI has decided to set up a committee to review the charges levied on the use to ATMs as the usage by the public has been growing significantly.
"There have, however, been persistent demands to change the ATM charges and fees," the RBI noted.
In order to address these, it has been decided to set up a committee involving all stakeholders, 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, RBI Governor Shaktikanta Das told reporters. The composition and terms of reference of the committee will be issued within a week, the central bank said.
Other key decisions taken at RBI's Monetary Policy Committee's meeting:
- The RBI today lowered the economic growth forecast for the current fiscal to 7 percent due to slowdown in domestic activities and escalation in global trade war. The annual growth during the last fiscal was 6.8 percent.
- RBI has decided to set up a committee to review the charges levied on the use to ATMs as the usage by the public has been growing significantly. RBI said that there have been persistent demands to change the ATM charges and fees.
- RBI's monetary policy committee (MPC) reduced the repo rate to 5.75 percent from 6 percent. Repo rate is the rate at which the apex bank lends short-term money to commercial banks.
- All members of the MPC reportedly unanimously decided to change the stance of monetary policy from neutral to accommodative.
- The consumer inflation for the first half of financial year 2019-20 has been pegged in range of 3-3.1 per cent with risks evenly balanced, RBI noted in the policy statement.
- RBI will issue draft guidelines for 'on tap' licensing of small finance banks by the end of August 2019.
- RBI expects the forex platform, developed by Clearing Corporation of India (CCIL), to be available to users for transactions from early August 2019. CCIL) has developed a forex trading platform to ensure transparent pricing for users of foreign exchange.