Electronic fund transfers set to become free

The government has asked the Reserve Bank of India to work out a framework under which funds could be transferred electronically free of charge from one account to the other.

These suggestions were made by Finance Minister Pranab Mukherjee in his address at a meeting with chief executives of the public sector banks, which among others, was also attended by RBI Deputy Governor K C Chakrabarty.

At present, banks charge between Rs 5 to Rs 55 for electronic transfer of funds from account of one bank to another through National Electronic Fund Transfer and Real Time Gross Settlement.

"I would also urge upon Reserve Bank of India to proactively work on this front and to see that all electronic banking

transactions should be possible without any charges being levied," Mukherjee said on Tuesday.

Cost free electronic transaction would encourage customers to use this medium for inter-bank as well as intra-bank fund transfer across the country.

The move would also help reduce cash movement and cash transaction, a senior official of a public sector bank said.

For outward transactions under RTGS mechanism, banks charge Rs 30 for electronic transfer of Rs 200,000 to Rs 500,000 and Rs 55 for amounts above Rs 5 lakh.

On the other hand, under NEFT the charges range between Rs 5 and Rs 25.

Citing example of Oriental Bank of Commerce, which has waived all charges for electronic transactions up to Rs 100,000, Mukherjee had said, "I am confident that all the public sector banks would follow this excellent initiative."