The Reserve Bank of India has announced it was waiving off charges that are applied on bank transfers carried out either by National Electronic Funds Transfer (NEFT) or Real Time Gross Settlement System (RTGS). The central bank asked consumer banks to pass on this benefit to customers, essentially asking banks to NEFT and RTGS transfers free of cost.

These announcements were made at the end of the RBI’s bi-monthly monetary policy meeting. The RBI announced a reduction of 25 basis points in the repo rate. The repo rate, which is the interest rate at which the central bank lends money to commercial banks, now stands at 5.75 per cent. The RBI’s rate cut see interest rates on home and car loans come down. While announcing the scrapping of charges on RTGS and NEFT transactions, the RBI said it was doing so to boost digital transactions.

The Real Time Gross Settlement System (RTGS) is meant for large-value instantaneous fund transfers while the National Electronic Funds Transfer (NEFT) System is used for fund transfers up to Rs 2 lakh. The State Bank of India (SBI) currently charges between Re 1 and Rs 5 for NEFT transactions and between Rs 5 and Rs 50 for RTGS.